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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
MYCOGEN CORPORATION
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(Name of Registrant as Specified In Its Charter)
CARLTON J. EIBL
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[_] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[X] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
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MYCOGEN CORPORATION
NOTICE OF ANNUAL MEETING
AND
PROXY STATEMENT
<PAGE>
MYCOGEN CORPORATION
MARCH 27, 1995
To the Stockholders of
MYCOGEN CORPORATION
You are cordially invited to attend the Annual Meeting of the Stockholders of
Mycogen Corporation, to be held on Thursday, April 20, 1995 at 10:00 a.m. at
the Wyndham Garden Hotel at 5975 Lusk Boulevard, San Diego, California.
Details of the business to be conducted at the Annual Meeting are given in
the attached Notice of Annual Meeting and Proxy Statement.
If you do not plan to attend the Annual Meeting, please sign, date, and
return the enclosed proxy promptly in the accompanying reply envelope. If you
decide to attend the Annual Meeting and wish to change your proxy vote, you may
do so automatically by voting in person at the Annual Meeting.
We look forward to seeing you at the Annual Meeting.
San Diego, California Jerry D. Caulder
Chairman, President and
Chief Executive Officer
YOUR VOTE IS IMPORTANT
In order to assure your representation at the meeting, you are requested to
complete, sign and date the enclosed proxy as promptly as possible and return
it in the enclosed envelope (to which no postage need be affixed if mailed in
the United States).
<PAGE>
MYCOGEN CORPORATION
4980 CARROLL CANYON ROAD
SAN DIEGO, CALIFORNIA 92121
--------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 20, 1995
--------------
To the Stockholders of
MYCOGEN CORPORATION
The Annual Meeting of Stockholders of Mycogen (the "Company") will be held at
the Wyndham Garden Hotel at 5975 Lusk Boulevard, San Diego, California 92121 on
Thursday, April 20, 1995 at 10:00 a.m. (the "Annual Meeting") for the following
purposes:
1. To elect the Board of Directors to serve until the next Annual Meeting
and until their successors are elected and qualified;
2. To approve the amendment to the Company's 1992 Stock Option Plan to
increase the number of shares of Common Stock reserved for issuance by
1,000,000 shares;
3. To approve the amendment to the Company's 1990 Restricted Stock Issuance
Plan to increase the number of shares of Common Stock reserved for
issuance by 150,000 shares;
4. To approve the reincorporation of the Company from Delaware to California
(the "Proposed Reincorporation"). Approval of the Proposed
Reincorporation by the stockholders will constitute approval of the
following by them as current stockholders of the Company and as
shareholders of the Company as reincorporated in California, immediately
following the effective time of the Proposed Reincorporation: (i) the
Agreement and Plan of Merger, in the form attached hereto as Appendix A
(including the assumption by Mycogen-California of the 1992 Stock Option
Plan, the 1990 Restricted Stock Issuance Plan and other employee benefits
plans and obligations of Mycogen-Delaware under such plans as set forth
therein); and (ii) the Articles of Incorporation and Bylaws of the
Company as reincorporated in California, attached hereto as Exhibits 1
and 2 to Appendix A, respectively;
5. To ratify the appointment of Ernst & Young LLP as the Company's
independent auditors for the fiscal year ending December 31, 1995; and
6. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice. Any stockholders of record at the close of
business on March 1, 1995 will be entitled to vote at the Annual Meeting and at
any adjournment thereof. The transfer books will not be closed. A list of
stockholders entitled to vote at the Annual Meeting will be available for
inspection at the offices of the Company. If you do not plan to attend the
Annual Meeting in person, please sign, date and return the enclosed proxy in
the envelope provided. If you attend the Annual Meeting and vote by ballot,
your proxy will be revoked automatically and only your vote at the Annual
Meeting will be counted. The prompt return of your proxy will assist us in
preparing for the Annual Meeting.
By Order of the Board of Directors
CARLTON J. EIBL as Secretary
San Diego, California
March 27, 1995
<PAGE>
MYCOGEN CORPORATION
4980 Carroll Canyon Road
San Diego, California 92121
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PROXY STATEMENT
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For the Annual Meeting of Stockholders
To Be Held
April 20, 1995
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors of
Mycogen Corporation, a Delaware corporation (the "Company" or "Mycogen"), for
use at the annual meeting of stockholders to be held on April 20, 1995 (the
"Annual Meeting"). The Annual Meeting will be held at 10:00 a.m. at the Wyndham
Garden Hotel at 5975 Lusk Boulevard, San Diego, California. Stockholders of
record on March 1, 1995 will be entitled to notice of and to vote at the Annual
Meeting.
This Proxy Statement and accompanying proxy (the "Proxy") were first mailed
to stockholders on or about March 28, 1995.
VOTING
On March 1, 1995, the record date for determination of stockholders entitled
to vote at the Annual Meeting, there were 19,304,047 shares of Common Stock
outstanding. Each stockholder is entitled to one vote for each share of Common
Stock held by such stockholder. Under Delaware law, an abstention as to any
particular matter does not constitute a vote "for" or "against" and will be
disregarded in calculating the votes cast as to such matter. "Broker non-votes"
(i.e., where a broker or nominee submits a proxy specifically indicating the
lack of discretionary authority to vote on a matter) will be treated in the same
manner as abstentions.
REVOCABILITY OF PROXIES
Any person giving a proxy has the power to revoke it at any time before its
exercise. It may be revoked by filing with the Secretary of the Company at the
Company's principal executive office, 4980 Carroll Canyon Road, San Diego,
California 92121, a notice of revocation or another signed proxy with a later
date. You may also revoke your proxy by attending the Annual Meeting and voting
in person.
SOLICITATION
The Company will bear the entire cost of solicitation, including the
preparation, assembly, printing and mailing of this Proxy Statement, the Proxy
and any additional soliciting material furnished to stockholders. Copies of
solicitation material will be furnished to brokerage houses, fiduciaries and
custodians holding shares in their names that are beneficially owned by others
so that they may forward this solicitation material to such beneficial owners.
In addition, the Company may reimburse such persons for their costs of
forwarding the solicitation materials to such beneficial owners. The original
solicitation of proxies by mail may be supplemented by solicitation by
telephone, telegram or other means by directors, officers, employees or agents
of the Company. No additional compensation will be paid to these individuals for
any such services. Except as described above, the Company does not presently
intend to solicit proxies other than by mail.
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PROPOSAL NO. 1
ELECTION OF DIRECTORS
The persons named below are nominees for director to serve until the next
annual meeting of stockholders and until their successors have been elected and
qualified. The Company's Bylaws provide that the authorized number of directors
shall be determined by resolution of the Board of Directors or by the
stockholders at the annual meeting of stockholders. The authorized number of
directors is currently between 5 and 11. The Board of Directors has selected 5
nominees, all of whom are currently directors of the Company. Each person
nominated for election has agreed to serve if elected, and management has no
reason to believe that any nominee will be unavailable to serve. Unless
otherwise instructed, the proxy holders will vote the proxies received by them
for the nominees named below. The 5 candidates receiving the highest number of
affirmative votes of the shares entitled to vote at the Annual Meeting will be
elected directors of the Company.
NOMINEES
The following table sets forth information regarding the nominees.
<TABLE>
<CAPTION>
NAME POSITIONS AND OFFICES HELD YEAR FIRST ELECTED DIRECTOR
<S> <C> <C>
Thomas J. Cable 1,2 Director 1983
Jerry D. Caulder Chairman, President, 1984
Chief Executive Officer
and Director
George R. Hill 1,2 Director 1993
David H. Rammler Director 1983
A. John Speziale 1 Director 1986
</TABLE>
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1 Member of Compensation Committee.
2 Member of Audit Committee.
BUSINESS EXPERIENCE OF DIRECTORS
Mr. Cable, 55, has served as a director of the Company since September 1983.
Mr. Cable was founder of the venture capital firm of Cable & Howse Ventures,
Inc. and has served as principal with that firm since 1982. Mr. Cable is a
director of Endosonics Corporation, a medical products company, Fischer Imaging
Corporation, a medical X-ray equipment company, and Ostex International, a
medical products company.
Dr. Caulder, 52, joined the Company in September 1984, as President, Chief
Executive Officer and a director, and has served as Chairman of the Board since
July 1989. Prior to joining Mycogen, Dr. Caulder spent over 15 years with
Monsanto Company ("Monsanto"). While at Monsanto, he managed various aspects of
both the international and domestic business of Monsanto Agricultural Products
Company (APC) serving as Director, Product Development Worldwide; Director,
Market Research Worldwide; and Director, Latin America. His last position at
Monsanto was as Director of New Business and Commercial Development for
biotechnology. Dr. Caulder is a director of Applied Genetics, a health care
company, and of Environmental Science & Engineering (ESE), an environmental
remediation company.
Dr. Hill, 53, has served as a director of the Company since April 1993. Dr.
Hill has served as a Senior Vice President of Lubrizol since 1987. Prior to
serving in that position, Dr. Hill served as Vice President of Research and
Development (1984 through 1987) and Assistant to the Vice President of Research
and Development with Lubrizol (1983 through 1984). Dr. Hill
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is also a director of the Lamson and Sessions Company and serves on the Board of
Directors of Lake Erie College, on the Advisory Committee of Case Western
Reserve University, the Visiting Committees of the University of Akron and the
Visiting Committees of Chemistry and Chemical Engineering at Case Western
University and Carnegie Mellon University, respectively.
Dr. Rammler, 66, a founder of the Company, served as the Chairman of the
Board from the Company's inception until July 1989. Dr. Rammler is a general
partner of Vanguard Associates, a venture capital firm, and has served in that
position since 1981. Dr. Rammler is a director of Endosonics Corporation, a
medical products company, and a director of several private companies.
Dr. Speziale, 78, has served as a director of the Company since February
1986. Dr. Speziale has been a principal in A. John Speziale Associates, a
chemistry and agricultural consulting firm, since 1980. Prior to that time, Dr.
Speziale worked for 32 years with Monsanto serving in various research
positions, including Research Director of APC.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of four meetings during
the fiscal year ended December 31, 1994. Each director attended at least three
of the meetings.
The Company has an Audit Committee and a Compensation Committee of the Board
of Directors. The Company does not have a Nominating Committee or a committee
that performs the functions of a Nominating Committee.
The Audit Committee was established in 1987 and is primarily responsible for
reviewing the financial reporting process and the Company's internal accounting
controls, and approving the services performed by, and the independence of, the
Company's auditors. This Committee currently consists of Dr. Hill and Mr. Cable.
The Audit Committee held a total of two meetings during the fiscal year ended
December 31, 1994.
The Compensation Committee was established in 1985 and reviews and approves
the Company's compensation policy. This committee currently consists of Dr.
Speziale, Mr. Cable and Dr. Hill. The Compensation Committee held a total of
three meetings during the fiscal year ended December 31, 1994.
DIRECTOR COMPENSATION
Non-employee members of the Board of Directors are each paid an annual
retainer fee of $12,000 plus reimbursement of all out-of-pocket costs incurred
in connection with their attendance at Board or Committee meetings. Each non-
employee Board member will automatically receive an option grant for 5,000
shares of Common Stock under the Company's 1992 Stock Option Plan on the date of
each Annual Stockholders Meeting at which he is re-elected to the Board. Also,
each individual who first becomes a non-employee Board member, whether through
election by the stockholders or appointment by the Board, will automatically be
granted, at the time of such initial election or appointment, a non-statutory
stock option to purchase 20,000 shares of Common Stock. Each automatic grant
will have an exercise price per share equal to fair market value of the Common
Stock on the grant date. The option will become exercisable over the optionee's
period of Board service in three equal annual installments, beginning one year
after the grant date. However, the option will immediately become exercisable
for all of the option shares should the Company be acquired by merger or asset
sale or through a hostile take-over effected through a tender offer for more
than 50 percent of the outstanding Common Stock or a proxy contest for Board
membership. The option will have a maximum term of 10 years measured from the
grant date, subject to earlier termination upon the optionee's cessation of
Board service. Upon the successful completion of a hostile tender offer for more
than 50 percent of the Company's outstanding Common Stock, the non-employee
Board member will have a 30-day period in which to surrender each of his
automatic option grants to the Company for a cash distribution based upon the
tender offer price of the shares of Common Stock subject to each surrendered
option.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors recommends a vote FOR the nominees listed herein.
3
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PROPOSAL NO. 2
APPROVAL OF AN AMENDMENT TO INCREASE
THE NUMBER OF SHARES RESERVED FOR ISSUANCE
UNDER THE COMPANY'S 1992 STOCK OPTION PLAN
BY 1,000,000 SHARES
In February 1995, the Board of Directors adopted, subject to stockholder
approval at the Annual Meeting, an amendment to the Company's 1992 Stock Option
Plan (the "Option Plan") to increase the number of shares issuable under the
Option Plan by 1,000,000 shares to 5,566,719 in the aggregate. As of January 31,
1995, there were an aggregate of 2,754,119 outstanding options, of which 545,888
options were vested and exercisable. The additional options for which
stockholder approval is being requested will be added to the option available
for grant under the Option Plan. No individuals have been designated to receive
any additional options. All option grants are made at the discretion of
Compensation Committee of the Company's Board of Directors, and all employees of
the Company are eligible for option grants.
The material terms and provisions of the Option Plan, as amended, are
summarized below. Copies of the actual plan document may be obtained by any
stockholder upon written request to the Secretary of the Company.
PLAN STRUCTURE
The Option Plan is divided into two separate components: the Discretionary
Grant Program and the Automatic Grant Program. Under the Discretionary Grant
Program, options may be issued to key employees (including officers),
consultants and other independent contractors of Mycogen or its subsidiaries
(which shall include corporate subsidiaries, the Partnership and any other
partnership or entity owned 50 percent or more by Mycogen) who contribute to the
management, growth and financial success of Mycogen or its subsidiaries. Under
the Automatic Grant Program, a special one-time option grant will be made to
each individual who first joins the Board as a non-employee director on or after
the effective date of the Option Plan and subsequent annual automatic option
grants will be made to each individual who continues to serve as a non-employee
director of Mycogen.
As of January 31, 1995, approximately 846 officers and employees were
eligible to participate in the Discretionary Grant Program.
PLAN ADMINISTRATION
The Discretionary Grant Program is administered by a committee of two or more
Board members (the "Committee") appointed by the Board. No member of the
Committee will be eligible to participate in the Option Plan or any other stock
plan of Mycogen or its subsidiaries, except to the extent such individuals may
become entitled to a special option grant under the Automatic Grant Program.
The Committee has the sole and exclusive authority, subject to the provisions
of the Option Plan, to determine the eligible individuals who are to receive
options under the Discretionary Grant Program, the number of shares to be
covered by each granted option, the date or dates on which the option is to
become exercisable and the maximum term for which the option is to remain
outstanding. The Committee also has the authority to determine whether the
granted option is to be an incentive stock option ("Incentive Option") under the
Federal tax laws and to establish rules and regulations for proper plan
administration.
ISSUABLE SHARES
The aggregate number of shares available for issuance under the Option Plan
may not exceed 5,566,719 shares of Common Stock, subject to adjustment from time
to time in the event of certain changes to Mycogen's capital structure. The
authorized share reserve includes (i) the aggregate number of shares currently
available for issuance under the Option Plan, plus (ii) the proposed additional
increase of 1,000,000 shares of Common Stock.
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Should any option under the Option Plan expire or terminate prior to exercise
or surrender in full, the shares subject to the portion of the option not so
exercised or surrendered will be available for subsequent option grants. Shares
subject to any option surrendered in accordance with the option surrender
provisions of the Option Plan and all share issuances under the Option Plan,
whether or not the shares are subsequently repurchased by Mycogen pursuant to
its repurchase rights under the Option Plan, will reduce on a share-for-share
basis the number of shares available for subsequent option grants.
OPTION PRICE AND EXERCISABILITY
The exercise price of options issued under the Discretionary Grant Program
may not be less than 85 percent of the fair market value of the Common Stock on
the grant date, and the maximum period during which any option may remain
outstanding may not exceed 10 years.
Options issued under the Discretionary Grant Program may either be
immediately exercisable for the full number of shares purchasable thereunder or
may become exercisable in cumulative increments over a period of months or years
as determined by the Committee.
The option price may be paid in cash or in shares of Common Stock valued at
fair market value on the exercise date. If shares of Common Stock are used to
pay the option price, the option holder surrenders to the Company a sufficient
number of fully paid shares of Common Stock, valued at the fair market value on
the exercise date, to fully pay the option price on the options being exercised.
Outstanding options may also be exercised through a same-day sale program,
pursuant to which a designated brokerage firm is to effect an immediate sale of
the shares purchased under the option and pay over to Mycogen, out of the sales
proceeds available on the settlement date, sufficient funds to cover the option
price for the purchased shares plus all applicable withholding taxes.
The Committee may also assist any optionee (including an officer) in the
exercise of outstanding options under the Discretionary Grant Program by
authorizing a loan from Mycogen or permitting the optionee to pay the option
price in installments over a period of years. The terms and conditions of any
such loan or installment payment will be established by the Committee in its
sole discretion, but in no event may the maximum credit extended to the optionee
exceed the aggregate option price payable for the purchased shares plus any
Federal, State or local income taxes or Federal employment taxes incurred by the
optionee in connection with the option exercise.
VALUATION
For purposes of establishing the option price and for all other valuation
purposes under the Option Plan, the fair market value per share of Common Stock
on any relevant date will be the closing selling price per share on such date,
as reported on the NASDAQ National Market System. If there is no reported
selling price for such date, then the closing selling price for the last
previous date for which such quotation exists will be determinative of fair
market value.
STOCKHOLDER RIGHTS AND ASSIGNABILITY OF OPTIONS
No optionee is to have any stockholder rights with respect to the option
shares until such individual has exercised the option, paid the option price and
been issued a stock certificate for the purchased shares. Options are not
assignable or transferable other than by will or by the laws of inheritance,
and, during the optionee's lifetime, the option may be exercised only by the
optionee.
REPURCHASE RIGHTS
Any unvested shares of Common Stock issued under the Option Plan will be
subject to repurchase by Mycogen, at the original exercise price paid per share,
upon the optionee's cessation of service prior to vesting in such shares. The
Committee will have complete discretion in establishing the vesting schedule for
any such unvested shares and will have full authority to cancel Mycogen's
outstanding repurchase rights with respect to one or more unvested shares held
by the optionee and may exercise this discretion at any time, whether before or
after the optionee's service actually ceases.
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ACCELERATION OF OPTIONS
Corporate Transaction
In the event of any of the following stockholder-approved transactions to
which Mycogen is a party (a "Corporate Transaction"):
(i) a merger or consolidation in which Mycogen is not the surviving
entity (except for a transaction the principal purpose of which is to
change the State of Mycogen's incorporation),
(ii) the sale, transfer or other disposition of all or substantially all
of the assets of Mycogen in complete liquidation or dissolution of
Mycogen, or
(iii) a reverse merger in which Mycogen is the surviving entity but in
which the holders of securities possessing more than 50 percent of
the combined voting power of Mycogen's outstanding securities (as
determined immediately prior to such merger) transfer their ownership
of those securities to person or persons not otherwise part of the
transferor group,
each outstanding option under the Discretionary Grant Program will
automatically become exercisable for all of the option shares and may be
exercised for any or all of such shares. However, an outstanding option under
the Discretionary Grant Program will not be so accelerated if and to the extent:
(i) such option is either to be assumed by the successor corporation (or its
parent corporation) in such Corporate Transaction or is otherwise to be replaced
with a comparable option to purchase shares of the capital stock of the
successor corporation, (ii) such option is to be replaced by a cash incentive
program of the successor corporation which preserves the option spread existing
at the time of the Corporate Transaction and provides for pay-out in accordance
with the same vesting schedule in effect for the option or (iii) the
acceleration of such option is subject to other limitations imposed by the
Committee at the time of grant. The Committee will, however, have full power and
authority to grant options under the Discretionary Grant Program, which are to
automatically accelerate in whole or in part immediately prior to the Corporate
Transaction, whether or not those options are otherwise to be assumed or
replaced in connection with the consummation of such Corporate Transaction.
Mycogen's outstanding repurchase rights under the Option Plan will also
terminate, and the shares subject to such terminated rights will become fully
vested, upon the Corporate Transaction, except to the extent (i) one or more of
such repurchase rights are expressly assigned to the successor corporation (or
its parent company) or (ii) such termination and accelerated vesting are
precluded by other limitations imposed by the Committee at the time the
repurchase rights are issued.
Upon the consummation of the Corporate Transaction, all outstanding options
under the Option Plan will terminate and cease to be exercisable, except to the
extent assumed by the successor corporation.
Change in Control
The Committee will have full power and authority, exercisable either in
advance of any actually-anticipated Change in Control or at the time of an
actual Change in Control, to provide for the automatic acceleration of one or
more outstanding options under the Discretionary Option Grant Program so that
each such option may, immediately prior to the Change in Control, be exercised
for any or all of the shares of Common Stock at the time subject to such option.
The Committee will have complete discretion in establishing the specific terms
and conditions upon which one or more outstanding options are to accelerate in
connection with the Change in Control or upon which any of Mycogen's outstanding
repurchase rights under the Option Plan are to terminate. Accordingly, the
Committee may in its discretion condition such accelerated vesting (and the
termination of any outstanding repurchase rights) upon the termination of the
optionee's service within a specified period following the Change in Control.
A Change in Control will be deemed to occur under the Option Plan in the
event:
(i) any person or related group of persons (other than Mycogen or any
affiliate) acquires beneficial ownership of securities possessing
more than fifty percent of the combined voting power of Mycogen's
outstanding securities pursuant to a tender or exchange offer made
directly to Mycogen's stockholders which the Board does not recommend
such stockholders to accept; or
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(ii) there is a change in the composition of the Board over a period of 24
consecutive months or less such that a majority of the Board members
(rounded up to the next whole number) cease, by reason of one or more
proxy contests for the election of Board members, to be comprised of
individuals who either (A) have been Board members continuously since
the beginning of such period or (B) have been elected or nominated
for election as Board members during such period by at least a
majority of the Board members described in clause (A) who were still
in office at the time such election or nomination was approved by the
Board.
The acceleration of options in the event of a Corporate Transaction or Change
in Control may be seen as an anti-takeover provision and may have the effect of
discouraging a merger proposal, a takeover attempt or other efforts to gain
control of Mycogen. The acceleration of options also could have the effect of
discouraging a change in control of the Company and in management, even though
such changes in control could be favored by a majority of stockholders.
STOCK APPRECIATION RIGHTS
At the Committee's discretion, options may be granted with stock appreciation
rights. Two types of stock appreciation rights are authorized for issuance under
the Option Plan: (i) tandem rights which require the option holder to elect
between the exercise of the underlying option for shares of Common Stock and the
surrender of such option for an appreciation distribution from Mycogen and (ii)
limited rights which will become exercisable upon the occurrence of a Hostile
Take-Over.
Tandem stock appreciation rights provide the holders with the right to
receive an appreciation distribution from Mycogen equal in amount to the excess
of (i) the fair market value (on the date such right is exercised) of the shares
of Common Stock in which the optionee is at the time vested under the
surrendered option over (ii) the aggregate exercise price payable for such
shares. Such appreciation distribution may, at the Committee's discretion, be
made in shares of Common Stock valued at fair market value on the exercise date,
in cash or in a combination of cash and Common Stock.
One or more officers of Mycogen subject to the short-swing profit
restrictions of the Federal securities laws may, at the Committee's discretion,
be granted limited stock appreciation rights as part of any stock option grants
made to such officers under the Option Plan. Any option with such a limited
stock appreciation right in effect for at least six months may, at the officer's
election, be surrendered to the Company upon the occurrence of a Hostile Take-
Over, to the extent the option is at such time exercisable for vested shares
(including any shares which vest in connection with such Hostile Take-Over). In
return, the optionee will be entitled to a cash distribution from Mycogen in an
amount equal to the excess of (i) the Take-Over Price of the vested shares of
Common Stock at the time subject to the canceled option (or the canceled
portion) over (ii) the aggregate exercise price payable for such shares. The
balance of the option (if any) will continue to remain outstanding and
exercisable in accordance with the agreement evidencing such grant.
For purposes of such limited stock appreciation right, the following
definitions will be in effect under the Option Plan:
Hostile Take-Over: the acquisition by any person or related group of
persons (other than Mycogen or its affiliates) of securities possessing
more than 50 percent of the combined voting power of Mycogen's outstanding
securities pursuant to a tender or exchange offer made directly to
Mycogen's stockholders which the Board does not recommend such stockholders
to accept.
Take-Over Price: the greater of (A) the fair market value of the shares
subject to the canceled option, measured on the option surrender date in
accordance with the valuation provisions of the Option Plan described
above, or (B) the highest reported price per share paid by the acquiring
entity in effecting the Hostile Take-Over.
TERMINATION OF SERVICE
Outstanding options under the Discretionary Grant Program will terminate,
with respect to any shares for which such options are exercisable at the time of
the optionee's cessation of service with Mycogen, within a specified period
(generally not in excess of 12 months) following such cessation of service,
unless the Committee determines that such exercise period
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should be further extended for one or more additional months or years. Under no
circumstances, however, may any such option remain exercisable after the
specified expiration date of the option term. To the extent the option is not
exercisable for one or more shares at the time of the optionee's cessation of
service, the option will immediately terminate and cease to be outstanding with
respect to those shares.
Should the optionee die while holding one or more exercisable options, then
those options may subsequently be exercised by the personal representative of
the optionee's estate or by the persons to whom such options are transferred by
the optionee's will or by the laws of inheritance. Should the optionee's service
be terminated for misconduct, all outstanding options held by the optionee will
be terminated immediately and cease to be outstanding.
During the applicable exercise period following the optionee's cessation of
service, the option may not be exercised for more than the number of option
shares for which the option is exercisable at the time of such cessation of
service. However, the Committee will have the discretionary authority to
accelerate in whole or in part the vesting of any outstanding options held by
the optionee and may exercise this discretion at any time while the option
remains outstanding.
For purposes of the Option Plan, the optionee will be deemed to be in the
service of Mycogen for so long as such individual renders periodic services to
Mycogen or any subsidiary, whether as an employee, board member or independent
consultant.
CANCELLATION AND NEW GRANT OF OPTIONS
The Committee has the authority to effect the cancellation of outstanding
options under the Discretionary Grant Program and to grant replacement options
covering the same or different numbers of shares of Common Stock but having an
option price per share not less than 85 percent of the fair market value of the
Common Stock on the new grant date. It is anticipated that the option price in
effect under the replacement grant will in all instances be less than the option
price in effect under the canceled option.
SPECIAL TAX WITHHOLDING ELECTION
The Committee may, in its discretion and upon such terms and conditions as it
may deem appropriate, provide one or more option holders under the Discretionary
Grant Program with the election to have Mycogen withhold, from the shares of
Common Stock otherwise issuable upon the exercise of their options, a portion of
such shares with an aggregate fair market value equal to the designated
percentage (up to 100 percent as specified by the option holder) of the Federal,
State and local income tax liability and Federal employment tax liability
incurred by such option holder in connection with the exercise of such option.
Any election so made will be subject to the approval of the Committee, and no
shares will actually be withheld in satisfaction of such taxes except to the
extent approved by the Committee. One or more option holders may also be granted
the alternative right, subject to Committee approval, to deliver previously-
issued shares of Common Stock in satisfaction of such tax liability.
AUTOMATIC GRANT PROGRAM
Under the Automatic Grant Program, each individual who first became a non-
employee Board member, whether through election by the stockholders or
appointment by the Board, and who was not otherwise in the prior employ of
Mycogen will automatically be granted, at the time of such initial election or
appointment, a non-statutory stock option to purchase 20,000 shares of Common
Stock. Further, each individual who is reelected at each annual Stockholders'
Meeting as a non-employee Board member will automatically be granted a non-
statutory stock option to purchase an additional 5,000 shares of Common Stock.
There is no limit on the number of such 5,000-share option grants the non-
employee Board member may receive over his or her period of Board service.
Each such option grant will be subject to the following terms and conditions:
(i) The option price per share will be equal to 100 percent of the fair
market value per share of Common Stock on the grant date.
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<PAGE>
(ii) Each option is to have a maximum term of ten years measured from the
grant date.
(iii) Each automatic grant will become exercisable in a series of three
equal annual installments over the optionee's period of Board
service, with the first such installment to become exercisable one
year after the automatic grant date.
(iv) The option will remain exercisable for a six-month period following
the optionee's cessation of Board service for any reason other than
death. Should the optionee die while holding the automatic grant,
then such option will remain exercisable for a twelve month period
following such optionee's death and may be exercised by the personal
representative of the optionee's estate or the person to whom the
grant is transferred by the optionee's will or the laws of
inheritance. In no event, however, may the option be exercised after
the expiration date of the option term. During the applicable
exercise period, the option may not be exercised for more than the
number of shares (if any) for which it is exercisable at the time of
the optionee's cessation of Board service. To the extent the option
is not exercisable for one or more option shares at the time of the
optionee's cessation of Board service, the option will immediately
terminate and cease to be outstanding with respect to those shares.
(v) The option will become immediately exercisable for all of the shares
at the time subject to such option in the event of a Corporate
Transaction (as defined above in the section entitled "Acceleration
of Options"). Upon the consummation of the Corporate Transaction,
each automatic option grant will terminate and cease to be
outstanding.
(vi) The option will become immediately exercisable for all of the shares
at the time subject to such option in the event of a Change in
Control (as defined above in the section entitled "Acceleration of
Options"). Except as otherwise provided in paragraph (vii) below, the
accelerated option will continue to remain outstanding until the
expiration or sooner termination of the option term.
(vii) Upon the occurrence of a Hostile Take-Over (as defined in the
section above entitled "Stock Appreciation Rights"), the non-employee
Board member will have a thirty-day period in which he or she may
elect to surrender the automatic option grant to the Company,
provided such grant has been outstanding for a period of at least six
months. In return for the surrendered option, the non-employee Board
member will be entitled to a cash distribution from Mycogen in an
amount equal to the excess of (i) the Take-Over Price (as defined
above in the section entitled "Stock Appreciation Rights") of the
shares of Common Stock at the time subject to the surrendered option
(whether or not the option is otherwise at the time exercisable for
such shares) over (ii) the aggregate exercise price payable for such
shares.
(viii) The remaining terms and conditions of the option will in general
conform to the terms described above for option grants made under the
Discretionary Grant Program and will be incorporated into the option
agreement evidencing the automatic grant.
(ix) The terms and provisions of the Automatic Grant Program and the
outstanding options thereunder may not be amended or modified at
intervals more frequently than once every six months, except as
otherwise required to comply with applicable Federal tax laws and
regulations.
CHANGES IN CAPITALIZATION
In the event any change is made to the Common Stock issuable under the Option
Plan by reason of any recapitalization, stock dividend, stock split, combination
of shares, exchange of shares, or other change in corporate structure effected
without Mycogen's receipt of consideration, appropriate adjustments will be made
to (i) the maximum number and/or class of securities issuable under the Option
Plan, (ii) the number and/or class of securities and price per share in effect
under each outstanding option (including all discretionary and automatic option
grants under the Option Plan), and (iii) the number and/or class of securities
per non-employee Board member for which the special option grants will
subsequently be made under the Automatic Grant Program.
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Each outstanding option which is assumed or is otherwise to continue in
effect after a Corporate Transaction will be appropriately adjusted to apply and
pertain to the number and class of securities which would have been issuable, in
connection with such Corporate Transaction, to an actual holder of the same
number of shares of Common Stock as are subject to such option immediately prior
to such Corporate Transaction. Appropriate adjustments will also be made to the
option price payable per share and to number and class of securities available
for issuance under the Option Plan.
Option grants under the Option Plan will not affect the right of Mycogen to
adjust, reclassify, reorganize or otherwise change its capital or business
structure or to merge, consolidate, dissolve, liquidate or sell or transfer all
or any part of its business or assets.
AMENDMENT AND TERMINATION OF THE OPTION PLAN
The Board of Directors may amend or modify the Option Plan in any or all
respects whatsoever, subject, however, to the limitation on plan amendments to
the Automatic Grant Program. No such amendment may adversely affect the rights
of outstanding option holders without their consent, and the Board may not,
without the approval of Mycogen's stockholders, (i) materially increase the
maximum number of shares issuable under the Option Plan or the number of shares
for which automatic grants may be made to non-employee Board members, except in
the event of certain changes to Mycogen's capital structure as indicated above,
(ii) materially modify the eligibility requirements for option grants, or (iii)
otherwise materially increase the benefits accruing to participants under the
Option Plan.
The Board may terminate the Option Plan at any time, and the Option Plan will
in all events terminate no later than ten years from the date of approval by the
stockholders at the Special Meeting. Any options outstanding at the time of such
plan termination will continue to remain outstanding and exercisable in
accordance with the terms and provisions of the instruments evidencing those
grants. The Option Plan will, however, automatically terminate on the date all
shares available for issuance under the Option Plan are issued or canceled
pursuant to the exercise, surrender or cash-out of outstanding options under the
Option Plan.
FEDERAL TAX CONSEQUENCES
Options granted under the Option Plan may be either Incentive Options which
satisfy the requirements of Section 422 of the Internal Revenue Code or non-
statutory options which do not meet such requirements. The Federal income tax
treatment for the two types of options differs as follows:
Incentive Options. No taxable income is recognized by the optionee at the
time of the option grant, and no taxable income is generally recognized at the
time the option is exercised. The optionee will however, recognize taxable
income in the year in which the purchased shares are sold or otherwise made the
subject of disposition.
For Federal tax purposes, dispositions are divided into two categories: (i)
qualifying and (ii) disqualifying. The optionee will make a qualifying
disposition of the purchased shares if the sale or disposition is made more than
two years after the grant date of the option and more than one year after the
exercise date. If the optionee fails to satisfy either of these two holding
periods prior to sale or disposition, then a disqualifying disposition of the
purchased shares will result.
Upon a qualifying disposition, the optionee will recognize long-term capital
gain in an amount equal to the excess of (i) the amount realized upon the sale
or other disposition of the purchased shares over (ii) the option price paid for
the shares. If there is a disqualifying disposition of the shares, then the
excess of (i) the fair market value of those shares on the exercise date over
(ii) the option price paid for the shares will be taxable as ordinary income.
Any additional gain recognized upon the disposition will be capital gain.
If the optionee makes a disqualifying disposition of the purchased shares,
then Mycogen will be entitled to an income tax deduction, for the taxable year
in which such disposition occurs, equal to the excess of (i) the fair market
value of such shares on the date the option was exercised over (ii) the option
price paid for such shares. In no other instance will Mycogen be allowed a
deduction with respect to the optionee's disposition of the purchased shares.
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<PAGE>
Non-Statutory Options. No taxable income is recognized by an optionee upon
the grant of a non-statutory option. The optionee will in general recognize
ordinary income, in the year in which the option is exercised, equal to the
excess of the fair market value of the purchased shares on the exercise date
over the option price paid for such shares, and the optionee will be required to
satisfy the tax withholding requirements applicable to such income.
Special provisions of the Internal Revenue Code apply to the acquisition of
Common Stock under a non-statutory option, if the purchased shares are subject
to repurchase by Mycogen. These special provisions may be summarized as follows:
(a) If the shares acquired upon exercise of the non-statutory option are
subject to repurchase by Mycogen at the original option price in the event
the optionee should terminate service prior to vesting in the shares, the
optionee will not recognize any taxable income at the time of exercise but
will have to report as ordinary income, as and when Mycogen's repurchase
right lapses, an amount equal to the excess of (i) the fair market value of
the shares on the date Mycogen's repurchase right lapses with respect to
those shares over (ii) the option price paid for such shares.
(b) The optionee may, however, elect under Section 83(b) of the Internal
Revenue Code to include as ordinary income in the year of exercise an
amount equal to the excess of (i) the fair market value of the purchased
shares on the exercise date (determined as if the shares were not subject
to Mycogen's repurchase right) over (ii) the option price paid for such
shares. If the Section 83(b) election is made, the optionee will not
recognize any additional income as and when Mycogen's repurchase right
lapses.
Mycogen will be entitled to a business expense deduction equal to the amount
of ordinary income recognized by the optionee with respect to the exercised non-
statutory option. The deduction will in general be allowed for the taxable year
of Mycogen in which ordinary income is recognized by the optionee in connection
with the acquisition of the option shares.
Surrender Rights. An optionee who surrenders an outstanding option for a cash
or stock distribution from Mycogen will recognize ordinary income in the year of
surrender equal to the amount of the appreciation distribution. Mycogen will be
entitled to a corresponding business expense deduction for such appreciation
distribution. The deduction will be allowed in the taxable year of Mycogen in
which the ordinary income is recognized by the optionee.
ACCOUNTING TREATMENT
Under present accounting rules, neither the grant nor the exercise of options
issued with an exercise price equal to the fair market value of the option
shares on the grant date will result in any charge to Mycogen's earnings.
However, the grant of options with exercise prices less than such fair market
value will result in a compensation expense for Mycogen equal to the discount at
the time of the grant, and Mycogen will have to amortize such expense over the
vesting period in effect for the option shares. Whether or not granted at a
discount, the number of outstanding options under the Option Plan may be a
factor in determining earnings per share.
Should one or more optionees be granted the unqualified right to surrender
their options under the Option Plan for a cash or stock distribution,
compensation expense will arise as a charge to Mycogen's earnings. Accordingly,
at the end of each fiscal quarter, the amount (if any) by which the fair market
value of the shares of Common Stock subject to each such surrenderable option
has increased from prior quarter-end will be accrued as compensation expense, to
the extent such amount is in excess of the aggregate exercise price payable for
such shares.
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OUTSTANDING OPTION GRANTS UNDER THE STOCK OPTION PLAN
The table below shows, as to the Company's President and Chief Executive
Officer and each of the other executive officers of the Company (collectively,
the "Named Executive Officers") and as to the various indicated groups, the
following information with respect to stock options granted during fiscal 1994
and fiscal 1993 and during all Option Plan years which are outstanding as of
December 31, 1994, as well as options which the company has determined to grant
under the Stock Option Plan on the effective date of the amendment to the extent
currently known or determinable: (i) the number of shares of Common Stock
subject to options granted and (ii) the weighted average exercise price per
share for such options.
<TABLE>
<CAPTION>
FISCAL 1994 FISCAL 1993 ALL PLAN YEARS
-------------------------------------------------------------------------------------------
Weighted Weighted Total Weighted
Options Average Options Average Options Average
Granted/1/ Exercise Price Granted Exercise Price Outstanding Exercise Price
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Jerry D. Caulder 260,000 $8.50 100,000 $11.25 357,000 $7.70
Chief Executive Officer
Andrew C. Barnes 160,000 $8.50 50,000 $11.25 237,000 $7.73
Executive Vice President
Carlton J. Eibl 80,000 $8.50 50,000 $11.25 80,000 $8.50
Executive Vice President
James R. Glynn 160,000 $8.50 50,000 $11.25 182,000 $8.39
Resigned as of March 1995
from the positions of
Executive Vice President,
Chief Financial Officer
Albert D. Kern 160,000 $8.50 50,000 $11.25 200,848 $8.13
Executive Vice President
Leo Kim 135,000 $8.50 50,000 $11.25 135,000 $8.50
Executive Vice President,
Chief Technical Officer
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
/1/ These options were granted on December 21, 1994 in exchange for an equal
number of options previously granted to such individuals. This grant of new
options was completed as part of a grant of new options with an exercise
price of $8.50 on December 21, 1994 to all full-time employees (including
the executive officers) who held options granted after December 1, 1989 in
exchange for an equal number of previously granted options. The newly
granted options vest in equal monthly installments over a new 36-month
period measured from December 21, 1994. Each option granted to the
executive officers is immediately exercisable for all of the option shares,
but any shares purchased under the option will be subject to repurchase by
the Company, at the original exercise price per share, upon the optionee's
cessation of service prior to vesting in such shares.
STOCKHOLDER APPROVAL
The affirmative vote of a majority of the outstanding shares of the
Company's Common Stock represented and voted at the Annual Meeting is required
for approval of the amendment to the Option Plan.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors recommends that the stockholders vote FOR approval
of the amendment to the Option Plan.
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PROPOSAL NO. 3
APPROVAL OF AN AMENDMENT TO INCREASE
THE NUMBER OF SHARES RESERVED FOR ISSUANCE
UNDER THE COMPANY'S
RESTRICTED STOCK ISSUANCE PLAN
In February 1995, the Board of Directors adopted, subject to stockholder
approval at the Annual Meeting, an amendment to the Company's 1990 Restricted
Stock Issuance Plan (the "Restricted Plan") to increase the number of shares
issuable under the Restricted Plan by 150,000 shares to 300,000 shares in
aggregate. As of January 31, 1995, there were an aggregate of 85,000 shares
issued under the Restricted Plan, of which 50,000 shares were vested. The
additional shares for which stockholder approval is being requested will be
added to the shares available for grant under the Restricted Plan. No
individuals have been designated to receive any additional shares under the
Restricted Plan. All share grants are made at the discretion of the Compensation
Committee of the Company's Board of Directors and key employees of the Company
(including officers and employee directors).
The issuance of shares under the Restricted Plan is used by the Company to
incentivize officers and employee directors of the Company to carry out their
individual responsibilities in a manner consistent with increasing the value of
the Company for stockholders. The Company believes that the number of shares
available for grant should be increased by 150,000 shares to provide sufficient
shares for two or more years under the Restricted Plan for the committee that
administers the plan to reward and retain key employees, particularly in
recognition of the number and increased responsibility of key employees as the
Company grows.
A summary of the material provisions of the Restricted Plan follows. Copies
of the actual plan document may be obtained by any stockholder upon written
request to the Secretary of the Company.
ELIGIBILITY
Key employees of the Company (including officers and employee directors) are
eligible to receive shares of the Company's Common Stock under the Restricted
Plan either as reward for services rendered or as incentive to continue in the
company's employ. As of January 31, 1995, approximately 22 key employees
(including 6 officers and employee directors) were eligible to participate in
the Restricted Plan.
ISSUABLE SHARES
The shares issuable under the Restricted Plan will be shares of the Company's
authorized but previously unissued Common Stock or shares of the Company's
Common Stock reacquired by the Company, including shares purchased on the open
market and held as treasury shares.
The maximum number of shares of the Company's Common Stock that may be issued
under the Restricted Plan may not exceed 300,000 shares. This number is subject
to periodic adjustment for certain changes in the Company's capital structure,
as discussed in the section below entitled "changes in Capitalization." Any
unvested shares issued under the Plan and subsequently surrendered to the
Company for cancellation upon the non-completion of the applicable vesting
schedule may be reissued under the Restricted Plan.
As of January 31, 1995, 85,000 shares of Common Stock had been issued under
the Restricted Plan and 65,000 shares were available for issuance under future
grants.
ADMINISTRATION
The Restricted Plan will be administered by the Compensation Committee of the
Board of Directors (the "Committee"). The Board may, however, assume
responsibility for administration of the Restricted Plan at any time.
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<PAGE>
The Plan Administrator (whether the Board or the Committee) will have full
authority, subject to the provisions of the Restricted Plan, to select the
individuals who are to be issued shares under the Restricted Plan and to
determine the number of shares to be issued to each selected individual, the
vesting schedule to be applicable to the issued shares and the consideration to
be paid by the individual for such shares.
The Plan Administrator will also have full authority to interpret and
construe the provisions of the Restricted Plan and the instruments evidencing
the various awards made thereunder, and to adopt rules and regulations for
proper administration.
All expenses incurred in the administration of the Restricted Plan will be
paid by the Company without charge to participants.
CONSIDERATION
Shares may be issued under the Restricted Plan for such consideration as the
Plan Administrator may from time to time deem appropriate, including (i) cash or
cash equivalents, (ii) promissory notes payable to the Company's order (which
may be subject to cancellation in whole or in part at the discretion of the Plan
Administrator) or (iii) services rendered to the Company or its subsidiaries.
To the extent the shares issued under the Plan are drawn from the Company's
authorized but unissued reserve of common stock, those shares must be issued for
consideration valued by the Plan Administrator at not less than eighty-five
percent (85%) of their current market price. Treasury shares (shares repurchased
by the Company and held as issued shares) may be issued under the Restricted
Plan for whatever consideration, including future services, the Plan
Administrator deems appropriate under the circumstances.
VESTING
Shares issued under the Restricted Plan may be fully vested upon issuance or
may vest over a period of time. The Plan Administrator will determine the
vesting schedule applicable to each issuance, including (i) the service period
to be completed by the participant or the performance objectives to be achieved
by the Company, (ii) the number of installments in which the shares are to vest,
(iii) the interval to lapse between each installment and (iv) the effect death,
disability or any other event designated by the Plan Administrator is to have on
the vesting schedule.
FINANCIAL ASSISTANCE
The Plan Administrator may, in its discretion and without any obligation to
do so, institute a loan program in order to assist one or more participants in
financing the acquisition of shares issued under the Restricted Plan for
consideration other than past or future services. The form in which such
assistance is to be made available in each particular case (including Company
loans or guarantees) and the terms upon which such assistance is to be provided
(including interest rate, repayment schedule and requirements for collateral and
security) will be determined by the Plan Administrator at its sole discretion.
However, the maximum amount of financing provided any participant may not exceed
the amount of cash consideration payable for the issued shares and the federal
and state income and employment tax withholding liabilities incurred by the
participant in connection with the acquisition of such shares.
The Plan Administrator may also provide for the forgiveness, in whole or in
part, of one or more loans outstanding under the Restricted Plan upon such terms
and conditions as the Plan Administrator deems appropriate.
STOCKHOLDER RIGHTS
A participant in the Restricted Plan will have full stockholder rights with
respect to the issued shares, including the right to vote such shares and
receive all cash dividends paid on such shares, whether or not such shares are
vested. However, any new, additional or different securities to which the
participant may become entitled with respect to the issued shares by reason of
(i) any stock dividend, stock split, reclassification, recapitalization or other
similar transaction affecting such shares, or (ii) a Corporate Transaction (as
such term is defined in the section entitled "Corporate Transaction/Change in
Control" below) will be subject to the same vesting schedule and escrow
requirements applicable to those issued shares.
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<PAGE>
Unvested shares held under the Restricted Plan may not be sold, transferred
or assigned, except for certain permitted transfers to the participant's spouse
or issue or transfers effected upon the participant's death.
Should the participant cease for any reason to remain in Service while
holding unvested shares under the Restricted Plan, then those unvested shares
will immediately be surrendered to the Company for cancellation, and the
participant will case to have any stockholder rights with respect to such
shares. to the extent the surrendered shares were previously issued to the
participant for consideration paid in cash or cash equivalent (including a
purchase-money promissory note), the Company will repay to the participant the
cash consideration or cancel the principal balance of any outstanding purchase-
money note to the extent attributable to the surrendered shares.
The Plan Administrator may in its discretion elect to waive the surrender and
cancellation of one or more unvested shares held by the participant at the time
of termination of Service and thereby accelerate vesting of the participants
interest in the shares as to which the waiver applies.
The participant will be deemed to remain in Service for so long as such
individual renders services on a periodic basis, whether as an employee,
consultant or member of the board of directors, to the Company or one or more of
its subsidiary corporations.
CHANGES IN CAPITALIZATION
In the event the outstanding shares of the Company's common stock are
increased or decreased as a result of stock dividends, stock splits,
recapitalizations, reorganizations or other changes in corporate structure
effected without the receipt of consideration, or in the event the Company's
common stock is converted into other shares or securities of the Company or any
other corporation in connection with a Corporate Transaction, then appropriate
adjustments will be made to the class and/or number of shares available for
subsequent issuance under the Restricted Plan.
CORPORATE TRANSACTION/CHANGE IN CONTROL
In the event of a Corporate Transaction or Change in Control (as such terms
are defined below), all unvested shares which have been outstanding under the
Restricted Plan for at least six (6) months will immediately vest in full,
except (and to the extent) the Plan Administrator imposes limitations at the
time the shares are issued under the Restricted Plan, which preclude such
accelerated vesting in whole or in part. The acceleration of the vesting of
restricted shares could have the effect of discouraging a Corporate Transaction
or Change in Control of the Company and in management even though such Corporate
Transaction or Change in Control could be favored by a majority of stockholders.
A Corporate Transaction includes one or more of the following transactions:
(i) a merger or consolidation in which the Company is not the surviving entity,
(ii) the sale, transfer or other disposition of substantially all of the
Company's assets, or (iii) any reverse merger in which the Company is the
surviving entity but in which fifty percent (50)%) or more of the Company's
outstanding voting stock is transferred to holders different from those who held
the stock immediately prior to such merger.
A Change in Control will be deemed to occur under the Restricted Plan in the
event that (A) twenty-five percent (25%) or more of the Company's outstanding
voting stock is acquired pursuant to a tender or exchange offer which the Board
does not recommend the Company's stockholders to accept, or (B) the composition
of the Board changes in such a manner that the individuals elected as Board
members at the last uncontested election cease to comprise a majority of the
board by reason of one or more contested elections.
VALUATION
For purposes of establishing the option price and for all other valuation
purposes under the Option Plan, the fair market value of a share of Common
Stock, on any relevant date, is the reported closing selling price per share, on
the date in question, on the NASDAQ National Market System. Should the Common
Stock subsequently be listed or admitted to trading on any stock exchange, then
the fair market value will be the closing selling price per share of Common
Stock, on the date in
15
<PAGE>
question, on the stock exchange determined by the Option Plan Administrator to
be the primary market for the Common Stock, as such price is officially quoted
on such exchange.
SPECIAL TAX ELECTION
The Plan Administrator may, in its discretion and upon such terms and
conditions as it deems appropriate, provide one or more participants with the
right to deliver to the Company, at the time the shares issued to them under the
Restricted Plan vest, shares of the Company's common stock with an aggregate
fair market value equal to all or part of the Federal and State income tax
liability incurred in connection with their acquisition of the issued shares.
The delivered shares will be accepted in satisfaction of such tax liability only
to the extent approved by the Plan Administrator.
AMENDMENT AND TERMINATION
The Board of Directors may at any time amend, alter, modify or terminate the
Restricted Plan, provided such action does not adversely affect the rights of
participants (or their beneficiaries) with respect to outstanding shares under
the Restricted Plan. NO modification to the Restricted Plan may, without
stockholder approval, increase the number of shares issueable under the
Restricted Plan (except for certain adjustments required under the Restricted
Plan in the event of changes in the Company's capital structure).
Unless sooner terminated by Board action, the Restricted Plan will terminate
upon the earlier of (i) November 2, 2000, or (ii) the first date when all the
shares of the Company's common stock available for issuance thereunder have been
issued.
FEDERAL INCOME TAX CONSEQUENCES
The Federal income tax treatment of shares issued under the Restricted Plan
may be summarized as follows:
Issuance of Vested Shares. To the extent the participant is issued vested
shares under the Restricted Plan, the individual must report as ordinary income
in the year of issuance an amount equal to the excess of (i) the fair market
value of those vested shares on the date of issue over (ii) the aggregate
purchase price paid for such shares in the form of cash or promissory note.
Issuance of Unvested Shares. To the extent the issued shares are unvested,
the participant will not recognize any taxable income at the time of issuance
but will have to report as ordinary income, for the taxable year in which the
participant's interest in the issued shares becomes vested, an amount equal to
the excess of (i) the fair market value of the shares on the date they become
vested over (ii) the aggregate purchase price paid for such shares in the form
of cash or promissory notes. Such participant, however, may elect under Section
83(b) of the Internal Revenue Code to include as ordinary income in the taxable
year of issuance an amount equal to the excess of (i) the fair market value of
the unvested shares on the date of issue over (ii) the aggregate purchase price
paid for such shares in the form of cash or promissory notes. If the Section
83(b) election is made, the participant will not recognize any additional income
as and when such participant's interest in the shares subsequently vests.
If any promissory note delivered in payment of the shares is forgiven in
whole or in part, the amount of such forgiveness will be reportable by the
participant as ordinary compensation income.
The Company will be entitled to a business expense deduction equal to the
amount of ordinary income recognized by the participant in connection with the
acquisition of the shares and any note forgiveness. The deduction will be
allowed for the taxable year of the Company in which the ordinary income is
recognized by the participant.
ACCOUNTING TREATMENT
To the extent shares are issued under the Restricted Plan for consideration
paid in cash or promissory notes with a value less than the fair market value of
such shares, the resulting discount will result in a charge to the Company's
earnings, either to be accrued over the vesting period applicable to such shares
or to be taken as an immediate compensation expense to the extent the shares are
vested upon issuance. If the shares are issued in consideration for services
rendered or to be rendered,
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the charge to the Company's earnings will be equal to the fair market value of
those shares at the time of issuance, and such charge will in general be
amortized over the vesting period applicable to such shares or will be a
compensation expense for the fiscal period of issuance to the extent the shares
are vested upon issuance. Shares issued for consideration paid in cash or
promissory notes with a value equal to the market value of the issued shares
will not result in any charge to the Company's earnings.
If any promissory notes delivered in payment for shares issued under the
Restricted Plan are forgiven in whole or in part, the amount of such forgiveness
will be a compensation expense to be charged to the Company's earnings in the
fiscal period in which the forgiveness is effected.
STOCKHOLDER APPROVAL
The affirmative vote of a majority of the outstanding shares of the Company's
Common Stock represented and voted at the Annual Meeting is required for
approval of the amendment to the Restricted Plan.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors recommends that the stockholders vote FOR approval of
the amendment to the Restricted Plan to increase the number of shares issuable
thereunder by 150,000 shares.
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PROPOSAL NO. 4
APPROVAL OF THE REINCORPORATION
OF THE COMPANY
FROM DELAWARE TO CALIFORNIA
GENERAL
The Board of Directors has approved and, for the reasons described below,
recommends that the Company's stockholders approve a reorganization in which the
Company's state of incorporation would be changed from Delaware to California.
The Proposed Reincorporation would be accomplished by merging the Company
("Mycogen-Delaware") into a wholly-owned California subsidiary called Mycogen
Corporation ("Mycogen-California"), newly formed for this purpose, with each
outstanding share of Mycogen-Delaware's capital stock being exchanged for one
corresponding share of capital stock of Mycogen-California. Assuming the
stockholders approve this Proposal, the Series A Preferred Stock of Mycogen-
Delaware will be exchanged for a similar number of shares of Series A Preferred
Stock of Mycogen-California and the Common Stock of Mycogen-Delaware will be
exchanged for a similar number of shares of Common Stock of Mycogen-California.
The authorized capital stock of Mycogen-California will be the same as the
authorized capital stock of Mycogen-Delaware, without any increase or decrease
in authorized shares of Preferred Stock or Common Stock. The Proposed
Reincorporation will be accomplished pursuant to the terms of an Agreement and
Plan of Merger between Mycogen-Delaware and Mycogen-California, a copy of which
is attached hereto as Appendix A. Because Mycogen-California will be governed by
California law, the Proposed Reincorporation will result in certain changes in
the rights of stockholders. See "Changes in the Company's Charter to be Effected
by Reincorporation" and "Certain Differences in State Corporation Laws."
THE PROPOSED REINCORPORATION, IF APPROVED AND EFFECTED, WILL EFFECT A CHANGE
IN THE LEGAL DOMICILE OF THE COMPANY, AND OTHER CHANGES OF A LEGAL NATURE, THE
MATERIAL ASPECTS OF WHICH ARE DESCRIBED IN THIS PROXY STATEMENT. THE PROPOSED
REINCORPORATION WILL NOT RESULT IN ANY SIGNIFICANT CHANGE IN THE COMPANY'S
BUSINESS, MANAGEMENT, ASSETS, LIABILITIES, FISCAL YEAR, LOCATION OF PRINCIPAL
EXECUTIVE OFFICES OR NET WORTH.
At and after the effective date of the Proposed Reincorporation of Mycogen-
Delaware and Mycogen-California, each certificate that previously represented
shares of Common Stock of Mycogen-Delaware will be deemed to represent that
number of shares of Common Stock of Mycogen-California into which such shares of
Mycogen-Delaware are convertible pursuant to the Agreement and Plan of Merger.
IT WILL NOT BE NECESSARY FOR STOCKHOLDERS OF MYCOGEN-DELAWARE TO CURRENTLY
EXCHANGE THEIR EXISTING STOCK CERTIFICATES FOR STOCK CERTIFICATES OF MYCOGEN-
CALIFORNIA. However, the Company currently plans to effect such exchange
following the effectiveness of the Proposed Reincorporation.
Assuming that the Proposed Reincorporation is approved, Mycogen-Delaware's
1992 Stock Option Plan and 1990 Restricted Stock Issuance Plan will be assumed
by Mycogen-California. Assuming approval by the Company's stockholders of
Proposals 2 and 3, a reserve of 5,866,719 shares of Common Stock will be
established for issuance pursuant to option grants made under the 1992 Plan and
share issuances under the Restricted Stock Issuance Plan. The Agreement and Plan
of Merger provides that Mycogen-California will assume all options outstanding
under the 1992 Stock Option Plan and such options will accordingly become
exercisable for shares of Mycogen-California. Stockholders should note that
approval of the Proposed Reincorporation will constitute approval of the
assumption by Mycogen-California of the 1992 Stock Option Plan and 1990
Restricted Stock Issuance Plan and the outstanding options and shares
thereunder. In addition, all new option grants and share issuances under the
1992 Stock Option Plan and 1990 Restricted Stock Issuance Plan will likewise
relate to shares of Mycogen-California Common Stock.
The Company's 401(k) Deferred Savings Plan and other employee benefits, such
as medical coverage, will remain in place. Mycogen-California also will adopt
the Stockholders Rights Agreement between Mycogen-Delaware and The First
National Bank of Boston, acting as the agent on behalf of the Company's
stockholders. The Rights Agreement provides certain protections for the Company
and its stockholders from certain changes of control of the Company not approved
by the Company's Board of Directors.
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As of January 31, 1995, Mycogen-Delaware had 2,999 shares of Series A
Preferred Stock issued and outstanding. Assuming the Proposed Reincorporation is
approved, Mycogen-California will assume the rights and obligations of Mycogen-
Delaware with respect to the Preferred Stock pursuant to the terms of the
Agreement and Plan of Merger. Such shares of Preferred Stock will be convertible
into shares of Mycogen-California Common Stock following the effective time of
the Proposed Reincorporation.
It is anticipated that the Proposed Reincorporation will be consummated
immediately following receipt of the required shareholder and stockholder
approvals. HOWEVER, THE PROPOSED REINCORPORATION MAY BE ABANDONED, EITHER BEFORE
OR AFTER SHAREHOLDER APPROVAL, IF CIRCUMSTANCES ARISE WHICH, IN THE OPINION OF
THE BOARD OF DIRECTORS, MAKE IT INADVISABLE TO PROCEED.
DISSENTERS' RIGHTS OF APPRAISAL
Although under Delaware law shareholders have the right, in some
circumstances, to dissent from certain corporate reorganizations and receive
cash for their shares, Delaware law does not permit dissenters' rights in
connection with the type of reorganization presently proposed and described
herein.
PRINCIPAL REASONS FOR REINCORPORATION
Although for many years Delaware has followed a policy of encouraging
incorporation in that state, and, in furtherance of that policy, has adopted
comprehensive, modern and flexible corporate laws which are periodically updated
and revised to meet changing business needs, California in recent years has
provided similar protections to businesses under the California General
Corporation Law ("California Law").
The Board of Directors has recommended the Proposed Reincorporation of the
Company under California Law primarily because it will result in cost savings to
the Company of approximately $80,000 to $100,000 in annual franchise tax fees
that are currently paid to the state of Delaware.
The Proposed Reincorporation will not result in any material changes to the
Company's charter documents. See "Changes in the Company's Charter to be
Effected by Reincorporation." There will, however, be some differences due to
the change in stockholder rights pursuant to the Proposed Reincorporation
reflecting differences in the corporations codes in the respective states. See
"Certain Differences in State Corporation Laws."
FEDERAL INCOME TAX CONSEQUENCES
The following discussion of the federal income tax consequences of the
Proposed Reincorporation is based on the Internal Revenue Code of 1986, as
amended (the "Code"), the applicable Treasury Regulations promulgated
thereunder, judicial authority and current administrative rulings and practices
as in effect on the date of this Information Statement. The Company has not
requested or received any formal legal opinions, nor has it requested or
received any advance rulings from the Internal Revenue Service with respect to
the tax considerations discussed below. This discussion is for general
information only. Not all of the tax consequences that may be relevant to a
particular stockholder (such as non-resident aliens, foreign corporations or
broker/dealers) are discussed. Furthermore, the discussion which follows does
not consider the possible impact or consequences of any events other than those
specifically described herein. Finally, no foreign, state or local tax
consequences are discussed. Accordingly, stockholders are urged to consult their
own tax advisors and must rely on their own tax advisors as to the specific
federal, state, local or foreign tax consequences to them of the Proposed
Reincorporation.
The Proposed Reincorporation is intended to qualify as a reorganization under
the Internal Revenue Code. Accordingly, the Company expects that no gain or loss
will be recognized by the stockholders of Mycogen-Delaware, or by either
Mycogen-Delaware or Mycogen-California.
Each former holder of Mycogen-Delaware Common or Preferred Stock will have
the same basis in the Mycogen-California Common or Preferred Stock received by
such person pursuant to the Proposed Reincorporation as such person had in the
Mycogen-Delaware Stock held immediately prior to the consummation of the
Proposed Reincorporation. Each
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Mycogen-Delaware stockholder will have a holding period with respect to the
Mycogen-California Common Stock received in the Proposed Reincorporation which
will include the period during which such person held the corresponding Mycogen-
Delaware Stock provided that such Mycogen-Delaware Stock was held as a capital
asset at the effective time of the Proposed Reincorporation.
CHANGES IN THE COMPANY'S CHARTER TO BE EFFECTED BY REINCORPORATION
The following discussion summarizes the material differences between the
Articles of Incorporation (the "California Articles") and Bylaws (the
"California Bylaws") of Mycogen-California and the Certificate of Incorporation,
as amended through the date hereof, and Bylaws of Mycogen-Delaware. A copy of
the California Articles is attached hereto as Exhibit 1 to Appendix A and a copy
of the California Bylaws is attached hereto as Exhibit 2 to Appendix A, and all
statements herein concerning such documents are qualified by reference to the
exact provisions thereof. Approval of the Proposed Reincorporation by the
stockholders will automatically result in the adoption of all such charter
provisions set forth in the California Articles and California Bylaws.
Cumulative Voting. Under cumulative voting, a shareholder is entitled to cast
as many votes as there are directors to be elected multiplied by the number of
shares registered in such shareholder's name. The shareholder may cast all of
such votes for a single nominee or may distribute them among any two or more
nominees. Under Delaware law, cumulative voting in the election of directors is
not permitted unless specifically adopted. Mycogen-Delaware did not have any
such provision in its Certificate of Incorporation.
Under California law, cumulative voting is an absolute right for the
shareholders of all corporations except those corporations that have outstanding
shares listed on the New York Stock Exchange or the American Stock Exchange, or
that have outstanding securities qualified for trading as a National Market
security on the Nasdaq and at least 800 equity holders (a "Public Company"). The
California Articles and California Bylaws will provide for cumulative voting in
accordance with California law. Since Mycogen-California will have its Common
Stock qualified and listed for trading on the NASDAQ-National Markets System and
will have more than 800 equity holders, Mycogen-California will meet the
requirements of California law in order to eliminate cumulative voting.
Special Stockholder Meetings. Under California law, a special meeting of
shareholders may be called by the Board of Directors, the chairman of the board,
the president, the holders of shares entitled to cast not less than 10% of the
votes at such meeting and such additional persons as are authorized by the
articles of incorporation or the bylaws. Under Delaware law, a special meeting
of stockholders may be called by the Board of Directors or by any other person
authorized to do so in the certificate of incorporation or the bylaws. The
California Bylaws authorize a majority of the Board of Directors, the Chairman
of the Board, the President and the holders of shares owning not less than 10%
of the votes at such meeting to call a special meeting of shareholders of
Mycogen-California.
Limited Liability of Directors. The Delaware General Corporation Law was
amended in 1986 in response to widespread concern about the ability of Delaware
corporations to attract capable directors in light of the difficulties in
obtaining and maintaining directors and officers liability insurance ("directors
and officers' insurance") policies. The legislative commentary to the law states
that it is "intended to allow Delaware companies to provide substitute
protection, in various forms, to their directors and to limit director liability
under certain circumstances."
The Certificate of Incorporation of Mycogen-Delaware eliminates the liability
of directors to the fullest extent permissible under Delaware law, as such law
exists currently or as it may be amended in the future. Under Delaware law, such
provision may not eliminate or limit director monetary liability for (a)
breaches of the director's duty of loyalty to the corporation or its
stockholders; (b) acts or omissions not in good faith or involving intentional
misconduct or knowing violations of law; (c) the payment of unlawful dividends
or unlawful stock repurchases or redemptions; or (d) transactions in which the
director received an improper personal benefit. Such provision also may not
limit a director's liability for violation of, or otherwise relieve Mycogen-
Delaware or its directors from the necessity of complying with, federal or state
securities laws or affect the availability of non-monetary remedies such as
injunctive relief or rescission.
The Corporations Code of California was amended in 1987 to permit California
corporations to include in their articles of incorporation a provision generally
similar to that permitted under Delaware law, except that: (i) the California
Law
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provides that indemnification is available for expenses incurred in a derivative
action if the director wins suit or with court approval (including amounts paid
in settlement if subsequently approved by the court). Indemnification is also
available for expenses incurred and amounts actually paid to settle any
threatened derivative action while Delaware only applies to expenses (but not
settlements) with respect to actual or threatened actions only with court
approval; and (ii) under the California provision, personal liability of a
director for monetary damages cannot be limited or eliminated where liability
arises from "acts or omissions that show a reckless disregard for the director's
duty to the corporation or its shareholders in circumstances in which the
director was aware, or should have been aware, in the ordinary course of
performing a director's duties, of a risk of serious injury to the corporation
or its shareholders," or from "acts or omissions that constitute an unexcused
pattern of inattention that amounts to an abdication of the director's duty to
the corporation or its shareholders."
The California Articles contain a provision limiting director liability for
monetary damages to the fullest extent permissible under California law. A
director would still be liable in such cases for the following: (i) breach of
the director's duty of loyalty to the Company or its stockholders; (ii) acts or
omissions not in good faith or involving intentional misconduct or knowing
violation of the law; (iii) willful or negligent conduct in paying dividends or
repurchasing stock out of other than lawfully available funds; (iv) any
transaction from which the director derives an improper personal benefit; (v)
reckless disregard for a director's duty to the corporation or its shareholders;
and (vi) an unexcused pattern of inattention amounting to an abdication of the
director's duty.
The liability limitation provision in the California Articles will not reduce
the exposure of directors to liability under federal or state securities laws.
The provision also would not affect the availability to the Company's
shareholders of injunctions and other equitable remedies for any violation of a
director's fiduciary duty to the Company or its shareholders.
Although the Company has obtained directors and officers' insurance for the
benefit of each of its directors, there is no assurance that the Company will be
able to maintain such directors and officers' insurance. Given this lack of
assurance, the Board has concluded that the Company should reincorporate in
California and adopt the liability limitation provision in the California
Articles in order to be able to continue to retain and attract capable and
responsible individuals to serve as directors even though the provision will
curtail to some extent the right of shareholders to pursue monetary claims
against directors on behalf of such shareholders or the Company.
The California Articles also provide any future repeal or modification of the
terms of the California Articles shall not adversely affect any right or
protection of a director existing at the time of the repeal or modification.
Loans to Directors, Officers and Employees. Under Delaware law, a corporation
may make loans to, or guarantee the obligations of, or otherwise assist its
officers or other employees and those of its subsidiaries when such action, in
the judgement of the directors, may reasonably be expected to benefit the
corporation. Under California law, any such loan or guaranty to or for the
benefit of any officer of a corporation or any of its subsidiaries, except for
certain loans or guaranties pursuant to employee benefit plans, must be approved
by the shareholders of the corporation, unless the corporation has outstanding
shares held of record by 100 or more persons and a bylaw provision adopted by a
majority of the outstanding shares authorizing the disinterested directors alone
to approve such loan or guaranty. The Company currently has 100 or more
shareholders of record and the California Bylaws contain a provision authorizing
the disinterested directors alone to approve any such loan or guaranty.
Therefore, shareholder approval will not be required for such loans and
guarantees by Mycogen-California.
CERTAIN DIFFERENCES IN STATE CORPORATION LAWS
In addition to the matters discussed above, Delaware law differs in many
respects from California law. Certain differences that could materially affect
the rights of shareholders of Mycogen-California are discussed below.
Size of the Board of Directors. Under Delaware law, the number of directors
of a corporation, or the range of authorized directors, may be fixed or changed
by the board of directors acting alone by amendment to the corporation's bylaws,
unless the directors are not authorized to amend the bylaws or the number of
directors is fixed in the certificate of incorporation, in which case
stockholder approval is required. The Bylaws of Mycogen-Delaware establish a
range of five to eleven directors, with the exact number currently set at seven,
and Mycogen-Delaware's Certificate of Incorporation authorizes the Board of
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Directors to make, alter, amend or repeal the Bylaws. Accordingly, a majority of
Mycogen-Delaware's Board of Directors currently has the power to change the
authorized number of directors.
Under California law, the number of directors of a corporation may be fixed
in the articles or incorporation or bylaws of a corporation, or a range may be
established for the number of directors, with the Board of Directors given
authority to fix the exact number of directors within such range. The California
Bylaws will establish a range of five to eleven directors, with the exact number
to be set at seven. The California Articles will authorize the Board of
Directors to make, alter, amend or repeal the Bylaws. Accordingly, a majority of
Mycogen-California's Board of Directors will have the power to change the
authorized number of directors. In the event the shareholders are asked to amend
the provision setting forth the number of directors in the California Bylaws to
reduce the minimum number of directors below five, if the votes case against the
adoption of such amendment at a meeting, or the shares not consenting in the
case of action by written consent, are equal to more than 16-2/3% of the
outstanding shares entitled to vote, such amendment will not be adopted.
Cumulative Voting. As described above, cumulative voting is mandatory unless
a company comes within the statutory exclusion. Since Mycogen-California will
have its Common Stock qualified and listed for trading on the NASDAQ-National
Markets System and will have more than 800 equity holders, Mycogen-California
will fall within the statutory exclusion and there will, therefore, be no
cumulative voting available to Mycogen-California shareholders.
Removal of Directors. Under Delaware law, a director of a corporation that
does not have a classified board of directors or cumulative voting may be
removed (with or without cause) with the approval of a majority of the
outstanding shares entitled to vote. In the case of a Delaware corporation
having cumulative voting, if less than the entire board is to be removed, a
director may not be removed without cause unless the number of shares voted
against such removal would not be sufficient to elect the director under
cumulative voting. A director of a corporation with a classified board of
directors may be removed only for cause, unless the certificate of incorporation
otherwise provides. The Certificate of Incorporation of Mycogen-Delaware does
not provide for a classified board of directors or for cumulative voting. The
Bylaws of Mycogen-Delaware currently allow for removal pursuant to Delaware law.
Under California law, any director or the entire board of directors may be
removed, with or without cause, with the approval of a majority of the
outstanding shares entitled to vote; however, no individual director may be
removed (unless the entire board is removed) if the number of votes cast against
such removal would be sufficient to elect the director under cumulative voting.
The term "cause" with respect to the removal of directors is defined under
California law to mean a director who has been declared of unsound mind by an
order of court or convicted of a felony. In addition, holders of at least 10% of
shares of any class may bring suit to remove a director in case of fraudulent or
dishonest acts or gross abuse of authority or discretion with reference to the
corporation. The Bylaws of Mycogen-California will allow for removal of any
director, with or without cause, by vote of a majority of shares entitled to
vote at an election of directors or as otherwise provided under California law.
Classified Board of Directors. A classified board is one on which a certain
number, but not all, of the directors are elected on a rotating basis each year.
This method of electing directors makes a change in the composition of the board
of directors, and a potential change in control of a corporation, a lengthier
and more difficult process. Delaware law permits, but does not require, a
classified board of directors, with staggered terms under which one-half or one-
third of the directors are elected for terms of two or three years,
respectively. Under California law, directors generally are elected annually;
however, corporations that are Public Companies may designate a classified board
of directors by adopting amendments to their articles and bylaws that must be
approved by shareholders.
The Certificate of Incorporation and Bylaws of Mycogen-Delaware do not
currently provide for a classified board of directors, and the Articles of
Incorporation and the California Bylaws also will not provide for a classified
board of directors. In the event that Mycogen-California were to wish to
implement a classified board of directors in the future, Mycogen-California
would have to solicit and receive shareholder approval of such classification
through amendments to the Articles of Incorporation and Bylaws.
Indemnification of Officers and Directors. The California and Delaware
corporation laws have similar provisions and limitations regarding
indemnification by a corporation of its officers, directors and employees. In
general, under both California and Delaware law, the indemnification provided
for therein is not deemed to be exclusive of any nonstatutory
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indemnification rights provided to officers, directors and employees under any
bylaw, agreement, or vote of stockholders or disinterested directors.
The Certificate of Incorporation and Bylaws of Mycogen-Delaware provide for
indemnification of directors and officers to the fullest extent permitted under
Delaware law. The California Articles provide for indemnification of directors
and officers to the fullest extent permitted under California law. The
California Bylaws mandate that Mycogen-California shall indemnify its officers
and directors to the fullest extent permitted or authorized under California law
as a result of any officer's or director's status as such and that the Board of
Directors shall have the power on behalf of Mycogen-California to indemnify any
other employee or agent of Mycogen-California for such expenses incurred as a
result of such person's status as an employee or agent of the Company. Under the
California Bylaws, indemnification will extend to persons who have ceased to act
as officers or directors of Mycogen-California for actions which arose in
connection with their services to the Company. The Bylaws of Mycogen-Delaware
currently provide for similar indemnification for those persons who have cased
to act as officers or directors of Mycogen-Delaware.
The SEC takes the position that the indemnification of directors, officers
and controlling persons of a corporation against liabilities arising under the
Securities Act of 1933, as amended (the "Act"), is against public policy as
expressed in the Act and is, therefore, unenforceable.
There is currently no litigation pending, and neither the Company nor any of
its directors or officers knows of any threatened litigation, which might result
in claims under indemnity agreements.
Certain Business Combinations. In the last several years, a number of states
(not including California) have adopted special laws designed to make certain
kinds of "unfriendly" corporate takeovers, or other transactions involving a
corporation and one or more of its significant stockholders, more difficult.
Under Section 203 of the Delaware General Corporation Law ("Section 203"),
certain "business combinations" with "interested stockholders" of Delaware
corporations are subject to a three- year moratorium unless specified conditions
are met. With certain exceptions, an interested stockholder is a person or group
who or which owns 15% or more of the corporation's outstanding voting stock
(including any rights to acquire stock pursuant to an option, warrant,
agreement, arrangement or understanding, or upon the exercise of conversion or
exchange rights, and stock with respect to which the person has voting rights
only), or is an affiliate or associate of the corporation and was the owner of
15% or more of such voting stock at any time within the previous three years.
For purposes of Section 203, the term "business combination" is defined
broadly to include mergers with or caused by the interested stockholder; sales
or other dispositions to the interested stockholder (except proportionately with
the corporation's other stockholders) of assets of the corporation or a
subsidiary equal to 10% or more of the aggregate market value of the
corporation's consolidated assets or its outstanding stock; the issuance or
transfer by the corporation or a subsidiary of stock of the corporation or such
subsidiary to the interested stockholder (except for transfers in a conversion
or exchange or a pro rata distribution or certain other transactions, none of
which increase the interested stockholder's proportionate ownership of any class
or series of the corporation's or such subsidiary's stock); or receipt by the
interested stockholder (except proportionately as a stockholder), directly or
indirectly, of any loans, advances, guarantees, pledges or other financial
benefits provided by or through the corporation or a subsidiary.
The three-year moratorium imposed on business combinations by Section 203
does not apply if: (i) prior to the date on which such stockholder becomes an
interested stockholder the board of directors approves either the business
combination or the transaction that resulted in the person becoming an
interested stockholder; (ii) the interested stockholders owns 85% of the
corporation's voting stock upon consummation of the transaction that made him or
her an interested stockholder (excluding from the 85% calculation shares owned
by directors who are also officers of the target corporation and shares held by
employee stock plans that do not permit employees to decide confidentially
whether to accept a tender or exchange offer); or (iii) on or after the date
such person becomes an interested stockholder, the board approves the business
combination and it is also approved at a stockholder meeting by 66-2/3% of the
voting stock not owned by the interested stockholder.
Section 203 has been challenged in lawsuits arising out of ongoing takeover
disputes, and it is not yet clear whether and to what extent its
constitutionality will be upheld by the courts. Although the United States
District Court for the District of Delaware has consistently upheld the
constitutionality of Section 203, the Delaware Supreme Court has not yet
considered the issue.
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Shareholder Voting. Both Delaware and California law generally require that a
majority of the stockholders of both acquiring and target corporations approve
statutory mergers. Delaware law does not require a stockholder vote of the
surviving corporation in a merger (unless the corporation provides otherwise in
its certificate of incorporation) if (a) the merger agreement does not amend the
existing certificate of incorporation, (b) each share of the surviving
corporation outstanding before the merger is an identical outstanding or
treasury share after the merger and (c) the number of shares to be issued by the
surviving corporation in the merger does not exceed 20% of the shares
outstanding immediately prior to the merger. California law contains a similar
exception to its voting requirements for reorganizations where shareholders or
the corporation itself, or both, immediately prior to the reorganization will
own immediately after the reorganization equity securities constituting more
than five-sixths of the voting power of the surviving or acquiring corporation
or its entity.
Both California and Delaware law also require that a sale of all or
substantially all of the assets of a corporation be approved by a majority of
the voting shares of the corporation transferring such assets.
Delaware law generally does not require class voting, except in certain
transactions involving an amendment to the certificate of incorporation that
adversely affects a specific class of shares. In contrast and with certain
exceptions, California law requires that mergers, reorganizations, certain sales
of assets and similar transactions be approved by a majority vote of each class
of shares outstanding.
California law also requires that holders of nonredeemable common stock
receive nonredeemable common stock in a merger of the corporation with the
holder of more than 50% but less than 90% of such common stock or its affiliate
unless all of the holders of such common stock consent to the transaction. This
provision of California law may have the effect of making a "cash-out" merger by
a majority shareholder more difficult to accomplish. Although Delaware law does
not parallel California law in this respect, under some circumstances Section
203 of the Delaware General Corporation Law does provide similar protection
against coercive two-tiered bids for a corporation in which the shareholders are
not treated equally. See "Certain Business Combinations."
California law also provides that, except in certain circumstances, when a
tender offer or a proposal for a reorganization or for a sale of assets is made
by an interested party (generally a controlling or managing party of the target
corporation), an affirmative opinion in writing as to the fairness of the
consideration to be paid to the shareholders must be delivered to shareholders.
This fairness opinion requirement does not apply to a corporation that does not
have shares held of record by at least 100 persons, or to a transaction that has
been qualified under California state securities laws. Furthermore, if a tender
of shares or vote is sought pursuant to an interested party's proposal and a
later proposal is made by another party at least 10 days prior to the date of
acceptance of the interested party proposal, the shareholders must be informed
of the later offer and be afforded a reasonable opportunity to withdraw any
vote, consent or proxy, or to withdraw any tendered shares. Delaware law has no
comparable provision.
California does not have any such statutory prohibition on business
combinations.
Dissenters' Rights. Delaware law does not require dissenters' rights of
appraisal with respect to (i) a sale of assets in a reorganization; (ii) a
merger by a corporation, the shares of which are either listed on a national
securities exchange, designated as a National Market security on the Nasdaq or
widely held (by more than 2,000 stockholders) if such stockholders receive
shares of the surviving corporation or of a listed or widely held corporation;
or (iii) stockholders of a corporation surviving a merger if no vote of such
stockholders is required to approve the merger. Under Delaware law, no vote of
the stockholders of a corporation surviving a merger is required if the number
of shares to be issued in the merger does not exceed 20% of the shares of the
surviving corporation outstanding immediately prior to such issuance and if
certain other conditions are met.
California law does, in general, afford dissenters' rights in a sale of
assets reorganization, and its exclusions from dissenters' rights in mergers are
somewhat different from those in Delaware. In merger or exchange
reorganizations, there are not dissenters' rights for any class of securities
listed on a national securities exchange certified by the California
Commissioner of Corporations or over-the-counter margin stocks unless (i) more
than five percent of the class dissents; or (ii) the shares are subject to a
restriction on transfer. Dissenters' rights are not available under California
or Delaware law to shareholders of the Company with respect to the Proposed
Reincorporation.
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<PAGE>
Inspection of Stockholders' List. Both California law and Delaware law allow
any shareholder to inspect the shareholders' list for a purpose reasonably
related to such person's interest as a shareholder. California law provides, in
addition, for an absolute right to inspect and copy a corporation's
shareholders' list by persons holding 5% or more of the corporation's voting
shares, or any shareholders holding 1% or more of the corporation's voting
shares who have filed a Schedule 14B with the SEC relating to the election of
directors. Delaware law does not provide for any such absolute right of
inspection.
Dividends and Repurchase of Shares. Delaware law permits a corporation,
unless otherwise restricted by its certificate of incorporation, to declare and
pay dividends out of surplus or, if there is no surplus, out of net profits for
the fiscal year in which the dividend is declared and/or for the preceding
fiscal year, as long as the amount of capital of the corporation is not less
than the aggregate amount of the capital represented by the issued and
outstanding stock of all classes having a preference upon the distribution of
assets. In addition, Delaware law generally provides that a corporation may
redeem or repurchase its shares provided such redemption or repurchase would not
impair the capital of the corporation. The ability of a Delaware corporation to
pay dividends on, or to make repurchases or redemptions of, its shares is
dependent on the financial status of the corporation standing alone, not
consolidated with subsidiary or parent corporations. In determining the amount
of surplus of a Delaware corporation, the assets of the corporation, including
stock of subsidiaries owned by the corporation, must be valued at their fair
market value as determined by the board of directors, regardless of their
historical book value.
Under California law, any distributions to shareholders (including dividends
and repurchases of shares) are limited either to retained earnings or to an
amount that would leave the corporation with assets (exclusive of goodwill,
capitalized research and development expenses and deferred charges) in an amount
equal to at least 125% of its liabilities (exclusive of deferred taxes, deferred
income and other deferred credits) and with current assets in an amount at least
equal to its current liabilities (or 125% of its current liabilities if the
average pre-tax and pre-interest earnings for the preceding two fiscal years
were less than the average interest expenses for such years). Such limitations
are applied to California corporations on a consolidated basis. Under California
law, there are certain exceptions to the foregoing limitations for repurchases
of shares in connection with certain rescission actions or pursuant to certain
employee stock plans.
VOTE REQUIRED
The affirmative vote of (i) a majority of the Common Stock of the Company;
and (ii) a majority of the Series A Preferred Stock of the Company is required
to approve the Proposed Reincorporation and all related matters thereto.
RECOMMENDATION OF BOARD OF DIRECTORS
The Board of Directors recommends that you vote FOR the Proposed
Reincorporation.
25
<PAGE>
PROPOSAL NO. 5
RATIFICATION OF INDEPENDENT AUDITORS
The Company is asking the stockholders to ratify the selection of Ernst &
Young LLP as the Company's independent auditors for the year ending December 31,
1995. The affirmative vote of the holders of a majority of the shares
represented and voting at the Annual Meeting will be required to ratify the
selection of Ernst & Young LLP.
In the event the stockholders fail to ratify the appointment, the Board of
Directors will reconsider its selection. Even if the selection is ratified, the
Board of Directors, in its discretion, may direct the appointment of a different
independent auditing firm at any time during the year if the Board of Directors
feels that such a change would be in the Company's and its stockholders' best
interests.
Representatives of Ernst & Young LLP are expected to be present at the Annual
Meeting, will have the opportunity to make a statement if they desire to do so
and will be available to respond to appropriate questions.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors recommends that the stockholders vote FOR the
ratification of the selection of Ernst & Young LLP to serve as the Company's
independent auditors for the year ending December 31, 1995.
26
<PAGE>
ADDITIONAL INFORMATION
Principal Stockholders
The following table sets forth certain information regarding the ownership of
the Company's Common Stock as of January 31, 1995 for each person known to the
Company to be the beneficial owner of more than five percent of the Company's
Common Stock. Unless otherwise indicated, each of the stockholders listed below
has sole voting and investment power with respect to the shares beneficially
owned.
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIAL OWNER BENEFICIALLY OWNED PERCENT OWNED 1
- --------------------------------------------------------------------------------
<S> <C> <C>
The Lubrizol Corporation2 7,804,083 37.6%
29400 Lakeland Boulevard
Wickliffe, OH 44092
The State of Wisconsin 1,638,800 7.9%
Investment Board
PO Box 7842
Madison, WI 53707
Kubota Corporation 1,111,200 5.3%
- --------------------------------------------------------------------------------
</TABLE>
1 Percentage of beneficial ownership is calculated pursuant to SEC Rule 13d-
3(d)(1) and assumes conversion into Common Stock of 2,999 shares of Series
A Preferred Stock at a conversion rate of approximately 557 shares of
Common Stock for each share of Series A Preferred Stock.
2 Dr. Hill, a director of the Company, is a Senior Vice President of
Lubrizol.
EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
Name1 Age Position Held With the Company1
- --------------------------------------------------------------------------------
<S> <C> <C>
Andrew C. Barnes 41 Executive Vice President and Director
Jerry D. Caulder 52 Chairman, President, Chief Executive
Officer and Director
Carlton J. Eibl 34 Executive Vice President and Secretary
Albert D. Kern 49 Executive Vice President
Leo Kim 52 Executive Vice President and Chief
Technical Officer
- --------------------------------------------------------------------------------
</TABLE>
1 Effective March 1995, Mr. James R. Glynn resigned as Executive Vice
President and Chief Financial Officer of the Company.
RESPONSIBILITIES AND BUSINESS EXPERIENCE OF EXECUTIVE OFFICERS
The executive officers of the Company individually have responsibility for
certain aspects of the Company's operations as noted below and collectively
comprise a committee responsible for overseeing all resources and operations of
the Company and charting Mycogen's strategic direction.
27
<PAGE>
Mr. Barnes, 41, a founder of Mycogen, has served as a director since April
1988 and currently serves as Executive Vice President responsible for the
biopesticide division and corporate development. Prior to joining Mycogen, Mr.
Barnes served as president of Zymogenetics Corporation, a genetic engineering
company, and managed that company's initial growth and financing. Mr. Barnes
began his career as a project and process engineer with G.D. Searle & Co. and
then served as a biotechnology licensing associate for Stanford University's
Office of Technology Licensing.
Dr. Caulder is being considered for the position of director of the Company.
See "Election of Directors--Business Experience of Directors" for a discussion
of Dr. Caulder's business experience.
Mr. Eibl joined the Company in December 1992 and currently serves as
Executive Vice President and Secretary responsible for finance and legal
affairs. Prior to joining Mycogen, Mr. Eibl was employed as a corporate attorney
with the law firms of, respectively, Brobeck, Phleger & Harrison in San Diego
from 1989 through 1992 and Paul Weiss Rifkind Wharton & Garrison in New York
from 1985 through 1989.
Dr. Kern joined the Company in June 1986 and currently serves as Executive
Vice President responsible for the international division, the Soilserv, Inc.
subsidiary and commercial product development and registration. Prior to joining
Mycogen, Dr. Kern worked for 12 years at Monsanto and was involved in management
of the commercial development of pesticide products. Dr. Kern served in a
variety of positions with Monsanto's APC, including Product Development
Director-North America and Manager, Product Development-International.
Dr. Kim joined the Company in September 1986 and currently serves as
Executive Vice President and Chief Technical Officer. Prior to joining Mycogen,
Dr. Kim was employed by Shell Oil Company for 18 years in a variety of
positions, including Principal Scientist involved in agricultural biotechnology,
Research and Development Director-Biomedical, Research and Development Director-
Interferon, and Manager Biological Chemistry in Shell's Agricultural Research
Center.
28
<PAGE>
EXECUTIVE COMPENSATION
Summary of Cash and Certain Other Compensation
The following table provides certain summary information concerning the
compensation earned by the Company's Chief Executive Officer and each of the
other four most highly compensated executive officers of the Company for
services rendered in all capacities to the Company and its subsidiaries for the
fiscal years ended December 31, 1992, 1993 and 1994.
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation Awards
----------------------------------------------------
Restricted Securities
Stock Underlying
Bonus Award(s)1 Options/
Name and Principal Position Year Salary ($) ($) ($) SARs2(#)
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Jerry D. Caulder 1994 $285,000 -- -- 260,000
Chief Executive Officer 1993 $285,000 $27,594 -- 100,000
1992 $259,585 -- $65,000 55,000
Andrew C. Barnes 1994 $165,000 -- -- 160,000
Executive Vice President 1993 $165,000 -- -- 50,000
1992 $149,343 -- $65,000 35,000
Carlton J. Eibl 1994 $150,000 -- -- 80,000
Executive Vice President 1993 $150,000 $10,000 -- 50,000
1992 $ 12,500 -- -- 30,000
James R. Glynn 1994 $165,000 -- -- 160,000
Resigned as of March 1995 1993 $165,000 -- -- 50,000
from the positions of Executive 1992 $149,343 $36,000 $65,000 35,000
Vice President, Chief Financial
Officer
Albert D. Kern 1994 $165,000 -- -- 160,000
Executive Vice President 1993 $165,000 -- -- 50,000
1992 $149,343 -- $65,000 35,000
Leo Kim 1994 $165,000 -- -- 135,000
Executive Vice President, 1993 $165,000 -- -- 50,000
Chief Technical Officer 1992 $149,343 -- $65,000 35,000
</TABLE>
29
<PAGE>
/1/ Restricted Stock holdings at the end of the 1994 fiscal year were as
follows:
<TABLE>
<CAPTION>
Name # of Shares Value
- -------------------------------------------------------
<S> <C> <C>
Jerry D. Caulder 5,000 $41,875
Andrew C. Barnes 5,000 $41,875
James R. Glynn 5,000 $41,875
(resigned as of March 1995)
Albert D. Kern 5,000 $41,875
Leo Kim 5,000 $41,875
- -------------------------------------------------------
</TABLE>
The shares of restricted stock will vest upon the named officers'
completion of three (3) years of service, measured from the award date.
However, in the event the Company is acquired by merger or asset sale or
there is a hostile take-over of the Company by tender offer for 25 percent
or more of the outstanding Common Stock or a proxy contest for Board
membership, then each restricted stock award which has been outstanding for
at least six (6) months will immediately vest in full.
/2/ The options reported for 1994 were granted on December 21, 1994 in exchange
for an equal number of options previously granted to such individuals and
include the same options reported for 1993 and 1992. This grant of new
options was completed as part of a grant of new options with an exercise
price of $8.50 on December 21, 1994 to all full-time employees (including
the executive officers) who held options granted after December 1, 1989 in
exchange for an equal number of previously granted options. The newly
granted options vest in equal monthly installments over a new 36-month
period measured from December 21, 1994. Each option granted to the
executive officers is immediately exercisable for all of the option shares,
but any shares purchased under the option will be subject to repurchase by
the Company, at the original exercise price per share, upon the optionee's
cessation of service prior to vesting in such shares.
30
<PAGE>
Stock Options and Stock Appreciation Rights
The following table contains information concerning the grant of stock
options and tandem limited stock appreciation rights ("SARs") under the
Company's 1992 Stock Option Plan (and the Company's predecessor 1983 Stock
Option Plan) to the named executive officers:
<TABLE>
<CAPTION>
Potential Realizable Value
at Assumed Annual Rates of
Stock Price Appreciation for
Individual Grants Option Term
---------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g)
Securities Percent of
Underlying Total Options/
Options/SARs SARs Granted Exercise or
Granted1,3 to Employees Base Price2 Expiration 5%4 10%4
Name (#) in Fiscal Year ($/Share) Date ($) ($)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Jerry D. Caulder 260,000 11.2% $ 8.50 12-21-04 $1,389,857 $3,522,171
Andrew C. Barnes 160,000 6.9% $ 8.50 12-21-04 $ 855,297 $2,167,490
Carlton J. Eibl 80,000 3.4% $ 8.50 12-21-04 $ 427,648 $1,083,745
James R. Glynn 160,000 6.9% $ 8.50 12-21-04 $ 855,297 $2,167,590
(resigned as of
March 1995)
Albert D. Kern 160,000 6.9% $ 8.50 12-21-04 $ 855,297 $2,167,490
Leo Kim 135,000 5.8% $ 8.50 12-21-04 $ 721,657 $1,828,819
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
1 These options were granted on December 21, 1994 in exchange for an equal
number of options previously granted to such individuals. This grant of new
options was completed as part of a grant of new options with an exercise
price of $8.50 on December 21, 1994 to all full-time employees who held
options granted after December 1, 1989 in exchange for an equal number of
previously granted options. The newly granted options vest in equal monthly
installments over a new 36-month period measured from December 21, 1994.
Each option granted to the executive officers is immediately exercisable
for all of the option shares, but any shares purchased under the option
will be subject to repurchase by the Company, at the original exercise
price per share, upon the optionee's cessation of service prior to vesting
in such shares. The grant dates for the options listed in the above table
are as follows:
<TABLE>
<CAPTION>
Options/SARs
Granted Grant
Name (#) Date
- --------------------------------------------------
<S> <C> <C>
Jerry D. Caulder 260,000 12-21-94
Andrew C. Barnes 160,000 12-21-94
Carlton J. Eibl 80,000 12-21-94
James R. Glynn 160,000 12-21-94
(resigned as of
March 1995)
Albert D. Kern 160,000 12-21-94
Leo Kim 135,000 12-21-94
- --------------------------------------------------
</TABLE>
31
<PAGE>
The shares subject to each option will immediately vest in the event the
Company is acquired by a merger or asset sale, unless the Company's
repurchase rights with respect to those shares are transferred to the
acquiring entity. For any repurchase rights so transferred, the Compensation
Committee as Plan Administrator will have the authority to provide for the
accelerated vesting of the shares of Common Stock (or other securities)
subject to those rights in the event the optionee's employment subsequently
terminates within a designated period following the transfer. The Plan
Administrator also has the discretionary authority to provide for
accelerated vesting of the option shares upon the termination of the
optionee's employment following a hostile take-over of the Company. For
further information concerning these vesting acceleration provisions, please
see the section below entitled "Employment Contracts and Change in Control
Arrangements." Each option has a maximum term of 10 years, subject to
earlier termination in the event of the optionee's cessation of service with
the Company.
/2/ The exercise price may be paid in cash, in shares of Common Stock valued
at fair market value on the exercise date or through a cashless exercise
procedure involving a same-day sale of the purchased shares. If shares of
Common Stock are used to pay the option price, the option holder surrenders
to the Company a sufficient number of fully paid shares of Common Stock,
valued at the fair market value on the exercise date, to fully pay the
option price on the options being exercised. The Company may also finance
the option exercise by loaning the optionee sufficient funds to pay the
exercise price for the purchased shares and the federal and state tax
liability incurred in connection with such exercise. The optionee may be
permitted, subject to the approval of the Plan Administrator, to apply a
portion of the shares purchased under the option (or to deliver existing
shares of Common Stock) in satisfaction of such tax liability. The Plan
Administrator also has the authority to reprice outstanding options through
the cancellation of those options and the grant of replacement options with
an exercise price equal to the lower fair market value of the option shares
on the regrant date.
/3/ The Plan Administrator may grant two types of stock appreciation rights in
connection with option grants made under the Stock Option Plan: (i) tandem
rights which require the holder to elect between the exercise of the
underlying option for shares of Common Stock and the surrender of such
option for a distribution from the Company, payable in cash or shares of
Common Stock, based upon the appreciated value of the option shares; and
(ii) limited rights which provide the optionee with a 30-day period
following the successful completion of a hostile tender offer for 25 percent
or more of the outstanding Common Stock in which to surrender the option to
the Company for a cash distribution equal to the excess of the tender offer
price per share of the vested shares of Common Stock subject to the
surrendered option over the option exercise share otherwise payable for such
shares. To date the Plan Administrator has not granted any tandem stock
appreciation rights to the Company's executive officers, but each of their
options does include a limited stock appreciation right.
/4/ There is no assurance provided to any executive officer or any other
holder of the Company's securities that the actual stock price appreciation
over the 10-year option term will be at the assumed 5 percent and 10 percent
levels or at any other defined level. Unless the market price of the Common
Stock does in fact appreciate over the option term, no value will be
realized from the option grants made to the executive officers.
32
<PAGE>
Option/SAR Exercises and Holdings
The following table provides information, with respect to the named executive
officers, concerning the exercise of options and/or SARs held as of the end of
the fiscal year:
<TABLE>
<CAPTION>
Number of Securities Underlying Value of Unexercised
Unexercised Options/SARs In-the-Money Options/SARs at
at December 31, 1994 December 31, 1994
--------------------------------------------------------------------
Shares
Acquired Value
on Exercise Realized Exercisable 1 Unexercisable Exercisable Unexercisable
Name (#) ($) (#) (#) ($) ($)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Jerry D. Caulder -- $ -- 357,000 -- $274,795 $ --
Andrew C. Barnes -- $ -- 237,000 -- $174,170 $ --
Carlton J. Eibl -- $ -- 80,000 -- $ -- $ --
James R. Glynn -- $ -- 182,000 -- $ 18,445 $ --
(resigned as of
March 1995)
Albert D. Kern -- $ -- 200,848 -- $ 70,233 $ --
Leo Kim -- $ -- 135,000 -- $ -- $ --
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
1 Of the exercisable options listed in the table above, 236,848 options or
19.87% are vested as of December 31, 1994. The exercisable options are
immediately exercisable for all of the option shares, but any shares
purchased under the option will be subject to repurchase by the Company. See
"Stock Options and Stock Appreciation Rights."
Security Ownership of Directors and Management as of January 31, 1995
The following table provides information, as of January 31, 1995, with
respect to the Directors and named executive officers, concerning the amount and
nature of beneficial ownership of Common Stock, assuming conversion of all
outstanding shares of Series A Preferred Stock into Common Stock.
<TABLE>
<CAPTION>
Amount and
Nature of Percent of
Title of Class Name of Beneficial Owner Beneficial Class +
Ownership
- -----------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Common Stock Andrew C. Barnes 312,147 1 1.5%
Common Stock Thomas J. Cable 21,662 2 *
Common Stock Jerry D. Caulder 429,358 3 2.0%
Common Stock Carlton J. Eibl 81,316 4 *
Common Stock Orville Freeman 21,666 5 *
Common Stock James R. Glynn (resigned as of March 1995) 189,325 6 *
Common Stock George Hill -- 7 *
Common Stock Albert D. Kern 216,322 8 1.0%
Common Stock Leo Kim 154,134 9 *
Common Stock David H. Rammler 124,960 10 *
Common Stock A. John Speziale 25,000 11 *
Common Stock Directors and executive officers as a group 1,575,894 12 7.1%
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
33
<PAGE>
__________
* Less than one percent (1%).
+ Percentage of beneficial ownership is calculated pursuant to SEC Rule 13d-
3(d)(1), and assumes conversion into Common Stock of 2,999 shares of Series A
Preferred Stock at a conversion rate of approximately 557 shares of Common
Stock for each share of Series A Preferred Stock.
1 This figure includes 75,147 shares held by the Andrew C. Barnes Family Trust
and 237,000 shares of Common Stock issuable upon exercise of options held by
Mr. Barnes, which were exercisable within sixty (60) days of January 31,
1995.
2 This figure includes 21,666 shares of Common Stock issuable upon exercise of
options held by Mr. Cable, which were exercisable within sixty (60) days of
January 31, 1995.
3 This figure includes 56,333 shares held by the Jerry D. Caulder Family Trust
and 357,000 shares of Common Stock issuable upon exercise of options held by
Dr. Caulder, which were exercisable within sixty (60) days of January 31,
1995.
4 This figure includes 80,000 shares of Common Stock issuable upon exercise of
options held by Mr. Eibl, which were exercisable within sixty (60) days of
January 31, 1995.
5 This figure includes 21,666 shares of Common Stock issuable upon exercise of
options held by Mr. Freeman, which were exercisable within sixty (60) days of
January 31, 1995.
6 This figure includes 182,000 shares of Common Stock issuable upon exercise of
options held by Mr. Glynn, which were exercisable within sixty (60) days of
January 31, 1995.
7 This figure does not include 6,666 shares of Common Stock issuable upon
exercise of options held by Dr. Hill, which were exercisable within sixty
(60) days of January 31, 1995, as the Lubrizol Corporation ("Lubrizol") has
beneficial ownership of such shares. Dr. Hill assigns to Lubrizol all options
received in connection with Dr. Hill's service as a member of the Company's
Board of Directors. It also does not include an aggregate of 6,134,067 shares
of Common Stock and 2,999 shares of Series A Preferred Stock, which are
convertible into 1,670,016 shares of Common Stock, owned by Lubrizol. Dr.
Hill is a Senior Vice President of Lubrizol. See "Certain Relationships and
Related Transactions."
8 This figure includes 15,000 shares held by the Albert D. Kern Family Trust
and 200,848 shares of Common Stock issuable upon exercise of options held by
Dr. Kern, which were exercisable within sixty (60) days of January 31, 1995.
9 This figure includes 135,000 shares of Common Stock issuable upon exercise of
options held by Dr. Kim, which were exercisable within sixty (60) days of
January 31, 1995.
10 This figure includes 21,666 shares of Common Stock issuable upon exercise of
options held by Dr. Rammler, which were exercisable within sixty (60) days of
January 31, 1995.
11 This figure includes 21,666 shares of Common Stock issuable upon exercise of
options held by Dr. Speziale, which were exercisable within sixty (60) days
of January 31, 1995.
12 This figure excludes all shares held by entities affiliated with Dr. Hill as
described in footnote (6) above, but includes 1,278,512 shares of Common
Stock exercisable within sixty (60) days of January 31, 1995 issuable upon
exercise of options held by all directors and executive officers as a group.
34
<PAGE>
Employment Contracts and Change of Control Arrangements
In February 1993, the Company entered into Employment/Severance Agreements
with the following named executive officers: Messrs. Caulder, Barnes, Glynn (no
longer with the Company), Kern and Kim. The agreements provide that upon
involuntary termination of the named executive officer's employment, other than
for cause, or in connection with a change of control of the Company, the named
executive officer is entitled to (i) salary continuation payments for 24 months
in the case of Dr. Caulder and 12 months in the case of the other named
executive officers at the officer's then current base salary and average bonus
paid for the preceding two years, (ii) health care coverage for a three year
period in the case of Dr. Caulder and a two year period in the case of the other
named executive officers and (iii) immediate vesting of restricted stock and
stock options. Termination "other than for cause" means termination of
employment for any reason other than for one or more alleged acts of fraud,
embezzlement, misappropriation of proprietary information or any other alleged
misconduct adversely affecting the business reputation of the Company in a
material manner. Upon involuntary termination other than for cause after a
change of control of the Company, the named executive officers are entitled to
the following: (i) in the case of Dr. Caulder, a lump-sum severance payment
equal to the lesser of (A) two times Dr. Caulder's annual base salary plus
average bonus paid for the preceding two years or (B) the excess of 2.99 times
the average W-2 wages for the five calendar years preceding the change in
control minus the value of any accelerated vesting of options and shares of
restricted stock, (ii) in the case of the other named executive officers, a
lump-sum severance payment equal to the lesser of (A) such individual's annual
base salary plus average bonus paid for the preceding two years or (B) the
excess of 2.99 times the average W-2 wages for the five calendar years preceding
the change in control minus the value of any accelerated vesting of options and
shares of restricted stock, (iii) health care coverage for a five year period in
the case of Dr. Caulder and a three year period in the case of the other named
executive officers and (iv) immediate vesting of restricted stock and stock
options. The agreements expire on December 31, 1996.
As indicated in footnote (1) to the table entitled "Option Grants in Last
Fiscal Year," the shares subject to option grants made to date under the
Company's 1992 Stock Option Plan (and the Company's predecessor 1983 Stock
Option Plant) will immediately vest upon a merger in which the Company is not
the surviving entity, a sale of substantially all of the Company's assets in
liquidation or dissolution of the Company or a reverse merger in which the
Company is the surviving entity but in which 50 percent or more of the Company's
outstanding voting stock is transferred to person or persons different from
those who held such stock immediately prior to the merger, unless the Company's
repurchase rights with respect to those shares are transferred to the successor
entity.
The Compensation Committee as Plan Administrator of the Company's 1992 Stock
Option/Stock Issuance Plan has the authority to provide for the accelerated
vesting of the shares of Common Stock subject to outstanding options held by the
Chief Executive Officer and the other four most highly-compensated executive
officers, whether granted under that plan or the predecessor 1983 plan, in the
event their employment is involuntarily terminated after a Corporate Transaction
or Change in Control which does not otherwise trigger the accelerated vesting of
their option shares. The following definitional provisions will be in effect for
purposes of such accelerated vesting:
Corporate Transaction: an acquisition of the Company by merger or
----------------------
consolidation, by sale of substantially all of the Company's assets or by
reverse merger in which the Company is the surviving entity but in which
more than 50 percent of the Company's outstanding voting stock is
transferred to person or persons different from those who held such stock
immediately prior to the merger.
Change in Control: (i) an acquisition by any person (other than the Company
-----------------
or its affiliates) of more than 50 percent of the outstanding Common Stock
pursuant to a tender or exchange offer made directly to the Company
shareholders which the Board does not recommend such shareholders to accept
or (ii) a change in the individuals comprising the majority of the Board
effected over a period of 24 months or less through one or more proxy-
contested elections for Board membership.
Involuntary Termination: the termination of the officer's employment with
-----------------------
the Company, whether initiated by the officer or the Company, in connection
with (A) a change in such individual's position with the Company which
materially reduces his level of responsibility, (B) a reduction in his
level of compensation or (C) a significant relocation of such individual's
primary place of employment.
35
<PAGE>
Compensation Committee Interlocks and Insider Participation
In fiscal 1994, Thomas J. Cable, George R. Hill and A. John Speziale served
as the Company's Compensation Committee.
The following Compensation Committee Report and Performance Graph should not
be considered to be part of this proxy statement and any current or future cross
references to this proxy statement in filings with the Securities and Exchange
Commission under either the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, shall not include the Board
Compensation Committee Report on Executive Compensation or the Performance Graph
reproduced below.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The following is the report delivered by the Compensation Committee of the
Board of Directors with respect to the principal factors considered by such
Committee in determining the compensation of the Company's executive officers.
Messrs. Cable, Hill and Speziale served as the Compensation Committee during all
of 1994.
As members of the Compensation Committee of the Board of Directors, it is our
duty to set the base salary of the Company's executive officers and to
administer the Company's Stock Option Plan under which grants may be made to
them and other key employees. In addition, we approve the individual bonus
programs to be effect for the executive officers each fiscal year.
GENERAL COMPENSATION POLICY. Our fundamental policy is to offer the Company's
executive officers competitive compensation opportunities based upon their
contribution to the success of the Company in achieving its corporate
objectives. As a general measure, we look to compensation paid to executives at
a broad base of over 200 other biotechnology companies, including agricultural
biotechnology companies, located in the United States to provide some guidance
on compensation levels. The Company's executive officer compensation places in
the 40th to 45th percentile of executive compensation of such companies. It is
our objective to have a substantial portion of each officer's compensation
contingent upon the Company's performance as well as upon his or her own level
of performance. Accordingly, each executive officer's compensation package is
comprised of three elements: (i) base salary which reflects individual
performance and is designed primarily to be competitive with salary levels in
the industry, (ii) annual variable performance awards, if awarded, are payable
in cash and tied to the achievement by the Company of its corporate objectives,
and (iii) long-term stock-based incentive awards that strengthen the mutuality
of interests between the executive officers and the Company's stockholders. As
an officer's level of responsibility increases, it is our intent to have a
greater portion of his or her total compensation be dependent upon Company
performance and stock price appreciation rather than base salary.
FACTORS. Several of the more important factors that we considered in
establishing the components of each executive officer's compensation package for
the 1994 fiscal year are summarized below. However, as set forth under an
incentive program implemented in 1993, the base salaries of all executive
officers were frozen until the end of 1995 at the 1993 level. Bonuses, if any,
are tied to the Company's achievement of target levels of profitability as
described below. Executive compensation is based primarily on the Company's
achievement of corporate objectives established at the start of the fiscal year.
For fiscal year 1994, the corporate objectives were to achieve profitability in
1994, to position the Company for continued future profitability and to continue
the Company's growth in terms of technological and product developments, market
acceptance of the Company's products, sales and earnings per share growth and
broadened participation in the crop protection industry through strategic
transactions. In the future, we may in our discretion apply entirely different
factors, particularly different measures of corporate growth and financial
performance, in setting executive compensation, but all compensation decisions
will be designed to further the general compensation policy indicated above.
Historically, we have tried to provide all executive officers, other than the
Chief Executive Officer, with the same level of compensation.
. INCENTIVE PROGRAM. In July 1993, we implemented an incentive program tied
to profitability of the Company as measured by net income applicable to
common shares. The incentive program applies to the executive officers and
certain other key employees and is comprised of a stock option component
and a cash component. Annual salaries of certain employees covered by the
program, including salaries of all executive officers, will be frozen at
their 1993 levels through the end of 1995. The stock options granted in
1993 under the program were exchanged for new
36
<PAGE>
options issued in December 1994. The options originally granted under the
incentive program would have vested at one time at the end of five years of
service to the Company, subject to accelerated vesting upon the Company
achieving two consecutive fiscal years of profitability. The new options
granted in December 1994, which were accepted by the employees covered by
the incentive program, including the executive officers, in exchange for
the options granted in 1993, vest in equal monthly installments over a 36-
month period. (See the discussion under "Long Term Incentive Compensation"
set forth below.) Under the incentive program, a cash component will be
awarded only if the Company achieves greater than $2 million of profits in
1994 and, separately, greater than $6 million of profits in 1995. No cash
was awarded with respect to 1994 profitability.
. BASE SALARY. The base salary for each executive officer is set on the
basis of the level of responsibility of the executive officers and the
salary levels in effect for comparable positions with the Company's
principal competitors. Under the incentive program described above,
officers' salaries have been frozen at the 1993 levels through the end of
1995.
. ANNUAL INCENTIVE COMPENSATION. Annual bonuses, if awarded, are earned by
each executive officer on the basis of the Company's achievement of
corporate objectives established at the start of the fiscal year. For 1994,
the sole criterion for an annual bonus was profitability greater than $2
million for fiscal year 1994. No bonuses were awarded to executive officers
in 1994 or with respect to the Company's performance in 1994.
. LONG-TERM INCENTIVE COMPENSATION. On December 21, 1994, the Compensation
Committee approved the grant of new options (new options) to all current
full-time employees of Mycogen who hold options granted after December 1,
1989 (old options) as an exchange of new options for an equal number of old
options. The new options have an exercise price per share equal to $8.50,
the closing price per share as reported by the NASDAQ National Market
System as of the close of business on the date of grant. Each new option
vests in successive equal monthly installments over a 36-month period
measured from December 21, 1994 and has a maximum term of ten (10) years
from the grant date.
The grants and awards are designed to align the interests of each executive
officer with those of the stockholders and provide each individual with a
significant incentive to manage the Company from the perspective of an owner
with an equity stake in the business. Each grant allows the officer to acquire
shares of the Company's common stock at a fixed price per share (the market
price on the grant date) over a specified period of time (up to 10 years).
Accordingly, the option will provide a return to the executive officer only if
the market price of the shares appreciates over the option term. Accordingly,
the awards provide the officers with a significant incentive to manage the
Company from the perspective of an owner with an interest in the appreciation of
the market prices of the shares.
CEO COMPENSATION. In setting the compensation payable to the Company's Chief
Executive Officer, Dr. Caulder, we have sought to be competitive with other
companies in the industry, while at the same time tying a significant percentage
of such compensation to Company performance and stock price appreciation. As a
general measure, we look to compensation paid to chief executive officers at a
broad base of over 200 other biotechnology companies, including agricultural
biotechnology companies, located in the United States to provide some guidance
on compensation levels. The Company's chief executive officer compensation
places in the 40th percentile of chief executive compensation of such companies.
With respect to Dr. Caulder's base salary, it is our intent to provide him
with a level of stability and certainty each year and not have this particular
component of compensation affected to any significant degree by Company
performance factors. Pursuant to the incentive program implemented in July 1993,
Dr. Caulder's base salary has been frozen through 1995 at the 1993 level. Also
as part of the incentive program, Dr. Caulder was entitled to a bonus only if
company profits in 1994 exceeded $2 million. No bonus was awarded in 1994 or
with respect to the Company's performance in 1994.
The stock option component of Dr. Caulder's 1994 fiscal year compensation,
however, was entirely dependent upon his contribution to the Company's corporate
objectives discussed above and provided no dollar guarantees. The option grant
made to him during the 1994 fiscal year as part of the grant of new options for
old options described above was intended to place a significant portion of his
total compensation for the year at risk, since the options will have no value
unless there is appreciation in the value of the Company's common stock over the
option term. As indicated, it is our objective to have an increasing percentage
of Dr. Caulder's total compensation each year tied to the attainment of the
Company's corporate objectives and stock price appreciation on his option
shares.
37
<PAGE>
We conclude our report with the acknowledgment that no member of the
Compensation Committee is a former or current officer or employee of the Company
or any of its subsidiaries.
Compensation Committee
A. John Speziale
Thomas Cable
George Hill
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<PAGE>
TEN-YEAR INFORMATION REGARDING REPRICING, REPLACEMENT OF CANCELLATION AND
REGRANT OF OPTIONS
The following table sets forth certain information concerning the repricing,
replacement or cancellation and regrant of options, within the last ten fiscal
years, of options held by the named executive officers:
<TABLE>
<CAPTION>
Length of
Number of Original
Securities Market Price Option Term
Underlying of Stock at Exercise Price Remaining at
Options/SARs Time of at Time of Date of
Name and Repriced or Repricing Repricing or New Exercise Repricing or
Principal Position Date Amended or Amendment ($) Amendment ($) Price ($) Amendment 1
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Jerry D. Caulder 12-21-94 40,000 $8.50 $ 9.99 $8.50 5.0
Chief Executive Officer 12-21-94 25,000 $8.50 $10.20 $8.50 5.9
12-21-94 40,000 $8.50 $15.75 $8.50 6.8
12-21-94 15,000 $8.50 $15.25 $8.50 7.1
12-21-94 40,000 $8.50 $13.00 $8.50 7.8
12-21-94 100,000 $8.50 $11.25 $8.50 8.6
Andrew C. Barnes 12-21-94 25,000 $8.50 $ 9.99 $8.50 5.0
Executive Vice President 12-21-94 20,000 $8.50 $10.20 $8.50 5.9
12-21-94 30,000 $8.50 $15.75 $8.50 6.8
12-21-94 10,000 $8.50 $15.25 $8.50 7.1
12-21-94 25,000 $8.50 $13.00 $8.50 7.8
12-21-94 50,000 $8.50 $11.25 $8.50 8.6
Carlton J. Eibl 12-21-94 30,000 $8.50 $12.25 $8.50 8.0
Executive Vice President, 12-21-94 50,000 $8.50 $11.25 $8.50 8.6
General Counsel
James R. Glynn 12-21-94 25,000 $8.50 $ 9.99 $8.50 5.0
Resigned as of March 1995 12-21-94 20,000 $8.50 $10.20 $8.50 5.9
from the positions of 12-21-94 30,000 $8.50 $15.75 $8.50 6.8
Executive Vice President, 12-21-94 10,000 $8.50 $15.25 $8.50 7.1
Chief Financial Officer 12-21-94 25,000 $8.50 $13.00 $8.50 7.8
12-21-94 50,000 $8.50 $11.25 $8.50 8.6
Albert D. Kern 12-21-94 25,000 $8.50 $ 9.99 $8.50 5.0
Executive Vice President 12-21-94 20,000 $8.50 $10.20 $8.50 5.9
12-21-94 30,000 $8.50 $15.75 $8.50 6.8
12-21-94 10,000 $8.50 $15.25 $8.50 7.1
12-21-94 25,000 $8.50 $13.00 $8.50 7.8
12-21-94 50,000 $8.50 $11.25 $8.50 8.6
Leo Kim 12-21-94 20,000 $8.50 $10.20 $8.50 5.9
Executive Vice President, 12-21-94 30,000 $8.50 $15.75 $8.50 6.8
Chief Technical Officer 12-21-94 10,000 $8.50 $15.25 $8.50 7.1
12-21-94 25,000 $8.50 $13.00 $8.50 7.8
12-21-94 50,000 $8.50 $11.25 $8.50 8.6
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
1 Length of time remaining is set forth in years.
39
<PAGE>
The following Compensation Committee Report should not be considered to be
part of this proxy statement and any current or future cross references to this
proxy statement in filings with the Securities and Exchange Commission under
either the Securities Act of 1933, as amended, or the Securities Exchange Act of
1934, as amended, shall not include this Board Compensation Committee Report
reproduced below.
COMPENSATION COMMITTEE REPORT ON 1994 CANCELLATION AND REGRANT OF OPTIONS
On December 21, 1994, the Compensation Committee approved the cancellation
and regrant of all outstanding options held by current full-time employees who
hold options granted after December 1, 1989. Each such optionee had the
opportunity to elect to retain his or her old options or accept a new option
with an exercise price of $8.50 per share. Each new option has a maximum term of
10 years and becomes exercisable in a series of 36 equal and consecutive monthly
installments ending on December 31, 1997, assuming continued employment with the
Company or with one of its subsidiaries. All optionees holding old options,
including all executive officers, agreed to the cancellation of their old
options in exchange for new options. Automatic option grants to the non-employee
directors were not eligible for participation in the cancellation-regrant
program.
The Committee approved the cancellation-regrant program because it believes
that equity interests are a significant factor in the Company's ability to
attract and retain key employees and consultants that are critical to the
Company's long-term success. In addition, the cancellation-regrant program ties
the interests of the Company's employees with those of the Company's
stockholders by (i) creating a strong incentive to build the value of the
Company and thereby increase the Company's share price above the current market
price per share and (ii) tying the vesting of the new options to an additional
period of service with the Company.
Accordingly, the Committee approved the cancellation-regrant program as a
means of ensuring that optionees have a meaningful equity interest in the
Company.
Compensation Committee
A. John Speziale
Thomas Cable
George Hill
40
<PAGE>
PERFORMANCE GRAPH
The following graph compares total stockholder returns of the Company over
the last five calendar years to the weighted average return of stocks of
companies included in the NASDAQ NMS Index and in a peer group index of
companies identified by the Company. The total return for each of the Company's
Common Stock, the NASDAQ NMS Index and the selected peer group index assumes the
reinvestment of dividends, although dividends have not been declared on the
Company's Common Stock and is based on the returns of the component companies
weighted according to their market capitalizations as of the end of each monthly
period for which returns are indicated. The NASDAQ NMS Index tracks the
aggregate price performance of equity securities of companies traded on the
NASDAQ National Market System ("NMS"). The Company's Common Stock is traded on
the NMS. The selected peer group index consists of the following agricultural
biotechnology companies, which are the only agricultural, crop-protection
biotechnology companies known to the Company to have their shares traded on NMS:
Agridyne Technologies, Inc., Calgene, Inc., DeKalb Genetics Corporation-CL B,
Ecogen, Inc., Ringer Corporation, Biosys, Crop Genetics International
Corporation, DNA Plant Technology Corporation and Ecoscience Corporation. The
stockholder return shown on the graph below is not necessarily indicative of
future performance and the Company will not make or endorse any predictions as
to future stockholder returns.
COMPARISON OF FIVE-YEAR CUMULATIVE RETURN AMONG MYCOGEN CORPORATION,
NASDAQ NMS INDEX AND SELECTED PEER GROUP Index
<TABLE>
<CAPTION>
MYCOGEN NASDAQ MYCOGEN NASDAQ
DATE CORPORATION NMS PEER INDEX DATE CORPORATION NMS PEER INDEX
- --------------------------------------------- ---------------------------------------------
<S> <C> <C> <C> <S> <C> <C> <C>
12/29/89 100 100 100 7/31/92 98 136 110
1/31/90 84 91 101 8/31/92 96 131 100
2/28/90 95 94 116 9/30/92 95 136 102
3/30/90 102 97 109 10/30/92 93 142 103
4/30/90 99 93 104 11/30/92 93 153 119
5/31/90 127 102 110 12/31/92 102 159 127
6/29/90 133 103 111 1/29/93 109 163 116
7/31/90 125 98 105 2/26/93 96 157 105
8/31/90 93 85 81 3/31/93 89 162 97
9/28/90 75 77 72 4/30/93 91 155 97
10/31/90 87 74 65 5/28/93 91 164 105
11/30/90 104 81 68 6/30/93 96 165 110
12/31/90 105 85 71 7/30/93 93 165 95
1/31/91 125 94 83 8/31/93 96 173 95
2/28/91 104 103 89 9/30/93 93 178 105
3/28/91 95 110 105 10/29/93 82 181 118
4/30/91 96 111 103 11/30/93 75 176 104
5/31/91 89 116 116 12/31/93 75 181 98
6/28/91 107 109 106 1/31/94 85 186 105
7/31/91 98 115 104 2/28/94 80 185 105
8/30/91 96 121 110 3/31/94 67 173 95
9/30/91 109 122 124 4/29/94 82 171 86
10/31/91 115 126 122 5/31/94 76 172 100
11/29/91 97 121 109 6/30/94 78 165 90
12/31/91 110 136 118 7/29/94 73 169 82
1/31/92 113 144 143 8/31/94 76 179 85
2/28/92 102 148 141 9/30/94 73 179 73
3/31/92 112 141 126 10/31/94 73 182 68
4/30/92 107 135 114 11/30/94 73 176 59
5/29/92 105 136 125 12/30/94 61 177 57
6/30/92 105 131 106
</TABLE>
41
<PAGE>
Certain Relationships and Related Transactions
On December 1, 1992, Mycogen and Lubrizol consummated a series of
transactions that resulted in: (i) the formation and capitalization of
Agrigenetics, L.P., a Delaware Limited Partnership doing business as Mycogen
Plant Sciences ("Mycogen Plant Sciences"), owned directly and indirectly 51
percent by Mycogen and 49 percent by Lubrizol, with the assets, rights and
related items required to permit Agrigenetics, L.P. to succeed to, own and
operate the business of Agrigenetics Company, the former agricultural seed and
plant science division of Lubrizol; and (ii) the issuance and sale to Lubrizol
of 2,294,590 shares of Mycogen Common Stock and 3,940 shares of Mycogen Series A
Preferred Stock. Dr. George R. Hill, a director of the Company, is a Senior Vice
President of Lubrizol.
On December 31, 1993, Mycogen Plant Sciences was reorganized from a limited
partnership to a corporation and Mycogen acquired an additional 29.54 percent
interest in Mycogen Plant Sciences from Lubrizol for $7 million in cash and 2
million shares of Mycogen Common Stock. Mycogen Plant Sciences currently is
owned 80.54 percent by Mycogen and 19.46 percent by Lubrizol.
Mycogen Plant Sciences is the sixth largest seed company in the United
States. It produces and markets planting seeds for corn, soybean, sunflower,
sorghum and alfalfa crops to farmers, principally in the northern and midwestern
regions of the United States and certain foreign countries. Mycogen Plant
Sciences also conducts advanced biotechnology research and development of plants
and carries out ongoing plant breeding programs for its principal crops.
Mycogen has granted to Mycogen Plant Sciences a perpetual, world-wide and
royalty-free license to all of Mycogen's technology for use by Mycogen Plant
Sciences solely for the purpose of developing and commercializing plants,
planting seeds and plant by-products (other than pesticides, herbicides,
fungicides and human and animal pharmaceuticals). In exchange, Mycogen Plant
Sciences granted to Mycogen an exclusive, perpetual, and world-wide and royalty-
free license to all of Mycogen Plant Sciences' technology, except certain
technology rights granted to Lubrizol with respect to specialty oils, for use by
Mycogen to develop and commercialize pesticides and human and animal
pharmaceuticals. The principal purpose of this arrangement is to consolidate
into Mycogen Plant Sciences the application of all technology related to the
development and commercialization of transgenetic plants and to consolidate into
Mycogen the application of all technology related to the development and
commercialization of pesticides and potential animal and human pharmaceuticals.
Under a related agreement, Lubrizol has agreed to provide to Mycogen Plant
Sciences with funding from the beginning of 1993 through 1998 for research and
development projects related to planting seeds that yield plants capable of
producing special oils with certain desired characteristics. Lubrizol is
obligation to provide a minimum of $5.5 million of funding over the next three
years. In exchange, Mycogen Plant Sciences has granted to Lubrizol an exclusive,
perpetual, world-wide and royalty-free license to planting seeds developed or
acquired by Mycogen Plant Sciences that yield plants capable of producing
certain special oils. Under commercial contracts between a subsidiary of
Lubrizol and Mycogen Plant Sciences, Mycogen Plant Sciences is the exclusive
supplier of such planting seeds and will manage the production of crops from
such seeds.
With respect to their ownership interest in Mycogen Plant Sciences, Mycogen
and Lubrizol have agreed to the following: (i) Mycogen and Lubrizol each has the
first opportunity to acquire the selling parties' interest in Mycogen Plant
Sciences; (ii) if Mycogen decides to sell any of its interest in Mycogen Plant
Sciences, Lubrizol has certain rights to sell all or any portion of its interest
in Mycogen Plant Sciences in the same transaction; (iii) Mycogen will purchase
Lubrizol's remaining interest in Mycogen Plant Sciences over time for additional
shares of Mycogen Common Stock or, after November 2000, for cash; and (iv)
Lubrizol will not acquire additional shares of Mycogen Common Stock (other than
shares of common stock that it currently holds or shares that are issuable in
connection with Mycogen's purchase of Lubrizol's remaining interest in Mycogen
Plant Sciences or upon conversion of the Series A Preferred Stock) except under
certain limited circumstances.
On December 1, 1993, Mycogen redeemed $10 million of Mycogen Series A
Preferred Stock from Lubrizol in accordance with the terms of such stock. The
remaining shares of the Series A Preferred Stock are not subject to mandatory
redemption.
42
<PAGE>
Effective December 31, 1993, Lubrizol surrendered to Mycogen 300 shares of
Mycogen Series A Preferred Stock in satisfaction of certain indemnification
obligations related to the Mycogen Plant Sciences transactions consummated
between the parties on December 1, 1992.
In October 1987, Mycogen entered into a collaborative agreement with Kubota
to develop agricultural bioinsecticide products for commercialization in Far
East Asia. In June 1992, Mycogen and Kubota entered into a license agreement
pursuant to which products developed under the collaboration agreement will be
marketed commercially in Far East Asia by Mycogen and Kubota. Mycogen retains
product and marketing rights elsewhere around the world.
In February 1993, the Company entered into Employment/Severance Agreements
with the following named executive officers: Messrs. Caulder, Barnes, Glynn (no
longer with the Company), Kern and Kim. See "Executive Compensation - Employment
Contracts and Change of Control Arrangements."
STOCKHOLDER PROPOSALS FOR 1995 PROXY STATEMENT
Stockholder proposals that are intended to be presented at the Company's
annual meeting of stockholders to be held in 1996 must be received by the
Company no later than November 10, 1995 in order to be included in the proxy
statement and related proxy materials.
FORM 10-K
THE COMPANY WILL MAIL WITHOUT CHARGE, UPON WRITTEN REQUEST, A COPY OF THE
ANNUAL REPORT ON FORM 10-K, INCLUDING THE FINANCIAL STATEMENTS, SCHEDULES AND
LIST OF EXHIBITS. REQUESTS SHOULD BE SENT TO INVESTOR RELATIONS.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than 10% of a registered class
of the Company's equity securities, to file reports of ownership and changes in
ownership with the SEC and Nasdaq. Officers, directors and greater than 10%
stockholders are required by SEC regulation to furnish the Company with copies
of all Section 16(a) forms they file.
Based solely on review of the copies of such forms furnished to the Company,
the Company believes that, during the period from January 1994 through December
1994, all Section 16(a) filing requirements applicable to its officers,
directors and greater than 10% beneficial owners were satisfied.
OTHER BUSINESS
The Board of Directors knows of no other business that will be presented for
consideration at the Annual Meeting. If other matters are properly brought
before the Annual Meeting, however, it is the intention of the persons named in
the accompanying proxy to vote the shares represented thereby on such matters in
accordance with their best judgment.
Dated: March 27, 1995 By Order of the Board of Directors
Carlton J. Eibl as Secretary
43
<PAGE>
APPENDIX A
PROPOSED FORM OF AGREEMENT AND PLAN OF MERGER
OF MYCOGEN CORPORATION A DELAWARE CORPORATION
AND MYCOGEN CORPORATION A CALIFORNIA CORPORATION
THIS AGREEMENT AND PLAN OF MERGER dated as of ___________________, 1995, (the
"Agreement") is between Mycogen Corporation, a California corporation ("Mycogen-
California") and Mycogen Corporation, a Delaware corporation ("Mycogen-
Delaware"). Mycogen-California and Mycogen-Delaware are sometimes referred to
herein as the "Constituent Corporations."
R E C I T A L S
A. Mycogen-California is a corporation duly organized and existing under the
laws of the State of California and has an authorized capital stock of
45,000,000 shares, 40,000,000 of which are designated "Common Stock", no
par value per share, and 5,000,000 of which are designated "Preferred
Stock", no par value per share. As of _________, 1995, 1,000 shares of
Common Stock were issued and outstanding, all of which were held by
Mycogen-Delaware. No shares of Preferred Stock are outstanding.
B. Mycogen-Delaware is a corporation duly organized and existing under the
laws of the State of Delaware and has an authorized capital stock of
45,000,000 shares, 40,000,000 of which are designated "Common Stock," par
value $.001 per share, and 5,000,000 of which are designated, "Preferred
Stock," par value $.001 per share. As of _______, 1995, _______ shares of
Common Stock were issued and outstanding and ___ shares of Series A
Preferred Stock were issued and outstanding.
C. The Board of Directors of Mycogen-Delaware has determined that, for the
purpose of effecting the reincorporation of Mycogen-Delaware in the State
of California, it is advisable and in the best interests of Mycogen-
Delaware that Mycogen-Delaware merge with and into Mycogen-California upon
the terms and conditions herein provided.
D. The respective Boards of Directors of Mycogen-California and Mycogen-
Delaware have approved this Agreement and have directed that this
Agreement be submitted to a vote of their respective stockholders and sole
shareholder, and executed by the undersigned officers.
E. Mycogen-California is a wholly-owned subsidiary of Mycogen-Delaware.
NOW, THEREFORE, in consideration of the mutual agreements and covenants set
forth herein, Mycogen-California and Mycogen-Delaware hereby agree, subject to
the terms and conditions hereinafter set forth, as follows:
I. MERGER
1.1 MERGER. In accordance with the provisions of this Agreement, the Delaware
General Corporation Law and the California General Corporation Law,
Mycogen-Delaware shall be merged with and into Mycogen-California (the
"Merger"), the separate existence of Mycogen-Delaware shall cease and
Mycogen-California shall be, and is herein sometimes referred to as, the
"Surviving Corporation," and the name of the Surviving Corporation shall be
Mycogen Corporation.
1.2 FILING AND EFFECTIVENESS. The Merger shall become effective when the
following actions shall have been completed:
(a) This Agreement and the Merger shall have been adopted and approved by
the board of directors and/or the stockholders of each Constituent
Corporation in accordance with the requirements of the Delaware General
Corporation Law and the California General Corporation Law;
(b) All of the conditions precedent to the consummation of the Merger
specified in this Agreement shall have been satisfied or duly waived by
the party entitled to satisfaction thereof; and
(c) An executed Certificate of Ownership and Merger or an executed
counterpart of this Agreement meeting the requirements of the Delaware
General Corporation Law and California General Corporation Law shall
have been
44
<PAGE>
filed with the Secretary of State of the State of Delaware, and the
Secretary of State of the State of California, respectively.
The date and time when the Merger shall become effective, as aforesaid, is
herein called the "Effective Date of the Merger."
1.3 EFFECT OF THE MERGER. Upon the Effective Date of the Merger, the separate
existence of Mycogen-Delaware shall cease and Mycogen-California, as the
Surviving Corporation (i) shall continue to possess all of its assets,
rights, powers and property as constituted immediately prior to the
Effective Date of the Merger, (ii) shall be subject to all actions
previously taken by its and Mycogen-Delaware's Board of Directors, (iii)
shall succeed, without other transfer or action on the part of any other
party, to all of the assets, rights, powers and property of Mycogen-
Delaware in the manner more fully set forth in Section 1107 of the
California General Corporation Law, (iv) shall continue to be subject to
all of the debts, liabilities and obligations of Mycogen-California as
constituted immediately prior to the Effective Date of the Merger, and (v)
shall succeed, without other transfer or other action on the part of any
other party, to all of the debts, liabilities and obligations of Mycogen-
Delaware in the same manner as if Mycogen-California had itself incurred
them, all as more fully provided under the applicable provisions of the
Delaware General Corporation Law and the California Corporations Code.
II. CHARTER DOCUMENTS, DIRECTORS AND OFFICERS
2.1 ARTICLES OF INCORPORATION. The Articles of Incorporation of Mycogen-
California as in effect immediately prior to the Effective Date of the
Merger shall continue in full force and effect as the Articles of
Incorporation of the Surviving Corporation until duly amended in accordance
with the provisions thereof and applicable law.
2.2 BYLAWS. The Bylaws of Mycogen-California as in effect immediately prior to
the Effective Date of the Merger shall continue in full force and effect as
the Bylaws of the Surviving Corporation until duly amended in accordance
with the provisions thereof and applicable law.
2.3 DIRECTORS AND OFFICERS. The directors and officers of Mycogen-California
immediately prior to the Effective Date of the Merger shall be the
directors and officers of the Surviving Corporation until their successors
shall have been duly elected and qualified or until as otherwise provided
by law, the Articles of Incorporation of the Surviving Corporation or the
Bylaws of the Surviving Corporation.
III. MANNER OF CONVERSION OF STOCK
3.1 MYCOGEN-DELAWARE COMMON STOCK. Upon the Effective Date of the Merger, each
share of Mycogen-Delaware Common Stock, par value $.001 per share, issued
and outstanding immediately prior thereto shall by virtue of the Merger and
without any action by the Constituent Corporations, the holder of such
shares or any other person, be converted into and exchanged for one (1)
fully paid and nonassessable share of Common Stock, no par value, of the
Surviving Corporation.
3.2 MYCOGEN-DELAWARE PREFERRED STOCK. Upon the Effective Date of the Merger,
each share of Mycogen-Delaware Preferred Stock, par value $.001 per share,
issued and outstanding immediately prior thereto shall by virtue of the
Merger and without any action by the Constituent Corporations, the holder
of such shares or any other person, be converted into and exchanged for one
(1) fully paid and nonassessable share of Preferred Stock, no par value, of
the Surviving Corporation.
3.3 MYCOGEN-DELAWARE 1992 STOCK OPTION PLAN, 1990 RESTRICTED STOCK ISSUANCE
PLAN.
(a) Upon the Effective Date of the Merger, the Surviving Corporation shall
assume all of the rights and obligations of Mycogen-Delaware under its
1992 Stock Option Plan, as amended through the date hereof (collectively,
the "Plan"). Each outstanding and unexercised option to purchase Mycogen-
Delaware Common Stock (an "Option") under the Plan shall become, subject
to the provisions in paragraph 3.3(d) below, on the basis of one (1)
share of the Surviving Corporation's Common Stock for each share of
Mycogen-Delaware Common Stock issuable pursuant to any such Option, an
option to purchase the Surviving Corporation's Common Stock on the same
terms
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and conditions set forth in such option. As of __________, 1995,
options to purchase ___________ shares of Mycogen-Delaware Common Stock
were outstanding and unexercised.
(b) Upon the Effective Date of the Merger, the Surviving Corporation shall
assume all of the rights and obligations of Mycogen-Delaware under its
1990 Restricted Stock Issuance Plan, as amended through the date hereof
(collectively, the "Restricted Stock Plan"). Each share of Mycogen-
Delaware Common Stock issued and outstanding under the Restricted Sock
Plan a share of the Surviving Corporation's Common Stock on the same
terms and conditions set forth in the agreement governing the issuance of
such share. As of __________, 1995, ___________ shares of Mycogen-
Delaware Common Stock were issued and outstanding under the Restricted
Stock Plan.
(c) One (1) share of the Surviving Corporation's Common Stock shall be
reserved for issuance under the 1992 Stock Option Plan and the Restricted
Stock Plan for each share of Mycogen-Delaware Common Stock so reserved
immediately prior to the Effective Date of the Merger.
(d) Following the Effective Date of the Merger, no "additional benefits"
(within the meaning of Section 424(a)(2) of the Internal Revenue Code of
1986, as amended) shall be accorded to the optionees pursuant to the
assumption of their options.
[other plans/poison pill]
3.4 MYCOGEN-CALIFORNIA COMMON STOCK. Upon the Effective Date of the Merger,
each share of Common Stock, no par value, of Mycogen-California issued and
outstanding immediately prior thereto shall, by virtue of the Merger and
without any action by Mycogen-California, the holder of such shares or any
other person, be cancelled and returned to the status of authorized but
unissued shares.
3.5 EXCHANGE OF CERTIFICATES. After the Effective Date of the Merger, each
holder of an outstanding certificate representing shares of Mycogen-
Delaware Common Stock or Preferred Stock may be asked to surrender the same
for cancellation to an exchange agent, whose name will be delivered to
holders prior to any requested exchange (the "Exchange Agent"), and each
such holder shall be entitled to receive in exchange therefor a certificate
or certificates representing the number of shares of the Surviving
Corporation's Common Stock or Preferred Stock, into which the surrendered
shares were converted as herein provided. Until so surrendered, each
outstanding certificate theretofore representing shares of Mycogen-Delaware
Common Stock or Preferred Stock shall be deemed for all purposes to
represent the number of shares of the Surviving Corporation's Common Stock
or Preferred Stock, respectively, into which such shares of Mycogen-
Delaware Common Stock or Preferred Stock, as the case may be, were
converted in the Merger.
The registered owner on the books and records of the Surviving Corporation
or the Exchange Agent of any such outstanding certificate shall, until such
certificate shall have been surrendered for transfer or conversion or
otherwise accounted for to the Surviving Corporation or the Exchange Agent,
have and be entitled to exercise any voting and other rights with respect
to and to receive dividends and other distributions upon the shares of
Common Stock or Preferred Stock of the Surviving Corporation represented by
such outstanding certificate as provided above.
Each certificate representing Common Stock or Preferred Stock of the
Surviving Corporation so issued in the Merger shall bear the same legends,
if any, with respect to the restrictions on transferability as the
certificates of Mycogen-Delaware so converted and given in exchange
therefore, unless otherwise determined by the Board of Directors of the
Surviving Corporation in compliance with applicable laws, or other such
additional legends as agreed upon by the holder and the Surviving
Corporation.
If any certificate for shares of the Surviving Corporation's stock is to be
issued in a name other than that in which the certificate surrendered in
exchange therefor is registered, it shall be a condition of issuance
thereof that the certificate so surrendered shall be properly endorsed and
otherwise in proper form for transfer, that such transfer otherwise be
proper and comply with applicable securities laws and that the person
requesting such transfer pay to the Exchange Agent any transfer or other
taxes payable by reason of issuance of such new certificate in a name other
than that of the registered holder of the certificate surrendered or
establish to the satisfaction of the Surviving Corporation that such tax
has been paid or is not payable.
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IV. GENERAL
4.1 COVENANTS OF MYCOGEN-CALIFORNIA. Mycogen-California covenants and agrees
that it will, on or before the Effective Date of the Merger:
(a) File any and all documents with the California Franchise Tax Board
necessary for the assumption by Mycogen-California of all of the
franchise tax liabilities of Mycogen-Delaware.
(b) Take such other actions as may be required by the California General
Corporation Law to effect the Merger.
(c) Take such other actions as may be required by the Delaware General
Corporation Law to effect the Merger.
4.2 FURTHER ASSURANCES. From time to time, as and when required by Mycogen-
California or by its successors or assigns, there shall be executed and
delivered on behalf of Mycogen-Delaware such deeds and other instruments,
and there shall be taken or caused to be taken by it such further and other
actions as shall be appropriate or necessary in order to vest or perfect in
or conform of record or otherwise by Mycogen-California the title to and
possession of all the property, interests, assets, rights, privileges,
immunities, powers, franchises and authority of Mycogen-Delaware and
otherwise to carry out the purposes of this Agreement, and the officers and
directors of Mycogen-California are fully authorized in the name and on
behalf of Mycogen-Delaware or otherwise to take any and all such action and
to execute and deliver any and all such deeds and other instruments.
4.3 ABANDONMENT. At any time before the Effective Date of the Merger, this
Agreement may be terminated and the Merger may be abandoned for any reason
whatsoever by the Board of Directors of either Mycogen-Delaware or of
Mycogen-California, or of both, notwithstanding the approval of this
Agreement by the stockholders of Mycogen-Delaware or by the sole
shareholder of Mycogen-California, or by both.
4.4 AMENDMENT. The Boards of Directors of the Constituent Corporations may
amend this Agreement at any time prior to the filing of this Agreement (or
certificate in lieu thereof) with the Secretary of State of the State of
Delaware; provided, that an amendment made subsequent to the adoption of
this Agreement by the stockholders of either Constituent Corporation shall
not: (1) alter or change the amount or kind of shares, securities, cash,
property and/or rights to be received in exchange for or on conversion of
all or any of the shares of any class or series thereof of such Constituent
Corporation, (2) alter or change any term of the Articles of Incorporation
of the Surviving Corporation to be effected by the Merger, or (3) alter or
change any of the terms and conditions of this Agreement if such alteration
or change would adversely affect the holders of any class or series of
capital stock of any Constituent Corporation.
4.5 AGREEMENT. Executed copies of this Agreement will be on file at the
principal place of business of the Surviving Corporation at 4980 Carroll
Canyon Rd., San Diego, California 92121 and copies thereof will be
furnished to any shareholder of either Constituent Corporation, upon
request and without cost.
4.6 GOVERNING LAW. This Agreement shall in all respects be construed,
interpreted and enforced in accordance with and governed by the laws of the
State of California and, so far as applicable, the merger provisions of the
Delaware General Corporations Code.
4.7 COUNTERPARTS. In order to facilitate the filing and recording of this
Agreement, the same may be executed in any number of counterparts, each of
which shall be deemed to be an original and all of which together shall
constitute one and the same instrument.
4.8 APPROVAL OF MYCOGEN-DELAWARE AS SOLE SHAREHOLDER OF MYCOGEN-CALIFORNIA. By
its execution and delivery of this Agreement, Mycogen-Delaware, as sole
shareholder of Mycogen-California, consents to, approves and adopts this
Agreement and approves the Merger. Mycogen-Delaware agrees to execute such
further instruments as may be necessary or desirable to evidence its
approval and adoption of this Agreement and the Merger as the sole
shareholder of Mycogen-California.
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IN WITNESS WHEREOF, this Agreement having first been approved by the resolutions
of the Board of Directors of Mycogen Corporation, a Delaware Corporation, and
Mycogen Corporation, a California Corporation is hereby executed on behalf of
each of such two corporations and attested by their respective officers
thereunto duly authorized.
MYCOGEN CORPORATION
a Delaware corporation
By:
----------------------------------------
Title:
-------------------------------------
ATTEST:
- ------------------------------------
- ------------------------------------
(Title)
MYCOGEN CORPORATION
a California corporation
By:
----------------------------------------
Title:
-------------------------------------
ATTEST:
- ------------------------------------
- ------------------------------------
(Title)
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EXHIBIT 1 TO APPENDIX A
PROPOSED FORM OF
ARTICLES OF INCORPORATION OF
MYCOGEN CORPORATION
(CALIFORNIA)
ARTICLE I
The name of this corporation is "Mycogen Corporation."
ARTICLE II
The purpose of this corporation is to engage in any lawful act or activity
for which a corporation may be organized under the General Corporation Law of
California other than the banking business, the trust company business or the
practice of a profession permitted to be incorporated by the California
Corporations Code.
ARTICLE III
The name and address in the State of California of this corporation's initial
agent for service of process is:
____________________________
____________________________
____________________________
ARTICLE IV
(A) CLASSES OF STOCK. This Corporation is authorized to issue two classes of
stock to be designated, respectively, "Common Stock" and "Preferred Stock."
The total number of shares which this corporation is authorized to issue is
forty-five million (45,000,000) shares. Forty million (40,000,000) shares
shall be Common Stock and five million (5,000,000) shares shall be Preferred
Stock.
(B) RIGHTS, PREFERENCES AND RESTRICTIONS OF PREFERRED STOCK.
The Preferred Stock authorized by these Articles of Incorporation may be
issued from time to time in series. The rights, preferences, privileges,
restrictions granted to and imposed on the Senior Redeemable Convertible
Preferred Stock, Series A (the "Series A Preferred Stock"), which series
consists of Three Thousand Nine Hundred and Forty (3,940) shares, are set
forth below in this Article IV(B). Except as to the Series A Preferred
Stock, and except as otherwise provided in these Articles of Incorporation,
the Board of Directors is hereby authorized to fix or alter the rights,
preferences, privileges and restrictions granted to or imposed upon such
additional series of Preferred Stock, and the number of shares constituting
any such series and the designation thereof, or any of them. The Board of
Directors is also authorized to increase or decrease the number of shares of
any series of Preferred Stock, subsequent to the issue of that series, but
not below the number of shares of such series then outstanding. In case the
number of shares of any series shall be so decreased, the shares
constituting such decrease shall resume the status which they had prior to
the adoption of the resolution originally fixing the number of shares of
such series.
The rights, preferences, privileges, restrictions and other matters relating
to the Series A Preferred Stock are as follows:
1. Designation. The Series A Preferred Stock shall be perpetual, but may be
redeemed in accordance with the provisions hereof. Shares of Series A
Preferred Stock redeemed, purchased, converted or otherwise acquired by
the Corporation or any Wholly-Owned Subsidiary shall be cancelled and
shall revert to the status of authorized but unissued preferred stock of
the Corporation undesignated as to series.
2. Dividends.
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(a) Holders of shares of Series A Preferred Stock shall be entitled to
receive, when and as declared by the Board of Directors of the
Corporation or a duly authorized committee thereof, out of funds
legally available for the payment of dividends (after taking into
account any increase therein resulting from any permitted revaluation
of the assets of the Corporation), cumulative preferential dividends
at a rate per annum, per share of (i) five percent (5%) of the
Liquidation Amount during the period commencing on the Original
Issuance Date and terminating on the fourth anniversary thereof, and
(ii) eight and one-half percent (8.5%) of the Liquidation Amount
during the period from the fourth anniversary of the Original Issuance
Date until the eighth anniversary thereof, and (iii) the greater of
ten percent (10%) or the Prime Rate plus three percent (3%) of the
Liquidation Amount during the period from the eighth anniversary of
the Original Issuance Date until the date on which all shares of
Series A Preferred Stock shall be redeemed in full; provided, that
during the period beginning with the date on which any Default exists
or occurs, and so long as any Default continues, the dividend rate
otherwise applicable to the Series A Preferred Stock pursuant to the
foregoing clause (i), (ii) or (iii), as the case may be, shall be
increased in an amount equal to an additional four percent (4%) per
annum.
(b) All dividends payable on the Series A Preferred Stock in accordance
with Section 2(a) shall be payable quarterly on the first business day
immediately following the final days of March, June, September, and
December in each year, beginning with December 31, 1992 (each such
date a "Dividend Payment Date"), shall accrue and cumulate, in the
case of each share, from the date of issuance of such share, and any
accrued dividends on the Series A Preferred Stock that are unpaid in
cash or, as provided herein, in P-I-K Shares, shall accrue additional
dividends in respect thereof ("Additional Dividends"), compounded
quarterly, at the dividend rate then applicable to the Series A
Preferred Stock. Dividends payable on the Series A Preferred Stock for
any period less than a full quarterly dividend period shall be
computed and paid as a pro rata portion of the full quarterly dividend
amount then in effect, on the basis of the total number of days in
such quarter and the actual number of days elapsed in such quarter to
and including the date on which payment is to be made.
(c) If at any time Full Cumulative Dividends on the outstanding shares of
Series A Preferred Stock to the end of the then current dividend
period shall not have been paid in cash or declared and a sum
sufficient for the payment thereof set aside for such payment, the
amount of the deficiency shall be fully paid, or dividends in such
amount declared and a sum sufficient for the payment thereof set aside
for such payment, before (i) any sum of sums shall be set aside by the
Corporation for, or applied to, the purchase, redemption or other
acquisition of any shares of the Corporation's capital stock, (ii) the
Corporation will cause or permit any Controlled Affiliate to purchase
or otherwise acquire any shares of the Corporation's capital stock or
(iii) any dividends shall be declared or paid upon, or any other
distribution shall be ordered or made in respect of, any shares of the
Corporation's capital stock, other than dividends or distributions
required to be paid or made on or in respect of shares of Senior Stock
in accordance with the terms thereof, unless such dividend or
distribution is payable solely in shares of Junior Stock.
Notwithstanding the prior sentence, no failure to pay in cash or set
aside a sum in respect of the foregoing dividends shall restrict the
Corporation from effecting any Permitted Purchase.
(d) The amount of the dividend declared and paid on each share of Series A
Preferred Stock shall equal the amount declared and paid on each other
share thereof. In any case when Full Cumulative Dividends are not
declared and paid on the outstanding shares of Series A Preferred
Stock, any dividends declared and paid on the Series A Preferred Stock
shall be declared and paid ratably in accordance with the sums which
would be payable on the Series A Preferred Stock if all such Full
Cumulative Dividends were declared and paid in full. Dividends shall
be declared and paid in cash, provided, that, except as otherwise
provided upon a Default in Section 4, during the period commencing on
the Original Issuance Date and terminating on the fifth anniversary
thereof, at the option of the Corporation, dividends may be paid in
additional shares of Series A Preferred Stock ("P-I-K Shares"). If a
dividend is declared and paid in P-I-K Shares, such P-I-K Shares shall
be issued to the holder of the Series A Preferred Stock entitled to
receive such dividend payment on the relevant Dividend Payment Date,
with such P-I-K Shares issued at the rate of $10,000 in Liquidation
Amount of such P-I-K Shares for each $10,000 of the dollar mount of
such dividend. Dividends paid in cash or in P-I-K Shares shall be paid
to the holders of record of shares of the Series A Preferred Stock as
they appear on the stock register of the Corporation on the record
date established for such dividend, which shall be not more
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than 30 days nor less than 10 days preceding the relevant Dividend
Payment Date, as shall be fixed by the Board of Directors of the
Corporation or a duly authorized committee thereof.
(e) The Corporation will use its diligent efforts to ensure that dividends
declared on the Series A Preferred Stock are treated as "dividends"
within the meaning of Section 316(a) of the Code (or any successor
provision) and to ensure that distributions made on or in respect of
the Series A Preferred Stock shall not be treated as "extraordinary
dividends" within the meaning of Section 1059 of the Code (or any
successor provision). The Corporation will not claim as an expense
reducing gross income any dividends paid on the Series A Preferred
Stock or any other shares of its preferred stock in any Federal income
tax return, claim for refund, or other statement, report or submission
made to the Internal Revenue Service (except to the extent that there
is no basis in law to do otherwise). The Corporation will reasonably
cooperate with any holder of Series A Preferred Stock (at the expense
of such holder) in connection with any litigation, appeal or other
proceeding (including any request for a revenue ruling) relating to
the characterization of any distribution on or in respect of the
Series A Preferred Stock as a dividend or to the eligibility for the
dividends received deduction under Section 243(a)(1) of the Code (or
any successor provision). To the extent possible, the principles of
this Section 2(e) shall also apply with respect to State and local
taxes.
3. Liquidation Preference.
(a) In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, the holders of the
Series A Preferred Stock shall be entitled to receive out of the
assets of the Corporation available for distribution to shareholders,
whether from capital, surplus or earnings, the Liquidation Amount,
plus Full Cumulative Dividends thereon to the date of final
distribution to the holders of the shares of the Series A Preferred
Stock, before any distribution may be made to the holders of shares of
Junior Stock.
(b) After the payment of Full Cumulative Dividends, the amount distributed
upon any liquidation, dissolution or winding up of the Corporation on
each share of Series A Preferred Stock shall equal the amount
distributed on each other share thereof. If in any such distribution
the funds of the Corporation shall be insufficient to pay the holders
of the outstanding shares of the Series A Preferred Stock the full
amounts to which they shall be entitled, such holders shall share
ratably in any distribution of assets in accordance with the sums
which would be payable on such distribution if all sums payable
thereon were paid in full.
(c) The holder of the shares of Series A Preferred Stock shall not be
entitled to receive any amounts with respect to any liquidation,
dissolution or winding up of the Corporation other than the amounts
provided for in this Section 3. Neither a merger nor consolidation of
the Corporation into or with another corporation nor a merger or
consolidation of any other corporation into or with the Corporation,
nor a sale, transfer, mortgage, pledge or lease of all or any part of
the assets of the Corporation shall be deemed to be a liquidation,
dissolution or winding up of the Corporation for the purposes of this
Section 3; provided, that this sentence shall not operate to release
or relieve the Corporation of any obligation to redeem or to
repurchase shares of Series A Preferred Stock by reason of the
occurrence of any such merger, consolidation, sale or other
transaction.
4. Dividend Provisions on Default. From and after the occurrence of a Default
and until Full Cumulative Dividends to the date of payment shall have been
paid to the holders of shares of Series A Preferred Stock or such Default
shall otherwise be cured or waived, (i) no dividends shall be declared or
paid upon, or any other distribution shall be ordered or made in respect
of, any shares of the capital stock of the Corporation, other than
dividends or distributions required to be paid or made on or in respect of
Senior Stock in accordance with its terms, nor shall the Corporation
purchase, redeem or otherwise acquire, or case or permit any Controlled
Affiliate to purchase or acquire, except for Permitted Purchases, any
shares of the capital stock of the Corporation, other than purchases or
acquisitions of Senior Stock required to be made in accordance with the
terms thereof; and (ii) if such Default is not cured with any applicable
grace period or, if a Financial Default, within ninety (90) days of its
occurrence, the dividend rate as of the date the Default occurred shall be
increased in accordance with Section 2(a) and, anything foregoing to the
contrary notwithstanding, the Corporation may not pay dividends in P-I-K
Shares, but shall pay all dividends in cash.
5. Optional Redemption. Out of funds legally available therefor after Full
Cumulative Dividends to the end of the then current dividend period on all
outstanding shares of Series A Preferred Stock have been paid in cash or,
as
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provided herein, in P-I-K Shares, or declared and a sum sufficient for
the payment thereof in cash set aside for such payment, the Corporation
may redeem, at its option expressed by resolution of its Board of
Directors or a duly authorized committed thereof, from time to time and at
any time, any or all shares of the Series A Preferred Stock at the
Liquidation Amount, plus, in each case, Full Cumulative Dividends on each
share so to be redeemed to the applicable Redemption Date; provided that
the Corporation shall not be required, either prior to or
contemporaneously with or as a result of such an optional redemption of
any shares of Series A Preferred Stock, to satisfy by payment in cash or
any amount representing Full Cumulative Dividends on any shares of Series
A Preferred Stock other than those that are the subject of such optional
redemption. Any redemption pursuant to this Section 5 shall be
accomplished in the manner and with the effect as set forth in Section 6.
6. Redemption Procedure.
(a) Notice of every redemption of Series A Preferred Stock shall be given
by mailing the same to every holder of record, any of whose shares are
to be redeemed, not less than 10 nor more than 30 days prior to the
applicable Redemption Date, at his or her respective address as the
same shall appear on the stock register of the Corporation, but no
defect in such mailed notice or in the mailing thereof or the failure
by any holder to receive any notice of redemption shall affect the
validity of the proceedings for the redemption of any share so to be
redeemed. The notice shall state that the shares specified will be
redeemed by the Corporation at their aggregate Liquidation Amount plus
Full Cumulative Dividends thereon to the applicable Redemption Date
and at the applicable Redemption Date upon the surrender for
cancellation, at the place designated in the notice, of the
certificates representing the shares (including any P-I-K Shares
constituting all or any portion of Full Cumulative Dividends thereon)
so to be redeemed (or, in the event such shares are represented by
certificates that are lost, stolen, destroyed or mutilated, delivery
of an affidavit to that effect and an indemnification agreement, each
in form and substance reasonably acceptable to the Corporation, from
the holder of such shares), properly endorsed for transfer or
accompanied by proper instruments of assignment and transfer in blank
and bearing all necessary transfer tax stamps.
(b) In the case of a redemption of less than all the outstanding shares of
Series A Preferred Stock, the shares to be redeemed shall be selected
pro rata on the basis of the relative number of shares held of record
on the applicable Redemption Date by each record holder thereof.
(c) If such notice of redemption shall have been duly given as provided
above, and if on or before the applicable Redemption Date the funds
necessary for such redemption shall have been set aside by the
Corporation, separate and apart from its other funds, in trust for the
pro rata benefit of the holders of the shares so called for or
otherwise subject to redemption, so as to be, and continue to be,
available therefor, then, notwithstanding that any certificate for
shares so called for or otherwise subject to redemption shall not have
been surrendered for cancellation, all shares of the Series A
Preferred Stock so called for or otherwise subject to redemption shall
no longer be deemed to be outstanding on and after such Redemption
Date, and all rights with respect to such shares shall forthwith on
such Redemption Date cease and terminate, except only the right of the
holders thereof to receive, out of the funds so set aside in trust,
the amount payable on redemption thereof, without interest.
(d) In the alternative, if such notice of redemption shall have been duly
given as provided above, or if the Corporation shall have given to the
bank or trust company hereinafter referred to irrevocable
authorization to give or complete such notice of redemption, and if
prior to the applicable Redemption Date the funds necessary for such
redemption shall have been deposited by the Corporation with a bank or
trust company in good standing (and shall have identified such bank or
trust company in a written notice given to the holders whose shares
are to be redeemed), organized under the laws of the United States of
America or a State thereof, having a capital surplus and undivided
profits aggregating at least $100,000,000 according to its last
published statement of condition, in trust for the pro rata benefit of
the holders of the shares so called for or otherwise subject to
redemption, so as to be, and to continue to be, available therefor,
then, notwithstanding that any certificate for shares so called for or
otherwise subject to redemption shall not have been surrendered for
cancellation, all shares of Series A Preferred Stock so called for or
otherwise subject to redemption shall no longer be deemed to be
outstanding on and after such Redemption Date, and all rights with
respect to such shares shall forthwith cease and terminate at such
time, except only the right of the holders, thereof to receive, out of
the funds so set aside in trust, the amount payable on redemption
thereof, without interest. Any interest
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accrued on any funds so deposited shall be the property of the
Corporation and shall be paid to the Corporation from time to time.
(e) Any funds so set aside or deposited, as the case may be, and unclaimed
at the end of one year from the applicable Redemption Date shall be
released or repaid to the Corporation, after which the holders of the
shares so called for redemption shall look only to the Corporation for
payment thereof, without interest, subject to the applicable law of
escheat.
(f) If the funds of the Corporation legally available, after taking into
account any increase therein resulting from any permitted revaluation
of the assets of the Corporation, to effect any mandatory redemption
of shares of the Series A Preferred Stock are insufficient to redeem
the total number of shares of Series A Preferred Stock required to be
redeemed, the Corporation shall (i) use the maximum available amount
of such funds and assets to redeem a smaller number of shares of
Series A Preferred Stock ratably from each holder thereof whose shares
are to be redeemed (based upon the number of shares of Series A
Preferred Stock held by each such holder), at the Liquidation Amount
per share plus Full Cumulative Dividends thereon to the date such
redemption is effected, and thereafter shall remain obligated to
redeem the remaining portion of the shares to be redeemed (without
being required to deliver a new notice) as promptly as practicable as
the funds or assets of the Corporation become legally available
(including, without limitation, by reason of permitted revaluations of
such assets) to effect such redemptions, and (ii) take any and all
action, permitted by applicable law and determined by the Board of
Directors to be in the best interests of the Corporation and fair to
its shareholders, necessary to increase its legally available funds to
an amount sufficient therefor, including without limitation, a
recapitalization or a sale of its assets.
(g) If fewer than all the shares of Series A Preferred Stock evidenced by
any certificate submitted to the Corporation for redemption pursuant
to this Section 6 are to be redeemed, the Corporation will issue new
certificate(s) for the remainder of the shares of Series A Preferred
Stock that were evidenced by the old certificate(s).
7. Conversion.
(a) Each holder of shares of Series A Preferred Stock may (prior to the
date such shares are redeemed, or are considered to be redeemed, for
payment in full of all amounts due upon such redemption), at such
holder's options at any time and from time to time, convert some or
all of such holder's shares of Series A Preferred Stock into fully
paid and nonassessable shares of Common Stock at the then applicable
Conversion Price, with the number of shares of Common Stock so
issuable to be equal to the aggregate Liquidation Amount of such
shares of Series A Preferred Stock to be so converted, divided by such
Conversion Price.
(b) Shares of Series A Preferred Stock may be converted by surrendering
the certificates representing such shares together with written notice
of conversion and a proper assignment of such certificates to the
Corporation or in blank. The notice of conversion shall state the
name(s) and address(Es) in which the certificates representing the
Common Stock issuable (and any cash payment instead of fractional
shares due) upon such conversion shall be issued, delivered or paid.
As promptly as practicable after the Conversion Date, the Corporation
shall issue and deliver, as specified in the notice of conversion,
certificates for the number of full shares of Common Stock issuable
upon such conversion together with any cash instead of fractional
shares as provided below. Such conversion shall be deemed to have been
effected immediately prior to the close of business on the Conversion
Date, and at such time all rights of the converted shares of Series A
Preferred Stock shall cease and terminate and the Person(s) in whose
name(s) any certificate(s) for Common Stock shall be issuable upon
such conversion shall be deemed to have become the holder(s) of the
record of the Common Stock represented thereby. At the Corporation's
option, not later than the second business day after the Conversion
Date, Full Cumulative Dividends with respect to the converted shares
of Series A Preferred Stock may be paid in full and in cash to the
converting holder; provided, that if such payment is not so made for
any reason, including without limitation the Corporation's lack of
legally available funds sufficient to make such payment, then shares
of Common Stock shall be issued, effective immediately prior to the
close of business on the Conversion Date, in satisfaction of such Full
Cumulative Dividends, with the number of shares of Common stock so
issuable to be equal to the amount of such Full Cumulative Dividends
divided by the then applicable Conversion Price.
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(c) No fractional shares of Common Stock or scrip representing fractional
shares shall be issued upon conversion of any shares of Series A
Preferred Stock (or Full Cumulative Dividends thereon). Instead, the
Corporation shall pay a cash adjustment in an amount equal to the
applicable fraction multiplied by the then applicable Conversion
Price.
(d) The Corporation shall at all times reserve and keep available and free
of preemptive rights out of its authorized but unissued Common Stock,
solely for the purpose of effecting the conversion of the outstanding
shares, such number of shares of its Common Stock as shall from time
to time be sufficient to effect the conversion (at the then applicable
Conversion Price) of all outstanding shares of Series A Preferred
Stock (including Full Cumulative Dividends with respect thereto), and
if at any time the number of authorized but unissued shares of Common
Stock shall not be sufficient to effect the conversion of all then
outstanding shares of Series A Preferred Stock (including Full
Cumulative Dividends with respect thereto), the Corporation shall take
such corporate action as may be necessary to increase its authorized
but unissued Common Stock to such number of shares as shall be
sufficient for such purpose.
(e) The Corporation shall pall all documentary, stamp, or other similar
taxes attributable to the issuance or delivery of Common Stock upon
conversion of shares of Series A Preferred Stock (or Full Cumulative
Dividends thereon). However, the Corporation shall not be required to
pay any taxes which may be payable in respect of any transfer involved
in the issuance or delivery of any certificate for such shares in a
name other than that of the holder of the shares of Series A Preferred
Stock (or Full Cumulative Dividends thereon) in respect of which such
shares are being issued.
8. Voting Rights.
(a) The holders of shares of Series A Preferred Stock shall not be
entitled to vote upon any matter relating to the business or affairs
of the Corporation.
(b) Notwithstanding the provisions of Section 8(a), without the
affirmative approval of the holders of at least a majority of the
outstanding shares of Series A Preferred Stock, given either by their
vote at an annual meeting or a special meeting called for such purpose
or in writing without a meeting, the Corporation shall not effect: (i)
any amendment, alteration or repeal (by any means, including any
merger or consolidation) of any of the provisions of this Article
IV(B) or of the Articles of Incorporation of the Corporation or of any
amendment thereto (including, without limitation, any certificate of
determination or similar instrument filed in connection with any class
or series of capital stock of the Corporation) which would alter or
change the absolute or relative powers, preferences or special rights
of the shares of Series A Preferred Stock so as to affect them or any
of the holders thereof adversely; (ii) the creation of any class or
series of capital stock other than Junior Stock (created in accordance
with Section 8(c), if applicable); (iii) the issuance of any shares of
Series A Preferred Stock in addition to the shares of such stock
initially issued pursuant to the Agreement on the Original Issuance
Date and any P-I-K Shares issued as contemplated herein; (iv) any
Restricted Combination; or (v) any Restricted Transaction.
(c) Notwithstanding the provisions of Section 8(a), without the
affirmative approval of the holders of at least a majority of the
outstanding shares of Series A Preferred Stock, given either by their
vote at an annual or a special meeting called for such purpose or in
writing without a meeting, the Corporation shall not create any Junior
Stock if the issuance thereof would cause a Default.
9. Definitions. For the purposes of this Article IV(B):
"Additional Dividends" has the meaning indicated in Section 2(b).
"Affiliate" means, as to any Person, another Person that directly or
indirectly Controls, is Controlled by or is under common Control with,
such Person.
"Agreement" means the Stock Purchase Agreement dated as of August 25, 1992
between Mycogen and Lubrizol pursuant to which the Series A Preferred
Stock is being issued on the Original Issuance Date.
"Base Price" means Seventeen Dollars and Ninety-Six Cents ($17.96).
"Code" means the Internal Revenue Code of 1986, as amended (or any
successor thereto), including the rules and regulations promulgated
thereunder from time to time in effect.
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<PAGE>
"Common Stock" means the Common Stock, $.001 par value, of the Corporation
and any other class of stock into which such Common Stock is changed
pursuant to any Reclassification or Reorganization.
"Control" and its variants means possession, directly or indirectly, of
power to direct or cause the direction of the management or policies
(whether through ownership of securities or partnership or other ownership
interests, by contract or otherwise) of a Person.
"Controlled Affiliate" means any Affiliate Controlled directly or
indirectly by the Corporation.
"Covenant Default" means (i) a material breach or violation by the
Corporation of any of the terms or provisions set forth in this Article
IV(B) (other than any such breach or violation of Sections 8(b) or 8(c)
hereof, or constituting either a Financial Default or a Dividend Default),
which breach or violation remains uncured 30 days after written notice
thereof is given to the Corporation or (ii) any breach or violation of
Sections 8(b) or 8(c) hereof.
"Conversion Date" means the date set forth in Section 7 upon which the
certificates representing the shares of Series A Preferred Stock to be
converted, the notice of conversion, and the proper assignment have all
been received by the Corporation.
"Conversion Price" means, the lesser of (i) the Base Price or (ii) One
hundred and twenty-five percent (125%) of the Market Price, and in either
such case shall be subject to adjustment to reflect any share split,
combination, Reclassification, Reorganization or similar event which
affects the convertibility of the Series A Preferred Stock. For purposes
of this paragraph, "Market Price" means the average daily closing price of
a share of Common Stock as reported on the Nasdaq National Market (or, if
the Common Stock is listed on the American or New York Stock Exchange,
then on such Exchange) during the sixty (60)-day period ending on the
Conversion Date.
"Default" means a Covenant Default, a Financial Default or a Dividend
Default.
"Dividend Payment Date" has the meaning indicated in Section 2(b).
"Exchange Act" means the Securities Exchange Act of 1934, or any similar
Federal statute and the rules and regulations thereunder, all as the same
may be in effect at the time.
"Financial Default" means (i) any failure by the Corporation or
Agrigenetics, Inc., a Delaware corporation, or any successor thereto
("Agrigenetics") so long as it is a Controlled Affiliate, to pay when due
(taking into account all applicable grace periods, agreed extensions and
waivers) any amount of principal or interest on indebtedness of the
Corporation or Agrigenetics, so long as it is a Controlled Affiliate,
which indebtedness is in an aggregate principal amount of at least
$10,000,000 ("Material Indebtedness") or (ii) a breach or violation of any
material covenant contained in the documents establishing or evidencing
any such Material Indebtedness, which breach or violation remains uncured
or unwaived more than 30 days after the date of occurrence thereof, (iii)
any Material Indebtedness being declared or becoming due and payable prior
to its stated maturity or due date, or (iv) the failure by the Corporation
to satisfy any or all of the following financial covenants:
(1) Minimum Equity. As tabulated below, the Corporation will at the
indicated date have and maintain until the next indicated date a
minimum balance with respect to stockholders' equity, as such term is
defined under generally accepted accounting principles, except that
(a) the value of any intangible assets acquired by the Corporation or
any of its Subsidiaries after the Original Issuance Date and (b) the
amount attributable to Senior Stock, Parity Stock and Series A
Preferred Stock will not be included in the calculation of such
balance.
(continues on next page)
55
<PAGE>
<TABLE>
<CAPTION>
AT YEAR MINIMUM
ENDED DECEMBER 31 STOCKHOLDERS' EQUITY
<S> <C>
Original issuance date $ 90 million
1993 90 million
1994 90 million
1995 100 million
1996 100 million
1997 115 Million
1998 115 Million
1999 115 Million
</TABLE>
(2) Maximum Leverage. The sum of the total book value at December 31st of each
year of all outstanding (a) debt for money borrowed (excluding any unused
portion of any credit facility) which is created, assumed or guaranteed in
any manner, and capitalized leases (as defined under generally accepted
accounting principles) of the Corporation and its Subsidiaries but
excluding any net increase in accounts receivable plus inventory minus
accounts payable occurring between August 31, 1992 and December 31 of each
year (which net calculation cannot be less than zero), (b) Senior Stock and
(c) Parity Stock shall not exceed thirty-five percent (35%) of the total
book value of Series A Preferred Stock (including PIK Shares), Junior Stock
and stockholders' equity (calculated consistently as set forth under item 1
above).
(3) Minimum Liquidity. As tabulated below, the Corporation will at the
indicated date have and maintain until the next indicated date an amount in
cash plus short-term investments equal to or in excess of the following
percentages of the then outstanding amount of Series A Preferred Stock
(including PIK Shares):
<TABLE>
<CAPTION>
CASH PLUS SHORT-TERM
INVESTMENTS AS A
PERCENTAGE OF SERIES A
PREFERRED STOCK
AT OCTOBER 31ST (INCLUDING PIK SHARES)
<S> <C>
1996 25%
1997 31.2%
1998 37.4%
1999 43.6%
2000 50%
</TABLE>
"Full Cumulative Dividends" means with reference to any share (including P-I-
K Shares) of the Series A Preferred Stock (whether or not in any dividend period
or part thereof in respect of which such terminology is used there shall have
been funds legally available for the payment of such dividends) that amount
which shall be equal to the dollar amounts of dividends at the applicable rate
set forth in Section 2(a) (plus Additional Dividends, if any, as contemplated by
Section 2(b)) for the period of time elapsed from the date of cumulation of
dividends on such share to the date as of which such computation is being made,
less the amount of all such dividends paid in cash upon such share. For purposes
of this Article IV(B), Full Cumulative Dividends on any share of the Series A
Preferred Stock shall be deemed to have been paid in full only when (i) all P-I-
K Shares issued in respect thereof shall have been redeemed for payment in full
and in cash and (ii) all accrued and unpaid dividends in respect thereof shall
have been paid in full and in cash.
"Junior Stock" means any class of equity stock of the Corporation which is
neither Series A Preferred Stock nor Parity Stock nor Senior Stock.
"Liquidation Amount" means $10,000.00 per share of Series A Preferred Stock.
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<PAGE>
"Original Issuance Date" means the date on which the Corporation first issues
shares of the Series A Preferred Stock pursuant to the Agreement.
"Outstanding" means, as used herein with reference to shares of Series A
Preferred Stock, such shares as have been issued but, as of the time of
determination thereof, have not yet been redeemed, purchased, converted or
otherwise acquired by the Corporation (including P-I-K Shares), other than
any of such shares held or beneficially owned at such time by the Corporation
or any Controlled Affiliate.
"Parity Stock" means any other series or class of preferred stock of the
Corporation which is equal in liquidation priority and preference to the
Series A Preferred Stock.
"Permitted Purchase" means any purchase or other acquisition for value by the
Corporation or a Controlled Affiliate of shares of capital stock of the
Corporation pursuant to any of the following: (i) the redemption or
conversion of shares of Series A Preferred Stock in accordance with this
Article IV(B), (ii) the redemption or conversion of any other series of
preferred stock (whether Senior Stock, Parity Stock or Junior Stock) so long
as such redemption or conversion does not result in a Default, (iii) as may
be required to comply with, or to cure violations of, applicable law, or (iv)
any program of the Corporation or a Controlled Affiliate to purchase shares
of Common Stock from time to time or to facilitate the operation of any
employee benefit plan of the Corporation; provided that in connection with
any purchases pursuant to the foregoing clause (iv), the aggregate amount
thereof shall not exceed five percent (5%) of the then issued and outstanding
shares of Common Stock in any consecutive 12-month period. Notwithstanding
the foregoing, such term shall not include any acquisition referred to in
clauses (ii), (iii) or (iv) of the foregoing sentence at any time while there
exists a Default.
"Person" means a corporation, an association, a partnership, an organization,
a business, a trust, an individual, a government or political subdivision
thereof or a governmental agency.
"P-I-K Shares" has the meaning indicated in Section 2(d).
"Prime Rate" means the prime interest rate as publicly announced by Citibank,
N.A. in New York.
"Reclassification" means that the Common Stock is changed into the same or a
different number or amount of other shares, other securities, cash or other
property. In the event of a Reclassification, the Series A Preferred Stock
shall become convertible into the same number or amount of other shares,
other securities, cash, or other property which would have been issuable,
deliverable, or payable on account of the Common Stock issuable upon the
conversion of the shares of the Series A Preferred Stock, assuming such
shares had been converted immediately prior to such Reclassification.
"Dividend Default" means the failure to declare and pay (either in cash or in
P-I-K Shares), or set aside a sum sufficient for the payment of, dividends on
all outstanding shares of Series A Preferred Stock (including P-I-K Shares)
in accordance with Section 2.
"Redemption Date" means each of the dates fixed by resolution of the Board of
Directors of the Corporation pursuant to Section 5 and specified in the
notice of redemption.
"Reorganization" means the merger of the Corporation with or into, or the
consolidation of the Corporation with, any other corporation, or the sale or
exchange of substantially all of the assets of the Corporation as an entirely
to any other Person. In the event of a Reorganization, the Series A Preferred
Stock shall become convertible into the same number or amount of other
shares, other securities, cash or other property of the Corporation or other
Person surviving or resulting from the Reorganization which would have been
issuable, deliverable, or payable on account of the Common Stock issuable
upon conversion of the shares of the Series A Preferred Stock, assuming such
shares had been converted immediately prior to such Reorganization.
"Restricted Combination" means any merger, combination or consolidation of
the Corporation with any one or more Persons without regard to the identity
of the surviving or resulting entity, and also means any sale, lease or other
disposition of all or substantially all the assets or properties of the
Corporation or the liquidation or winding up of the Corporation, except such
term shall not include a merger or consolidation of the Corporation in which
the group of Persons who together hold at least a majority of the outstanding
shares of the Common Stock of the Corporation prior to such merger or
consolidation will receive (or will retain) in such transactions, voting
securities
57
<PAGE>
in the surviving or resulting entity that represent at least a majority of
the voting power of all voting securities of such surviving or resulting
entity.
"Restricted Transaction" means any transaction in which the Corporation or
any of its Subsidiaries or Affiliates is involved if, either immediately
prior to or upon and giving effect to such transaction (and related
occurrences), the Corporation is or would be in Default.
"Senior Stock" means any other series or class of preferred stock of the
Corporation which is superior, in liquidation priority or preference, to the
Series A Preferred Stock.
"Subsidiary" means any corporation, of which not less than a majority of the
capital stock ordinarily entitled to elect directors is owned by the
Corporation and/or one or more Subsidiaries.
"Wholly-Owned Subsidiary" means any subsidiary all the capital stock of which
(other than director's qualifying shares, if any) is owned by the Corporation
and/or one or more Wholly-Owned Subsidiaries.
(C) COMMON STOCK.
1. Dividend Rights. Subject to the rights of holders of all classes of stock
at the time outstanding having prior rights as to dividends, the holders
of the Common Stock shall be entitled to receive, when and as declared by
the Board of Directors, out of any assets of the corporation legally
available therefor, such dividends as may be declared from time to time by
the Board of Directors.
2. Liquidation Rights. Upon the liquidation, dissolution or winding up of the
corporation, the assets of the corporation shall be distributed as
provided in Section 3 of Division (B) of this Article IV hereof.
3. Redemption. The Common Stock is not redeemable.
4. Voting Rights. The holder of each share of Common Stock shall have the
right to one vote, and shall be entitled to notice of any shareholders'
meeting in accordance with the Bylaws of this corporation, and shall be
entitled to vote upon such matters and in such manner as may be provided
by law.
ARTICLE V
Except as otherwise provided in these Articles of Incorporation, in
furtherance and not in limitation of the powers conferred by statute, the Board
of Directors is expressly authorized to make, repeal, alter, amend and rescind
any or all of the Bylaws of the corporation.
ARTICLE VI
The number of directors of the corporation shall be fixed from time to time
by a bylaw or amendment thereof duly adopted by the Board of Directors or by the
shareholders.
ARTICLE VII
Elections of directors need not be by written ballot unless the Bylaws of the
corporation shall so provide.
ARTICLE VIII
The election of directors by the shareholders shall not be by cumulative
voting. At each election of directors, each shareholder entitled to vote may
vote all the shares held by that shareholder for each of the several nominees
for director up to the number of directors to be elected. The shareholder may
not cast more votes for any single nominee than the number of shares held by
that shareholder. This Article VIII shall become effective only when the
Corporation becomes a "listed corporation" within the meaning of the California
Corporations Code Section 301.5(d).
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<PAGE>
ARTICLE IX
Meetings of shareholders may be held within or without the State of
California, as the Bylaws may provide. The books of the corporation may be kept
(subject to any provision contained in the statutes) outside the State of
California at such place or places as may be designated from time to time by the
Board of Directors or in the Bylaws of the corporation.
ARTICLE X
(A) LIABILITY OF DIRECTORS. The liability of the directors of this corporation
for monetary damages shall be eliminated to the fullest extent permissible
under California law.
(B) INDEMNIFICATION OF DIRECTORS, OFFICERS AND AGENTS. This corporation is
authorized to indemnify the directors and officers of this corporation to
the fullest extent permissible under California law. This corporation is
authorized to provide indemnification of agents (as defined in Section 317
of the California Corporations Code) through bylaw provisions, agreements
with agents, vote of shareholders or disinterested directors or otherwise,
in excess of the indemnification otherwise permitted by Section 317 of the
California Corporations Code, subject only to applicable limits set forth in
Section 204 of the California Corporations Code with respect to actions for
breach of duty to the corporation and its shareholders.
(C) REPEAL OR MODIFICATION. Any repeal or modification of the foregoing
provisions of this Article IX shall be prospective and shall not adversely
affect any right of indemnification or liability of a director, officer or
agent of the corporation relating to acts or omissions occurring prior to
such repeal or modification.
ARTICLE XI
The corporation reserves the right to amend, alter, change or repeal any
provision contained in these Articles of Incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred upon shareholders
herein are granted subject to this reservation.
Dated:_______________, 1995
------------------------------------
[Name]
------------------------------------
Incorporator
59
<PAGE>
EXHIBIT 2 TO APPENDIX A
BYLAWS OF
MYCOGEN CORPORATION
ARTICLE I
OFFICES
SECTION 1. The registered office shall be the principal executive offices of
Mycogen Corporation (the "Corporation") located in California or such other
registered office as may be determined from time to time by the Board of
Directors. The principal executive office of the Corporation shall be at such
place, inside or outside of California, as may be determined by the Board of
Directors.
SECTION 2. The corporation may also have offices at such other places both
within and without the State of California as the Board of Directors may from
time to time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. All meetings of the stockholders for the election of directors
shall be held at such place as may be fixed from time to time by the Board of
Directors, or at such other place either within or without the State of
California as shall be designated from time to time by the Board of Directors
and stated in the notice of the meeting. Meetings of stockholders for any other
purpose may be held at such time and place, within or without the State of
California, as shall be stated in the notice of the meeting or in a duly
executed waiver of notice thereof.
SECTION 2. Annual meetings of stockholders, commencing with the year 1995,
shall be held on the third Thursday in April at 10:00 a.m. at the principal
office of the Corporation, or at such other place and time as may be determined
by the Board of Directors if not a legal holiday, and, if a legal holiday, then
on the next succeeding business day at the same hour and place, or such other
date and time as shall be designated from time to time by the Board of Directors
and stated in the notice of the meeting, at which they shall elect by a
plurality vote a board of directors, and transact such other business as may
properly be brought before the meeting.
SECTION 3. Written notice of the annual meeting stating the place, date and
hour of the meeting shall be given to each stockholder entitled to vote at such
meeting not less than ten (10) nor more than sixty (60) days before the date of
the meeting.
SECTION 4. The officer who has charge of the stock ledger of the corporation
shall prepare and make, at least ten (10) days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten (10) days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
SECTION 5. Special meetings of the stockholders, for any purpose or purposes,
unless otherwise prescribed by statute or by the certificate of incorporation,
may be called by the president and shall be called by the chairman or the
president or secretary at the request in writing of a majority of the Board of
Directors, or at the request in writing of stockholders owning not less than
one-tenth of the entire capital stock of the corporation issued and outstanding
and entitled to vote. Such request shall state the purpose or purposes of the
proposed meeting.
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SECTION 6. Written notice of a special meeting stating the place, date and
hour of the meeting and the purpose or purposes for which the meeting is called,
shall be given not less than ten (10) nor more than sixty (60) days before the
date of the meeting, to each stockholder entitled to vote at such meeting.
SECTION 7. Business transacted at any special meeting of stockholders shall
be limited to the purposes stated in the notice.
SECTION 8. The holders of a majority of the stock issued and outstanding and
entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction of
business except as otherwise provided by statute or by the certificate of
incorporation. If, however, such quorum shall not be present or represented at
any meeting of the stockholders, the stockholders entitled to vote thereat,
present in person or represented by proxy, shall have power to adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
notified. If the adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
SECTION 9. When a quorum is present at any meeting, the vote of the holders
of a majority of the stock having voting power present in person or represented
by proxy shall decide any question brought before such meeting, unless the
question is one upon which by express provision of the statutes or of the
certificate of incorporation, a different vote is required, in which case such
express provision shall govern and control the decision of such question.
SECTION 10. Unless otherwise provided in the articles of incorporation each
stockholder shall at every meeting of the stockholders be entitled to one vote
in person or by proxy for each share of the capital stock having voting power
held by such stockholder, but no proxy shall be voted on after three years from
its date, unless the proxy provides for a longer period.
SECTION 11. Unless otherwise provided in the articles of incorporation, any
action required to be taken at any annual or special meeting of stockholders of
the corporation, or any action which may be taken at any annual or special
meeting of such stockholders, may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted. Prompt notice of the taking of the corporate action without a meeting
by less than unanimous written consent shall be given to those stockholders who
have not consented in writing.
SECTION 12. In order that the corporation may determine the stockholders
entitled to consent to corporate action in writing without a meeting pursuant to
Article II, Section 11 of these Bylaws, the Board of Directors may fix a record
date, which record date shall not precede the date upon which the resolution
fixing the record date is adopted by the Board of Directors, and which record
date shall not be more than ten (10) days after the date upon which the
resolution fixing the record date is adopted by the Board of Directors. Any
stockholder of record seeking to have the stockholders authorize or take
corporate action by written consent shall, by written notice to the secretary,
request the Board of Directors to fix a record date. The Board of Directors
shall promptly, but in all events within ten (10) days after the date on which
such a request is received, adopt a resolution fixing the record date. If no
record date has been fixed by the Board of Directors within such ten (10) day
period, the record date for determining stockholders entitled to consent to
corporate action in writing without a meeting, when no prior action by the Board
of Directors is required by applicable law, shall be the first date on which a
signed written consent setting forth the action taken or proposed to be taken is
delivered to the corporation by delivery to its registered office in the State
of California, its principal place of business, or an officer or agent of the
corporation having custody of the book in which proceedings of stockholders'
meetings are recorded, to the attention of the secretary of the corporation.
Delivery shall be by hand or by certified or registered mail, return receipt
requested. If no record date has been fixed by the Board of Directors and prior
action by the Board of Directors is required by applicable law, the record date
for determining stockholders entitled to consent to corporate action in writing
without a meeting shall be at the close of business on the date on which the
Board of Directors adopts the resolution taking such prior action.
SECTION 13. At any annual meeting of the stockholders, only such business
shall be conducted as shall be properly before the meeting. To be properly
before an annual meeting, business must be (a) specified in the notice of
meeting (or any supplement thereto) given by or at the direction of the Board of
Directors, (b) otherwise properly brought before the meeting by or at the
direction of the Board of Directors, or (c) otherwise properly brought before
the meeting by a stockholder. For
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business to be properly brought before an annual meeting by a stockholder, the
stockholder must have given timely notice thereof in writing to the secretary.
To be timely, a stockholder's notice must be delivered to or mailed and received
at the principal place of business of the corporation not less than sixty (60)
days nor more than ninety (90) days prior to the meeting; provided, however,
that in the event that less than seventy (70) days notice or prior public
disclosure of the date of the meeting is given or made to stockholders, notice
by the stockholder to be timely must be received not later than the close of
business on the tenth day following the day on which such notice of the date of
the meeting was mailed or such public disclosure was made. A stockholder's
written notice to the secretary shall set forth as to each matter the
stockholder proposes to bring before the annual meeting (a) a description of the
business desired to be brought before the annual meeting and the reasons for
conducting such business at the annual meeting, (b) the name and address as they
appear on the corporation's books of the stockholder proposing such business,
(c) the class and number of shares of the corporation which are beneficially
owned by such stockholder, and (d) any material interest of such stockholder in
such business. Notwithstanding anything in these Bylaws to the contrary, no
business shall be conducted at any annual meeting unless properly brought before
such meeting in accordance with the procedures set forth in this Section 13. The
chairman of the meeting shall, it the facts warrant, determine and declare to
the meeting that business was not properly brought before the meeting in
accordance with the provisions of this Section 13 and if it shall be so
determined, the chairman of the meeting shall so declare this to the meeting and
such business not properly brought before the meeting shall not be transacted.
SECTION 14. Special meetings of stockholders shall be called by the president
or secretary at the request in writing of a majority of the Board of Directors
or upon written application of one or more stockholders who hold at least fifty
percent (50%) of the capital stock entitled to vote at such meeting. Such
request of the Board of Directors or written application of the stockholders
shall state the purpose or purposes of the proposed special meeting. The place,
date and time of any special meeting shall be determined by the Board of
Directors. Such determination shall include the record date for determining the
stockholders having the right to notice of and to vote at such meeting.
ARTICLE III
DIRECTORS
SECTION 1. The number of directors which shall constitute the whole board
shall not be less than five (5) nor more than eleven (11). The first board
shall consist of seven (7) directors. Thereafter, within the limits above
specified, the number of directors shall be determined by resolution of the
Board of Directors or by the stockholders at the annual meeting of the
stockholders, except as provided in Section 2 of this Article, and each director
elected shall hold office until his successor is elected and qualified.
Directors need not be stockholders.
SECTION 2. Vacancies and newly created directorships resulting from any
increase in the authorized number of directors may be filled by a majority of
the directors then in office, though less than a quorum, or by a sole remaining
director, and the directors so chosen shall hold office until the next annual
election and until their successors are duly elected and shall qualify, unless
sooner displaced. If there are no directors in office, then an election of
directors may be held in the manner provided by statute. If, at the time of
filling any vacancy or any newly created directorship, the directors then in
office shall constitute less than a majority of the whole board (as constituted
immediately prior to any such increase), a court or governmental agency of
competent jurisdiction may, upon application of any stockholder or stockholders
holding at least ten (10) percent of the total number of the shares at the time
outstanding having the right to vote for such directors, summarily order an
election to be held to fill any such vacancies or newly created directorships,
or to replace the directors chosen by the directors then in office.
SECTION 3. The business of the corporation shall be managed by or under the
direction of its board of directors which may exercise all such powers of the
corporation and do all such lawful acts and things as are not by statute or by
the certificate of incorporation or by these bylaws directed or required to be
exercised or done by the stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
SECTION 4. The Board of Directors of the corporation may hold meetings, both
regular and special, either within or without the State of California.
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SECTION 5. The first meeting of each newly elected Board of Directors shall
be held at such time and place as shall be fixed by the vote of the stockholders
at the annual meting and no notice of such meeting shall be necessary to the
newly elected directors in order legally to constitute the meeting, provided a
quorum shall be present. In the event of the failure of the stockholders to fix
the time or place of such first meeting of the newly elected Board of Directors,
or in the event such meeting is not held at the time and place so fixed by the
stockholders, the meeting may be held at such time and place as shall be
specified in a notice given as hereinafter provided for special meetings of the
Board of Directors, or as shall be specified in a written waiver signed by all
of the directors.
SECTION 6. Regular meetings of the Board of Directors may be held without
notice at such time and at such place as shall from time to time be determined
by the board.
SECTION 7. Special meetings of the Board of Directors may be called by the
chairman or the president on four (4) days' notice to each director by mail or
forty-eight (48) hours' notice to each director either personally or by
telephone or telegram; special meetings shall be called by the chairman or the
president or secretary in like manner and on like notice on the written request
of two directors unless the Board of Directors consists of only one director, in
which case special meetings shall be called by the chairman or the president or
secretary in like manner and on like notice on the written request of the sole
director.
SECTION 8. At all meetings of the Board of Directors a majority of the
authorized number of directors shall constitute a quorum for the transaction of
business and the act of a majority of the directors present at any meeting at
which there is a quorum shall be the act of the Board of Directors, except as
may be otherwise specifically provided by statute or by the certificate of
incorporation. If a quorum shall not be present at any meeting of the Board of
Directors, the directors present thereat may adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present.
SECTION 9. Unless otherwise restricted by the certificate of incorporation of
these bylaws, any action required or permitted to be taken at any meeting of the
Board of Directors or of any committee thereof may be taken without a meeting,
if all members of the Board of Directors or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the Board of Directors or committee.
SECTION 10. Unless otherwise restricted by the articles of incorporation of
these bylaws, members of the Board of Directors, or any committee designated by
the Board of Directors, may participate in a meeting of the Board of Directors,
or any committee, by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and such participation in a meeting shall constitute presence in
person at the meeting.
COMMITTEES OF DIRECTORS
SECTION 11. The Board of Directors may, by resolution passed by a majority of
the whole board, designate one or more committees, each committee to consist of
one or more of the directors of the corporation. The Board of Directors may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee.
In the absence or disqualification of a member of a committee, the member or
members thereof present at any meeting and not disqualified from voting, whether
or not he or they constitute a quorum, may unanimously appoint another member of
the Board of Directors to act at the meeting in the place of any such absent or
disqualified member.
Any such committee, to the extent provided in the resolution of the Board of
Directors, shall have and may exercise all the powers and authority of the Board
of Directors in the management of the business and affairs of the corporation,
and may authorize the seal of the corporation to be affixed to all papers which
may require it; but no such committee shall have the power or authority in
reference to amending the articles of incorporation, adopting an agreement of
merger or consolidation, recommending to the stockholders the sale, lease or
exchange of all or substantially all of the corporation's property and assets,
recommending to the stockholders a dissolution of the corporation or a
revocation of a dissolution, or amending the bylaws of the corporation; and,
unless the resolution or the certificate of incorporation expressly so provide,
no such committee shall have the power or authority to declare a dividend or to
authorize the issuance of stock. Such committee or
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committees shall have such name or names as may be determined from time to time
by resolution adopted by the Board of Directors.
SECTION 12. Each committee shall keep regular minutes of its meetings and
report the same to the Board of Directors when required.
COMPENSATION OF DIRECTORS
SECTION 13. Unless otherwise restricted by the articles of incorporation or
these bylaws, the Board of Directors shall have the authority to fix the
compensation of directors. The directors may be paid their expenses, if any, of
attendance at each meeting of the Board of Directors and may be paid a fixed sum
for attendance at each meeting of the Board of Directors or a stated salary as
director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
REMOVAL OF DIRECTORS
SECTION 14. Unless otherwise restricted by the articles of incorporation or
bylaw, any director or the entire Board of Directors may be removed, with or
without cause, by the holders of a majority of shares entitled to vote at an
election of directors or as otherwise provided under California law.
STOCKHOLDER NOMINATION OF DIRECTORS
SECTION 15. Only persons who are nominated in accordance with the procedures
set forth in this Section 15 shall be eligible for election as directors of the
corporation by the stockholders. Nominations of persons for election to the
Board of Directors may be made at a meeting of stockholders by or at the
direction of the Board of Directors or by any stockholder of the corporation
entitled to vote for the election of directors at the meeting who complies with
the notice procedures set forth in this Section 15. Such nominations, other than
those made by or at the direction of the Board of Directors, shall be made
pursuant to timely notice in writing to the secretary. To be timely, a
stockholder's notice shall be delivered to or mailed and received at the
principal place of business of the corporation not less than sixty (60) nor more
than ninety (90) days prior to the meeting; provided, however, that in the event
that less than seventy (70) days notice or prior public disclosure of the date
of the meeting is given or made to stockholders, notice by the stockholder to be
timely must be so received not less than the close of business on the tenth day
following the day on which such notice of the date of the meeting was mailed or
such public disclosure was made. Such stockholder's notice shall set forth (a)
as to each person whom the stockholder proposes to nominate for election or re-
election as a director (i) the name, age, business address and residence address
of such person, (ii) the principal occupation or employment of such person,
(iii) the class and number of shares of the corporation which are beneficially
owned by such person and (iv) any other information relating to such person that
is required to be disclosed in solicitations of proxies for election of
directors or is otherwise required in each case pursuant to Regulation 14A under
the Securities and Exchange Act of 1934, as amended (including without
limitation such person's written consent to being named in the proxy statement
as a nominee and to serving as a director if elected); and (b) as to the
stockholder giving the notice (i) the name and address, as they appear on the
corporation's books of such stockholder, (ii) the class and number of shares of
the corporation which are beneficially owned by such stockholder, and (iii) any
material relationship of the stockholder to the person the stockholder proposes
to nominate. At the request of the Board of Directors any person nominated by
the Board of Directors for election as a director shall furnish to the secretary
that information required to be set forth in a stockholder's notice of
nomination which pertains to the nominee. No person shall be eligible for
election as a director of the corporation unless nominated in accordance with
the procedures set forth in this Section 15. The chairman of the meeting shall,
if the facts warrant, determine and declare to the meeting that a nomination was
not made in accordance with the provisions of this Section 15 and if it shall be
so determined, the chairman shall so declare this to the meeting and the
defective nomination shall be disregarded.
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ARTICLE IV
NOTICES
SECTION 1. Whenever, under the provisions of the statutes or of the articles
of incorporation or of these bylaws, notice is required to be given to any
director or stockholder, it shall not be construed to mean personal notice, but
such notice may be given in writing, by mail, addressed to such director or
stockholder, at his address as it appears on the records of the corporation,
with postage thereon prepaid, and such notice shall be deemed to be given at the
time when the same shall be deposited in the United States mail. Notice to
directors may also be given by telegram.
SECTION 2. Whenever any notice is required to be given under the provisions
of the statutes or of the articles of incorporation or of these bylaws, a waiver
thereof in writing, signed by the person or persons entitled to said notice,
whether before or after the time stated therein, shall be deemed equivalent
thereto.
ARTICLE V
OFFICERS
SECTION 1. The officers of the corporation shall be chosen by the Board of
Directors and shall be a president and a secretary. The Board of Directors may
elect from among its members a Chairman of the Board and a Vice Chairman of the
Board. The Board of Directors may also choose one or more vice presidents,
assistant secretaries and assistant treasurers. Any number of offices may be
held by the same person, unless the certificate of incorporation or these bylaws
otherwise provide.
SECTION 2. The Board of Directors at its first meeting after each annual
meeting of stockholders shall choose a president and a secretary and may choose
one or more vice presidents and a treasurer.
SECTION 3. The Board of Directors may appoint such other officers and agents
as it shall deem necessary who shall hold their offices for such terms and shall
exercise such powers and perform such duties as shall be determined from time to
time by the Board.
SECTION 4. The salaries of all officers and agents of the corporation shall
be fixed by the Board of Directors and no officer shall be prevented from
receiving such salary by reason of the fact that such officer is also a director
of the corporation.
SECTION 5. The officers of the corporation shall hold office until their
successors are chosen and qualify. Any officer elected or appointed by the Board
of Directors may be removed at any time by the affirmative vote of a majority of
the Board of Directors. Any vacancy occurring in any office of the corporation
shall be filled by the Board of Directors.
THE CHAIRMAN OF THE BOARD
SECTION 6. The Chairman of the Board, if any, shall preside at all meetings
of the Board of Directors and of the stockholders at which he shall be present.
He shall have and may exercise such powers as are, from time to time, assigned
to him by the Board and as may be provided by law.
SECTION 7. In the absence of the Chairman of the Board, the Vice Chairman of
the Board, if any, shall preside at all meetings of the Board of Directors and
of the stockholders at which he shall be present. He shall have and may exercise
such powers as are, from time to time, assigned to him by the Board and as may
be provided by law.
THE PRESIDENT AND VICE-PRESIDENT
SECTION 8. The president shall be the chief executive officer of the
corporation; and in the absence of the Chairman and Vice Chairman of the Board
he shall preside at all meetings of the stockholders and the Board of Directors;
he shall have general and active management of the business of the corporation
and shall see that all orders and resolutions of the Board of Directors are
carried into effect.
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SECTION 9. He shall execute bonds, mortgages and other contracts requiring a
seal, under the seal of the corporation, except where required or permitted by
law to be otherwise signed and executed and except where the signing and
execution thereof shall be expressly delegated by the Board of Directors to some
other officer or agent of the corporation.
SECTION 10. In the absence of the president or in the event of his inability
or refusal to act, the vice president, if any (or in the event there be more
than one vice president, the vice presidents in the order designated by the
directors, or in the absence of any designation, then in the order of their
election) shall perform the duties of the president, and when so acting, shall
have all the powers of and be subject to all the restrictions upon the
president. The vice presidents shall perform such other duties and have such
other powers as the Board of Directors may from time to time prescribe.
THE SECRETARY AND ASSISTANT SECRETARY
SECTION 11. The secretary shall attend all meetings of the Board of Directors
and all meetings of the stockholders and record all the proceedings of the
meetings of the corporation and of the Board of Directors in a book to be kept
for that purpose and shall perform like duties for the standing committees when
required. The secretary shall give, or cause to be given, notice of all meetings
of the stockholders and special meetings of the Board of Directors, and shall
perform such other duties as may be prescribed by the Board of Directors or
president, under whose supervision he shall be. The secretary shall have custody
of the corporate seal of the corporation and he, or an assistant secretary,
shall have authority to affix the same to any instrument requiring it and when
so affixed, it may be attested by his signature or by the signature of such
assistant secretary. The Board of Directors may give general authority to any
other officer to affix the seal of the corporation and to attest the affixing by
his signature.
SECTION 12. The assistant secretary, or if there be more than one, the
assistant secretaries in the order determined by the Board of Directors (or if
there be no such determination, then in the order of their election) shall, in
the absence of the secretary or in the event of the secretary's inability or
refusal to act, perform the duties and exercise the powers of the secretary and
shall perform such other duties and have such other powers as the Board of
Directors may from time to time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
SECTION 13. The treasurer shall have the custody of the corporate funds and
securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the corporation in
such depositories as may be designated by the Board of Directors.
SECTION 14. The treasurer shall disburse the funds of the corporation as may
be ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the president and the Board of Directors, at
its regular meetings, or when the Board of Directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation.
SECTION 15. If required by the Board of Directors, the treasurer shall give
the corporation a bond (which shall be renewed every six years) in such sum and
with such surety or sureties as shall be satisfactory to the Board of Directors
for the faithful performance of the duties of his office and for the restoration
to the corporation, in case of his death, resignation, retirement or removal
from office, of all books, papers, vouchers, money and other property of
whatever kind in his possession or under his control belonging to the
corporation.
SECTION 16. The assistant treasurer, or if there shall be more than one, the
assistant treasurers in the order determined by the Board of Directors (or if
there be no such determination, then in the order of their election) shall, in
the absence of the treasurer or in the event of his inability or refusal to act,
perform the duties and exercise the powers of the treasurer and shall perform
such other duties and have such other powers as the Board of Directors may from
time to time prescribe.
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ARTICLE VI
CERTIFICATE OF STOCK
SECTION 1. Every holder of stock in the corporation shall be entitled to have
a certificate, signed by, or in the name of the corporation by, the Chairman or
Vice Chairman of the Board of Directors, or the president or a vice-president
and the treasurer or an assistant treasurer, or the secretary or an assistant
secretary of the corporation, certifying the number of shares owned by him in
the corporation.
Certificates may be issued for partly paid shares and in such case upon the
face or back of the certificates issued to represent any such partly paid
shares, the total amount of the consideration to be paid therefor, and the
amount paid thereon shall be specified.
If the corporation shall be authorized to issue more than one class of stock
or more than one series of any class, the powers, designations, preferences and
relative, participating, optional or other special rights of each class of stock
or series thereof and the qualification, limitations or restrictions of such
preferences and/or rights shall be set forth in full or summarized on the face
or back of the certificate which the corporation shall issue to represent such
class or series of stock, provided that in lieu of the foregoing requirements,
there may be set forth on the face or back of the certificate which the
corporation shall issue to represent such class or series of stock, a statement
that the corporation will furnish without charge to each stockholder who so
requests the powers, designations, preferences and relative, participating,
optional or other special rights of each class of stock or series thereof and
the qualifications, limitations or restrictions of such preferences and/or
rights.
SECTION 2. Any of or all the signatures on the certificate may be facsimile.
In case any officer, transfer agent or registrar who has signed or whose
facsimile signature has been placed upon a certificate shall have ceased to be
such officer, transfer agent or registrar before such certificate is issued, it
may be issued by the corporation with the same effect as if he were such
officer, transfer agent or registrar at the date of issue.
LOST CERTIFICATES
SECTION 3. The Board of Directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost, stolen or destroyed. When authorizing such
issue of a new certificate or certificates, the Board of Directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate or certificates, or his
legal representative, to advertise the same in such manner as it shall require
and/or to give the corporation a bond in such sum as it may direct as indemnity
against any claim that may be made against the corporation with respect to the
certificate alleged to have been lost, stolen or destroyed.
TRANSFER OF STOCK
SECTION 4. Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignation or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
FIXING RECORD DATE
SECTION 5. In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholder or any
adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix, in advance, a record date,
which shall not be more than sixty nor less than ten days before the date of
such meeting, nor more than sixty days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote at a
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meeting of stockholders shall apply to any adjournment of the meeting: provided,
however, that the Board of Directors may fix a new record date for the adjourned
meeting.
REGISTERED STOCKHOLDERS
SECTION 6. The corporation shall be entitled to recognize the exclusive right
of a person registered on its books as the owner of shares to receive dividends,
and to vote as such owner, and to hold liable for calls and assessments a person
registered on its books as the owner of shares and shall not be bound to
recognize any equitable or other claim to or interest in such share or shares on
the part of any other person, whether or not it shall have express or other
notice thereof, except as otherwise provided by the laws of California.
ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
SECTION 1. Dividends upon the capital stock of the corporation, subject to
the provisions of the certificate of incorporation, if any, may be declared by
the Board of Directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property, or in shares of the capital stock,
subject to the provisions of the certificate of incorporation.
SECTION 2. Before payment of any dividend, there may be set aside out of any
funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purposes as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
CHECKS
SECTION 3. All checks or demands for money and notes of the corporation shall
be signed by such officer or officers or such other person or persons as the
Board of Directors may from time to time designate.
FISCAL YEAR
SECTION 4. The fiscal year of the corporation shall be fixed by resolution of
the Board of Directors.
SEAL
SECTION 5. The Board of Directors may adopt a corporate seal having inscribed
thereon the name of the corporation, the year of its organization. The seal may
be used by causing it or a facsimile thereof to be impressed or affixed or
reproduced or otherwise.
BOOKS AND RECORDS
SECTION 6. Any stockholder or any director shall have the right to inspect
the books and records of the corporation to the full extent permitted by, and
subject to the terms and conditions of, the California Corporation Code.
INDEMNIFICATION
SECTION 7. The corporation shall indemnify to the full extent permitted by,
and in the manner permissible under the laws of the State of California, any
person made or threatened to be made, a party to an action or proceeding,
whether criminal, civil, administrative or investigative, by reason of the fact
that he, his testator or intestate is or was a director or officer of the
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corporation or any predecessor of the corporation, or served any other
enterprise as a director or officer at the request of the corporation or any
predecessor of the corporation.
The foregoing provisions of this section shall be deemed to be a contract
between the corporation and each director and officer who serves in such
capacity at any time while this bylaw is in effect, and any repeal or
modification thereof shall not affect any rights or obligations then existing
with respect to any state of facts then or theretofore existing or any action,
suit or proceeding theretofore or thereafter brought based in whole or in part
upon any such state of facts.
Expenses incurred by a director of the corporation in defending a civil or
criminal action, suit or proceeding by reason of the fact that he is or was a
director of the corporation (or was serving at the corporation's request as a
director or officer of another corporation) shall be paid by the corporation in
advance of the final disposition of such action, suit or proceeding upon receipt
of an undertaking by or on behalf of such director to repay such amount if it
shall ultimately be determined that he is not entitled to be indemnified by the
corporation as authorized by relevant sections of the California Corporations
Code.
The foregoing indemnification rights shall not be deemed exclusive of any
other rights to which any director or officer may be entitled apart from the
provisions of Article VII.
The Board of Directors in its discretion shall have power on behalf of the
corporation to indemnify any person, other than a director or officer, made a
party to any action, suit or proceeding by reason of the fact that he, his
testator or intestate, is or was an employee of the corporation.
ARTICLE VIII
AMENDMENTS
SECTION 1. These bylaws may be altered, amended or repealed, or new bylaws
may be adopted by the stockholders or by the Board of Directors, when such power
is conferred upon the Board of Directors by the certificate of incorporation at
any regular meeting of the stockholders or of the Board of Directors, or at any
special meeting of the stockholders or of the Board of Directors, if notice of
such alteration, amendment, repeal or adoption of new bylaws be contained in the
notice of such special meeting. If the power to adopt, amend or repeal bylaws is
conferred upon the Board of Directors by the certificate or incorporation it
shall not divest or limit the power of the stockholders to adopt, amend or
repeal bylaws.
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MYCOGEN CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
P The undersigned hereby appoints Carlton J. Eibl, the Secretary of the
R Company, as proxy, with full power of substitution, to vote all shares of
O stock which the undersigned is entitled to vote at the Annual Meeting of
X Stockholders of Mycogen Corporation to be held on Thursday, April 20, 1995,
Y or at any adjournment(s) thereof, as specified on the reverse side, and to
vote in his discretion on such other business as may properly come before
the Meeting and any adjournment(s) thereof.
(Please sign and date on reverse side) SEE REVERSE SIDE
<PAGE>
Please mark
[X] votes as in
this example.
Unless otherwise specified by the undersigned, this proxy will be voted in the
manner directed below, but if no contrary direction is made, it will be voted
FOR the director nominees listed below, and by the proxyholder at his discretion
as to any other matters properly transacted at the Meeting or any adjournment(s)
thereof.
1. Election of Directors:
NOMINEES: Thomas J. Cable, Jerry D. Caulder,
David H. Rammler, A. John Speziale and George R. Hill
FOR WITHHELD
[_] [_] MARK HERE
IF YOU PLAN [_]
TO ATTEND
THE MEETING
MARK HERE
FOR ADDRESS [_]
[_] _____________________________ CHANGE AND
For all nominees except above NOTE BELOW
FOR AGAINST ABSTAIN
2. To approve the amendment to the Company's [_] [_] [_]
1992 Stock Option Plan to increase the
number of shares of Common Stock reserved
for issuance by 1,000,000 shares.
3. To approve the amendment to the Company's [_] [_] [_]
1990 Restricted Stock Issuance Plan to
increase the number of shares of Common
Stock reserved for issuance by 150,000
shares.
4. To approve the reincorporation of the [_] [_] [_]
Company from Delaware to California.
5. Ratification and approval of the selection of [_] [_] [_]
Ernst & Young LLP as independent auditors
for the fiscal year ending December 31,
1995.
6. The undersigned confers upon the proxy
hereby appointed discretion to transact any
other business which may properly come
before the meeting or any adjournment(s)
thereof.
Please sign exactly as name appears on your
stock certificate. If signing as attorney,
executor, administrator, trustee, or
guardian, please give full title as such, and
if signing for an organization, give your title.
When shares are in the names of more than one
person, each should sign.
Signature: _______________________Date____________
Signature: _______________________Date____________
