-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BD/iTeTnskqRJnIaxHeuzITV9IsAVd2sw+seRtnM206SwoDo8rPrdG7SnhQmC5m/ M+W8rDcS7ePQm4ksJqWAVg== 0001047469-98-035537.txt : 19980928 0001047469-98-035537.hdr.sgml : 19980928 ACCESSION NUMBER: 0001047469-98-035537 CONFORMED SUBMISSION TYPE: SC 14D1/A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 19980925 SROS: NASD SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: MYCOGEN CORP CENTRAL INDEX KEY: 0000813742 STANDARD INDUSTRIAL CLASSIFICATION: AGRICULTURE SERVICES [0700] IRS NUMBER: 953802654 STATE OF INCORPORATION: CA FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: SC 14D1/A SEC ACT: SEC FILE NUMBER: 005-39279 FILM NUMBER: 98715201 BUSINESS ADDRESS: STREET 1: 5501 OBERLIN DR CITY: SAN DIEGO STATE: CA ZIP: 92121 BUSINESS PHONE: 6194538030 MAIL ADDRESS: STREET 1: 5501 OBERLIN DRIVE CITY: SAN DIEGO STATE: CA ZIP: 92121 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: DOW CHEMICAL CO /DE/ CENTRAL INDEX KEY: 0000029915 STANDARD INDUSTRIAL CLASSIFICATION: CHEMICALS & ALLIED PRODUCTS [2800] IRS NUMBER: 381285128 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D1/A BUSINESS ADDRESS: STREET 1: 2030 DOW CENTER CITY: MIDLAND STATE: MI ZIP: 48674-2030 BUSINESS PHONE: 5176361000 MAIL ADDRESS: STREET 1: 2030 DOW CENTER CITY: MIDLAND STATE: MI ZIP: 48674-2030 SC 14D1/A 1 SC 14D1/A - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------------- SCHEDULE 14D-1 Tender Offer Statement Pursuant to Section 14(d)(1) of the Securities Exchange Act of 1934 (Amendment No. 1) ----------------------- `MYCOGEN CORPORATION (Name of Subject Company) THE DOW CHEMICAL COMPANY ROFAN SERVICES INC. CENTEN AG INC. DOW AGROSCIENCES LLC and AGROSCIENCES ACQUISITION INC. (Bidder) COMMON STOCK PAR VALUE $0.001 PER SHARE (INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS) (Title of Class of Securities) 628452 10 4 (CUSIP Number of Class of Securities) John Scriven Jane M. Gootee Brian G. Taylorson Vice President, General Vice President President Counsel and Secretary Rofan Services Inc. Centen Ag Inc. The Dow Chemical Company 2030 Dow Center 2030 Dow Center 2030 Dow Center Midland, Michigan 48674 Midland, Michigan 48674 Midland, Michigan 48674 (517) 636-1000 (517) 636-1000 (517) 636-1000 Louis W. Pribila Brian G. Taylorson Vice President, Secretary President and General Counsel AgroSciences Acquisition Inc. Dow AgroSciences LLC 2030 Dow Center 9330 Zionsville Road Midland, Michigan 48674 Indianapolis, Indiana 46268 (517) 636-1000 (317) 337-3000 with a copy to: Scott J. Davis James T. Lidbury Mayer, Brown & Platt 190 South LaSalle Street Chicago, Illinois 60603 (312) 782-0600 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications on Behalf of Bidder)
CALCULATION OF FILING FEE - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Transaction Valuation* Amount of Filing Fee - ------------------------------------------------------------------------------- $374,232,918 $74,847 - ------------------------------------------------------------------------------- - -------------------------------------------------------------------------------
* For purposes of calculating the filing fee only. This amount assumes the purchase of 11,532,381 shares of common stock (the "Shares") of the subject company at $28.00 in cash per Share as well as the purchase of 3,568,635 Shares subject to outstanding options at $28.00 per Share less the average exercise price per Share subject to such options of $13.6174. /X/ Check box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. Amount Previously Paid: $74,847 Form or Registration Number: Schedule 14D-1 Filing Party: The Dow Chemical Company, Rofan Services Inc., Centen Ag Inc., Dow AgroSciences LLC and AgroSciences Acquisition Inc. Date Filed: September 4, 1998 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Page 1 of 8 Pages Exhibit Index is located on Page 8 CUSIP No.: 628452 10 4 14D-1 - ------------------------------------------------------------------------------- 1. Name of Reporting Person: The Dow Chemical Company S.S. or I.R.S. Identification Nos. of Above Person: 38-1285128 Name of Reporting Person: Rofan Services Inc. S.S. or I.R.S. Identification Nos. of Above Person: 38-2853855 Name of Reporting Person: Centen Ag Inc. S.S. or I.R.S. Identification Nos. of Above Person: 38-3355904 Name of Reporting Person: Dow AgroSciences LLC S.S. or I.R.S. Identification Nos. of Above Person: 35-1781118 Name of Reporting Person: AgroSciences Acquisition Inc. S.S. or I.R.S. Identification Nos. of Above Person: 38-3409607 - ------------------------------------------------------------------------------- 2. Check the Appropriate Box if a Member of a Group: (a) / / (b) / / - ------------------------------------------------------------------------------- 3. SEC Use Only: - ------------------------------------------------------------------------------- 4. Sources of Funds: WC - ------------------------------------------------------------------------------- 5. Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(e) or 2(f): / / - ------------------------------------------------------------------------------- 6. Citizenship or Place of Organization: Delaware (The Dow Chemical Company) Delaware (Rofan Services Inc.) Delaware (Centen Ag Inc.) Delaware (Dow AgroSciences LLC) Delaware (AgroSciences Acquisition Inc.) - ------------------------------------------------------------------------------- 7. Aggregate Amount Beneficially Owned by Each Reporting Person: 24,766,157 Shares (except Centen Ag Inc. and AgroSciences Acquisition Inc., which beneficially own no shares) - ------------------------------------------------------------------------------- 8. Check if the Aggregate in Row (7) Excludes Certain Shares: / / - ------------------------------------------------------------------------------- 9. Percent of Class Represented by Amount in Row (7): 68.3% - ------------------------------------------------------------------------------- 10. Type of Reporting Person: CO (The Dow Chemical Company) CO (Rofan Services Inc.) CO (Centen Ag Inc.) OO (Dow AgroSciences LLC) CO (AgroSciences Acquisition Inc.) - ------------------------------------------------------------------------------- Page 2 of 8 ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY. The sixth full paragraph on page 19 of the Offer to Purchase is hereby amended by adding the following to the end thereof: This report (the "Management Report") supported the projections included in the Wasserstein Perella materials, which were more favorable to the Company than the estimates presented to the Board in December 1997. In this regard, the Management Report stated that the Company's North American seed business is poised to significantly expand distribution channels and increase market share reach. The Management Report also stated that the Company believes that its internal breeding programs are proving to be competitive. The Management Report noted the Company's recent successes in accessing South American markets (primarily Brazil) and in attracting interest from potential partners in Europe and South Africa. It was also noted that the Company was exploring possible alliances covering alfalfa, turf and vegetables. The Management Report further noted the Company's validation of plant disease resistance technology which has been in-licensed by the Company. The Company's recent successes in developing and acquiring access to potentially valuable new technologies were briefly summarized as were the Company's recent patent litigation successes. The Management Report also indicated that substantial additional investment was necessary in research and development to develop the Company's technology platforms. In light of these developments, the Management Report concluded that the Company's management supported more favorable projected results over a ten-year time frame for the business than those reflected in the projections which had been presented to the Board in December 1997. Paragraph (ix) on page 22 of the Offer to Purchase is hereby amended and restated as follows: (ix) the written opinion of Wasserstein Perella delivered to the Special Committee on August 31, 1998 (the "Wasserstein Perella Opinion") to the effect that, subject to the various assumptions and limitations set forth in the Wasserstein Perella Opinion, the $28.00 cash price to be received by the holders of shares of Common Stock (other than TDCC or its affiliates) pursuant to the Merger Agreement is fair to such holders from a financial point of view, and the report and analysis presented by Wasserstein Perella. In considering the Wasserstein Perella Opinion, the Special Committee noted that the $28.00 cash price was below the range of valuations derived by Wasserstein Perella for comparable transactions. In this regard, the Special Committee noted Wasserstein Perella's explanation that there were only four comparable transactions and that the comparability of those transactions was limited because all of the other parties whose securities were acquired were significantly larger companies in terms of sales, had greater market shares with respect to their principal products and were profitable companies. Wasserstein Perella advised the Special Committee that comparable transactions were only one of the means of determining value and in this case not a Page 3 of 8 particularly useful means to do so in light of the foregoing factors. The full text of the Wasserstein Perella Opinion, which sets forth among other things, assumptions made, matters considered and limitations on the review undertaken, is attached hereto as Annex A and is incorporated herein by reference. The Wasserstein Perella Opinion is directed to the Special Committee, addresses only the fairness of the consideration to be received by the Minority Stockholders from a financial point of view and does not constitute a recommendation to any such stockholder as to whether such stockholder should accept the Offer and tender its Shares. STOCKHOLDERS ARE URGED TO CAREFULLY READ THE WASSERSTEIN PERELLA OPINION AND THE "OPINION OF WASSERSTEIN PERELLA" SECTION SET FORTH BELOW IN THEIR ENTIRETY; The final paragraph on page 29 and extending to the top of page 30 of the Offer to Purchase is hereby amended and restated as follows: THE FULL TEXT OF THE WRITTEN OPINION OF WASSERSTEIN PERELLA, DATED AUGUST 31, 1998, WHICH SETS FORTH AMONG OTHER THINGS THE OPINIONS EXPRESSED, THE ASSUMPTIONS MADE, PROCEDURES FOLLOWED, MATTERS CONSIDERED AND LIMITATIONS OF THE REVIEW UNDERTAKEN IN CONNECTION WITH THE OPINION, IS ATTACHED AS SCHEDULE III AND HOLDERS OF THE SHARES ARE URGED TO READ IT IN ITS ENTIRETY. WASSERSTEIN PERELLA'S OPINION DOES NOT CONSTITUTE A RECOMMENDATION TO ANY HOLDER OF SHARES AS TO WHETHER OR NOT SUCH HOLDER SHOULD TENDER SHARES PURSUANT TO THE OFFER OR HOW SUCH HOLDER SHOULD VOTE OR OTHERWISE ACT IN RESPECT OF THE OFFER, THE MERGER AGREEMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY AND SHOULD NOT BE RELIED UPON BY ANY HOLDER AS SUCH A RECOMMENDATION. THE SUMMARY OF THE OPINION OF WASSERSTEIN PERELLA SET FORTH HEREIN IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF THE OPINION ATTACHED AS SCHEDULE III. The following paragraphs are hereby added immediately before the first full paragraph on page 30 of the Offer to Purchase. Preliminary drafts dated June 25, 1998, July 20, 1998, July 27, 1998 and August 3, 1998 of the final valuation report dated August 31, 1998 were presented to and discussed with the Special Committee on or about such dates. See "Background of the Offer" above. Between June 25, 1998 and August 31, 1998, Wasserstein Perella conducted due diligence with respect to the Company to refine its valuation analysis. Based upon its ongoing due diligence, Wasserstein Perella refined the discount rate, perpetuity growth rate and EBIT exit multiple assumptions used in the discounted cash flow analyses for the Company's various business segments, which had the effect of reducing the per share value of the Company in some instances and had the effect of increasing the per share value of the Company in other instances. The discounted cash flow analyses in the preliminary presentations did not include certain cost savings, synergies, research and development costs, litigation expenses and other miscellaneous items that were taken into account in the August 31, 1998 report, which had the effect of reducing the per share value of the Company in some instances and had the effect of increasing the per share value of the Company in other instances. The draft reports dated June 25, 1998, July 20, 1998 and July 27, 1998 were preliminary in nature and subject to revision and completion and, as a result, were not material to the Special Committee's negotiations of the terms of the contemplated transactions or its determination that the Merger Agreement, the Offer, the Merger and the other transactions contemplated by the Merger Agreement are advisable and fair to, and in the best interests of, the Company and the Minority Stockholders. On the other hand, the Special Committee did consider the August 3, 1998 preliminary report to be material to its negotiations of the contemplated transactions and its determination that the Merger Agreement, the Offer, the Merger and the other transactions contemplated by the Merger Agreement are advisable and fair to, and in the best interests of, the Company and the Minority Stockholders. However, the August 3, 1998 preliminary report did not include the impact of the recent erosion of the Company's market share which was reflected in Wasserstein Perella's final valuation report. As stated in Wasserstein Perella's August 31, 1998 report, compilation of the Company's fiscal year 1998 financial results revealed that North American and Argentine seed sales and market share would be significantly below projected levels. The discounted cash flow analysis in Wasserstein Perella's August 31, 1998 report took this new information into account and reduced the projected market share growth assumptions, which had the effect of reducing the per share value of the Company derived from the discounted cash flow analysis by approximately $1.00 per Share. Page 4 of 8 The following paragraph is hereby added immediately following the first full paragraph on page 34 of the Offer to Purchase: Wasserstein Perella advised the Special Committee that the comparability of these transactions to the Offer and the Merger was limited by the fact that each of the four companies whose securities were acquired was substantially larger than the Company in terms of sales, had a greater market share than the Company with respect to its principal products and was profitable. The paragraph appearing under the heading "Composite Range" on page 35 of the Offer to Purchase is hereby amended and restated as follows: Composite Range. At the August 31, 1998 meeting of the Special Committee, Wasserstein Perella provided the Special Committee with a composite range of per share values of $25.00 to $35.00. In deriving this composite range, Wasserstein Perella applied its professional judgment to the foregoing analyses taking into account, among other things, that (i) the Company historically has failed to achieve its operating projections and the projections provided to Wasserstein Perella by management of the Company were significantly higher than those included in the Company's 1997 business plan, (ii) the Company is projecting net operating losses for the next several years, (iii) due to the fact that the Company is projecting net losses for the next several years, the inherent uncertainty associated with the success and timing of scientific research activities and the historical uncertainty associated with the Company's cash flows, selection of appropriate discount rates for purposes of the DCF analyses set forth above involved a greater than usual degree of subjective judgment, and (iv) the Company's competitors generally are significantly larger, better established companies with much greater resources, larger market capitalization, greater market share and a history of profits. Page 5 of 8 ITEM 11. MATERIAL TO BE FILED AS EXHIBITS. (a) and (c) A list of exhibits filed with this Schedule 14D-1 is set forth on the Exhibit Index immediately following the signature page of this Schedule 14D-1 and is incorporated herein by reference. (b) and (d) None. (e)-(f) Not Applicable. Page 6 of 8 SIGNATURES After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: September 25, 1998. THE DOW CHEMICAL COMPANY By: /s/ G. MICHAEL LYNCH -------------------------------------- Name: G. Michael Lynch Title: Vice President and Controller ROFAN SERVICES INC. By: /s/ J. PEDRO REINHARD -------------------------------------- Name: J. Pedro Reinhard Title: President CENTEN AG INC. By: /s/ BRIAN G. TAYLORSON -------------------------------------- Name: Brian G. Taylorson Title: President DOW AGROSCIENCES LLC By: /s/ LOUIS W. PRIBILA -------------------------------------- Name: Louis W. Pribila Title: Vice President, Secretary and General Counsel AGROSCIENCES ACQUISITION INC. By: /s/ BRIAN G. TAYLORSON -------------------------------------- Name: Brian G. Taylorson Title: President Page 7 of 8 EXHIBIT INDEX Sequentially Numbered
Exhibit Description Page - ------- ----------- ---- 99(a)(1) Offer to Purchase dated September 4, 1998*. . . . . . . . . . . . . . . . 99(a)(2) Form of Letter of Transmittal*. . . . . . . . . . . . . . . . . . . . . . 99(a)(3) Form of Notice of Guaranteed Delivery*. . . . . . . . . . . . . . . . . . 99(a)(4) Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees, dated September 4, 1998*. . . . . . . . . 99(a)(5) Form of Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and other Nominees* . . . . . . . . . 99(a)(6) Form of Option Election*. . . . . . . . . . . . . . . . . . . . . . . . . 99(a)(7) Form of Stock Purchase Election*. . . . . . . . . . . . . . . . . . . . . 99(a)(8) Form of Restricted Stock Election*. . . . . . . . . . . . . . . . . . . . 99(a)(9) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9*. . . . . . . . . . . . . . . . . . . . . . . . . . 99(a)(10) Form of Summary Advertisement*. . . . . . . . . . . . . . . . . . . . . . 99(c)(1) Agreement and Plan of Merger among Mycogen Corporation, Dow AgroSciences LLC and AgroSciences Acquisition Inc. dated as of August 31, 1998. (Incorporated herein by reference from Exhibit 99.1 to Amendment No. 15 to Schedule 13D filed September 1, 1998)* . . . . . 99(c)(2) Confidentiality Agreement among Mycogen Corporation, The Dow Chemical Company and Dow AgroSciences LLC dated July 16, 1998*. . . . . . . . . . . . . . . . . . . . . . . . . . 99(c)(3) Exchange and Purchase Agreement among Mycogen Corporation, Agrigenetics, Inc., DowElanco and United AgriSeeds, Inc. dated as of January 15, 1996 (Incorporated herein by reference from Exhibit 99(a)(1) to Schedule 13D filed January 25, 1996)* . . . . . . . . . . . 99(c)(4) Amendment to Exchange and Purchase Agreement between Mycogen Corporation and Dow AgroSciences LLC dated as of July 2, 1998. (Incorporated herein by reference from Exhibit 99(1) to Amendment No. 14 to Schedule 13D filed July 23, 1998)*. . . . . . . . . . . . . . 99(c)(5) Technology Agreement among Mycogen Corporation, Agrigenetics, Inc. and DowElanco dated as of February 19, 1996 (Incorporated herein by reference from Exhibit B to Exhibit 99(a)(1) to Schedule 13D filed January 25, 1996)*. . . . . . . . . . . . . . . . . . . . . . . . . . . 99(c)(6) Brassica License and Research Agreement between DowElanco Canada and Mycogen Corporation dated October 30, 1997*.. . . . . . . . . . . . 99(c)(7) Restated Loan Agreement between Dow AgroSciences, LLC and Mycoyen S.A. dated May 15, 1998*. . . . . . . . . . . . . . . . . . . . 99(c)(8) Loan Agreement between DowElanco and Mycogen Corporation dated as of April 1, 1997 (the "Dow Loan Agreement")*. . . . . . . . . . . . . . 99(c)(9) Amendment No. 1 to Dow Loan Agreement dated as of September 29, 1997*.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99(c)(10) Amendment No. 2 to Dow Loan Agreement dated as of November 14, 1997*. . . 99(c)(11) Amendment No. 3 to Dow Loan Agreement dated as of November 18, 1997*. . . 99(c)(12) Amendment No. 4 to Dow Loan Agreement dated as of April 6, 1998*. . . . . 99(c)(13) Amendment No. 5 to Dow Loan Agreement dated as of October 1, 1997*. . . . 99(c)(14) Loan Agreement between Mycogen Corporation and DowElanco dated as of April 1, 1997 (the "Mycogen Loan Agreement)*.. . . . . . . . . . . . 99(c)(15) Amendment No. 1 to Mycogen Loan Agreement dated as of April 6, 1998*. . . 99(c)(16) Amendment No. 2 to Mycogen Loan Agreement dated as of October 1, 1998*. . 99(c)(17) Memorandum of Understanding dated September 3, 1998** . . . . . . . . . . * Previously filed with the original Schedule 14D-1 on September 4, 1998. ** Filed herewith.
Page 8 of 8 EX-99.(C)(17) 2 EXHIBIT 99(C)(17) MEMORANDUM OF UNDERSTANDING WHEREAS, there are now pending several consolidated putative class action lawsuits in the Superior Court for the State of California, for the County of San Diego (the "Court"), consolidated under the lead case of LESLIE SUSSER V. MYCOGEN CORPORATION, ET AL., Case No. 720255 (the "Litigation"), brought on behalf of the public, minority shareholders of Mycogen Corporation ("Mycogen" or the "Company"); WHEREAS, the Complaint in the Litigation challenges certain actions allegedly taken or not taken by defendant Dow Agrosciences LLC ("DAS") the majority shareholder of Mycogen, The Dow Chemical Company ("TDCC"), DAS's parent, and certain members of Mycogen's Board of Directors, some of whom are also affiliated with DAS and TDCC, in connection with DAS's April 30, 1998, request to the board of directors of Mycogen to execute a contractual amendment to permit Mycogen to enter discussions with DAS regarding the possible acquisition by DAS of all of the outstanding shares of Mycogen common stock held by persons and entities other than DAS at a price of $20.50 per share (the "Proposed Transaction"); WHEREAS, following announcement of the Proposed Transaction, the board of directors of Mycogen formed a Special Committee of disinterested directors to negotiate with TDCC and DAS regarding the Proposed Transaction, which Special Committee retained legal and financial advisors to assist in evaluations and negotiations regarding the Proposed Transaction; WHEREAS, following the commencement of the Litigation and the filing of the complaints, plaintiffs' attorneys continued their investigative efforts, communicated at various times with counsel for the defendants, and, together with their independent financial advisor, were provided by defendants' counsel with, INTER ALIA, confidential financial evaluations, analyses and projections prepared by DAS's financial advisor, Salomon Smith Barney, and the Special Committee's financial advisor, Wasserstein Perella and Company, pertaining to Mycogen and the Proposed Transaction, so that plaintiffs, through their counsel, could convey their position as to a fair price for Mycogen shares. Plaintiffs attorneys and their independent financial advisor reviewed these materials and other publicly available materials filed with the Securities and Exchange Commission with respect to Mycogen in connection with their communications with defendants' counsel and their financial advisors; WHEREAS, the documents provided by defendants' counsel to plaintiffs' counsel included a draft letter written in August 1997 by Dr. Jerry Caulder, who had resigned in May 1997 as Chairman of the Board and Chief Executive Officer of Mycogen, and Thomas J. Cable, a director of the Company, alleging that TDCC and DAS had not acted in the best interest of the Company with regard to certain transactions, and various other documents relating to the matters discussed in the draft letter (collectively, the "Caulder documents"); WHEREAS, after review of the materials provided by the defendants to plaintiffs' counsel and their independent financial advisor, and plaintiffs' counsel's independent review of other pertinent materials, plaintiffs' counsel and their independent financial advisor, at the request of attorneys for the defendants, met in person with attorneys and financial advisors for TDCC, DAS and the Special Committee to discuss the Proposed Transaction and the ongoing negotiations between TDCC and DAS and the Special Committee and to present their views; WHEREAS, the pendency of the Litigation and the communications between counsel for plaintiffs and defendants and their respective financial advisors with respect to the above matters, were among the material causal factors that TDCC, DAS and the Special 2 Committee took into account in the course of the negotiations regarding enhancement of the terms of the Proposed Transaction; WHEREAS, on August 31, 1998, Mycogen and DAS jointly announced the execution of a definitive merger agreement (the "Merger Agreement") whereby DAS, through an acquisition subsidiary, will make a tender offer to acquire all of the shares of Mycogen common stock that DAS does not already own for a price of $28.00 per share (the "Tender Offer") and, following the Tender Offer, if DAS and the acquisition subsidiary obtain at least 90% of the total shares of Mycogen (on a fully diluted basis), the acquisition subsidiary will be merged into Mycogen and each remaining shareholder will receive $28.00 per share for each remaining share of Mycogen common stock; WHEREAS, plaintiffs' counsel, after consultation with their independent financial advisor, and after a candid exchange of views with defendants and their financial advisors, have agreed in principle, subject to the review of final transaction documents and confirmatory discovery as further set forth herein, that the enhanced terms of the transaction set forth in the Merger Agreement result in a transaction that is fair to and in the best interests of the plaintiffs and the minority shareholders of Mycogen, taking into account all factors affecting or potentially affected the value and business prospects of Mycogen; WHEREAS, defendants deny that they have committed any wrongdoing but nevertheless believe that is in their best interests to resolve the Litigation on the basis set forth herein, WHEREAS, counsel for the parties have reached an agreement in principle, subject to confirmatory discovery by plaintiffs in the Litigation and the other terms hereof, 3 providing for the settlement of the Litigation (the "Settlement") between and among plaintiffs, on behalf of themselves and the putative class of persons on behalf of whom plaintiffs have brought the Litigation, and all defendants, on the terms and subject to the conditions set forth below; NOW THEREFORE, as a result of the foregoing and the negotiations among counsel to the parties, the parties to the Litigation hereby agree as follows: 1. INCORPORATION OF RECITALS: The foregoing recitals are incorporated into and expressly made a part of this Memorandum of Understanding. 2. STIPULATION AND OTHER SETTLEMENT DOCUMENTS: The parties to the Litigation will attempt in good faith to agree upon and to execute as soon as practicable an appropriate stipulation of settlement (the "Stipulation") and such other documentation as may be required in order to obtain any and all necessary or appropriate court approvals of the Stipulation and the Settlement, upon and consistent with the terms set forth in this Memorandum of Understanding. The Stipulation will expressly provide, INTER ALIA: (1) CLASS CERTIFICATION: for class certification, conditional on final Court approval (as defined herein) of the Settlement, pursuant to Section 382 of the California Code of Civil Procedure of a class consisting of all persons (other than defendants and their affiliates) who owned common stock of Mycogen on April 30, 1998, and their successors in interest and transferees, immediate and remote through and including the closing of the Merger (the "Class"); (2) NO ADMISSION OF WRONGDOING: that all defendants have denied, and continue to deny, that they have committed any violations of law and that they are entering into 4 the Stipulation because the proposed Settlement would eliminate the burden and expense of further litigation; (3) RELEASE OF ALL CLAIMS: for the release of all claims that were asserted or could have been asserted in the Litigation by members of the Class, or any or all of them, and any and all other or additional such claims by or on behalf of Mycogen itself or the stockholders of Mycogen, against TDCC, DAS, Mycogen, the Special Committee, each of the members thereof, each of the current directors of Mycogen and any and all other defendants, as well as each of their present or former officers, directors, employees, agents, attorneys, accountants, financial advisors, commercial bank lenders, investment bankers, representatives, affiliates, associates, parents, subsidiaries, general and limited partners and partnerships, heirs, executors, administrators, successors and assigns, whether known or unknown, under state or federal law, and whether directly, derivatively, representatively or in any other capacity, arising out of, relating to, or in connection with, in whole or in part, the Proposed Transaction, the Tender Offer, the Merger, the Merger Agreement, the Caulder documents or any of the matters alleged in them, any disclosures made in connection with any of these, or any other matter affecting or alleged to affect the sufficiency or fairness of the consideration offered or paid in the Tender Offer or the Merger on any basis whatsoever, except for statutory appraisal rights (the "Settled Claims"). In addition, Mycogen shall release TDCC, DAS and each of their present or former officers, directors, employees, agents, representatives, affiliates, parents, subsidiaries, successors and assigns, from any and all claims arising out of, relating to, or in connection with, in whole or in part, their fiduciary duties as majority or controlling shareholders or directors of Mycogen, including without limitation any of the matters alleged in the Caulder documents. 5 (4) DISMISSAL: for the dismissal of the Litigation and all Settled Claims with prejudice and without costs to any party (except as set forth below); (5) OPT OUTS: that the defendants shall in their sole discretion have the option to terminate the Settlement if potential class members holding in excess of a certain number of shares of Mycogen (to be agreed upon in advance by the parties and set forth in the Stipulation) request exclusion from the class. 3. SUBMISSION TO THE COURT. The parties to the Litigation, through their counsel, will present the Stipulation and Settlement to the Court for hearing and approval as soon as practicable following appropriate notice to the members of the Class and will use their best efforts to final Court approval of the Stipulation and Settlement, including dismissal of the Litigation with prejudice and the release of all claims as set forth above. It is expressly acknowledged that the Tender Offer and the Merger may be closed prior to final Court approval of the Settlement. As used in this Memorandum of Understanding, "final COURT approval" of the Settlement means that the Court has entered an Order approving the Settlement in accordance with the Stipulation and that Order is finally affirmed on appeal or is no longer subject to appeal. 4. SUSPENSION OF PROCEEDINGS. Pending the preparation of the Stipulation and other documents and their presentation to the Court for its approval, the plaintiffs agree that they shall not move for preliminary injunction in the Litigation and all parties agree that all proceedings in the Litigation shall be suspended, except for the confirmatory discovery provided herein and any other matters as to which the parties may expressly agree. 5. CONFIRMATORY DISCOVERY. The parties shall conduct as expeditiously as possible such reasonable additional discovery as the parties agree or the Court orders is 6 necessary and appropriate to confirm the fairness and reasonableness of the terms of the Settlement. Plaintiffs presently anticipate that up to four depositions will be required in addition to relevant document production in response to the Request for Production of Documents previously served by plaintiff's counsel. Plaintiffs reserve the right to withdraw from the terms of this Memorandum of Understanding and the proposed Settlement in the event that such discovery reveals that the Settlement is not fair and reasonable. 6. ATTORNEYS' FEES. Conditional upon a Stipulation of Settlement being executed, Court approval of the Settlement (including the class certification and release) being granted, and the Court dismissing the Litigation with prejudice, all in accordance with the Stipulation of Settlement, plaintiffs' counsel of record in the Litigation will jointly apply at the settlement hearing to the Court for an award of attorneys' fees and expenses (including, but not limited to, fees and expenses of plaintiffs' counsels' independent financial advisor). The parties shall attempt in good faith to agree on a maximum dollar amount of plaintiffs' counsel's fees application and, in the event they so agree the fee application shall not exceed that maximum dollar amount and the defendants will not oppose the application. In the event the parties are unable to agree on a maximum dollar amount, plaintiffs' counsel may make a fee petition in any amount, without limitation, but the defendants shall reserve the rights to make any and all objections to the petition, or any part thereof, on any relevant grounds, plaintiffs shall reserve the right to oppose any and all such objections and pursue any additional relevant discovery pertaining thereto, and defendants shall reserve the right to oppose such discovery on any applicable ground. Subject to the conditions set forth in this Memorandum of Understanding and any order of the Court, any and all attorneys' fees and expenses awarded by the Court to 7 plaintiffs' counsel may be paid by any combination of TDCC, DAS, Mycogen and/or their successors in interest on behalf of all defendants to the order of Milberg Weiss Bershad Hynes & Lerach LLP, as receiving agent for plaintiffs' counsel, within ten days after final Court approval of the Settlement (as defined in paragraph 3 hereof) and dismissal, with prejudice and without costs or fees (except as otherwise set forth in this paragraph), of the Litigation. TDCC, DAS and/or Mycogen or their successors in interest shall also cause the dissemination of notice of the Settlement to the Class in such manner as the Court determines to be appropriate, and shall pay all costs and expenses incurred in providing such notice to the members of the Class. 7. CONDITIONS TO SETTLEMENT. The consummation of the Settlement is subject to (a) the completion by plaintiffs' counsel of confirmatory discovery as provided above; (b) confirmation by plaintiffs' counsel following such confirmatory discovery that the Settlement is fair and reasonable, (c) drafting and execution of the Stipulation and such other documentation as may be required to obtain final Court approval of the Settlement in a form satisfactory to the parties; (d) consummation of the Tender Offer, and (e) final Court approval of the Settlement and the Stipulation, including class certification, release, and dismissal with prejudice as set forth above. The consummation of the Merger shall not be a condition of this Memorandum of Understanding or of the Settlement. In the event that the Settlement is not consummated for any reason, neither this Memorandum of Understanding, anything contained herein, nor anything done or disclosed by any person or party in connection herewith shall be deemed to prejudice in any way the positions of any party with respect to the Litigation. In such event, neither the existence of this Memorandum of Understanding nor its contents shall be admissible in evidence or shall be referred to for any purpose in the Litigation or in any other litigation or proceeding. 8 8. COUNTERPARTS. This Memorandum of Understanding may be executed in counterpart by any of the signatories hereto, including by telecopier, and as so executed shall constitute one agreement. 9. GOVERNING LAW. This Memorandum of Understanding and the Settlement contemplated by it shall be governed by, and construed in accordance with, the laws of the State of California, without regard to California's conflict of law rules. 10. MODIFICATION. This Memorandum of Understanding may be modified or amended only by a writing signed by the signatories hereto. 11. BINDING EFFECT. This Memorandum of Understanding shall be binding upon and inure to the benefit of the parties and their respective agents, executors, heirs, successors and assigns. 9 12. CONFIDENTIALITY OF INFORMATION. All agreements by, between or among the parties, their counsel and their other advisors as to the confidentiality of information exchanged between or among them shall remain in full force and effect, and shall survive the execution of this Memorandum of Understanding and the consummation of the Settlement, if consummated, without regard to any of the conditions of the Settlement. Dated: September 3, 1998 MILBERG WEISS BERSHAD HYNES & LERACH LLP By: /s/ Steven G. Schulman ---------------------------------------- STEVEN G. SCHULMAN SETH OTTENSOSER One Pennsylvania Plaza, 49th Floor New York, New York 10119 (212) 594-5300 MILBERG WEISS BERSHAD HYNES & LERACH LLP WILLIAM S. LERACH STEVEN W. PEPICH RANDALL J. BARON 600 West Broadway, Suite 1800 San Diego, CA 92101 Telephone: 619/231-1058 ABBEY, GARDY & SQUITIERI, LLP DATED: September 3, 1998 By: /s/ Mark C. Gardy ---------------------------------------- ARTHUR ABBEY MARK C. GARDY JAMES S. NOTIS 212 East 39th Street New York, NY 10016 Telephone: 212/889-3700 CO-LEAD COUNSEL FOR PLAINTIFFS 10 MAYER, BROWN & PLATT DATED: September 3, 1998 By: /s/ Bennett W. Lasko _______________________________________ HERBERT L. ZAROV BENNETT W. LASKO 190 South La Salle Street Chicago, IL 60603-3411 Telephone: 312/782-0600 MAYER, BROWN & PLATT FREDERICK S. LEVIN 350 South Grand Avenue 25th Floor Los Angeles, CA 90071 Telephone: 213/229-9500 ATTORNEYS FOR DEFENDANTS DOW AGROSCIENCES, THE DOW CHEMICAL CO. CARLTON J. EIBL, JOHN L. HAGAMAN, NICKOLAS D. HEIN, LOUIS W. PRIBILA, G. WILLIAM TOLBERT, J. PEDRO REINHARD, ROY M. BARBEE, WILLIAM C. SCHMIDT AND PERRY J. GEHRING ALTHEIMER & GRAY DATED: September 3, 1998 By: /s/ Theodore J. Low ---------------------------------------- THEODORE J. LOW 10 South Wacker Drive Suite 4000 Chicago, IL 60606 Telephone: 312/715-4000 GRAY, CARY, WARE & FREIDENRICH ROBERT W. BROWNLIE 401 B Street, Suite 1700 San Diego, CA 92101-4297 Telephone: 619/699-2700 ATTORNEYS FOR DEFENDANTS MYCOGEN CORP., JOSEPH P. SULLIVAN, AND GEORGE KHACHATOURIANS 11 -----END PRIVACY-ENHANCED MESSAGE-----