-----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, E+b0kk+SlSchzGAfHZonp1iwF0KA0+4w77FseRNSs1DH350DXG0l205iIx+yZ7Em U6VcNCO9xynb3DrPNMyMkA== 0000898430-96-000119.txt : 19960117 0000898430-96-000119.hdr.sgml : 19960117 ACCESSION NUMBER: 0000898430-96-000119 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19951130 FILED AS OF DATE: 19960116 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: MYCOGEN CORP CENTRAL INDEX KEY: 0000813742 STANDARD INDUSTRIAL CLASSIFICATION: AGRICULTURE SERVICES [0700] IRS NUMBER: 953802654 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-15881 FILM NUMBER: 96503396 BUSINESS ADDRESS: STREET 1: 4980 CARROLL CANYON RD CITY: SAN DIEGO STATE: CA ZIP: 92121 BUSINESS PHONE: 6194538030 MAIL ADDRESS: STREET 1: 4980 CARROLL CANYON ROAD CITY: SAN DIEGO STATE: CA ZIP: 92121 10-Q 1 FORM 10-Q FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended November 30, 1995 ----------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______________ to ____________________ Commission file number: 0-15881 ------- MYCOGEN CORPORATION ------------------------------------------------------------------ (Exact name of registrant as specified in its charter) California 95-3802654 - ---------------------------------- ------------------------ (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 5501 Oberlin Drive, San Diego, California 92121 - ------------------------------------------ ---------------- (Address of principal executive offices) (Zip Code) (619) 453-8030 -------------- (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ----- ----- 22,525,767 shares of Common Stock were outstanding as of January 9, 1996. 1 PART 1. - FINANCIAL INFORMATION - ------------------------------- Item 1. Financial Statements MYCOGEN CORPORATION INTERIM CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (Amounts in thousands, except per share data)
THREE MONTHS ENDED NOVEMBER 30, 1995 1994 ------- -------- (UNAUDITED) Net operating revenues.................................. $12,049 $ 9,509 Contract and other revenues: Unrelated parties..................................... 896 1,054 Related party......................................... 675 842 ------- -------- Total revenues...................................... 13,620 11,405 ------- -------- Costs and expenses: Cost of operating revenues............................ 7,823 6,245 Selling, general and administrative................... 8,181 7,015 Research and development.............................. 4,579 5,196 Amortization of intangible assets..................... 604 493 ------- -------- Total costs and expenses............................ 21,187 18,949 ------- -------- Operating loss.......................................... (7,567) (7,544) Interest income and expense, net...................... 148 564 Exchange gain (loss).................................. 7 (35) ------- -------- Net loss................................................ (7,412) (7,015) Dividends on preferred stock............................ (384) (369) ------- -------- Net loss applicable to common shares.................... $(7,796) $(7,384) ======= ======== Net loss per common share............................... $ (.40) $ (.39) ======= ======== Weighted average number of shares....................... 19,447 19,099 ======= ========
See accompanying Notes to Interim Consolidated Condensed Financial Statements. 2 MYCOGEN CORPORATION CONSOLIDATED CONDENSED BALANCE SHEETS (Dollars in thousands, except par value data)
NOVEMBER 30, AUGUST 31, 1995 1995 ASSETS (UNAUDITED) (NOTE) ------------ ---------- Current assets: Cash and cash equivalents............................. $ 14,636 $ 5,687 Securities available-for-sale......................... 8,706 11,913 Accounts and notes receivable, net of allowances...... 13,125 27,402 Inventories........................................... 46,967 33,633 Prepaid expenses...................................... 1,762 1,267 ------------ ---------- Total current assets................................ 85,196 79,902 Net property, plant and equipment....................... 49,332 49,646 Net intangible assets................................... 17,570 17,759 Other assets............................................ 11,879 12,301 ------------ ---------- Total assets............................................ $ 163,977 $ 159,608 ============ ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Short-term borrowings................................. $ 6,000 $ - Accounts payable...................................... 11,269 6,760 Accrued compensation and related taxes................ 3,792 3,553 Deferred revenues..................................... 7,125 5,670 Other current liabilities............................. 3,565 5,225 ------------ ---------- Total current liabilities........................... 31,751 21,208 Long-term liabilities................................... 3,486 3,291 Minority interest....................................... 21,406 21,406 Stockholders' equity: Senior convertible cumulative preferred stock: Series A preferred stock, $.001 par value, 3,940 shares authorized; 3,139 and 3,100 shares issued to a related party and outstanding at November 30, 1995 and August 31, 1995, respectively; aggregate liquidation preference, $31,390 and $31,004, respectively........................................ - - Common stock, $.001 par value, 40,000,000 shares authorized; 19,476,958 and 19,400,764 shares issued and outstanding at November 30, 1995 and August 31, 1995, respectively.................................. 19 19 Additional paid in capital............................ 217,479 216,436 Deficit............................................... (110,164) (102,752) ------------ ---------- Total stockholders' equity.......................... 107,334 113,703 ------------ ---------- Total liabilities and stockholders' equity.............. $ 163,977 $ 159,608 ============ ==========
Note: The balance sheet at August 31, 1995 has been derived from the audited financial statements at that date. See accompanying Notes to Interim Consolidated Condensed Financial Statements. 3 MYCOGEN CORPORATION INTERIM CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Dollars in thousands)
THREE MONTHS ENDED NOVEMBER 30, 1995 1994 -------- -------- (UNAUDITED) Operating activities: Net loss................................................... $ (7,412) $ (7,015) Items which did not use cash: Depreciation............................................. 1,144 1,298 Amortization of intangible assets........................ 587 493 Other expense not requiring cash......................... 455 209 Changes in operating assets and liabilities: Accounts and notes receivable............................ 14,378 10,999 Inventories.............................................. (13,334) (16,558) Prepaid expenses......................................... (495) (354) Accounts payable......................................... 4,509 10,588 Deferred revenues........................................ 1,455 2,047 Other current liabilities................................ (1,073) (2,079) -------- -------- Cash provided by (used in) operating activities........ 214 (372) -------- -------- Investing activities: Proceeds from sales of available-for-sale securities....... 2,993 - Proceeds from maturities of available-for-sale securities.. 291 2,000 Capital expenditures....................................... (812) (1,032) Prepaid contract manufacturing............................. - (3,588) Change in intangibles and other assets..................... (472) (335) -------- -------- Cash provided by (used in) investing activities........ 2,000 (2,955) -------- -------- Financing activities: Net change in short-term borrowings........................ 6,000 - Payments on long-term borrowings........................... (110) (4) Proceeds from sale of common stock......................... 782 82 -------- -------- Cash provided by financing activities.................. 6,672 78 -------- -------- Effect of exchange rate changes on cash and cash equivalents. 63 35 -------- -------- Increase (decrease) in cash and cash equivalents............. 8,949 (3,214) Cash and cash equivalents at beginning of period............. 5,687 8,681 -------- -------- Cash and cash equivalents at end of period................... $ 14,636 $ 5,467 ======== ========
See accompanying Notes to Interim Consolidated Condensed Financial Statements. 4 PART I - FINANCIAL INFORMATION - ------------------------------ Item 1. Financial Statements (continued). Mycogen Corporation ------------------- Notes to Interim Consolidated Condensed Financial Statements General - ------- The accompanying financial statements include the accounts of Mycogen Corporation, its wholly-owned subsidiaries and majority-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. The interim financial statements have been prepared by the Company, without audit, according to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the accompanying unaudited financial statements contain all adjustments (which include only normal recurring adjustments) necessary to state fairly the financial position, results of operations and cash flows as of and for the periods indicated. It is suggested that these financial statements be read in conjunction with the financial statements and the notes thereto included in the Annual Report and Form 10-K of the Company for the fiscal year ended August 31, 1995. The Company's business is highly seasonal. Operating revenues are expected to be concentrated principally in the quarters ending in February and May as a result of the North American agricultural growing season. Consequently, operating revenues and results of operations for the three months ended November 30, 1995 are not indicative of operating revenues and results to be expected for a full fiscal year. Supplemental Schedule of Non-Cash Investing and Financing Activities - -------------------------------------------------------------------- Non-cash investing and financing activities are as follows:
Three months ended November 30, ------------------ (In thousands) 1995 1994 ------- ------- Dividends on preferred stock $ 384 $ 369 ======= =======
5
Inventories - ----------- Inventories are comprised of: November 30, August 31, (In thousands) 1995 1995 ------------ ---------- Raw materials and supplies $ 4,789 $ 5,895 Work in process 7,920 3,578 Finished goods 34,258 24,160 ------------ ---------- Total $46,967 $33,633 ============ ==========
Accumulated Depreciation and Amortization - ----------------------------------------- Accumulated depreciation of property, plant and equipment was $18.3 million and $16.7 million at November 30, 1995 and August 31, 1995, respectively. Accumulated amortization of intangible assets was $7.4 and $6.8 million at November 30, 1995 and August 31, 1995, respectively. Income Taxes - ------------ No provision for income tax is recognized for the three months ended November 30, 1995 since the Company anticipates that the effective tax rate for the year ending August 31, 1996 will be zero due to the available net operating loss carryforwards. Net Loss Per Common Share - ------------------------- Net loss per common share for the three months ended November 30, 1995 is determined by deducting dividends on preferred stock from net loss and dividing the net result by the weighted average number of common shares outstanding during the respective period. The dilutive effect of common shares issuable under stock options was less than 3% and was not included in the computation of primary earnings per share. Subsequent Event - ---------------- In December 1995, the Company entered into an agreement with Pioneer to develop transgenic crops with built-in resistance. Under the agreement, Pioneer purchased three million shares of the Company's common stock for $30 million and provided $10 million in research and development funding. Pioneer will provide an additional $11 million in funding near the end of 1998. Pioneer will receive non-exclusive rights to all Bt crop protection technology and associated technologies codeveloped by the Company and Pioneer during the next 10 years. The Company and Pioneer are able to market their own products resulting from the collaboration, royalty-free, in North America. Pioneer will pay a royalty to Mycogen for jointly developed technology that it markets through seed products outside of North America. The Company has exclusive world wide rights to license jointly developed technology to third parties. No proprietary seed lines will be shared by the companies. 6 PART I - FINANCIAL INFORMATION - ------------------------------ Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. RESULTS OF OPERATIONS SEASONALITY The Company's businesses are highly seasonal as described in each segment summary. Revenues, expenses and losses for the three months ended November 30 are not indicative of the revenues, expenses and income or loss to be expected for a full fiscal year. SUMMARY Mycogen develops and markets value-added planting seeds for major agricultural crops and environmentally compatible biopesticide products and provides crop protection services to control pests and improve food and fiber production. The Company is organized into two business units, Seed and Crop Protection. Varying climatic conditions can shift revenues between quarters. Operating revenues and seed costs are impacted by weather. Weather can influence pest populations, the effectiveness of pesticides and seeds, seed production yields, commodity prices, growers' planting decisions and other factors affecting revenues and costs. Operating revenues also depend on a number of other factors, including market acceptance of products, competition and U.S. and foreign government policies that affect crop acreage and farm income. Planted acreage is a key factor in determining volumes of seed, crop protection services and biopesticide products purchased by growers. Weather, competition, regulation and other external factors may affect Mycogen's ability to increase operating revenues and achieve profitability. The Company also must continue to invest in commercializing existing products and in discovery and development of new products, so the trend in losses from operations may continue if revenues do not increase. SEGMENT OPERATING REVENUES AND OPERATING LOSS
Three months ended November 30, (In thousands) 1995 1994 -------------- --------------- Operating Revenues Seed $ 1,126 $ 596 Crop Protection 10,923 8,913 -------------- --------------- Total Operating Revenues $12,049 $ 9,509 ============== =============== Operating Income (Loss) Seed $(7,635) $(6,691) Crop Protection 336 (516) Corporate (268) (337) -------------- --------------- Total Operating Loss $(7,567) $(7,544) ============== ===============
SEED SEGMENT OPERATING REVENUES: First quarter Seed operating revenues are not significant and consist mainly of late season alfalfa sales and international shipments. The majority of Seed operating revenues are recorded during the second and third fiscal quarters. Second and third quarter operating revenues also 7 include estimates of seed product returns and the fourth quarter includes adjustments to reconcile those earlier estimates. OPERATING LOSS: First quarter Seed operating loss increased from $6.7 million for the quarter ended November 30, 1994 to $7.6 million for the same quarter in 1995, due mainly to higher sales and promotion efforts for the coming growing season which accounted for $.8 million of the increase. CROP PROTECTION SEGMENT OPERATING REVENUES: First quarter Crop Protection operating revenues increased $2.0 million to $10.9 million for the three months ended November 30, 1995 compared to the same period last year. Soilserv accounted for $1.4 million of the increase as a result of higher penetration this year into the winter crop protection markets in Arizona. Biopesticides sales of new products, Mattch(TM) and Scythe(R), and higher shipments of MVP(R) powder to Kubota accounted for the remainder of the increase. The majority of Crop Protection revenues are recorded during the third and fourth fiscal quarters. Second quarter operating revenues are not significant. OPERATING INCOME (LOSS): The Crop Protection segment recognized operating income of $.3 million for the quarter ended November 30, 1995 compared to an operating loss of $.5 million for the same period in 1994. This improvement in operating results is due mainly to higher sales volume, which contributed an additional $.6 million in gross profit, and lower research and development expenses of $.7 million resulting primarily from headcount and expense reductions. NON-OPERATING ITEMS Non-operating income items decreased $.4 million due mainly to lower net interest income as a result of less cash available for investment. LIQUIDITY AND CAPITAL RESOURCES The Company's cash, cash equivalents and securities available-for-sale increased by $5.7 million to $23.3 million during the three months ended November 30, 1995. This increase was due primarily to proceeds of $6.0 million from the Company's bank line of credit facility. The Company has a $25 million bank line of credit facility, which expires November 30, 1996, to fund portions of its seasonal working capital needs, of which $19.0 million was unused at November 30, 1995. In December 1995, the Company signed a definitive agreement for technology collaboration with Pioneer. Under the agreement, Pioneer purchased three million shares of the Company's common stock for $30 million and has provided $10 million in research and development funding. Pioneer will provide an additional $11 million in funding near the end of 1998. The Company expects capital expenditures for fiscal 1996 to total approximately $5.4 million. However, as part of the Seed unit's strategy to transition from a seller of low-cost generic products to proprietary, value- added seed products, the Company has decided to undertake an analysis of its production facilities to determine alternatives for improving quality. The conclusion of this analysis may result in higher than expected capital expenditures and/or write-downs. The biopesticide fermentation facility funded under the Company's long-term manufacturing agreement with Enzyme Bio-Systems, Ltd. ("EB"), is completed and fully operational. The Company does not anticipate any significant funding for capital under the EB agreement for the remainder of fiscal 1996. The Company is involved 8 in various actions related to its patent positions and plans to continue to spend resources as required to defend its intellectual property rights. The Company will continue to pursue an aggressive acquisition and joint venture strategy for both the Seed and Crop Protection business units. Dividends on the Series A preferred stock are cumulative and are payable quarterly to Lubrizol in additional shares of preferred stock. Starting in December 1997 and thereafter, the dividends are payable in cash. Also, the Company has agreed to purchase the remaining ownership interest of MPS from Lubrizol for additional Common Stock or, after November 2000, for cash at a price between $21.4 million and $26.3 million. The Company anticipates that its current cash position, and revenue from operations and contract and other revenues will be sufficient to finance working capital and capital requirements for the immediate future. However, the Company's capital requirements may vary as a result of competitive and technological developments, the timing of regulatory approval for new products and the terms and conditions of any future strategic transactions. If such requirements change, the Company may need to raise additional capital. 9 PART II - OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders. a) The annual meeting of stockholders was held on December 14, 1995. b) See c below. c) The following members of the Board of Directors were elected to serve until the next Annual Meeting and until their successors are elected and qualified:
Number of Votes Cast Affirmative Negative ----------- -------- Thomas J. Cable 17,801,392 169,152 Jerry D. Caulder 17,712,136 258,908 George R. Hill 17,702,452 268,592 Kenneth H. Hopping 17,700,857 270,187 David H. Rammler 17,708,118 262,926 A. John Speziale 17,804,153 166,891
The proposal to approve the implementation of the 1995 Employee Stock Purchase Plan, pursuant to which 250,000 shares of Common Stock will be reserved for issuance, was approved by 15,663,825 affirmative votes vs. 2,029,260 negative votes vs. 99,543 abstentions vs. 178,416 broker non-votes. The proposal to ratify the non-statutory stock option grants for 20,000 shares of Common Stock under the Company's Automatic Grant Program to each of three non-employees Board members was approved by 16,498,948 affirmative votes vs. 1,166,962 negative votes vs. 126,718 abstentions vs. 178,416 broker non-votes. The proposal to ratify the appointment of Ernst & Young LLP as the Company's independent auditors for the fiscal year ending August 31, 1996 was approved by 17,887,617 affirmative votes vs. 44,659 negative votes vs. 38,768 abstentions. d) Not applicable. Item 6. Exhibits and Reports on Form 8-K. a) Exhibits Exhibit 10.1 - Amendment to the 1992 Stock Option Plan. See Exhibit 10.1 attached hereto. Exhibit 10.2 - Amendment to the Restricted Stock Issuance Plan. See Exhibit 10.2 attached hereto. Exhibit 10.3 - 1995 Employee Stock Purchase Plan. See Exhibit 10.3 attached hereto. Exhibit 27 - Financial Data Schedule. See Exhibit 27 attached hereto. 10 b) Reports on Form 8-K A current report on Form 8-K was filed on November 28, 1995 to report the Company's reincorporation from the state of Delaware to the state of California on October 26, 1995 and to provide quarterly operating revenues by segment for fiscal year 1995. SIGNATURES ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Mycogen Corporation ------------------- (Registrant) Date: January 11, 1996 /s/ JAMES A. BAUMKER ------------------ ----------------------- James A. Baumker Vice President and Chief Financial Officer 11 EX-10.1 2 STOCK OPTION PLAN EXHIBIT 10.1 MYCOGEN CORPORATION 1992 STOCK OPTION PLAN PLAN AMENDMENT EFFECTIVE AS OF FEBRUARY 1, 1995 ----------------------------------------------- The Mycogen Corporation 1992 Stock Option Plan (the "Plan") is hereby amended (the "Plan Amendment"), effective as of the 1st day of February, 1995, as follows: 1. Article One, Section V.A of the Plan is hereby amended in its entirety to read as follows: A. Shares of the Company's Common Stock shall be issuable under the Plan, and such shares may be obtained from either the Company's authorized but unissued shares of Common Stock or from shares of Common Stock reacquired by the Company and held as treasury shares. The aggregate number of shares available for issuance over the term of the Plan shall not exceed 5,566,719 shares of Common Stock/1/ subject to adjustment from time - to time in accordance with the provisions of this Section V. To the extent one or more outstanding options under the 1983 Plan which have been incorporated into this Plan are subsequently exercised, the number of shares issued with respect to each such option shall reduce, on a share- for-share basis, the number of shares available for issuance under this Plan 2. New Section III.E is hereby added to Article Four of the Plan to read as follows: As of February 1, 1995, the Board authorized an additional 1,000,000- share increase to the number of shares of Common Stock available for issuance over the term of the Plan. However, no option granted on the basis of such share increase shall become exercisable, in whole or in part, unless and until the Corporation's stockholders approve the increase. If such stockholder approval is not obtained at the 1995 Annual Stockholders Meeting, then any options previously granted on the basis of the 1,000,000- share increase shall terminate, and no further options based on such increase shall be granted. All outstanding options under the Plan which have NOT been granted on the basis of the 1,000,000-share increase shall remain outstanding in accordance with the terms and provisions of the agreements evidencing those grants, whether or not stockholder approval of the share increase is obtained. Subject to the foregoing limitations, the Plan Administrator may grant options under the Plan at any time before the date fixed herein for the termination of the Plan. - ------------------ /1/ Includes the 1,000,000-share increase approved by the Board as of - February 1, 1995, subject to approval by the Company's stockholders at the 1995 Annual Stockholders Meeting. 2. All capitalized terms in this Plan Amendment shall have the meanings assigned to such terms in the Plan. To the extent that there is a conflict between the provisions of the Plan and the provisions of this Plan Amendment, the provisions of this Plan Amendment shall take precedence. 3. Except as modified by this Plan Amendment, the terms and provisions of the Plan shall continue in full force and effect. IN WITNESS WHEREOF, Mycogen Corporation has caused this Plan Amendment to be executed on its behalf by its duly-authorized officer as of the 1st day of February, 1995. MYCOGEN CORPORATION By: /s/ JERRY CAULDER -------------------- Jerry Caulder Title: Chairman and Chief Executive Officer EX-10.2 3 RESTRICTED STOCK PLAN EXHIBIT 10.2 MYCOGEN CORPORATION RESTRICTED STOCK ISSUANCE PLAN PLAN AMENDMENT EFFECTIVE AS OF FEBRUARY 1, 1995 ----------------------------------------------- The Mycogen Corporation Restricted Stock Issuance Plan (the "Plan") is hereby amended (the "Plan Amendment"), effective as of the 1st day of February, 1995, as follows: 1. Section III.B of the Plan is hereby amended in its entirety to read as follows: B. The total number of shares of Common Stock which may be issued over the term of the Plan shall not exceed 300,000 shares, subject, however, to adjustment under Section III.C. Such authorized share reserve is comprised of (i) the 150,000 shares of Common Stock initially reserved for issuance under the Plan plus (ii) the 150,000-share increase authorized by the Board as of February 1, 1995, subject to stockholder approval at the 1995 Annual Stockholders Meeting. Each share issuance under the Plan, whether or not the shares are subsequently repurchased by the Corporation or otherwise cancelled, shall reduce on a share-for-share basis the number of shares of Common Stock available for subsequent stock issuances under the Plan. Should shares of Common Stock otherwise issuable under the Plan be withheld by the Corporation in satisfaction of the withholding taxes incurred by participants in connection with the vesting of such shares under the Plan, then the number of shares available for issuance under the Plan shall be reduced by the gross number of shares issuable under the Plan prior to such withholding, and not by the net number of shares of Common Stock actually issued to the participants. 2. Section XII of the Plan is hereby amended in its entirety to read as follows: XII. AMENDMENT OR TERMINATION OF THE PLAN A. The Board may at any time amend, alter or modify this Plan; provided, however, that no such action shall adversely affect the rights of any Participant with respect to any Common Stock or other assets at the time held by such Participant under the Plan prior to such action. In addition, the Board shall not, without the approval of the stockholders, (i) materially increase the maximum number of shares of Common Stock issuable under the Plan, except to the extent necessary to effect the adjustments required by Section III.C, (ii) materially increase the benefits accruing to Participants under the Plan or (iii) materially modify the eligibility requirements for participation in the Plan. B. Shares of Common Stock may be issued under the Plan which are in excess of the number of shares then available for issuance under the Plan, provided any such excess shares are held in escrow by the Corporation until there is obtained stockholder approval of an amendment sufficiently increasing the number of shares of Common Stock available for issuance under the Plan. If such stockholder approval is not obtained within twelve (12) months after the date the first such excess issuances are made, then the Corporation shall promptly refund to the Participants the purchase price paid for such shares, together with interest thereon (at the applicable Short Term Federal Rate) for the period the shares were held in escrow, and such shares shall be automatically cancelled and cease to be outstanding. C. As of February 1, 1995, the Board authorized a 150,000-share increase to the number of shares of Common Stock available for issuance under the Plan. Any shares of Common Stock issued under the Plan on the basis of such share increase shall be held in escrow by the Corporation until such increase is approved by the Corporation's stockholders. If such stockholder approval is not obtained at the 1995 Annual Stockholders Meeting, then the Corporation shall promptly refund to the Participants the purchase price paid for such shares, together with interest thereon (at the applicable Short Term Federal Rate) for the period the shares were held in escrow, and such shares shall be automatically cancelled and cease to be outstanding. D. The Board may at any time terminate the Plan by appropriate corporate resolution. Unless sooner terminated by the Board, the Plan shall automatically terminate upon the earlier of (i) the 10th anniversary ------- of the date the Plan is adopted by the Board or (ii) the first date when all the shares available for issuance under the Plan have been issued. Under no circumstances shall the termination of the Plan adversely affect the rights of Participants with respect to any unvested Common Stock or other assets at the time held by them under the Plan, and their interests in such Common Stock or other assets shall continue to vest in accordance with the vesting schedule specified in the applicable Restricted Issuance Agreement. 3. All capitalized terms in this Plan Amendment shall have the meanings assigned to such terms in the Plan. To the extent that there is a conflict between the provisions of the Plan and the provisions of this Plan Amendment, the provisions of this Plan Amendment shall take precedence. 4. Except as modified by this Plan Amendment, the terms and provisions of the Plan shall continue in full force and effect. IN WITNESS WHEREOF, Mycogen Corporation has caused this Plan Amendment to be executed on its behalf by its duly-authorized officer as of the 1st day of February, 1995. MYCOGEN CORPORATION By: /s/ JERRY CAULDER -------------------- Jerry Caulder Title: Chairman and Chief Executive Officer EX-10.3 4 95 STOCK PLAN EXHIBIT 10.3 A-1. MYCOGEN CORPORATION 1995 EMPLOYEE STOCK PURCHASE PLAN --------------------------------- I. PURPOSE OF THE PLAN This Employee Stock Purchase Plan is intended to promote the interests of MYCOGEN CORPORATION by providing eligible employees with the opportunity to acquire a proprietary interest in the Corporation through participation in a payroll-deduction based employee stock purchase plan. Capitalized terms herein shall have the meanings assigned to such terms in the attached Appendix. II. ADMINISTRATION OF THE PLAN The Compensation Committee of the Board in its capacity as Plan Administrator shall have full authority to interpret and construe any provision of the Plan and to adopt such rules and regulations for proper administration of the Plan as it may deem necessary or appropriate. Decisions of the Plan Administrator shall be final and binding on all parties having an interest in the Plan. III. STOCK SUBJECT TO PLAN A. The stock purchasable under the Plan shall be shares of authorized but unissued or reacquired Common Stock, including shares of Common Stock purchased on the open market. The maximum number of shares of Common Stock which may be issued over the term of the Plan shall not exceed 250,000 shares. Such authorized share reserve is comprised of (i) the estimated number of shares (184,000 shares) which will remain available for issuance under the Predecessor Plan following the November 30, 1995 purchase date thereunder plus (ii) an additional increase of approximately 66,000 shares. B. Should any change be made to the Common Stock by reason of any stock split, stock dividend, recapitalization, combination of shares, exchange of shares or other change affecting the outstanding Common Stock as a class without the Corporation's receipt of consideration, appropriate adjustments shall be made to (i) the maximum number and class of securities issuable under the Plan, (ii) the maximum number and class of securities purchasable per Participant on any one Purchase Date and (iii) the number and class of securities and the price per share in effect under each outstanding purchase right in order to prevent the dilution or enlargement of benefits thereunder. IV. PURCHASE PERIODS A-2. A. Shares of Common Stock shall be offered for purchase under the Plan through a series of successive Purchase Periods until such time as (i) the maximum number of shares of Common Stock available for issuance under the Plan shall have been purchased or (ii) the Plan shall have been sooner terminated. B. Each Purchase Period shall be of six (6) months duration. The initial Purchase Period shall commence on the Effective Date and shall end on the last business day in May 1996. Subsequent Purchase Periods shall run from the first business day in June to the last business day in November each year and from the first business day of December each year to the last business day of May in the succeeding year. C. Under no circumstances shall any shares of Common Stock be issued under the Purchase Plan until such time as (i) the Plan shall have been approved by the Corporation's stockholders and (ii) the Corporation shall have complied with all applicable requirements of the Securities Act, all applicable listing requirements of any securities exchange (or the Nasdaq National Market if applicable) on which shares of the Common Stock are listed for trading and all other applicable statutory and regulatory requirements. V. ELIGIBILITY A. Each Eligible Employee may commence participation in the Plan on the start date of any Purchase Period coincident with or subsequent to his or her completion of one month of continuous service with the Corporation or any Corporate Affiliate, provided he or she remains an Eligible Employee on such start date. B. To participate in the Plan for a particular Purchase Period, the Eligible Employee must complete the enrollment forms prescribed by the Plan Administrator (including a stock purchase agreement and a payroll deduction authorization form) and file such forms with the Plan Administrator (or its designate) prior to the start date of that Purchase Period. VI. PAYROLL DEDUCTIONS A-3. A. The payroll deduction authorized by the Participant for purposes of acquiring shares of Common Stock under the Plan may be any multiple of one percent (1%) of the Base Salary paid to the Participant during the Purchase Period, up to a maximum of fifteen percent (15%). The deduction rate so authorized shall continue in effect from Purchase Period to Purchase Period. However, the Participant may, prior to the commencement of any new Purchase Period, increase or decrease the rate of his or her payroll deduction by filing the appropriate form with the Plan Administrator prior to the start date of that Purchase Period. The new rate (which may not exceed the fifteen percent (15%) maximum) shall become effective as of the start date of the first Purchase Period following the filing of such form. B. Payroll deductions shall begin on the first pay day following the start date of the Purchase Period and shall (unless sooner terminated by the Participant) continue through the pay day ending with or immediately prior to the last day of that Purchase Period. The amounts so collected shall be credited to the Participant's book account under the Plan, but no interest shall be paid on the balance from time to time outstanding in such account. The amounts collected from the Participant shall not be held in any segregated account or trust fund and may be commingled with the general assets of the Corporation and used for general corporate purposes. C. Payroll deductions shall automatically cease upon the termination of the Participant's purchase right in accordance with the provisions of the Plan. D. The Participant's acquisition of Common Stock under the Plan on any Purchase Date shall neither limit nor require the Participant's acquisition of Common Stock on any subsequent Purchase Date. VII. PURCHASE RIGHTS A. GRANT OF PURCHASE RIGHT. A Participant shall be granted a separate ----------------------- purchase right for each Purchase Period in which he or she participates. The purchase right shall be granted on the start date of the Purchase Period and shall provide the Participant with the right to purchase shares of Common Stock upon the terms set forth below. The Participant shall execute a stock purchase agreement embodying such terms and such other provisions (not inconsistent with the Plan) as the Plan Administrator may deem advisable. Under no circumstances shall purchase rights be granted under the Plan to any Eligible Employee if such individual would, immediately after the grant, own (within the meaning of Code Section 424(d)) or hold outstanding options or other rights to purchase, stock possessing five percent (5%) or A-4. more of the total combined voting power or value of all classes of stock of the Corporation or any Corporate Affiliate. B. EXERCISE OF THE PURCHASE RIGHT. Each purchase right shall be ------------------------------ automatically exercised on the last day of the Purchase Period by applying the Participant's payroll deductions for that Purchase Period to the purchase of whole shares of Common Stock at the purchase price in effect for the Purchase Period. C. PURCHASE PRICE. The purchase price per share at which Common Stock -------------- will be purchased on the Participant's behalf on the last day of each Purchase Period shall be equal to eighty-five percent (85%) of the lower of (i) the Fair Market Value per share of Common Stock on the ----- last business day immediately preceding the start date of that Purchase Period or (ii) the Fair Market Value per share of Common Stock on the Purchase Date. D. NUMBER OF PURCHASABLE SHARES. The number of shares of Common Stock ---------------------------- purchasable per Participant at the end of each Purchase Period shall be the number of whole shares obtained by dividing the amount collected from the Participant through payroll deductions during the Purchase Period by the purchase price in effect for that Purchase Period. However, the maximum number of shares of Common Stock purchasable per Participant on any one Purchase Date shall not exceed Three Hundred Seventy-Five (375) shares, subject to periodic adjustments in the event of certain changes in the Corporation's capitalization. E. EXCESS PAYROLL DEDUCTIONS. Any payroll deductions not applied to the ------------------------- purchase of shares of Common Stock at the end of any Purchase Period because they are not sufficient to purchase a whole share of Common Stock shall be held for the purchase of Common Stock on the next Purchase Date. However, any payroll deductions not applied to the purchase of Common Stock by reason of the limitation on the maximum number of shares which the Participant may purchase on any one Purchase Date shall be promptly refunded. F. TERMINATION OF PURCHASE RIGHT. The following provisions shall govern ----------------------------- the termination of outstanding purchase rights: (I.) A Participant may, at any time prior to the last day of the Purchase Period, terminate his or her outstanding purchase right by filing the appropriate form with the Plan Administrator (or its designate), and no further payroll deductions shall be collected from the Participant with respect to the terminated purchase right. Any payroll deductions collected on the Participant's behalf during the Purchase A-5. Period in which such termination occurs shall be held for the purchase of shares at the end of that Purchase Period. (II.) The termination of such purchase right shall be irrevocable, and the Participant may not subsequently rejoin the Purchase Period for which the terminated purchase right was granted. In order to resume participation in any subsequent Purchase Period, such individual must re-enroll in the Plan (by making a timely filing of the prescribed enrollment forms) prior to the start date of that Purchase Period. (III.) A Participant's purchase right shall immediately terminate upon his or her cessation of Eligible Employee status for any reason (other than death or Disability), and the payroll deductions collected on behalf of the Participant pursuant to the terminated purchase right shall be promptly refunded. (IV.) Should the Participant cease to remain an Eligible Employee by reason of death or Disability while his or her purchase right remains outstanding, then such individual (or the personal representative of the estate of a deceased Participant) shall have the following election, exercisable up until the end of the Purchase Period in which such cessation of Eligible Employee status occurs: . to withdraw all of the payroll deductions collected to date on the Participant's behalf during that Purchase Period or . to have such funds held for the purchase of shares at the end of that Purchase Period. In the absence of such a timely election, the Participant's payroll deductions shall be refunded as soon as possible after the close of the Purchase Period. (V.) In no event may any payroll deductions be made on the Participant's behalf following his/her cessation of Eligible Employee status. (VI.) Should the Participant cease to remain in active service by reason of an approved unpaid leave of absence, then the Participant shall have the election, exercisable up until the last business day of the Purchase Period in which such leave commences, to (a) withdraw all the payroll deductions collected to date on the Participant's behalf during that Purchase Period or (b) have such funds held for the purchase of shares at the end of such Purchase Period. In no event, however, shall any further payroll deductions be collected on the A-6. Participant's behalf during such unpaid leave. Upon the Participant's return to active service, his or her payroll deductions under the Plan shall automatically resume at the rate in effect at the time the leave began, provided the Participant returns to service prior to the expiration date of the Purchase Period in which such leave began. G. CHANGE IN CONTROL. Each outstanding purchase right shall ----------------- automatically be exercised, immediately prior to the effective date of any Change in Control, by applying the payroll deductions of each Participant for the Purchase Period in which such Change in Control occurs to the purchase of whole shares of Common Stock at a purchase price per share equal to eighty-five percent (85%) of the lower of (i) ----- the Fair Market Value per share of Common Stock on the last business day immediately preceding the start date of the Purchase Period in which such Change in Control occurs or (ii) the Fair Market Value per share of Common Stock immediately prior to the effective date of such Change in Control. H. PRORATION OF PURCHASE RIGHTS. Should the total number of shares of ---------------------------- Common Stock to be purchased pursuant to outstanding purchase rights on any particular date exceed the number of shares then available for issuance under the Plan, the Plan Administrator shall make a pro-rata allocation of the available shares on a uniform and nondiscriminatory basis, and the payroll deductions of each Participant, to the extent in excess of the aggregate purchase price payable for the Common Stock pro-rated to such individual, shall be refunded. I. ASSIGNABILITY. No purchase right granted under the Plan shall be ------------- assignable or transferable by the Participant other than by will or by the laws of descent and distribution following the Participant's death, and during the Participant's lifetime the purchase right shall be exercisable only by the Participant. J. STOCKHOLDER RIGHTS. A Participant shall have no stockholder rights ------------------ with respect to the shares subject to his or her outstanding purchase right until the shares are purchased on the Participant's behalf in accordance with the provisions of the Plan and the Participant has become a holder of record of the purchased shares. A Participant shall be issued, as soon as practicable after the end of each Purchase Period, a statement showing the number of shares purchased on the Participant's behalf for that Purchase Period and the purchase price paid per share. The Participant may at any time request the issuance of a stock certificate for any shares purchased on his or her behalf under the Plan. However, not more than one A-7. certificate shall be issued per Participant for each Purchase Period of participation in the Plan, and such certificate may, upon the Participant's request, be issued in the names of the Participant and his or her spouse as community property or as joint tenants with right of survivorship. Alternatively, the stock certificate may be delivered to a designated stock brokerage account maintained for the Participant and held in "street name" in order to facilitate the subsequent sale of the purchased shares. VIII. ACCRUAL LIMITATIONS A. No Participant shall be entitled to accrue rights to acquire Common Stock pursuant to any purchase right outstanding under this Plan if and to the extent such accrual, when aggregated with (i) rights to purchase Common Stock accrued under any other purchase right granted under this Plan and (ii) similar rights accrued under other employee stock purchase plans (within the meaning of Code Section 423) of the Corporation or any Corporate Affiliate, would otherwise permit such Participant to purchase more than Twenty-Five Thousand Dollars ($25,000) worth of stock of the Corporation or any Corporate Affiliate (determined on the basis of the Fair Market Value of such stock on the date or dates such rights are granted) for each calendar year such rights are at any time outstanding. B. For purposes of applying such accrual limitations to the purchase rights granted under this Plan, the following provisions shall be in effect: (I.) The right to acquire Common Stock under each outstanding purchase right shall accrue on the last day of the Purchase Period for which such right is granted. (II.) No right to acquire Common Stock under any outstanding purchase right under the Plan shall accrue to the extent the Participant has already accrued in the same calendar year the right to acquire Common Stock under one (1) or more other purchase rights at a rate equal to Twenty-Five Thousand Dollars ($25,000) worth of Common Stock (determined on the basis of the Fair Market Value of such stock on the date or dates of grant) for each calendar year such rights were at any time outstanding. C. If by reason of such accrual limitations, any purchase right of a Participant does not accrue for a particular Purchase Period, then the payroll deductions collected on the Participant's behalf with respect to that purchase right shall be promptly refunded. A-8. D. In the event there is any conflict between the provisions of this Article and one or more provisions of the Plan or any instrument issued thereunder, the provisions of this Article shall be controlling. IX. EFFECTIVE DATE AND TERM OF THE PLAN A. The Plan was adopted by the Board on October 19, 1995 and shall become effective on the Effective Date, provided the Plan is approved by the -------- Corporation's stockholders at the 1995 Annual Meeting. The Plan is intended to be the successor to the Predecessor Plan, and should such stockholder approval be obtained, the Predecessor Plan, together with all outstanding purchase rights thereunder, shall terminate with the November 30, 1995 quarterly purchase date thereunder, and no more purchase rights shall be granted or exercised and no shares of Common Stock shall be issued under the Predecessor Plan after the November 30, 1995 purchase date. In the event such stockholder approval is not obtained, then this Plan shall not be implemented, and the Predecessor Plan shall continue in full force and effect with its existing terms and provisions. B. Unless sooner terminated by the Board, the Plan shall terminate upon the earliest of (i) the last business day in November 2005, (ii) the -------- date on which all shares available for issuance under the Plan shall have been sold pursuant to purchase rights exercised under the Plan or (iii) the date on which all purchase rights are exercised in connection with a Change in Control. No further purchase rights shall be granted or exercised, and no further payroll deductions shall be collected, under the Plan following such termination. X. AMENDMENT OF THE PLAN The Board may alter, amend, suspend or discontinue the Plan at any time to become effective immediately following the close of any Purchase Period. However, the Board may not, without the approval of the Corporation's stockholders, (i) materially increase the number of shares of Common Stock issuable under the Plan or the maximum number of shares purchasable per Participant at the end of each Purchase Period, except for permissible adjustments in the event of certain changes in the Corporation's capitalization, (ii) alter the purchase price formula so as to reduce the purchase price payable for the shares of Common Stock purchasable under the Plan, or (iii) materially increase the benefits accruing to Participants under the Plan or materially modify the requirements for eligibility to participate in the Plan. XI. GENERAL PROVISIONS A-9. A. The Plan shall NOT be administered as a qualified employee stock purchase plan under Code Section 423. Accordingly, each Participant shall, in connection with his or her purchases of Common Stock under the Plan, satisfy all applicable federal, state and local income and employment tax withholding requirements. B. All costs and expenses incurred in the administration of the Plan shall be paid by the Corporation. C. Nothing in the Plan shall confer upon the Participant any right to continue in the employ of the Corporation or any Corporate Affiliate for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Corporation (or any Corporate Affiliate employing such person) or of the Participant, which rights are hereby expressly reserved by each, to terminate such person's employment at any time for any reason, with or without cause. D. The provisions of the Plan shall be governed by the laws of the State of California without resort to that State's conflict-of-laws rules. A-10. SCHEDULE A ---------- CORPORATIONS PARTICIPATING IN EMPLOYEE STOCK PURCHASE PLAN AS OF THE EFFECTIVE DATE ------------------------ Mycogen Corporation Mycogen Plant Sciences Mycogen Crop Protection Mycogen Canada, Inc. Mycogen Plant Sciences Puerto Rico Corporation A-11. APPENDIX -------- The following definitions shall be in effect under the Plan: A. BASE SALARY shall mean the (i) regular base salary paid to a Participant ----------- by one or more Participating Companies during such individual's period of participation in the Plan plus (ii) any pre-tax contributions made by the Participant to any Code Section 401(k) salary deferral plan or any Code Section 125 cafeteria benefit program now or hereafter established by the Corporation or any Corporate Affiliate. Base Salary shall NOT include overtime payments, bonuses, commissions, profit-sharing distributions or other incentive-type payments, or any contributions (other than Code Section 401(k) or Code Section 125 contributions) made on the Participant's behalf by the Corporation or any Corporate Affiliate to any deferred compensation plan or welfare benefit program now or hereafter established. B. BOARD shall mean the Corporation's Board of Directors. ----- C. CHANGE IN CONTROL shall mean a change in ownership or control of the ----------------- Corporation effected through any of the following transactions: (I.) a merger or consolidation in which securities possessing more than fifty percent (50%) of the total combined voting power of the Corporation's outstanding securities are transferred to a person or persons different from the persons holding those securities immediately prior to such transaction, or (II.) the sale, transfer or other disposition of all or substantially all of the assets of the Corporation in complete liquidation or dissolution of the Corporation, or (III.) the acquisition by any person or group of related persons (other than the Corporation or any person controlled by, controlling or under common control with the Corporation) of beneficial ownership of securities possessing more than fifty percent (50%) of the total combined voting power of the Corporation's outstanding securities pursuant to a tender or exchange offer made directly to the Corporation's stockholders. D. CODE shall mean the Internal Revenue Code of 1986, as amended. ---- E. COMMON STOCK shall mean the Corporation's common stock. ------------ A-12. F. CORPORATE AFFILIATE shall mean any parent or subsidiary corporation of ------------------- the Corporation (as determined in accordance with Code Section 424), whether now existing or subsequently established. G. CORPORATION shall mean Mycogen Corporation, a California corporation, ----------- and any corporate successor to all or substantially all of the assets or voting stock of Mycogen Corporation which shall by appropriate action adopt the Plan. H. DISABILITY shall mean the Participant's inability, by reason of any ---------- medically determinable physical or mental impairment expected to result in death or to be of continuous duration of twelve (12) months or more, to engage in any substantial gainful employment. I. EFFECTIVE DATE shall mean December 1, 1995. Any Corporate Affiliate -------------- which becomes a Participating Corporation after such Effective Date shall designate a subsequent Effective Date with respect to its employee- Participants. J. ELIGIBLE EMPLOYEE shall mean any person expected on a regularly- ----------------- scheduled basis expected to work than twenty (20) hours per week for more than five (5) months per calendar year in the employ of any Participating Corporation for earnings considered wages under Code Section 3401(a). K. FAIR MARKET VALUE per share of Common Stock on any relevant date shall ----------------- be determined in accordance with the following provisions: (I.) If the Common Stock is at the time traded on the Nasdaq National Market, then the Fair Market Value shall be the closing selling price per share of Common Stock on the date in question, as such price is reported by the National Association of Securities Dealers on the Nasdaq National Market or any successor system. If there is no closing selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists. (II.) If the Common Stock is at the time listed on any Stock Exchange, then the Fair Market Value shall be the closing selling price per A-13. share on the date in question on the Stock Exchange determined by the Plan Administrator to be the primary market for the Common Stock, as such price is officially quoted in the composite tape of transactions on such exchange. If there is no closing selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists. L. PARTICIPANT shall mean any Eligible Employee of a Participating ----------- Corporation who is actively participating in the Plan. M. PARTICIPATING CORPORATION shall mean the Corporation and such ------------------------- Corporate Affiliate or Affiliates as may be authorized from time to time by the Board to extend the benefits of the Plan to their Eligible Employees. The Participating Corporations in the Plan as of the Effective Date are listed in attached Schedule A. N. PLAN shall mean the Corporation's 1995 Employee Stock Purchase Plan, ---- as set forth in this document. O. PLAN ADMINISTRATOR shall mean the Compensation Committee of the Board ------------------ in its capacity as administrator of the Plan. P. PREDECESSOR PLAN shall mean the Corporation's existing Employee Stock ---------------- Purchase Plan. Q. PURCHASE PERIOD shall mean each successive six (6) month period at the --------------- end of which there shall be purchased shares of Common Stock on behalf of each Participant. R. PURCHASE DATE shall mean the last business day of each Purchase Period ------------- and shall accordingly occur on the last business day of May and November each year. S. SECURITIES ACT shall mean the Securities Act of 1933, as amended. -------------- T. STOCK EXCHANGE shall mean either the American Stock Exchange or the -------------- New York Stock Exchange. A-14. EX-27 5 FINANCIAL DATA SCHEDULE
5 3-MOS AUG-31-1996 NOV-30-1995 14,636 8,706 13,125 0 46,967 85,196 67,666 18,334 163,977 31,751 0 19 0 0 217,479 163,977 12,049 13,620 7,823 7,823 0 0 0 (7,412) 0 (7,412) 0 0 0 (7,412) (.40) (.40)
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