EXHIBIT 10.2
Employee Stock Purchase Plan Summary and Prospectus
MYCOGEN CORPORATION
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EMPLOYEE STOCK PURCHASE PLAN
PLAN SUMMARY AND PROSPECTUS
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The date of this Prospectus is December 1, 1995
TABLE OF CONTENTS
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PAGE
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INFORMATION ON THE 1995 EMPLOYEE STOCK PURCHASE PLAN............................................ 1
QUESTIONS AND ANSWERS ABOUT THE PURCHASE PLAN................................................... 1
1. What is the purpose of the Purchase Plan?.................................................. 1
2. When will the new Purchase Plan become effective?.......................................... 1
3. What happens to my outstanding purchase rights under the Predecessor Plan?................. 1
4. Who administers the Purchase Plan?......................................................... 1
5. How many shares of Common Stock may be issued under the Purchase Plan?..................... 1
6. How will the Common Stock be made available for purchase?.................................. 2
7. Who is eligible to participate in the Purchase Plan?....................................... 2
8. When may I become a participant?........................................................... 2
9. How do I become a participant?............................................................. 2
10. How much may I invest through the Purchase Plan?........................................... 2
11. May I change the rate of my payroll deductions?............................................ 3
12. What happens to my payroll deductions?..................................................... 3
13. When will my purchase right be exercised?.................................................. 3
14. How will my purchase right be exercised?................................................... 3
15. What is the purchase price of the Common Stock?............................................ 3
16. How is the fair market value of the Common Stock determined?............................... 3
17. Will I receive a report indicating the amount and status of my account?.................... 3
18. Are there any limitations on the number of shares I may purchase?.......................... 4
19. What if there are not enough shares available to cover all the exercised purchase rights
on a particular purchase date?............................................................. 4
20. May I terminate my purchase right?......................................................... 4
21. How do I rejoin the Purchase Plan if I terminate my purchase right?........................ 4
22. What happens if my employment terminates or my eligibility status changes?................. 4
23. What happens if I die while a participant?................................................. 5
24. What happens if I go on an approved unpaid leave of absence?............................... 5
25. What happens if I become permanently disabled while a participant?......................... 5
26. May I assign or transfer my rights under the Purchase Plan?................................ 5
27. What happens if the Corporation is acquired?............................................... 5
28. What happens if there is a change in the Corporation's capital structure?.................. 5
29. When will I receive the stock certificate for my purchased shares?......................... 6
30. After becoming a stockholder, may I vote my shares?........................................ 6
31. When may I sell my purchased shares?....................................................... 6
32. What restrictions apply if I am a Section 16 Insider?...................................... 6
33. What restrictions apply if I am an affiliate?.............................................. 7
34. Should I be concerned about taxes?......................................................... 7
35. May the Corporation terminate the Purchase Plan?........................................... 7
36. May the Purchase Plan be amended?.......................................................... 7
37. What is the maximum duration of the Purchase Plan?......................................... 7
38. Does the Purchase Plan have any impact on the terms of my employment?...................... 8
39. Is the Purchase Plan subject to ERISA?..................................................... 8
TABLE OF CONTENTS (CONTINUED)
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PAGE
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QUESTIONS AND ANSWERS ON FEDERAL TAX CONSEQUENCES................................. 8
T1. Will the receipt of purchase rights or the purchase of shares on my behalf
under the Purchase Plan result in taxable income?............................ 8
T2. What if I subsequently sell or dispose of the purchased shares?.............. 8
T3. How do I calculate my taxable income for Purchase Plan transactions?......... 8
T4. What are the applicable Federal tax rates?................................... 9
T5. Are there any special tax rules applicable to Section 16 Insiders?........... 9
T6. What are the Federal tax consequences to the Corporation?.................... 10
REGISTRANT INFORMATION AND PURCHASE PLAN ANNUAL INFORMATION....................... 10
THIS DOCUMENT CONSTITUTES PART OF THE OFFICIAL PROSPECTUS COVERING SECURITIES
THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
INFORMATION ON THE 1995 EMPLOYEE STOCK PURCHASE PLAN
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Mycogen Corporation, a Delaware corporation (the "Corporation"), has
established a new employee stock purchase program which will allow eligible
individuals to acquire shares of the Corporation's common stock (the "Common
Stock") at periodic intervals through their accumulated payroll deductions. The
new program is officially titled the Mycogen Corporation 1995 Employee Stock
Purchase Plan and will be referred to in this document as the Purchase Plan.
The Purchase Plan is the successor plan to the Mycogen Corporation Restated 1988
Employee Stock Purchase Plan (the "Predecessor Plan").
QUESTIONS AND ANSWERS ABOUT THE PURCHASE PLAN
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The Plan Summary and Prospectus sets forth in question and answer format
the major features of the Purchase Plan and the principal rights and benefits
available to the participating employees.
1. WHAT IS THE PURPOSE OF THE PURCHASE PLAN?
The purpose of the Purchase Plan is to provide eligible employees with
the opportunity to acquire stock ownership in the Corporation through
periodic payroll deductions. These deductions will be applied at semi-
annual intervals to purchase shares of Common Stock at a discount from
the then current market price.
2. WHEN WILL THE NEW PURCHASE PLAN BECOME EFFECTIVE?
The Purchase Plan will be submitted to the Corporation's stockholders
for approval at the 1995 Annual Meeting and, subject to such approval,
will become effective on December 1, 1995.
3. WHAT HAPPENS TO MY OUTSTANDING PURCHASE RIGHTS UNDER THE PREDECESSOR
PLAN?
Your purchase rights under the Predecessor Plan will automatically
terminate on November 30, 1995. As of that date, the Predecessor Plan
will come to an end, and no further purchase rights will thereafter be
granted or exercised and no further payroll deductions will be
collected under the terminated plan.
4. WHO ADMINISTERS THE PURCHASE PLAN?
The Purchase Plan will be administered by the Compensation Committee of
the Board. All references in this document to "Plan Administrator" will
accordingly mean the Compensation Committee in its capacity as
administrator of the Purchase Plan. The members of the Compensation
Committee are appointed by the Board and may be removed by the Board at
any time. The members of the Board are elected annually by the
Company's stockholders, and each Board member serves until he or she
resigns or until his or her successor is duly elected and qualified.
5. HOW MANY SHARES OF COMMON STOCK MAY BE ISSUED UNDER THE PURCHASE PLAN?
A total of 250,000 shares of Common Stock have been reserved for
issuance under the Purchase Plan. This 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. These shares will be made
available either from the Corporation's authorized but unissued shares
of Common Stock or from shares of Common Stock reacquired by the
Corporation, including shares repurchased on the open market.
6. HOW WILL THE COMMON STOCK BE MADE AVAILABLE FOR PURCHASE?
Shares of Common Stock will be offered for purchase through a series of
successive purchase periods, each with a duration of six (6) months.
Purchase periods will run from the first business day in June to the
last business day in November each year and from the first business day
in December each year to the last business day in May in the following
year. The initial purchase period will begin on December 1, 1995.
7. WHO IS ELIGIBLE TO PARTICIPATE IN THE PURCHASE PLAN?
Employees of the Corporation or any participating subsidiary will be
eligible to participate in the Purchase Plan if employed on a basis
under which they are regularly expected to work more than twenty (20)
hours per week for more than five (5) months per calendar year. As of
the initial purchase period beginning on December 1, 1995, the
following subsidiaries will be participating in the Purchase Plan:
Mycogen Plant Sciences, Mycogen Crop Protection, Mycogen Canada and
Mycogen Plant Sciences Puerto Rico. You will be notified from time to
time as additional subsidiaries extend the Purchase Plan to their
eligible employees.
Certain individuals eligible to participate in the Purchase Plan will
be subject to special provisions designed to assure their compliance
with the short-swing profit restrictions of Section 16(b) of the
Securities Exchange Act of 1934, as amended (the "1934 Act"). These
individuals, who will be referred to in this document as "Section 16
Insiders," include all executive officers of the Corporation. The
special provisions applicable to Section 16 Insiders will be discussed
from time to time in this document.0
8. WHEN MAY I BECOME A PARTICIPANT?
You may participate in any purchase period if you satisfy the following
requirements on the start date of that purchase period:
. you are an eligible employee of the Corporation or any participating
subsidiary, and
. you have been employed for at least one month.
On the start date of each purchase period in which you participate in
the Plan, you will be granted a purchase right to acquire shares of
Common Stock at the end of that purchase period.
IF YOU DO NOT JOIN THE PURCHASE PERIOD ON THE START DATE, YOU MAY NOT
SUBSEQUENTLY JOIN THAT PARTICULAR PURCHASE PERIOD AT ANY LATER DATE.
ACCORDINGLY, YOU WILL NOT BE ABLE TO PARTICIPATE IN THE PURCHASE PLAN
UNTIL THE START OF THE NEXT PURCHASE PERIOD.
9. HOW DO I BECOME A PARTICIPANT?
In order to participate in a particular purchase period, you must
complete and file the appropriate enrollment form with the Plan
Administrator before the start date of the purchase period. The
enrollment form includes a stock purchase agreement along with a
payroll deduction authorization. This form may be obtained from the
Human Resources Department.
10. HOW MUCH MAY I INVEST THROUGH THE PURCHASE PLAN?
You may authorize payroll deductions in 1% multiples of your eligible
earnings each purchase period, up to a maximum of fifteen percent
(15%). Your eligible earnings will be limited to your regular base pay
before any pre-tax or after-tax contributions now or hereafter
maintained by the Corporation or any participating subsidiary.
11. MAY I CHANGE THE RATE OF MY PAYROLL DEDUCTIONS?
You may NOT change your rate of payroll deduction in effect for a
particular purchase period once that purchase period begins. However,
you may increase or decrease your rate of payroll deduction for any
subsequent purchase period by filing a new payroll deduction
authorization with the Plan Administrator prior to the start date of
that purchase period. The new rate (which may not be in excess of
fifteen percent (15%) of your eligible earnings) will become effective
on the start date of the first purchase period following the filing of
your new authorization.
12. WHAT HAPPENS TO MY PAYROLL DEDUCTIONS?
Your payroll deductions will be credited to an account established in
your name on the Corporation's books. No interest will be paid on the
balance credited to your account. However, since the Corporation pays
all administrative expenses of the Purchase Plan, the full amount of
your payroll deductions will be applied to the purchase of Common
Stock. Your payroll deductions may be commingled with the general
assets of the Corporation and may be used for general corporate
purposes.
13. WHEN WILL MY PURCHASE RIGHT BE EXERCISED?
Your purchase right will be exercised on the last business day of each
purchase period.
14. HOW WILL MY PURCHASE RIGHT BE EXERCISED?
Your purchase right will be exercised by applying the payroll
deductions credited to your account to the purchase of whole shares of
Common Stock on each purchase date. Any remaining amount in your
account will be carried over to the next purchase period. However any
payroll deductions not applied to the purchase of Common Stock by
reason of the limitations on the number of shares purchasable per
participant (see Question 18) will be promptly refunded.
15. WHAT IS THE PURCHASE PRICE OF THE COMMON STOCK?
The purchase price per share of Common Stock will be eighty-five
percent (85%) of the lower of (i) the fair market value per share of
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Common Stock on the last business day immediately preceding the start
date of the purchase period or (ii) the fair market value per share on
the purchase date. In any event, your purchases of Common Stock will
always be at a discount of at least fifteen percent (15%) of fair
market value on the purchase date.
16. HOW IS THE FAIR MARKET VALUE OF THE COMMON STOCK DETERMINED?
The fair market value per share on any relevant date under the Purchase
Plan will be the closing selling price of the Common Stock on that
date, as reported on the NASDAQ National Market. If there is no
reported selling price for such date, then the closing selling price on
the last preceding date for which there is such a quotation will be
used. Stock prices are reported daily in most major newspapers.
17. WILL I RECEIVE A REPORT INDICATING THE AMOUNT AND STATUS OF MY
ACCOUNT?
After each purchase date, you will receive a report indicating the
number of shares purchased on your behalf and the purchase price paid
per share.
18. ARE THERE ANY LIMITATIONS ON THE NUMBER OF SHARES I MAY PURCHASE?
Yes. The following limitations apply:
(a.) The total number of shares of Common Stock available for purchase
over the ten (10)-year term of the Purchase Plan is limited to
250,000 shares (subject to the adjustments described under
Question 28).
(b.) The maximum number of shares of Common Stock that you may
purchase on any one purchase date may not exceed 375 shares
(subject to the adjustments described under Question 28).
(c.) You may not purchase shares at a rate in excess of $25,000 worth
of Common Stock (determined on the basis of the fair market value
of the Common Stock on the start date of the purchase period) for
each calendar year your purchase right is outstanding.
(d.) Finally, no purchase right will be granted to any employee who,
immediately after the grant of such right, would own (or
otherwise hold options or other rights to purchase) stock
possessing five percent (5%) or more of the total voting power or
value of all classes of stock of the Corporation or any parent or
subsidiary corporation.
Any payroll deductions collected from you which cannot be applied to
the purchase of Common Stock by reason of one or more of these
limitations will be refunded.
19. WHAT IF THERE ARE NOT ENOUGH SHARES AVAILABLE TO COVER ALL THE
EXERCISED PURCHASE RIGHTS ON A PARTICULAR PURCHASE DATE?
If the total number of shares for which purchase rights are to be
exercised on any purchase date exceeds the number of shares at the time
available for issuance under the Purchase Plan, then the Plan
Administrator will make a pro-rata allocation of the available shares
on a uniform and non-discriminatory basis, and any payroll deductions
not applied to the purchase of the available shares will be refunded.
20. MAY I TERMINATE MY PURCHASE RIGHT?
Yes. You may terminate your purchase right by filing the prescribed
notification form with the Plan Administrator at any time before the
last day of any purchase period. No further payroll deductions will be
collected on your behalf during the remainder of that period. Any
payroll deductions already collected for that purchase period will be
applied to the purchase of Common Stock at the end of the period. Once
you have terminated your purchase right for a particular purchase
period, you may not rejoin that purchase period at any later date, and
you must wait until the start of a new purchase period to resume
participation.
21. HOW DO I REJOIN THE PURCHASE PLAN IF I TERMINATE MY PURCHASE RIGHT?
Individuals who terminate their purchase rights may participate in any
subsequent purchase period by filing a new enrollment form on or before
the start date of that purchase period. Section 16 Insiders, however,
will be subject to certain restrictions on their ability to rejoin a
new purchase period following their withdrawal from an earlier purchase
period. See Question 32 below.
22. WHAT HAPPENS IF MY EMPLOYMENT TERMINATES OR MY ELIGIBILITY STATUS
CHANGES?
Your participation in the Purchase Plan will immediately cease should
your employment terminate for any reason (other than death or
disability) or should you otherwise lose your status as an eligible
employee. Any payroll deductions collected on your behalf for the
purchase period in which your termination or loss of eligibility occurs
will automatically be refunded to you.
23. WHAT HAPPENS IF I DIE WHILE A PARTICIPANT?
The person to whom your rights under the Purchase Plan are transferred
by will or the laws of inheritance may elect to (i) withdraw any
payroll deductions collected on your behalf for the purchase period in
which your death occurs or (ii) have those funds held for the purchase
of Common Stock on the next scheduled purchase date. The election may
be made at any time prior to that purchase date, and in the absence of
such election, your payroll deductions will automatically be refunded.
In no event may any further payroll deductions be made on your behalf
after your death.
24. WHAT HAPPENS IF I GO ON AN APPROVED UNPAID LEAVE OF ABSENCE?
Your payroll deductions will cease with the paycheck immediately
preceding the start of your leave and will not resume unless you return
to active service before the end of the purchase period in which your
leave began. Your existing payroll deductions for that purchase period
may either be withdrawn or applied to the purchase of Common Stock on
the next scheduled purchase date. Your must, however, make your
election at the time your leave begins; otherwise, your payroll
deductions will automatically be refunded.
25. WHAT HAPPENS IF I BECOME PERMANENTLY DISABLED WHILE A PARTICIPANT?
If your employment terminates due to permanent disability, you may
elect to (i) withdraw all the payroll deductions collected on your
behalf for the purchase period in which such termination occurs or (ii)
have those funds held for purchase of Common Stock on the next
scheduled purchase date. The election may be made at any time prior to
that purchase date. In the absence of such election, your payroll
deductions will automatically be refunded. In no event, however, will
any further payroll deductions be collected on your behalf following
your termination of employment.
You will be deemed to be permanently disabled should you become unable
to engage in any substantial gainful employment by reason of any
medically determinable physical or mental impairment expected to result
in death or to be of continuous duration of at least twelve (12)
months.
26. MAY I ASSIGN OR TRANSFER MY RIGHTS UNDER THE PURCHASE PLAN?
No. Your purchase rights cannot be assigned or transferred, except by
will or the laws of inheritance following your death.
27. WHAT HAPPENS IF THE CORPORATION IS ACQUIRED?
If the Corporation is acquired, whether by merger or asset sale or sale
of more than fifty percent (50%) of the Corporation's outstanding
voting stock (an "Acquisition"), then all payroll deductions for the
purchase period in which such Acquisition occurs will automatically be
applied to the purchase of Common Stock immediately prior to the
effective date of the Acquisition, subject to the share limitations
summarized in Question 18. The purchase price of such shares will be
eighty-five percent (85%) of the lower of (i) the fair market value of
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the Common Stock on the last business day immediately preceding the
purchase period in which such Acquisition occurs or (ii) the fair
market value of the Common Stock immediately prior to the effective
date of the Acquisition.
28. WHAT HAPPENS IF THERE IS A CHANGE IN THE CORPORATION'S CAPITAL
STRUCTURE?
In the event of any stock dividend, stock split, 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 will be made to (i) the
maximum number and class of securities issuable under the Purchase
Plan, (ii) the maximum number and class of securities purchasable per
participant on each purchase date and (iii) the number and class of
securities and the price per share in effect under each outstanding
purchase right. Such adjustments will prevent any dilution or
enlargement of the rights and benefits of Purchase Plan participants.
29. WHEN WILL I RECEIVE THE STOCK CERTIFICATE FOR MY PURCHASED SHARES?
You may at any time request the issuance of a stock certificate for any
shares purchased on your behalf under the Purchase Plan. However, not
more than one certificate will be issued to your for each purchase
period of participation. Your may specify whether the certificate
should be issued in your name alone or in the name of you and your
spouse as community property or as joint tenants with right of
survivorship. Alternatively, you may request the certificate to be
issued directly to a Corporation-designated brokerage account so that
you can sell the shares promptly at any time.
30. AFTER BECOMING A STOCKHOLDER, MAY I VOTE MY SHARES?
Yes, even if you do not have physical possession of a stock
certificate.
31. WHEN MAY I SELL MY PURCHASED SHARES?
Individuals who purchase Common Stock under the Purchase plan may
resell such shares without restriction, except for Section 16 Insiders
and other persons who are considered to be affiliates of the
Corporation.
32. WHAT RESTRICTIONS APPLY IF I AM A SECTION 16 INSIDER?
Section 16(b) of the 1934 Act requires the Corporation to recover any
profit realized by any Section 16 Insider from any purchase and sale,
or sale and purchase, of shares of Common stock made within a period of
less than six (6) months. As a result, the following rules will be in
effect for Section 16 Insiders who participate in the Purchase Plan:
(i.) The acquisition of Common Stock under the Purchase Plan will
NOT be treated as a purchase of those shares for short-swing
liability purposes, provided the acquired shares are held for
at least six (6) months after the purchase date. The exempt
purchase must be reported on the Form 5 filed by the Section 16
Insider for the fiscal year in which the shares are acquired or
may be reported on any earlier Form 4 filed after the purchase
date.
(ii.) In the event the Section 16 Insider makes a special irrevocable
election to participate in the Purchase Plan at a specified
rate of payroll deduction, with no right to withdraw the funds
so contributed to the Purchase Plan, then any acquisition of
Common Stock made under the Purchase Plan more than six (6)
months after the effective date of that election will NOT be
treated as a purchase of those shares for short-swing liability
purposes, and the acquisition will NOT be matched against any
sale of Common Stock made within six (6) months before or after
the acquisition date.
(iii.) Should a Section 16 Insider who has not made such an
irrevocable election sell any Purchase plan shares within six
(6) months after the purchase date, then the acquisition of
those shares will be treated as a purchase for short-swing
liability purposes, retroactive to such purchase date, and must
be reported on a Form 4 filed by the Section 16 Insider within
ten (10) days after the close of the calendar month in which
the sale is made. The non-exempt acquisition will be matched
with any sales of Common stock made by the Section 16 Insider
within six (6) months before or after the retroactive purchase
date, including the sale which triggered the non-exempt
treatment.
NOTE: The exemption for the acquisition of common stock under
the Purchase Plan will not be lost if other shares of
Common Stock held by the Section 16 Insider are sold
within six (6) months after the purchase date.
(iv.) If the Section 16 Insider who has not filed the special
irrevocable election withdraws from a purchase period, then
that individual may be precluded from rejoining the Purchase
plan until the start date of a new purchase period beginning at
least six (6) months after the earlier withdrawal date in order
to preserve the exempt status of any Purchase Plan acquisitions
he or she may have made within the preceding six (6) months.
(v.) Any change made by the Section 16 Insider to the special
irrevocable election filed under the Purchase Plan (including a
decision to withdraw from the offering period) will not become
effective for at least six (6) months.
33. WHAT RESTRICTIONS APPLY IF I AM AN AFFILIATE?
In general, persons with power to manage and direct the policies of
the Corporation, relatives of these people and trusts, estates,
corporations or other entities controlled by any of these people may
be deemed to be affiliates of the Corporation. Affiliates of the
Corporation are obligated to resell their shares of Common Stock in
compliance with Rule 144 of the Securities and Exchange Commission
("SEC"). This rule requires sales to be effected in "broker's
transactions," as defined in such rule, and a written notice of each
sale must be filed with the SEC at the time of the sale. The rule also
limits the number of shares which may be sold in any three (3)-month
period to no more than the greater of (i) one percent (1%) of the
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outstanding shares of Common Stock or (ii) the average weekly reported
volume of trading in such shares on all securities exchanges during
the four (4) calendar weeks preceding the filing of the required
notice of proposed sale. However, the two (2)-year holding period
requirement of Rule 144 will not be applicable to any Common Stock
acquired under the Purchase Plan.
OFFICERS OF THE CORPORATION SHOULD CONSULT WITH COUNSEL BEFORE
OFFERING FOR SALE ANY SHARES OF COMMON STOCK ACQUIRED UNDER THE
PURCHASE PLAN IN ORDER TO ASSURE THEIR COMPLIANCE WITH RULE 144,
SECTION 16 AND ALL OTHER APPLICABLE PROVISIONS OF FEDERAL AND STATE
SECURITIES LAWS.
34. SHOULD I BE CONCERNED ABOUT TAXES?
Yes. A summary description of the Federal tax consequences applicable
to your participation in the Purchase Plan is included below.
35. MAY THE CORPORATION TERMINATE THE PURCHASE PLAN?
Yes. The Plan Administrator has the discretion to terminate all
outstanding purchase rights immediately following the close of any
purchase period. If the Plan Administrator exercises this discretion,
the Purchase Plan will terminate in its entirety, no further purchase
rights will thereafter be granted or exercised and no further payroll
deductions will be collected under the terminated plan.
36. MAY THE PURCHASE PLAN BE AMENDED?
The Board may alter or amend the Purchase Plan at any time to become
effective immediately following the close of any purchase period.
However, no amendment may be made without approval of the
Corporation's stockholders if the amendment would (i) materially
increase the number of shares of Common Stock which may be issued over
the term of the Purchase Plan or the number of shares which may be
purchased per participant on each purchase date, except for certain
permissible adjustments in the event of changes to the Corporation's
capital structure, (ii) reduce the purchase price formula specified in
the Purchase Plan or (iii) otherwise materially increase the benefits
available under the Purchase Plan or materially modify the eligibility
requirements for participation.
37. WHAT IS THE MAXIMUM DURATION OF THE PURCHASE PLAN?
The Purchase Plan will in all events terminate upon the earliest of
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(i) the last business day in November 2005, (ii) the date on which all
shares available for issuance under the Purchase Plan have been sold
or (iii) the date on which all purchase rights are exercised in
connection with an Acquisition.
38. DOES THE PURCHASE PLAN HAVE ANY IMPACT ON THE TERMS OF MY EMPLOYMENT?
Neither the Purchase Plan nor any outstanding purchase right is
intended to provide any participant with the right to remain in the
Corporation's employ for any specific period, and both you and the
Corporation will each have the right to terminate your employment at
any time and for any reason, with or without cause.
39. IS THE PURCHASE PLAN SUBJECT TO ERISA?
The Purchase Plan is not subject to the provisions of the Employee
Retirement Income Security Act of 1974 ("ERISA") or Section 401(a) of
the Internal Revenue Code.
QUESTIONS AND ANSWERS ON FEDERAL TAX CONSEQUENCES
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The following is a description of the Federal income tax consequences of
participation in the Purchase Plan. State and local tax treatment, which is not
discussed below, may vary from such Federal income tax treatment. You should
consult with your own tax advisor as to the tax consequences of your particular
transactions under the Purchase Plan.
T1. WILL THE RECEIPT OF PURCHASE RIGHTS OR THE PURCHASE OF SHARES ON MY
BEHALF UNDER THE PURCHASE PLAN RESULT IN TAXABLE INCOME?
No taxable income will be reportable upon your receipt of a purchase
right under the Purchase Plan. However, the Purchase Plan is not a
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qualified employee stock purchase plan under Section 423 of the
Internal Revenue Code, and you will accordingly recognize compensation
income at the time your purchase right is exercised. The amount of
such income will be equal to the fair market value of the shares of
Common Stock purchased on your behalf at the time of such purchase
less the purchase price paid for those shares. The Corporation will
include this income on your W-2 statement for the calendar year in
which you acquire the shares, and you must satisfy all Federal, state
and local withholding and other payroll taxes applicable to such
income at the time your purchase right is exercised.
T2. WHAT IF I SUBSEQUENTLY SELL OR DISPOSE OF THE PURCHASED SHARES?
Any gain or loss recognized upon your subsequent sale or disposition
of the purchased shares will be either capital gain or capital loss.
Whether the capital gain or loss is long-term or short-term will
depend on the period of time the shares are held prior to sale. Gain
or loss on shares held for more than one (1) year will be long-term.
T3. HOW DO I CALCULATE MY TAXABLE INCOME FOR PURCHASE PLAN TRANSACTIONS?
The following example will illustrate the taxable income you will have
to report upon your acquisition of Purchase Plan shares and the
additional taxable income you will recognize upon your subsequent sale
of those shares.
EXAMPLE: On December 1, 1995 you enroll in the Purchase Plan when the
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fair market value per share is $12.00 and contribute $1,000.00 for the
purchase period ending May 31, 1996. On May 31, 1996, the fair market
value per share is $15.00, and the purchase price for your shares will
accordingly be $10.20 per share (85% of $12.00). 98 shares of Common
Stock will be purchased on your behalf on May 31, 1996 at the $10.20
price per share (1,000/$10.20). Your taxable income at the time of
such purchase will be determined as follows:
Ordinary Income Per Share
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$15.00 fair market value at May 31, 1996 purchase less
$10.20 per share purchase price = $4.80 per share at the time of
purchase
Assume you subsequently sell the shares for $20.00 per share. Your
taxable income at that time will be determined as follows:
Capital Gain Per Share
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$20.00 per share selling price less
$15.00 fair market value on May 31, 1996 = $5.00 per share
The capital gain will be long-term if you hold the shares for at least
one (1) year after the May 31, 1996 purchase date.
T4. WHAT ARE THE APPLICABLE FEDERAL TAX RATES?
Ordinary income is subject to a maximum Federal tax rate of 39.6% on
taxable income in excess of $256,500 ($128,250 for a married taxpayer
filing a separate return). The applicable $256,500 or $128,250
threshold is subject to cost-of-living adjustments in taxable years
beginning after December 31, 1995. Certain limitations are imposed
upon a taxpayer's itemized deductions, and the personal exemptions
claimed by the taxpayer are subject to phase-out. These limitations
may result in the taxation of ordinary income at an effective top
marginal rate in excess of 39.6%. Long-term capital gains are taxed at
the same rates as ordinary income, subject to a maximum rate of 28%.
For the tax year ending December 31, 1995, itemized deductions are
reduced by 3% of the amount by which the taxpayer's adjusted gross
income for the year exceeds $114,700 ($57,350 for a married taxpayer
filing a separate return). The reduction may not, however, exceed 80%
of the total itemized deductions (excluding medical expenses, casualty
and theft losses, and certain investment interest expenses) claimed by
the taxpayer. The applicable $114,700 or $57,350 threshold is subject
to cost-of-living adjustments in taxable years beginning after
December 31, 1995.
In addition, the deduction for personal exemptions claimed by the
taxpayer is reduced by 2% for each $2,500 ($1,250 for a married
taxpayer filing a separate return) or fraction thereof by which the
taxpayer's adjusted gross income for the year exceeds a specified
threshold amount. The applicable thresholds for 1995 are $172,050 for
married taxpayers filing joint returns, $114,700 for single taxpayers
and $86,025 for married taxpayers filing separate returns.
Accordingly, the deduction is completely eliminated for any taxpayer
whose adjusted gross income for the year exceeds the applicable
threshold amount by more than $122,500. The threshold amounts will be
subject to cost-of-living adjustments in taxable years beginning after
December 31, 1995.
T5. ARE THERE ANY SPECIAL TAX RULES APPLICABLE TO SECTION 16 INSIDERS?
If you are a Section 16 Insider, the applicable tax rules for the
acquisition and sale or other disposition of Purchase Plan shares
acquired by you will be as follows:
. Purchase Plan shares acquired by you will, under the Federal tax
laws, be deemed to be subject to a substantial risk of forfeiture
for the six (6)-month period following the purchase date, since the
sale of those shares at a profit during that six (6)-month period
will trigger short-swing liability under Section 16(b) of the 1934
Act. Accordingly, there will be no taxable income recognized at the
time the Purchase Plan shares are acquired, unless you make a
Section 83(b) election to be taxed at that time (see next
paragraph). Without such a Section 83(b) election, taxation will be
deferred for six (6) months, and you will, at the end of such
deferral period, recognize ordinary income in an amount equal to the
excess of (i) the fair market value of the purchased shares at that
time over (ii) the purchase price paid for those shares.
. If your Purchase Plan shares are deemed to be subject to a
substantial risk of forfeiture, then you may elect under Code
Section 83(b) to include as ordinary income in the year those shares
are purchased an amount equal to the excess of (i) the fair market
value of those shares at the time of purchase over (ii) the purchase
price paid for the shares. If your make the Section 83(b) election,
you will not recognize any additional income when the forfeiture
period subsequently lapses.
. If you choose to file a special irrevocable election to participate
in the Purchase Plan at a specified rate of payroll deduction, with
no right to withdraw the funds so contributed, then any acquisition
of Purchase Plan shares made more than six (6) months after the
effective date of such election will be an exempt transaction under
the Federal securities laws, and the acquired shares will NOT be
deemed to be subject to a substantial risk of forfeiture for
purposes of the Federal tax laws. Accordingly, you will recognize
taxable income, immediately upon your acquisition of those shares,
in an amount equal to their fair market value at the time of
purchase less the purchase price paid for those shares.
. Whether or not you file the special irrevocable election, your sale
of the Purchase Plan shares will result in capital gain to the
extent the amount realized upon the sale exceeds the fair market
value of the shares at the time you recognized the ordinary income
with respect to their acquisition. A capital loss will result to the
extent the amount realized upon the sale is less than such fair
market value. The gain or loss will be long-term if the shares are
held for more than one (1) year prior to the sale. For shares issued
to Section 16 Insiders, the capital gain holding period will
generally start six (6) months after the purchase date, unless the
Section 16 Insider files a Section 83(b) election to be taxed on the
shares at the time of purchase or the shares are otherwise purchased
pursuant to the special irrevocable election.
T6. WHAT ARE THE FEDERAL TAX CONSEQUENCES TO THE CORPORATION?
The Corporation will be entitled to a business expense deduction equal
to the amount of ordinary income recognized by the participant in
connection with his or her acquisition of the Purchase Plan shares.
The deduction will normally be allowed for the taxable year in which
such acquisition occurs.
REGISTRANT INFORMATION AND PURCHASE PLAN ANNUAL INFORMATION
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Mycogen Corporation is a Delaware corporation which maintains its principal
executive offices at 5501 Oberlin Drive, San Diego, California 92121. The
telephone number at the executive offices is (619) 453-8030. You may contact
the Corporation at this address or telephone number for further information
concerning the Purchase Plan and its administration.
A copy of the Corporation's Annual Report to Stockholders for the most
recent fiscal year will be furnished to each participant in the Purchase Plan,
and additional copies will be furnished, without charge, to each participant
upon written or oral request to the Corporate Secretary of the Corporation at
its principal executive offices, or upon telephoning the Corporation at its
principal executive offices. In addition, any person receiving a copy of this
Prospectus may obtain without charge, upon written or oral request to the
Corporate Secretary, a copy of any of the documents listed below, which are
hereby incorporated by reference into this Prospectus, other than certain
exhibits to such documents:
(a.) The Corporation's Annual Report on Form 10-K for the fiscal year ended
December 31, 1994 filed with the SEC on March 3, 1995;
(b.) The Corporation's Quarterly Reports on Form 10-Q for the fiscal
quarters ended March 31, 1995 and June 30, 1995, filed with the SEC on
May 15, 1995 and August 10, 1995, respectively;
(c.) The Corporation's Registration Statement No. 0-15881 on Form 8-A filed
with the SEC on May 7, 1992 in which there is described the terms,
rights and provisions applicable to the Corporation's Common Stock;
and
(d.) Any similar report filed subsequently with the SEC and distributed to
the Corporation's stockholders.
The Corporation will also deliver to each participant in the Purchase Plan
who does not otherwise receive such materials a copy of all reports, proxy
statements and other communications distributed to the Corporation's
stockholders