MILBERG WEISS BERSHAD
HYNES & LERACH LLP
WILLIAM S. LERACH (68581)
ALAN SCHULMAN (128661)
DARREN J. ROBBINS (168593)
600 West Broadway, Suite 1800
San Diego, CA 92101
Telephone: 619/231-1058
ABBEY, GARDY & SQUITIERI, LLP
MARK C. GARDY
JAMES S. NOTIS
212 East 39th Street
New York, NY 10016
Telephone: 212/889-3700
Attorneys for Plaintiff
SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF SAN DIEGO
LESLIE SUSSER, On Behalf of Himself ) Case No.
and All Others Similarly Situated, )
) CLASS ACTION
Plaintiff, )
) COMPLAINT BASED UPON UNFAIR
vs. ) BUSINESS PRACTICES, SELF
) DEALING AND BREACH OF
MYCOGEN CORPORATION, J. PEDRO ) FIDUCIARY DUTY
REINHARD, CARLTON J. EIBL, JOHN L. )
HAGAMAN, JOSEPH P. SULLIVAN, ROY M. )
BARBEE, GEORGE KHACHATOURIANS, )
NICKOLAS D. HEIN, G. WILLIAM )
TOLBERT, LOUIS W. PRIBILA, DOW )
CHEMICAL COMPANY and DOES 1-25, )
inclusive, )
)
Defendants. ) Plaintiff Demands A
) Trial By Jury
- ------------------------------------- ) -------------------
Plaintiff. by his name attorneys, alleges upon information and belief,
except as to PARA4 which plaintiff alleges upon knowledge, as follows:
JURISDICTION AND VENUE
1. This Court has jurisdiction over all causes of action asserted herein
pursuant to the California Constitution, Article XL, Section 10, because this
case is a cause not given by statute to other trial courts.
2. This court has jurisdiction over Mycogen because this defendant is a
California corporation with its principal place of business at 5501 Oberlin
Drive, San Diego, California.
3. Venue is proper in this Court because the conduct at issue took place
and had an effect in this County and defendants made misrepresentations which
had an effect in this County.
PARTIES
4. Plaintiff Leslie Susser is a stockholder of defendant Mycogen
Corporation ("Mycogen" or the "Company").
5. Defendant Mycogen is a corporation duly organized and existing under
the laws of the state of California, with its principal offices located at
5501 Oberlin Drive, San Diego, California 92121. Mycogen develops,
manufactures and markets biopesticides as alternatives to chemical pesticides
to control a variety of insects, weeds and parasitic worms. As of April 7,
1998, there were over 36 million shares of Mycogen common stock outstanding.
6. Defendant Dow Chemical Company ("Dow") is a corporation duly
organized and existing under the laws of the State of Delaware with its
principal offices located at 2030 Dow Center, Midland,
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Michigan 48674. Dow is the fifth largest chemical company in the world, with
annual sales of more than $20 billion. Dow manufactures and supplies
chemicals, plastics, energy, agricultural products, consumer goods and
environmental services. Through its wholly-owned subsidiary, Dow
Agrosciences, LLC ("Dow Agrosciences"), Dow owns or controls shares
representing approximately 69 percent of the outstanding common stock of
Mycogen.
7. Defendant J. Pedro Reinhard is a Director of Mycogen and the Chief
Financial Officer and Executive Vice President of Dow Agrosciences.
8. Defendant Charles J. Eibl is the President of Mycogen and a member
of its Board of Directors.
9. Defendant John L. Hagaman is a Director of Mycogen and the President
of Dow Agrosciences.
10. Defendant Joseph P. Sullivan is a Director of Mycogen.
11. Defendant Roy M. Barbee is a Director of Mycogen.
12. Defendant George Khachatourians is a Director of Mycogen.
13. Defendant Nickolas D. Hein is a Chairman of Mycogen's Board of
Directors and a Vice President of "Global Growth" for Dow Agrosciences.
14. Defendant G. William Tolbert is a Director of Mycogen and a "Global
Business Development Director" for Dow Agrosciences.
15. Defendant Louis W. Pribila is a Director of Mycogen and the
Secretary, General Counsel and Vice President of Dow Agrosciences.
16. The Defendants named in PARAs 7 through 15 are sometimes
collectively referred to herein as the "Individual Defendants."
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17. The true names and capacities of defendants sued herein under
California Code of Civil Procedure Section 474 as Does 1 through 25,
inclusive, are presently not known to plaintiff, who therefore sues these
defendants by such fictitious names. Plaintiff will seek to amend this
Complaint and include these Doe defendants' true names and capacities when
they are ascertained. Each of the fictitiously named defendants is
responsible in some manner for the conduct alleged herein and for the
injuries suffered by the Class.
18. The Individual Defendants as officers and/or directors of Mycogen
have a fiduciary relationship and responsibility to plaintiff and the other
common public stockholders of Mycogen and owe to plaintiff the other class
members the highest obligations of good faith, loyalty, fair dealing, due care
and candor.
CLASS ACTION ALLEGATIONS
19. Plaintiff brings this action pursuant to Section 382 of the
California Code of Civil Procedure on his own behalf and as a class action on
behalf of all common stockholders of Mycogen, or their successors in
interest, who are being and will be harmed by defendants' actions described
below (the "Class"). Excluded from the Class are defendants herein and any
person, firm, trust, corporation, or other entity related to or affiliated
with any of the defendants.
20. This action is properly maintainable as a class action because:
(a) The Class is so numerous that joinder of all members is
impracticable. There are hundreds of Mycogen stockholders of record who are
located throughout the United States;
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(b) There are questions of law and fact which are common to the
Class, including: whether the defendants have engaged or are continuing to
act in a manner calculated to benefit themselves at the expense of Mycogen's
minority stockholders; and whether plaintiff and the other members of the
Class would be irreparably damaged if the defendants are not enjoined in the
manner described below;
(c) The defendants have acted or refused to act on grounds
generally applicable to the Class, thereby making appropriate final
injunctive relief with respect to the Class as a whole;
(d) Plaintiff is committed to prosecuting this action and has
retained competent counsel experienced in litigation of this nature. The
claims of plaintiff are typical of the claims of the other members of the
Class and plaintiff has the same interests as the other members of the Class.
Accordingly, plaintiff is an adequate representative of the Class and will
fairly and adequately protect the interests of the Class; and
(e) Plaintiff anticipates that there will be no difficulty in the
management of this litigation as a class action.
21. For the reasons stated herein, a class action is superior to other
available methods for the fair and efficient adjudication of this controversy.
CLAIM FOR RELIEF
22. Mycogen is a California corporation that develops, manufactures and
markets biopesticides as alternatives to chemical pesticides to control a
variety of insects, weeds and parasitic worms. The Company's products are
based on natural agents that are
4
compatible with the environment and are developed through genetic engineering
technology and innovative formulations.
23. Dow currently owns or controls approximately 69 percent of the
outstanding common stock of Mycogen. Under the terms of a prior agreement
with Mycogen (the "Agreement"), Dow cannot acquire the remaining shares of
Mycogen before February 1999.
24. After the close of trading on April 30, 1998, it was reported that
Dow, through Dow Argosciences, requested an amendment to the Agreement to
permit it to begin discussions regarding the acquisition of the remaining
shares of Mycogen common stock it does not already own for $20.50 per share
in cash.
25. As set forth above, Mycogen has 9 board members whose loyalties are,
at best, divided in the instant transaction and cannot be expected to act
in the best interest of Mycogen's minority stockholders.
26. The purpose of the proposed acquisition is to enable Dow to acquire
the shares of Mycogen it does not already own, as well as Mycogen's valuable
assets, for Dow's own benefit at the expense of Mycogen's minority
stockholders.
27. The proposed acquisition comes at a time when Mycogen has performed
well and Dow expects it will continue to perform well because it is already
well positioned to do so.
28. Dow has timed this transaction to capture Mycogen's future potential
and use it to its own ends without paying an adequate or fair price for the
Company's remaining shares.
29. Amidst this backdrop of positive and improving financial position
and increased prospects for growth, Dow announced its desire to acquire the
remaining shares of Mycogen for $20.50 cash
5
per share. The offer made by Dow represents no premium over the current price
of Mycogen common stock. In fact, prior to Dow's announcement on April 30,
1998, the price of Mycogen common stock closed at $20.625 per share -- higher
than the price offered by Dow in the proposed acquisition.
30. The Individual Defendants and Dow are in a position of control and
power over Mycogen's stockholders and have access to internal financial
information about Mycogen, its true value, expected increase in true value
and the benefits to Dow of 100 percent ownership of Mycogen to which
plaintiff and the Class members are not privy. Defendants are using their
positions of power and control to benefit Dow in this transaction, to the
detriment of the Mycogen common stockholders.
31. In proposing the aquisition, Dow and the Individual Defendants have
committed or threatened to commit the following acts to the detriment and
disadvantage of Mycogen minority stockholders:
(a) They have undervalued Mycogen's common stock by ignoring the full
value of its assets and future prospects. The proposed acquisition
consideration does not reflect the value of Mycogen's valuable assets; and
(b) They timed the announcement of the proposed buyout to place an
artificial lid on the market price of Mycogen's common stock to justify a
price that is unfair to Mycogen's minority stockholders.
32. The Individual Defendants have clear and material conflicts of
interest and are acting to better the interests of Dow and themselves at the
expense of Mycogen's minority stockholders.
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33. In light of the foregoing, the Individual Defendants must, as their
fiduciary obligations require:
- undertake an appropriate evaluation of Mycogen's worth as an
acquisition candidate;
- act independently so that the interests of Mycogen's minority
stockholders will be protected, including but not limited to the
retention of independent advisors and the appointment of a Special
Committee of some or all of the members of the Mycogen's board to
consider the Dow offer and negotiate with Dow on behalf of
Mycogen's minority stockholders;
- adequately ensure that no conflicts of interest exist between
defendants' own interests and their fiduciary obligation to
maximize stockholder value or, if such conflicts exist, to ensure
that all conflicts be resolved in the best interests of Mycogen's
minority stockholders; and
- if an acquisition transaction is to go forward, require that it be
approved by a majority of Mycogen's minority stockholders.
34. As a result of the defendants' failure to take such steps to date,
plaintiff and the other members of the Class have been and will be damaged in
that they have not and will not receive their proportionate share of the
value of the Company's assets and business, and have been and will be
prevented from obtaining a fair price for their common stock.
35. Defendants, in failing to disclose the material non-public
information in their possession as to the value of Mycogen's assets, the full
extent of the future earnings potential of Mycogen and its expected increase
in profitability, are engaging in self-dealing, are not acting in good faith
toward plaintiff and the other members of the Class, and have breached and
are breaching their fiduciary duties to the member of the Class.
36. As a result of the defendants' unlawful actions, plaintiff and the
other members of the Class will be irreparably
7
harmed in that they will not receive their fair portion of the value of
Mycogen's assets and business and will be prevented from obtaining the real
value of their equity ownership of the Company. Unless the proposed
acquisition is enjoined by the Court, defendants will continue to breach
their fiduciary duties owed to plaintiff and the members of the Class, will
not engage in arm's-length negotiations on the acquisition terms, and will
not supply to Mycogen's minority stockholders sufficient information to
enable them to cast informed votes on the proposed acquisition and may
consummate the proposed acquisition, all to the irreparable harm of the
members of the Class.
37. Plaintiff and other members of the Class have no adequate remedy at
law.
PRAYER FOR RELIEF
WHEREFORE, plaintiff prays for judgment and relief as follows:
1. Ordering that this action may be maintained as a class action and
certifying plaintiff as the Class representative;
2. Declaring that defendants have breached their fiduciary and other
duties to plaintiff and other members of the Class;
3. Entering an order requiring defendants to take the steps set forth
hereinabove;
4. Preliminarily and permanently enjoining the defendants and their
counsel, agents, employees and all persons acting under, in concert with, or
for them, from proceeding with, consummating or closing the proposed
transaction;
5. In the event the proposed acquisition is consummated, rescinding it
and setting it aside;
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6. Awarding compensatory damages against defendants individually and
severally in an amount to be determined at trial, together with prejudgment
interest at the maximum rate allowable by law;
7. Awarding costs and disbursements, including plaintiff's counsel's
fees and experts' fees; and
8. Granting such other and further relief as to the Court may seem
just and proper.
DATED: May 1, 1998 MILBERG WEISS BERSHAD
HYNES & LERACH LLP
WILLIAM S. LERACH
ALAN SCHULMAN
DARREN J. ROBBINS
/s/ Alan Schulman
-----------------------------------
ALAN SCHULMAN
600 West Broadway, Suite 1800
San Diego, CA 92101
Telephone: 619/231-1058
ABBEY, GARDY & SQUITIERI, LLP
MARK C. GARDY
JAMES S. NOTIS
212 East 39th Street
New York, NY 10016
Telephone: 212/889-3700
Attorneys for Plaintiff
9
MILBERG WEISS BERSHAD
HYNES & LERACH LLP
WILLIAM S. LERACH (68581)
ALAN SCHULMAN (128661)
DARREN J. ROBBINS (168593)
600 West Broadway, Suite 1800
San Diego, CA 92101
Telephone: 619/231-1058
ABBEY, GARDY & SQUITIERI, LLP
MARK C. GARDY
JAMES S. NOTIS
212 East 39th Street
New York, NY 10016
Telephone: 212/889-3700
Attorneys for Plaintiff
SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF SAN DIEGO
LESLIE SUSSER, On Behalf of Himself ) Case No. 720255
and All Others Similarly Situated, )
) CLASS ACTION
Plaintiff, )
) JURY DEMAND
vs. )
)
MYCOGEN CORPORATION, J. PEDRO )
REINHARD, CARLTON J. EIBL, JOHN L. )
HAGAMAN, JOSEPH P. SULLIVAN, ROY M. )
BARBEE, GEORGE KHACHATOURIANS, )
NICKOLAS D. HEIN, G. WILLIAM )
TOLBERT, LOUIS W. PRIBILA, DOW )
CHEMICAL COMPANY and DOES 1-25, )
inclusive. )
)
Defendants. )
)
- ------------------------------------- )
Plaintiff demands a trial by jury.
DATED: May 1, 1998 MILBERG WEISS BERSHAD
HYNES & LERACH LLP
WILLIAM S. LERACH
ALAN SCHULMAN
DARREN J. ROBBINS
/s/ Alan Schulman
-----------------------------------
ALAN SCHULMAN
600 West Broadway, Suite 1800
San Diego, CA 92101
Telephone: 619/231-1058
ABBEY, GARDY & SQUITIERI, LLP
MARK C. GARDY
JAMES S. NOTIS
212 East 39th Street
New York, NY 10016
Telephone: 212/889-3700
Attorneys for Plaintiff
1