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
BERNSTEIN LIEBHARD & LIFSHITZ
STANLEY D. BERNSTEIN
274 Madison Avenue
New York, NY 10016
Telephone: 212/779-1414
Attorneys for Plaintiff
SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF SAN DIEGO
ELLIS INVESTMENTS, LTD., On Behalf ) Case No. 720257
of Itself and All Others Similarly )
Situated, ) CLASS ACTION
Plaintiff, )
) COMPLAINT FOR BREACHES OF
vs. ) FIDUCIARY DUTIES
)
CARLTON J. EIBL, PERRY J. GEHRING, )
NICKOLAS D. HEIN, LOUIS W. PRIBILA, )
WILLIAM C. SCHMIDT, G. WILLIAM )
TOLBERT, MYCOGEN CORP., DOW )
AGROSCIENCES LLC and DOES 1-25, )
inclusive )
)
Defendants. ) Plaintiff Demands A
) Trial By Jury
- ------------------------------------- ) -------------------
Plaintiff, by its attorneys, for its complaint against defendants,
alleges upon information and belief, except for paragraph 4 hereof, which is
alleged 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.
4. 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.
5. 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.
6. 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
7. Plaintiff Ellis Investments, Ltd. has been the owner of the common
stock of the Mycogen Corp. ("Mycogen" or the "Company")
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since prior to the transaction herein complained of and continuously to date.
8. Defendant Mycogen is a corporation duly organized and existing under
the laws of the State of California and maintains its principal executive
offices at 5501 Oberlin Drive, San Diego, California. The Company is a
diversified agribusiness and biotechnology company that develops and markets
seed for improved crop varieties and provides crop protection products and
services.
9. Defendant Dow AgroSciences LLC ("Dow AG") is a wholly owned
subsidiary of the Dow Chemical Company which maintains its principal offices
at 2030 Dow Center, Midland, Michigan. Dow AG owns or controls approximately
69% of Mycogen.
10. Defendant Nickolas D. Hein is Chairman of the Board of Directors of
Mycogen.
11. Defendant Carlton J. Eibl is President and a Director of Mycogen.
12. Defendant Perry J. Gehring is a Director of Mycogen and a Vice
President of Dow AG.
13. Defendant Louis W. Pribila is a Director of Mycogen and a Vice
President and General Counsel of Dow AG.
14. Defendant William C. Schmidt is a Director of Mycogen and Vice
President and Chief Financial Officer of Dow AG.
15. Defendant G. William Tolbert is a Director of Mycogen and a
Director of Dow AG.
16. The Individual Defendants named in paragraphs 7 through 12 are
controlled by Dow AG and are in a fiduciary relationship with plaintiff and
the other public stockholders of Mycogen and owe them the highest obligations
of good faith and fair dealing.
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17. The true names and capacitates 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. Each defendant herein is sued individually as a conspirator and aider
and abbetor, as well as in his capacity as an officer and/or director of the
Company (in the case of the Individual Defendants), or as a control person,
and the liability of each arises from the fact that he or it has engaged in
all or part of the unlawful acts, plans, schemes, or transactions complained
of herein.
CLASS ACTION ALLEGATIONS
------------------------
19. Plaintiff brings this action on its own behalf and as a class
action, pursuant to Section 382 of the California Code of Civil Procedure, on
behalf of all common stockholders of the Company (except the defendants
herein and any person, firm, trust, corporation or other entity related to or
affiliated with any of the defendants) and their successors in interest, who
are or will be threatened with injury arising from defendants' actions as
more fully described herein (the "Class").
20. This action is properly maintainable as a class action.
21. The Class is so numerous that joinder of all members is
impracticable. As of November 25,1997, there were in excess of
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31.4 million shares of Mycogen common stock outstanding, of which
approximately 31% were held by persons not affiliated with Dow AG.
22. There are questions of law and fact which are common to the Class
and which predominate over questions affecting any individual Class member.
The common questions include, inter alia, the following: (a) whether
defendants have breached their fiduciary and other common law duties owed by
them to plaintiff and the members of the Class; (b) whether defendants are
pursing a scheme or course of conduct designed to eliminate the public
securities holders of Mycogen in violation of the laws of the State of
California in order to enrich Dow AG at the expense and to the detriment of
the public shareholders of Mycogen; (c) whether the proposed transaction,
hereinafter described, constitutes a breach of the duty of fair dealing with
respect to the plaintiff and the other members of the Class; and (d) whether
the Class is entitled to injunctive relief or damages as a result of the
wrongful conduct committed by defendants.
23. Plaintiff is committed to prosecuting this action and has retained
competent counsel experienced in litigation of this nature. The claims of the
plaintiff are typical of the claims of other members of the Class, and
plaintiff has the same interests as the other members the Class. Plaintiff
will fairly and adequately represent the Class. A class action is superior to
any other type of adjudication of this controversy.
24. Defendants have acted in a manner which affects plaintiff and all
members of the Class, thereby making appropriate injunctive relief and/or
corresponding declaratory relief with respect to the Class as a whole.
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25. The prosecution of separate actions by individual members of the
Class would create a risk of inconsistent or varying adjudications with
respect to individual members of the Class, which would establish
incompatible standards of conduct for defendants, or adjudications with
respect to individual members of the Class which would, as a practical matter,
be dispositive of the interests of other members or substantially impair or
impede their ability to protect their interests.
SUBSTANTIVE ALLEGATIONS
26. In February 1996, Dow AG (at the time known as Dow AG LLC) purchased
37% of Mycogen's common stock from the Lubrizol Corporation, and in a
simultaneous transaction, Mycogen issued Dow AG 9% of its common stock in
return for cash and Dow AG's seed businesses. As part of this transaction,
Dow AG entered into an agreement (the "1996 Agreement") whereby it was
prohibited from acquiring all of the shares of Mycogen prior to February 1999.
27. On April 30, 1998, Dow, through a press release, announced that,
through Dow AG, it had requested an amendment to the 1996 Agreement to permit
Dow AG to acquire the shares of Mycogen that it does not already own. If the
amendment to the 1996 Agreement is approved, Dow AG will offer to purchase
the shares held by Mycogen's minority shareholders for $20.50 per share.
28. The press release indicated that Dow's request to amend the 1996
Agreement would have to be approved by "Mycogen's board of directors and the
independent directors." Given Dow's stranglehold over the Company, none of
the directors can be considered "independent," and they cannot be expected to
vigorously protect the rights and interests of Mycogen's public shareholders.
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Accordingly, the approval of the amendment is a foregone conclusion.
29. The price of $20.50 per share to be paid to the Class members is
unconscionable, unfair and grossly inadequate consideration because, among
other things: (a) the intrinsic value of the stock of Mycogen is materially
in excess of $20.50 per share, giving due consideration to the possibilities
of growth and profitability of Mycogen in light of its business, earnings and
earnings power, present and future; (b) the $20.50 per share price is
inadequate and offers no premium to the public stockholders of Mycogen in
light of the fact that Mycogen shares closed at $20.50 on April 30, 1998,
prior to the announcement by Dow; and (c) the $20.50 per share price is not
the result of arm's-length negotiations but was fixed arbitrarily by Dow AG
to "cap" the market price of Mycogen stock. As part of a plan for Dow AG to
obtain complete ownership of Mycogen's assets and business at the lowest
possible price.
30. The proposed bid serves no legitimate business purpose of Mycogen
but rather is an attempt by defendants to unfairly benefit Dow AG from the
transaction at the expense of Mycogen's public stockholders. The proposed
plan will, for a grossly inadequate consideration, deny plaintiff and the
other members of the Class their right to share proportionately in the future
success of Mycogen and its valuable assets, while permitting Dow AG to reap
huge benefits from the transaction.
31. By reason of the foregoing acts, practices and course of conduct,
Dow AG has breached and will breach its duty as
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controlling stockholder of Mycogen by engaging in improper overreaching in
attempting to carry out the proposed transaction.
32. By reason of the foregoing, the Individual Defendants will violate
their fiduciary duties to Mycogen and the minority stockholders of Mycogen in
the event that they fail to oppose the bid on the terms presently proposed.
33. Plaintiff and the Class have suffered and will continue to suffer
irreparable damage unless defendants are enjoined from breaching their
fiduciary duties and from carrying out the aforesaid plan and scheme.
34. Plaintiff and the other members of the Class have no adequate
remedy at law.
PRAYER FOR RELIEF
WHEREFORE, plaintiff demands judgment against the defendants jointly and
severally, as follows:
1. declaring this action to be a class action and certifying
plaintiff as Class representative;
2. enjoining, preliminarily and permanently, Dow AG's offer for
acquisition of the Mycogen stock owned by plaintiff and the other members of
the Class under the terms presently proposed;
3. to the extent, if any, that the transaction or transactions
complained of are consummated prior to the entry of this Court's final
judgment, rescinding such transaction or transactions, and granting, inter
alia, rescissory damages;
4. directing that defendants pay to plaintiff and the other members of
the Class all damages caused to them and account for all profits and any
special benefits obtained as a result of their unlawful conduct;
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5. awarding the plaintiff the costs and disbursements of this action,
including a reasonable allowance for the fees and expenses of plaintiff's
attorneys and experts; and
6. granting plaintiff and the other members of the Class such other and
further relief as may be 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
BERNSTEIN LIEBHARD & LIFSHITZ
STANLEY D. BERNSTEIN
274 Madison Avenue
New York, NY 10016
Telephone: 212/779-1414
Attorneys for Plaintiff
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2MILBERG WEISS BERSHAD
HYNES & LERACH LLP
WILLIAM S. LERACH (68581)
ALAN SCHULMAN (128661)
DAREN J. ROBBINS (168593)
600 West Broadway, Suite 1800
San Diego, CA 92101
Telephone: 619/231-1058
BERNSTEIN LIEBHARD & LIFSHITZ
STANLEY D. BERNSTEIN
274 Madison Avenue
New Yor, NY 10016
Telephone: 212/779-1414
Attorneys for Plaintiff
SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF SAN DIEGO
ELLIS INVESTMENTS, LTD., On behalf ) Case No.
of Itself and All Others Similarly )
Situated, ) CLASS ACTION
Plaintiff, )
)
vs. ) JURY DEMAND
)
CARLTON H. EIBL, PERRY J. GEHRING, )
NICKOLAS D. HEIN, LOUIS W. PRIBILA, )
WILLIAM C. SCHMIDT, G. WILLIAM )
TOLBERT, MYCOGEN CORP., and DOW )
AGROSCIENCES LLC, 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
BERNSTEIN LIEHARD & LIFSHITZ
STANLEY D. BERNSTEIN
274 Madison Avenue
New York, NY 10016
Telephone: 212/779-1414
Attorneys for Plaintiff
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