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
KAPLAN, KILSHEIMER & FOX LLP
ROBERT N. KAPLAN
CHRISTINE M. COMAS
685 Third Avenue, 26th Fl.
New York, NY 10017
Telephone: 212-687-1980
Attorneys for Plaintiff
[Additional Counsel On Signature Page]
SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF SAN DIEGO
JEAN BOETTCHER, On Behalf of ) Case No. 720530
Herself and All Others Similarly )
Situated, ) CLASS ACTION
) ------------
v. )
)
MYCOGEN CORPORATION, J. PEDRO )
REINHARD, CARLTON J. EIBL, JOHN L. )
HAGAMAN, JOSEPH P. SULLIVAN, ROY M. )
BARBEE, GEORGE KHACHATOURIANS, ) JURY DEMAND
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 8, 1998
MILBERG WEISS BERSHAD
HYNES & LERACH LLP
WILLIAM S. LERACH
ALAN SCHULMAN
DARREN J. ROBBINS
/s/ William S. Lerach
------------------------------
WILLIAM S. LERACH
600 West Broadway, Suite 1800
San Diego, CA 92101
Telephone: 619/231-1058
KAPLAN, KILSHEIMER & FOX LLP
ROBERT N. KAPLAN
CHRISTINE M. COMAS
685 Third Avenue, 26th Floor
New York, NY 10017
Telephone: 212-687-1980
WOLF POPPER LLP
ROBERT M. KORNREICH
PAUL O. PARADIS
845 Third Avenue
New York, NY 10022
Telephone: 212/759-4600
Attorneys for Plaintiff
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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
KAPLAN, KILSHEIMER & FOX LLP
ROBERT N. KAPLAN
CHRISTINE M. COMAS
685 Third Avenue, 26th Fl.
New York, NY 10017
Telephone: 212-687-1980
Attorneys for Plaintiff
[Additional Counsel On Signature Page]
SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF SAN DIEGO
JEAN BOETTCHER, On Behalf of ) Case No. 720530
Herself and All Others Similarly )
Situated, ) CLASS ACTION
) ------------
v. )
)
MYCOGEN CORPORATION, J. PEDRO ) COMPLAINT BASED UPON UNFAIR
REINHARD, CARLTON J. EIBL, JOHN L. ) BUSINESS PRACTICES, SELF
HAGAMAN, JOSEPH P. SULLIVAN, ROY M. ) DEALING AND BREACH OF
BARBEE, GEORGE KHACHATOURIANS, ) FIDUCIARY DUTY
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 her attorneys, alleges upon information and belief, except
as to PARA 4 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 Corporation ("Mycogen" or
the "Company") 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
and omissions which had an effect in this County.
PARTIES
4. Plaintiff Jean Boettcher is a stockholder of defendant Mycogen.
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,
manufacturers 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.
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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, 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 Carlton 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 Khacharourians is a Director of Mycogen.
13. Defendant Nickolas D. Hein is the 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.
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15. Defendant Louis W. Pribila is a Director of Mycogen and the
Secretary, General Counsel and a Vice President of Dow Agrosciences.
16. The defendants named in PARA 7 through 15 are sometimes
collectively referred to herein as the "Individual Defendants."
17. The true names and capacities of defendants sued herein under
California Code of Civil Procedures 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 and 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 her 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 defendants.
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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;
(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 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 refuse 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 interest 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.
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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 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 stand still
agreement with Mycogen (the "Agreement"), Dow cannot acquire the remaining
shares of Mycogen prior to February 1999.
24. After the close of trading on April 30, 1998, it was reported that
Dow is seeking to amend the Agreement to permit it, acting through Dow
Agrosciences, to begin discussions regarding the acquisition of the remaining
shares of Mycogen common stock Dow does not already own for $20.50 per share
in cash.
25. The majority of the nine board members identified in paragraphs 7
through 15 are in irrevocable positions of conflict and cannot be expected to
act in the best interest of Mycogen's minority stockholders in connection with
this proposed transaction. They alone have the authority to vote to allow the
amendment to the Agreement that is being sought by Dow and to thereby deprive
Mycogen's minority shareholders of the true value of their Mycogen shares.
26. The sole purpose of the proposed transaction is to enable Dow to
acquire the shares of Mycogen it does not already own, as
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well as Mycogen's valuable assets, for Dow's own benefit at the expense of
Mycogen's minority stockholders.
27. The proposed transaction comes at a time when Mycogen has performed
well and Dow expects it will continue to perform well because it is already
positioned to do so.
28. Dow has timed this transaction to capture Mycogen's future
potential and is seeking to appropriate Mycogen's assets for itself without
paying an adequate or fair price for the Company's remaining shares.
29. Amidst a backdrop of an improving financial position and increased
prospects for growth, Dow announced its desire to acquire the remaining
shares of Mycogen for $20.50 cash 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, its 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 Mycogen's minority common stockholders.
31. In proposing the acquisition, Dow and the Individual Defendants
have committed or threatened to commit the following
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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 true value of Mycogen's valuable assets;
and
b. They have timed the announcement of the proposed buyout in order
to artificially depress 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.
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 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
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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
continue to breach their fiduciary duties to the members of the Class.
36. As a result of the defendants' unlawful actions, plaintiff and the
other members of the Class will be irreparably 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
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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 the 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 the other members of the Class;
3. Entering an order requiring defendants to take the steps set forth
herein;
4. Preliminary 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;
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
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8. Granting such other and further relief as the Court may deem just
and proper.
DATED: May 8, 1998
MILBERG WEISS BERSHAD
HYNES & LERACH LLP
WILLIAM S. LERACH
ALAN SCHULMAN
DARREN J. ROBBINS
/s/ William S. Lerach
--------------------------------
WILLIAM S. LERACH
600 West Broadway, Suite 1800
San Diego, CA 92101
Telephone: 619/231-1058
KAPLAN, KILSHEIMER & FOX, LLP
ROBERT N. KAPLAN
CHRISTINE M. COMAS
685 Third Avenue, 26th Floor
New York, NY 10017
Telephone: 212/687-1980
WOLF POPPER LLP
ROBERT M. KORNREICH
PAUL O. PARADIS
845 Third Avenue
New York, NY 10022
Telephone: 212/759-4600
Attorneys for Plaintiff
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