<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
ENVIROGEN, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
ENVIROGEN, INC.
4100 QUAKERBRIDGE ROAD
LAWRENCEVILLE, NEW JERSEY 08648
____________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TIME 10:00 a.m. on Thursday, May 21, 1998
PLACE Envirogen, Inc.
4100 Quakerbridge Road
Lawrenceville, New Jersey 08648
ITEMS OF BUSINESS 1. To elect seven directors to hold office as
specified in the proxy statement.
2. To appoint Coopers & Lybrand L.L.P. as auditors for
the Company for the current fiscal year.
3. To act upon any other matters properly coming before
the meeting or any adjournment or postponement thereof.
RECORD DATE The close of business on March 31, 1998 has been fixed as
the record date for the meeting. All stockholders of
record at that time are entitled to notice of, and all
such holders of Common Stock are entitled to vote at, the
meeting and any adjournment or postponement thereof.
ANNUAL REPORT The 1997 Annual Report of Envirogen, Inc. is being mailed
simultaneously herewith. The Annual Report is not to be
considered part of the proxy solicitation materials.
IMPORTANT In order to avoid additional soliciting expense to the
Company, please MARK, SIGN, DATE and MAIL your proxy
PROMPTLY in the return envelope provided, even if you plan
to attend the meeting. If you attend the meeting and wish
to vote your shares in person, arrangements will be made
for you to do so.
By order of the Board of Directors,
/s/ Morgan R. Jones
Lawrenceville, New Jersey Morgan R. Jones
April 16, 1998 Secretary
<PAGE>
ENVIROGEN, INC.
4100 QUAKERBRIDGE ROAD
LAWRENCEVILLE, NEW JERSEY 08648
________________________
PROXY STATEMENT
________________________
This proxy statement, which is being sent to stockholders on or about April
16, 1998, is furnished in connection with the solicitation of proxies by the
Board of Directors of Envirogen, Inc. (the "Company") for use at the forthcoming
Annual Meeting of Stockholders to be held on Thursday, May 21, 1998, and at any
adjournment or postponement thereof.
The close of business on March 31, 1998 has been fixed as the record date
for the meeting (the "Record Date"). All stockholders at that time are entitled
to notice of, and all holders of record of the Company's Common Stock are
entitled to vote at, the meeting and any adjournment or postponement thereof.
On the Record Date, there were outstanding 23,294,835 shares of Common Stock,
which constituted the only outstanding securities of the Company entitled to
vote.
VOTING AND REVOCABILITY OF PROXIES
Each record holder of Common Stock will be entitled to one vote per share.
Directors are to be elected by a plurality of the votes of the shares present,
in person or by proxy, at the meeting and entitled to vote. Cumulative voting
in the election of directors is not permitted. Approval of Proposal 2 requires
the affirmative vote of the holders of a majority of the shares present, in
person or by proxy, at the meeting and entitled to vote. If a proxy is marked
as "Withhold Authority" or "Abstain" on any matter, or if specific instructions
are given that no vote be cast on any specific matter (a "Specified Non-Vote"),
the shares represented by such proxy will not be voted on such matter.
Abstentions will be included within the number of shares present at the meeting
and entitled to vote for purposes of determining whether such matter has been
authorized, but nominee and other Specified Non-Votes will not be so included.
Shares may be voted at the meeting in person or by proxy. All valid
proxies received prior to the meeting will be voted. Unless marked to the
contrary, such proxies will be voted "FOR" the election of all directors and
"FOR" the appointment of Coopers & Lybrand L.L.P. as the Company's independent
accountants for 1998. If any other business is brought before the meeting, the
proxies will be voted, to the extent permitted by the rules of the Securities
and Exchange Commission (the "Commission"), in accordance with the judgment of
the persons voting the proxies. A stockholder who has given a proxy may revoke
it at any time prior to such proxy being voted at the meeting by filing with the
Secretary of the Company an instrument revoking it or a duly executed proxy
bearing a later date, or by attending the meeting and giving notice of such
revocation. Attendance at the meeting does not by itself constitute revocation
of a proxy.
In addition to the use of the mails, proxies may be solicited by the
directors, officers and employees of the Company, without additional
compensation, by personal interview, telephone, telegram, or otherwise.
Arrangements also may be made with brokerage firms and other custodians,
nominees and fiduciaries who hold the voting securities of record for the
forwarding of solicitation material to the beneficial owners thereof. The
Company will reimburse such brokers, custodians, nominees and fiduciaries for
the reasonable out-of-pocket expenses incurred by them in connection therewith.
1
<PAGE>
PROPOSAL 1. ELECTION OF DIRECTORS
The Board of Directors has nominated seven persons for election as
directors whose terms will expire at the 1999 Annual Meeting of Stockholders, or
when their successors are elected and qualified. There has been a vacant seat
on the Board since the resignation of Dr. Harcharan Gill on October 20, 1997.
The nominees are Robert F. Johnston, Robert F. Hendrickson, Robert C. Miller,
Peter J. Neff, William C. Smith and Robert S. Hillas, each of whom are currently
directors of the Company, and Nicholas Lowcock.
If any nominee should be unable to serve as a director, an event not now
anticipated, it is intended that the shares represented by proxies will be voted
for election of such substitute as the Board of Directors may nominate. Set
forth below is certain information with respect to the persons nominated as
directors of the Company.
ROBERT F. JOHNSTON is a founder of the Company and has been a director
since its incorporation in June 1988. Mr. Johnston served as Chairman of the
Board from March 1992 to March 1994. He serves on the Executive Compensation
and Stock Option Committee. Since 1967, Mr. Johnston has been President of
Johnston Associates, Inc., a mergers, acquisitions and venture capital firm
located in Princeton, New Jersey. Mr. Johnston is also a director of Sepracor,
Inc., as well as several privately held companies. Mr. Johnston is 61 years
old.
ROBERT F. HENDRICKSON has been a director of the Company since March 1992
and served as Chairman of the Board from March 1994 to April 1997. He serves on
the Executive Compensation and Stock Option Committee. Mr. Hendrickson served
as President and Chief Executive Officer of the Company on an interim basis from
March 1, 1994 to August 1, 1994. Mr. Hendrickson was employed by Merck & Co.,
Inc. from 1961 until his retirement in 1990, most recently as Senior Vice
President, Manufacturing and Technology. He is also a director of Cytogen Co.,
Inc., The Liposome Co., Inc. and Unigene Laboratories, Inc. and has served as a
consultant to a number of other biotechnology firms. Mr. Hendrickson is 65
years old.
ROBERT C. MILLER has been a director of the Company since June 1994 and
serves on the Audit Committee. Mr. Miller is a Vice President and director of
the investment banking firm of Allen & Company Incorporated and has been
associated with that firm since June 1986. Mr. Miller is a director of Audits &
Surveys Worldwide, Inc. and Applied Imaging Corp., as well as several privately
held companies. Mr. Miller is 32 years old.
PETER J. NEFF has been a director of the Company since July 1996 and
serves on the Executive Compensation and Stock Option Committee. Mr. Neff was
Chairman and Chief Executive Officer of Genovo, Inc., a gene therapy company,
from January 1997 until December 1997. Mr. Neff was employed by Rhone-Poulenc
Inc. from June 1987 to December 1996, where he served as President and Chief
Operating Officer until 1991 and as Chief Executive Officer until December 1996.
Prior to joining Rhone-Poulenc, Mr. Neff was President and Chief Executive
Officer of St. Joe Minerals Corporation, a subsidiary of Fluor Corporation. Mr.
Neff is also a director of Homestake Mining Co., UST, Inc., the Chemical
Manufactures Association and the French-American Chamber of Commerce and serves
on the Board of Trustees of Rider University. Mr. Neff is 59 years old.
WILLIAM C. SMITH has been a director and Chairman of the Board of the
Company since April 1997 and Chief Executive Officer since October 1997. Mr.
Smith also serves as the President and Chief Executive Officer of the Company's
FMI Operations Group. Mr. Smith was the President and Chief Executive Officer
of Fluid Management, Inc. ("FMI") from 1989 until April 1997, when FMI was
merged into the Company. Mr. Smith has over 40 years of technical and financial
management experience in the wood chemicals, plastics and petroleum products
industries. Mr. Smith has a degree in Chemical Engineering from the University
of Wisconsin - Madison and is a Wisconsin registered professional engineer. Mr.
Smith is 66 years old.
ROBERT S. HILLAS has been a director of the Company since April 1997,
serving as the nominee of E.M. Warburg, Pincus and Co., L.L.C., and has agreed
to become Chairman, President and Chief Executive Officer of the Company
effective April 20, 1998. Mr. Hillas served as a Managing Director and a member
of E.M. Warburg, Pincus & Co., L.L.C. and its predecessors from 1993 until April
1998. Previously, Mr. Hillas was a partner of DSV Management Ltd., a venture
capital investment firm, and its affiliated venture capital partnerships. Mr.
Hillas is also a director of Advanced Technology Materials, Inc., United States
Filter Corporation, Transition Systems, Inc. and several privately held
companies. Mr. Hillas is 49 years old.
2
<PAGE>
NICHOLAS J. LOWCOCK serves as a Vice President at E.M. Warburg, Pincus &
Co., LLC, where he has been employed since 1994, and is its nominee to the
Company's Board of Directors. From 1992 to 1994, Mr. Lowcock was a consultant
at the Boston Consulting Group, a management consulting company. Mr. Lowcock is
also a director of Anergen, Inc., The Medicines Company, Inc. and Scientific
Learning Corporation. Mr. Lowcock is 34 years old.
INFORMATION CONCERNING MEETINGS AND CERTAIN COMMITTEES
The Board of Directors held eight meetings during 1997. The Company has a
standing Audit Committee and an Executive Compensation and Stock Option
Committee of its Board of Directors.
The Audit Committee makes recommendations to the Board of Directors
concerning the engagement, retention and discharge of independent auditors,
reviews with the Company's independent auditors the plans and results of the
auditing engagement, the Company's financial statements and the adequacy of the
Company's system of internal accounting controls, and directs any investigations
into matters within the scope of the foregoing duties. During 1997, the Audit
Committee met twice.
The Executive Compensation and Stock Option Committee makes recommendations
to the Board of Directors concerning the remuneration arrangements for senior
management and the adoption, extension, amendment and termination of
compensation plans in which senior management may participate. It also
exercises administrative power pursuant to certain of those plans, including the
Company's 1990 Incentive Stock Option and Non-Qualified Stock Option Plan (the
"1990 Plan"). The Executive Compensation and Stock Option Committee held three
formal meetings during 1997.
During 1997, all incumbent directors attended in person or by conference
telephone at least 75% of the total number of meetings of the Board of Directors
and committees of the Board on which they served during their incumbency.
COMPENSATION OF DIRECTORS
Non-employee directors (the "Non-Employee Directors") receive a $1,000
quarterly retainer and an additional $1,000 for each Board of Directors meeting
attended in person and are eligible for stock option grants pursuant to the
Company's 1993 Directors' Non-Qualified Stock Option Plan (the "1993 Plan").
Directors are also reimbursed for out-of-pocket expenses for attendance at
meetings.
Under the 1993 Plan, upon the initial election of each Non-Employee
Director, he will automatically be granted an option to purchase 15,000 shares
of Common Stock, and an option to purchase an additional 5,000 shares of Common
Stock shall be granted on June 1 of each year to each Non-Employee Director
elected at subsequent Annual Meetings of Stockholders, except that the Chairman
of the Board (if he is a Non-Employee Director) shall be granted an option to
purchase 7,500 shares instead of 5,000 shares of Common Stock. The option to
purchase 15,000 shares vests over five years, and the option to purchase 5,000
shares vests on the first anniversary of grant. Non-Employee Directors who are
not initially elected at an Annual Meeting of Stockholders will receive (i) an
option to purchase 15,000 shares of Common Stock and (ii) an option to purchase
a pro rata portion of 5,000 shares (or 7,500 shares with respect to the Chairman
of the Board, if he is a Non-Employee Director) of Common Stock based on the
number of full months remaining from the date of election until the next Annual
Meeting of Stockholders, divided by twelve. Any fractional shares resulting
from such calculation shall be rounded up to the nearest whole number. To date,
Messrs. Neff, Miller, Johnston, Hendrickson and Hillas have received stock
option grants pursuant to the 1993 Plan.
3
<PAGE>
PROPOSAL 2. RATIFICATION OF APPOINTMENT OF AUDITORS
The firm of Coopers & Lybrand L.L.P. served as the Company's independent
accountants for 1997 and has been selected by the Board of Directors to serve in
the same capacity for 1998. The stockholders will be asked to ratify this
appointment at the meeting. The ratification of independent accountants by the
stockholders is not required by law or the Company's By-laws. Traditionally,
the Company has submitted this matter to the stockholders and believes that it
is good practice to continue to do so. A majority of the votes cast in favor of
the ratification of Coopers & Lybrand L.L.P. is necessary to approve this
matter. If a majority of the votes cast on this matter are not cast in favor of
the ratification of Coopers & Lybrand L.L.P., the Company will appoint other
independent accountants as soon as practicable and before the close of the 1998
year.
A representative of Coopers & Lybrand L.L.P. is expected to be present at
the meeting and will be available to respond to appropriate questions. The
representative will also have the opportunity to make a statement if he or she
desires to do so.
THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR" RATIFICATION OF THE
APPOINTMENT OF COOPERS & LYBRAND L.L.P. AS THE COMPANY'S INDEPENDENT ACCOUNTANTS
FOR 1998.
PROPOSAL 3. OTHER MATTERS
The Board of Directors knows of no matters to be presented for action at
the meeting other than those set forth in the attached notice and customary
procedural matters. However, if any other matters should properly come before
the meeting or any adjournments or postponements thereof, the proxies solicited
hereby will be voted on such matters, to the extent permitted by the rules of
the Securities and Exchange Commission, in accordance with the judgment of the
persons voting such proxies.
ADDITIONAL INFORMATION
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and executive officers, as
well as persons beneficially owning more than 10% of the Company's outstanding
shares of Common Stock and certain other holders of such shares (collectively,
"Covered Persons"), to file with the Securities and Exchange Commission and The
Nasdaq Stock Market, within specified time periods, initial reports of
ownership, and subsequent reports of changes in ownership, of Common Stock and
other equity securities of the Company.
Based solely upon the Company's review of copies of such reports furnished
to it and upon representations of Covered Persons that no other reports were
required, to the Company's knowledge, all of the Section 16(a) filings required
to be made by the Covered Persons with respect to 1997 were made on a timely
basis except that one report of changes of beneficial ownership on Form 4, each
with respect to one transaction, was filed late for each of David N. Enegess,
Vice President of Product Development, Robert F. Hendrickson, a director, and
Robert C. Miller, a director.
4
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth certain information, for the Company's last
three fiscal years, concerning the annual and long-term compensation paid to the
Company's Chief Executive Officer, each of the Company's other executive
officers whose total annual salary and bonus during 1997 exceeded $100,000 and
two other non-executive officers who were among the most highly compensated
officers during 1997 (collectively, the "Named Officers"):
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
------------
Awards
-------
Annual Compensation/(1)/ Securities All Other
Name and ----------------------- Underlying Compen-
Principal Position Year Salary Bonus Options sation/(2)/
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
William C. Smith/(3,4)/ 1997 $129,545 -- 25,000 --
Chief Executive Officer 1996 -- -- -- --
1995 -- -- -- --
Harcharan S. Gill/(3)/ 1997 $161,538 -- 200,000 $53,362
Former President and 1996 $190,000 $12,500 120,000 $ 4,135
Chief Executive Officer 1995 $175,000 $10,000 90,000 $51,140
Ronald Unterman 1997 $144,000 -- 106,000 $ 2,326
Senior Vice President and 1996 $138,000 $ 4,000 70,000 $ 2,863
Chief Scientific Officer 1995 $134,000 -- 41,800 $ 2,680
David N. Enegess 1997 $142,000 -- 31,000 $ 2,839
Vice President of Product 1996 $138,000 -- 35,000 $ 2,863
Development 1995 $134,000 -- 31,800 $ 2,680
Douglas W. Jacobson/(4)/ 1997 $100,758 -- 21,000 --
Senior Vice President 1996 -- -- -- --
of Marketing 1995 -- -- -- --
Peter E. Nangeroni 1997 $120,000 -- 31,000 $ 2,459
Vice President of 1996 $110,000 $ 3,000 70,000 $ 2,372
Remediation and Consulting 1995 $ 90,134 $ 5,000 15,900 $ 1,803
William J. Guarini 1997 $110,000 $ 2,000 29,000 $ 2,240
Senior Vice President of 1996 $107,000 $ 2,000 35,000 $ 2,258
Governmental and 1995 $105,039 $ 2,000 16,350 $ 2,021
Petro-Chemical Sales
</TABLE>
_____________
(1) The costs of certain perquisites and other personal benefits are not
included because they did not exceed, in the case of each Named Officer,
the lesser of $50,000 or 10% of the total annual salary and bonus
indicated in the above table.
(2) With the exception of Dr. Gill, this column consists of the Company's
matching contributions to the Envirogen, Inc. 401(k) Plan ("401(k)
Plan"). For 1997, the amount reported in this column for Dr. Gill
consists of $38,462 of severance payments paid pursuant to the letter
agreement between the Company and Dr. Gill dated October 20, 1997,
$11,700 of income attributable to the exercise of non-qualified stock
options on October 24, 1997 and $3,200 representing the Company's
matching contribution under the 401(k) Plan. For 1995, the amount
reported in this column for Dr. Gill consists of $49,659 as reimbursement
of relocation expenses in connection with Dr. Gill's employment with the
Company and $1,481 representing the Company's matching contribution under
the 401(k) Plan.
(3) Mr. Smith has served as Chief Executive Officer of the Company since the
resignation of Dr. Gill on October 20, 1997. See "Severance Agreement"
below.
(4) Messrs. Smith and Jacobson joined the Company when Fluid Management,
Inc., a company of which they were founders, was merged into the Company
in April 1997.
5
<PAGE>
The following tables set forth certain information concerning stock options
granted to the Named Officers during 1997, options exercised by the Named
Officers during 1997 and unexercised options held by them at December 31,
1997:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants
-------------------------------------------------------------------------
Number of
Securities % of Total Options Exercise
Underlying Granted to Employees Price Expiration
Name Options Granted/(1)/ in Fiscal Year/(2)/ Per Share Date
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
William C. Smith 25,000 1.8% $1.79 12/15/07
Harcharan S. Gill 200,000/(3)/ 14.5% $3.14 02/04/07
Ronald Unterman 75,000 7.7% $3.14 02/04/07
31,000 $1.79 12/15/07
David N. Enegess 31,000 2.3% $1.79 12/15/07
Douglas W. Jacobson 21,000 1.5% $1.79 12/15/07
Peter E. Nangeroni 31,000 2.3% $1.79 12/15/07
William J. Guarini 29,000 2.1% $1.79 12/15/07
- -----------------------
</TABLE>
(1) All of the options were granted under the 1990 Plan at fair market value.
Such options are non-transferable and are exercisable in equal
installments over a five-year period commencing with the date of grant;
provided, however, that such options are immediately exercisable in the
case of certain business combinations involving the Company.
(2) The Company granted options to employees to purchase a total of 1,375,250
shares of Common Stock during 1997.
(3) These options expired in accordance with their terms 30 days after Dr.
Gill's resignation in October 1997.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
Number of
Securities
Underlying
Unexercised Value of Unexercised
Options at Fiscal In-the-Money Options
Year-End at Fiscal Year-End/(2)/
Shares -------------------- ----------------------
Acquired on Value Exercis- Unexer- Exercis- Unexercis-
Name Exercise Realized/(1)/ able cisable able able
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
William C. Smith -- -- -- 25,000 -- --
Harcharan S. Gill/(3)/ 30,000 $35,100 -- -- -- --
Ronald Unterman -- -- 41,920 187,880 -- --
David N. Enegess 2,800 $ 7,946 30,920 78,880 -- --
Douglas W. Jacobson -- -- -- 21,000 -- --
Peter E. Nangeroni -- -- 27,760 98,140 -- --
William J. Guarini 1,600 $ 3,541 16,740 67,610 -- --
- -----------------------
(Footnotes to table on following page)
</TABLE>
6
<PAGE>
(Footnotes to table from previous page)
_____________
(1) Calculated on the basis of the fair market value of the underlying
securities at the exercise date minus the exercise price.
(2) In-the-money options are those where the fair market value of the
underlying securities exceeds the exercise price of the option. The
closing price of the Company's Common Stock on December 31, 1997 was
$1.50 per share.
(3) Dr. Gill's unexercised options expired in accordance with their terms 30
days after his resignation in October 1997.
EMPLOYMENT AND NONCOMPETITION AGREEMENTS
In April 1998, Robert S. Hillas, a director of the Company, entered into an
employment agreement with the Company providing for his employment as
Chairman, President and Chief Executive Officer effective April 20, 1998. The
employment agreement is for an initial term of three years with automatic
renewals for successive one-year terms unless either party provides notice of
non-renewal at least three months prior to the then-current expiration date.
Mr. Hillas will receive an annual salary of $250,000, subject to such
increases, if any, as may be approved by the Board of Directors. He will be
eligible to receive annual incentive bonuses based upon corporate and
individual performance goals fixed by the Board of Directors and grants of
stock options under such stock option plans of the Company as are in effect
from time to time, in such amounts and on such terms as the Executive
Compensation and Stock Option Committee may determine. Mr. Hillas will receive
upon commencement of his employment an option under the 1990 Plan to purchase
500,000 shares of the Company's Common Stock, initially exercisable in equal
increments on each of the first five anniversaries of the grant date. Mr.
Hillas has agreed to purchase an additional 500,000 shares of Common Stock
from the Company at $1.25 per share by May 1, 1998, and the Company has
granted Mr. Hillas certain registration rights with respect to such shares.
If Mr. Hillas' employment is terminated early due to disability, or by the
Company without cause (as defined), or by Mr. Hillas with good reason (as
defined), including without limitation an election to terminate employment
within six months following a change in control (as defined), or if the
Company elects not to renew his employment after the expiration date, the
Company is obligated to continue to pay salary and provide fringe benefits for
12 months following termination (provided that if he terminates his employment
for good reason due to his good faith determination within six months
following a change in control that he has been assigned, without his prior
written consent, duties or responsibilities inconsistent with his positions,
duties, responsibilities and status immediately prior to the change in
control, such amounts shall be paid for an additional 12 months so long as he
is unable to obtain satisfactory full-time employment, provided he
continuously and diligently seeks the same) and to pay a prorated portion of
any bonus that would have been paid to him for the year in which such
termination occurs. If his employment is terminated by the Company without
cause or by Mr. Hillas with good reason, all options held by Mr. Hillas which
would vest in such 12-month period will become exercisable on the date of
termination. During the term of his employment, Mr. Hillas may not, directly
or indirectly, participate in the United States, Canada or any other
jurisdiction in which the Company has derived at least $250,000 in revenues
during the period the employment agreement was in effect, in any business or
enterprise which is directly competitive with any principal line of business
of the Company or any of its subsidiaries or affiliates, nor may Mr. Hillas
induce any customers or employees of the Company to take actions
disadvantageous to the Company for two years after termination of employment.
Mr. Smith's employment with the Company as its Chairman of the Board began
on April 10, 1997 when FMI was merged into the Company. His employment
agreement with the Company provides for an annual base salary of $180,000.
Mr. Smith will also be eligible to receive annual incentive bonuses based upon
attainment of corporate and individual performance goals and grants of stock
options under such stock option plans of the Company as are in effect from
time to time. His initial term of employment expires December 31, 1998,
subject to earlier termination by the Company or by Mr. Smith. If his
employment is terminated early due to disability, or by the Company without
cause (as defined), or by Mr. Smith with good reason (as defined), or if the
Company elects not to renew his employment after the expiration date, the
Company is obligated to continue to pay salary and provide benefits for 12
months following termination (provided that if he terminates his employment
for good reason due to his good faith determination within six months
following a change in control that he has been assigned, without his prior
written consent, duties or responsibilities inconsistent with his positions,
duties, responsibilities and status immediately prior to the change in
control, such amounts shall be paid for an additional 12 months so long as he
is unable to obtain satisfactory full-time employment, provided he
continuously and diligently seeks the same). If his employment is terminated
by the Company without cause or by Mr. Smith with good reason, all options
held by Mr. Smith which would vest in such 12-month period will become
exercisable on the date of termination. During the term of his employment,
Mr. Smith may not, directly or indirectly, participate in the United States,
Canada or any other jurisdiction in which the Company has derived at least
$250,000 in revenues during the period the employment agreement was in effect,
in any business or enterprise competing with the Company or any
7
<PAGE>
of its subsidiaries or affiliates, nor may he induce any consultants,
customers or employees of the Company to take actions disadvantageous to the
Company for two years after termination of employment.
Mr. Jacobson's employment with the Company as Senior Vice President of
Marketing began on April 10, 1997 when FMI was merged into the Company. His
employment agreement with the Company provides for an annual base salary of
$140,000. Mr. Jacobson will also be eligible to receive annual incentive
bonuses based upon attainment of corporate and individual performance goals
and grants of stock options under such stock option plans of the Company as
are in effect from time to time. His initial term of employment expires
December 31, 1998, subject to earlier termination by the Company or Mr.
Jacobson. If his employment is terminated early due to disability, or by the
Company without cause (as defined), or by Mr. Jacobson with good reason (as
defined), or if the Company elects not to renew his employment after the
expiration date, the Company is obligated to continue to pay Mr. Jacobson
salary and provide fringe benefits for 12 months following termination
(provided that if he terminates his employment for good reason due to his good
faith determination within six months following a change in control that he
has been assigned, without his prior written consent, duties or
responsibilities inconsistent with his positions, duties, responsibilities and
status immediately prior to the change in control, such amounts shall be paid
for an additional 12 months so long as he is unable to obtain satisfactory
full-time employment, provided he continuously and diligently seeks the same).
If his employment is terminated by the Company without cause or by Mr.
Jacobson with good reason, all options held by Mr. Jacobson which would vest
in such 12-month period will become exercisable on the date of termination.
During the term of his employment Mr. Jacobson may not, directly or
indirectly, participate in the United States, Canada or any other jurisdiction
in which the Company has derived at least $250,000 in revenues during the
period the employment agreement was in effect, in any business or enterprise
competing with the Company or any of its subsidiaries or affiliates, nor may
he induce any consultants, customers or employees of the Company to take
actions disadvantageous to the Company for two years after termination of
employment.
The Company has noncompetition agreements with Messrs. Enegess and Unterman
which provide one-year covenants not to compete following termination of
employment; provided, however, that if employment is terminated by Envirogen
without cause and Envirogen elects not to pay an amount equal to such person's
annual salary for such one-year period, then there is no such post-termination
covenant.
SEVERANCE AGREEMENT
Effective October 20, 1997, Dr. Gill resigned as President, Chief Executive
Officer and director of the Company. Pursuant to a letter agreement between
the Company and Dr. Gill dated October 20, 1997, Dr. Gill will receive from
the Company bi-weekly severance payments equal to $7,692 (less applicable
withholding taxes) during the 18-month period ending April 20, 1999 and will
also be entitled to receive ongoing health insurance and certain other
benefits. In addition, the portion of Dr. Gill's options that would have
vested on or before October 20, 1998 became immediately exercisable pursuant
to the agreement. In November 1997, Dr. Gill exercised options to purchase
30,000 shares of the Company's Common Stock, and his remaining options expired
in accordance with their terms.
8
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of February 13, 1998 by (a) each
stockholder known to the Company to be the beneficial owner, as defined in
Rule 13d-3 under the Exchange Act, of more than 5% of the Common Stock, based
upon Company records or Securities and Exchange Commission filings, (b) each
director and director nominee of the Company, (c) each of the Named Officers
and (d) all executive officers and directors of the Company as a group. Each
of the stockholders named below has sole voting power and sole investment
power with respect to the shares indicated as beneficially owned, unless
otherwise indicated.
<TABLE>
<CAPTION>
SHARES OWNED
-------------------------
NAME OF BENEFICIAL OWNER NUMBER PERCEN
------------------------ --------------- --------
<S> <C> <C>
Warburg, Pincus Ventures, L.P. 6,095,238/(1)/ 26.2%
466 Lexington Avenue
New York, NY 10017-3147
Robert S. Hillas, Director 6,095,238/(2)/ 26.2
466 Lexington Avenue
New York, NY 10017-3147
Allen & Company Incorporated 2,625,511/(3)/ 11.1
711 Fifth Avenue
New York, NY 10022
William C. Smith, Director and 1,048,619/(4)/ 4.5
Named Officer
Douglas W. Jacobson, Named Officer 1,047,619 4.5
Robert F. Johnston, Director 430,000/(5)/ 1.8
Robert C. Miller, Director 262,610/(6)/ 1.1
Robert F. Hendrickson, Director 189,000/(7)/ *
Ronald Unterman, Named Officer 151,420/(8)/ *
David N. Enegess, Named Officer 111,220/(9)/ *
Harcharan S. Gill, Former Director 90,000/(10)/ *
and Named Officer
Peter E. Nangeroni, Named Officer 37,960/(11)/ *
William J. Guarini, Named Officer 28,140/(12)/ *
Peter J. Neff, Director 7,165/(13)/ *
Nicholas J. Lowcock, Director Nominee -- *
All executive officers and directors as a group 9,362,891/(14)/ 39.6
(nine persons)
</TABLE>
______________
(Footnotes to table on following page)
9
<PAGE>
(Footnotes to table from previous page)
______________
* Less than 1%.
(1) The sole general partner of Warburg, Pincus Ventures, L.P. ("Warburg")
is Warburg, Pincus & Co., a New York general partnership ("WP"). E.M.
Warburg, Pincus & Co., LLC, a New York limited liability company ("EMW
LLC"), manages Warburg. The members of EMW LLC are substantially the
same as the partners of WP. Lionel I. Pincus is the managing partner
of WP and the managing member of EMW LLC and may be deemed to control
both WP and EMW LLC. WP has a 15% interest in the profits of Warburg
as the general partner, and also owns approximately 1.5% of the
limited partnership interests in Warburg. Mr. Hillas, a director of
the Company, is a Managing Director and member of EMW LLC and a
general partner of WP. As such, Mr. Hillas may be deemed to have an
indirect pecuniary interest (within the meaning of Rule 16a-1 under
the Exchange Act) in an indeterminate portion of the shares
beneficially owned by Warburg and WP. See Note 2 below.
(2) All of the shares indicated as beneficially owned by Mr. Hillas are owned
directly by Warburg and are included because of Mr. Hillas' affiliation
with Warburg. Mr. Hillas disclaims "beneficial ownership" of these
shares within the meaning of Rule 13d-3 under the Exchange Act. In April
1998, Mr. Hillas entered into an employment agreement with the Company to
serve as Chairman, President and Chief Executive Officer of the Company,
effective April 20, 1998. Mr Hillas intends to depart Warburg upon
commencement of his employment with the Company. See Note 1 above.
(3) Includes 2,162,772 shares beneficially held by Allen & Company. Also
includes 462,739 shares issuable upon exercise of currently exercisable
warrants to Allen & Company. Does not include shares owned by officers
and directors of Allen & Company for which Allen & Company disclaims
beneficial ownership, including shares held by Robert C. Miller, a
director of the Company. Allen Holding Inc. owns 100% of the outstanding
stock of Allen & Company and may be deemed to beneficially own all shares
owned by Allen and Company.
(4) Does not give effect to the transfer by Mr. Smith in March 1998 of
600,000 shares to a limited partnership of which Mr. Smith and his wife
are the sole general partners and trusts for the benefit of his children
are the sole limited partners.
(5) Includes 10,000 shares issuable upon exercise of options and warrants
that are currently exercisable.
(6) Includes 157,400 shares issuable upon exercise of options and warrants
that are currently exercisable.
(7) Includes 40,500 shares subject to options that are currently exercisable.
(8) Includes 71,320 shares subject to options that are currently exercisable.
(9) Includes 40,320 shares subject to options that are currently exercisable.
(10) Dr. Gill resigned on October 20, 1997.
(11) Includes 37,160 shares subject to options that are currently exercisable.
(12) Includes 23,140 shares subject to options that are currently exercisable.
(13) Consists of 7,165 shares subject to options that are currently
exercisable.
(14) See Notes 2, 4 through 9 and 13 above. Includes 20,000 shares subject to
options that are currently exercisable and that are held by an executive
officer who is not listed in the foregoing table.
CERTAIN TRANSACTIONS
In December 1996, the Company engaged Allen & Company to provide financial
advisory services in connection with the Company's proposed acquisition of
FMI, including the preparation and delivery of an opinion to the Company's
Board of Directors regarding the fairness, from a financial point of view, of
the terms of the transaction to the Company's stockholders. Robert C. Miller,
a director of the Company, currently serves as a Vice President and a director
of Allen & Company. In connection therewith, the Company paid Allen & Company
$150,000 in February 1997 and $100,000 in April 1997.
STOCKHOLDER PROPOSALS
In order to be eligible for inclusion in the Company's proxy materials for
the 1999 Annual Meeting of Stockholders, stockholders' proposals to take
action at such meeting must comply with applicable Securities and Exchange
Commission rules and regulations, must be directed to the Secretary of the
Company at its offices set forth on page one of this Proxy Statement and must
be received by the Company not later than December 10, 1998.
10
<PAGE>
MISCELLANEOUS
A copy of the Company's 1997 Annual Report to Stockholders is being mailed
simultaneously herewith to stockholders but is not to be regarded as proxy
solicitation material.
THE COMPANY, UPON REQUEST, WILL FURNISH TO RECORD AND BENEFICIAL HOLDERS OF
ITS COMMON STOCK, FREE OF CHARGE, A COPY OF ITS ANNUAL REPORT ON FORM 10-K
(INCLUDING FINANCIAL STATEMENTS AND SCHEDULES BUT WITHOUT EXHIBITS) FOR FISCAL
1997. COPIES OF EXHIBITS TO THE FORM 10-K ALSO WILL BE FURNISHED UPON REQUEST
AND THE PAYMENT OF A REASONABLE FEE. ALL REQUESTS SHOULD BE DIRECTED TO GALE
T. SMITH, INVESTOR RELATIONS, AT THE OFFICES OF THE COMPANY SET FORTH ON PAGE
ONE OF THIS PROXY STATEMENT.
By order of the Board of Directors,
/s/ Morgan R. Jones
Morgan R. Jones, Secretary
April 16, 1998
11
<PAGE>
- --------------------------------------------------------------------------------
ENVIROGEN, INC.
4100 QUAKERBRIDGE ROAD
LAWRENCEVILLE, NEW JERSEY 08648
PROXY - Annual Meeting of Stockholders - May 21, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints William C. Smith and Mark J. Maten as
proxies, each with the power to appoint his substitute, and hereby authorizes
them to represent and to vote, as designated on the reverse side hereof, all the
shares of Common Stock of Envirogen, Inc. held of record by the undersigned on
March 31, 1998 at the Annual Meeting of Stockholders to be held on Thursday, May
21, 1998 or at any adjournment or postponement thereof.
(Continued, and to be signed, on Reverse Side)
- --------------------------------------------------------------------------------
<PAGE>
Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Stockholders
ENVIROGEN, INC.
May 21, 1998
Please Detach and Mail in the Envelope Provided
- --------------------------------------------------------------------------------
A [X] Please mark your |_
votes as in this
example.
WITHHOLD
FOR all nominees AUTHORITY
listed (except as To vote for all
marked to the nominees listed
contrary below) at right
1. ELECTION OF
DIRECTORS. [_] [_] Nominees:
Robert F. Hendrickson
Robert S. Hillas
(INSTRUCTIONS: To withhold authority to vote Robert F. Johnston
for any individual nominee, write that Nicholas J. Lowcock
nominee's name below.) Robert C. Miller
Peter J. Neff
- ------------------------------------- William C. Smith
2. Proposal to ratify the appointment of Coopers FOR AGAINST ABSTAIN
& Lybrand L.L.P. as the independent
accountants for the Company for the year [_] [_] [_]
ending December 31, 1998.
In their discretion, the Proxies are authorized, to the extent permitted by the
rules of the Securities and Exchange Commission, to vote upon such other
business as may properly come before the meeting or any adjournment or
postponement thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
IN FAVOR OF ALL NOMINEES LISTED FOR ELECTION AS DIRECTORS; FOR PROPOSAL 2; AND
IN ACCORDANCE WITH THE PROXIES' BEST JUDGMENT UPON OTHER MATTERS PROPERLY COMING
BEFORE THE MEETING AND ANY ADJOURNMENT OR POSTPONEMENT THEREOF.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
SIGNATURE_______________ DATE_______ SIGNATURE_____________________ DATE_______
NOTE: Please sign exactly as name appears above. When shares are held by joint
tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign with full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
