<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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:
-------------------------------------------------------------------------
(4) Date Filed:
-------------------------------------------------------------------------
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 13, 1999
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 approve the Envirogen, Inc. Deferred Fee Plan for Non-
Employee Directors.
3. To appoint Ernst & Young LLP as auditors for the Company
for the current fiscal year.
4. 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, 1999 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 1998 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 14, 1999 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
14, 1999, 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 13, 1999, and at any
adjournment or postponement thereof.
The close of business on March 31, 1999 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 3,975,868 shares of Common Stock,
which constituted the only outstanding securities of the Company entitled to
vote. All share and per share information set forth in this Proxy Statement has
been restated to reflect the one-for-six reverse split of the Company's Common
Stock on November 24, 1998.
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 Proposals 2 and 3
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, "FOR"
the approval of the Envirogen, Inc. Deferred Fee Plan for Non-Employee Directors
and "FOR" the appointment of Ernst & Young LLP as the Company's independent
accountants for 1999. 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 2000 Annual Meeting of Stockholders, or
when their successors are elected and qualified. The nominees are Robert F.
Hendrickson, Robert S. Hillas, Robert F. Johnston, Nicholas J. Lowcock, Robert
C. Miller, Peter J. Neff and William C. Smith, each of whom is currently a
director of the Company.
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. 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 66
years old.
ROBERT S. HILLAS has been a director of the Company since April 1997 and
has served as President, Chief Executive Officer and Chairman of the Board of
the Company since April 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. Mr. Hillas is also a director of ATMI and United States
Filter Corporation. Mr. Hillas is 50 years old.
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 62 years
old.
NICHOLAS J. LOWCOCK has been a director of the Company since May 1997 and
serves on the Audit Committee. Mr. 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 Leciva a.s., and several private companies.
Mr. Lowcock is 35 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 Applied
Imaging Corp. as well as several privately held companies. Mr. Miller is 33
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 is an
international business management consultant. 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 60 years old.
WILLIAM C. SMITH has been a director of the Company since April 1997. Mr.
Smith served as Chairman of the Board of the Company from April 1997 until April
1998 and as Chief Executive Officer from October 1997 until April 1998. Mr.
Smith also served as the President and Chief Executive Officer of the Company's
Wisconsin Operations Group until his retirement on December 31, 1998. 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 is 67 years
old.
2
<PAGE>
INFORMATION CONCERNING MEETINGS AND CERTAIN COMMITTEES
The Board of Directors held eight meetings during 1998. 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 1998, 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 1998.
During 1998, 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") currently 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. If the Envirogen, Inc. Deferred Fee Plan for Non-Employee Directors
is approved by the Company's stockholders at the meeting, the quarterly retainer
and meeting fees would be deferred and credited to stock accounts, established
at the time of each deferral, equivalent to shares of the Company's Common
Stock, at prices contemporaneous with each deferral date. See "Proposal 2.
Deferred Fee Plan".
Under the 1993 Plan, upon the initial election of each Non-Employee
Director, he will automatically be granted an option to purchase 2,500 shares of
Common Stock, and an option to purchase an additional 834 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
1,250 shares instead of 834 shares of Common Stock. The option to purchase
2,500 shares vests over five years, and the option to purchase 834 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 2,500 shares of Common Stock and (ii) an option to purchase a pro rata
portion of 834 shares (or 1,250 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, Lowcock and Hillas have received stock
option grants pursuant to the 1993 Plan.
3
<PAGE>
PROPOSAL 2. DEFERRED FEE PLAN
The Board of Directors believes that a non-qualified deferred fee plan
enhances the ability of the Company to attract and retain non-employee directors
and motivate them to exercise their best efforts on behalf of the Company and
its affiliates. The Board of Directors also believes that the adoption of a
non-qualified deferred fee plan will help preserve the Company's capital
resources. Accordingly, the Board of Directors proposes and recommends that the
stockholders approve the Envirogen, Inc. Deferred Fee Plan for Non-Employee
Directors (the "Plan").
The text of the Plan is attached as Appendix A to this Proxy Statement.
----------
The following description of the Plan is intended merely as a summary of its
principal features and is qualified in its entirety by reference to the Plan.
1. Eligibility. Only individuals serving on the Board of Directors who
are not employees of the Company or any of its subsidiaries or affiliates
(collectively, "Eligible Directors") are eligible to participate in the Plan. As
of the date of this Proxy Statement, all of the Company's directors, other than
Mr. Hillas, are Eligible Directors.
2. Administration. The Plan will be administered by the Company's
Executive Stock Option and Compensation Committee (the "Committee"), the members
of which are designated by the Board of Directors. The Committee shall have
full power and authority to administer the Plan, including the power to (a)
promulgate forms to be used with respect to the Plan, (b) promulgate rules of
administration, (c) settle any disputes as to rights or benefits arising from
the Plan, (d) interpret and construe the terms of the Plan, including, but not
limited to, determining entitlement to benefits and the amount of such benefits,
and (e) make such decisions or take such action as the Committee, in its sole
discretion, deems necessary or advisable to aid in the proper administration of
the Plan. Currently, the members of the Committee are Robert F. Hendrickson,
Robert F. Johnston and Peter J. Neff.
3. Stock Accounts. A bookkeeping account (a "Stock Account") shall be
established for each Eligible Director consisting of Stock Credits (as defined
below) granted to such director in accordance with the Plan. A record of the
value of each Eligible Director's Stock Account shall be maintained by the
Committee, and each Eligible Director will receive an annual statement of his or
her Stock Account. An Eligible Director's interest in his or her Stock Account
shall be fully vested and nonforfeitable at all times.
4. Grant of Stock Credits. On the last business day of each calendar
quarter commencing on March 31, 1999, each Eligible Director shall receive a
credit (a "Stock Credit") to such director's Stock Account in an amount equal to
(a) all retainer, meeting and other fees otherwise payable to such Eligible
Director during the calendar quarter just ended for services rendered on the
Board of Directors or a committee thereof, divided by (b) the Fair Market Value
of the Common Stock on such date. For purposes of the Plan, "Fair Market Value"
shall equal the mean between the last bid and asked prices of the Common Stock
as reported on the Nasdaq SmallCap Market for the date on which the Fair Market
Value is to be determined or, if not available on such date, the next prior
business day that such prices are available. If the Common Stock is not then
traded on Nasdaq, Fair Market Value shall be determined in good faith by the
Committee.
Eligible Directors will receive additional Stock Credits in the event
any dividend is paid on the Common Stock based on the number of shares of Common
Stock which is equal to the number of Stock Credits attributed to an Eligible
Director's Stock Account as of the record date for the dividend payment.
In the event of any change in the outstanding shares of Common Stock
by reason of any stock dividend, split, subdivision or reclassification,
appropriate adjustments in the number of Stock Credits allocated to each Stock
Account shall be made.
5. Distribution of Accounts. Distribution of an Eligible Director's
Stock Account shall be made on the first business day of the first calendar
month following such director's termination of service as a director of the
Company or, in the event that an Eligible Director dies while serving as a
director of the Company, as soon as practicable after the Committee receives
notice of such death. The distribution shall be made in a single installment of
that number of shares of Common Stock as is equal to the number of Stock Credits
in the Eligible Director's Stock Account on the date of distribution (less an
offset for applicable withholding taxes), except that the value of any
fractional share shall be paid in cash. In the event of death, the distribution
shall be made to such person or persons as the Eligible Director may have
previously designated to the Committee, or to the administrator of such
director's estate.
4
<PAGE>
6. Hardship Distributions. The Committee may at any time make a single
distribution to an Eligible Director equal to a part or all of the balance of
such director's Stock Account upon a showing of severe financial hardship to the
Eligible Director if such distribution were not made. The determination of
whether such hardship exists shall be made at the sole discretion of the
Committee.
7. Restriction on Transferability. The right of an Eligible Director or
any other person to receive distributions under the Plan shall not be subject in
any manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, or charge, and any attempt to do so shall be void.
8. Amendment and Termination of Plan. The Board of Directors at any time
may terminate and in any respect amend or modify the Plan; provided, however,
that no such termination, amendment or modification shall adversely affect the
rights of any Eligible Director or beneficiary credited prior to such
termination, amendment or modification without his or her consent.
The aggregate amount of fees received by all Eligible Directors during
the fiscal year ended December 31, 1998 for services rendered on the Board of
Directors or a committee thereof was $41,000. If the Plan had been in effect
for fiscal 1998, the Eligible Directors would have received an aggregate of
14,989 Stock Credits under the Plan.
THE BOARD OF DIRECTORS HAS ADOPTED A RESOLUTION APPROVING THE PLAN AND
HEREBY RECOMMENDS THAT THE STOCKHOLDERS OF THE COMPANY VOTE "FOR" THE APPROVAL
OF THE PLAN.
PROPOSAL 3. RATIFICATION OF APPOINTMENT OF AUDITORS
The firm of PricewaterhouseCoopers LLP served as the Company's independent
accountants for 1998. On March 31, 1999, the Company dismissed
PricewaterhouseCoopers LLP and selected Ernst & Young LLP to serve as the
Company's independent accountants for 1999. The Company's Board of Directors
participated in and approved the decision to change independent accountants.
The Company's stockholders will be asked to ratify the appointment of Ernst
& Young LLP 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 Ernst & Young LLP 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 Ernst & Young LLP, the Company will appoint other independent
accountants as soon as practicable and before the close of the 1999 year.
The reports of PricewaterhouseCoopers LLP on the Company's consolidated
financial statements for the last two fiscal years did not contain any adverse
opinion or disclaimer of opinion, or modification or qualification as to
uncertainty, audit scope or accounting principles. In connection with its
audits for the two most recent fiscal years and through March 31, 1999, there
have been no disagreements between the Company and PricewaterhouseCoopers LLP on
any matter of accounting principles or practices, financial statement disclosure
or auditing scope or procedure, which disagreements, if not resolved to the
satisfaction of PricewaterhouseCoopers LLP, would have caused them to make
reference thereto in their report on the Company's consolidated financial
statements for such years. During the two most recent fiscal years and through
March 31, 1999, there have been no reportable events (as defined in Item
304(a)(1)(v) of Regulation S-K of the Commission).
Representatives of PricewaterhouseCoopers LLP and Ernst & Young LLP are
expected to be present at the meeting and will be available to respond to
appropriate questions. Each 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 ERNST & YOUNG LLP AS THE COMPANY'S INDEPENDENT ACCOUNTANTS FOR
1999.
5
<PAGE>
PROPOSAL 4. 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 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 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 1998 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 Systems Sales and Services, Douglas W. Jacobson, Senior Vice
President, Mark J. Maten, Vice President Finance and Chief Financial Officer,
Patricia A. McQueary, Controller and Ronald Unterman, Senior Vice President and
Chief Scientific Officer.
6
<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
each individual serving as the Company's Chief Executive Officer during 1998 and
each of the Company's other executive officers whose total annual salary and
bonus during 1998 exceeded $100,000 (collectively, the "Named Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
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>
Robert S. Hillas/(3)/ 1998 $175,000 -- 83,334 --
President, Chief Executive 1997 -- -- 3,334 --
Officer and Chairman of 1996 -- -- -- --
the Board
William C. Smith/(3,4)/ 1998 $181,225 $25,000 -- --
Former Chief Executive 1997 $129,545 -- 4,167 --
Officer and Executive 1996 -- -- -- --
Vice President
Ronald Unterman 1998 $144,000 $ 2,000 38,302 $ 2,880
Senior Vice President and 1997 $144,000 -- 17,667 $ 2,326
Chief Scientific Officer 1996 $138,000 $ 4,000 11,667 $ 2,863
David N. Enegess 1998 $142,000 $ 2,500 18,302 $ 2,840
Vice President of Systems 1997 $142,000 -- 5,167 $ 2,839
Sales and Services 1996 $138,000 -- 5,834 $ 2,863
Douglas W. Jacobson/(4)/ 1998 $138,333 $ 2,000 3,500 --
Senior Vice President 1997 $100,758 -- 3,500 --
1996 -- -- -- --
Mark J. Maten 1998 $128,500 $ 2,000 33,334 $25,688
Vice President, Finance and 1997 -- -- -- --
Chief Financial Officer 1996 -- -- -- --
- -------------
</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 the amount listed for Mr. Maten, this column consists
of the Company's matching contributions to the Envirogen, Inc. 401(k)
Plan. For Mr. Maten, the amount listed consists of reimbursement of
relocation expenses in connection with Mr. Maten's employment with the
Company.
(3) Mr. Smith served as Chief Executive Officer of the Company from October
1997 until Mr. Hillas was appointed in April 1998.
(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.
7
<PAGE>
The following tables set forth certain information concerning stock options
granted to the Named Officers during 1998 and unexercised options held by them
at December 31, 1998. No options were exercised by the Named Officers during
1998.
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>
Robert S. Hillas 83,334 20.6% $6.54 04/16/08
William C. Smith -- -- -- --
Ronald Unterman 38,302 9.5% $2.40 12/07/08
David N. Enegess 18,302 4.5% $2.40 12/07/08
Douglas W. Jacobson 3,500 0.9% $2.40 12/07/08
Mark J. Maten 16,667 8.3% $2.40 12/07/08
- -------------
</TABLE>
(1) All of the options were granted under the 1990 Plan at an exercise price
equal to or greater than the fair market value of the Company's common
stock on the dates of grant. 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. With the exception of the options granted to Mr. Hillas, all of
such options were granted on December 7, 1998 in exchange for previously
granted options. See "Report of the Executive Compensation and Stock
Option Committee on Repricing of Options" and "Ten-Year Option Repricings"
table below.
(2) The Company granted options to employees to purchase a total of 404,000
shares of Common Stock during 1998, including options to purchase a total
of 296,495 shares of Common Stock in connection with the Company's offer to
issue replacement options to certain participants in the 1990 Plan. See
"Report of the Executive Compensation and Stock Option Committee on
Repricing of Options" below.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES /(1)/
<TABLE>
<CAPTION>
Number of Securities Underlying Unexercised Value of Unexercised In-the-Money
Options at Fiscal Year-End Options at Fiscal Year-End/(2)/
------------------------------------------- ----------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Robert S. Hillas 1,334 85,334 -- --
William C. Smith -- 25,000 -- --
Ronald Unterman -- 38,302 -- --
David N. Enegess -- 18,302 -- --
Douglas W. Jacobson -- 3,500 -- --
Mark J. Maten -- 16,667 -- --
- -------------
</TABLE>
(1) No options were exercised by the Named Officers in 1998.
(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, 1998 was $1.375 per share. None
of the options held by the Named Officers were in-the-money on December 31,
1998.
8
<PAGE>
REPORT OF THE EXECUTIVE COMPENSATION AND STOCK OPTION COMMITTEE ON REPRICING OF
OPTIONS
The Company's 1990 Plan was established to further the interests of the
Company and its stockholders by encouraging the growth of its business through
securing, retaining and motivating management employees of high caliber who
possess the skills necessary to accelerate the development and growth of the
Company. In December 1998, as a result of the decrease in the market value of
the Company's Common Stock over an extended period of time, and recognizing that
previously granted stock options had lost much of their value and that the
Company's ability to motivate employees (including the Named Officers) to remain
with the Company would be significantly impaired unless value was restored in
the form of options at an exercise price that was closer to the current market
price, the Executive Compensation and Stock Option Committee of the Board of
Directors, pursuant to authority under the Company's 1990 Plan, approved an
option exchange program.
Under the option exchange program, participants in the 1990 Plan were given
the opportunity to exchange their options for replacement options to acquire the
same number of shares at an exercise price of $2.40 per share. The replacement
options, like the forfeited options, have an original term of ten years and are
subject to a five-year vesting period commencing on the date of grant of the
replacement options. Approximately 105 participants in the 1990 Plan exchanged
their options on December 7, 1998 for replacement options to purchase an
aggregate of 296,495 shares of Common Stock.
The Executive Compensation and Stock Option Committee
Robert F. Hendrickson
Robert F. Johnston
Peter J. Neff
9
<PAGE>
The table set forth below gives certain information as to all options
exchanged by the Company's executive officers during the last ten fiscal years:
TEN-YEAR OPTION REPRICINGS
<TABLE>
<CAPTION>
Length of
Number of Original
Securities Market Price Option Term
Underlying of Stock at Exercise Price Remaining
Options Time of at Time of New at Date of
Repriced or Repricing or Repricing or Exercise Repricing or
Name Date Amended Amendment Amendment Price Amendment
- --------------------------- -------- ----------- ------------ -------------- -------- ---------------
<S> <C> <C> <C> <C> <C> <C>
David N. Enegess, 12/07/98 1,667 $ 1.53 $21.00 $ 2.40 3 yrs., 2 mos.
Vice President of 334 $ 1.53 $22.86 $ 2.40 5 yrs., 2 mos.
Systems Sales 5,000 $ 1.53 $10.26 $ 2.40 6 yrs., 1 mos.
and Services 300 $ 1.53 $19.32 $ 2.40 6 yrs., 9 mos.
2,500 $ 1.53 $23.10 $ 2.40 7 yrs., 2 mos.
3,334 $ 1.53 $16.80 $ 2.40 7 yrs., 11 mos.
5,167 $ 1.53 $10.74 $ 2.40 9 yrs., 0 mos.
9/15/95 300 $19.32 $43.50 $19.32 7 yrs., 4 mos.
Douglas W. Jacobson 12/07/98 3,500 $ 1.53 $10.74 $ 2.40 9 yrs. 0 mos.
Senior Vice President
Mark J. Maten 12/07/98 16,667 $ 1.53 $ 9.36 $ 2.40 9 yrs. 1 mos.
Vice President, Finance
and Chief Financial
Officer
Ronald Unterman 12/07/98 1,667 $ 1.53 $21.00 $ 2.40 3 yrs., 2 mos.
Senior Vice President 334 $ 1.53 $22.86 $ 2.40 5 yrs., 2 mos.
and Chief Scientific 6,667 $ 1.53 $10.26 $ 2.40 6 yrs., 1 mos.
Officer 300 $ 1.53 $19.32 $ 2.40 6 yrs., 9 mos.
5,000 $ 1.53 $23.10 $ 2.40 7 yrs., 2 mos.
6,667 $ 1.53 $16.80 $ 2.40 7 yrs., 11 mos.
12,500 $ 1.53 $18.84 $ 2.40 8 yrs., 2 mos.
5,167 $ 1.53 $10.74 $ 2.40 9 yrs., 0 mos.
9/15/95 300 $19.32 $43.50 $19.32 7 yrs., 4 mos.
</TABLE>
EMPLOYMENT AND NONCOMPETITION AGREEMENTS
In April 1998, Robert S. Hillas 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 received upon
commencement of his employment an option under the 1990 Plan to purchase 83,334
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 purchased
an additional 83,334 shares of Common Stock from the Company at $7.50 per share
in April 1998, and the Company granted Mr. Hillas certain registration rights
with respect to such shares. If Mr. Hillas' employment is terminated prior to
the expiration date 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
10
<PAGE>
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 was employed by the Company pursuant to an employment agreement from
April 1997 until his retirement on December 31, 1998. Under the terms of his
employment agreement, Mr. Smith may not 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. In November 1998, the agreement was modified and the
term extended to December 31, 1999. 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), the Company is obligated to continue to pay Mr.
Jacobson salary and provide fringe benefits following termination until December
31, 1999. In addition, 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 on or before December 31, 1999 would become exercisable on the
date of termination and his noncompetition covenants would terminate. 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.
11
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of February 28, 1999 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
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 PERCENT
- ------------------------------------------------- -------------- --------
<S> <C> <C>
Warburg, Pincus Ventures, L.P. 1,015,873/(1)/ 25.6%
466 Lexington Avenue
New York, NY 10017-3147
William C. Smith, Director and Named Officer 174,770/(2)/ 4.4
Douglas W. Jacobson, Named Officer 174,604 4.4
Robert S. Hillas, Director and Named Officer 108,469/(3)/ 2.7
Robert F. Johnston, Director 98,835/(4)/ 2.5
Robert C. Miller, Director 44,604/(5)/ 1.1
Robert F. Hendrickson, Director 27,002/(6)/ *
Ronald Unterman, Named Officer 13,350 *
David N. Enegess, Named Officer 11,817 *
Peter J. Neff, Director 2,696/(7)/ *
Nicholas J. Lowcock, Director -- *
Mark J. Maten, Named Officer -- *
All executive officers and directors as a group 656,281/(8)/ 16.4
(twelve persons)
</TABLE>
______________
* 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.
(2) Does not give effect to the transfer by Mr. Smith in March 1998 of 100,000
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.
(3) Includes 1,334 shares issuable upon exercise of options that are currently
exercisable.
(4) Includes 1,668 shares issuable upon exercise of options that are currently
exercisable.
(5) Includes 27,069 shares issuable upon exercise of options and warrants that
are currently exercisable.
(6) Includes 7,252 shares issuable upon exercise of options that are currently
exercisable.
(7) Includes 2,112 shares issuable upon exercise of options that are currently
exercisable.
(8) See Notes 2 through 7 above. Also includes 134 shares owned by an executive
officer who is not listed in the above table.
12
<PAGE>
CERTAIN TRANSACTIONS
In April 1998, Robert S. Hillas, the Company's newly-appointed Chairman,
President and Chief Executive Officer, purchased 83,334 shares of Common Stock
from the Company at $7.50 per share in connection with the execution of his
employment agreement. The Company granted Mr. Hillas certain registration
rights with respect to such shares.
STOCKHOLDER PROPOSALS
The deadline for stockholders to submit proposals pursuant to Rule 14a-8 of
the Exchange Act for inclusion in the Company's proxy statement and form of
proxy for the 2000 Annual meeting of Stockholders (the "Annual Meeting") is
December 16, 1999. The date after which notice of a stockholder proposal
submitted outside of the process of Rule 14a-8 of the Exchange Act is considered
untimely is February 29, 2000. If notice of a stockholder proposal submitted
outside of the process of Rule 14a-8 of the Exchange Act is received by the
company after February 29, 2000, then the Company's proxy for the Annual Meeting
may confer discretionary authority to vote on such matter without any discussion
of such matter in the proxy statement for the Annual Meeting.
MISCELLANEOUS
A copy of the Company's 1998 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
1998. 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
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 14, 1999
13
<PAGE>
APPENDIX A
ENVIROGEN, INC.
DEFERRED FEE PLAN FOR NON-EMPLOYEE DIRECTORS
ARTICLE 1
---------
1.1 NAME AND PURPOSE. The name of this Plan is the "Deferred Fee Plan for
Non-Employee Directors of Envirogen, Inc." The purpose of the Plan is to
provide non-employee directors of Envirogen, Inc., a Delaware corporation (the
"Corporation"), with a vehicle to defer receipt of all quarterly and meeting
fees and permit such deferred fees to be credited to Stock Accounts, established
at the time of each deferral, equivalent to shares of the Corporation's Common
Stock, at prices contemporaneous with each deferral date.
1.2 DEFINITIONS. Whenever used in the Plan, the following terms shall have
the meaning set forth or referenced below:
(a) "Board" means the Board of Directors of the Corporation.
(b) "Business Day" means a day except for a Saturday, Sunday or a legal
holiday.
(c) "Committee" means the Executive Stock Option and Compensation Committee
of the Board.
(d) "Common Stock" means (i) the common stock of the Corporation, adjusted as
provided in Section 3.5, or (ii) if there is a merger or consolidation
and the Corporation is not the surviving corporation thereof, the capital
stock of the surviving corporation given in exchange for such common
stock of the Corporation.
(e) "Compensation" means retainer fees for service on, and fees for
attendance at meetings of, the Board and any committees thereof, which
are payable to a Non-Employee Director during a Plan Year.
(f) "Corporation" has the meaning set forth in Section 1.1 above.
(g) "Deferral Date" has the meaning set forth in Section 2.2.
(h) "Fair Market Value" means the mean between the last bid and asked prices
of the Common Stock as reported on the NASDAQ Stock Exchange for the date
on which Fair Market Value is to be determined; if both a bid and an
asked price are not available on such date, then Fair Market Value shall
be determined with reference to the next prior Business Day on which both
a bid and an asked price are so available; if the Common Stock is not
then traded on the NASDAQ Stock Exchange, Fair Market Value shall be as
determined in good faith by the Committee.
(i) "Non-Employee Director" means any individual serving on the Board who is
not an employee of the Corporation or any of its subsidiaries or
affiliates.
(j) "Participant" means each person serving from time to time as a Non-
Employee Director during the period of such service.
(k) "Plan" has the meaning set forth in Section 1.1 above.
A-1
<PAGE>
(l) "Plan Year" means the calendar year.
(m) "Stock Account" means a bookkeeping account established for each
Participant pursuant to the terms hereof consisting of Stock Credits.
(n) "Stock Credit" means a credit to a Stock Account, calculated pursuant to
Article 2.
(o) "Stockholders' Meeting" means the Annual Meeting of Stockholders of the
Corporation.
ARTICLE 2
---------
FEE DEFERRALS
2.1 ELIGIBILITY. Effective on the first day of January 1999, if this Plan
has been approved by the Stockholders of the Corporation at the 1999
Stockholders' Meeting, each Non-Employee Director shall be eligible to
participate, and shall participate, in the Plan.
2.2 ANNUAL GRANT OF STOCK CREDITS. Effective on the first day of January
1999, if this Plan has been approved by the Stockholders of the Corporation at
the 1999 Stockholders' Meeting, each Participant who serves as a director shall
have his or her Stock Account credited with Stock Credits as herein described.
Such Stock Credits shall be established on the last Business Day of each
calendar quarter (each, a "Deferral Date") in an amount equal to (A) the
aggregate Compensation which would have been paid to such Participant during
such calendar quarter, divided by (B) the Fair Market Value of the Common Stock
on the Deferral Date.
2.3 DIVIDENDS. As of the date any dividend is paid to holders of shares of
Common Stock, such Stock Account shall be credited with additional Stock Credits
equal to the number of shares of Common Stock (including fractions of a share)
that are equal in value, using the Fair Market Value of shares of Common Stock
on the dividend payment date, to the amount which would have been paid as
dividends on that number of shares (including fractions of a share) of Common
Stock which is equal to the number of Stock Credits attributed to such Stock
Account as of the record date for the dividend payment. In the case of
dividends paid in property other than cash, the amount of the dividend shall be
deemed to be the fair market value of the property at the time of the payment of
the dividend, as determined in good faith by the Committee.
ARTICLE 3
---------
DISTRIBUTION OF ACCOUNTS.
3.1 TIME AND METHOD OF PAYMENT. Distribution of the Stock Account of a
Participant shall be made on the first Business Day of the first calendar month
following such Participant's termination of service as a director of the
Corporation. Distribution of a Participant's Stock Account shall be made,
subject to Section 3.4 hereof, in a single installment in that number of shares
of Common Stock as is equal to the number of Stock Credits in the Participant's
Stock Account on the date of distribution, except that the value of any
fractional share shall be paid in cash based on the Fair Market Value of the
Common Stock on the date of distribution.
3.2 SEVERE FINANCIAL HARDSHIP. Notwithstanding any other Section of this
Article 3, at the written request of a Participant or a Participant's legal
representative, the Committee, in its sole discretion upon a finding that
continued deferral will result in severe financial hardship to the Participant,
may authorize the payment of all or a part of a Participant's Stock Account,
subject to Section 3.4 hereof, in Common Stock, in a single installment prior to
the distribution date for such Account under Section 3.1 or Section 3.3.
3.3 DISTRIBUTION UPON DEATH. Notwithstanding any other provision of this
Plan, upon the death of a
A-2
<PAGE>
Participant, the Committee shall authorize the Company to distribute, subject to
Section 3.4 hereof, all of such Participant's Stock Account in a single
installment to such person or persons, as the Participant may have designated.
All such designations shall be made in writing and delivered to the Committee.
A Participant may from time to time revoke or change any such designation by
written notice to the Committee. If there is no designation on file with the
Committee at the time of the Participant's death, or if the person or persons
designated therein shall have all predeceased the Participant or otherwise
ceased to exist, or if there is a dispute among designees of a Participant, such
distributions shall be made to the executor or administrator of the
Participant's estate. Any distribution under this Section 3.3 shall be made as
soon as practicable after the Committee is notified of the Participant's death
or is satisfied as to the identity of the appropriate payee, whichever is later.
Such distribution shall be made as provided in the second sentence of Section
3.1.
3.4 WITHHOLDING TAXES. The Corporation shall deduct from all distributions
under the Plan any taxes required to be withheld by federal, state, or local
governments, computed on the basis of the Fair Market Value of the number of
shares of Common Stock otherwise distributable on the date of distribution.
3.5 ADJUSTMENT OF STOCK ACCOUNTS. If at any time the number of outstanding
shares of Common Stock shall be increased as the result of any stock dividend,
stock split, subdivision or reclassification of shares, the number of Stock
Credits with which the Stock Account of each Participant is credited shall be
increased in the same proportion as the outstanding number of shares of Common
Stock is increased. If the number of outstanding shares of Common Stock shall
at any time be decreased as the result of any combination, reverse stock split
or reclassification of shares, the number of Stock Credits with which the Stock
Account of each Participant is credited shall be decreased in the same
proportion as the outstanding number of shares of Common Stock is decreased. In
the event a dividend in kind is declared having a value per share of Common
Stock equal to 10% or more of the Fair Market Value of a share of Common Stock
on the date prior to the public announcement of such dividend, the Committee
shall make an appropriate equitable adjustment in the number of Stock Credits
with which the Stock Account of each Participant is credited. In the event the
Corporation shall at any time be consolidated with or merged into any other
corporation and holders of shares of Common Stock receive shares of the capital
stock of the resulting or surviving corporation (or any consideration other than
shares of capital stock), there shall be credited to the Stock Account of each
Participant, in place of the Stock Credits then credited thereto, new Stock
Credits in an amount equal to the product of the number of shares of capital
stock (or consideration other than shares of capital stock) exchanged for one
share of Common Stock upon such consolidation or merger and the number of Stock
Credits with which such Account then is credited.
ARTICLE 4
---------
THE COMMITTEE
4.1 AUTHORITY. The Committee shall have full power and authority to
administer the Plan, including the power to (a) promulgate forms to be used with
respect to the Plan, (b) promulgate rules of Plan administration, (c) settle any
disputes as to rights or benefits arising from the Plan, (d) interpret and
construe the terms of the Plan, including, but not limited to, determining
entitlement to benefits and the amount of such benefits, and (e) make such
decisions or take such action as the Committee, in its sole discretion, deems
necessary or advisable to aid in the proper administration of the Plan. Any
decision made by the Committee shall be final and binding on the Corporation,
Participants and their heirs or successors. The Committee may delegate its
power and authority to administer the Plan to officers and employees of the
Corporation; provided, however, that the Committee's power and authority under
Section 3.2 (regarding Severe Financial Hardship) shall not be delegated.
4.2 OPERATION. The Committee may act (a) by majority vote of its members
meeting in person or by telephone, or (b) by consent in writing signed by all of
the members of the Committee.
A-3
<PAGE>
4.3 ELECTIONS, NOTICES. All elections and notices required to be provided to
the Committee under the Plan must be in such form or forms prescribed by, and
contain such information as is required by, the Committee.
ARTICLE 5
---------
MISCELLANEOUS
5.1 FUNDING. All amounts payable under the Plan shall constitute a general
unsecured obligation of the Corporation.
5.2 NON-ALIENATION OF BENEFITS. No benefit under the Plan shall be subject
in any manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, or charge, and any attempt to do so shall be void. No such
benefit, prior to receipt thereof pursuant to the provisions of the Plan, shall
be in any manner liable for or subject to the debts, contracts, liabilities,
engagements or torts of the Participant.
5.3 GOVERNING LAW. This Plan shall be governed by the laws of the State of
New Jersey.
5.4 AMENDMENT, MODIFICATION AND TERMINATION OF THE PLAN. The Board at any
time may terminate and in any respect amend or modify the Plan; provided,
however, that no such termination, amendment or modification shall adversely
affect the rights of any Participant or beneficiary, including his or her rights
with respect to Stock Credits, credited prior to such termination, amendment or
modification, without his or her consent.
5.5 SUCCESSORS AND HEIRS. The Plan and any properly executed elections
hereunder shall be binding upon the Corporation and Participants, and upon any
assignee or successor in interest to the Corporation and upon the heirs, legal
representatives and beneficiaries of any Participant.
5.6 STATUS OF PARTICIPANTS. Stock Credits are not, and do not constitute,
shares of Common Stock. No right as a holder of shares of Common Stock shall
devolve upon a Participant by reason of his or her participation in the Plan.
5.7 STATEMENT OF ACCOUNT. In February of each Plan Year, each Participant in
the Plan during the immediately preceding Plan Year shall receive a statement of
his or her Account under the Plan as of December 31 of such preceding Plan Year.
Such statement shall be in a form and contain such information as is deemed
appropriate by the Committee.
5.8 ENTIRE AGREEMENT. The Plan contains the entire agreement of the
Corporation with respect to the subject matter hereof. No modification or claim
of waiver of any of the provisions hereof shall be valid unless in writing
signed by the party against whom such modification or waiver is sought to be
enforced.
A-4
<PAGE>
ENVIROGEN, INC.
4100 QUAKERBRIDGE ROAD
LAWRENCEVILLE, NEW JERSEY 08648
PROXY--Annual Meeting of Stockholders - May 13, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Robert S. Hillas 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, 1999 at the Annual Meeting of Stockholders to be held on Thursday,
May 13, 1999 or at any adjournment or postponement thereof.
(Continued, and to be signed, on Reverse Side)
<PAGE>
Please Detach and Mail in the Envelope Provided
[X] Please mark your
votes as in this
example.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FOR ALL nominees WITHHOLD
listed (except as AUTHORITY
marked to the To vote for all
contrary below) nominees listed at right
1. ELECTION OF [ ] [ ] Nominees: Robert F. Hendrickson
DIRECTORS Robert S. Hillas
(INSTRUCTIONS: To withhold authority to vote Robert F. Johnston
for any individual nominee, write that nominee's Nicholas J. Lowcock
name below.) Robert C. Miller
Peter J. Neff
William C. Smith
<CAPTION>
<S> <C> <C> <C>
FOR AGAINST ABSTAIN
2. Proposal to approve and adopt the [ ] [ ] [ ]
Envirogen, Inc. Deferred Fee Plan for Non-
Employee Directors.
3. Proposal to ratify the appointment of Ernst & [ ] [ ] [ ]
Young LLP as the independent accountants
for the Company for the year ending
December 31, 1999.
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 STOCKHOLD-
ER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED IN
FAVOR OF ALL NOMINEES LISTED FOR ELECTION AS DIREC-
TORS; FOR PROPOSALS 2 AND 3; AND IN ACCORDANCE WITH THE PROX-
IES' BEST JUDGMENT UPON OTHER MATTERS PROPERLY COM-
ING BEFORE THE MEETING AND ANY ADJOURNMENT OR POST-
PONEMENT 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.
</TABLE>
