ENVIROGEN, INC.
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of April 10, 1997, among the
investors listed on Schedule I hereto (the "Investors") and Envirogen, Inc., a
Delaware corporation (the "Company").
R E C I T A L S
WHEREAS, Warburg, Xxxxxx Ventures, L.P., a Delaware limited partnership
("Warburg"), has agreed, pursuant to the terms of the Securities Purchase
Agreement, dated as of January 14, 1997, by and between Warburg and the Company
(the "Purchase Agreement"), to purchase 6,095,238 shares of the common stock,
par value $0.01 per share, of the Company (the "Common Stock") at the aggregate
cash purchase price of $15,999,999.75; and
WHEREAS, the Company has agreed, as a condition precedent to the
Warburg's obligations under the Purchase Agreement, to xxxxx Xxxxxxx certain
registration rights; and
WHEREAS, pursuant to the Agreement and Plan of Merger, dated January
14, 1997 (the "Merger Agreement"), by and among the Company, Fluid Management,
Inc., a Wisconsin corporation ("Fluid Management"), and Xxxxxxx X. Xxxxx,
Xxxxxxx X. Xxxxxxxx, Xxxx X. Xxxx and Xxxxxxx X. Xxxxxxxxxxxx (Messrs. Smith,
Jacobson, Hawk and Xxxxxxxxxxxx collectively, the "Other Investors"), the Other
Investors shall receive, collectively, 4,190,477 shares of Common Stock in
connection with the transactions contemplated by the Merger Agreement and
WHEREAS, the Company has agreed, as a condition precedent to Fluid
Management's and the Other Investor's obligations under the Merger Agreement, to
grant the Other Investors certain registration rights; and
WHEREAS, the Investors and the Company desire to define the
registration rights of the Investors on the terms and subject to the conditions
herein set forth.
NOW, THEREFORE, in consideration of the foregoing premises and for
other good and valuable consideration, the parties hereby agree as follows:
1. DEFINITIONS
-----------
As used in this Agreement, the following terms have the respective
meaning set forth below:
Commission: shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act;
Exchange Act: shall mean the Securities Exchange Act of 1934, as
amended;
Holder: shall mean any holder of Registrable Securities;
Person: shall mean an individual, partnership, joint-stock company,
corporation, trust or unincorporated organization, and a government or agency or
political subdivision thereof;
register, registered and registration: shall mean to a registration
effected by preparing and filing a registration statement in compliance with the
Securities Act (and any post-effective amendments filed or required to be filed)
and the declaration or ordering of effectiveness of such registration statement;
Registrable Securities: shall mean (A) shares of Common Stock acquired
by Warburg pursuant to the Purchase Agreement and shares of Common Stock
acquired by the Other Investors pursuant to the Merger Agreement, and (B) any
common stock of the Company issued as a dividend or other distribution with
respect to, or in exchange for or in replacement of, the shares of Common Stock
referred to in clause (A);
Registration Expenses: shall mean all expenses incurred by the Company
in compliance with Section 2 hereof, including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel for the Company, fees and expenses of one counsel for all the Holders in
an amount not to exceed $15,000 in connection with an underwritten transaction
or $5,000 in connection with a non-underwritten transaction, blue sky fees and
expenses and the expense of any special audits incident to or required by any
such registration (but excluding the compensation of regular employees of the
Company, which shall be paid in any event by the Company);
Security, Securities: shall have the meaning set forth in Section 2(1)
of the Securities Act;
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Securities Act: shall mean the Securities Act of 1933, as amended; and
Selling Expenses: shall mean all underwriting discounts and selling commissions
applicable to the sale of Registrable Securities and all fees and disbursements
of counsel for each of the Holders other than fees and expenses of one counsel
for all the Holders in an amount not to exceed $15,000 in connection with an
underwritten transaction or $5,000 in connection with a non-underwritten
transaction.
2. REGISTRATION RIGHTS
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(a) Shelf Registration.
------------------
(i) As soon as practicable after the Closing Date, but in any
event within nine (9) months after the Closing Date, the Company shall
file with the Commission and cause to be declared effective a
registration statement pursuant to Rule 415 under the Securities Act (a
"Shelf Registration Statement") relating to the offer and sale of
Registrable Securities by the Holders thereof from time to time in
accordance with the methods of distribution elected by such Holders and
set forth in such Shelf Registration Statement.
(ii) The Company shall supplement or amend, if necessary, the
Shelf Registration Statement as required by the applicable registration
form or by the Securities Act or the rules and regulations promulgated
thereunder or as reasonably requested by the Holders of a majority of
the Registrable Securities (the "Majority Holders"), and the Company
shall furnish to the holders of the Registrable Securities to which the
Shelf Registration Statement relates copies of any such supplement or
amendment prior to its being used and/or filed with the Commission.
(b) Expenses of Registration. All Registration Expenses incurred
in connection with any registration, qualification or compliance pursuant to
this Section 2 shall be borne by the Company, and all Selling Expenses shall be
borne by the Holders of the securities so registered pro rata on the basis of
the number of their shares so registered.
(c) Registration Procedures. In connection with the Shelf
Registration Statement filed pursuant to this Section 2, the Company will keep
the Holders, as applicable, advised in writing as to the initiation of such
registration and as to the completion thereof. Subject to Section 2(g) hereof,
at its expense, the Company will, as expeditiously as possible:
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(i) prepare and file with the SEC such amendments and supplements
to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective
and to comply with the provisions of the Securities Act with respect to the
disposition of all Registrable Securities covered by such registration
statement or as may be reasonably requested by the Majority Holders, until
such time (x) as all of such Registrable Securities have been disposed of in
accordance with the intended methods of disposition by the seller or sellers
thereof set forth in such registration statement or (y) as set forth in
Section 2(h) hereof;
(ii) use its best efforts (x) to register or qualify all
Registrable Securities and other securities covered by such registration
statement under such other securities or blue sky laws of such States of the
United States of America where an exemption is not available and as the
sellers of Registrable Securities covered by such registration statement
shall reasonably request, (y) to keep such registration or qualification in
effect for so long as such registration statement remains in effect, and (z)
to take any other action which may be reasonably necessary or advisable to
enable such sellers to consummate the disposition in such jurisdictions of
the securities to be sold by such sellers, except that the Company shall not
for any such purpose be required to qualify generally to do business as a
foreign corporation in any jurisdiction wherein it would not but for the
requirements of this subdivision (ii) be obligated to be so qualified,
subject itself to taxation in any such jurisdiction or to consent to general
service of process in any such jurisdiction;
(iii) use its best efforts to cause all Registrable Securities
covered by such registration statement to be registered with or approved by
such other federal or state governmental agencies or authorities as may be
necessary in the opinion of counsel to the Company and counsel to the seller
or sellers of Registrable Securities to enable the seller or sellers thereof
to consummate the disposition of such Registrable Securities;
(iv) promptly notify each Holder of Registrable Securities covered
by such registration statement at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, upon discovery
that, or upon the happening of any event as a result of which, the
prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact
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or omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, in the light of the
circumstances under which they were made, and at the request of any such
Holder promptly prepare and furnish to it a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be necessary so
that, as thereafter delivered to the purchasers of such securities, such
prospectus shall not include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary tomake
the statements therein not misleading in the light of the circumstances
under which they were made;
(v) furnish, on the date that such Registrable Securities are
delivered to the underwriters for sale, if such securities are being sold
through underwriters, (1) an opinion, dated as of such date, of the counsel
representing the Company for the purposes of such registration, in form and
substance as is customarily given to underwriters in an underwritten public
offering and reasonably satisfactory to a majority in interest of the
Holders participating in such registration, addressed to the underwriters
and to the Holders participating in such registration and (2) a letter,
dated as of such date, from the independent certified public accountants of
the Company, in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public
offering and reasonably satisfactory to a majority in interest of the
Holders participating in such registration, addressed to the underwriters,
and if permitted by applicable accounting standards, to the Holders
participating in such registration; and
(vi) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, and make available to its security
holders, as soon as reasonably practicable, an earnings statement covering
the period of at least twelve months, but not more than eighteen months,
beginning with the first full calendar month after the effective date of
such registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158 promulgated
thereunder, and promptly furnish to each Holder of Registrable Securities a
copy of any amendment or supplement to such registration statement or
prospectus.
Notwithstanding the foregoing, if any such registration or
comparable statement refers to any Holder by name or otherwise as the holder of
any securities of the Company and in its sole and exclusive judgment such Holder
is or might be deemed to be a
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controlling person of the Company, such Holder shall have the right to require
the insertion therein of language, in form and substance reasonably satisfactory
to such Holder and the Company, to the effect that the holding by such Holder of
such securities is not to be construed as a recommendation by such Holder of the
investment quality of the Company's securities covered thereby and that such
holding does not imply that such Holder will assist in meeting any future
financial requirements of the Company.
(d) Indemnification.
---------------
(i) The Company will indemnify each of the Holders, as applicable,
each of its officers, directors and partners, and each person controlling
each of the Holders, with respect to the registration which has been
effected pursuant to this Section 2, and each underwriter, if any, and each
person who controls any underwriter, against all claims, losses, damages and
liabilities (or actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained
in any prospectus, offering circular or other document (including any
related registration statement, notification or the like) incident to any
such registration, qualification or compliance, or based on any omission (or
alleged omission) to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, or any
violation by the Company of the Securities Act or any rule or regulation
thereunder applicable to the Company and relating to action or inaction
required of the Company in connection with any such registration,
qualification or compliance, and will reimburse each of the Holders, each of
its officers, directors and partners, and each person controlling each of
the Holders, each such underwriter and each person who controls any such
underwriter, for any reasonable legal and any other expenses incurred in
connection with investigating and defending any such claim, loss, damage,
liability or action, provided that the Company will not be liable in any
such case to the extent that any such claim, loss, damage, liability or
expense arises out of or is based on any untrue statement or omission based
upon written information furnished to the Company by the Holders or
underwriter and stated to be specifically for use therein.
(ii) Each of the Holders severally will, if Registrable Securities
held by it are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify the Company, each
of its directors and officers and each underwriter, if any, of the Company's
securities covered by such registration
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statement, each person who controls the Company or such underwriter and each
of their officers, directors, and partners against all claims, losses,
damages and liabilities (or actions in respect thereof) arising out of or
based on any untrue statement (or alleged untrue statement) of a material
fact contained in such registration statement, prospectus, offering circular
or other document made by such Holder, or any omission (or alleged omission)
to state therein a material fact required to be stated therein or necessary
to make the statements by such Holder therein not misleading, and will
reimburse the Company and such directors, officers, partners, persons,
underwriters or control persons for any legal or any other expenses
reasonably incurred in connection with investigating or defending any such
claim, loss, damage, liability or action, in each case to the extent, but
only to the extent, that such untrue statement (or alleged untrue statement)
or omission (or alleged omission) is made in such registration statement,
prospectus, offering circular or other document in reliance upon and in
conformity with written information furnished to the Company by such Holder
and stated to be specifically for use therein; provided, however, that the
obligations of each of the Holders hereunder shall be limited to an amount
equal to the net proceeds to such Holder of securities sold as contemplated
herein.
(iii) Each party entitled to indemnification under this Section
2(d) (the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity
may be sought, and shall permit the Indemnifying Party to assume the defense
of any such claim or any litigation resulting therefrom; provided that
counsel for the Indemnifying Party, who shall conduct the defense of such
claim or any litigation resulting therefrom, shall be approved by the
Indemnified Party (whose approval shall not unreasonably be withheld) and
the Indemnified Party may participate in such defense at such party's
expense (unless the Indemnified Party shall have reasonably concluded that
there may be a conflict of interest between the Indemnifying Party and the
Indemnified Party in such action, in which case the fees and expenses of
counsel shall be at the expense of the Indemnifying Party, provided that in
such event the Indemnifying Party shall not be responsible for the fees of
more than one counsel (plus one local counsel) to the Indemnified Parties),
and provided further that the failure of any Indemnified Party to give
notice as provided herein shall not relieve the Indemnifying Party of its
obligations under this Section 2 unless the Indemnifying Party is
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materially prejudiced thereby. No Indemnifying Party, in the defense of any
such claim or litigation shall, except with the consent of each Indemnified
Party, consent to entry of any judgment or enter into any settlement which
does not include as an unconditional term thereof the giving by the claimant
or plaintiff to such Indemnified Party of a release from all liability in
respect to such claim or litigation. Each Indemnified Party shall furnish
such information regarding itself or the claim in question as an
Indemnifying Party may reasonably request in writing and as shall be
reasonably required in connection with the defense of such claim and
litigation resulting therefrom.
(iv) If the indemnification provided for in this Section 2(d) is
held by a court of competent jurisdiction to be unavailable to an
Indemnified Party with respect to any loss, liability, claim, damage or
expense referred to herein, then the Indemnifying Party, in lieu of
indemnifying such Indemnified Party hereunder, shall contribute to the
amount paid or payable by such Indemnified Party as a result of such loss,
liability, claim, damage or expense in such proportion as is appropriate to
reflect the relative fault of the Indemnifying Party on the one hand and of
the Indemnified Party on the other in connection with the statements or
omissions which resulted in such loss, liability, claim, damage or expense,
as well as any other relevant equitable considerations. The relative fault
of the Indemnifying Party and of the Indemnified Party shall be determined
by reference to, among other things, whether the untrue (or alleged untrue)
statement of a material fact or the omission (or alleged omission) to state
a material fact relates to information supplied by the Indemnifying Party or
by the Indemnified Party and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or
omission.
(v) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with any underwritten public offering
contemplated by this Agreement are in conflict with the foregoing
provisions, the provisions in such underwriting agreement shall be
controlling.
(vi) The foregoing indemnity agreement of the Company and the
Holders is subject to the condition that, insofar as they relate to any
loss, claim, liability or damage made in a preliminary prospectus but
eliminated or remedied in the amended prospectus on file with the Commission
at the time the registration statement in
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question becomes effective or the amended prospectus filed with the
Commission pursuant to Rule 424(b) (the "Final Prospectus"), such indemnity
agreement shall not inure to the benefit of (i) any underwriter if a copy of
the Final Prospectus was furnished to the underwriter and was not furnished
to the person asserting the loss, liability, claim or damage at or prior to
the time such action is required by the Securities Act and (ii) any Holder
if the loss, claim, liability or damage relates to a transaction pursuant to
which shares of Common Stock were not distributed pursuant to an
underwritten offering and if a copy of the Final Prospectus was furnished to
the Holder and was not furnished to the person asserting the loss,
liability, claim or damage at or prior to the time such action is required
by the Securities Act.
(e) Information by the Holders. Each of the Holders holding
securities included in any registration shall furnish to the Company such
information regarding such Holder and the distribution proposed by such Holder
as the Company may reasonably request in writing and as shall be reasonably
required in connection with any registration, qualification or compliance
referred to in this Section 2.
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(f) Rule 144 Reporting.
------------------
With a view to making available the benefits of certain rules and
regulations of the Commission which may permit the sale of restricted securities
to the public without registration, the Company agrees to:
(i) make and keep public information available as those terms are
understood and defined in Rule 144 under the Securities Act ("Rule 144");
(ii) use its best efforts to file with the Commission in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act; and
(iii) so long as the Holder owns any Registrable Securities,
furnish to the Holder upon request, a written statement by the Company as to
its compliance with the reporting requirements of Rule 144 and of the
Securities Act and the Exchange Act, a copy of the most recent annual or
quarterly report of the Company, and such other reports and documents so
filed as the Holder may reasonably request in availing itself of any rule or
regulation of the Commission allowing the Holder to sell any such securities
without registration.
(g) Holdback Periods. Notwithstanding anything in this Agreement
to the contrary if (i) the Company shall determine in good faith that it would
be significantly disadvantageous to the Company and its stockholders for any
such Shelf Registration Statement to be amended or supplemented, and (ii) the
need for such an amendment or supplement is not caused by a proposed public
offering of any securities of the Company by any of its securityholders (other
than an offering made pursuant to a registration on Form S-8), the Company may
defer such amending or supplementing of such Shelf Registration Statement for
not more than 60 days and in such event, upon appropriate notice to the Holders,
the Holders shall be required to discontinue disposition of any Registrable
Securities covered by such Shelf Registration Statement during such period;
provided, however, that this right may not be exercised by the Company more than
once in any twelve-month period.
(h) Termination. The registration rights set forth in this Section
2 shall not be available to any Holder if, in the opinion of counsel to the
Company, all of the Registrable Securities then owned by such Holder could be
sold in any 90-day period pursuant to Rule 144 under the Securities Act (without
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giving effect to the provisions of Rule 144(k)). Upon termination of such
registration rights in accordance with this Section 2(h), the obligations of the
Company to continue the effectiveness of the Shelf Registration Statement shall
terminate.
3. MISCELLANEOUS
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(a) Directly or Indirectly. Where any provision in this Agreement
refers to action to be taken by any Person, or which such Person is prohibited
from taking, such provision shall be applicable whether such action is taken
directly or indirectly by such Person.
(b) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed entirely within such State.
(c) Section Headings. The headings of the sections and subsections
of this Agreement are inserted for convenience only and shall not be deemed to
constitute a part thereof.
(d) Notices.
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(i) All communications under this Agreement shall be in writing
and shall be delivered by hand or mailed by overnight courier or by
registered or certified mail, postage prepaid:
(A) if to the Company, to 0000 Xxxxxxxxxxxx Xxxx,
Xxxxxxxxxxxxx, XX 00000, Attention: Harch X. Xxxx, or at such other
address as it may have furnished in writing to the Investors;
(B) if to the Investors, at the addresses listed on Schedule
I hereto, or at such other addresses as may have been furnished the
Company in writing.
(iii) Any notice so addressed shall be deemed to be given: if
delivered by hand, on the date of such delivery; if mailed by courier, on
the first business day following the date of such mailing; and if mailed by
registered or certified mail, on the third business day after the date of
such mailing.
(e) Reproduction of Documents. This Agreement and all documents
relating thereto, including, without limitation, any consents, waivers and
modifications which may hereafter be executed may be reproduced by the Investor
by any
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photographic, photostatic, microfilm, microcard, miniature photographic or other
similar process and the Investors may destroy any original document so
reproduced. The parties hereto agree and stipulate that any such reproduction
shall be admissible in evidence as the original itself in any judicial or
administrative proceeding (whether or not the original is in existence and
whether or not such reproduction was made by theInvestors in the regular course
of business) and that any enlargement, facsimile or further reproduction of such
reproduction shall likewise be admissible in evidence.
(f) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties.
(g) Entire Agreement; Amendment and Waiver. This Agreement
constitutes the entire understanding of the parties hereto and supersedes all
prior understanding among such parties. This Agreement may be amended, and the
observance of any term of this Agreement may be waived, with (and only with) the
written consent of the Company and the Investors holding a majority of the then
outstanding Registrable Securities.
(h) Severability. In the event that any part or parts of this
Agreement shall be held illegal or unenforceable by any court or administrative
body of competent jurisdiction, such determination shall not effect the
remaining provisions of this Agreement which shall remain in full force and
effect.
(i) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall be considered one and the same agreement.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first set forth above.
ENVIROGEN, INC.
/s/ Xxxxxxxxx X. Xxxx
By:_________________________________
Xxxxxxxxx X. Xxxx
President
INVESTORS:
WARBURG, XXXXXX VENTURES, L.P.
By: Warburg, Xxxxxx & Co.,
General Partner
/s/ Xxxxxx X. Xxxxxx
By:_________________________________
Xxxxxx X. Xxxxxx
Partner
/s/ Xxxxxxx X. Xxxxx
____________________________________
XXXXXXX X. XXXXX
/s/ Xxxxxxx X. Xxxxxxxx
____________________________________
XXXXXXX X. XXXXXXXX
/s/ Xxxx X. Xxxx
____________________________________
XXXX X. XXXX
/s/ Xxxxxxx X. Xxxxxxxxxxxx
____________________________________
XXXXXXX X. XXXXXXXXXXXX
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SCHEDULE I
Name and Address
of Investor
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Warburg, Xxxxxx Ventures, L.P.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxx
X00 X00000 Xxxxxxx X
Xxxxxxx, XX 00000
Xxxxxxx X. Xxxxxxxx
0000 X. 00xx Xxxxxx
Xxxxxxxxx, XX 00000
Xxxx X. Xxxx
X000 X0000 Xxxxxx Xxxx Xxxxx
Xxxxxxxx, XX 00000
Xxxxxxx X. Xxxxxxxxxxxx
000 X. Xxxxxx Xxxxx Xxxxx
Xxxxxxxxxx, XX 00000
