1
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
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
[X] Definitive Proxy Statement Commission only (as permitted
[ ] Definitive Additional Materials by Rule 14a-6(e)(2))
[ ] Soliciting Materials Under Rule 14a-12
EPL TECHNOLOGIES, 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:
N.A.
(2) Aggregate number of securities to which transaction applies:
N.A.
(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): N.A.
(4) Proposed maximum aggregate value of transaction: N.A.
(5) Total fee paid:
N.A.
[ ] Fee paid previously with preliminary materials: N.A.
[ ] 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:
N.A.
(2) Form, Schedule or Registration Statement No.:
N.A.
(3) Filing Party:
N.A.
(4) Date Filed:
N.A.
2
EPL TECHNOLOGIES, INC.
2 INTERNATIONAL PLAZA, SUITE 245
PHILADELPHIA, PA 19113-1507
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
The Annual Meeting of Shareholders (the "Annual Meeting") of EPL
Technologies, Inc. (the "Company") will be held on Thursday, June 28, 2001, at
9:30 A.M. (local time) at the Top of the Tower, 1717 Arch Street, Philadelphia,
Pennsylvania for the following purposes:
1. to elect four (4) directors to serve for the ensuing year or until
their respective successors shall have been duly elected and
qualified;
2. to approve an amendment to the Company's 1998 Stock Incentive Plan
(the "Plan") that would increase the number of shares of Common Stock
reserved for issuance under the Plan to 1,500,000;
3. to approve an amendment to the Company's Articles of Incorporation
that would increase the authorized number of the Company's shares of
Common Stock to 100,000,000; and
4. to transact such other business as may properly come before the Annual
Meeting or any adjournment or postponement thereof.
The Board of Directors has fixed the close of business on May 7, 2001
as the record date for the Annual Meeting. Only holders of record at that time
of the Company's Common Stock, par value $0.001 per share and Series A Preferred
Stock, par value $1.00 per share, Series E Preferred Stock, par value $0.01 per
share and Series F Preferred Stock, par value $0.01 per share, are entitled to
notice of, and are entitled to vote at, the Annual Meeting and any adjournment
or postponement thereof. A complete list of shareholders entitled to vote at the
Annual Meeting will be available, upon written demand, for inspection during
normal business hours at the Company's address shown above by any shareholder of
the Company prior to the Annual Meeting.
A copy of the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 2000, a letter from the Company's Chief Executive Officer, a
Proxy Statement and a proxy accompany this notice. It is expected that these
materials are first being sent to shareholders on or about May 21, 2001.
3
The right to vote your stock at the Annual Meeting is an important
shareholder right and should be exercised by you in person or by proxy
regardless of the number of shares held by you. The Board of Directors sincerely
hopes you will be able to be present at the Annual Meeting but requests in any
event that you SIGN and DATE your proxy and mail it in the enclosed addressed,
postage-prepaid envelope promptly. The return of the enclosed proxy will not
affect your right to vote in person at the Annual Meeting. The prompt return of
your proxy will eliminate the need for further solicitation, with its attendant
expense to the Company.
4
By Order of the Board of Directors
Michael S. Leo
Secretary
May 18, 2001
Philadelphia, Pennsylvania
PROXY STATEMENT
Annual Meeting of Shareholders
To Be Held June 28, 2001
This Proxy Statement and the accompanying proxy are being furnished in
connection with the solicitation of proxies by the Board of Directors (the
"Board") of EPL Technologies, Inc. (the "Company"), to be voted at its Annual
Meeting of Shareholders (the "Annual Meeting") which will be held at 9:30 A.M.
(local time) on June 28, 2001 at the Top of the Tower, 1717 Arch Street,
Philadelphia, Pennsylvania and at any adjournment or postponement thereof, for
the purposes set forth in the accompanying Notice of the Annual Meeting. It is
expected that this Proxy Statement, the foregoing notice and the enclosed proxy
are to be first mailed to shareholders entitled to vote on or about May 21,
2001. Such mailing also includes the Company's Annual Report on Form 10-K for
the year ended December 31, 2000 ("2000") and a letter from the Company's Chief
Executive Officer. The Annual Report and such other materials are not to be
considered a part of the Company's proxy solicitation materials.
PURPOSE OF ANNUAL MEETING
At the Annual Meeting, shareholders will be asked: (i) to elect four
(4) directors to serve for the ensuing year and until their respective
successors shall have been duly elected and qualified; (ii) to approve an
amendment to the Company's 1998 Stock Incentive Plan (the "Plan") that would
increase the number of shares of Common Stock reserved for issuance under the
Plan to 1,500,000; (iii) to approve an amendment to the Company's Articles of
Incorporation that would increase the authorized number of the Company's shares
of Common Stock to 100,000,000 (the "Articles Amendment"), and (iv) to transact
such other business as may properly come before the Annual Meeting or any
adjournment or postponement thereof. The Board recommends a vote in favor of
(i.e., "FOR") items (i) - (iii) described above.
5
QUORUM AND VOTING RIGHTS
The presence in person or by proxy of the holders of a majority of the
votes entitled to be cast by the holders of the outstanding shares of (i) Common
Stock, $0.001 par value per share (the "Common Stock") and (ii) Series A 10%
Cumulative Convertible Preferred Stock, $1.00 par value per share (the "A
Preferred Stock"), (iii) Series E Convertible Preferred Stock, $0.01 par value
per share (the "E Preferred Stock") and (iv) Series F Convertible Preferred
Stock, $0.01 par value per share (the "F Preferred Stock"), voting together as a
class, is necessary to constitute a quorum for consideration of the matters to
be voted upon at the Annual Meeting, other than the proposed Articles Amendment.
With respect to the Articles Amendment, the presence in person or by proxy of
the holders of a majority of the votes entitled to be cast by each class of
Common Stock, A Preferred Stock, E Preferred Stock and F Preferred Stock, voting
separately, is necessary to constitute a quorum.
Only holders of record of shares of Common Stock, A Preferred Stock, E
Preferred Stock and F Preferred Stock at the close of business on May 7, 2001
(the "Record Date") will be entitled to notice of, and to vote at, the Annual
Meeting. As of the Record Date, there were 39,275,814 shares outstanding of the
Company's Common Stock, 10,000 shares of A Preferred Stock (each share of which
is convertible into 0.667 shares of Common Stock), 650 shares of E Preferred
Stock (each share of which is convertible into 1,000,000 shares of Common Stock)
and 0 shares of F Preferred Stock (each share of which is convertible into 0
shares of Common Stock). Holders of A Preferred Stock, E Preferred Stock and F
Preferred Stock are entitled to one vote per share for each share of Common
Stock into which such Preferred Stock is convertible. Thus, as of the Record
Date, there were a total of 40,282,480 votes entitled to be cast by holders of
the Company's capital stock. The holders as of the Record Date of the Company's
Common Stock, the A Preferred Stock, the E Preferred Stock and the F Preferred
Stock will vote together as a class on an as-converted basis (the "As-Converted
Voting Group") on all matters presented at the Annual Meeting, other than the
Articles Amendment, on which each of the Common Stock, the A Preferred Stock,
the E Preferred Stock and the F Preferred Stock will vote as separate classes.
These shares exclude 210,610 shares held in treasury as of the Record Date.
VOTING AND SOLICITATION OF PROXIES
A shareholder who submits a proxy may revoke it at any time before the
proxy is exercised. A proxy may be revoked prior to exercise by (a) filing with
the Company's Secretary a written revocation of the proxy, (b) appearing at the
Annual Meeting and casting a vote contrary to that indicated on the proxy or (c)
submitting a duly executed proxy bearing a later date. Returning a signed proxy
will not affect a shareholder's right to attend the Annual Meeting and vote in
person. When a proxy is returned properly signed, the shares represented will be
voted in accordance with the instructions provided therein. Broker non-votes
will not be counted as votes cast and will have no effect on the results of a
vote, although they will count towards the presence of a quorum. Abstentions
will have the effect of a "no" vote, and will count towards the presence of
quorum. In the absence of instructions, the shares represented at the Annual
Meeting by proxy will be voted
6
"FOR" the nominees of the Board in the election of directors, "FOR" the
amendment to the Plan and "FOR" the Articles Amendment.
The expense of this proxy solicitation will be borne by the Company. In
addition to solicitation by mail, proxies may be solicited in person or by
telephone or facsimile by officers or other regular employees of the Company who
will not receive any additional compensation for such efforts. Additionally, the
Company had retained the proxy solicitation firm of DF King to assist management
in soliciting proxies. The Company has agreed to pay such firm a fee of
approximately $4,000 for its services, plus expenses. The Company will reimburse
reasonable expenses incurred by record holders of Common Stock, A Preferred
Stock, E Preferred Stock or F Preferred Stock who are brokers, dealers, banks,
voting trustees or other nominees for mailing proxy materials to any beneficial
owners of such stock, upon request of such record holders.
VOTE REQUIRED FOR ELECTION OF DIRECTORS
AND APPROVAL OF OTHER PROPOSALS
To be elected a director, a nominee for election must receive the
favorable vote of a majority of the shares in the As-Converted Voting Group,
represented in person or by proxy at the Annual Meeting. Shareholders entitled
to vote will not have cumulative voting rights. Approval of the proposal to
amend the Plan requires the favorable vote of a majority of the shares in the
As-Converted Voting Group, represented in person or by proxy at the Annual
Meeting. Approval of the proposal to amend the Company's Articles of
Incorporation requires the favorable vote of a majority of the shares of each of
the Common Stock, the A Preferred Stock, the E Preferred Stock and the F
Preferred Stock, each voting as a separate class, represented in person or by
proxy at the Annual Meeting.
PROPOSAL NO. 1 - ELECTION OF DIRECTORS
The Board of Directors, the size of which the Board sets from time to
time at between three (3) and seven (7) members, currently consists of four (4)
members: Paul L. Devine, A.S. Clausi, W. Ward Carey and Richard M. Harris. The
Board proposes that the four current directors, listed below as nominees, be
re-elected as directors of the Company, to hold office until the next annual
meeting of shareholders and until such director's successor is duly elected and
qualified. The Board may determine to increase the size of the board hereafter.
Each nominee has consented to be named as a nominee and, to the present
knowledge of the Company, is willing to serve as a director, if elected. Should
any of the nominees not remain a candidate at the end of the Annual Meeting (a
situation that is not expected), proxies with respect to which no contrary
direction is made will be voted in favor of those who remain as candidates and
may be voted for substitute nominees.
7
The nominees, their ages at the Record Date and certain other information
about them is set forth below:
Position(s) with
Name Age the Company Director Since
- ---- --- ----------- --------------
Paul L. Devine 46 Chairman of the Board, 1992
President and Chief Executive Officer
A.S. Clausi 78 Director 1998
W. Ward Carey 63 Director 1999
Richard M. Harris 65 Director 2000
PAUL L. DEVINE - Mr. Devine was appointed Chairman, President and Chief
Executive Officer of the Company in March 1992. From 1989 to 1992, Mr. Devine
was involved as a business consultant in the identification and targeting of
acquisitions for various public companies. During this time, he also served as a
director and chief executive officer of various companies, including three
United Kingdom (U.K.) subsidiaries of Abbey Home Healthcare, Inc., a U.S. public
health care group. Mr. Devine is a graduate of London University and holds
Bachelors and Masters degrees in curriculum research. Throughout his business
career, he has been intimately involved in the design and implementation of new
product strategies, both in financial services and health/hygiene services.
A.S. CLAUSI - Mr. Clausi was elected to the Board of Directors in March
1998. For more than five years, Mr. Clausi has served as a consultant and
adviser to the food industry. He was Senior Vice President and Chief Research
Officer of General Foods Corporation worldwide, prior to his retirement. Mr.
Clausi is a past President of the Institute of Food Technologists (IFT), past
Chairman of the IFT Foundation and past Chairman of the Food Safety Council. He
has a chemistry degree from Brooklyn College and has done graduate work at
Stevens Institute of Technology. Mr. Clausi is the holder of 13 patents, has
authored chapters in food technology texts and has delivered numerous papers on
various aspects of the management of food science and technology. Mr. Clausi is
currently a director of Opta Food Ingredients, Inc. and also serves as a member
of the Technical Advisory Board of Goodman Fielder, Ltd. He served on the
Technical Advisory Board of Martek Biosciences, Inc. from 1990 to 1997. Mr.
Clausi also serves as a director and a member of Technical Advisory Boards of a
number of private companies as well as being a member of the Company's Audit,
Compensation and 1994 Stock Incentive Plan Administrative Committees of the
Board of Directors.
W. WARD CAREY - Mr. Carey was elected to the Board of Directors in January
1999. He is currently Senior Vice President - Investments at PaineWebber
Incorporated in New York. Prior to joining PaineWebber in 1993, he served as an
Executive Vice President and Director of Bessemer Trust Company of Florida. He
previously served as President, Chairman and Chief Executive Officer of Tucker
Anthony in New York and Chairman of the Executive Committee of Sutro and Company
in San Francisco. He has almost 40 years of senior level experience in the
investment and investment banking fields.
8
RICHARD M. HARRIS - Mr. Harris was appointed to the Board of Directors in
July 2000. For over eight years, Mr. Harris has worked as a business consultant
to various public and private companies. Prior to his early retirement he was
Senior Vice President and Chief Financial Officer of Axel Johnson, Inc. He
previously served for 18 years with the International Paper Company as Senior
Vice President for all packaging operations. He was Group Chief Executive of the
industrial packaging business and Executive Vice President and Chief Financial
Officer of the parent company.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board held two meetings during 2000 and also acted by unanimous written
consent. The Board currently has an Audit Committee and a Compensation
Committee, but does not have a nominating committee. The Company also had a 1994
Stock Incentive Plan (1994 Plan) Administration Committee, but the 1994 Plan
expired in May 1999, after which time no further options could be issued under
this plan. During 2000, the Audit, Compensation and 1994 Plan Committees were
comprised of Messrs. Clausi and Carey, together with Mr. Richard M. Harris,
subsequent to his appointment in July 2000. The board as a whole serves as the
administrative committee for the Plan. The Compensation Committee held one
meeting in 2000 and the Audit Committee held three meetings in 2000, and also
acted by unanimous written consent. The 1998 Plan Administrative Committee met
once in 2000 and also acted by unanimous written consent. Each incumbent
director who served on the Board during the full 2000 fiscal year attended over
75% of the aggregate number of meetings of the Board and of the committees on
which and during the periods in which such director served.
The Audit Committee has authority to recommend the appointment of the
Company's independent auditors and review the results and scope of audits,
internal accounting controls and tax and other accounting-related matters. The
Compensation Committee sets compensation policies applicable to executive
officers and approves salaries, bonuses and other compensation matters for
executive officers of the Company. The 1994 Plan Administrative Committee
administers the 1994 Plan and the Board as a whole administers the Plan,
together with the Company's 1993 Non-Qualified Stock Option Plan.
COMPENSATION OF DIRECTORS
With the exception of Mr. Devine in his capacity as an officer of the
Company, no cash compensation was paid to any director of the Company during the
year ended December 31, 2000. In July 2000, in accordance with the terms of the
Company's 1994 Plan, W. Ward Carey and Adolph S. Clausi were each granted an
option to acquire 7,500 shares of Common Stock at an exercise price of $1.25 per
share, for their services as members of the Audit and Compensation Committees.
These options are exercisable for ten-year terms and have exercise prices equal
to the fair market value of such shares on the date of grant.
In addition, in March 2000, Messrs. Carey and Clausi were both granted an
option to acquire
9
50,000 shares of Common Stock, at an exercise price of $2.475 per share. In
September 2000, the Company granted Mr. Harris an option to acquire 50,000
shares of Common Stock, at an exercise price of $1.0312. These options, which
were granted under the Plan and were fully vested as of the date of grant, are
exercisable for ten-year terms and have exercise prices at 110% of the closing
market price on the date of grant.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE
NOMINEES PRESENTED.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of the Record Date,
regarding the beneficial ownership (as defined in Rule 13d-3 under the
Securities Exchange Act of 1933, as amended) of (i) each director, (ii) each of
the executive officers named in the summary compensation table, (iii) all
executive officers and directors of the Company as a group and (iv) each person
known to the Company to be a beneficial owner of more than 5% of the Company's
outstanding Common Stock and/or A Preferred Stock and/or E Preferred Stock
and/or F Preferred Stock (information regarding the A Preferred Stock, E
Preferred Stock and F Preferred Stock is presented both on an as-converted basis
and as a separate class of voting securities). Except as set forth below, the
shareholders named below have sole voting and investment power with respect to
the respective shares of Common Stock and Preferred Shares shown as beneficially
owned by them.
COMMON STOCK SHARES PERCENT
BENEFICIALLY OF
NAME OF BENEFICIAL OWNER OWNED (1) COMMON
- ------------------------ --------- ------
Lancer Partners, L.P. 7,638,505(2) 19.45%
GHM, Inc. 5,020,487(3) 12.27%
Joseph Giamanco 3,877,412(4) 9.47%
Mrs. Wayne Close 2,563,336(5) 6.48%
Paul L. Devine 570,916(6) 1.45%
W. Ward Carey 162,175(7) *
A.S. Clausi 130,625(8) *
Richard M. Harris 50,000(9) *
Antony E. Kendall 196,000(10) *
10
William R. Romig 112,500(9) *
Directors and executive officers
as a group (7 persons) 1,222,216(11) 3.06%
Total number of shares
outstanding - common 39,275,814 100.00%
Shares of common stock issuable
upon conversion of A Preferred 6,666(12) *
* Less than one percent.
(1) Unissued shares of Common Stock of each owner subject to currently
exercisable options or other rights to acquire securities exercisable
within 60 days of the date hereof are included in the totals listed and are
deemed to be outstanding for the purpose of computing the percentage of
Common Stock owned by such person, but are not deemed to be outstanding for
the purpose of computing the percentage of the class owned by any other
person. The effect of this calculation is to increase the stated total
ownership percentage currently controlled. Information in the table is
based solely upon information contained in filings with the Securities and
Exchange Commission, pursuant to Sections 13(d) and 13(g) of the Securities
Exchange Act of 1934, as amended, and the records of the Company. The
calculation also excludes 210,610 shares held in treasury as of the Record
Date.
(2) Includes shares of Common Stock held by funds other than Lancer Partners,
L.P., but that are commonly managed in a group that includes Lancer
Partners, L.P. The address for Lancer Partners, L.P. is 375 Park Avenue,
Suite 2006, New York, NY 10152.
(3) Includes 1,650,000 shares of Common Stock that may be acquired by
exercising warrants. The address for GHM, Inc. is 74 Trinity Place, New
York, NY 10006.
(4) Includes 1,650,000 shares of Common Stock that may be acquired by
exercising warrants. Mr. Giamanco is a controlling shareholder in GHM, Inc.
The address for Mr. Giamanco is c/o GHM, Inc., 74 Trinity Place, New York,
NY 10006.
(5) Includes 20,000 shares of Common Stock held jointly with a family member.
Also includes 278,571 shares of Common Stock that may be acquired by
exercising warrants. The address for Mrs. Close is c/o Marcus J. Williams
Esq., Davis Wright Tremaine, LLP, Suite 2300, 1300 SW Fifth Avenue,
Portland, OR 97201-5682.
(6) Includes 200,000 shares of Common Stock that may be acquired by exercising
options. The address for Mr. Devine is c/o the Company, 2 International
Plaza, Suite 245, Philadelphia, PA 19113-1507.
(7) Includes 109,375 shares of Common Stock issuable upon exercise of options.
Also includes
11
5,000 shares of Common Stock owned by Mr. Carey's wife, as to which he
disclaims beneficial ownership.
(8) Includes 115,625 shares of Common Stock issuable upon exercise of options.
(9) Amount shown represents shares of Common Stock that may be acquired by
exercising options.
(10) Includes 95,000 shares of Common Stock that may be acquired by exercising
options and 100,000 shares of Common Stock that may be acquired by
exercising warrants.
(11) Includes 682,500 shares of Common Stock that may be acquired by exercising
options and 100,000 shares of Common Stock that may be acquired by
exercising warrants.
(12) As of the Record Date there were a total of 10,000 shares of A Preferred
Stock outstanding, beneficially held as follows: 5,000 held by J. Matthew
Dalton, whose address is 1232 W. George Street, Chicago, IL 60657; and
5,000 held by Verne Scazzero, whose address is 1414 South Prairie Ave.,
Chicago, IL 60605.
(13) As of the record date there were a total of 650 shares of E Preferred Stock
outstanding, beneficially held as follows: 312 shares by ABN Amro Bank
(Switzerland) Ltd, 175.5 shares by Bank Von Ernst, 65 shares by Von
Greffenried AG and 97.5 shares by DC Bank, all c/o Riedel Invest,
Dufourstrasse 29, CH-3000 Berne 6, Switzerland.
12
EXECUTIVE COMPENSATION
The following table sets forth the aggregate compensation (cash and
non-cash, plan and non-plan) paid by the Company during 2000 for services
rendered in all capacities to the Chief Executive Officer and each of the other
four most highly compensated executive officers (collectively "Named Executive
Officers").
LONG-TERM COMPENSATION
----------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
-------------------------------- -------------------- ----------------
RESTRICTED ALL
OTHER ANNUAL STOCK OPTIONS/ LTIPC OTHER
NAME AND SALARY BONUS COMPENSATION AWARD(S) SARS PAYOUTS COMP.
PRINCIPAL POSITION YEAR ($) ($) ($) ($) (#) ($) ($)
- ------------------ ---- --- --- --- --- --- --- ---
Paul L. Devine 2000 375,000 0 2,740 0 0 0 0
Chairman, President 1999 275,000 0 5,888 0 0 0 0
and Chief Executive 1998 275,000 0 2,872 0 0 0 0
Officer
Jose Saenz de Santa Maria 2000 122,332 0 3,096(1) 0 0 0 0
Managing Director 1999 128,205 0 21,659(1) 0 0 0 0
Fabbri Artes Graficas 1998 133,600 13,360 25,593(1) 0 45,000 0 0
Valencia S.A.
Antony E. Kendall 2000 151,400 0 16,613(2) 0 0 0 0
Chief Executive 1999 134,460 0 15,837(2) 0 0 0 0
EPL Flexible 1998 137,423 0 12,788(2) 0 20,000 0 0
Packaging Ltd
William R. Romig 2000 130,000 0 288 0 0 0 0
Senior Vice President, 1999 120,000 0 0 0 0 0 0
Science & Technology 1998 105,750 0 0 0 0 0 0
(1) assumes an exchange rate of $1:PTS177 for 2000, $1:PTS162 for 1999 and
$1:PTS149.70 for 1998.
(2) assumes an exchange rate of pound 1:$1.514 for 2000, pound 1:$1.652
for 1999, pound 1:$1.65 for 1998.
OPTION GRANTS IN LAST FISCAL YEAR
No grants of stock options were made by the Company during 2000 to
Named Executive Officers.
13
AGGREGATED OPTION EXERCISES IN LAST FISCAL
YEAR AND FISCAL YEAR-END OPTION VALUES(1)
The following table sets forth certain information concerning exercises of
stock options during fiscal 2000 and the value of unexercised stock options at
December 31, 2000 for Named Executive Officers.
VALUE OF UNEXERCISED
NUMBER OF SECURITIES IN-THE-MONEY
UNDERLYING UNEXERCISED OPTIONS AT
SHARES OPTIONS AT DECEMBER 31, 2000 DECEMBER 31, 2000(1)
ACQUIRED VALUE UNEXER- UNEXER-
NAME ON EXERCISE REALIZED($) EXERCISABLE CISABLE EXERCISABLE CISABLE
---- ----------- ----------- ----------- ------- ----------- -------
Paul L. Devine 0 0 350,000 0 0 0
Jose Saenz de Santa Maria 0 0 45,000 0 0 0
Antony E. Kendall 0 0 95,000 0 0 0
William R. Romig 0 0 162,500 0 0 0
(1) The fair market value of the in-the-money-options was calculated
on the basis of the difference between the exercise price of the
options held and the closing price of a share of common stock on
the Nasdaq SmallCap Market, on December 31, 2000, multiplied by
the number of options held. At December 31, 2000, the closing
price of a share of Common Stock on the Nasdaq SmallCap Market
was $0.50.
In April 2000, Antony Kendall was awarded a warrant to purchase 100,000
shares of Common Stock, with an exercise price of $0.75 per share. These
warrants were unexercised as at December 31, 2000.
EMPLOYMENT AND CONSULTING CONTRACTS
Mr. Devine and the Company are parties to an employment agreement dated as
of January 1, 1997 that provides that Mr. Devine is to serve as the Company's
Chairman of the Board, President and Chief Executive Officer. The Agreement
provides for a rolling three-year term. The Agreement provides for a base salary
to be fixed by the Board that, as of January 1, 1997, was $275,000 per year. On
March 28, 2000, the Board of Directors raised Mr. Devine's annual salary to
$375,000. Pursuant to the Agreement the Company will maintain life insurance on
Mr. Devine's life with a face amount equal to at least $1,000,000, for which Mr.
Devine may designate a beneficiary. Under the agreement Mr. Devine also will be
entitled to receive a retirement benefit if he remains continuously employed (as
defined in the Agreement) by the Company until age 50. Generally, if Mr. Devine
retires at age 65, the retirement benefit to be received annually will be equal
to 50% of his average annual base salary and bonus during the final three years
of his employment (less benefits from any other defined benefit pension plan of
the Company). The percentage of Mr. Devine's average annual base salary and
bonus will be reduced or increased by 6% for each year by which Mr. Devine
retires and elects to have such retirement benefit commence earlier or later
than his 65th birthday. The agreement further provides that Mr. Devine is
entitled to participate in all benefit plans and arrangements of the Company and
may also receive bonuses, if any, as determined by the Board of Directors. The
14
agreement also provides certain disability and death benefits to Mr. Devine, as
well as severance payments approximately equal to Mr. Devine's average salary
and bonus for the previous three years, to continue for three years if Mr.
Devine is terminated under certain conditions. Additionally, Mr. Devine is
entitled to receive a payment of slightly less than three times his "base
amount" (as defined in the Internal Revenue Code of 1986, as amended) in the
event of a "change of control" of the Company (as defined in the Agreement). The
Agreement also contains certain customary provisions regarding confidentiality
and non-competition restrictions.
The Company, through Fabbri Artes Graficas Valencia S.A. ("Fabbri"),
entered into an employment agreement with Mr. Saenz de Santa Maria commencing on
May 1, 1998, which provides that Mr. Saenz de Santa Maria is to serve as
managing director of Fabbri. The agreement provides for an annual salary of
PTS20,000,000 ($133,000 at an exchange rate of $1:PTS150), which salary is
reviewable on January 1 annually, together with customary benefits, such as
vacation and the provision of an automobile. A bonus is also payable upon the
achievement of certain performance targets, as agreed on an annual basis. The
contract may be terminated by either side upon six months notice. The agreement
also contains certain customary provisions regarding confidentiality and
non-competition.
The Company, through Bakery Packaging Services Limited (now known as EPL
Flexible Packaging Limited ("EPL Flexible")), entered into an employment
agreement with Mr. Kendall commencing on August 1, 1996, which provides that Mr.
Kendall is to serve as Chief Executive Officer of EPL Flexible. The agreement
originally provided for an annual salary of pound 70,000 ($115,000 at an
exchange rate of pound 1:$1.65), which salary is reviewable on January 1
annually, was increased to pound 83,000 ($137,000 at an exchange rate of pound
1:$1.65) as of July 1, 1997, and was increased to pound 100,000 ($165,000 at an
exchange rate of pound 1:$1.65) as of January 1, 2000. It also contains
customary benefits, such as vacation, the provision of an automobile, healthcare
coverage and contributions into a defined contribution pension scheme. A bonus
is also payable upon the achievement of certain performance targets, as agreed
on an annual basis. The contract may be terminated by either side upon six
months notice. The agreement also contains certain customary provisions
regarding confidentiality and non-competition.
Effective January 1, 1998, the Company entered into a new employment
agreement with Dr. Romig, which runs for an initial term of two years, with
annual renewal terms thereafter. Either party may terminate the contract upon
six months' notice. The initial annual salary was $120,000, with a bonus of up
to 25% of the salary based upon the achievement of agreed-upon objectives. The
salary was increased to $140,000 per annum effective July 1, 1999. In addition
to the customary provisions on vacation and healthcare coverage, the agreement
also provides that, in the event of a termination of employment by either party
due to a change in control (as defined in the agreement), Dr. Romig would
receive a total payment equal to twice his annual salary plus a bonus equal to
his average bonus earned over the previous twelve months. The agreement also
contains certain customary provisions regarding confidentiality and
non-competition.
15
STOCK INCENTIVE PLANS
The Company's 1994 Stock Incentive Plan was adopted by the shareholders on
July 21, 1994, and modified by the shareholders to increase the shares issuable
thereunder and to make certain other changes on July 22, 1996, and again on July
21, 1997 (as so modified, the 1994 Plan). The Company's 1998 Stock Incentive
Plan, as amended and restated (the "1998 Plan"), was adopted by the Company's
shareholders on September 29, 1998. The 1994 Plan and the 1998 Plan are intended
to provide additional incentive to certain employees, certain consultants or
advisors and non-employee members of the Board of Directors to enter into or
remain in the employ of the Company or to serve on the Board of Directors by
providing them with an additional opportunity to increase their proprietary
interest in the Company and to align their interests with those of the Company's
shareholders generally through the receipt of options to purchase Common Stock
that have been structured to comply with the applicable provisions of Section
16(b) of the Securities Exchange Act of 1934, as amended, and Rule 16b-3
thereunder. The 1994 Plan and the 1998 Plan provide for the grant of incentive
stock options within the meaning of the Internal Revenue Code of 1986, as
amended, and non-qualified stock options and the award of shares of Common
Stock. The particular terms of each option grant or stock award are set forth in
a separate agreement between the Company and the optionee or award recipient.
The 1994 Plan and the 1998 Plan are administered by the administration
committees appointed by the Board of Directors, which are currently comprised of
W. Ward Carey, A.S. Clausi and Richard M. Harris. The committees generally have
the discretion to determine the number of shares subject to each award, and
other applicable terms and conditions, including a grants vesting schedule. The
term of an option granted under the 1994 Plan may not be more than five years
from the grant date and options generally terminate three months after an
optionee ceases to be employed by the Company (twelve months in the case of
death or disability). The 1994 Plan provides that no option may be granted under
it after May 4, 1999.
Under the 1998 Plan, 850,000 shares of Common Stock are reserved for
issuance. The terms of the 1998 Plan are substantially similar to those of the
1994 Plan, except that (i) the minimum exercise price for options granted under
the 1998 Plan to executives, officers and employee directors of the Company that
were serving as of September 29, 1998, is $14.00 per share, (ii) all options
granted under the 1998 Plan must be granted at a premium to the market price of
the Common Stock at the time of grant, (iii) options granted under the 1998 Plan
cannot be repriced without shareholder approval and (iv) the term of an option
may not be more than ten years from the grant date. In addition, the 1998 Plan
provides for the automatic grant to each non-employee director of the Company of
options to purchase 7,500 shares of Common Stock on June 25, 2000 and on each
June 25 thereafter during the term of the 1998 Plan. The 1998 Plan provides that
no option may be granted under it after June 25, 2008.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Company's Compensation Committee during fiscal 2000 were
Messrs. Carey and Clausi, who served for the entire year and Mr. Harris who was
elected to the committee in July 2000. Neither Messrs. Carey, Clausi nor Harris
were officers or employees of the Company or any of its subsidiaries during
2000. Except as disclosed under "Item 13 - Certain Relationships
16
and Related Transactions" of the Company's Form 10-K filed with the SEC on April
3, 2001, none of the members of the Compensation Committee nor any of their
affiliates entered into any transactions with the Company during 2000.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee sets compensation policies applicable to
executive officers and has the authority to approve salaries and bonuses and
other compensation matters for the Company's executive officers. The Committee
reviews the overall performance of the Company and its executive officers based
on the Company's financial and operating performance. The Committee's
compensation policy generally reflects the basic principles that compensation
should reflect the financial performance of the Company and a portion of an
executive officer's compensation should provide long-term incentives that will
tie long-term rewards for the executive officers to increases in shareholder
value. Company philosophy regarding base salary is to maintain it at a
competitive level sufficient to recruit individuals possessing the skills
necessary to achieve the Company's vision and mission over the long term. The
Committee monitors salary levels for comparable executives. The Committee, in
its discretion, may award bonuses to employees, based on Company performance and
each employee's performance goals. The intent of a bonus is to motivate and
reward performance of employees measured against specific goals and in light of
the competitive compensation practices of comparable companies. The goals vary
with each employee's responsibilities rather than being fixed by reference to
overall measures of Company performance. Finally, stock options are viewed as a
fundamental element in the total compensation program and, in keeping with the
Company's basic philosophy, emphasize long-term Company performance as measured
by the creation and enhancement of shareholder value, fostering a community of
interest between shareholders and employees. The specific determination of the
number of options to be granted, however, is not based upon any specific
criteria. Although options may be granted at any price (but not less than $14.00
in the case of executive officers employed as of September 29, 1998), options
generally have been granted at the fair market value of the underlying shares on
the date of grant. The Committee also relies on recommendations of management
regarding option grants.
The compensation for the Company's Chief Executive Officer is based on the
salary required by the terms of the Company's employment agreement for the Chief
Executive Officer and, with respect to any discretionary bonus the Committee may
award, among other factors, his ability to obtain necessary financing to fund
the Company's operations, expand sales growth opportunities, integrate various
operations and continue to guide the Company in its role in servicing the
fresh-cut produce industry as the same may expand. In evaluating the performance
of the Company's executive officers, including the Chief Executive Officer, the
Committee noted that the Company's 2000 sales revenue had fallen slightly, from
$30,307,000 to $27,814,000. However, this was more than accounted for by the
fall in sales revenue within the Company's corn operations. In addition, there
was a fall in sales revenue due to adverse currency movements and flood damage
at the Company's Spanish packaging operations. This masked increases in sales
revenue at the Company's U.S. packaging operations, and especially the U.K.
packaging operations. Significant achievements in the year included: (i) the
licensing arrangement announced in early 2000 with Monterey Mushrooms, and the
initial generation of revenue from Mushroom Fresh, (ii) the continued growth and
development
17
of the Company's U.K. packaging operations, where the business is now number one
in produce packaging, as well as developing business in many other applications,
notably cooked meat pastry products (this also included the development of the
tactical platform available to the business with the installation of an 8-color
press during the first quarter of 2000), (iii) the significantly reduced losses
in the Company's fresh-cut potato operations, following the strategic
partnership with Resers Fine Foods, Inc., (iv) the growth in the Company's U.S.
packaging operations, including the opening of a second facility near Chicago to
help service new business with Procter & Gamble, and (v) the raising of funds
via new debt and equity, to help move the Company's operations forward. The
decision also was taken to close the Company's corn operations, which had
consumed much financial and management resource over recent years. This, amongst
the other actions taken during 2000, is expected to result in significantly
improved operating results during 2001 and beyond. The satisfaction of certain
performance criteria and qualitative criteria, consideration from time to time
by the Committee, without any formulae or strict industry comparisons,
including, management skills and leadership ability, are the bases upon which
the Committee evaluates compensation decisions for its executive officers,
including the Chief Executive Officer.
QUALIFYING EXECUTIVE COMPENSATION FOR DEDUCTIBILITY UNDER APPLICABLE PROVISIONS
OF THE INTERNAL REVENUE CODE
Section 162(m) of the Internal Revenue Code of 1986, as amended, provides
that a publicly-held corporation generally may not deduct compensation for its
chief executive officer or for each of certain other executive officers to the
extent that such compensation exceeds $1,000,000 for the executive or does not
qualify as a "performance based" compensation arrangement. The Committee
currently intends to consider taking such actions as may be appropriate to
qualify compensation received by such executives upon exercise of options
granted under the Company's stock option plans for deductibility under Section
162(m), although it has not done so in the past. The Committee notes that base
salary and bonus levels are currently expected to remain below the $1,000,000
limitation.
This report is furnished by the Compensation Committee of the Board of Directors
April 17, 2001
W. Ward Carey - Chairman
A.S. Clausi
Richard M. Harris
18
REPORT OF AUDIT COMMITTEE
To the Board of Directors of EPL Technologies, Inc.
The Audit Committee is comprised of three independent directors appointed by the
Board of Directors and operates under a charter that was adopted in May 2000
(see Exhibit B to this Proxy Statement)
Deloitte & Touche LLP, independent auditors, audited the financial statements of
the Company for the fiscal year ended December 31, 2000. Representatives of
Deloitte & Touche LLP are expected to attend the Annual Meeting, will have the
opportunity to make a statement if they desire to do so and are expected to be
available to respond to appropriate questions. The Board has selected Deloitte &
Touche LLP as the independent auditors to audit the Company's financial
statements for the fiscal year ending December 31, 2001.
Audit Fees - Audit fees billed to the Company by Deloitte & Touche LLP during
the Company's 2000 fiscal year for review of the Company's annual financial
statements and those financial statements included in the Company's quarterly
reports on Form 10Q totaled $150,000.
Financial information Systems Design and Implementation Fees - The Company did
not engage Deloitte & Touche LLP to provide advice to the Company regarding
financial information systems design and implementation during the fiscal year
ended December 31, 2000.
All Other Fees - Fees billed to the Company by Deloitte & Touche LLP during the
Company's 2000 fiscal year for all other non-audit services rendered to the
Company, including tax related services, totaled $3,200.
We have reviewed and discussed with management the Company's audited financial
statements as of and for the year ended December 31, 2000.
We have discussed with the independent auditors the matters required to be
discussed by Statement on Auditing Standards No. 61, Communications with Audit
Committees, as amended, by the Auditing Standards Board of the American
Institute of Certified Public Accountants.
We have received and reviewed the written disclosures and the letter from the
independent auditors required by Independence Standard No. 1, Independence
Discussions with Audit Committees, as amended, by the Independence Standards
Board, and have discussed with the auditors the auditors' independence. We
discussed whether the additional service provided by Deloitte & Touche LLP to
the Company were compatible with maintaining their independence. We determined
that such service were so compatible.
Based upon the reviews and discussions referred to above, we recommend to the
Board of Directors that the financial statements referred to above be included
in the Company's Annual Report on Form 10-K for the year ended December 31,
2000.
19
Richard M. Harris - Chairman
W. Ward Carey
A.S. Clausi
April 17, 2001
STOCK PERFORMANCE GRAPH
The following graph compares the percentage change in cumulative total
stockholder return on the Common Stock since December 31, 1995 to December 31,
2000, comparing the difference between the price of the Common Stock at the
beginning and end of the measurement period with the cumulative total return on
the Nasdaq Composite (US) Index and the Nasdaq Industrial Index over the same
period. The comparison assumes $100 was invested on December 30, 1995 in the
Common Stock and in each of the indices and assumes reinvestment of dividends,
if any, from that date to December 31, 2000. The Company has not paid cash
dividends on the Common Stock. Historic stock prices are not indicative of
future stock price performance. (1)
[TOTAL RETURN TO STOCKHOLDERS]
(ASSUMES $100 INVESTMENT ON 12/31/95)
[LINE GRAPH]
TOTAL RETURN ANALYSIS
12/31/95 12/31/96 12/31/97 12/31/98 12/31/99 12/31/00
EPL TECHNOLOGIES, INC. $ 100.00 $ 156.45 $ 158.06 $ 61.29 $ 12.50 $ 6.45
NASDAQ INDUSTRIAL $ 100.00 $ 115.03 $ 127.57 $ 135.20 $ 232.09 $ 153.73
NASDAQ COMPOSITE $ 100.00 $ 122.71 $ 149.25 $ 208.40 $ 386.77 $ 234.81
20
(1) The Common Stock traded on the Nasdaq SmallCap Market from September 1999 to
April 2001, and from July 1996 to May 1998. From May 1998 to September 1999 the
Common Stock traded on the Nasdaq Stock Market's National Market.
This Stock Performance Graph shall not be deemed incorporated by reference
by any general statement incorporating by reference this Proxy Statement into
any filing under the Securities Act of 1933, as amended (the Securities Act), or
under the Securities Exchange Act of 1934 (the Exchange Act), except to the
extent that the Company specifically incorporates this information by reference,
and shall not otherwise be deemed filed under the Securities Act or the Exchange
Act and is not to be deemed to be soliciting material.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In March 1999, Paul L. Devine, the Company's Chairman and Chief Executive
Officer, agreed to extend to the Company on a short-term basis a revolving
credit facility in an amount of up to $500,000, of which $67,860, excluding
unpaid interest, was outstanding as of March 31, 2001. The Company's obligations
under this facility are unsecured, and amounts outstanding thereunder bear
interest at a rate of nine percent (9%) per annum. Mr. Devine has agreed to
defer repayment of the remaining balance owed to him until such time as the
Company is able to do so. The Company has agreed to pay all reasonable
out-of-pocket expenses incurred by Mr. Devine in connection with advancing funds
to the Company under this facility.
The Company from time-to-time has granted to certain of its non-employee
directors a number of options to purchase shares of Common Stock upon the
initial election of such director to the Company's Board of Directors to provide
incentive for a high level of dedication in the future and to align the
interests of such directors with the interests of the Company's shareholders. On
March 28, 2000, the Company granted, under the 1998 Plan, to each of A.S. Clausi
and W. Ward Carey options to purchase 50,000 shares of Common Stock at $2.475,
an exercise price which represented 110% of the closing price of the Common
Stock on the date of grant. On September 8, 2000, the Company granted Richard M.
Harris, under the 1998 Plan, options to purchase 50,000 shares of
21
Common Stock at $1.0312, an exercise price which represented 110% of the closing
price of the Common Stock on the date of grant. Such options were fully vested
as of the date of grant.
In December 1999 two investment funds affiliated with the Company granted
the Company a credit facility of $3,500,000, which amount was fully drawn as at
December 31, 2000 and 1999. The facility carries a stated interest at the rate
of 12% per annum and is secured by a pledge of certain assets of the Company. In
connection with this facility, the Company issued two million shares of Common
Stock (valued at $1,188,000) and issued a warrant to acquire 350,000 shares of
Common Stock at an exercise price of $0.50 per share (such warrant having a fair
value of $161,000). In May 2000, the Lenders agreed to defer the repayment date
until September 2000, as well as agreed to other changes in the terms of the
facility. In connection with this restructuring, the Company issued an aggregate
of 1,000,000 shares of Common Stock to the Lenders and 150,000 shares of Common
Stock to a third party which participated in the negotiation of the
restructuring. Based on the market value at the date of issuance, the shares had
a value of $1,725,000. Such value was recorded as deferred debt costs on the
balance sheet under prepaid expenses and other current assets and was amortized
into interest expense over the life of the initial debt agreement. This
amortization was complete as at September 30, 2000. In August 2000, the lenders
agreed to further restructure the facility, including to defer repayment until
December 2000. Under this agreement, the Company issued an aggregate of
1,200,000 shares of Common Stock to the Lenders and 160,000 shares of Common
Stock to a third party which participated in the negotiation of the
restructuring. The value of the shares ($1,186,250) was amortized into interest
expense over the life of the agreed restructuring. In November 2000, the
facility was again restructured, including to defer repayment until March 2001.
Under this latest agreement, a further total of 1,850,000 shares were issued in
March 2001 and charged into interest expense during December 2000, January 2001
and February 2001, based on the market value at those times. Subsequent to the
year end, repayment has been deferred again to May 2001, at which time further
shares will be issuable. As of December 31, 2000, the effective interest rate of
this facility, after including all of the debt issue costs, including the value
of the stock and warrants issued, is approximately 145%.
PROPOSAL NO. 2
AMENDMENT TO THE COMPANY'S 1998 STOCK INCENTIVE PLAN,
AS AMENDED AND RESTATED
On September 29, 1998, the Company's shareholders approved the Company's
1998 Stock Incentive Plan, as amended and restated (the "1998 Plan"), which
provides for the granting of options for the cash purchase of an aggregate of
850,000 shares of Common Stock, subject to certain adjustments, for employees
(including employees who are members of the Board) and consultants or advisors
of the Company or any Affiliate (as defined under the 1998 Plan). On April 17,
2001, the Board adopted, found advisable and recommended to the shareholders a
further amendment to the 1998 Plan, pursuant to the terms and conditions of the
1998 Plan. The amendment, which is subject to shareholder approval, would
increase the number of shares of Common Stock reserved for issuance under the
1998 Plan to 1,500,000. If the shareholders do not approve the amendment, the
amendment will not be effective.
22
The purpose of the 1998 Plan is to provide such eligible persons with
additional incentive to devote themselves to the future success of the Company
or an Affiliate and to attract, retain and motivate individuals upon whom the
Company's sustained growth and financial success depend, by providing such
persons with an opportunity to acquire or increase their proprietary interest in
the Company.
The 1998 Plan is intended as an additional incentive to certain employees,
certain consultants or advisors and non-employee members of the Board of
Directors to enter into or remain in the employ of the Company or to serve on
the Board of Directors by providing them with an additional opportunity to
increase their proprietary interest in the Company and to align their interests
with those of the Company's shareholders generally through the receipt of
options to purchase Common Stock and has been structured to comply with the
applicable provisions of Section 16(b) of the Securities Exchange Act of 1934,
as amended and Rule 16b-3 thereunder.
The 1998 Plan is to be administered by the 1998 Stock Incentive Plan
Committee appointed by the Board (the "1998 Plan Committee"). Options granted
under the 1998 Plan may be designated by the 1998 Plan Committee as "incentive
stock options" ("ISOs") within the meaning of Section 422(b) of the Internal
Revenue Code of 1986, as amended ("Code"), or may be designated by the 1998 Plan
Committee as options not intended to be ISOs ("non-qualified stock options").
Options for 627,500 shares have been granted under the 1998 Plan. The Board
of Directors believes that, in light of the Company's recent development, an
increase in the maximum number of shares subject to options under the 1998 Plan
is appropriate. The Company has found that the use of options has enabled it to
retain talented and experienced individuals at salary levels below that which
might otherwise be required if options were not offered as part of the
compensation package. Moreover, options provide more or less of an economic
benefit to option holders depending on the market value of the Company's Common
Stock, thereby constituting a particularly effective incentive to option holders
to endeavor to improve the Company's performance. The Board of Directors
believes that increasing the number of shares issuable under the 1998 Plan to
1,500,000 will provide a sufficient number of shares for option grants over the
next few years.
The material features of the 1998 Plan, as amended by the proposed
amendment, are as follows:
1. Number of Shares. The aggregate maximum number of shares for which
options to purchase shares of Common Stock may be granted under the 1998 Plan is
1,500,000 shares, subject to adjustment upon the occurrence of stock dividends,
stock splits, recapitalization or certain other capital adjustments that cause
an increase or decrease in the number of issued and outstanding shares of Common
Stock. As of the Record Date, the aggregate market value of the 636,500 shares
of Common Stock for which such options might be granted under the 1998 Plan was
$312,500.
2. Administration. The employees and certain consultants or advisors of the
Company to whom options may be granted, the timing of grants for all eligible
recipients and the option price for options granted to such eligible persons,
including non-employee members of the Board of Directors, are as set forth in
the 1998 Plan. Subject to the foregoing and other provisions of the 1998
23
Plan, the 1998 Plan is administered by the 1998 Plan Committee, composed of two
or more Non-Employee Directors (as defined under the 1998 Plan). This committee
operates and administers the 1998 Plan in the Board's stead.
3. Eligibility. Employees, consultants or advisors and directors of the
Company and its Affiliates are eligible to receive options under the 1998 Plan.
Non-Employee Directors also receive a defined amount of non-qualified stock
options, with vesting, exercise price and other provisions as described in
Paragraph 11 below. On the Record Date, the number of employees eligible to
participate in the 1998 Plan was approximately 186.
4. Term of 1998 Plan. The 1998 Plan provides that no option may be granted
under it after June 25, 2008.
5. Term of Option. All options (other than those for Non-Employee
Directors, as further described in Paragraph 11 below) terminate on the earliest
of: (a) expiration of the option term specified in the document granting the
option, which for an ISO shall not exceed (i) ten years from the date of grant
(or such shorter period as the 1998 Plan Committee may select) or (ii) ten years
from the date of grant if the optionee owns, directly or by attribution under
the Code, shares possessing more than ten percent of the total combined voting
power of all classes of stock of the Company or of its Affiliates; (b) the
expiration of three months (or such shorter period as the 1998 Plan Committee
may select) from the date an optionee's employment terminates for any reason
other than a "Change of Control", death or disability; (c) a finding by the 1998
Plan Committee that the optionee has breached his employment or service contract
with the Company or has been engaged in any sort of disloyalty to the Company;
(d) the expiration of one year from the date on which the optionee's employment
terminates due to such optionee's disability or death; (e) the date set by the
1998 Plan Committee to be an accelerated expiration date in the event of the
liquidation or dissolution of the Company or other "Change of Control"; and (f)
the date set by the 1998 Plan Committee to be an accelerated expiration date in
the event of a change in the financial accounting treatment for options from
that in effect on the date the 1998 Plan was adopted adversely affects the
Company, or may adversely affect the Company in the foreseeable future.
Notwithstanding the foregoing, the 1998 Plan Committee may extend the
period during which an option may be exercised to a date no later than the date
of expiration of the term specified in the option document.
In addition, the non-qualified stock options granted or to be granted to
Non-Employee Directors and described in Paragraph 11 below have further
limitations on their term, as described in Paragraph 11.
6. Option Price. The option price per share may be equal to or greater than
the fair market value of the Common Stock subject to the option on the date the
option is granted, as the 1998 Plan Committee may determine; provided, however,
that the option price per share for an ISO shall be 100% of the fair market
value of the Common Stock on the date the option is granted,
24
The 1998 Plan defines such fair market value, if the Common Stock is listed on a
national securities exchange or included in the Nasdaq National Market, as the
last reported sales price thereof on the relevant date or, if not so listed or
included, as the mean between the closing "bid" and "asked" prices or the mean
between the highest and lowest quoted selling prices of the Common Stock, as
reported in customary financial reporting services, on the date the option is
granted. However, the minimum exercise price for options granted under the 1998
Plan to executives, officers and employee directors of the Company that were
serving as of September 29, 1998 is $14.00 per share. In addition, options
granted under the 1998 Plan cannot be repriced without shareholder approval.
7. Special Rules for Certain Shareholders. If an ISO is granted to an
optionee who then owns, directly or by attribution under the Code, shares
possessing more than 10% of the total combined voting power of all classes of
stock of the Company or an Affiliate, then the term of the option will not
exceed five years and the option price per share will be at least 110% of the
fair market value of the Common Stock subject to the option on the date the
option is granted. Such restrictions do not apply to non-qualified stock options
granted to such an optionee, which are governed by the rules described in
Paragraphs 5 and 6 above.
8. Payment. An option holder may pay for shares covered by an option in
cash or by certified check or by such other mode of payment as the 1998 Plan
Committee may approve, including payment through a broker in accordance with
certain federal laws, or payment in whole or in part of unencumbered shares of
the Company's Common Stock, based on the fair market value of such Common Stock
at the time of payment. Notwithstanding the foregoing, the Board of Directors,
in its sole discretion, may refuse to accept shares of Common Stock in payment
of the option exercise price.
9. Option Document; Transferability. All options will be evidenced by a
written option document containing provisions consistent with the 1998 Plan.
Options granted under the 1998 Plan may be transferred, by will or by the laws
of descent and distribution and in other circumstances or pursuant to certain
other laws.
10. Provisions Relating to a "Change of Control". In the event of a "Change
of Control", the 1998 Plan Committee may take whatever action with respect to
outstanding options it deems necessary or desirable, including accelerating the
expiration date of the options to a date no earlier than 30 days after notice of
such acceleration is given to holders of options. In addition, in the event of a
Change of Control, all options and other awards granted pursuant to the 1998
Plan will become immediately exercisable in full.
A Change of Control will occur under the 1998 Plan upon requisite
shareholder (or, if such approval is not required, Board of Directors) approval
of a plan of liquidation or dissolution or the sale of substantially all of the
assets of the Company. Subject to certain exceptions, a Change of Control will
also occur upon requisite approval by the Company's and the other constituent
corporation's stockholders (or, if such approval is not required, by the
applicable boards of directors) of the merger or consolidation of the Company
with or into such other constituent corporation. In
25
addition, a Change of Control will occur if certain entities, persons or groups
specified in the 1998 Plan (not including persons owning in excess of 20% of the
outstanding Common Stock at the time of the adoption of the 1998 Plan by the
Board of Directors and the shareholders) have become beneficial owners of, or
have obtained voting control over, more than 50% of the Company's outstanding
Common Stock, or on the first date upon which a majority of the Board of
Directors consists of persons who have been members of the Board of Directors
for less than 24 months, unless the nomination for election of each new director
who was not a director at the beginning of such period was approved by a vote of
at least two-thirds of the directors then still in office who were directors at
the beginning of such period.
11. Special Provisions for Grant of Options to Non-Employee Directors. In
addition to other options that may be granted under the 1998 Plan to
Non-Employee Directors, options will be granted to Non-Employee Directors and
will become exercisable under the 1998 Plan in accordance with the following
terms:
A. Each Non-Employee Director will be granted, commencing on June 25,
1998 and on each June 25th thereafter on which such person remains a
non-employee director, an option to purchase up to 7,500 shares of Common Stock
on a pro rata basis.
B. Each such option granted to a Non-Employee Director will be a
non-qualified stock option, so that the optionee shall have the right to
exercise the option with respect to 100% of the shares covered by such option on
the date of grant. The option exercise price shall be equal to the fair market
value of the underlying shares on the date the option is granted, as determined
by the Plan Committee.
C. Each such option granted to a Non-Employee Director will be
exercisable until the first to occur of (i) expiration of five years from the
date of grant; (ii) expiration of five years from the date the optionee's
service with the Company or its Affiliates terminates for any reason other than
death or disability; (iii) expiration of five years from the date the optionee's
service with the Company terminates by reason of death or disability; and (iv)
the date of a "Change of Control."
D. In no event shall (i) the exercise price of the option be less than
the fair market value of the shares subject to the option on the date of grant;
and (ii) payment of the exercise price for the option in whole or in part in
shares of Common Stock held by the optionee for more than one year be
restricted. The option document for such options may contain such other
restrictions and terms as are permitted by and consistent with the 1998 Plan and
as the 1998 Plan Committee shall determine.
12. Amendments to the Option Document and the 1998 Plan. Subject to the
provisions of the 1998 Plan, the Board of Directors may amend an option
document, subject to the optionee's consent if the amendment is not favorable to
the optionee. The Board of Directors may amend the 1998 Plan from time to time
in such manner as it may deem advisable. Nevertheless, the Board of Directors
may not, without obtaining approval of a vote of a majority of the outstanding
voting stock of the Company, within twelve months before or after adoption of
the 1998 Plan or any amendment thereto, change the class of individuals eligible
to receive an ISO, extend the expiration date of the
26
1998 Plan, decrease the minimum exercise price of an ISO granted under the 1998
Plan or increase the maximum number of shares as to which options may be
granted. In addition, the provisions of the 1998 Plan determine (i) which
Non-Employee Directors shall be granted options under the provisions applicable
to them and described in paragraph 11 above, (ii) the number of option shares
subject to options so granted and (iii) the exercise price for such options.
13. Tax Aspects of the 1998 Plan. The following discussion is intended to
summarize briefly the general principles of Federal income tax law currently
applicable to options granted under the 1998 Plan. A recipient of an ISO will
not recognize taxable income upon either the grant or exercise of the ISO. The
option holder will recognize long-term capital gain or loss on a disposition of
the shares acquired upon exercise of an ISO, provided the option holder does not
dispose of those shares within two years from the date the ISO was granted or
within one year after the shares were transferred to such option holder.
Currently, for regular federal income tax purposes, long-term capital gain is
taxed at a maximum rate of 20% where the holding period is more than 12 months,
while ordinary income may be subject to a maximum rate of 39.6%. If the option
holder satisfies both of the foregoing holding periods, then the Company will
not be allowed a deduction by reason of the grant or exercise of an ISO.
As a general rule, if the option holder disposes of the shares before
satisfying both holding period requirements (a "disqualifying disposition"), the
gain recognized by the option holder on the disqualifying disposition will be
taxed as ordinary income to the extent of the difference between (a) the lesser
of the fair market value of the shares on the date of exercise or the amount
received for the shares in the disqualifying disposition, and (b) the adjusted
basis of the shares, and the Company will be entitled to a deduction in that
amount. The gain (if any) in excess of the amount recognized as ordinary income
on a disqualifying disposition will be long-term or short-term capital gain,
depending on the length of time the option holder held the shares prior to the
disposition.
The amount by which the fair market value of a share at the time of
exercise exceeds the option price will be included in the computation of such
option holder's "alternative minimum taxable income" in the year the option
holder exercises the ISO. Currently the alternative minimum tax rate is 28%. If
an option holder pays alternative minimum tax with respect to the exercise of an
ISO, then the amount of such tax paid will be allowed as a credit against
regular tax liability in subsequent years to the extent that the credit does not
reduce the regular tax below the tentative alternative minimum tax in any year.
The option holder's basis in the shares for purposes of the alternative minimum
tax will be adjusted when income is included in alternative minimum taxable
income.
A recipient of a non-qualified stock option will not recognize taxable
income at the time of grant, and the Company will not be allowed a deduction by
reason of the grant. Such an option holder will recognize ordinary income in the
taxable year in which the option holder exercises the option, in an amount equal
to the excess of the fair market value of the shares received upon exercise at
the time of exercise of such options over the exercise price of the option, and
the Company will be allowed a deduction in that amount. Upon disposition of the
shares subject to the option, an option holder will recognize long-term or
short-term capital gain or loss, depending upon the length of time the shares
were held prior to disposition, equal to the difference between the amount
realized on disposition and the option holder's basis in the shares subject to
the option (which basis ordinarily
27
is the fair market value of the shares subject to the option on the date the
option was exercised).
Whenever the Company proposes or is required to deliver or transfer shares
in connection with the exercise of an option under the 1998 Plan, the Company
has the right to require the option holder to remit or otherwise make available
to the Company an amount sufficient to satisfy any federal, state and/or local
withholding tax requirements prior to the delivery or transfer of any
certificate or certificates for such shares or to take whatever action it deems
necessary to protect its interests with respect to tax liabilities in connection
with the issuance of such shares.
The Board of Directors believes that the grant of stock options will
provide significant incentives to directors and employees who contribute
materially to the Company's future success.
The votes of shares of the As-Converted Voting Group, present in person or
by proxy or entitled to vote at the Annual Meeting in favor of the Amendment to
the 1998 Plan must exceed the number of votes cast in opposition to the
Amendment of 1998 Plan to approve the amendment to the 1998 Plan, assuming the
presence of a quorum at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE PROPOSAL
TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK ISSUABLE UNDER THE 1998 PLAN.
PROPOSAL NO. 3
AMENDMENT TO THE COMPANY'S
ARTICLES OF INCORPORATION
On April 17, 2001 the Board adopted, found advisable and recommended to the
shareholders, a resolution to amend the Company's Articles of Incorporation in
the form attached as Exhibit A. The amendment, which is subject to shareholder
approval, increases the authorized number of shares of Common Stock from
50,000,000 to 100,000,000 shares, which would be immediately available for
issuance. If the shareholders do not approve the amendment, the amendment will
not be effective.
The basic purpose of the proposed amendment is to afford the Company
increased flexibility, as permitted by the Colorado Business Corporation Act, in
structuring its future capitalization to meet financing needs for expansion and
growth and for other corporate purposes that the Board may deem desirable,
including, without limitation, future public offerings or private placements,
acquisitions, employee benefit plans, stock splits, stock dividends, stock
options or other distributions, by permitting the issuance of shares on terms
that can be specifically adapted to a particular situation promptly and
economically by the Board, without solicitation of proxies, further action or
authorization by the shareholders. The Board has no immediate plans for issuing
any additional shares other than shares to be issued as part of the Company's
ongoing capital raising. If the proposed amendment is approved, however, the
shares of Common Stock authorized in the Company's Articles of Incorporation and
not then outstanding, may be issued by the Company without further authorization
by the shareholders.
28
Adoption of the amendment could, however, make more difficult, and
therefore discourage, attempts to acquire or alter control of the Company, even
though some shareholders of the Company may deem such change of control
desirable. The authority to issue additional shares on terms set by the Board
could be used to create voting impediments or other hindrances to frustrate
persons seeking to effect a merger or otherwise take control of the Company or
could be used to issue shares in a private placement to one or more persons
sympathetic to management and opposed to any takeover bid.
The Board has no knowledge of any present effort to accumulate the
Company's securities or to obtain control of the Company. The Board has no plans
at the present time to submit to shareholders for approval, or take any other
action with respect to any proposals, other than the proposed amendment to the
Company's Articles of Incorporation set forth in this Proxy Statement, that
might be deemed to have an anti-takeover effect. In the judgment of the Board,
there are now no provisions in the Company's Articles of Incorporation, its
Bylaws or any other agreement or plan to which the Company is a party that could
be viewed as having, to a significant extent, such an effect other than the
existing classes of Preferred Stock. There is no inter-relationship between the
existing provisions and the proposed amendment.
The proposed amendment to the Company's Articles of Incorporation will
become effective if it receives the affirmative votes of the holders of a
majority of the outstanding shares of each of the classes of the Company's
Common Stock, A Preferred Stock, E Preferred Stock and F Preferred Stock. The
resolution proposed by the Board for adoption by the shareholders is set forth
as Exhibit A to this Proxy Statement and is incorporated in this Proxy Statement
by reference.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE
"FOR" THE PROPOSAL TO INCREASE THE AUTHORIZED CAPITAL OF THE
COMPANY BY 50,000,000 SHARES OF COMMON STOCK.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT 1934
Section 16(a) of the Exchange Act requires that the Company's directors,
officers and persons who own more than 10% of a registered class of the
Company's equity securities ("10% Holders") to file with the Securities and
Exchange Commission ("SEC") initial reports of ownership and reports of changes
in ownership of Common Stock and other equity securities of the Company.
Directors, officers and 10% Holders are required by SEC regulations to furnish
the Company with copies of all of the Section 16(a) reports they file. Based
solely upon a review of the copies of the forms furnished to the Company and the
representations made by the reporting persons to the Company, the Company
believes that during 1999 its directors, officers and 10% Holders complied with
all filing requirements under Section 16(a) of the Exchange Act.
SHAREHOLDER PROPOSALS - 2002 ANNUAL MEETING
In accordance with Rule 14a-8 of the Exchange Act 1934, as amended ("Rule
14a-8"), proposals of shareholders intended to be presented at the annual
meeting of shareholders in 2002 must be received by December 28, 2001 in order
to be considered for inclusion in the Company's Proxy Statement and form of
proxy relating to that annual meeting. If the 2002 Annual Meeting date
29
is more than 30 days away from the anniversary of the 2001 Annual Meeting date,
the Company will disclose changes to the December 28 deadline in its earliest
possible report on Form 10-Q. Shareholder proposals should be directed to the
Company's Secretary, at the address of the Company set forth on the first page
of this Proxy Statement.
OTHER MATTERS
The Board knows of no matter, other than as referred to in this Proxy
Statement, that will be presented at the Annual Meeting. However, if other
matters properly come before the Annual Meeting, or any adjournment or
postponement thereof, the person or persons voting the proxies will vote them in
accordance with their judgment in such matters.
ANNUAL REPORT ON FORM 10-K
THE COMPANY WILL PROVIDE, WITHOUT CHARGE, TO EACH PERSON SOLICITED BY
THIS PROXY STATEMENT, ON THE WRITTEN REQUEST OF ANY SUCH PERSON, A COPY OF THE
FINANCIAL STATEMENTS, EXHIBITS AND SCHEDULES THAT ARE ATTACHED TO THE COMPANY'S
ANNUAL REPORT ON FORM 10-K AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
FOR ITS MOST RECENT FISCAL YEAR. SUCH WRITTEN REQUEST SHOULD BE DIRECTED TO THE
ATTENTION OF THE COMPANY'S SECRETARY AT THE ADDRESS OF THE COMPANY APPEARING ON
THE FIRST PAGE OF THIS PROXY STATEMENT OR FAXED TO THE COMPANY AT (610)
521-5985.
By Order of the Board of Directors,
Michael S. Leo
Secretary
May 18, 2001
30
EXHIBIT A
RESOLVED, that Paragraph A. of Article V of the Articles of Incorporation of the
Company be amended and restated to read in its entirety as follows:
The Corporation shall have the authority to issue one hundred million
(100,000,000) shares of common stock with a par value $0.001 per share,
three million two hundred fifty thousand (3,250,000) shares of Series A 10%
Cumulative Convertible Preferred Stock with a par value of $1.00 per share
("Series A Preferred Stock"), two thousand (2,000) shares of Series E
Convertible Preferred Stock with a par value of $0.01 per share ("Series E
Preferred Stock"), ten thousand (10,000) shares of Series F Convertible
Preferred Stock with a par value of $0.01 per share ("Series F Preferred
Stock") and three million, nine hundred and eighty-eight thousand
(3,988,000) shares of preferred stock with a par value of $0.01 per share
("Board Designated Preferred Stock"). The Board of Directors of the
Corporation may determine, in whole or in part, the preferences,
limitations, and relative rights of the Board Designated Preferred Stock,
within the limits set forth in Section 7-106-101 of the Colorado Business
Corporation Act, of any class of the Board Designated Preferred Stock,
before the issuance of any shares of that class, or one or more series
within a class of the Board Designated Preferred Stock before the issuance
of any shares of that series. The Board of Directors may issue, in one or
more classes or series, shares of the Board Designated Preferred Stock with
full, limited, multiple, fractional or no voting rights, and with such
designations, preferences, qualifications, privileges, limitations,
restrictions, options, conversion rights, or other special or relative
rights as shall be fixed from time to time by the Board of Directors,
except for and subject to, in each case, the limits set forth in Section
7-106-101 of the Colorado Business Corporation Act and in accordance with
the provisions and requirements of Section 7-106-102 of the Colorado
Business Corporation Act.
31
EXHIBIT B
AUDIT COMMITTEE CHARTER
This Audit Committee Charter (the "Charter") has been adopted by the Board of
Directors (the "Board") of EPL Technologies, Inc. (the "Company"). The Audit
Committee of the Board (the "Committee") shall review and reassess the Charter
annually and recommend any proposed changes to the Board for approval.
ROLE AND INDEPENDENCE: ORGANIZATION
The Committee assists the Board in fulfilling its responsibility for oversight
of the quality and integrity of the accounting, auditing, internal control and
financial reporting practices of the Company. It may also have such other duties
as may from time to time be assigned to it by the Board. The membership of the
Committee shall consist of at least three directors, who are each free of any
relationship that, in the opinion of the Board, may interfere with such members
individual exercise of independent judgment. Each Committee member shall also
meet the independence and financial literacy requirements for serving on audit
committees, and at least one member shall have accounting or related financial
management expertise, all set forth in the applicable rules of the Nasdaq and/or
American Stock Exchanges. The Committee shall maintain free and open
communication with the independent auditors, the internal auditor and Company
management. In discharging its oversight role, the Committee is empowered to
investigate any matter relating to the Company's accounting, auditing, internal
control or financial reporting practices brought to its attention, with full
access to all Company books, records, facilities and personnel. The Committee
may retain outside counsel, auditors or other advisors.
One member of the Committee shall be appointed as chair. The Chair shall be
responsible for leadership of the Committee, including scheduling and presiding
over meetings, preparing agendas, and making regular reports to the Board. The
chair will also maintain regular liaison with the CEO, CFO, the lead independent
audit partner and the director of internal audit.
The Committee shall meet at least four times a year or more frequently as the
Committee considers necessary. At least once each year the Committee shall have
separate private meetings with the independent auditors, management and the
internal auditors.
RESPONSIBILITIES
Although the Committee may wish to consider other duties from time to time, the
general recurring activities of the Committee in carrying out its oversight role
are described below. The Committee shall be responsible for:
- - Recommending to the Board the independent auditors to be retained (or
nominated for shareholder approval) to audit the financial statements of
the Company. Such auditors are ultimately accountable to the Board and the
Committee, as representatives of the shareholders.
32
- - Evaluating, together with the Board and management, the performance of the
independent auditors and, where appropriate, replacing such auditors.
- - Obtaining annually from the independent auditors a formal written statement
describing all relationships between the auditors and the Company,
consistent with Independence Standards Board Standard Number 1. The
Committee shall actively engage in a dialogue with the independent auditors
with respect to any relationships that may impact the objectivity and
independence of the auditors and shall take, or recommend that the Board
take, appropriate actions to oversee and satisfy itself as to the auditors'
independence.
- - Reviewing the audited financial statements and discussing them with
management and the independent auditors. These discussions shall include
the matters required to be discussed under Statement of Auditing Standards
No. 61 and consideration of the quality of the Company's accounting
principles as applied in its financial reporting, including a review of
particularly sensitive accounting estimates, reserves and accruals,
judgment areas, audit adjustments (whether or not recorded), and other such
inquiries as the Committee or the independent auditors shall deem
appropriate. Based on such review, the Committee shall make its
recommendation to the Board as to the inclusion of the Company's audited
financial statements in the Company's Annual Report on Form 10K (or the
Annual Report to Shareholders, if distributed prior to the filing of the
Form 10-K).
- - Issuing annually a report to be included in the Company's proxy statement
as required by the rules of the Securities and Exchange Commission.
- - Overseeing the relationship with the independent auditors, including
discussing with the auditors the nature and rigor of the audit process,
receiving and reviewing audit reports, and providing the auditors full
access to the Committee (and the Board) to report on any and all
appropriate matters.
- - Discussing with a representative of management and the independent
auditors: (1) the interim financial information contained in the Company's
Quarterly Report on Form 10-Q prior to its filing, (2) the earnings
announcement prior to its release (if practicable), and (3) the results of
the review of such information by the independent auditors. (These
discussions may be held with the Committee as a whole or with the Committee
chair in person or by telephone).
- - Overseeing internal audit activities, including discussing with management
and the internal auditors the internal audit function's organization,
objectivity, responsibilities, plans, results, budget and staffing.
- - Discussing with management, the internal auditors and the independent
auditors the quality and adequacy of and compliance with the Company's
internal controls.
- - Discussing with management and the Company's general counsel any legal
matters (including the status of pending litigation) that may have a
material impact on the Company's financial
33
statements, and any material reports or inquiries from regulatory or
governmental agencies.
The Committee's job is one of oversight. Management is responsible for the
preparation of the Company's financial statements and the independent auditors
are responsible for auditing those financial statements. The Committee and the
Board recognize that management (including the internal audit staff) and the
independent auditors have more resources and time, and more detailed knowledge
and information regarding the Company's accounting, auditing, internal control
and financial reporting practices than the Committee does: accordingly, the
Committee's oversight role does not provide any expert or special assurance as
to the financial statements and other financial information provided by the
Company to its shareholders and others.
34
PROXY
EPL TECHNOLOGIES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Paul L. Devine and Michael S.
Leo, each of them acting individually, as the attorney and proxy of the
undersigned and each with the power to appoint his substitute, and hereby
authorizes them to represent and to vote in the name and stead of the
undersigned as designated below, all the shares of EPL Technologies, Inc. held
of record by the undersigned on MAY 7, 2001, which the undersigned would be
entitled to vote at the Annual Meeting of Shareholders to be held on JUNE 28,
2001, (the "Meeting"), or any adjournment or further postponement thereof, if
personally present.
1 - Election of Directors:
Withhold
Name Vote For Authority to Vote
---- -------- -----------------
Paul L. Devine _______ _______
A.S. Clausi _______ _______
W. Ward Carey _______ _______
Richard M. Harris _______ _______
2 - Proposal to amend the 1998 Stock Incentive Plan to increase the number of
shares of Common Stock reserved for issuance under the Plan to 1,500,000.
_______ For _______ Against _______ Abstain
3 - Proposal to amend the Articles of Incorporation to increase the
authorized number of shares of Common Stock to 100,000,000.
_______ For _______ Against _______ Abstain
4 - Upon such other matters as may properly come before the Annual Meeting or
any adjournment or postponement thereof.
This Proxy, when properly executed, will be voted in the manner as directed
herein by the undersigned shareholder. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED "FOR" PROPOSALS 1, 2 AND 3. THIS PROXY ALSO DELEGATES DISCRETIONARY
AUTHORITY TO VOTE WITH RESPECT TO ANY OTHER BUSINESS AS MAY PROPERLY COME BEFORE
THIS ANNUAL MEETING OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF. THE UNDERSIGNED
HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF ANNUAL MEETING AND PROXY STATEMENT
OF EPL TECHNOLOGIES, INC.
-------------------------------- -----------------------------
PRINT SHAREHOLDER NAME SIGNATURE OF SHAREHOLDER
-------------------------------- -----------------------------
DATE SIGNATURE OF SHAREHOLDER
Please sign your name exactly as it appears on your stock certificate,
date and return this proxy in the enclosed envelope. When signing as
attorney-in-fact, executor, administrator, trustee or guardian, please add your
title as such. When signing as joint tenants, all parties in the joint tenancy
must sign. If shareholder is a corporation, limited liability company or
partnership, please have a duly authorized officer, manager, member or partner
sign in full corporate, limited liability company or partnership name.
Please return this proxy to EPL Technologies, Inc., 2 International Plaza,
Suite 245, Philadelphia, PA, 19113-1507 prior to June 28, 2001 so that your
votes may be counted at the Annual Meeting.