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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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 Commission Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
EPL Technologies, Inc.
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(Name of Registrant as Specified In Its Charter)
Not Applicable
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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[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:
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(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):
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[ ] Fee paid previously with preliminary materials:
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[ ] 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.
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EPL TECHNOLOGIES, INC.
2 INTERNATIONAL PLAZA, SUITE 245
PHILADELPHIA, PENNSYLVANIA 19113-1507
FEBRUARY 27, 1998
DEAR SHAREHOLDER:
On behalf of the Board of Directors (the "Board"), I cordially invite you
to attend a special meeting of shareholders (the "Special Meeting") of EPL
Technologies, Inc. (the "Company"), which will be held at the Philadelphia
Airport Marriott, Philadelphia, Pennsylvania 19113 on March 13, 1998 at 10:00
local time.
At the Special Meeting, shareholders will be asked to consider and vote
upon the following matters: (1) to approve a "1-for-2 reverse split" of the
Company's outstanding shares of Common Stock (the "Reverse Stock Split"); and
(2) to consider and vote on such other matters as may properly be presented
incident to the conduct of the Special Meeting or any adjournment or
postponement thereof.
After careful consideration and consultation with its legal and financial
advisors, the Board has approved, and recommends that the shareholders vote FOR,
the Reverse Stock Split. The Reverse Stock Split requires the approval of both
the majority of (i) the outstanding shares of Common Stock and (ii) the
outstanding shares of Common Stock collectively with, on an as-converted basis,
the Company's Series A 10% Cumulative Convertible Preferred Stock, $1.00 par
value per share; and Series C Convertible Preferred Stock, $0.01 par value per
share, present in person or by proxy at the Special Meeting, in each case
assuming a quorum has been established at the Special Meeting. In limited
instances, holders of Common Stock may have dissenters' rights in the event the
Reverse Stock Split is approved.
The Board of Directors believes the Reverse Stock Split will enhance the
acceptability of the Common Stock by the financial community and the investing
public. The Board of Directors also believes the Reverse Stock Split may
facilitate the currently proposed public offering of the Company's Common Stock.
For a further discussion of the purpose and effect of the Reverse Stock Split,
see "REVERSE SPLIT OF THE OUTSTANDING SHARES OF THE COMPANY'S COMMON
STOCK -- Purpose and Effect of the Reverse Stock Split" in the accompanying
Proxy Statement.
Details of the Reverse Stock Split proposal and other important information
are set forth in the accompanying Proxy Statement and should be considered
carefully by shareholders.
I hope that you will attend the Special Meeting. Whether or not you plan to
attend the Special Meeting and regardless of the number of shares of stock you
own, please complete, date and sign the enclosed proxy card and return it
promptly in the accompanying envelope. You may, of course, attend the Special
Meeting and vote in person, even if you have previously returned your proxy
card.
Sincerely,
/s/ Paul L. Devine
Paul L. Devine
Chairman, President and
Chief Executive Officer
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EPL TECHNOLOGIES, INC.
2 INTERNATIONAL PLAZA, SUITE 245
PHILADELPHIA, PENNSYLVANIA 19113-1507
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MARCH 13, 1998
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders of EPL
Technologies, Inc., a Colorado corporation (the "Company"), will be held at the
Philadelphia Airport Marriott, Philadelphia, Pennsylvania, on Friday, March 13,
1998 at 10:00 a.m., local time, for the following purposes:
1. To approve the proposal of the Board of Directors to effect a
1-for-2 reverse split of the Company's outstanding shares of
Common Stock; and
2. To consider and vote on such other matters as may properly be
presented incident to the conduct of the Special Meeting, or any
postponement or adjournment thereof.
The Board of Directors has fixed the close of business on February 20, 1998
as the record date (the "Record Date") for determining the shareholders entitled
to receive notice of, and to vote at, the Special Meeting. A complete list of
shareholders entitled to vote at the Special Meeting is available for inspection
prior to the Special Meeting upon written demand, during normal business hours,
by any shareholder of the Company, at the Company's address shown above.
ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE SPECIAL MEETING IN PERSON.
HOWEVER, TO ENSURE YOUR REPRESENTATION AT THE SPECIAL MEETING, YOU ARE URGED TO
MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE
POSTAGE-PREPAID ENVELOPE ENCLOSED FOR THAT PURPOSE. ANY SHAREHOLDER ATTENDING
THE SPECIAL MEETING MAY VOTE IN PERSON IF SUCH SHAREHOLDER HAS PREVIOUSLY
RETURNED A PROXY.
By Order of the Board of Directors
/s/ Timothy B. Owen
Timothy B. Owen
Secretary
Philadelphia, Pennsylvania
February 27, 1998
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EPL TECHNOLOGIES, INC.
2 INTERNATIONAL PLAZA, SUITE 245
PHILADELPHIA, PENNSYLVANIA 19113-1507
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MARCH 13, 1998
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed Proxy is solicited on behalf of the Board of Directors of EPL
Technologies, Inc., a Colorado corporation (the "Company"), for use at a Special
Meeting of Shareholders to be held on Friday, March 13, 1998 at 10:00 a.m.,
local time, or at any postponement(s) or adjournment(s) thereof, for the purpose
of approving a proposal by the Board of Directors to effect a 1-for-2 reverse
split of the Company's outstanding shares of Common Stock (the "Reverse Stock
Split"), as set forth herein and in the accompanying Notice of Special Meeting
of Shareholders. The Special Meeting will be held at the Philadelphia Airport
Marriott, Philadelphia, Pennsylvania 19113. The Company's telephone number is
(610) 521-4400. These proxy solicitation materials are expected to be first
mailed on or about February 27, 1998 to record holders of the Company's capital
stock as of February 20, 1998 (the "Record Date").
SHARES OUTSTANDING, QUORUM, VOTING RIGHTS AND VOTE REQUIRED
The presence in person or by proxy of the holders of a majority of the
votes entitled to be cast by each of (i) the outstanding shares of Common Stock,
$0.001 par value per share (the "Common Stock"), and (ii) the outstanding shares
of Common Stock collectively with, on an as-converted basis, the Series A 10%
Cumulative Convertible Preferred Stock, $1.00 par value (the "A Preferred
Stock"), and Series C Convertible Preferred Stock, $0.01 par value per share
(the "C Preferred Stock"), is necessary to constitute a quorum for consideration
of the Reverse Stock Split at the Special Meeting. If a quorum does not exist
with respect to either voting group, the president or any shareholder or proxy
that is present at the meeting, whether or not a member of that voting group,
may adjourn the meeting to a different date, time or place. The voting group
described in clause (i) above is hereinafter referred to as the "Common Voting
Group" and the voting group described in clause (ii) above is hereinafter
referred to as the "As-Converted Voting Group." All of the Company's previously
issued Series B Convertible Preferred Stock has been converted into Common Stock
and the Company's Series D Convertible Preferred Stock is not entitled to vote
with respect to the Reverse Stock Split, but holders of the Series D Preferred
Stock are entitled to notice of the Special Meeting.
Only shareholders of record in the Common Voting Group and the As-Converted
Voting Group at the close of business on the Record Date will be entitled to
notice of, and to vote at, the Special Meeting. As of the Record Date,
18,095,965 shares of the Company's Common Stock, 2,073,000 shares of A Preferred
Stock and 144,444 shares of C Preferred Stock were outstanding. Each share of A
Preferred Stock is currently convertible into 1.333 shares of Common Stock and
holders of A Preferred Stock are entitled to one vote per share for each share
of Common Stock into which such A Preferred Stock is convertible. Each share of
C Preferred Stock is currently convertible into one share of Common Stock and
holders of C Preferred Stock are entitled to one vote per share for each share
of Common Stock into which such C Preferred Stock is convertible. Thus, as of
the Record Date, there were a total of 21,004,409 shares of the Common Stock on
an as-converted basis entitled to vote in the As-Converted Voting Group. Holders
of shares of the Common Stock in the Common Voting Group as of the Record Date
will vote together as a class on the Reverse Stock Split. Additionally, in a
separate vote of the As-Converted Voting Group, the holders as of the Record
Date of the Company's Common Stock will vote together as a class on the Reverse
Stock Split with the holders as of the Record Date of the A Preferred Stock and
C Preferred Stock.
Once a quorum has been established, approval of the Reverse Stock Split
requires the favorable vote of a majority of the shares in both the Common
Voting Group and the As-Converted Voting Group, represented in person or by
proxy and entitled to vote at the Special Meeting. The Company has been notified
by Trilon
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Dominion Partners, L.L.C. ("Trilon"), the beneficial owner of 2,804,473 shares
of Common Stock (15.5% of the Common Voting Group) and 2,577,333 shares of
Common Stock issuable upon conversion of A Preferred Stock (25.6% of the
As-Converted Voting Group), that it intends to vote in favor of the Reverse
Stock Split. Ronald W. Cantwell, a director of the Company, is the President of
Trilon and of VC Holdings, Inc. ("VC Holdings"), the sole managing member of
Trilon. Additionally, directors (other than Mr. Cantwell, who may be deemed to
be the beneficial owner of Trilon's securities) and officers of the Company
beneficially owning an aggregate of 1,032,298 shares of Common Stock (5.7% of
the Common Voting Group) and 66,667 shares of Common Stock issuable upon
conversion of A Preferred Stock (5.2% of the As-Converted Voting Group) have
informed the Company that they intend to vote in favor of the Reverse Stock
Split. See "REVERSE SPLIT OF THE OUTSTANDING SHARES OF THE COMPANY'S COMMON
STOCK -- Interests of Certain Persons in the Reverse Stock Split."
VOTING OF PROXIES
When a proxy is returned properly signed, the shares represented will be
voted in accordance with the instructions provided therein. A shareholder
entitled to vote who submits a proxy may revoke it at any time before the proxy
is voted. A shareholder may revoke a proxy prior to its vote by (a) filing with
the Company a written revocation of the proxy, (b) appearing at the Special
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 Special Meeting and vote in
person. 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, but will count
towards the presence of a quorum. In the absence of instructions, the shares
represented at the Special Meeting by proxy will be voted "FOR" the Reverse
Stock Split.
SOLICITATION OF PROXIES
The expense of this proxy solicitation will be borne by the Company. Trilon
has agreed to reimburse the Company for all or a portion of the expense of this
proxy solicitation. See "REVERSE SPLIT OF THE OUTSTANDING SHARES OF THE
COMPANY'S COMMON STOCK -- Interests of Certain Persons in the Reverse Stock
Split." 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 has retained the proxy solicitation firm of Georgeson
& Company Inc. to assist management in soliciting proxies. The Company has
agreed to pay such firm a fee of approximately $8,000 for its services, plus
expenses. The Company will reimburse reasonable expenses incurred by record
holders of Common Stock or any series of 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.
REVERSE SPLIT OF THE OUTSTANDING SHARES OF THE COMPANY'S COMMON STOCK
GENERAL
The Board of Directors of the Company has authorized a vote by the
shareholders on a 1-for-2 reverse split of the issued and outstanding shares of
Common Stock. The Reverse Stock Split, if adopted, will be effected pursuant to
a Plan to Effect a Reverse Stock Split (the "Plan"), which has been unanimously
approved by the Board of Directors and recommended to the shareholders for their
approval at the Special Meeting. A copy of the Plan is attached as Exhibit A. If
the Reverse Stock Split is approved and the Plan is adopted, each share of
Common Stock issued and outstanding as of the close of business on the date the
Plan is approved by the shareholders of the Company (the "Effective Date") will
be converted into one-half of one share of Common Stock.
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However, under the Plan, the Board of Directors will have the authority to
determine, in its sole discretion, that it is in the best interest of the
Company to abandon the Reverse Stock Split at any time prior to its approval by
the shareholders.
The Reverse Stock Split, if it occurs, will not affect any shareholder's
proportionate equity interest in the Company (other than as a result of the
payment of cash in lieu of fractional shares as discussed below) or the relative
rights, preferences, privileges or priorities of any shareholder. In addition,
pursuant to the terms of the Company's stock option plans, warrants and
convertible preferred stock, the number of shares issuable upon exercise of
outstanding options and warrants, and conversion of convertible preferred stock,
and the related exercise or conversion price per share, will be proportionately
adjusted.
PURPOSE AND EFFECT OF THE REVERSE STOCK SPLIT
The principal effect of the Reverse Stock Split will be to decrease the
number of outstanding shares of Common Stock from 18,095,965 shares, as of the
Record Date, to approximately 9,047,982 shares, (assuming that the Reverse Stock
Split occurred on the Record Date). The respective voting rights and other
rights that accompany the Common Stock will not be altered by the Reverse Stock
Split (other than as a result of payment of cash in lieu of fractional shares as
discussed below), and the par value of the Common Stock will remain at $.001 per
share. Additionally, the Reverse Stock Split will not affect the Company's
accumulated deficit and total shareholders' equity will remain unchanged.
Consummation of the Reverse Stock Split will not alter the number of authorized
shares of the Company's Common Stock, which will remain at 50,000,000.
Consequently, the Board of Directors effectively will have the authority to
issue twice as many shares of Common Stock as it had the authority to issue
prior to the Reverse Stock Split. The currently authorized and outstanding
shares of the Company's A Preferred Stock and C Preferred Stock will not be
affected by this vote, other than a pro-rata reduction in the number of shares
of Common Stock into which the A Preferred Stock and the C Preferred Stock are
convertible and a pro-rata increase in conversion price. Additionally,
outstanding options and warrants will be adjusted, in the manner described in
the preceding sentence, automatically on the Effective Date. Furthermore, the
Company's D Preferred Stock, the conversion of which is based on a market price
formula, will be adjusted in a comparable manner, automatically on the Effective
Date. After giving effect to the Reverse Stock Split, the number of outstanding
shares of Common Stock (as of the Record Date) would be as set forth above, with
the result that authorized but unissued shares would be 40,952,018, with
approximately 5,565,448 of such shares of Common Stock being reserved for
issuance pursuant to the Company's warrants, stock option plans and convertible
preferred stock. Accordingly, the Reverse Stock Split could result in a
significant increase in possible dilution to present shareholders' percentage of
ownership of Common Stock due to possible issuances of Common Stock after the
Reverse Stock Split.
The Board of Directors believes that the Reverse Stock Split is in the best
interests of the Company and its shareholders. In this regard, the Board of
Directors believes the Reverse Stock Split will enhance the acceptability of the
Common Stock to the financial community and investing public. The Board of
Directors also believes that the reduction in the number of issued and
outstanding shares of Common Stock caused by the Reverse Stock Split will
increase the post-split market price per share of the Common Stock over the
pre-split market price per share of the Common Stock. The Board of Directors
further believes that the proposed Reverse Stock Split will result in a broader
market for the Common Stock than that which currently exists. Theoretically, the
number of shares outstanding should not, by itself, affect the marketability of
the Common Stock, the type of investor who acquires it, or the Company's
reputation in the financial community. In practice, this is not necessarily the
case, as certain investors view low-priced stock as unattractive, although
certain other investors may be attracted to low-priced stock because of the
greater trading volatility sometimes associated with such securities.
In addition, a variety of brokerage house policies and practices tend to
discourage individual brokers within those firms from dealing with lower-priced
stocks. Some of those policies and practices pertain to the payment of broker's
commissions and to time-consuming procedures that function to make the handling
of lower-priced stocks economically unattractive to brokers. Furthermore, many
brokerage houses do not permit low-priced stocks to be used as collateral for
margin accounts or to be purchased on margin. In addition, the
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structure of trading commissions also tends to have an adverse impact upon
holders of lower-priced stock because the brokerage commission on a sale of
lower-priced stock generally represents a higher percentage of the sales price
than the commission on a relatively higher-priced stock. The Board of Directors
believes that the proposed Reverse Stock Split could result in a price level for
the Common Stock that will reduce, to some extent, the effect of the
above-referenced policies and practices of brokerage firms and diminish the
adverse impact of trading commissions on the market for the Common Stock. The
expected increased price level may also encourage interest and trading in the
Common Stock, particularly by institutional investors, and possibly promote
greater liquidity for the Company's shareholders, although such liquidity could
be adversely affected by the reduced number of shares of Common Stock
outstanding after the Effective Date.
The Reverse Stock Split also will result in some shareholders owning "odd
lots" of less than 100 shares of the Common Stock received as a result of the
Reverse Stock Split. Brokerage commissions and other costs of transactions in
odd lots may be higher, particularly on a per-share basis, than the cost of
transactions in even multiples of 100 shares.
The Board of Directors also believes the Reverse Stock Split may facilitate
the currently proposed public offering of Common Stock by the Company and Trilon
(the "Offering"), in which Trilon intends to sell all of its shares, as well as
enhance the Company's flexibility in its future financing and capitalization
needs. The Offering consists of 3,500,000 shares (on a post-split basis) of
Common Stock, of which 809,097 shares of Common Stock would be sold by the
Company (and an additional 525,000 shares if the underwriters' over-allotment
option is exercised) and 2,690,903 shares of Common Stock (including 1,288,666
shares issuable upon conversion of A Preferred Stock) would be sold by Trilon,
which has informed the Company that it intends to vote in favor of the Reverse
Stock Split. A registration statement relating to the Offering has been filed
with the Securities and Exchange Commission (SEC file no. 333-46397) but has not
yet become effective. The securities to be registered under the registration
statement may not be sold nor may offers to buy be accepted prior to the time
the registration statement becomes effective. Information concerning the
Offering is being furnished in this proxy statement only to provide full
disclosure to the Company's shareholders entitled to vote at the Special
Meeting. Accordingly, this proxy statement and any other materials delivered
herewith shall not constitute an offer to sell or the solicitation of an offer
to buy such securities. There can be no assurance that the Offering will be
completed or that the currently proposed terms will not be modified. The Board
of Directors recommends approval of the Reverse Stock Split, subject to the
right of the Board of Directors to abandon the Reverse Stock Split at any time
prior to approval by the shareholders, regardless of whether the Offering is
completed. See "-- Interests of Certain Persons in the Reverse Stock Split."
There can be no assurance that the Reverse Stock Split will increase or
will not adversely impact the market price of the Common Stock, that the
marketability of the Common Stock will improve as a result of the Reverse Stock
Split or that the Reverse Stock Split will otherwise have any of the effects
described herein.
CERTIFICATES AND FRACTIONAL SHARES
If approved by the shareholders, the Reverse Stock Split will occur on the
Effective Date without regard to the date or dates certificates currently
representing shares of the Common Stock (the "Old Certificates") are physically
surrendered for certificates representing the number of shares of the Common
Stock such shareholders are entitled to receive as a consequence of the Reverse
Stock Split (the "New Certificates"). In such event, the Old Certificates will
be deemed to represent the number of shares of Common Stock resulting from the
application of the 1-for-2 Reverse Stock Split. New Certificates will be issued
in due course as Old Certificates are tendered to Securities Transfer
Corporation (the "Exchange Agent") for exchange or transfer. No fractional
shares of Common Stock will be issued upon the effectiveness of the Reverse
Stock Split and, in lieu thereof, shareholders holding a number of shares of
Common Stock not evenly divisible by two, upon surrender of their Old
Certificates, will receive cash in lieu of the fractional share of Common Stock
held. Such cash payment will not be made until a shareholder presents Old
Certificates to the Exchange Agent. The price payable by the Company for the
fractional share of Common Stock will be the average of the last sale price of
one share of Common Stock prior to the Reverse Stock Split, as reported on the
Nasdaq SmallCap Market for the five trading days immediately preceding the
Effective Date.
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Only fractional shares generated by the Reverse Stock Split will be
purchased by the Company. As a result, whole shares will remain outstanding. For
example, if a shareholder, prior to the Reverse Stock Split, owns 125 shares of
Common Stock, then dividing 125 shares by two would cause such shareholder to
hold, after the Reverse Stock Split, 62.5 shares. This shareholder would be
issued a New Certificate for 62 new shares and would receive a cash payment
(calculated as described above) for the new 0.5 share fractional interest.
SOURCE OF FUNDS; NUMBER OF HOLDERS
The Company has available and will pay from its cash reserves the funds
required to purchase the fractional shares. The Company's shareholder list
indicates that a portion of the outstanding shares of Common Stock is registered
in the names of clearing agencies and broker nominees. It is, therefore, not
possible to predict with certainty the number of fractional shares and the total
amount that the Company will be required to pay for fractional share interests.
However, it is not expected that the funds necessary to effect the cancellation
of fractional shares will be material.
As of February 20, 1998, the Company had approximately 300 shareholders of
record of the Common Stock. The Company does not expect that the Reverse Stock
Split and the payment of cash in lieu of fractional shares will result in a
significant reduction in the number of shareholders of record or beneficial
owners of Common Stock.
EXCHANGE OF STOCK CERTIFICATES
If the Reverse Stock Split becomes effective, as soon as practicable after
the Effective Date, the Company will send a letter of transmittal to each
shareholder of record on the Effective Date for use in transmitting Old
Certificates to the Exchange Agent. The letter of transmittal will contain
instructions for the surrender of Old Certificates to the Exchange Agent in
exchange for New Certificates. No New Certificates will be issued to a
shareholder until such shareholder has surrendered all Old Certificates together
with a properly completed and executed letter of transmittal to the Exchange
Agent.
Upon proper completion and execution of the letter of transmittal and
return thereof, together with all Old Certificates, to the Exchange Agent,
shareholders will receive a New Certificate or New Certificates representing the
number of whole shares of post-split Common Stock into which their shares of
Common Stock represented by the Old Certificates have been converted as a result
of the Reverse Stock Split. Until surrendered, outstanding Old Certificates held
by shareholders will be deemed for all purposes to represent the number of whole
shares of post-split Common Stock to which such shareholders are entitled as a
result of the Reverse Stock Split. Shareholders should not send their Old
Certificates to the Exchange Agent until they have received the letter of
transmittal. Shares not presented for surrender as soon as practicable after the
letter of transmittal is sent will be exchanged at the first time they are
presented for transfer.
No service charges will be payable by holders of shares of Common Stock in
connection with the exchange of certificates, all expenses of which will be
borne by the Company. However, if a transfer of ownership is requested, a fee
may be charged by the Exchange Agent for such transfer.
INTERESTS OF CERTAIN PERSONS IN THE REVERSE STOCK SPLIT
Ronald W. Cantwell, a director of the Company, is the President of Trilon
and of VC Holdings. All of the shares of Common Stock beneficially owned by
Trilon will be included in the Offering. Trilon believes that the Reverse Stock
Split will be beneficial to the Offering, and has indicated to the Company that
it intends to vote in favor of the Reverse Stock Split. If the Offering is
completed, Trilon has agreed that the expenses of this proxy solicitation will
be apportioned to and paid by Trilon in the same proportion as the gross
proceeds of the Offering received by Trilon bear to the aggregate gross proceeds
of the Offering. If the Offering is not completed, Trilon will pay all of the
expenses of the proxy solicitation. See "-- Purpose and Effect of the Reverse
Stock Split."
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Except as described above, no officer, director, associate or affiliate of
the Company will derive any material benefit from the Reverse Stock Split other
than the benefits that would be enjoyed by any other person holding the same
number of shares.
FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the material anticipated federal income tax
consequences of the Reverse Stock Split to shareholders of the Company. This
summary is based on the provisions of the Internal Revenue Code of 1986, as
amended (the "Code"), the Treasury Department Regulations (the "Regulations")
issued pursuant thereto, and published rulings and court decisions in effect as
of the date hereof, all of which are subject to change. This summary does not
take into account possible changes in such laws or interpretations, including
amendments to the Code, applicable statutes, Regulations and proposed
Regulations or changes in judicial or administrative rulings; some of which may
have retroactive effect. No assurance can be given that any such changes will
not adversely affect the discussion of this summary.
In particular, and without limiting the foregoing, this summary does not
consider the federal income tax consequences to shareholders of the Company in
light of their individual investment circumstances or to holders subject to
special treatment under the federal income tax laws (for example, tax exempt
entities, life insurance companies, regulated investment companies and foreign
taxpayers). In addition, this summary does not address any consequences of the
Reverse Stock Split under any state, local or foreign tax laws. As a result, it
is the responsibility of each shareholder to obtain and rely on advice from his,
her or its personal tax advisor as to: (i) the effect on his, her or its
personal tax situation of the Reverse Stock Split, including the application and
effect of state, local and foreign income and other tax laws; (ii) the effect of
possible future legislation and Regulations; and (iii) the reporting of
information required in connection with the Reverse Stock Split on his, her or
its own tax returns. It will be the responsibility of each shareholder to
prepare and file all appropriate federal, state and local tax returns.
Except as described below with respect to cash received in lieu of
fractional share interests by holders of Common Stock, the Company believes that
the Reverse Stock Split will not result in any taxable gain or loss to
shareholders for federal income tax purposes. The tax basis of Common Stock
received as a result of the Reverse Stock Split (including any fractional share
interests to which a shareholder is entitled) will be equal, in the aggregate,
to the basis of the shares exchanged for such Common Stock. For tax purposes,
the holding period of the shares exchanged will be included in the holding
period of the Common Stock received as a result of the Reverse Stock Split
(including any fractional share interests to which a shareholder is entitled),
provided that the shares exchanged were held as capital assets as of the
Effective Date. A shareholder who receives cash in lieu of fractional shares of
Common Stock will be treated as first receiving such fractional shares and then
receiving cash as payment in exchange for such fractional shares of Common
Stock, and will recognize capital gain or loss in an amount equal to the
difference between the amount of cash received and the adjusted basis of the
fractional shares treated as surrendered for cash.
THE FEDERAL INCOME TAX DISCUSSION WITH RESPECT TO THE REVERSE STOCK SPLIT
SET FORTH ABOVE IS INCLUDED HEREIN FOR GENERAL INFORMATION ONLY AND IS NOT
INTENDED AS TAX ADVICE TO ANY PERSON OR ENTITY. NO RULING FROM THE INTERNAL
REVENUE SERVICE OR OPINION OF COUNSEL WILL BE OBTAINED REGARDING THE FEDERAL
INCOME TAX CONSEQUENCES TO THE SHAREHOLDERS OF THE COMPANY AS A RESULT OF THE
REVERSE STOCK SPLIT. ACCORDINGLY, ALL SHAREHOLDERS ARE ADVISED TO CONSULT THEIR
OWN TAX ADVISORS AS TO ANY FEDERAL, STATE, LOCAL OR FOREIGN TAX CONSEQUENCES
APPLICABLE TO THEM WHICH COULD RESULT FROM THE REVERSE STOCK SPLIT.
RIGHT TO DISSENT
Article 113 of the Colorado Business Corporation Act provides that a
shareholder, whether or not entitled to vote, is entitled to dissent and obtain
payment of the fair value of such shareholder's shares in the event of a reverse
split that reduces the number of shares owned by the shareholder to only a
fraction of a share or to
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scrip if so created is to be acquired for cash. Although the Company is not
aware that any of its shareholders owns only one share of Common Stock such that
the single share would be converted into a fractional share by the Reverse Stock
Split and such shareholders, therefore, would be "cashed out" of their total
equity interest in the Company by the Reverse Stock Split, if any such
shareholders exist (the "Qualifying Shareholders"), they have a statutory right
to dissent. Shareholders other than Qualifying Shareholders will not have a
right to dissent. The Company's Qualifying Shareholders will be entitled to the
statutory dissenter's right if the Reverse Stock Split is approved by the
shareholders of the Company and the Reverse Stock Split becomes effective.
Unless this Proxy Statement is determined to have failed to provide the
Company's shareholders with notice that they are or may be entitled to assert a
statutory dissenter's right, if a Qualifying Shareholder desires to exercise its
statutory dissenter's right, it must (a) cause the Company to receive written
notice, before the vote is taken, of such Qualifying Shareholder's intention to
demand payment for such Qualifying Shareholder's fractional share resulting from
the Reverse Stock Split (a "Dissenter's Payment Demand"), and (b) not vote the
single share held by such Qualifying Shareholder in favor of the proposed
Reverse Stock Split. If a shareholder, at the beginning of the Special Meeting,
does not object to the holding of the meeting or the transacting of business at
the meeting due to lack of notice or defective notice, including withdrawing any
previously delivered proxy, any such possible objection regarding lack of notice
or defective notice is waived. If a Qualifying Shareholder does not demonstrate
lack of notice or defective notice with respect to the statutory dissenter's
right or the Special Meeting, does not provide a Dissenter's Payment Demand and
does not either vote against the Reverse Stock Split or abstain from voting, the
shareholder is not entitled to demand payment as described above and such
potential statutory dissenter's right is waived. A vote against the Reverse
Stock Split is not statutorily defined as being equivalent to a Dissenter's
Payment Demand.
If the Reverse Stock Split is approved at the Special Meeting, the Company
shall give all Qualifying Shareholders who complied with clauses (a) and (b)
above written notice of the approval of the Reverse Stock Split within ten (10)
days after the Effective Date. Such notice shall inform those Qualifying
Shareholders how they may receive payment as a dissenting shareholder. Such
Qualifying Shareholders will be given at least thirty (30) days to deliver the
appropriate payment demand and stock certificate to the Company or its agent.
Upon the later of (i) the date of the Dissenter's Payment Demand or (ii) the
Effective Date of the Reverse Stock Split, the Company shall pay the dissenting
Qualifying Shareholder the amount the Company estimates to be the fair value of
the Qualifying Shareholder, plus accrued interest (the "Company's Payment
Offer"). If the Reverse Stock Split has not become effective within sixty (60)
days after the date set by the Company by which payment demands and stock
certificates must be received, the stock certificates received by the Company or
its agent shall be returned to each dissenting Qualifying Shareholder. If the
Reverse Stock Split becomes effective after such sixty days, the Company shall
send a new dissenter's notice and the provisions of Article 113 shall again be
applicable.
A dissenting Qualifying Shareholder may reject the Company's Payment Offer,
or may give notice to the Company in writing of the shareholder's estimate of
the fair value and amount of interest owed to the shareholder by the Company, if
(a) the dissenting shareholder believes the amount paid by the Company in the
Company's Payment Offer is less than fair value or the interest calculation is
incorrect, (b) the Company fails to make payment within sixty (60) days of the
date the shareholder's payment demand was due, or (c) the Company does not
return the deposited stock certificates as required if the Reverse Stock Split
does not become effective. If the dissenting Qualifying Shareholder provides
such notice, the Company must pay the shareholder's demand or commence a court
proceeding within sixty (60) days of receiving such rejection or additional
payment demand, as set forth in Part 3 of Article 113. A dissenting Qualifying
Shareholder waives its right to require the Company to pay such demand or seek
judicial review if the Company does not receive this notice within thirty (30)
days after the Company made or offered payment to the dissenting Qualifying
Shareholder. In the event that any Shareholder has only one share of the
Company's Common Stock and wishes to consider exercising dissenter's rights,
such shareholder may contact the Company (Attention: Timothy B. Owen, Secretary
and Treasurer) to obtain at no cost a copy of Article 113 of the Colorado
Business Corporation Act.
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AFTER CAREFUL CONSIDERATION, THE BOARD OF DIRECTORS HAS DETERMINED THAT THE
REVERSE STOCK SPLIT IS IN THE BEST INTERESTS OF THE COMPANY AND ITS SHAREHOLDERS
AND RECOMMENDS A VOTE "FOR" THE REVERSE STOCK SPLIT. SUCH PROPOSAL SHALL BE
APPROVED IF A MAJORITY OF EACH OF (i) THE SHARES OF COMMON STOCK AND (ii) THE
SHARES OF COMMON STOCK AND PREFERRED STOCK (ON AN AS-CONVERTED BASIS), VOTING
TOGETHER AS A CLASS, REPRESENTED IN PERSON OR BY PROXY AT THE SPECIAL MEETING,
VOTE IN FAVOR OF THE PROPOSAL.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock as of the Record Date (on a pre-split basis) by:
(i) each person known by the Company to be the beneficial owner of more than 5%
of the Common Stock, (ii) each director, (iii) each of the Company's five most
highly paid executive officers for the fiscal year ended December 31, 1997, and
(iv) all executive officers and directors of the Company as a group. Except as
set forth below, the shareholders named below have sole voting and investment
power with respect to all shares of Common Stock shown as beneficially owned by
them.
SHARES BENEFICIALLY
OWNED(1)
-----------------------
NAME OF BENEFICIAL OWNER NUMBER PERCENT
- ----------------------------------------------------------------------- --------- -------
Trilon Dominion Partners, L.L.C........................................ 5,381,806(2) 26.0%
Lancer Partners, L.P................................................... 3,577,011(3) 19.7
Norwich Union Investment Management Limited............................ 962,500(4) 5.3
Willbro Nominees Ltd................................................... 293,930(5) 1.6
Paul L. Devine......................................................... 1,540,833(6) 8.1
Robert D. Mattei....................................................... 428,965(7) 2.3
Ronald W. Cantwell..................................................... 5,381,806(8) 26.0
Derrick W. Lyon........................................................ 200,000(9) 1.1
Dr. William R. Romig................................................... 360,000(9) 2.0
Timothy B. Owen........................................................ 375,000(10) 2.0
Antony E. Kendall...................................................... 150,000(9) *
Directors and executive officers as a group (10 persons)............... 8,899,104(11) 38.3
- ---------------
* 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.
(2) Includes 2,577,333 shares of Common Stock that may be acquired by
converting 1,933,000 shares of A Preferred Stock into shares of Common
Stock. Trilon beneficially owns 93.2% of the Company's outstanding A
Preferred Stock. The sole members of Trilon are VC Holdings (the sole
managing member of Trilon and owner of 100% of the voting interest in
Trilon) and Dominion Capital, Inc., a Virginia corporation ("Dominion
Capital"). Mr. Cantwell owns all of the voting stock of VC Holdings.
Dominion Capital is a wholly-owned subsidiary of Dominion Resources, Inc.,
a Virginia corporation ("Dominion Resources"). Both Dominion Capital and
Dominion Resources may be considered to be indirect beneficial owners of
the shares of Common Stock held by Trilon. However, both Dominion Capital
and Dominion Resources disclaim any beneficial ownership of such shares.
Trilon intends to sell all of its shares in the Offering. The address for
Trilon is 245 Park Avenue, Suite 2820, New York, NY 10017.
(3) Includes shares of Common Stock held by funds other than Lancer Partners,
L.P., but which 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 10017.
(4) Includes 62,500 shares of Common Stock issuable upon exercise of warrants.
The address for Norwich Union Investment Management Limited is Sentinel
House, 37 Surrey Street, Norwich NR13UZ, England, U.K.
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(5) Includes 144,444 shares of Common Stock issuable upon conversion of C
Preferred Stock and 61,986 shares of Common Stock issuable upon exercise of
warrants. Willbro Nominees Ltd. beneficially owns 100% of the C Preferred
Stock. The address for Willbro Nominees Ltd. is 6 Broadgate, London,
EC2M2RP, England, U.K.
(6) Includes 880,000 shares of Common Stock that may be acquired by (i)
converting 50,000 shares of A Preferred Stock into 66,667 shares of Common
Stock, (ii) exercising options to acquire 800,000 shares of Common Stock
and (iii) exercising warrants to acquire 13,333 shares of Common Stock. Mr.
Devine beneficially owns 2.4% of the A Preferred Stock. The address for Mr.
Devine is c/o the Company, 2 International Plaza, Suite 245, Philadelphia,
PA 19113-1507.
(7) Includes 95,000 shares of Common Stock that may be acquired by exercising
options to acquire 95,000 shares of Common Stock and 20,000 shares of
Common Stock owned by Mr. Mattei's wife, as to which he disclaims
beneficial ownership.
(8) Mr. Cantwell may be considered to be an indirect beneficial owner of such
shares of Common Stock by virtue of his ownership of all of the voting
stock of VC Holdings, the sole managing member of Trilon and owner of 100%
of the voting interest in Trilon. The only other member of Trilon is
Dominion Capital, which holds a non-voting membership interest in Trilon.
Dominion Capital is a wholly-owned subsidiary of Dominion Resources. Both
Dominion Capital and Dominion Resources may be considered to be indirect
beneficial owners of such shares of Common Stock. However, both entities
disclaim any beneficial ownership of such shares.
(9) Amount shown represents shares issuable upon exercise of options.
(10) Includes 340,000 shares of Common Stock that may be acquired by exercising
options.
(11) Includes 5,027,333 shares of Common Stock that may be acquired by (i)
converting 1,983,000 shares of A Preferred Stock into 2,644,000 shares of
Common Stock, (ii) exercising options to acquire 2,370,000 shares of Common
Stock and (iii) exercising warrants to acquire 13,333 shares of Common
Stock.
DEADLINE FOR RECEIPT OF SHAREHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
Shareholders of the Company who intend to present proposals at the
Company's 1998 Annual Meeting of Shareholders must have delivered such proposals
to the Company no later than February 20, 1998 in order to be included in the
Proxy Statement and form of Proxy relating to the 1998 Annual Meeting of
Shareholders. The Company currently anticipates that the 1998 Annual Meeting of
Shareholders will be held in July 1998.
OTHER MATTERS
Management knows of no other matters to be submitted to the Special
Meeting. If any other matters are properly presented incident to the conduct of
the Special Meeting, it is intended that the person named in the enclosed form
of Proxy will vote such Proxy in accordance with his judgment.
By Order of the Board of Directors
DATED: February 27, 1998
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EXHIBIT A
PLAN TO EFFECT A REVERSE STOCK SPLIT
The Board of Directors of EPL Technologies, Inc. (the "Company") has
unanimously adopted the following Plan to Effect a Reverse Stock Split (the
"Plan") and authorizes the officers of the Company to present this Plan to the
Company's shareholders for approval pursuant to Section 105 of Article 106 of
the Colorado Business Corporation Act, and further unanimously recommends such
approval to the shareholders of the Company.
Section 1. If this Plan is approved by the Company's shareholders, each
share of Common Stock of the Company issued and outstanding
(the "Pre-Split Shares") on the date the Plan is approved by
the shareholders of the Company (the "Effective Date") shall
automatically and without any action on the part of the holder
thereof be converted into one half of one share of Common Stock
(the "Post-Split Shares") based upon the reverse split ratio of
1 for 2, subject to the treatment of fractional share interests
as described below. Such conversion of Pre-Split Shares into
Post-Split Shares shall not change the par value per share of
the shares converted, which par value shall remain $.001 per
share. Each holder of a certificate or certificates, which
immediately prior to the Effective Date represented outstanding
Pre-Split Shares (the "Old Certificates," whether one or more),
shall be entitled to receive, upon surrender of such Old
Certificates to Securities Transfer Corporation, the Company's
exchange agent (the "Exchange Agent") for cancellation, a
certificate or certificates representing the number of whole
Post-Split Shares into which and for which the Pre-Split
Shares, formerly represented by such Old Certificates so
surrendered, are converted under the terms hereof (the "New
Certificates," whether one or more).
Section 2. No certificate or scrip representing fractional Post-Split
Shares will be issued, and no such fractional share interest
will entitle the holder thereof to vote, or to any rights of a
shareholder of the Company. A holder of Old Certificates shall
receive, in lieu of any fraction of a Post-Split Share to which
the holder would otherwise be entitled, a cash payment therefor
in an amount equal to the average of the last sale price of one
Pre-Split Share, as reported on the Nasdaq SmallCap Market for
the five business days immediately preceding the Effective Date
for which transactions in Pre-Split Shares are reported. If
more than one Old Certificate shall be surrendered at one time
for the account of the same shareholder, the number of full
Post-Split Shares for which New Certificates shall be issued
shall be computed on the basis of the aggregate number of
shares represented by the Old Certificates so surrendered. In
the event that the Exchange Agent becomes aware that a holder
of Old Certificates has not tendered all the holder's
certificates for exchange, the Exchange Agent shall carry
forward any fractional share until all certificates of that
holder have been presented for exchange such that payment for
fractional shares to any one holder shall not exceed the value
of one Pre-Split Share.
Section 3. If any New Certificate is to be issued in a name other than
that in which the Old Certificates surrendered for exchange are
issued, the Old Certificates so surrendered shall be properly
endorsed and otherwise in proper form for transfer, and the
person or persons requesting such exchange shall affix any
requisite stock transfer tax stamps to the Old Certificates
surrendered, or provide funds for their purchase, or establish
to the satisfaction of the Exchange Agent that such taxes are
not payable.
Section 4. From and after the Effective Date, the amount of capital
represented by the Post-Split Shares into which and for which
the Pre-Split Shares are converted under the terms hereof shall
be the same as the amount of capital represented by the
Pre-Split Shares so converted, until thereafter reduced or
increased in accordance with applicable law.
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Section 5. Before the vote by the shareholders to approve this Plan, the
Board of Directors shall have the authority to determine, in
its sole discretion, that it is in the best interest of the
Company to abandon the reverse stock split and this Plan.
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EPL TECHNOLOGIES, INC.
2 INTERNATIONAL PLAZA, SUITE 245
PHILADELPHIA, PENNSYLVANIA 19113-1507
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS
The undersigned hereby constitutes and appoints each of Paul L. Devine and
Timothy B. Owen, each of them acting individually, as proxy and attorney-in-fact
for the undersigned, with full power of substitution, to vote as designated
below on behalf of the undersigned at the Special Meeting of Shareholders to be
held on March 13, 1998 and at any postponement(s) or adjournment(s) thereof, all
shares of capital stock of the Company standing in the name of the undersigned
on February 20, 1998 or which the undersigned may be entitled to vote as
follows:
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED "FOR" THE REVERSE STOCK SPLIT DESCRIBED IN THE PROXY STATEMENT. THIS
PROXY HEREBY REVOKES ANY PROXY OR PROXIES HERETOFORE GIVEN BY THE UNDERSIGNED.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS AND PROXY STATEMENT OF EPL TECHNOLOGIES, INC. THIS PROXY IS
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
1. To approve the proposal of the Board of Directors to effect a 1-for-2 reverse
split of the Company's outstanding shares of Common Stock as described in the
accompanying Proxy Statement:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. In their discretion, the Proxies are authorized to vote upon such other
matters as may properly be presented incident to the conduct of the Special
Meeting, or any postponement or adjournment thereof.
(continued, and to be signed, on other side)
17
(continued from other side)
PLEASE SIGN YOUR NAME EXACTLY AS IT APPEARS ON YOUR STOCK CERTIFICATE, AND
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 OR PARTNERSHIP, PLEASE HAVE A DULY
AUTHORIZED OFFICER OR PARTNER SIGN IN THE FULL CORPORATE OR PARTNERSHIP NAME.
PLEASE RETURN THIS PROXY TO EPL TECHNOLOGIES, INC., 2 INTERNATIONAL PLAZA,
SUITE 245, PHILADELPHIA, PA 19113-1507 PRIOR TO MARCH 13, 1998 SO THAT YOUR
VOTES MAY BE COUNTED AT THE SPECIAL MEETING.
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PRINT SHAREHOLDER NAME
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DATE
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SIGNATURE OF SHAREHOLDER
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SIGNATURE OF SHAREHOLDER