SCHEDULE 14A
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:
|X| Preliminary Proxy Statement
|_| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
|_| Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
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:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
|_| Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
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 Friday, July 30, 1999, 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 directors to serve for the ensuing year and until their
respective successors shall have been duly elected and qualified;
2. to approve the issuance of certain shares of Common Stock upon
conversion of Series D Convertible Preferred Stock;
3. to approve an amendment to the preferences and rights of the Series D
Convertible Preferred Stock
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 June 29, 1999 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, 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 by
any shareholder of the Company prior to the Annual Meeting at the Company's
address shown above.
A copy of the Company's Annual Report for the fiscal year ended December
31, 1998, a copy of its report on Form 10-Q for the quarter ended March 31,
1999, a Proxy Statement and a proxy accompany this notice. It is expected that
these materials are first being sent to shareholders on or about June 30, 1999.
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. 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 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.
Bruce M. Crowell
Secretary
June____, 1999
EPL TECHNOLOGIES, INC.
2 International Plaza, Suite 245
Philadelphia, PA 19113
PROXY STATEMENT
Annual Meeting of Shareholders
To Be Held July 30, 1999
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 July 30, 1999 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 June 30,
1999. Such mailing also includes the Company's Annual Report for the year ended
December 31, 1998 ("1998") and its report on Form 10-Q for the quarter ended
March 31, 1999. 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
directors to serve for the ensuing year and until their respective successors
shall have been duly elected and qualified; (ii) to approve the issuance of
certain shares of Common Stock upon conversion of Series D Convertible Preferred
Stock (the "Series D Stock"); (iii) to approve an amendment to the preferences
and rights of the Series D Stock; 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") the four persons
nominated to serve as directors and described in this Proxy Statement, "FOR" the
issuance of certain shares of Common Stock upon conversion of Series D Stock,
and "FOR" the amendment to the preferences and rights of the Series D Stock.
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 Common
Stock, $0.001 par value per share (the "Common Stock") and the shares of Series
A 10% Cumulative Convertible Preferred Stock, $1.00 par value per share (the "A
Preferred Stock"), is necessary to constitute a quorum for consideration of the
matters to be voted upon at the Annual Meeting.
Only holders of record of shares of Common Stock and A Preferred Stock at
the close of business on June 29, 1999 (the "Record Date") will be entitled to
notice of, and to vote at, the Annual Meeting. As of the Record Date, there were
outstanding ___________ shares of the Company's Common Stock and 60,000 shares
of A Preferred Stock. Each share of A Preferred Stock is convertible into 0.667
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. Thus, as of the Record Date, there were a total of __________ 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 and the A Preferred Stock will
vote together as a class on all matters presented at the Annual Meeting.
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 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 "FOR" the nominees of the Board in the election
of directors, "FOR" the issuance of shares of Common Stock upon conversion of
the Series D Stock and "FOR" the amendment to the preferences and rights of the
Series D Stock.
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. The Company will
reimburse reasonable expenses incurred by record holders of Common Stock or A
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 of Common Stock and A Preferred Stock (on an
as-converted basis), voting together as a class, represented in person or by
proxy at the Annual Meeting. Shareholders entitled to vote will not have
cumulative voting rights. Approval of the proposals concerning the issuance of
shares of Common Stock upon conversion of the Series D Stock and the amendment
to the preferences and rights of the Series D Stock requires the favorable vote
of a majority of the shares of Common Stock and A Preferred Stock (on an
as-converted basis), voting together as a class, represented in person or by
proxy and entitled to vote at the Annual Meeting.
-2-
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, Robert D. Mattei, A. S. Clausi and W. Ward Carey. 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 which 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.
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 44 Chairman of the Board, 1992
President and Chief
Executive Officer
Robert D. Mattei 60 Director 1988
A. S. Clausi 77 Director 1998
W. Ward Carey 61 Director 1999
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. He 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.
Robert D. Mattei - Mr. Mattei is an investor and entrepreneur. Mr. Mattei
has been self-employed in various aspects of the food service industry for over
20 years. As a restaurateur, Mr. Mattei has developed, operated and sold many
successful operations. Mr. Mattei currently owns three restaurants and acts as
an industry consultant, involved primarily in the development of restaurant
concepts. Mr. Mattei has been a member of the Board of the Company since
February 1988, was Secretary of the Company from February 1988 to March 1993 and
is also a member of the Audit, Compensation and 1994 Stock Incentive Plan
Administrative Committees of the Board of Directors.
-3-
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 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.
Meetings and Committees of the Board of Directors
The Board held seven meetings during 1998 and also acted by unanimous
written consent. The Board currently has an Audit Committee, a Compensation
Committee and the 1994 Stock Incentive Plan ("1994 Plan") Administration
Committee, but does not have a nominating committee. During 1998, the Audit,
Compensation and 1994 Plan Administration Committees were comprised of Mr.
Mattei and a former director, Mr. Ronald W. Cantwell, together with Mr A. S.
Clausi subsequent to his appointment in March 1998. Following Mr. Cantwell's
resignation from the Board in May 1998, the Audit, Compensation and 1994 Plan
Committees were comprised of Mr. Mattei and Mr. Clausi. The board as a whole
serves as the administrative committee for the 1998 Stock Incentive Plan ("1998
Plan"). The Audit Committee met once, the Compensation Committee met once and
the 1994 Plan Administration Committee held two meetings in 1998. The 1998 Plan
Administrative Committee did not meet in 1998. Each incumbent director who
served on the Board during the full 1998 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 1998 Plan,
together with the Company's 1993 NonQualified Stock Option Plan.
-4-
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, 1998. In May 1998, in accordance with the terms of the
Company's 1994 Plan, Robert D. Mattei, A. S. Clausi and former director Ronald
W. Cantwell were each granted an option to acquire 7,500, 625 and 7,500 shares
respectively of Common Stock at an exercise price of $12.875 per share, for
their services as members of the Audit and Compensation Committees. In May 1999,
Mr. Mattei, Mr. Clausi and Mr. Carey were each granted an option to acquire
7,500, 7,500 and 1,875 shares of Common Stock at an exercise price of $3.875 per
share for their services as members of such committees. In June 1999, in
accordance with the terms of the Company's 1998 Plan, Mr. Mattei, Mr. Clausi and
Mr. Carey were each granted an option to acquire 7,500, 7,500 and 3,125 shares
of Common Stock respectively at an Exercise Price per share of 110% of the
market price on June 25, 1999 for their servicers as members of such committees.
These options are exercisable for five-year terms and have exercise prices equal
to the fair market value of such shares on the date of grant.
In addition, in March 1999, Mr. Carey and Mr. Clausi were both granted an
option to acquire 50,000 shares of Common Stock each, at an exercise price of
$4.6063 per share. These options, which were granted under the 1998 Plan, 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.
-5-
SECURITY OWNERSHIP OF PRINCIPAL SHAREHOLDERS 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. The table also sets forth certain information as of
the Record Date regarding beneficial ownership of the Company's Series A
Preferred Stock, each share of which is convertible into Common Stock and is
entitled to the number of votes equal to the number of whole shares of Common
Stock into which each such share is convertible. The Convertible Series D
Preferred Stock is not a class of voting securities. 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.
COMMON STOCK Shares Percent
Beneficially of
Name of Beneficial Owner Owned (1) Common
- --------------------------------------------------------------------------------
Lancer Partners, L.P. 1,788,505(2) 15.02%
Trilon Dominion Partners, L.L.C. 1,120,000(3) 9.41%
Paul L. Devine 370,416 3.11%
Robert D. Mattei 199,483(4) 1.67%
Al Clausi 0 *
W. Ward Carey 15,300(5) *
Bruce Crowell 6,500 *
William R. Romig 17,500(6) *
Antony E. Kendall 1,000 *
Timothy B. Owen 57,000(7) *
Directors and executive officers
as a group (10 persons) 692,449(8) 5.77%
Total number of shares 11,905,509 100.00%
outstanding - common
Shares of common stock
issuable upon conversion of
Series A Preferred 40,000(11) *
* 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. Specifically, out of money options are not included in this
ownership table. 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 current filings with the
Securities and Exchange Commission, pursuant to sections 13(d) and 13(g) of
the Securities Exchange Act of 1934, as amended, as of the mailing date of
this Proxy Statement, and the records of the Company.
-6-
(2) 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.
(3) The address for Trilon Dominion Partners, L.L.C. is Two Greenwich Plaza,
Suite 100, Greenwich, CT 06830.
(4) Includes 7,500 shares of Common Stock that may be acquired by exercising
currently vested and exercisable options to acquire shares of Common Stock
and 10,000 shares of Common Stock owned by Mr. Mattei's wife, as to which
he disclaims beneficial ownership.
(5) Includes 5,000 shares of Common Stock owned by Mr. Carey's wife, as to
which he disclaims beneficial ownership.
(6) Amount shown represents only shares of Common Stock that may be acquired by
exercising currently vested and exercisable options.
(7) Includes 37,500 shares of Common Stock that may be acquired by exercising
currently vested and exercisable options.
(8) Includes 87,500 shares of Common Stock that may be acquired by exercising
currently vested and exercisable options.
(11) As of the record date there were a total of 60,000 shares of Series A
Preferred Stock outstanding, beneficially held as follows: 50,000 or 83.34%
held by Dr. Joe Cherry, whose address is 320 Cardinal Heights, Dadeville,
AL; 5,000 or 8.33% held by J. Matthew Dalton, whose address is 1232 W.
George Street, Chicago, IL 60657; and 5,000 or 8.33% held by Verne
Scazzero, whose address is 1414 South Priarie Av., Chicago, IL 60605.
-7-
EXECUTIVE COMPENSATION
The following table sets forth the aggregate compensation (cash and
non-cash, plan and non-plan) paid by the Company during 1998 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
------------------- ---------------------------
All
Restricted Other
Other Stock Options/ LTIPC Compen-
Name and Salary Bonus Compensation Award(s) SARs Payouts sation
Principal Position Year ($) ($) ($) ($) (#) ($) ($)
- ----------------------------------------------------------------------------------------------------------------
Paul L. Devine 1998 275,000 0 2,872 0 0 0 0
Chairman, President 1997 225,000 225,000 0 0 100,000 0 0
and Chief Executive 1996 225,000 210,978 0 0 250,000 0 0
Officer
Jose Saenz de Santa Maria 1998 133,600 13,360 25,593(1) 0 52,500 0 0
Managing Director 1997 0 0 32,895(1) 0 0 0 0
Fabbri Artes Graficas 1996 0 0 0 0 0 0 0
Valencia S.A.
Bruce M. Crowell 1998 157,500 0 0 0 100,000 0 0
Vice President 1997 0 0 0 0 0 0 0
Chief Financial Officer 1996 0 0 0 0 0 0 0
Antony E. Kendall 1998 137,423 0 12,788(2) 0 20,000 0 0
Chief Executive 1997 125,470 8,200 13,089(2) 0 25,000 0 0
EPL Flexible 1996 47,839 0 2,470(2) 0 50,000 0 0
Packaging Ltd
William R. Romig 1998 120,000 0 0 0 0 0 0
Senior Vice President, 1997 105,750 14,075 1,634 0 75,000 0 0
Science & Technology 1996 94,089 5,000 0 0 87,500 0 0
Timothy B. Owen 1998 120,000 0 0 0 0 0 0
Treasurer 1997 105,000 40,000 0 0 50,000 0 0
1996 90,000 5,000 0 0 57,500 0 0
(1) assumes an exchange rate of $1:PTS149.70 for 1998 and $1: PTS152.10
for 1997.
(2) assumes an exchange rate of (pound)1:$1.65.
-8-
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information concerning individual grants of
stock options made by the Company during 1998 to each of the Named Executive
Officers.
Individual Grants
------------------------------------------------------
% of Potential Realizable Value at
Shares Total Options Assumed Annual Rates of
Underlying Granted to Stock Price Appreciation for
Options Employees in Exercise Expiration Option Term(5 Years)(1)
------------------------------
Name Granted Fiscal Year Price Date 0% 5% 10%
- --------------------------------------------------------------------------------------------------------------------
Paul L. Devine - - - - - - -
Jose Saenz de Santa Maria 17,500 4.41 14.00 01/09/2003 0 0 0
Jose Saenz de Santa Maria 27,500 8.82 5.625 01/09/2003 0 0 0
Bruce Crowell 100,000 25.21 11.125 03/10/2003 0 0 0
Antony E. Kendall 20,000 5.04 5.625 09/29/2003 0 0 0
Timothy B. Owen - - - - - - -
William R. Romig - - - - - - -
(1) The dollar amounts under these columns are the result of calculations at
0%, 5% and 10% annual growth rates set by the Securities and Exchange
Commission and therefore are not intended to forecast possible future
appreciation, if any, of the price of the Common Stock. All such options
were granted pursuant to the 1994 Plan.
AGGREGATED OPTION EXERCISES IN LAST FISCAL
YEAR AND FISCAL YEAR-END OPTION VALUES(1)
The following table sets forth certain information concerning exercises by
Named Executive Officers of options to purchase Common Stock during the year
ended December 31, 1998 and the value of unexercised stock options held by Named
Executive Officers as of such date.
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options Options at
at December 31, 1998 December 31, 1998(2)
Shares ----------------------------------------------
Acquired Value Unexer- Unexer-
Name on Exercise Realized($) Exercisable cisable Exercisable cisable
- -------------------------------------------------------------------------------------------------------------
Paul L. Devine 0 0 400,000 0 $37,500 0
Jose Saenz de Santa Maria 0 0 45,000 0 0 0
Bruce Crowell 5,000(1) 5,625 95,000 0 0 0
Antony E. Kendall 0 0 95,000 0 0 0
William R. Romig 0 0 180,000 0 21,875 0
Timothy B. Owen 0 0 170,000 0 65,625 0
(1) None of the shares underlying the exercised options had been sold as at
December 31, 1998.
(2) 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 National Market,
on December 31, 1998, multiplied by the number of options held. At December
31, 1998, the closing price of a share of Common Stock on the Nasdaq
National Market was $4.75.
-9-
Employment and Consulting Contracts
Mr. Devine and the Company are parties to an employment agreement dated as
of January 1, 1997 which 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 which, as of January 1, 1997, was $275,000 per year.
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) by the Company until age fifty. 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 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) in the event of a "change of
control" of the Company (as defined in the agreement). This agreement also
contains certain customary provisions regarding confidentiality and
non-competition.
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 entered into an employment agreement with Mr. Crowell effective
February 18, 1998, under which Mr. Crowell will serve as Vice President and
Chief Financial Officer. The contract has an initial term of two years with
annual renewal terms thereafter. Either party may terminate the agreement upon
four weeks notice. If the Company terminates Mr. Crowell's employment without
cause, or the initial or any renewal term expires without being renewed, Mr.
Crowell will receive an amount paid in monthly installments, equal to his annual
base salary (and bonus, if any) earned in the previous twelve months. The
initial annual salary is $180,000, with a bonus of up to 35% of the salary based
upon the achievement of agreed-upon objectives. In addition to customary
provisions on vacation and healthcare coverage, the agreement also provides for
-10-
relocation expenses. The agreement further provides that, in the event of a
termination of employment by either party due to a change in control (as defined
in the agreement), Mr. Crowell 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. Mr. Crowell was also awarded
options to purchase 100,000 shares of Common Stock, which vested on the date of
the agreement.
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 and has been increased to (pound)83,000 ($137,000 at an exchange rate
of (pound)1:$1.65) as of July 1, 1997, together with 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 is $120,000, with a bonus of up to
25% of the salary based upon the achievement of agreed-upon objectives. 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.
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
-11-
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 was administered by the administration committees appointed by the
Board of Directors, which are currently comprised of Robert D. Mattei and Adolph
S. Clausi. The 1998 Plan is administered by the Board as a whole. The committees
generally have the discretion to determine the number of shares subject to each
award, and other applicable terms and conditions, including a grant's 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.
No options under the 1998 Plan had been awarded as of December 31, 1998. 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, 1999 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.
-12-
Compensation Committee Interlocks and Insider Participation
The members of the Company's Compensation Committee during fiscal 1998 were
Mr. Mattei, who served for the entire year, Mr. Cantwell, who served until his
resignation in May 1998, and Mr. Clausi who was elected to the committee in
March 1998. Mr. Cantwell, a former director of the Company, is the President of
Trilon Dominion Partners LLC ("Trilon"), a major shareholder of the Company, and
President of VC Holdings, the sole managing member of Trilon. None of Mr.
Mattei, Mr. Cantwell or Mr. Clausi were officers or employees of the Company or
any of its subsidiaries during 1998. Mr. Mattei was Secretary of the Company
from February 1988 to March 1993. Except as disclosed under "Item 13 - Certain
Transactions," none of the members of the Compensation Committee nor any of
their affiliates entered into any transactions with the Company during 1998.
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, 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
-13-
Executive Officer, the Committee noted that the Company's 1998 sales increased
by 65% from $19,953,000 in 1997 to $32,978,000, total assets grew from
$26,200,000 to $29,772,000, the Company had completed a public offering
underwritten by Prudential Securities, which had (i) facilitated the orderly
disposal of the majority of the holding of Trilon Dominion LLC,(ii) raised
further funds for the Company, (iii) resulted in analyst coverage for the
Company, (iv) raised the Company's corporate profile and (v) allowed the Company
to progress to the Nasdaq National Market, the Company executed a twenty-year
exclusive trademark sublicense agreement (subject to extension) with The Sholl
Group for the use of the Green Giant(R) Fresh brand on fresh-cut corn products,
the Company entered into a joint venture with American National Can to market
flexible packaging systems for the fresh produce market in the US, built a new
state-of-the-art fresh corn processing facility in Camarillo, California, which
was approved by The Sholl Group, on behalf of the Pillsbury Company, and
relocated its existing west coast corn and potato processing activities there,
and that the Company had further developed its strategic alliance with
Farmington Fresh to license its Apple Fresh(R) processing aids in connection
with the production by Farmington Fresh of certain varieties of fresh-cut sliced
apples. In addition, during 1998 the Company received confirmation of patent
approval for technologies designed to (i) eliminate the use of ice in shipping
boxes of processed broccoli and (ii) inhibit the enzymatic browning of fresh
whole peeled potatoes. In addition, US patent protection has been obtained
during 1998 for a processing technology developed by the Company in
collaboration with Penn State University for use on freshly harvested mushrooms.
The satisfaction of certain performance criteria and qualitative criteria,
considered 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 the
Company's 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
June 17, 1999
Robert D. Mattei
A. S. Clausi
-14-
STOCK PERFORMANCE GRAPH
The following graph compares the percentage change in cumulative total
stockholder return on the Common Stock since December 30, 1995 to December 31,
1998 (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 31, 1995 in the
Common Stock and in each of the indices and assumes reinvestment of dividends,
if any, from that date to December 31, 1998. The Company has not paid cash
dividends on the Common Stock. Historic stock prices are not indicative of
future stock price performance. (1)
[GRAPHIC OMITTED]
- --------------------------------------------------------------------------------
Total Return Analysis 12/31/95 12/31/96 12/31/97 12/31/98
- --------------------------------------------------------------------------------
EPL Technologies, Inc. $100.00 $156.45 $158.06 $61.29
- --------------------------------------------------------------------------------
Nasdaq Non-Financial $100.00 $121.49 $142.54 $208.77
- --------------------------------------------------------------------------------
Nasdaq Composite (US) $100.00 $122.97 $150.86 $212.08
- --------------------------------------------------------------------------------
(1) Since May 1998, the Common Stock has traded on the Nasdaq Stock Market's
National Market. Prior to this, from July 1996 to May 1998, the Common
Stock traded on the Nasdaq Stock Market's SmallCap Market. From September
1995 to July 1996, the Common Stock traded on the National Association of
Securities Dealers "bulletin board." Prior to September 1995, the Common
Stock traded on the National Quotation Bureau "pink sheets."
-15-
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
On May 15, 1998 the Company completed the public offering of 2,400,000
shares of its common stock (the "Offering"), of which 809,097 shares were sold
by the Company and 1,590,903 were sold by Trilon. In connection with the
Offering, Trilon converted 1,933,000 shares of the Company's Series A Stock into
1,288,667 shares of common stock, leaving 90,000 shares of Series A Stock issued
and outstanding as at June 30, 1998. The Offering price was $10.00 per share of
common stock. The Company and Trilon agreed to apportion the expenses of the
Offering, Trilon paying $1,011,000 and the Company paying $1,420,000. The
Company and Trilon also have agreed to indemnify each other from certain
liabilities in connection with the Offering, including liabilities under the
Securities Act.
Mr. Cantwell, a former director of the Company, is the President of Trilon
and President of VC Holdings, the sole managing member of Trilon.
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 $475,000 is outstanding
as of the date of this Proxy Statement. The Company's obligations under this
facility are unsecured, and amounts outstanding thereunder bear interest at a
rate of nine percent (9%) per annum and are due on the earlier to occur of (a)
demand for payment and (b) June 30, 1999. 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 26, 1999, the Company granted, under the 1998 Plan, to each of Al S.
Clausi and W. Ward Carey options to purchase 50,000 shares of Common Stock at
$4.6063, an exercise price which represents 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.
-16-
PROPOSAL NO. 2 - TO APPROVE THE ISSUANCE OF
CERTAIN SHARES OF COMMON STOCK UPON CONVERSION OF
SERIES D CONVERTIBLE PREFERRED STOCK
At the Annual Meeting you will be asked to approve the issuance of shares
of the Company's Common Stock required to be issued upon the conversion of the
Company's Series D Stock. The total number of shares of Common Stock that may be
issued upon the conversion of all of the Series D Stock is unknown because the
conversion price of the Series D Stock is based on the prevailing market price
of the Common Stock at the time of conversion.
Background
In November 1997, the Company issued 12,500 shares of Series D Stock. The
Series D Stock carries the option to convert into shares of Common Stock at a
variable rate, based on the stated value ($1,000) divided by 94% of the
prevailing market price of the Common Stock at the time of conversion, as
calculated based on the lowest five-day average closing bid price per share of
Common Stock during a specified time period, and subject to certain limitations.
The terms of the Series D Stock limit the number of shares of Common Stock into
which the Series D Stock is convertible to 19.99% of the Company's outstanding
Common Stock at the conversion date if the Company has not obtained approval of
the Company's shareholders for that issuance of Common Stock. The Series D Stock
also contains a provision whereby the stated value of the Series D Stock is to
increase by 4% per annum, accruing from the date of issuance until conversion.
As at March 31, 1999, 1,600 of these shares had been converted, leaving 10,900
outstanding.
The Board of Directors authorized the sale of the Series D Stock in order
to raise proceeds which were applied principally towards corporate development,
including the acquisition of Fabbri Artes Graficas Valencia SA. The terms of the
Series D Stock are discussed in Note 9 to the Company's Consolidated Financial
Statements, which are included in the Annual Report on Form 10-K enclosed with
this proxy statement. Copies of the relevant documents for the issuance of the
Series D Stock were filed as exhibits to the Company's Report on Form 10-Q for
the period ended September 30, 1997.
Nasdaq Rule 4460
Rule 4460 of the Nasdaq Stock Market sets forth certain corporate
governance standards for issuers, such as the Company, whose securities are
listed on the Nasdaq National Market. Rule 4460 requires, among other things,
that the Company obtain shareholder approval for the sale or issuance of a
number of shares of Common Stock (or securities convertible into or exchangeable
for shares of Common Stock, such as the Series D Stock) equal to or in excess of
20% of the number of shares of Common Stock outstanding prior to such issuance
if such issuance is for a purchase price which is less than the greater of the
book or market value of the shares of Common Stock.
-17-
On the date the Series D Stock was issued (the "Series D Closing Date),
there were 8,978,150 shares of Common Stock outstanding and one share less than
20% of such number of shares is 1,795,629. The Series D stock, plus 4% per annum
accretion on the stated value, have been converted into 415,133 shares of Common
Stock, leaving 1,380,496 shares of Common Stock available for issuance upon
conversion of the balance of the Series D Stock in compliance with Rule 4460 at
the time of issuance of the Series D Stock. As of June 18, 1999 the total number
of shares of the Company's Common Stock into which the 10,900 outstanding shares
of Series D Stock were convertible was 3,290,438 shares, which would have
represented 21.64% of the total number of shares of Common Stock then
outstanding on that date. Given the initial conversion price of the Series D
Stock, the Company was not required to obtain shareholder approval for the
issuance of the Series D Stock. However, the conversion right of the investors
was structured so that at any time a conversion would comply with Rule 4460 and
therefore shareholder approval is now required.
Accordingly, the rights of the Series D Stock provide that if on any
conversion date the conversion of all the outstanding Series D Stock, together
with all shares of Common Stock previously issued upon conversion of the Series
D Stock, would require the issuance of a number of shares of Common Stock equal
to or in excess of 20% of the number of shares of Common Stock outstanding on
the Series D Stock Closing Date, the Company is required, at its option, either
to redeem all of such holder's unconverted Series D Stock (at 115% of the stated
value as increased for the 4% per annum accretion amount) or, after obtaining
shareholder approval, to convert such Series D Stock into shares of Common
Stock.
Because the redemption amount depends on the date on which the Company pays
the redemption amount in full and such date is not known, the Company cannot
determine at this time the amount it may have to pay to redeem any such
outstanding Series D Stock. Were it to use any of its available liquidity to
redeem any such Series D Stock, the Company would diminish its cash position,
depriving itself of necessary resources for ongoing operations and future
development. If the Company had redeemed the remaining Series D Stock on June
18, 1999, the Company would have paid the remaining investors approximately
$11,599,000.
Reasons for the Proposal and vote required
The Board of Directors of the Company believes that the redemption of any
of the Series D Stock has the potential to severely diminish the Company's
existing working capital. Alternatively, if the Company does not obtain
shareholder approval necessary to issue the shares in excess of the limits of
Rule 4460, and the Company nevertheless issues such shares, the Company could be
delisted from the Nasdaq National Market. The Board of Directors believes that
the potential adverse consequences of a failure of the shareholders to approve
this proposal far outweigh the possible dilutive effect of approval of the
proposal. Therefore, in order to protect the Company's working capital and
preserve the liquidity of the investment of its shareholders in the shares of
Common Stock, the Board of Directors has determined that approving under Rule
4460 the issuance to the investors of 20% or more of the outstanding shares of
Common Stock at less than the greater of market or book value required to be
issued upon the conversion of all of the outstanding Series D Stock is advisable
and in the best interest of the Company and its shareholders.
-18-
The affirmative vote of the holders of a majority of the votes cast by the
shareholders at the Annual Meeting, in person or by proxy, is required for the
approval of the issuance pursuant to Rule 4460 of the shares of Common Stock
required to be issued.
The Board of Directors recommends that the shareholders vote "FOR" the
adoption of this proposal.
-19-
PROPOSAL NO. 3 - TO APPROVE AN AMENDMENT TO
THE PREFERENCES AND RIGHTS OF THE SERIES D PREFERRED STOCK
At the Annual Meeting, you will be asked to vote to approve an amendment to
the preferences and rights of the Company's Series D Stock. The Company
previously filed with the Colorado Secretary of State a Certificate of
Designation, Number, Voting Powers, Preferences and Rights of the Series of the
Preferred Stock of the Company to Be Designated as Series D Convertible
Preferred Stock. That Certificate amended, and became a part of, the Company's
Articles of Incorporation and therefore the Company's shareholders must approve
any changes to the preferences and rights of the Series D Stock. The Board
approved the amendment on ____________, 1999 and the holders of the Series D
Stock approved the amendment on _________________, 1999.
Reasons for the Proposal and vote required
The Company currently is required to classify the Series D Stock separately
from stockholders equity on the Company's balance sheet because the preferences
and rights of the Series D Stock contain provisions that result in mandatory
redemption of the Series D Stock upon the occurrence of certain events beyond
the Company's control. The Board believes it is in the best interests of the
Company to amend the rights and preferences to permit us to reclassify the
Series D Stock with other stockholder's equity. Additionally, if the Series D
Stock is not reclassified as equity on the Company's balance sheet, the Company
may be unable to satisfy the net tangible asset requirement of the Nasdaq Stock
Market for companies' whose securities are listed on the Nasdaq National Market.
The Company has received a letter from the Nasdaq Stock Market informing the
Company that the Company may be delisted from the Nasdaq National Market because
they consider the Series D Stock as part of total liabilities in their
calculation of net tangible assets as opposed to equity and the Company
therefore may not satisfy the Nasdaq National Market net tangible asset
requirement.
The preferences and rights of the Series D Stock currently provide that in
the event that the Company shall fail to maintain the listing of its Common
Stock on the Nasdaq SmallCap Market, the Nasdaq National Market, the New York
Stock Exchange or the American Stock Exchange and such failure shall remain
uncured for at least ten days then at the option of one or more holders of the
then outstanding shares of Series D Stock may require the Company to redeem
those holders' shares of Series D Stock in accordance with the terms of the
preferences and rights of the Series D Stock. The preferences and rights of the
Series D Stock also provide that the Company must automatically redeem the
shares of Series D Stock if (i) the Company shall make an assignment for the
benefit of creditors, or apply for or consent to the appointment of a receiver
or trustee for it or for all or substantially all of its property or business;
or such a receiver or trustee shall otherwise be appointed; or (ii) bankruptcy,
insolvency, reorganization or liquidation proceedings or other proceedings for
relief under any bankruptcy or any law for the relief of debtors shall be
instituted by or against the Company or any subsidiary of the Company and shall
be unstayed for a period of 45 days. The amendment to the preferences and rights
of the Series D Stock will delete the provisions requiring the redemption of the
Series D Stock in the above-referenced events.
-20-
The amendment to the preferences and rights of the Series D Stock will also
permit the owners of the Series D Stock to convert their shares into Common
Stock at a conversion price equal to 82% of the average of the closing bid
prices of the Company's Common Stock for any five consecutive trading days in
the 25 trading day period ending one trading day prior to the conversion date of
the Series D Stock in the event that the Common Stock is no longer listed on the
Nasdaq SmallCap Market, the Nasdaq National Market, the New York Stock Exchange,
or the American Stock Exchange and the Company has not cured such failure within
at least ten days.
If the amendment to the rights and preferences of the Series D Stock is
approved by the Company's shareholders at the Annual Meeting, the Company has
been informed by its independent auditors that the Company may reclassify the
Series D Stock as equity on the Company's balance sheet. The affirmative vote of
the holders of a majority of the votes cast by shareholders at the Annual
Meeting, in person or by proxy, is required for the approval of the amendment to
the preferences and rights of the Series D Stock.
The Board of Directors recommends that the shareholders vote "FOR" the
adoption of this proposal.
-21-
INDEPENDENT AUDITORS
Deloitte & Touche LLP, independent auditors, audited the financial
statements of the Company for the fiscal year ended December 31, 1998.
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, 1999.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT 1934
Section 16(a) of the Exchange Act 1934 requires that the Company's
directors, officers (including a person performing a principal policy-making
function) 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 1998 its directors, officers and 10% Holders complied with
all filing requirements under Section 16(a) of the Exchange Act.
SHAREHOLDER PROPOSALS - 2000 ANNUAL MEETING
Under 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 2000 must be received by March 3, 2000 in order to be considered
for inclusion in the Company's Proxy Statement and form of proxy relating to
that annual meeting. Alternatively, shareholders who submit a proposal for
consideration by the Company outside of the processes established by Rule 14a-8
must do so by June 16, 2000 or face the possibility that management proxies may
use their discretionary voting authority if and when any such proposal is raised
at the 2000 Annual Meeting of Shareholders, without any discussion of the matter
at the meeting. If the 2000 Annual Meeting date is more than 30 days subsequent
to the anniversary of the 1999 Annual Meeting date, the Company will disclose
changes in the March 3 and June 16 deadlines above 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, which 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.
-22-
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following information is incorporated by reference into this Proxy
Statement: (i) "Item 1. Financial Statements" and "Item 2. Management's
Discussion and Analysis of Financial Condition and Results of Operations" from
the Company's Form 10-Q for the quarter ended March 31, 1999 and (ii) "Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations," "Item 7A. Quantitative and Qualitative Disclosure About Market
Risk" and "Item 8. Financial Statements and Supplementary Data" included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1998.
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,
Bruce M. Crowell
Secretary
June ___, 1999
-23-
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 Bruce M.
Crowell, 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 June 29, 1999, which the undersigned would be
entitled to vote at the Annual Meeting of Shareholders to be held on July 30,
1999, (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 _______ _______
Robert D. Mattei _______ _______
A. S. Clausi _______ _______
W. Ward Carey _______ _______
2 - Proposal to approve the issuance of certain shares of Common Stock upon
conversion of Series D Convertible Preferred Stock
_______ For _______ Against _______ Abstain
3 - Proposal to approve the amendment to the preferences and rights of the
Series D Convertible Preferred Stock
_______ 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" THE FOUR PERSONS NOMINATED BY THE BOARD OF DIRECTORS TO SERVE AS
DIRECTORS OF THE COMPANY AS SET FORTH ABOVE, "FOR" THE ISSUANCE OF CERTAIN
SHARES OF COMMON STOCK UPON CONVERSION OF SERIES D CONVERTIBLE PREFERRED STOCK
AND "FOR" THE AMENDMENT TO THE PREFERENCES AND RIGHTS OF THE SERIES D
CONVERTIBLE PREFERRED STOCK. 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, PROXY STATEMENT AND
SUPPLEMENT TO NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENT OF
EPL TECHNOLOGIES, INC. THE BOARD IS NOT CURRENTLY AWARE OF ANY MATTERS EXPECTED
TO COME BEFORE THE MEETING OTHER THAN THE ELECTION OF DIRECTORS, CONSIDERATION
OF ISSUANCE OF CERTAIN SHARES OF COMMON STOCK UPON CONVERSION OF SERIES D
CONVERTIBLE PREFERRED STOCK AND CONSIDERATION OF THE AMENDMENT TO THE
PREFERENCES AND RIGHTS OF THE SERIES D CONVERTIBLE PREFERRED STOCK.
-24-
- -------------------------------- --------------------------
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 July 30, 1999 so that your
votes may be counted at the Annual Meeting.
-25-