<PAGE> 1
As filed with the Securities and Exchange Commission on October 11, 1996.
Registration No. 333-09719
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
-------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------
EPL TECHNOLOGIES, INC.
(Exact Name of Registrant as Specified in Its Charter)
Colorado 84-0990658
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
2 International Plaza, Suite 245
Philadelphia, Pennsylvania 19113-1507
(610) 521-4400
(Address, Including Zip Code, and Telephone Number, Including
Area Code, of Registrant's Principal Executive Offices)
PAUL L. DEVINE
Chairman, President and Chief Executive Officer
EPL Technologies, Inc.
2 International Plaza, Suite 245
Philadelphia, Pennsylvania 19113-1507
(610) 521-4400
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
-------------------
Copy to:
RAYMOND D. AGRAN, ESQ.
BALLARD SPAHR ANDREWS & INGERSOLL
1735 Market Street, 51st Floor
Philadelphia, Pennsylvania 19103-7599
(215) 665-8500
--------------------------------------
Approximate date of commencement of proposed sale to the public: From time
to time after this Registration Statement becomes effective.
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box: [x]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF ADDITIONAL REGISTRATION FEE(2)
<TABLE>
<CAPTION>
====================================================================================================================================
Title of Each Class of Proposed Maximum Proposed Maximum
Securities to Be Amount to Offering Price Aggregate Amount of
Registered Be Registered Per Share(1) Offering Price Registration Fee
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock ($.001 par value) 524,117 shares $6.0625 $3,177,459 $1,096
- - ------------------------------------------------------------------------------------------------------------------------------------
Common Stock underlying Warrants 22,650 shares $6.0625 $ 137,316 $ 47
- - ------------------------------------------------------------------------------------------------------------------------------------
Common Stock issuable upon
conversion of Preferred Stock 385,249 shares $6.0625 $2,335,572 $ 805
- - ------------------------------------------------------------------------------------------------------------------------------------
Total 932,016 shares $6.0625 $5,650,347 $1,948
====================================================================================================================================
</TABLE>
(1) Calculated in accordance with Rule 457(c) on the basis of the average of
the high and low price for the Registrant's Common Stock on October 4,
1996.
(2) The registration fee with respect to the additional 11,851,995 shares
of Common Stock registered pursuant to this Registration Statement was
paid on August 7, 1996.
-------------------
The Registrant hereby amends this Registration Statement on such
date or dates as may be necessary to delay its effective date until the
Registrant shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until this Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
================================================================================
<PAGE> 2
***************************************************************************
* *
* Information contained herein is subject to completion or amendment. *
* A registration statement relating to these securities has been filed *
* with the Securities and Exchange Commission. These securities may *
* not be sold nor may offers to buy be accepted prior to the time the *
* registration statement becomes effective. This prospectus shall not *
* constitute an offer to sell or the solicitation of an offer to buy nor *
* shall there be any sale of these securities in any State in which *
* such offer, solicitation or sale would be unlawful prior to *
* registration or qualification under the securities laws of any such *
* State. *
* *
***************************************************************************
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED OCTOBER 11, 1996
PROSPECTUS
12,784,011 Shares
EPL TECHNOLOGIES, INC.
Common Stock
(par value $.001 per share)
This Prospectus relates to 12,784,011 shares (the "Shares") of
common stock, par value $.001 per share ("Common Stock"), of EPL Technologies,
Inc., a Colorado corporation (the "Company"), which may be offered for sale
from time to time by certain shareholders of the Company (the "Selling
Shareholders"), or by their respective pledgees, donees, transferees or other
successors in interest, to or through underwriters or directly to other
purchasers or through agents, in one or more transactions, at varying prices
determined at the time of sale or at negotiated prices (the "Offering"). See
"PLAN OF DISTRIBUTION."
293,334 of the Shares are issuable to Selling Shareholders by the
Company pursuant to the terms of certain outstanding warrants (the "Warrants").
45,000 of the Shares are issuable to Selling Shareholders by the Company
pursuant to the terms of certain outstanding options (the "Options").
3,173,333 of the Shares are issuable to Selling Shareholders by the Company
upon conversion of outstanding shares of the Company's Series A 10% Cumulative
Convertible Preferred Stock (the "Series A Preferred Stock"). 531,915 of the
Shares are issuable to Selling Shareholders by the Company upon conversion of
outstanding shares of the Company's Series B 10% Cumulative Convertible
Preferred Stock (the "Series B Preferred Stock"). Although the Company will
receive the exercise price of any Warrants or Options which are exercised, the
Company will not receive any of the proceeds from the sale of any Shares by the
Selling Shareholders. The expenses of registration of the Shares which may be
offered hereby under the Securities Act of 1933, as amended (the "Securities
Act"), will be paid by the Company.
The Common Stock is traded on the Nasdaq Small Cap Market under the
symbol "EPTG". On October 4, 1996, the closing price of the Common Stock was
$6.0625.
SEE "RISK FACTORS" BEGINNING ON PAGE 4 FOR INFORMATION THAT SHOULD
BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE SECURITIES OFFERED HEREBY.
--------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS OCTOBER __, 1996
<PAGE> 3
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY, THE SELLING SHAREHOLDERS OR ANY OTHER PERSON. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH AN OFFER IN SUCH JURISDICTION. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS
OF THE COMPANY SINCE SUCH DATE.
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TABLE OF CONTENTS
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Page
----
<TABLE>
<S> <C>
AVAILABLE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE . . . . . . . . . . . . . . 3
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SELLING SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
LEGAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
</TABLE>
2
<PAGE> 4
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Reports, proxy
statements and other information concerning the Company filed with the
Commission may be inspected and copied at the public reference facilities
maintained by the Commission at its office at Room 1024, 450 Fifth Street,
N.W., Washington, D.C. 20549, as well as at the Regional Offices of the
Commission at Citicorp Center, 300 West Madison Street, Chicago, Illinois
60661, and Seven World Trade Center, New York, New York 10048. Copies of such
material can be obtained from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. Shares of
the Company's Common Stock are traded on the Nasdaq Small Cap Market.
The Company has filed a registration statement on Form S-3 (herein,
together with all amendments and exhibits thereto, the "Registration
Statement"), under the Securities Act with respect to the securities offered
pursuant to this Prospectus. This Prospectus does not contain all of the
information set forth in the Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the Commission. For
further information, reference is made to the Registration Statement and the
exhibits filed as a part thereof. Statements contained herein concerning any
document filed as an exhibit are not necessarily complete and, in each
instance, reference is made to the copy of such document filed as an exhibit to
the Registration Statement. Each such statement is qualified in its entirety
by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission pursuant to the
Exchange Act (File No. 0-28444) are hereby incorporated by reference into this
Prospectus: (a) the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995, as amended by Form 10-K/A, (b) the Company's Quarterly
Reports on Form 10-Q for the quarters ended March 31, 1996 and June 30, 1996,
(c) the Company's Current Reports on Form 8-K dated February 20, 1996, July 12,
1996, July 19, 1996 and September 13, 1996, (d) the Company's Current Report on
Form 8-K dated September 19, 1995, as amended on November 14, 1995 and (e) the
description of the Common Stock contained in the Company's Registration
Statement on Form 8-A dated April 30, 1996.
All other documents filed by the Company pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the Offering pursuant to this
Prospectus shall be deemed to be incorporated by reference and to be a part of
this Prospectus from the date of filing of such documents. Any statement
contained in a document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a
copy of this Prospectus is delivered, upon oral or written request of any such
person, a copy of any or all of the documents incorporated herein by reference,
other than the exhibits to such documents (unless such exhibits are
specifically incorporated by reference into the information that this
Prospectus incorporates). Requests should be directed to Timothy B. Owen, EPL
Technologies, Inc., 2 International Plaza, Suite 245, Philadelphia,
Pennsylvania 19113-1507, telephone (610) 521-4400.
3
<PAGE> 5
RISK FACTORS
Each prospective investor should carefully consider the following
factors inherent in and affecting the business of the Company and this Offering
before making a decision to purchase the Shares offered hereby.
Losses Since Inception; Uncertainty of Future Profitability. To
date, the Company has generated limited revenues from operations. Primarily as
a result of expenses incurred in organization and reorganization, research and
development and marketing activities, the Company has incurred net losses
aggregating approximately $11,362,545 from its inception through December 31,
1995. The Company expects that it will continue to incur significant operating
losses until such time, if ever, that the Company is able to attain sales
levels for its products and services sufficient to support its operations. The
Company's continuation as a going concern is dependent ultimately upon
attaining profitable operations. There can be no assurance that the Company's
products can be successfully marketed or that the Company will ever achieve
significant revenues or profitable operations.
Future Capital Needs; Uncertainty of Additional Funding. The
Company's capital requirements have been fairly significant, and the Company's
continued ability to operate is dependent upon its ability to maintain adequate
financing and to achieve levels of revenue necessary to support its cost
structure. There can be no assurance the Company will be successful in
obtaining additional financing on commercially acceptable terms, or at all.
Failure to obtain additional financing could materially limit the Company's
ability to fund its operations.
New Industry Uncertainty. The Company is involved in the business
of maintaining the integrity of fresh cut produce, serving a relatively new but
rapidly expanding market. New products are continually being introduced,
although their demand and market acceptance is uncertain. In light of the
evolving nature of the market, there can be no assurance as to the ultimate
level of demand for or market acceptance of the Company's products.
Multiple Product Lines. The Company currently is engaged in two
lines of business, processing aids and packaging, designed to maintain the
integrity of fresh-cut produce. Although the Company believes these two
segments are complementary and present cross-marketing opportunities, there can
be no assurance that they in fact can be successfully cross marketed.
Additionally, if problems are encountered with either line of business, the
financial and personnel resources available to a business of the size of the
Company may be diverted from the other line of business, which could have a
material adverse effect on the Company's business, financial condition and
results of operations.
Competition. Since the U.S. Food and Drug Administration ("FDA")
originally banned the use of sulfites on freshly processed fruits and
vegetables (a ban which was subsequently overturned), other "sulfite
substitutes" have appeared in the marketplace. The Company faces competition
from these products as well as various alternative preservation and packaging
technologies. The Company faces competition in each of its markets from
numerous enterprises, some of which are larger and more established than the
Company and have greater resources. There can be no assurance that the Company
will be able to compete effectively.
Product Obsolescence. The market for technologies used in
maintaining the integrity of fresh cut produce may be characterized by rapidly
changing technology and evolving industry standards, which could result in
product obsolescence or short product life cycles. Therefore, the Company's
ability to achieve and maintain profitability will be dependent upon its
ability to continually enhance and improve its products and its applications
technology. The Company will also be required to develop products and services
to satisfy evolving industry or customer requirements, and may have to expend
significant funds and resources to do so. Additionally, there can be no
assurance that the Company will be successful in improving its current products
or developing new products.
Risks Associated With Food Processing Products. Although all of
the ingredients used in the Company's food processing formulations are detailed
as generally recognized as safe ("GRAS," under the definition of the FDA) the
Company is subject to risks generally associated with food processing products.
These risks include, among
4
<PAGE> 6
others, that (i) production defects may occur; (ii) an ingredient used in the
Company's products may be banned, or its use limited; and (iii) sales may be
limited or discontinued due to perceived health concerns, adverse publicity or
other reasons beyond the control of the Company. Regulations applicable to the
Company and its products, including the FDA's current "good manufacturing
practices" and labelling requirements applicable to food, may change, which
could have a material adverse effect on the Company, although the Company is
not aware of any pending regulatory changes that would have such effect.
Extended Sales and Product Commercialization Process. The Company
markets its products to processors of fresh fruits and vegetables for inclusion
in integrated produce processing systems. The testing process involves
numerous stages of product formulation, testing and evaluation by the Company
and the processor, becoming steadily more sophisticated during the process,
before any possible production decision can be made. Introduction of the
Company's products to new produce applications may require product
re-formulation, which can be a time-consuming process. The testing and
evaluation process can also be lengthy and may consume significant time and
resources, particularly if unexpected problems are encountered. Although the
Company believes it has substantially refined and improved its sales efforts,
the sales process remains lengthy and time-consuming, and can limit the rate of
expansion of the Company's customer base. The Company does not believe that
its sales process is likely to shorten significantly and there can be no
assurance that the Company will be successful in creating a broad customer base
for its products.
Possible Adverse Effect of Rapid Expansion. The Company has
significantly increased the scope of its operations within the past twelve
months through numerous acquisitions. There can be no assurance that the
Company's management and financial controls, personnel, computer systems and
other corporate support systems will be adequate to manage the resulting
increase in the size and scope of the Company's operations. In addition,
acquisitions involve a number of special risks, including adverse short-term
effects on the Company's reported operating results, the diversion of
management's attention, the dependence on retention, hiring and training of key
personnel, the amortization of acquired intangible assets and risks associated
with unanticipated problems or legal liabilities, some or all of which could
have a material adverse effect on the Company's operations and financial
performance.
No Assurance that the Company Can Attract or Retain Key Employees.
The Company's success may be dependent upon the efforts of certain key
personnel, including Paul L. Devine, Chairman, President and Chief Executive
Officer. Although the Company has entered into a two-year employment agreement
with Mr. Devine, some key employees do not have employment agreements.
Moreover, the loss of the services of Mr. Devine or other key employees could
have an adverse effect on the Company's business and prospects. Additional
suitably qualified staff will also need to be recruited to expand the business
as planned. There can be no assurance that the Company will be able to recruit
any such personnel, to the extent necessary.
Possible Volatility of Share Price and Absence of Dividends. The
Company's Common Stock began trading on the Nasdaq Small Cap Market on July 9,
1996 in relatively small volume. Previously, the Common Stock was quoted on
the National Association of Securities Dealers "bulletin board", and trading
volume in the Common Stock was therefore more limited. Such limited "float" of
the Company's Common Stock may generate inefficiencies in the Common Stock's
pricing and liquidity. In addition, factors such as operating results, new
customer contracts, developments relating to the Company's products or its
competitors, as well as changes within the industry, may have a significant
effect on the market price of the Common Stock. Other than in connection with
the payment of dividends on its Series A Preferred Stock and Series B Preferred
Stock, the Company intends to retain earnings, if any, which may be generated
from operations to finance the expansion and development of its business. No
cash dividends have been paid to date on its Common Stock and the Company does
not expect to pay cash dividends to the holders of its Common Stock in the
foreseeable future.
Patents, Proprietary Information and Trademarks. The Company's
success is dependent in part on its ability to obtain patent protection for its
products, maintain trade secret protection and operate without infringing
5
<PAGE> 7
the proprietary rights of others. The Company currently has two U.S. patents,
two U.S. patents pending and numerous others under review for application.
Furthermore, it has one overseas patent and patents pending in 26 overseas
countries for its main technology, with others under review. There can be no
assurance that patents issued to or licensed by the Company will provide the
Company with any competitive advantages or adequate protection for its
products. Moreover, no assurance can be given that any patents issued to or
licensed by the Company will not be challenged, invalidated or circumvented by
others. The Company's patent rights on its products might conflict with the
patent rights of others, whether existing now or in the future. Alternatively,
the products of others could infringe the patent rights of the Company. The
defense and prosecution of patent claims is both costly and time consuming,
even if the outcome were favorable to the Company. An adverse outcome could
subject the Company to significant liabilities to third parties, require
disputed rights to be licensed from third parties or require the Company to
cease selling its products.
The Company also relies on trade secrets and proprietary know-how,
which it seeks to protect in part by confidentiality agreements with its
collaborators, employees and consultants. There can be no assurance that these
agreements will not be breached, that the Company will have adequate remedies
for any such breach or that the Company's trade secrets will not otherwise
become known or be independently developed by competitors.
Although the Company intends to defend its proprietary intellectual
property rights, there can be no assurance that the Company will have the
financial or other resources necessary to enforce or defend a patent or
proprietary rights violation action.
International Sales. A significant portion of the Company's
revenues are earned outside of the United States and therefore are subject to
the risks associated with international sales, including economic or political
instability in the Company's markets, shipping delays, fluctuations in foreign
currency exchange rates and various trade restrictions, all of which could have
a significant impact on the Company's ability to deliver products on a
competitive and timely basis. Future imposition of, or significant increases
in the level of, customs, duties, export quotas or other trade restrictions,
could have an adverse effect on the Company's business, financial condition and
results of operations. In addition, the laws of certain foreign countries do
not protect the Company's intellectual property rights to the same extent as do
the laws of the United States, although this effect is lessened in countries
that adhere to the General Agreement on Tariffs and Trade.
Outstanding Options. At September 30, 1996, approximately 2,551,500
options had been granted and were outstanding, exercisable at various dates
within the next five years, and 1,309,500 shares remain available for issuance
under the Company's 1994 Stock Incentive Plan. The Company also may consider
amending the 1994 Stock Incentive Plan to increase the number of shares
available for issuance thereunder. To the extent that the options (or any other
future options issued under the 1994 Stock Incentive Plan or any other stock
option plan that the Company may adopt hereafter) are exercised, material and
substantial dilution to the interests of the Company's stockholders will occur.
Moreover, the terms upon which the Company will be able to obtain additional
equity capital may be adversely affected since the holders of the options can be
expected to exercise them at a time when the Company would, in all likelihood,
be able to obtain any needed capital on terms more favorable to the Company than
those provided in the options or any other such options.
Shares Eligible for Future Sale. Future sales by existing
shareholders could adversely affect the prevailing market price of the Common
Stock. Upon completion of the Offering, assuming exercise in full of all of the
Warrants and Options and the conversion of the Series A Preferred Stock and
Series B Preferred Stock, the Company will have 19,821,647 shares of Common
Stock outstanding. All of the Shares offered hereby will be eligible for
immediate sale in the public market without restriction. Other unregistered
shares outstanding or issuable upon conversion of Series A Preferred Stock may
be eligible for immediate resale, subject in some cases to compliance with the
notice, volume and other limitations of Rule 144 promulgated under the
Securities Act. In addition, the Company has effective registration statements
covering an aggregate of 3,820,000 shares issued or issuable upon the exercise
of options granted under its 1994 Stock Incentive Plan and another plan
(collectively, the "Stock Option Plans").
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<PAGE> 8
THE COMPANY
EPL Technologies, Inc. is in the business of maintaining the
integrity of fresh-cut produce. It offers its own patented and proprietary
technology to processors of fresh fruits and vegetables as part of the
processors' integrated produce processing systems. The Company's proprietary
technology includes processing aids, all of which the Company formulates at its
own facilities. All of the ingredients used in the Company's food processing
formulations are identified by the U.S. Food and Drug Administration as "GRAS"
("generally recognized as safe") and the Company believes its products are
safe, environmentally friendly and add significant value to the business of its
customers. The Company's goal is to become a world class provider of products
designed to maintain the integrity of fresh produce. As consumer awareness of
the possible health hazards of preservatives continues to grow, management
believes interest in the Company's products will increase. The Company also is
continually searching for new ways to market its products and expand
operations, both organically and, where appropriate opportunities can be
identified, through strategic acquisitions, although the Company has currently
no agreements in principle with respect to any such acquisitions.
As part of its objective to develop and integrate technologies that
maintain the integrity of fresh-cut produce, in September 1994 the Company
acquired Respire Films, Inc. This acquisition provided the Company access to a
packaging-related technology in the fresh-cut produce industry, complementary
to other products and services offered by the Company, thus allowing the
Company to pursue its plan of providing the industry with a full systems
approach to maintaining product integrity. The acquisition has also afforded
the Company cross-marketing opportunities for such other products and services.
In September 1995 the Company acquired Bakery Packaging Services
Limited ("BPS"). BPS, based in northwest England, manufactures and sells
packaging materials, principally perforated packaging materials used by leading
companies in the fresh-cut produce and institutional bakery industries. BPS
also produces wax-coated packaging used principally in the confectionery
industry. The Company believes the acquisition of BPS provides it with an
additional source of packaging, access to new packaging technologies and an
opportunity for additional cross-marketing activities. BPS' operations
currently provide the Company's largest single source of revenue.
In February 1996, the Company executed a letter of intent with
Potanden Produce LLC, which markets products under the Green Giant label under
license from The Pillsbury Company, for an exclusive North American license and
technical assistance agreement relating to the Company's Potato Fresh(TM)
product, subject to negotiation and execution of a definitive agreement. This
agreement is currently under negotiation and although there can be no assurance
that a definitive agreement in fact will be completed, the Company expects to
file a Report on Form 8-K regarding the eventual completion or the termination
of these negotiations.
In April 1996, through a newly formed, wholly-owned subsidiary,
Pure Produce, Inc. ("PPI"), the Company acquired certain assets of Pure
Produce. PPI is engaged in the business of providing companies in the food
industry, especially those involved with fresh and minimally processed produce,
with analyses, protocols and plans relating to food and quality assurance
programs, including microbial testing. The Company believes that this further
extends the range of products and services it can offer the fresh produce
industry via its total systems approach.
In July 1996 the Company acquired, through a newly formed
wholly-owned UK subsidiary, EPL Flexible Packaging Limited ("EPL Flexible"),
certain fixed assets of Printpack Europe (St Helens) Limited ("Printpack St
Helens"). EPL Flexible also assumed a lease of real estate located in
Gainsborough, Lincolnshire, UK, and offered employment to some of the employees
of Printpack St Helens. EPL Flexible will specialize in the printing of
flexible packaging films serving primarily the snackfood industry. The Company
is considering the transfer of certain printing functions from BPS to the
Gainsborough facility to achieve economies of scale and increase production at
the Gainsborough facility, while freeing plant capacity at BPS for expanded
film perforation production.
Also in July 1996, through a new wholly-owned US subsidiary,
Crystal Specialty Films, Inc., the Company acquired the assets and assumed some
of the liabilities of Crystal Plastics, Inc., based in Illinois. Crystal uses
"K" and polystyrene resins to manufacture a range of proprietary films for a
variety of applications. Crystal
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<PAGE> 9
will serve as the site for installation of proprietary gas flame perforation
equipment which the Company has had custom-built in the UK and which is planned
to be the basis for penetration of the U.S. film perforation market, which the
Company is currently serving, to a limited degree, from the U.K. The Company
currently is providing to a U.S. film manufacturer, under an interim purchase
order, the Company's proprietary gas flame perforation of film, which film the
Company is currently shipping, at this U.S. customer's expense, to and from the
Company's perforation facility in the U.K. The Company currently is negotiating
with this U.S. customer to convert this interim purchase order into a long-term
supply agreement, although there can be no assurance that a definitive
agreement in fact will be completed. The Company expects to file a Report on
Form 8-K regarding the eventual completion or termination of these
negotiations.
In addition, also in July 1996, the Company formed NewCornCo LLC, a
jointly owned limited liability company in which the Company owns a 51%
interest. The other member of NewCornCo is Underwood Ranches, the trade name
of Agricultural Innovation and Trade, Inc.("AIT"). The new company will
utilize the Company's proprietary processing aid and packaging technologies and
AIT's existing corn processing and distribution capabilities to develop a
year-round, national, value-added market for fresh corn products.
The Company's executive offices are located at 2 International
Plaza, Suite 245, Philadelphia, Pennsylvania 19113-1507, and its telephone
number is (610) 521-4400.
USE OF PROCEEDS
The net proceeds from the sale of the Shares will be received by
the Selling Shareholders. The Company will not receive any of the proceeds
from any sale of the Shares by the Selling Shareholders, but will receive the
exercise price of any Options or Warrants exercised by the Selling
Shareholders, up to a maximum of approximately $868,865. Any proceeds
received from the exercise of the Options or Warrants will be used for working
capital and general corporate purposes.
8
<PAGE> 10
SELLING SHAREHOLDERS
The table below sets forth information as of September 20, 1996 with
respect to the Selling Shareholders, including names, holdings of shares of
Common Stock prior to the offering of the Shares, the number of Shares being
offered for each account, and the number and percentage of shares of Common
Stock to be owned by the Selling Shareholders immediately following the sale of
the Shares, assuming all of the offered Shares are sold.
<TABLE>
<CAPTION>
Shares Beneficially Owned Shares Beneficially Owned
Before the Offering(1) After the Offering(1)(2)
------------------------- -------------------------
Shares Being
Name Number Percent Offered Number Percent
---- ------ ------- ------- ------ -------
<S> <C> <C> <C> <C> <C>
Alis & Co. 125,000 * 125,000 0 *
Minos Athanassiadis 15,000(3) * 15,000 0 *
Jeffrey Bornstein 2,500 * 2,500 0 *
Boyd & Co. 225,000 1.5% 225,000 0 *
Aubrey Brocklebank 25,000 * 25,000 0 *
W. Ward Carey 37,500 * 37,500 0 *
Robert M. Chasson Trust 41,995(4) * 41,995 0 *
Shawn J. Collins 113,500(5) * 2,500 111,000 *
Laura Cowan 8,000(5) * 2,500 5,500 *
Elise Davies 27,500 * 2,500 25,000 *
Paul L. Devine 1,140,833(5)(6) 7.0 340,833 800,000 4.9%
William Dickinson 4,800(7) * 4,800 0 *
Virginia Finnerty 127,500(5) * 2,500 125,000 *
Hesham A. Gawad 42,500(5) * 2,500 40,000 *
Joseph Giamanco 100,000 * 100,000 0 *
John Goepfert 8,667(8) * 8,667 0 *
Robert E. Goldschmidt 50,000 * 50,000 0 *
Harvest Investments 16,000(9) * 16,000 0 *
Markus Hasler 6,667(8) * 6,667 0 *
Philip Hempleman 6,667(8) * 6,667 0 *
Hyprom S.A. 166,667 1.1 166,667 0 *
Mark Jephcott 22,400(10) * 22,400 0 *
Sandra Jones 750(8) * 750 0 *
Jungbunzlauer Holding AG 687,332 4.4 687,332 0 *
Bernice Kaminski 2,667(8) * 2,667 0 *
Jack Kehoe 208,633(11) 1.3 138,633 70,000 *
Veronica M. Kehoe 22,500(12) * 2,500 20,000 *
Keyway Investments Ltd. 100,000 * 100,000 0 *
Jane Kidd 16,000(13) * 16,000 0 *
Lancer Partners LP 3,028,579(14) 18.9 3,001,579 27,000 *
Robert H. Langman 12,500(5) * 2,500 10,000 *
Ethan K. Liebermann 5,000 * 5,000 0 *
Ruth K. Liebermann 90,000 * 90,000 0 *
Nyssa K. Liebermann 5,000 * 5,000 0 *
Joel Longstreth 140,000(5)(15) * 70,000 70,000 *
Sandra Kay Longstreth 70,000(16) * 70,000 0 *
C. Charles Morran 200,000 1.3 200,000 0 *
</TABLE>
9
<PAGE> 11
<TABLE>
<CAPTION>
Shares Beneficially Owned Shares Beneficially Owned
Before the Offering(1) After the Offering(1)(2)
------------------------- -------------------------
Shares Being
Name Number Percent Offered Number Percent
---- ------ ------- ------- ------ -------
<S> <C> <C> <C> <C> <C>
Robert D. Mattei 393,531(17) 2.5 213,531 180,000 1.1
Denise Mattei 20,000(18) * 20,000 0 *
Janet Morgan 600(8) * 600 0 *
Jenny Muir 25,000 * 25,000 0 *
John Nava 4,667(8) * 4,667 0 *
Van Negris 10,000(8) * 10,000 0 *
Norwich Union Life Insurance Society 275,000 1.8 275,000 0 *
Oak Hall Equity Fund 100,000 * 100,000 0 *
Timothy B. Owen 225,000(5) 1.4 25,000 200,000 1.3
Quaestas S.A. 525,450(19) * 461,450 64,000 *
Pence Revington 500 * 500 0 *
Jim Roberts 15,000(3) * 15,000 0 *
S.W. Ryan & Company Inc. 66,667 * 66,667 0 *
Robert R. Sargert 32,500(5) * 2,500 30,000 *
Bruce Schermerhorn 82,500(5) * 2,500 80,000 *
Bruce Slovin 113,333(20) * 113,333 0 *
Linda K. Sorens 10,000 * 10,000 0 *
David Spector 24,000 * 4,000 20,000 *
Fred Stein 75,000 * 75,000 0 *
John M. Surgent 9,000 * 4,000 5,000 *
Taglich Brothers, D'Amadeo, Wagner
& Co., Inc. 5,000 * 5,000 0 *
Robert Taglich 7,500 * 7,500 0 *
Michael Taglich 7,500 * 7,500 0 *
Trilon Dominion Partners LLC 5,579,606(21) 30.6 5,579,606 0 *
G.C. Turney 32,000(22) * 32,000 0 *
Craig Underwood 15,000(3) * 15,000 0 *
TRP Partners 96,000(23) * 96,000 0 *
Elizabeth Watters 11,000(8) * 1,000 10,000 *
Thomas Whitesides 8,500(5) * 2,500 6,000 *
Christopher Yates 10,000(8) * 10,000 0 *
</TABLE>
____________________
* Less than 1%.
(1) Beneficial ownership is determined in accordance with rules of the
Securities and Exchange Commission, and includes generally voting power
and/or investment power with respect to securities. Shares of Common
Stock subject to options or warrants currently exercisable or exercisable
within 60 days of September 20, 1996 are deemed outstanding for computing
the percentage of the person holding such options but are not deemed
outstanding for computing the percentage of any other person. Except as
indicated by footnote, the persons named in the table above have sole
voting and investment power with respect to all shares of Common Stock
shown as beneficially owned by them.
(2) Assumes all Shares offered hereby are sold in the Offering.
(3) All of such shares of Common Stock are issuable pursuant to the exercise
of Options.
(4) Such shares are held by Robert M. Chasson as trustee.
10
<PAGE> 12
(5) Includes the following number of shares of Common Stock issuable upon the
exercise of options granted under the Company's Stock Option Plans:
<TABLE>
<S> <C>
Shawn J. Collins 111,000
Laura Cowan 5,500
Elise Davies 25,000
Paul L. Devine 800,000
Virginia Finnerty 125,000
Hesham A. Gawad 40,000
Robert H. Langman 10,000
Joel Longstreth 70,000
Timothy B. Owen 200,000
Robert R. Sargent 30,000
Bruce Schermerhorn 80,000
Thomas Whitesides 6,000
</TABLE>
(6) Includes 66,667 shares of Common Stock issuable upon conversion of Series
A Preferred Stock and 13,333 shares of Common Stock issuable upon
exercise of Warrants.
(7) Includes 4,000 shares of Common Stock issuable upon conversion of Series
A Preferred Stock and 800 shares of Common Stock issuable upon exercise
of Warrants.
(8) All of such shares of Common Stock are issuable upon exercise of
Warrants.
(9) Includes 13,333 shares of Common Stock issuable upon conversion of Series
A Preferred Stock and 2,667 shares of Common Stock issuable upon exercise
of Warrants.
(10) Includes 18,667 shares of Common Stock issuable upon conversion of Series
A Preferred Stock and 3,733 shares of Common Stock issuable upon exercise
of Warrants.
(11) Includes 50,000 shares of Common Stock issuable upon exercise of options
granted pursuant to the Company's Stock Incentive Plan and 10,000 shares
of Common Stock issuable upon exercise of Warrants. Does not include
22,500 shares beneficially owned by Mr. Kehoe's spouse, as to which he
disclaims beneficial ownership. (See Note 12.)
(12) Does not include 188,633 shares of Common Stock beneficially owned by
Mrs. Kehoe's spouse, as to which she disclaims beneficial ownership.
(See Note 11.)
(13) Includes 13,333 shares of Common Stock issuable upon conversion of Series
A Preferred Stock and 2,667 shares of Common Stock issuable upon exercise
of Warrants.
(14) Includes 468,085 shares of Common Stock issuable upon conversion of
Series B Preferred Stock. Also includes 480,000 shares of Common Stock
owned by Lancer Off-Shore Inc., and 63,830 shares of Common Stock
issuable upon conversion of Series B Preferred Stock also owned Lancer
Off-Shore, Inc. Lancer Off-Shore, Inc. is under common control with
Lancer Partners, L.P.
(15) Does not include 70,000 shares of Common Stock owned by Mr. Longstreth's
spouse, as to which he disclaims beneficial ownership. (See Note 16.)
11
<PAGE> 13
(16) Does not include 140,000 shares of Common Stock beneficially owned by
Mrs. Longstreth's spouse, as to which she disclaims beneficial ownership.
(See Note 15.)
(17) Includes 180,000 shares of Common Stock issuable upon exercise of options
granted under the Company's Stock Option Plans. Does not include 20,000
shares beneficially owned by Mr. Mattei's spouse, as to which he
disclaims beneficial ownership. (See Note 18.)
(18) Does not include 393,531 shares beneficially owned by Mrs. Mattei's
spouse, as to which shares she disclaims beneficial ownership. (See Note
17.)
(19) Includes 333,333 shares of Common Stock issuable upon conversion of
Series A Preferred Stock and 80,450 shares of Common Stock issuable upon
the exercise of Warrants.
(20) Includes 13,333 shares of Common Stock issuable upon the exercise of
Warrants.
(21) Includes 2,617,333 shares of Common Stock issuable upon conversion of
Series A Preferred Stock and 100,000 shares of Common Stock issuable upon
the exercise of Warrants.
(22) Includes 26,667 shares of Common Stock issuable upon conversion of Series
A Preferred Stock and 5,333 shares of Common Stock issuable upon the
exercise of Warrants.
(23) Includes 80,000 shares of Common Stock issuable upon conversion of Series
A Preferred Stock and 16,000 shares of Common Stock issuable upon the
exercise of Warrants.
RELATIONSHIPS BETWEEN THE COMPANY AND THE SELLING SHAREHOLDERS
Paul L. Devine has served as the Company's Chairman, President and
Chief Executive Officer since March 1992.
Timothy B. Owen was appointed European Financial Controller of the
Company in 1995 and prior thereto, from 1992 until 1995, performed financial
and accounting services for the Company as an independent consultant.
Shawn Collins has served as the Company's Treasurer since July
1994, Secretary since October 1994, and Controller since July 1993.
Joel Longstreth has served as President of Respire Films, Inc., a
wholly-owned subsidiary of the Company, since the Company's acquisition of
Respire in September 1994. In connection with such acquisition, as the
controlling shareholder of Respire, Mr. Longstreth and his spouse each received
70,000 shares of the Company's Common Stock in exchange for the common stock of
Respire.
Robert Mattei has served as a Director of the Company since
February 1988.
Aubrey Brocklebank serves as a director of EPL Limited, a
wholly-owned UK subsidiary of the Company with limited operations.
Laura Cowan, Elise Davies, Virginia Finnerty, Hesham A. Gawad,
Robert H. Langman, Robert R. Sargert, Bruce Schermerhorn and Thomas Whitesides
are employees of the Company.
Jeffrey Bornstein and Linda K. Sorens are former employees of the
Company.
12
<PAGE> 14
The Company had a revolving line of credit under an agreement
originally obtained from Dominion Capital, Inc. ("Dominion"), a related party
of Trilon Dominion Partners LLC ("Trilon"), which was to have expired on March
21, 1998, bearing interest at prime plus 2.5%. In July 1995, Dominion
transferred its interest in this line of credit to Trilon. On October 2, 1995
Trilon agreed to convert the outstanding principal amount of $4,050,000 under
the line of credit into 2,025,000 shares of Common Stock and Warrants to
purchase 100,000 shares of Common Stock for $2.00 per share. The Company also
issued 162,613 shares of Common Stock in settlement of accrued interest of
$310,164, and 46,500 shares of Common Stock in settlement of commitment fees.
The Company currently obtains all of its requirements for certain
raw materials from a subsidiary of Jungbunzlauer Holding AG. In the years
ended December 31, 1995 and 1994, these purchases totaled $35,760 and $30,514,
respectively. Dr. Rainer G. Bichlbauer, a director of the Company since July
1994, serves as Director of Finance and Marketing of Jungbunzlauer Holding AG.
Minos Athanassiadis, Jim Roberts and Craig Underwood are
shareholders of AIT, which holds a 49% interest in NewCornCo LLC. Messrs.
Athanassiadis, Roberts and Underwood each were issued Options to purchase
15,000 shares of Common Stock for $7.00 per share in connection with the
creation of NewCornCo LLC.
Jack Kehoe is the founder of Kehoe White Savage & Co., Inc., which
has been the primary provider of significant public relations and other
consulting services to the Company on an ongoing basis since 1993. Sandra
Jones, Janet Morgan, Van Negris and Elizabeth Watters are employees of Kehoe
White Savage & Co., Inc.
PLAN OF DISTRIBUTION
Any distribution of the Shares by the Selling Shareholders, or by
their pledgees, donees, transferees or other successors in interest, may be
effected from time to time in one or more of the following transactions: (a) to
underwriters who will acquire the Shares for their own account and resell them
in one or more transactions, including negotiated transactions, at a fixed
public offering price or at varying prices determined at the time of sale (any
public offering price and any discount or concessions allowed or reallowed or
paid to dealers may be changed from time to time); (b) through brokers, acting
as principal or agent, in transactions (which may involve block transactions)
on the Nasdaq Stock Market or on one or more exchanges on which the Shares are
then listed, in special offerings, exchange distributions pursuant to the rules
of the applicable exchanges or in the over-the-counter market, or otherwise, at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices, at negotiated prices or at fixed prices; (c) directly
or through brokers or agents in private sales at negotiated prices; or (d) by
any other legally available means.
The Selling Shareholders and such underwriters, brokers, dealers or
agents, upon effecting a sale of the Shares, may be considered "underwriters"
as that term is defined by the Securities Act.
Underwriters participating in any offering made pursuant to this
Prospectus (as amended or supplemented from time to time) may receive
underwriting discounts and commissions, discounts or concessions may be allowed
or reallowed or paid to dealers, and brokers or agents participating in such
transaction may receive brokerage or agent's commissions or fees.
Upon the Company being notified by any Selling Shareholder that a
material arrangement has been entered into with a broker or dealer for the sale
of shares through a block trade, special offering, exchange distribution or
secondary distribution or a purchase by a broker or dealer, a supplemented
Prospectus will be filed, if required, pursuant to Rule 424(c) under the
Securities Act, disclosing (a) the name of each such broker-dealer, (b) the
number of shares involved, (c) the price at which such shares were sold, (d)
the commissions paid or discounts or concessions allowed to such
broker-dealer(s), where applicable, (e) that such broker-dealer(s) did not
conduct any
13
<PAGE> 15
investigation to verify the information set out or incorporated by reference in
this Prospectus, as supplemented, and (f) other facts material to the
transaction.
In order to comply with the securities laws of certain states, if
applicable, the Shares will be sold in such jurisdictions, if required, only
through registered or licensed brokers or dealers. In addition, in certain
states the Shares may not be sold unless the Shares have been registered or
qualified for sale in such state or an exemption from registration or
qualification is available and complied with.
The Company has agreed that it will bear all costs, expenses and
fees in connection with the registration of the Shares.
LEGAL MATTERS
The validity of the Shares offered hereby is being passed upon for
the Company by Ballard Spahr Andrews & Ingersoll, Philadelphia, Pennsylvania
and Denver, Colorado.
EXPERTS
The consolidated financial statements incorporated in this
prospectus by reference from the Company's Annual Report on Form 10-K/A for the
years ended December 31, 1995 and 1994 have been audited by Deloitte & Touche
LLP, independent auditors, as stated in their report, which is incorporated
herein by reference and have been so incorporated in reliance upon the report of
such firm given upon their authority as experts in accounting and auditing.
The consolidated financial statements of EPL Technologies, Inc. and
subsidiaries for the year ended December 31, 1993 included in the Company's
Annual Report on Form 10-K/A have been audited by Schalleur & Company,
independent auditors, as set forth in their report thereon. Such consolidated
financial statements are included herein in reliance upon such report given
upon the authority of such firm as experts in accounting and auditing.
The financial statements of Bakery Packaging Services Limited for
the years ended November 30, 1994 and 1993 included in the Company's Current
Report on Form 8-K dated September 19, 1995, as amended on November 14, 1995
have been audited by Porter Matthews & Marsden, independent auditors, as set
forth on their report thereon. Such financial statements are included herein
in reliance upon such report given upon the authority of such firm as experts
in accounting and auditing.
14
<PAGE> 16
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
W
The following is a list of the estimated expenses to be incurred by
the Registrant in connection with the issuance and distribution of the Shares
being registered hereby.
<TABLE>
<S> <C>
SEC Registration Fee . . . . . . . . . . . . . $28,002
Accountants' Fees and Expenses . . . . . . . . 5,000*
Legal Fees and Expenses . . . . . . . . . . . . 50,000*
Miscellaneous . . . . . . . . . . . . . . . . . 6,998*
-------
TOTAL . . . . . . . . . . . . . . . . . . $90,000*
</TABLE>
____________________
* As estimated and subject to change.
The Selling Shareholders will not bear any portion of the expenses of
registration of the Shares.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Under Article 109 of the Colorado Business Corporation Act, as amended
(the "CBCA"), the Company has the power to indemnify directors and officers
under prescribed circumstances and subject to certain limitations against
certain costs and expenses, including attorneys' fees actually and reasonably
incurred in connection with any action, suit or proceeding, whether civil,
criminal, administrative or investigative, to which any of them is a party by
reason of his or her being a director or officer of the Company if it is
determined that he or she acted in accordance with the applicable standard of
conduct set forth in such statutory provisions.
Article V F. of the Company's Articles of Incorporation, as amended
and Article VI of the Company's Bylaws, as amended, provide that the Company
shall indemnify directors and officers of the Company against all expenses,
liability and loss incurred as a result of such person's being a party to, or
threatened to be made a party to, any proceeding (as defined, which includes
any threatened proceeding) by reason of the fact that he or she is or was a
director or officer of the Company or is otherwise the subject of any such
proceeding by reason of that person's relationship with the Company, to the
fullest extent authorized by the CBCA, if the person conducted the activities
in question in good faith, reasonably believed that the conduct was in the
Company's best interests or was not opposed to the Company's best interests
and, in the case of a criminal proceeding, had no reasonable cause to believe
the conduct was unlawful. Article VI of the Bylaws further permits the Company
to maintain insurance, at its expense, to protect itself and any such director
or officer of the Company against any such expenses, liability or loss, whether
or not the Company would have the power to indemnify such person against such
expenses, liability or loss under the Bylaws. The Company has directors' and
officers' liability insurance.
II-1
<PAGE> 17
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------ -----------
<S> <C>
3.1* Amended and Restated Articles of Incorporation of the Company.
3.1.1 Articles of Amendment to Articles of Incorporation of the Company
3.2 Amended and Restated Bylaws of the Company
4.1* Specimen Common Stock Certificate (Incorporated by reference to Exhibit 4.1 to the
Company's Annual Report or Form 10-K for the eight months ended December 31, 1992 on
file with the Commission)
4.2* Specimen Series A Preferred Stock Certificate (Incorporated by reference to Exhibit 4.2
to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1993
on file with the Commission).
4.3* Specimen Series A Preferred Stock Subscription Agreement (Incorporated by reference to
Exhibit 4.3 to the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1993 on file with the Commission).
4.4 Specimen Series B Preferred Stock Certificate
4.5 Specimen Series B Preferred Stock Subscription Agreement
5.1 Opinion of Ballard Spahr Andrews & Ingersoll as to the validity of the shares of Common
Stock being registered.
24.1 Consent of Schalleur & Company.
24.2 Consent of Porter Matthews & Marsden
24.3 Consent of Deloitte & Touche LLP.
24.4 Consent of Ballard Spahr Andrews & Ingersoll (included in Exhibit 5.1).
</TABLE>
* Previously filed.
ITEM 17. UNDERTAKINGS.
A. The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933, as amended (the "Act");
(ii) To reflect in the prospectus any facts or
events arising after the effective date of the Registration Statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change in
the information set forth in the Registration Statement.
Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered
would not exceed that which was registered) and any deviation from the
low or high and of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in volume and price
represent no
II-2
<PAGE> 18
more than a 20 percent change in the maximum aggregate offering price
set forth in the "Calculation of Registration Fee" table in the
effective registration statement;
(iii) To include any material information with
respect to the plan of distribution not previously disclosed in the
Registration Statement or any material change to such information in
the Registration Statement;
provided, however, that paragraphs (A)(1)(i) and (A)(1)(ii) do
not apply if the Registration Statement is on Form S-3, Form S-8 or Form F-3,
and the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed with or furnished to
the Securities and Exchange Commission (the "Commission") by the Registrant
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), that are incorporated by reference in the
Registration Statement.
(2) That, for the purpose of determining any liability
under the Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered which remain
unsold at the termination of the offering.
B. The undersigned Registrant hereby undertakes that for purposes
of determining any liability under the Act, each filing of the Registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act
(and, where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in the Registration Statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
C. Insofar as indemnification for liabilities arising under the
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
II-3
<PAGE> 19
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-3 and has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of West Conshohocken,
Commonwealth of Pennsylvania, on October 11, 1996.
EPL TECHNOLOGIES, INC.
By: /s/ Paul L. Devine
------------------------------------
Paul L. Devine
Chairman, President and Chief Executive Officer
(Principal Executive Officer)
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- - --------- ----- ----
<S> <C> <C>
/s/ Paul L. Devine Chairman, President and October 11, 1996
- - --------------------------- Chief Executive Officer
Paul L. Devine (Principal Executive Officer)
/s/ Timothy B. Owen* Principal Financial and October 11, 1996
- - --------------------------- Accounting Officer
Timothy B. Owen
/s/ William J. Hopke* Director October 11, 1996
- - ---------------------------
William J. Hopke
/s/ Robert D. Mattei* Director October 11, 1996
- - ---------------------------
Robert D. Mattei
/s/ Rainer G. Bichlbauer* Director October 11, 1996
- - ---------------------------
Dr. Rainer G. Bichlbauer
</TABLE>
*By: /s/ Paul L. Devine
---------------------------
Paul L. Devine
Attorney-in-fact
II-4
<PAGE> 20
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
------ ----------- ------------
<S> <C> <C>
3.1* Amended and Restated Articles of Incorporation of the Company.
3.1.1 Articles of Amendment to the Articles of Incorporation of the
Company.
3.2 Amended and Restated Bylaws of the Company.
4.1* Specimen Common Stock Certificate (Incorporated by reference to
Exhibit 4.1 to the Company's Annual Report or Form 10-K for the
eight months ended December 31, 1992 on file with the
Commission)
4.2* Specimen Series A Preferred Stock Certificate (Incorporated by
reference to Exhibit 4.2 to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1993 on file with
the Commission).
4.3* Specimen Series A Preferred Stock Subscription Agreement
(Incorporated by reference to Exhibit 4.3 to the Company's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1993 on file with the Commission).
4.4 Specimen Series B Preferred Stock Certificate.
4.5 Specimen Series B Preferred Stock Subscription Agreement.
5.1 Opinion of Ballard Spahr Andrews & Ingersoll as to the validity
of the shares of Common Stock being registered.
24.1 Consent of Schalleur & Company.
24.2 Consent of Porter Matthews & Marsden
24.3 Consent of Deloitte & Touche LLP.
24.4 Consent of Ballard Spahr Andrews & Ingersoll (included in
Exhibit 5.1).
</TABLE>
* Previously filed.
<PAGE> 1
-------------------
FOR OFFICE USE ONLY
MAIL TO: SECRETARY OF STATE
CORPORATIONS SECTION
1560 BROADWAY, SUITE 200
DENVER, CO 80202
(303) 894-2251
FAX (303) 894-2242
MUST BE TYPED -------------------
FILING FEE: $25.00
MUST SUBMIT TWO COPIES
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
PLEASE INCLUDE A TYPED
SELF-ADDRESSED ENVELOPE
Pursuant to the provisions of the Colorado Business Corporation Act, the
undersigned corporation adopts the following Articles of Amendment to its
Articles of Incorporation:
FIRST: The name of the corporation is EPL Technologies, Inc.
SECOND: The following amendment to the Articles of Incorporation was adopted on
July 22, 1996, as prescribed by the Colorado Business Corporation Act, in the
manner marked with an X below:
/ / No shares have been issued or Directors Elected - Action by
Incorporators
/ / No shares have been issued but Directors Elected - Action by Directors
/X/ Such amendment was adopted by the board of directors where shares have
been issued.
/ / Such amendment was adopted by a vote of the shareholders. The number of
shares voted for the amendment was sufficient for approval.
THIRD: The manner, if not set forth in such amendment, in which any exchange,
reclassification, or cancellation of issued shares provided for in the
amendment shall be effected, is as follows: See amendment attached.
If these amendments are to have a delayed effective date, please list that date:
N/A
- - --------------------------------------------------------
(Not to exceed ninety (90) days from the date of filing)
EPL Technologies, Inc.
By /s/ SHAWN J. COLLINS
----------------------------
Its Secretary
------------------------
Title
<PAGE> 2
Certificate of Designation, Number, Voting Powers,
Preferences and Rights of the Series of the Preferred Stock
of
EPL TECHNOLOGIES, INC.
To be Designated
Series B Convertible Preferred Stock
EPL Technologies, Inc., a Colorado corporation (the "Corporation"),
pursuant to authority conferred on the Board of Directors of the Corporation by
its Articles of Incorporation, and in accordance with the provisions of Section
7-108-101 of the Colorado Business Corporation Act ("CBCA"), certifies that the
Board of Directors of the Corporation, at a meeting duly called and held
pursuant to Section 7-108-201 of the CBCA, duly adopted the following
resolution providing for the establishment and issuance of a series of
Preferred Stock to be designated "Series B Convertible Preferred Stock" and to
consist of 531,915 shares as follows:
RESOLVED, that, pursuant to the authority expressly granted and vested
in the Board of Directors of this Corporation in accordance with the provisions
of its Amended and Restated Certificate of Incorporation, as amended, a series
of Preferred Stock of the Corporation be and hereby is established, consisting
of 531,915 shares, to be designated "Series B Convertible Preferred Stock" (the
"Series B Preferred Stock"); the Board of Directors be and hereby is authorized
to issue such shares of Series B Preferred Stock from time to time and for such
consideration and on such terms as the Board of Directors shall determine; and
subject to the limitations provided by law and by
<PAGE> 3
the Articles of Incorporation, the powers, designations, preferences and
relative, participating, option or other special rights of, and the
qualifications, limitations or restrictions upon, the Series B Preferred Stock
shall be as follows:
2
<PAGE> 4
1. Dividends
In each fiscal year of the Corporation, the holders of shares
of Series B Preferred Stock shall be entitled to receive, before any cash
dividends shall be declared and paid upon or set aside for the Common Stock in
such fiscal year, out of the funds legally available for that purpose,
dividends at a rate of ten percent (10%) per annum, or $.47 per share, and no
more, in cash or in stock, at the Corporation's discretion, (i. e., stock at
the stated conversion price) and in preference and priority to any payment of
any cash dividend on Common Stock or any other shares of capital stock of the
Corporation ranking on liquidation junior to the Series B Preferred Stock by
reason of their ownership thereof ("Junior Shares") and pari passu with the
Series A Preferred Stock or any other shares of capital stock of the
Corporation ranking on liquidation pari passu with the Series B Preferred
Stock.
Dividends shall accrue and be deemed to accrue from day to day
whether or not earned or declared and shall be cumulative so that if at any
time after the issuance of the Series B Preferred Stock such dividends shall
not have been paid, or declared and set apart for payment, the deficiency shall
be fully paid on or declared and set apart for payment before any dividend
shall be paid on or declared or set apart for any shares of Junior Shares is
made by the Corporation, except the repurchase of Junior Shares from employees
of this Corporation upon termination of employment. Any accumulation of
dividends on the Series B Preferred Stock shall not bear interest.
2. Liquidation, Dissolution or Winding Up
(a) In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, the holders of
shares of Series B Preferred Stock then outstanding shall be entitled to be
paid out of the assets of the Corporation available for distribution to its
stockholders, after and subject to the payment in full of all amounts required
to be distributed to the holders of any class of series of stock of the
Corporation ranking on liquidation prior and in preference to the Series B
Preferred Stock, but before any payment shall be made to the holders of Common
Stock or any other Junior Shares, an amount
3
<PAGE> 5
equal to $4.70 per share of Series B Preferred Stock (subject to appropriate
adjustment in the event of any stock dividend, stock split, combination or
other similar recapitalization affecting such shares). If upon any such
liquidation, dissolution or winding up of the Corporation the remaining assets
of the Corporation available for distribution to its stockholders shall be
insufficient to pay the holders of shares of Series B Preferred Stock the full
amount to which they shall be entitled, the holders of shares of Series B
Preferred Stock and any other class of series of stock ranking on liquidation
on a parity with the Series B Preferred Stock shall share ratably in any
distribution of the remaining assets and funds of the Corporation in proportion
to the respective amounts which would otherwise be payable in respect of the
shares held by them upon such distribution if all amounts payable on or with
respect to such shares were paid in full. The Series B Preferred Stock shall
rank on liquidation on a parity with the Series A Preferred Stock and the
Common Stock shall constitute Junior Shares hereunder.
(b) After the payment of all preferential amounts
required to be paid to the holders of any class or series of stock of the
Corporation ranking on liquidation prior and in preference to the Series B
Preferred Stock and any other class or series of stock of the Corporation
ranking on liquidation on a parity with the Series B Preferred Stock, upon the
dissolution, liquidation or winding up of the Corporation, the holders of
shares of Common Stock or any other Junior Shares then outstanding shall be
entitled to receive the remaining assets and funds of the Corporation available
for distribution to its stockholders.
3. Voting
(a) Each holder of outstanding shares of Series B Preferred
Stock shall be entitled to the number of votes equal to the number of whole
shares of Common Stock into which the shares of Series B Preferred Stock held
by such holder are convertible (as adjusted from time to time pursuant to
Section 4 hereof), at each meeting of stockholders of the Corporation (and
written actions of stockholders in lieu of meetings) with respect to any and
all matters presented to the stockholders of the Corporation for their action
or consideration. Except as required by law or
4
<PAGE> 6
by the provisions of its Amended and Restated Certificate of Incorporation, as
amended from time to time, holders of Series B Preferred Stock and any other
outstanding series of Preferred Stock shall vote together with the holders of
Series A Preferred Stock and the Common Stock as a single class or "voting
group" within the meaning of the Colorado Business Corporation Act.
(b) The Corporation shall not (i) amend, alter or repeal the
preferences, special rights or other powers of the Series B Preferred Stock so
as to affect adversely the Series B Preferred Stock, or (ii) amend, alter or
modify its Articles of Incorporation to increase the number of authorized
shares of Series B Preferred Stock, without the written consent or affirmative
vote of the holders of a majority of the then outstanding shares of the Series
B Preferred Stock in writing or by vote at a meeting, consenting or voting (as
the case may be) separately as a class. For this purpose, without limiting
the generality of the foregoing, the authorization of any class or series of
stock with preference or priority over the Series B Preferred Stock as to the
right to receive either dividends or amounts distributable upon liquidation,
dissolution or winding up the Corporation shall be deemed to affect adversely
the Series B Preferred Stock, and the authorization of any class or series of
stock on a parity with the Series B Preferred Stock as to the rights to receive
either dividends or amounts distributable upon liquidation, dissolution or
winding up of the Corporation shall not be deemed to affect adversely the
Series B Preferred Stock.
4. Optional Conversion The holders of the Series B Preferred Stock
shall have conversion rights as follows (the "Conversion Rights"):
(a) Right to Convert Each share of Series B
Preferred Stock shall be convertible, at the option of the holder thereof, at
any time into such number of fully paid and nonassessable shares of Common
Stock as is determined by dividing $4.70 by the Conversion Price (as defined
below) in effect at the time of conversion for each share of Series B Preferred
Stock. The conversion price at which shares of Common Stock shall be
deliverable upon conversion of Series B Preferred Stock without the payment of
additional consideration by the holder thereof (the "Conversion Price") shall
initially be $4.70. Such initial
5
<PAGE> 7
Conversion Price, and the rates at which shares of Series B Preferred Stock may
be converted into shares of Common Stock, shall be subject to adjustment as
provided below.
In the event of a liquidation of the Corporation, the Conversion
Rights shall terminate at the close of business on the first full day preceding
the date fixed for the payment of any amounts distributable on liquidation to
the holders of Series B Preferred Stock.
(b) Fractional Shares No fractional shares of
Common Stock shall be issued upon conversion of the Series B Preferred Stock.
In lieu of any fractional shares to which the holder would otherwise be
entitled, the Corporation shall pay cash equal to such fraction multiplied by
the then effective Conversion Price.
(c) Mechanics of Conversion
(i) In order for a holder of Series B Preferred
Stock to convert shares of Series B Preferred Stock into shares of Common
Stock, such holder shall surrender the certificate or certificates for such
shares of Series B Preferred Stock (or at the principal office of the
Corporation if the Corporation serves as its own transfer agent), together with
written notice that such holder elects to convert all or any number of the
shares of the Series B Preferred Stock represented by such certificate or
certificates. Such notice shall state such holder's name or the names of the
nominees in which such holder wishes the certificate or certificates for shares
of Common Stock to be issued. If required by the Corporation, certificates
surrendered for conversion shall be endorsed or accompanied by a written
instrument or instruments of transfer, in form satisfactory to the Corporation,
duly executed by the registered holder or his, her, or its attorney duly
authorized in writing. The date of receipt of such certificates and notice by
the transfer agent (or by the Corporation if the Corporation serves as its own
transfer agent) shall be the Conversion Date. The Corporation shall, as soon
as practicable after the Conversion Date, issue and deliver at such office to
such holder, or to his, her, or its nominees, a certificate or certificates for
the number of shares of Common
6
<PAGE> 8
Stock to which such holder shall be entitled, together with cash in lieu of any
fraction of a share.
(ii) The Corporation shall at all times when the
Series B Preferred Stock shall be outstanding, reserve and keep available out
of its authorized but unissued stock, for the purpose of effecting the
conversion of the Series B Preferred Stock, such number of its duly authorized
shares of Common Stock as shall from time to time be sufficient to effect the
conversion of all outstanding Series B Preferred Stock. Before taking any
action which would cause an adjustment reducing the Conversion Price below the
then par value of the shares of Common Stock issuable upon conversion of the
Series B Preferred Stock, the Corporation will take any corporate action which
may, in the opinion of its counsel, be necessary in order that the Corporation
may validly and legally issue fully paid and nonassessable shares of Common
Stock at each such adjusted Conversion Price.
(d) Issue of Securities Deemed Issue of Additional Shares
of Common Stock
(i) Adjustment for Merger or Reorganization, etc.
In case of any consolidation or merger of the Corporation with or into another
corporation or the sale of all or substantially all of the assets of the
Corporation to another corporation, each share of Series B Preferred Stock
shall thereafter be convertible into the kind and amount of shares of stock or
other securities or property to which a holder of the number of shares of
Common Stock of the Corporation deliverable upon conversion of such Series B
Preferred Stock would have been entitled upon such consolidation, merger or
sale; and, in such case, appropriate adjustment (as determined in good faith
by the Board of Directors) shall be made in the application of the provisions
in this Section 4 set forth with respect to the rights and interest thereafter
of the holders of the Series B Preferred Stock, to the end that the provisions
set forth in this Section 4 (including provisions with respect to changes in
and other adjustments of the Conversion Price) shall thereafter be applicable,
as nearly as reasonably may be, in relation to any shares of stock or other
property thereafter deliverable upon the conversion of the Series B Preferred
Stock.
7
<PAGE> 9
(ii) No Impairment
The Corporation will not by amendment of its Restated
Certificate of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any
of the terms to be observed or performed hereunder by the Corporation, but will
at all times in good faith assist in the carrying out of all the provisions of
this Section 4 and in the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights of the holders of the
Series B Preferred Stock against impairment.
(iii) Certificate as to Adjustments
Upon the occurrence of each adjustment or
readjustment of the Conversion Price pursuant to this Section 4, the
Corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each holder of
Series B Preferred Stock a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. The Corporation shall, upon the written request at any
time of any holder of Series B Preferred Stock, furnish or cause to be
furnished to such holder a similar certificate setting forth (i) such
adjustments and readjustments, (ii) the Conversion Price then in effect, and
(iii) the number of shares of Common Stock and the amount, if any, of other
property which then would be received upon the conversion of Series B Preferred
Stock.
(5) Notice of Record Date In the event:
(i) that the Corporation declares a dividend (or
any other distribution) on its Common Stock
payable in Common Stock or other securities
of the Corporation;
(ii) that the Corporation subdivides or combines
its outstanding shares of Common Stock;
8
<PAGE> 10
(iii) of any reclassification of the Common Stock
of the Corporation (other than a subdivision
or combination of its outstanding shares of
Common Stock or a stock distribution
thereon), or of any consolidation or merger
of the Corporation into or with another
corporation, or of the sale of all or
substantially all of the assets of the
Corporation; or
(iv) of the involuntary or voluntary dissolution,
liquidation or winding up of the Corporation; then the Corporation shall cause
to be filed at its principal office or at the office of the transfer agent of
the Series B Preferred Stock, and shall cause to be mailed to the holders of
the Series B Preferred Stock at their last addresses as shown on the records of
the Corporation or such transfer agent, at least ten days prior to the record
date specified in (A) below or 20 days before the date specified in (B) below,
a notice stating
(A) the record date of such dividend, distribution,
subdivision or combination, or, if a record is
not to be taken, the date as of which the holders
of Common Stock of record to be entitled to such
dividend, distribution, subdivision or combination
are to be determined, or
(B) the date on which such reclassification,
consolidation, merger, sale, dissolution,
liquidation or winding up is expected to become
effective, and the date as of which it is expected
that holders of Common Stock of record shall be
entitled to exchange their shares of Common Stock
for securities or other property deliverable upon
such reclassification, consolidation, merger,
sale, dissolution or winding up.
IN WITNESS WHEREOF, the Corporation has caused its corporate seal to
be affixed hereto and this Certificate of Designation to
9
<PAGE> 11
be signed by its Chief Executive Officer and attested by its Secretary this
23rd day of July, 1996
/s/ Paul L. Devine
- - -----------------------------------------------
Paul L. Devine
Chairman, President and Chief Executive Officer
EPL Technologies, Inc.
/s/ Shawn J. Collins
- - -----------------------------------------------
Shawn J. Collins
Secretary
EPL Technologies, Inc.
10
<PAGE> 1
EXHIBIT 3.2
AMENDED AND RESTATED BYLAWS
OF
EPL TECHNOLOGIES, INC.
ARTICLE I - OFFICES
1.1 PRINCIPAL OFFICE. The principal offices of the Corporation shall
initially be at 200 Four Falls Corporate Center, Suite 315, W. Conshohocken, PA
19428, but the Corporation may, in the discretion of the board of directors,
maintain offices wherever the business of the Corporation may require.
1.2 REGISTERED OFFICE AND AGENT. The Corporation shall continuously
maintain in the State of Colorado a registered office and a registered agent
whose business office is identical with the registered office. The initial
registered office and the initial registered agent are specified in the original
Articles of Incorporation for the Corporation. The Corporation may change its
registered office, its registered agent, or both, upon filing a statement as
specified by law in the office of the Secretary of State of Colorado.
ARTICLE II - SHAREHOLDERS
2.1 TIME AND PLACE. Any meeting of the shareholders may be held at
such time and place, within or outside the State of Colorado, as may be fixed by
the board of directors or as shall be specified in the notice or waiver of
notice of the meeting. If the place for a meeting is not fixed by the board of
directors, such meeting shall be held at the Corporation's principal office.
2.2 ANNUAL SHAREHOLDERS' MEETING.
(a) An annual meeting of the shareholders of the Corporation
shall be held in each calendar year during the month of July on such date and at
such time fixed by the board of directors (or such other month, date and time as
the board of directors may fix or as fixed by the president in the absence of
action by the board of directors), for the purposes of electing directors and
for the transaction of such other business as may come before the meeting. If
the election of directors is not held on the day fixed as provided herein for
any annual meeting of shareholders, or any adjournment thereof, the board of
directors shall cause the election to be held at a special meeting of the
shareholders as soon thereafter as it may conveniently be held.
(b) A shareholder may apply to the district court in the
county in Colorado where the Corporation's principal office is located or if the
Corporation has no principal office in Colorado to the district court the county
in which the Corporation's registered office is located to seek an order that a
shareholder meeting be held (i) if an annual meeting was not held on a date
which is within the earlier of six months after the close of the last fiscal
year or fifteen months after the last annual meeting, or (ii) if the shareholder
participated in a proper call of or proper demand for a special meeting, and
notice of the special meeting was not given within thirty days after the date of
the call or the date the last of
<PAGE> 2
the demands necessary to require calling the meeting was received by the
Corporation pursuant to section 7-107-102(1)(b) of the Colorado Business
Corporation Act, or the special meeting was not held in accordance with the
notice.
2.3 SPECIAL SHAREHOLDERS' MEETING. A special shareholders meeting
for any purpose or purposes, may be called by the board of directors or the
president. The Corporation shall also hold a special shareholders meeting in the
event it receives, in the manner specified in Section 8.3, one or more written
demands for the meeting, stating the purpose or purposes for which it is to be
held, signed and dated by the holders of shares representing not less than
one-tenth of all of the votes entitled to be cast on any issue to be determined
at the meeting. Special meetings shall be held at the principal office of the
Corporation or at such other place as the board of directors or the president
may determine.
2.4 RECORD DATE FOR DETERMINATION OF SHAREHOLDERS.
(a) In order to make a determination of shareholders entitled
to (i) notice of or to vote at any shareholders meeting or at any adjournment of
a shareholders meeting, (ii) demand a special shareholders meeting, (iii) take
any other action or (iv) receive payment of a share dividend or a distribution,
or for any other purpose, the board of directors may fix a future date as the
record date for such determination of shareholders. The record date may be fixed
not more than seventy days before the date of the proposed action.
(b) Unless otherwise specified when the record date is fixed,
the time of day for determination of shareholders shall be as of the
Corporation's close of business on the record date.
(c) A determination of shareholders entitled, to be given
notice of or to vote at a shareholders meeting is effective for any adjournment
of the meeting unless the board of directors fixes a new record date, which the
board shall do if the meeting is adjourned to a date more than one hundred
twenty days after the date fixed for the original meeting.
(d) If no record date is otherwise fixed, the record date for
determining shareholders entitled to be given notice of and to vote at an annual
or special shareholders meeting is the day before the first notice is given to
shareholders.
(e) The record date for determining shareholders entitled to
take action without a meeting pursuant to Section 2.11 is the date a writing
upon which the action is taken is first received by the Corporation.
2.5 VOTING LIST.
(a) After a record date is fixed for a shareholders meeting,
the secretary shall prepare a list of the names of all its shareholders who are
entitled to be given notice of the meeting. The list (i) shall be arranged by
voting groups and within each voting group by class or series of shares, (ii)
shall be alphabetical within each class or series and
<PAGE> 3
(iii) shall show the address of, and the number of shares of each such class and
series that are held by, each shareholder.
(b) The shareholders' list shall be available for inspection
by any shareholder, beginning the earlier of ten days before the meeting for
which the list was prepared or two business days after notice of the meeting is
given and continuing through the meeting, and any adjournment thereof, at the
Corporation's principal office or at a place identified in the notice of the
meeting in the city where the meeting will be held.
(c) The secretary shall make the shareholders list available
at the meeting, and any shareholder or agent or attorney of a shareholder is
entitled to inspect the list at any time during the meeting or any adjournment
thereof.
2.6 NOTICE TO SHAREHOLDERS.
(a) The secretary shall give notice to shareholders of the
date, time, and place of each annual and special shareholders meeting no fewer
than ten nor more than sixty days before the date of the meeting; except that,
if the articles of incorporation are to be amended to increase the number of
authorized shares, at least thirty days notice shall be given. Except as
otherwise required by the Colorado Business Corporation Act (the "Act"), the
secretary shall be required to give such notice only to shareholders entitled to
vote at the meeting.
(b) Notice of an annual shareholders meeting need not include
a description of the purpose or purposes for which the meeting is called unless
a purpose of the meeting is to consider an amendment to the articles of
incorporation, a restatement of the articles of incorporation, a plan of merger
or share exchange, disposition of substantially all of the property of the
Corporation, consent by the Corporation to the disposition of property by
another entity, or dissolution of the Corporation.
(c) Notice of a special shareholders meeting shall include a
description of the purpose or purposes for which the meeting is called.
(d) Notice of a shareholders meeting shall be in writing and
shall be given
(i) by deposit in the United States mail, properly
addressed to the shareholder's address shown in the Corporation's current record
of shareholders, first class postage prepaid, and, if so given, shall be
effective when mailed; or
(ii) by telegraph, teletype, electronically transmitted
facsimile, electronic mail, mail, or private carrier or by personal delivery to
the shareholder, and, if so given, shall be effective when actually received by
the shareholder.
-3-
<PAGE> 4
(e) If an annual or special shareholders meeting is adjourned
to a different date, time, or place, notice need not be given of the new date,
time, or place if the new date, time, or place is announced at the meeting
before adjournment; provided, however, that, if a new record date for the
adjourned meeting is fixed pursuant to Section 2.4, notice of the adjourned
meeting shall be given to persons who are shareholders as of the new record
date.
(f) If three successive notices are given by the Corporation,
whether with respect to a shareholders meeting or otherwise, to a shareholder
and are returned as undeliverable, no further notices to such shareholder shall
be necessary until another address for the shareholder is made known to the
Corporation.
2.7 QUORUM. Shares entitled to vote as a separate voting group may
take action on a matter at a meeting only if a quorum of those shares exists
with respect to that matter. A majority of the votes entitled to be cast on the
matter by the voting group shall constitute a quorum of that voting group for
action on the matter. If a quorum does not exist with respect to any 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, and (subject to the next sentence) notice need
not be given of the new date, time, or place if the new date, time, or place is
announced at the meeting before adjournment. If a new record date for the
adjourned meeting is or must be fixed pursuant to Section 2.4, notice of the
adjourned meeting shall be given pursuant to Section 2.6 to persons who are
shareholders as of the new record date. At any adjourned meeting at which a
quorum exists, any matter may be acted upon that could have been acted upon at
the meeting originally called; provided, however, that, if new notice is given
of the adjourned meeting, then such notice shall state the purpose or purposes
of the adjourned meeting sufficiently to permit action on such matters. Once a
share is represented for any purpose at a meeting, including the purpose of
determining that a quorum exists, it is deemed present for quorum purposes for
the remainder of the meeting and for any adjournment of that meeting unless a
new record date is or shall be set for that adjourned meeting.
2.8 VOTING ENTITLEMENT OF SHARES. Except as stated in the articles
of incorporation, each outstanding share, regardless of class, is entitled to
one vote, and each fractional share is entitled to a corresponding fractional
vote, on each matter voted on at a shareholders meeting.
2.9 PROXIES, ACCEPTANCE OF VOTES AND CONSENTS.
(a) A shareholder may vote either in person or by proxy.
(b) An appointment of a proxy is not effective against the
Corporation until the appointment is received by the Corporation. An appointment
is valid for eleven months unless a different period is expressly provided in
the appointment form.
-4-
<PAGE> 5
(c) The Corporation may accept or reject any appointment of a
proxy, revocation of appointment of a proxy, vote, consent, waiver, or other
writing purportedly signed by or for a shareholder, if such acceptance or
rejection is in accordance with the provisions of Sections 7-107-203 and
7-107-205 of the Colorado Business Corporation Act.
2.10 WAIVER OF NOTICE.
(a) A shareholder may waive any notice required by the Act,
the articles of incorporation or these bylaws, whether before or after the date
or time stated in the notice as the date or time when any action will occur or
has occurred. The waiver shall be in writing, be signed by the shareholder
entitled to the notice and be delivered to the Corporation for inclusion in the
minutes or filing with the corporate records, but such delivery and filing shall
not be conditions of the effectiveness of the waiver.
(b) A shareholder's attendance at a meeting (i) waives
objection to lack of notice or defective notice of the meeting, unless the
shareholder at the beginning of the meeting objects to holding the meeting or
transacting business at the meeting because of lack of notice or defective
notice and (ii) waives objection to consideration of a particular matter at the
meeting that is not within the purpose or purposes described in the meeting
notice, unless the shareholder objects to considering the matter when it is
presented.
2.11 ACTION BY SHAREHOLDERS WITHOUT A MEETING. Any action required
or permitted to be taken at a shareholders meeting may be taken without a
meeting if all of the shareholders entitled to vote thereon consent to such
action in writing. Action taken pursuant to this Section 2.11 shall be effective
when the Corporation has received writings that describe and consent to the
action, signed by all of the shareholders entitled to vote thereon. Action taken
pursuant to this Section 2.11 shall be effective as of the date the last writing
necessary to effect the action is received by the Corporation, unless all of the
writings necessary to effect the action specify another date, which may be
before or after the date the writings are received by the Corporation. Such
action shall have the same effect as action taken at a meeting of shareholders
and may be described as such in any document. Any shareholder who has signed a
writing describing and consenting to an action taken pursuant to this Section
2.11 may revoke such consent by a writing signed by the shareholder describing
the action and stating that the shareholder's prior consent thereto is revoked,
if such writing is received by the Corporation before the effectiveness of the
action.
2.12 MEETINGS BY TELECOMMUNICATIONS. Any or all of the shareholders
may participate in an annual or special shareholders meeting by, or the meeting
may be conducted through the use of, any means of communication by which all
persons participating in the meeting may hear each other during the meeting. A
shareholder participating in a meeting by this means is deemed to be present in
person at the meeting.
-5-
<PAGE> 6
ARTICLE III - DIRECTORS
3.1 AUTHORITY OF THE BOARD OF DIRECTORS. The corporate powers shall
be exercised by or under the authority of, and the business and affairs of the
Corporation shall be managed under the direction of, a board of directors.
3.2 NUMBER. The number of directors shall be at least three (3) and
not more than seven (7). Within that range, the number of directors shall be as
stated by resolution adopted by the board of directors from time to time, but no
decrease in the number of directors shall have the effect of shortening the term
of any incumbent director.
3.3 QUALIFICATION. Directors shall be natural persons at least
eighteen years old but need not be residents of the State of Colorado or
shareholders of the Corporation.
3.4 ELECTION. The board of directors shall be elected at the annual
meeting of the shareholders or at a special meeting called for that purpose.
3.5 TERM. Each director shall be elected to hold office until the
next annual meeting of shareholders and until the director's successor is
elected and qualified.
3.6 RESIGNATION. A director may resign at any time by giving written
notice of his or her resignation to any other director or (if the director is
not also the secretary) to the secretary. The resignation shall be effective
when it is received by the other director or secretary, as the case may be,
unless the notice of resignation specifies a later effective date. Acceptance of
such resignation shall not be necessary to make it effective unless the notice
so provides.
3.7 REMOVAL. Any director may be removed by the shareholders of the
voting group that elected the director, with or without cause, at a meeting
called for that purpose. The notice of the meeting shall state that the purpose,
or one of the purposes, of the meeting is removal of the director. A director
may be removed only if the number of votes cast in favor of removal exceeds the
number of votes cast against removal.
3.8 VACANCIES.
(a) If a vacancy occurs on the board of directors, including a
vacancy resulting from an increase in the number of directors:
(i) The shareholders may fill the vacancy at the next
annual meeting or at a special meeting called for that purpose; or
(ii) The board of directors may fill the vacancy; or
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(iii) If the directors remaining in office constitute
fewer than a quorum of the board, they may fill the vacancy by the affirmative
vote of a majority of all the directors remaining in office.
(b) Notwithstanding Section 3.8(a), if the vacant office was
held by a director elected by a voting group of shareholders, then, if one or
more of the remaining directors were elected by the same voting group, only such
directors are entitled to vote to fill the vacancy if it is filled by directors,
and they may do so by the affirmative vote of a majority of such directors
remaining in office; and only the holders of shares of that voting group are
entitled to vote to fill the vacancy if it is filled by the shareholders.
(c) A vacancy that will occur at a specific later date, by
reason of a resignation that will become effective at a later date under Section
3.6 or otherwise, may be filled before the vacancy occurs, but the new director
may not take office until the vacancy occurs.
3.9 MEETINGS. The board of directors may hold regular or special
meetings within or outside of Colorado. A regular meeting shall be held without
notice immediately after and at the same place as the annual meeting of the
shareholders. The board of directors may, by resolution, establish other dates,
times and places for additional regular meetings, which may thereafter be held
without further notice. Special meetings may be called by the president or by
any two directors and shall be held at the principal office of the Corporation
unless otherwise specified in the notice of the meeting. At any time when the
board consists of a single director, that director may act at any time, date, or
place without notice.
3.10 NOTICE OF SPECIAL MEETING. Notice of a special meeting shall be
given to every director at least seventy-two (72) hours before the time of the
meeting, stating the date, time, and place of the meeting. The notice should
describe the purpose of the meeting. Notice may be given orally to the director,
personally or by telephone or other wire or wireless communication. Notice may
also be given in writing by telegraph, teletype, electronically transmitted
facsimile, electronic mail, mail, or private carrier. Notice shall be effective
at the earliest of (a) the time it is received; (b) five days after it is
deposited in the United States mail, properly addressed to the last address for
the director shown on the records of the Corporation, first class postage
prepaid or (c) the date shown on the return receipt if mailed by registered or
certified mail, return receipt requested, postage prepaid, in the United States
mail and if the return receipt is signed by the director to which the notice is
addressed.
3.11 QUORUM. Except as provided in Section 3.8, a majority of the
number of directors fixed in accordance with these Bylaws shall constitute a
quorum for the transaction of business at all meetings of the board of
directors. The act of a majority of the directors present at any meeting at
which a quorum is present shall be the act of the board of directors, except as
otherwise specifically required by law.
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3.12 WAIVER OF NOTICE.
(a) A director may waive any notice of a meeting before or
after the time and date of the meeting stated in the notice. Except as provided
by Section 3.12(b), the waiver shall be in writing and shall be signed by the
director. Such waiver shall be delivered to the secretary for filing with the
corporate records, but such delivery and filing shall not be conditions of the
effectiveness of the waiver.
(b) A director's attendance at or participation in a meeting
waives any required notice to him or her of the meeting unless, at the beginning
of the meeting or promptly upon his or her later arrival, the director objects
to holding the meeting or transacting business at the meeting because of lack of
notice or defective notice and does not thereafter vote for or assent to action
taken at the meeting.
3.13 MEETINGS BY TELECOMMUNICATIONS. One or more directors may
participate in a regular or special meeting by, or conduct the meeting through
the use of, any means of communication by which all directors participating may
hear each other during the meeting. A director participating in a meeting by
this means is deemed to be present in person at the meeting.
3.14 DEEMED ASSENT TO ACTION. A director who is present at a meeting
of the board of directors when corporate action is taken shall be deemed to have
assented to all action taken at the meeting unless
(i) The director objects at the beginning of the
meeting, or promptly upon his or her arrival, to holding the meeting or
transacting business at the meeting and does not thereafter vote for or assent
to any action taken at the meeting;
(ii) The director contemporaneously requests that his or
her dissent or abstention as to any specific action taken be entered in the
minutes of the meeting; or
(iii)The director causes written notice of his or her
dissent or abstention as to any specific action to be received by the presiding
officer of the meeting before adjournment of the meeting or by the secretary
(or, if the director is the secretary, by another director) promptly after
adjournment of the meeting.
The right of dissent or abstention pursuant to this Section 3.14 as to a
specific action is not available to a director who votes in favor of the action
taken.
3.15 ACTION BY DIRECTORS WITHOUT A MEETING. Any action required or
permitted by law to be taken at a board of directors meeting may be taken
without a meeting if all members of the board consent to such action in writing.
The action shall be deemed to have been so taken by the board at the time the
last director signs a writing describing the
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action taken, unless, before such time, any director has revoked his or her
consent by a writing signed by the director and received by the president or the
secretary or any other person authorized by board of directors to receive such a
revocation. Such action shall be effective at the time and date it is so taken
unless the directors establish a different effective time or date. Such action
has the same effect as action taken at a meeting of directors and may be
described as such in any document.
ARTICLE IV - COMMITTEES OF THE BOARD OF DIRECTORS
4.1 Subject to the provisions of section 7-109-106 of the Act, the
board of directors may create one or more committees and appoint one or more
members of the board of directors to serve on them. The creation of a committee
and appointment of members to it shall require the approval of a majority of all
the directors in office when the action is taken, whether or not those directors
constitute a quorum of the board.
4.2 The provisions of these bylaws governing meetings, action
without meeting, notice, waiver of notice, and quorum and voting requirements of
the board of directors apply to committees and their members as well.
4.3 To the extent specified by resolution adopted from time to time
by a majority of all the directors in office when the resolution is adopted,
whether or not those directors constitute a quorum of the board, each committee
shall exercise the authority of the board of directors with respect to the
corporate powers and the management of the business and affairs of the
Corporation, except that a committee shall not:
(a) authorize distributions;
(b) approve or propose to shareholders action that the
Colorado Business Corporation Act requires to be approved by shareholders;
(c) fill vacancies on the board of directors or on any of its
committees;
(d) amend the articles of incorporation pursuant to section
7-110-102 of the Colorado Business Corporation Act;
(e) adopt, amend, or repeal bylaws;
(f) approve a plan of merger not requiring shareholder
approval;
(g) authorize or approve reacquisition of shares, except
according to a formula or method prescribed by the board of directors; or
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(h) authorize or approve the issuance or sale of shares, or a
contract for the sale of shares, or determine the designation and relative
rights, preferences, and limitations of a class or series of shares, except that
the board of directors may authorize a committee or an officer to do so within
limits specifically prescribed by the board of directors.
4.4 The creation of, delegation of authority to, or action by, a
committee does not alone constitute compliance by a director with applicable
standards of conduct.
ARTICLE V - OFFICERS
5.1 GENERAL. The Corporation shall have as officers a president, a
secretary, and a treasurer, who shall be appointed by the board of directors.
The board of directors may appoint as additional officers a chairman and other
officers of the board. The board of directors, the president, and such other
subordinate officers as the board of directors may authorize from time to time,
acting singly, may appoint as additional officers one or more vice presidents,
assistant secretaries, assistant treasurers, and such other subordinate officers
as the board of directors, the president, or such other appointing officers deem
necessary or appropriate. The officers of the Corporation shall hold their
offices for such terms and shall exercise such authority and perform such duties
as shall be determined from time to time by these Bylaws, the board of
directors, or (with respect to officers whom are appointed by the president or
other appointing officers) the persons appointing them; provided, however, that
the board of directors may change the term of offices and the authority of any
officer appointed by the president or other appointing officers. Any two or more
offices may be held by the same person. The officers of the Corporation shall be
natural persons at least eighteen years old.
5.2 TERM. Each officer shall hold office from the time of
appointment until the time of removal or resignation pursuant to Section 3.6 or
until the officer's death.
5.3 REMOVAL AND RESIGNATION. Any officer appointed by the board of
directors may be removed at any time by the board of directors. Any officer
appointed by the president or other appointing officer may be removed at any
time by the board of directors or by the person appointing the officer. Any
officer may resign at any time by giving written notice of resignation to any
director (or to any director other than the resigning officer if the officer is
also a director), to the president, to the secretary or to the officer who
appointed the officer. Acceptance of such resignation shall not be necessary to
make it effective, unless the notice so provides.
5.4 PRESIDENT. The president shall preside at all meetings of
shareholders, and the president shall also preside at all meetings of the board
of directors unless the board of directors has appointed a chairman, vice
chairman, or other officer of the board and has authorized such person to
preside at meetings of the board of directors instead of the president. Subject
to the direction and control of the board of directors, the president shall be
the chief
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executive officer of the Corporation and, as such shall have general and active
management of the business of the Corporation and shall see that all orders and
resolutions of the board of directors are carried into effect. The president may
negotiate, enter into and execute contracts, deeds, and other instruments on
behalf of the Corporation as are necessary and appropriate to the conduct to the
business and affairs of the Corporation or as are approved by the board of
directors. The president shall have such additional authority and duties as are
appropriate and customary for the office of president and chief executive
officer, except as the same may be expanded or limited by the board of directors
from time to time.
5.5 VICE PRESIDENT. The vice president, if any, or, if there are
more than one, the vice presidents in the order determined by the board of
directors or the president (or, if no such determination is made, in the order
of their appointment), shall be the officer or officers next in seniority after
the president. Each vice president shall have such authority and duties as are
prescribed by the board of directors or the president. Upon the death, absence,
or disability of the president, the vice president, if any, or, if there are
more than one, the vice presidents in the order of seniority as determined
above, shall have the authority and duties of the president.
5.6 SECRETARY. The secretary shall be responsible for the
preparation and maintenance of minutes of the meetings of the board of directors
and of the shareholders and of the other records and information required to be
kept by the Corporation under section 7-116-101 of the Act and for
authenticating records of the Corporation. The secretary shall also give, or
cause to be given, notice of all meetings of the shareholders and special
meetings of the board of directors, keep the minutes of such meetings, have
charge of the corporate seal and have authority to affix the corporate seal to
any instrument requiring it (and, when so affixed, it may be attested by the
secretary's signature), be responsible for the maintenance of all other
corporate records and files and for the preparation and filing of reports to
governmental agencies (other than tax returns), and have such other authority
and duties as are appropriate and customary for the office of secretary, except
as the same may be expanded or limited by the board of directors from time to
time.
5.7 ASSISTANT SECRETARY. The assistant secretary, if any, or, if
there are more than one, the assistant secretaries shall, under the supervision
of the secretary, perform such duties and have such authority as may be
prescribed from time to time by the board of directors or the secretary. Upon
the death, absence, or disability of the secretary, the assistant secretary, if
any, or, if there are more than one, the assistant secretaries in the order
designated by the board of directors or the secretary (or, if no such
determination is made, in the order of their appointment), shall have the
authority and duties of the secretary.
5.8 TREASURER. The treasurer shall have control of the funds and the
care and custody of all stocks, bonds, and other securities owned by the
Corporation, and shall be responsible for the preparation and filing of tax
returns. The treasurer shall receive all moneys paid to the Corporation and,
subject to any limits imposed by the board of directors, shall have authority to
give receipts and vouchers, to sign and endorse checks and warrants in
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the Corporation's name and on the Corporation's behalf, and give full discharge
for the same. The treasurer shall also have charge of disbursement of funds of
the Corporation, shall keep full and accurate records of the receipts and
disbursements, and shall deposit all moneys and other valuable effects in the
name and to the credit of the Corporation in such depositories as shall be
designated by the board of directors. The treasurer shall have such additional
authority and duties as are appropriate and customary for the office of
treasurer, except as the same may be expanded or limited by the board of
directors from time to time.
5.9 ASSISTANT TREASURER. The assistant treasurer, if any, or, if
there are more than one, the assistant treasurers shall, under the supervision
of the treasurer, have such authority and duties as may be prescribed from time
to time by the board of directors or the treasurer. Upon the death, absence, or
disability of the treasurer, the assistant treasurer, if any, or if there are
more than one, the assistant treasurers in the order determined by the board of
directors or the treasurer (or, if no such determination is made, in the order
of their appointment), shall have the authority and duties of the treasurer.
5.10 COMPENSATION. Officers shall receive such compensation for
their services as may be authorized or ratified by the board of directors.
Election or appointment of an officer shall not of itself create a contractual
right to compensation for services performed as such officer.
ARTICLE VI - INDEMNIFICATION
6.1 DEFINITIONS. As used in this Article VI:
(a) "Corporation" includes any domestic or foreign entity that
is a predecessor of the Corporation by reason of a merger or other transaction
in which the predecessor's existence ceased upon consummation of the
transaction.
(b) "Director" means an individual who is or was a director of
the Corporation or an individual who, while a director of the Corporation, is or
was serving at the Corporation's request as a director, officer, partner,
trustee, employee, fiduciary or agent of another domestic or foreign corporation
or other person or of an employee benefit plan. A director is considered to be
serving an employee benefit plan at the Corporation's request if his or her
duties to the Corporation also impose duties on, or otherwise involve services
by, the director to the plan or to participants in or beneficiaries of the plan.
"Director" includes, unless the context requires otherwise, the estate or
personal representative of a director.
(c) "Expenses" includes counsel fees.
(d) "Liability" means the obligation incurred with respect to
a proceeding to pay a judgment, settlement, penalty, fine, including an excise
tax assessed with respect to an employee benefit plan, or reasonable expenses.
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(e) "Official capacity" means, when used with respect to a
director, the office of director in the Corporation and, when used with respect
to a person other than a director as contemplated in Section 6.7, the office in
the Corporation held by the officer or the employment, fiduciary or agency
relationship undertaken by the employee, fiduciary or agent on behalf of the
Corporation. "Official capacity" does not include service for any other domestic
or foreign corporation or other person or employee benefit plan.
(f) "Party" includes a person who was, is or is threatened to
be made, a named defendant or respondent in a proceeding.
(g) "Proceeding" means any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative and whether formal or informal.
6.2 AUTHORITY TO INDEMNIFY DIRECTORS.
(a) Except as provided in Section 6.2(d), the Corporation
shall indemnify a person made a party to a proceeding because the person is or
was a director against liability incurred in the proceeding if:
(i) The person conducted himself or herself in good
faith; and
(ii) The person reasonably believed:
(A) In the case of conduct in an official capacity
with the Corporation, that his or her conduct was in the Corporation's best
interests; and
(B) In all other cases, that his or her conduct was
at least not opposed to the Corporation's best interests; and
(iii) In the case of any criminal proceeding, the person
had no reasonable cause to believe his or her conduct was unlawful.
(b) A director's conduct with respect to an employee benefit
plan for a purpose the director reasonably believed to be in the interests of
the participants in or beneficiaries of the plan is conduct that satisfies the
requirement of Section 6.2(a)(ii)(B). A director's conduct with respect to an
employee benefit plan for a purpose that the director did not reasonably believe
to be in the interests of the participants in or beneficiaries of the plan shall
be deemed not to satisfy the requirements of Section 6.2(a)(i).
(c) The termination of a proceeding by judgment, order,
settlement, conviction or upon a plea of nolo contendere or its equivalent is
not, of itself, determinative that the director did not meet the standard of
conduct described in this Section 6.2.
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(d) Except to the extent authorized by a court as provided in
Section 6.5, the Corporation may not indemnify a director under this Section
6.2:
(i) In connection with a proceeding by or in the right
of the Corporation in which the director was adjudged liable to the Corporation;
or
(ii) In connection with any other proceeding charging
that the director derived an improper personal benefit, whether or not involving
action in an official capacity, in which proceeding the director was adjudged
liable on the basis that he or she derived an improper personal benefit.
(e) Indemnification permitted under this Section 6.2 in
connection with a proceeding by or in the right of the Corporation is limited to
reasonable expenses incurred in connection with the proceeding.
6.3 MANDATORY INDEMNIFICATION OF DIRECTORS. The Corporation shall
indemnify a person who was wholly successful, on the merits or otherwise, in the
defense of any proceeding to which the person was a party because the person is
or was a director, against reasonable expenses incurred by him or her in
connection with the proceeding.
6.4 ADVANCE OF EXPENSES TO DIRECTORS.
(a) The Corporation shall pay for or reimburse the reasonable
expenses incurred by a director who is a party to a proceeding in advance of
final disposition of the proceeding if:
(i) The director furnishes to the Corporation a written
affirmation of the director's good faith belief that he or she has met the
standard of conduct described in Section 6.2.
(ii) The director furnishes to the Corporation a written
undertaking, executed personally or on the director's behalf, to repay the
advance if it is ultimately determined that he or she did not meet the standard
of conduct; and
(iii) A determination is made that the facts then known
to those making the determination would not preclude indemnification under this
Article VI.
(b) The undertaking required by Section 6.4(a)(ii) shall be an
unlimited general obligation of the director but need not be secured and may be
accepted without reference to financial ability to make repayment.
(c) Determinations and authorizations of payments under this
Section 6.4 shall be made in the manner specified in Section 6.6.
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6.5 COURT-ORDERED INDEMNIFICATION OF DIRECTORS. A director who is or
was a party to a proceeding may apply for indemnification to the court
conducting the proceeding or to another court of competent jurisdiction. On
receipt of an application, the court, after giving any notice the court
considers necessary, may order indemnification in the following manner:
(i) If it determines that the director is entitled to
mandatory indemnification under Section 6.3, the court shall order
indemnification, in which case the court shall also order the Corporation to pay
the director's reasonable expenses incurred to obtain court-ordered
indemnification.
(ii) If it determines that the director is fairly and
reasonably entitled to indemnification in view of all the relevant
circumstances, whether or not the director met the standard of conduct set forth
in Section 6.2(a) or was adjudged liable in the circumstances described in
Section 6.2(d), the court may order such indemnification as the court deems
proper; except that the indemnification with respect to any proceeding in which
liability shall have been adjudged in the circumstances described in Section
6.2(d) is limited to reasonable expenses incurred in connection with the
proceeding and reasonable expenses incurred to obtain court ordered
indemnification.
6.6 DETERMINATION AND AUTHORIZATION OF INDEMNIFICATION OF DIRECTORS.
(a) Except to the extent authorized by a court as provided in
Section 6.5, the Corporation shall not indemnify a director under Section 6.2
unless authorized in the specific case after a determination has been made that
indemnification of the director is permissible in the circumstances because the
director has met the standard of conduct set forth in Section 6.2. The
Corporation shall not advance expenses to a director under Section 6.4 unless
authorized in the specific case after the written affirmation and undertaking
required by Section 6.4(a)(i) and 6.4(a)(ii) are received and the determination
required by Section 6.4(a)(iii) has been made.
(b) The determinations required by Section 6.6(a) shall be
made:
(i) By the board of directors by a majority vote of
those present at a meeting at which a quorum is present, and only those
directors not parties to the proceeding shall be counted in satisfying the
quorum; or
(ii) If a quorum cannot be obtained, by a majority vote
of a committee of the board of directors designated by the board of directors,
which committee shall consist of two or more directors not parties to the
proceeding; except that directors who are parties to the proceeding may
participate in the designation of directors for the committee.
(c) If a quorum cannot be obtained as contemplated in Section
6.6(b)(i), and a committee cannot be established under Section 6.6(b)(ii), or
even if a
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quorum is obtained or a committee is designated, if a majority of the directors
constituting such quorum or such committee so directs, the determination
required to be made by Section 6.6(a) shall be made:
(i) By independent legal counsel selected by a vote of
the board of directors or the committee in the manner specified in Section
6.6(b)(i) or 6.6(b)(ii), or, if a quorum of the full board cannot be obtained
and a committee cannot be established, by independent legal counsel selected by
a majority vote of the full board of directors; or
(ii) By the shareholders.
(d) Authorization of indemnification and advance of expenses
shall be made in the same manner as the determination that indemnification or
advance of expenses is permissible; except that, if the determination that
indemnification or advance of expenses is required or permissible is made by
independent legal counsel, authorization of indemnification and advance of
expenses shall be made by the body that selected such counsel.
6.7 INDEMNIFICATION OF OFFICERS, EMPLOYEES, FIDUCIARIES, AND AGENTS.
(a) The Corporation shall indemnify and advance expenses to an
officer to the same extent as a director.
(b) The Corporation may indemnify and advance expenses to an
employee, fiduciary or agent of the Corporation to the same extent as to a
director.
(c) The Corporation may also indemnify and advance expenses to
an officer, employee, fiduciary or agent who is not a director to a greater
extent than is provided in these bylaws, if not inconsistent with public policy,
and if provided for by general or specific action of its board of directors or
shareholders or by contract.
6.8 INSURANCE. The Corporation may purchase and maintain insurance
on behalf of a person who is or was a director, officer, employee, fiduciary or
agent of the Corporation, or who, while a director, officer, employee, fiduciary
or agent of the Corporation, is or was serving at the request of the Corporation
as a director, officer, partner, trustee, employee, fiduciary or agent of
another domestic or foreign corporation or other person or of an employee
benefit plan, against liability asserted against or incurred by the person in
that capacity or arising from his or her status as a director, officer,
employee, fiduciary or agent, whether or not the Corporation would have power to
indemnify the person against the same liability under Section 6.2, 6.3, or 6.7.
Any such insurance may be procured from any insurance company designated by the
board of directors, whether such insurance company is formed under the laws of
this state or any other jurisdiction of the United States or elsewhere,
including any insurance company in which the Corporation has an equity or any
other interest through stock ownership or otherwise.
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6.9 NOTICE TO SHAREHOLDERS OF INDEMNIFICATION OF DIRECTOR. If the
Corporation indemnifies or advances expenses to a director under this Article VI
in connection with a proceeding by or in the right of the Corporation, the
Corporation shall give written notice of the indemnification or advance to the
shareholders with or before the notice of the next shareholders meeting. If the
next shareholder action is taken without a meeting at the instigation of the
board of directors, such notice shall be given to the shareholders at or before
the time the first shareholder signs a writing consenting to such action.
ARTICLE VII - SHARES
7.1 CERTIFICATES. Certificates representing shares of the capital
stock of the Corporation shall be in such form as is approved by the board of
directors and shall be signed by the chairman or vice chairman of the board of
directors (if any), or the president or any vice president, and by the secretary
or an assistant secretary or the treasurer or an assistant treasurer. All
certificates shall be consecutively numbered, and the names of the owners, the
number of shares and the date of issue shall be entered on the books of the
Corporation. Each certificate representing shares shall state upon its face:
(a) that the Corporation is organized under the laws of the
State of Colorado;
(b) the name of the person to whom the shares are issued;
(c) the number and class of the shares and the designation of
the series, if any, that the certificate represents;
(d) the par value, if any, of each share represented by the
certificate;
(e) on the front or the back, (i) a summary of the
designations, preferences, limitations, and relative rights applicable to each
class, the variations in preferences, limitations, and rights determined for
each series, and the authority of the board of directors to determine variations
for future classes or series; or (ii) a conspicuous statement that the
Corporation will furnish to the shareholder, on request in writing and without
charge, information concerning the designations, preferences, limitations, and
relative rights applicable to each class, the variations in preferences,
limitations, and rights determined for each series, and the authority of the
board of directors to determine variations for future classes or series; and
(f) any restrictions imposed by the Corporation upon the
transfer of the shares represented by the certificate.
7.2 FACSIMILE SIGNATURES. Where a certificate is signed (a) by a
transfer agent other than the Corporation or its employee, or (b) by a registrar
other than the
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Corporation or its employee, any or all of the officers' signatures on the
certificate required by Section 7.1 may be facsimile. If any officer, transfer
agent or registrar who has signed, or whose facsimile signature or signatures
have been placed upon, any certificate, shall cease to be such officer, transfer
agent or registrar, whether because of death, resignation, or otherwise, before
the certificate is issued by the Corporation, it may nevertheless be issued by
the Corporation with the same effect as if he or she were such officer, transfer
agent or registrar at the date of issue.
7.3 TRANSFERS OF SHARES. Transfers of shares shall be made on the
books of the Corporation only upon presentation of the certificate or
certificates representing such shares properly endorsed by the person or persons
appearing upon the face of such certificate to be the owner, or accompanied by a
proper transfer or assignment separate from the certificate, except as may
otherwise be expressly provided by the statutes of the State of Colorado or by
order of a court of competent jurisdiction. The officers or transfer agents of
the Corporation may, in their discretion, require a signature guaranty before
making any transfer. Except to the extent the Corporation otherwise provides
pursuant to Section 7.4 and except for the assertion of dissenters' rights to
the extent provided in Article 113 of the Colorado Business Corporation Act, the
Corporation shall be entitled to treat the person in whose name any shares are
registered on its books as the owner of those shares for all purposes and shall
not be bound to recognize any equitable or other claim or interest in the shares
on the part of any other person, whether or not the Corporation shall have
notice of such claim or interest.
7.4 LOST, STOLEN OR DESTROYED CERTIFICATES. Any Shareholder claiming
that his Certificate for shares is lost, stolen or destroyed may make an
affidavit or affirmation of that fact and lodge the same with the Secretary of
the Corporation with a signed application for a new certificate. Then, upon the
receipt of a satisfactory indemnity bond in an amount not exceeding double the
value of the Shares represented by the lost Certificate (the actual amount
required to be determined by the President and Treasurer), the Corporation shall
issue a new Certificate for the same number of shares and the same class and
series of stock as represented by the Certificate which was lost, stolen or
destroyed.
7.5 SHARES HELD FOR ACCOUNT OF ANOTHER. The board of directors may
adopt by resolution a procedure whereby a shareholder of the Corporation may
certify in writing to the Corporation that all or a portion of the shares
registered in the name of such shareholder are held for the account of a
specified person or persons. The resolution shall set forth:
(a) the classification of shareholders who may certify;
(b) the purpose or purposes for which the certification may be
made;
(c) the form of certification and the information to be
contained therein;
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(d) if the certification is with respect to a record date or
closing of the stock transfer books, the time after the record date or the
closing of the stock transfer books within which the certification must be
received by the Corporation; and
(e) such other provisions with respect to the procedure as are
deemed necessary or desirable. Upon receipt by the Corporation of a
certification complying with the procedure, the persons specified in the
certification shall be deemed, for the purpose or purposes set forth in the
certification, to be the holders of record of the number of shares specified in
place of the shareholder making the certification.
ARTICLE VIII - VOTE OF SECURITIES HELD BY THE CORPORATION
Unless otherwise ordered by the Board, the President shall have full
power and authority to attend, to act and to vote at any meeting of security
holders of other corporations in which the Corporation may hold securities. At
such meetings, the President may exercise any and all of the Corporation's
ownership rights and powers. The Board may, from time to time, confer like
powers upon any other person or persons.
ARTICLE IX - MISCELLANEOUS
9.1 CORPORATE SEAL. The board of directors may adopt a seal,
circular in form and bearing the name of the Corporation and the words "SEAL"
and "COLORADO," which, when adopted, shall constitute the seal of the
Corporation. The seal may be used by causing it or a facsimile of it to be
impressed, affixed, manually reproduced or rubber stamped with indelible ink.
9.2 FISCAL YEAR. The board of directors may, by resolution, adopt a
fiscal year for the Corporation.
9.3 RECEIPT OF NOTICES BY THE CORPORATION. Notices, shareholder
writings consenting to an action, and other documents or writings shall be
deemed to have been received by the Corporation when they are received:
(a) at the registered office of the Corporation in the State
of Colorado;
(b) at the principal office of the Corporation (as that office
is designated in the most recent document filed by the Corporation with the
Secretary of State for the State of Colorado designating a principal office)
addressed to the attention of the secretary of the Corporation;
(c) by the secretary of the Corporation wherever the secretary
may be found; or
-19-
<PAGE> 20
(d) by any other person authorized from time to time by the
board of directors, the president or the secretary to receive such writings,
wherever such person is found.
9.4 AMENDMENT OF BYLAWS. These Bylaws may at any time and from time
to time be amended, supplemented or repealed by the board of directors.
The undersigned secretary of the Corporation hereby certifies that
the foregoing bylaws are the bylaws of the Corporation in effect on
May 3, 1996.
By: /s/ SHAWN J. COLLINS
--------------------------------------
Shawn J. Collins, Secretary
-20-
<PAGE> 1
NUMBER [LOGO] SHARES
EPL TECHNOLOGIES, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF COLORADO
SERIES B CONVERTIBLE PREFERRED STOCK
PAR VALUE $0.01 PER SHARE
THIS CERTIFIES THAT SPECIMEN is the owner of __________________________________
shares of the SERIES B CONVERTIBLE PREFERRED STOCK of EPL TECHNOLOGIES, INC.,
fully paid and non-assessable, transferable only on the books of the
Corporation in person or by Attorney upon surrender of this Certificate
properly endorsed.
The Corporation will furnish to any shareholder upon request and
without charge, a full or summary statement of the designations, voting rights,
preferences, limitations and special rights of the shares of each class
authorized to be issued.
IN WITNESS WHEREOF, the said Corporation has caused this Certificate to
be signed by its duly authorized officers and its Corporate Seal to be hereunto
affixed this _________________________ day of __________________ A.D. 19 ______.
_______________________________ ________________________________
CHAIRMAN SECRETARY
[SEAL]
<PAGE> 2
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<S> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT - _____ Custodian______ under
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT ENT - as joint tenants with a right of survivorship Uniform Gifts to Minor Act__________
and not as tenants in common (State)
</TABLE>
Additional abbreviations may also be used though not in the above list.
For Value Received, __hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- - --------------------------------------
- - --------------------------------------
- - --------------------------------------------------------------------------------
Shares represented by the within Certificate, and do hereby irrevocably
constitute and appoint________________________________Attorney to transfer the
said Shares on the books of the within named Corporation with full power of
substitution in the premises.
Dated_______________ 19__
In presence of
- - ----------------------------------------------------------------
<PAGE> 1
SUBSCRIPTION AGREEMENT
EPL TECHNOLOGIES, INC.
200 Four Falls Corporate Center, Suite 315
West Conshohocken, PA 19428
RE: PURCHASE OF SHARES OF THE SERIES B CONVERTIBLE PREFERRED
STOCK OF EPL TECHNOLOGIES, INC.
Ladies and Gentlemen:
1. Subscription
(a) This Subscription Agreement (the "Agreement") evidences the
agreement of each of Lancer Partners, L.P., a New York limited partnership (the
"Partnership") and Lancer Off-Shore, Inc., a company formed under the laws of
the British Virgin Islands (the "Corporation" (each of the Partnership and the
Company being a "Subscriber" and collectively, the "Subscribers")) to purchase
shares (the "Shares") of the Series B Convertible Preferred Stock of EPL
Technologies, Inc., a Colorado corporation (the "Company") at a subscription
price of $4.70 per share (determined as a 20% discount from the price of $5
7/8, the closing bid price for a share of the Company's Common Stock as quoted
on the National Association of Securities Dealers "bulletin board" on June 26,
1996.
(b) Each Subscriber hereby (i) tenders this subscription (the
"Subscription") and (ii) subscribes for the purchase of the Shares for the
aggregate purchase price of $2,500,000 (the "Purchase Price"), of which the
Partnership subscribes for Shares with an aggregate purchase price of
$2,200,000 and the Corporation subscribes for Shares with an aggregate purchase
price of $300,000.
(c) The Purchase Price shall be due and payable on the Closing
Date (as defined below) and shall be paid by the Company crediting the
Subscribers with the capital contribution of $2,500,000 made by the Subscribers
on June 28, 1996 to the Company as payment in full for the purchase of the
Shares.
2. Closing
The closing of the sale and purchase of the Shares by the Subscriber
and the crediting of the payment of the Purchase Price
<PAGE> 2
therefor (the "Closing") shall take place at the offices of the Company, on
July 23, 1996, or at such other place and on such other date as shall be
selected by the Company. The date on which the Closing is held is sometimes
referred to herein as the "Closing Date."
3. Investor Status
Each Subscriber has read the definition of "Accredited Investor" in
Rule 501 of Regulation D of the rules and regulations of the U.S. Securities
and Exchange Commission promulgated under the Securities Act of 1933, as
amended, in the form attached hereto as Attachment A, and certifies and
represents to the Company, intending that the Company rely thereon in issuing
the Shares hereunder, that such Subscriber is an "Accredited Investor."
4. Representations and Warranties
Each Subscriber hereby jointly and severally represents and warrants
to the Company, intending that the Company rely thereon in issuing the Shares,
as follows:
(a) Pending the effectiveness of the registration of the purchased
Shares of the Company pursuant to the registration rights granted to the
Subscriber, the Shares subscribed for by each Subscriber are being acquired for
the account of the Subscriber for investment, with no intention of distributing
or selling any portion thereof and not with a view to any distribution thereof
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act"), and will not be transferred by the Subscriber in violation of the
Securities Act and the then applicable rules or regulations thereunder. No one
other than the Subscriber has any interest in or any right to acquire the
Shares.
(b) The Subscriber's financial condition is such that it is able
to bear the risk of holding the Shares for an indefinite period of time and the
risk of loss of its entire investment in the Company. The Subscriber has such
knowledge and experience in the financial and business matters that it is
capable of evaluating the perils and risks of an acquisition of the Shares.
(c) The Subscriber has not received any offering material relating
to the issuance and sale of the Shares; however, it has been afforded an
opportunity to ask questions of and receive answers from officers and directors
of the Company to evaluate the merits and risks of this investment and has
received and reviewed the Company's Report on Form 10-K/A for the year ended
2
<PAGE> 3
December 31, 1995 and its Report on Form 10-Q for the period ended March 31,
1996.
(d) No representations or warranties have been made to the
Subscriber by the Company, any director or officer of the Company or any agent
of said persons or entities, other than as set forth in this Agreement.
(e) The Subscriber has been advised to consult with an attorney
regarding legal matters concerning the Company and its investment in the
Shares.
(f) The Subscriber acknowledges and is aware of the following:
(i) No state or federal agency has made any finding or
determination as the the fairness of the terms of the offering and sale of the
Shares.
(ii) Neither the Shares nor the shares of Common Stock to
be issued upon conversion of the Shares (the "Conversion Shares") have been
registered under the Securities Act and, accordingly, must be held until they
are subsequently registered under the Securities Act or unless, in the opinion
of counsel of the Company, a sale or transfer may be made without registration
thereunder. Until the registration of the Shares and/or the Conversion Shares
is completed, the Subscriber may not be able to make any sales or transfers of
the Shares or the Conversion Shares and transfers prior to registration of the
Shares or the Conversion Shares will require prior approval of the officers and
directors of the Company. Any certificate evidencing the Shares and the
Conversion Shares will bear a legend restricting the transfer thereof
consistent with the foregoing and a notation shall be made in the stock
transfer records of the Company restricting the transfer of any of the Shares
or the Conversion Shares in a manner inconsistent with the foregoing.
(iii) The Company has agreed to register the Conversion
Shares under the Securities Act as soon as practicable upon the request by
shareholders holding not less than 51% of the Conversion Shares following the
conversion of the Shares into the Conversion Shares.
(g) The Subscriber's additional information as to its form of
ownership set forth on the signature page attached hereto is an additional
representation and warranty incorporated herein by reference as if fully set
forth herein.
3
<PAGE> 4
The foregoing representations and warranties are true and accurate as
of the date hereof and shall be true and accurate as of the Closing Date and
shall survive the Closing of the purchase of the Shares by the subscriber. If
in any respect such representations and warranties shall not be true and
accurate prior to the Closing, the Subscriber shall give immediate notice of
such fact to the Company by telecopy or hand delivery, specifying which
representations and warranties are not true and accurate and the reasons
therefor.
5. Indemnity
Each Subscriber hereby agrees, jointly and severally, to indemnify the
Company and its affiliates, officers, directors and employees from and against
any and all loss, damage, liability, cost or expense (including without
limitation reasonable attorneys' fees), which the Company or any of them may
incur by reason of or in connection with any misrepresentation made by any
Subscriber or the failure of any Subscriber to fulfill any covenants or
agreements under this Agreement.
6. Registration Rights
Upon the terms and subject to the conditions of the Stock Registration
Rights Agreement which has been provided to the subscriber, the Company shall
prepare and file with the Securities and Exchange Commission a registration
statement on Form S-3 to register the Conversion Shares as soon as practicable
upon the request by shareholders holding not less than 51% of the Conversion
Shares following the conversion of all of the Shares into the Conversion
Shares. The Company will use its best efforts to cause such registration
statement to become effective.
7. No Revocation
The Subscriber agrees that this Agreement and any agreement of the
Subscriber made hereunder is irrevocable, and that this Agreement shall survive
the death, disability or dissolution of the Subscriber.
8. Counterparts
This Agreement may be executed in any number of counterparts, each of
which shall be an original but all of which taken together shall constitute one
agreement.
9. Backup Withholding and Tax I.D. Number Certification
4
<PAGE> 5
Under penalties of perjury, the Subscriber certifies that the
information provided in this section is true, correct, and complete and that
(1) The number shown on this Agreement is the Subscriber's correct
Taxpayer Identification Number (or the subscriber is waiting for a
number to be issued), and
(2) The Subscriber is not subject to backup withholding either because the
Subscriber has not been notified by the Internal Revenue Service
("IRS") that it is subject to backup withholding as a result of a
failure to report all interest or dividends, or the IRS has notified
the Subscriber that it is no longer subject to backup withholding.
5
<PAGE> 6
10. Governing Law
This Agreement shall be governed by and constructed under the laws of
the Commonwealth of Pennsylvania.
Very truly yours,
SUBSCRIBERS:
LANCER PARTNERS, L.P.
By:/s/ M. LAUER
-------------------------
Title: General Partner
Address: 237 Park Avenue
-------------------
8th Floor New York, New York
Total Purchase Price: $2,200,000 ----------------------------
10017
-----
U.S, Taxpayer ID Number:
133798983
---------------------------
LANCER OFF-SHORE, INC.
By:/s/ M. LAUER
-------------------------
Title: General Partner
Address: c/o CITCO Fund
-------------------
Services, Kaya Flamboyan 9,
Total Purchase Price: $300,000 ----------------------------
P.O. Box 812, Curacao,
----------------------------
Netherlands Antilles
----------------------------
U.S, Taxpayer ID Number:
---------------------------
ACCEPTED BY:
By:/s/ PAUL L. DEVINE
----------------------------
Paul L. Devine,
Chairman and President
6
<PAGE> 7
SHARE REGISTRATION RIGHTS AGREEMENT
This Share Registration Rights Agreement (the "Agreement") made and entered
into as of the 23rd day of July, 1996, by and among EPL Technologies, Inc., a
Colordo corporation and each of Lancer Partners, L.P., a New York limited
partnership (the "Partnership") and Lancer Off-Shore, Inc., a company formed
under the laws of the British Virgin Islands (the "Corporation") (each of the
Partnership and the Corporation being a "Shareholder" and collectively, the
"Shareholders");
W I T N E S S E T H:
WHEREAS, simultaneously with the execution hereof each of the
Shareholders has entered into a Subscription Agreement (the "Subscription
Agreement") pursuant to which each of the Shareholders has agreed to purchase
shares of Series B Convertible Preferred Stock (the "Shares") of EPL
Technologies, Inc., a Colorado corporation (the "Company"); and
WHEREAS, the Shareholders, absent the registration of the shares of
Common Stock issuable upon conversion of the Shares (the "Registrable Shares"),
is precluded from selling the Registrable Shares in the United States for,
under current law, at least two years from the date of issuance because neither
the Shares nor the Registrable Shares have been registered under the Securities
Act of 1933, as amended, (the "1933 Act"); and
WHEREAS, the Shareholders wish to have the ability from time to time
to be able to sell some or all of the Registrable Shares in order to maintain
liquidity of the Shareholders' portfolio; and
WHEREAS, in order to induce the Shareholders to enter into the
Subscription Agreement and purchase the Shares, the Company is willing to
effect the registration of the Registrable Shares under the 1933 Act as
hereinafter provided;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto do hereby agree as follows:
1. Registration of the Shares
(a) Upon the terms and subject to the conditions of this
Agreement, the Company shall, at its expense, upon the written request of
Shareholders representing not less than 51% of
1
<PAGE> 8
the Registrable Shares, given at any time after the conversion of the Shares
into the Registrable Shares, prepare and file with the Securities and Exchange
Commission in Washington, D.C. (the "Commission") in accordance with the
provisions of the 1933 Act and the rules and regulations of the Commission
thereunder the following:
(i) A registration statement on Form S-3 and
appropriate amendments, if any, to the registration statement necessary to
cause such registration statement to become effective, to register the
Registrable Shares under the 1933 Act; and
(ii) Such post-effective amendments or supplements
to the registration statement or the prospectus as are either requested by the
Commission or deemed necessary or appropriate by the Company.
(b) In the event the Company does not meet the
Requirements as set forth in the General Instructions to the Commission's Form
S-3 at the time of the requested filing, upon the request of the holder of the
Registrable Shares, at its expense, will use its best efforts to effect the
registration of the Registrable Shares on the appropriate form.
In such event, the Company shall promptly give written notice of such
proposed registration to all holders of outstanding Registrable Shares and
thereupon the Company shall, as expeditiously as possible, use its best efforts
to effect the registration under the 1933 Act of the Registrable Shares.
As used herein, "Registration Statement" and "Prospectus" shall refer
to a registration statement, as amended at the time it becomes effective, and
the prospectus in the form first filed with the Commission pursuant to Rule
424(b) under the 1933 Act after the registration statement becomes effective,
prepared as required by either Subsection (a) or (b) of this Section.
(c) Notwithstanding the foregoing, the Company reserves
the right to delay such registration, or to withhold efforts to cause the
registration statement to become effective for a period of up to 180 days, if
the Company determines in good faith that such registration might (1) interfere
with or affect the negotiation or completion of any transaction that is being
contemplated by the Company, or (2) involve initial or continuing disclosure
obligations that might not be in the best interest of the Company's
stockholders. If, after a registration statement becomes effective, the
Company advises the holders of registered shares covered by such registration
statement that the Company considers it appropriate for the registration
statement to be
2
<PAGE> 9
amended, the holders of such shares shall suspend any further sales of their
registered shares until the Company advises them that the registration
statement has been amended. The __ day time period referred to above shall be
extended for an additional number of business days equal to the number of
business days during which the rights to sell shares was suspended.
2. Registration Procedures and Expenses
(a) If and whenever the Company is required by the
provisions of the Section 1(a) to use its best efforts to effect the
registration of the Registrable Shares under the 1933 Act, the Company will, as
expeditiously as possible:
(i) prepare and file with the Commission a
Registration Statement with respect to such securities and use its best efforts
to cause such Registration Statement to become and remain effective during the
term of this Agreement. Notwithstanding anything contained herein, the Company
does not and cannot guarantee that the Registration Statement will become
effective or remain effective during the entire term of this Agreement or that
the shareholder will be able to resell the Registrable Shares at any price even
if the Registration Statement becomes and remains effective; and
(b) If and whenever the Company is required by the
provisions of Section 1(b) to use its best efforts to effect the registration
of the Registrable Shares under the 1933 Act, the Company will, as
expeditiously as possible:
(i) prepare and file with the Commission such amendments
and supplements to such Registration Statement and the Prospectus used in
connection therewith as may be necessary to keep such Registration Statement
effective for a six month period from the date of effectiveness and to comply
with the provisions of the 1933 Act with respect to the sale or other
disposition of all securities covered by such Registration Statement;
(ii) use its best efforts to register or qualify the
securities covered by such Registration Statement under such other securities
or blue sky laws of such jurisdictions within the United States and Puerto Rico
as each seller of the securities being sold by such seller shall request, and
do any and all other acts and things which may be necessary or advisable to
enable such seller to consummate the public sale or other disposition in such
jurisdictions of the securities owned by such seller, provided, however, that
the Company shall not be required to register or qualify the securities in any
jurisdictions where such registration or qualification would require the
Company to
3
<PAGE> 10
qualify or do business as a foreign corporation in any jurisdiction wherein it
is not so qualified;
(iii) use its best efforts to cause the securities
covered by such Registration statement to be registered with or approved by
such other governmental agencies or authorities as may be necessary to enable
the seller or sellers thereof to consummate this disposition of such
securities;
(iv) notify each seller of any securities covered
by such Registration Statement, at any time when a prospectus relating thereto
is required to be delivered under the 1933 Act, of the Company's becoming aware
that the Prospectus included in such Registration Statement, as then in effect,
includes an untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing, and at the
request of any such seller promptly prepare and furnish to such seller and each
underwriter of the securities being sold by; such seller a reasonable number of
copies of a Prospectus supplemented or amended so that, as thereafter delivered
to the purchasers of such securities, such Prospectus shall not include an
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
in the light of the circumstances then existing; and
It shall be a condition precedent to the obligation of the Company to
take any action pursuant to this Section that such prospective seller of the
Registrable Shares shall furnish to the Company an instrument duly executed by
such seller and such underwriter specifically for use in the preparation of the
Registration Statement or the Prospectus containing such information regarding
the seller and the securities held by such seller and the intended method of
disposition thereof as the Company shall reasonably request and as shall be
required in connection with the action to be taken by the Company
3. Permissible Sales
During the term of this Agreement, the Shareholders agree that
neither the Shares nor the Registrable Shares may be offered or sold unless
such securities are sold either in a transaction which meets the requirements
of Section 4(2) under the Securities Act of 1933, as amended, or Rule 144
thereunder, or any other available exemption from the registration requirements
of such Act, and the Shareholders shall not (i) solicit or arrange for the
solicitation of orders to buy the Shares or the Registrable Shares in
anticipation of or in
4
<PAGE> 11
connection with such transactions, or (ii) make any payment in connection with
the offer or sale of the Shares or the Registrable Shares to any person other
than the broker who executed the order to sell the Shares.
4. Covenants
The Company hereby covenants and agrees that it will do the
following:
(a) will advise the Shareholders promptly, and, if
requested by the Shareholders, confirm such advice in writing (i) when the
Registration Statement has become effective or when any amendments thereto
thereafter become effective, (ii) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or the
suspension of the qualification of the Registrable Shares for offering or sale
in any jurisdiction, and (iii) make every reasonable effort to obtain the
withdrawal of any stop order issued by the Commission suspending the
effectiveness of the Registration Statement;
(b) will furnish to the Shareholders, without change, one
conformed copy of the Registration Statement (without exhibits) as originally
filed and of each amendment thereto;
(c) On the effective date of the Registration Statement
and thereafter from time to time, for such period as in the opinion of counsel
for a prospectus is required by law to be delivered in connection with sales by
a broker or dealer, the Company will furnish to each Shareholders and its
securities broker or brokers without charge as many copies of the Prospectus
(and of any amendment or supplement thereto) as they may reasonably request;
and
(d) During the term of this Agreement the Company shall
make all filings required by the Securities Exchange Act of 1934, as amended
(the "1934 Act") on a timely basis, and each such filing shall, when made, be
true and correct in all material respects and shall not omit to state any
material fact required to be stated therein or necessary in order to make such
information not false or misleading.
5. Covenants of the Shareholders
Each of the Shareholders covenants and agrees that it will do
the following in connection with any sale pursuant to the Registration
Statement:
(a) The Shareholder will take all reasonable actions in
cooperation with the Company to cause the Registration
5
<PAGE> 12
Statement to become effective at the earliest possible time, including, without
limitation, compiling and providing such information and documentation as
requested by the Company or its counsel;
(b) The Shareholder shall not accomplish the sale of the
Shares or the Registrable Shares under the Registration Statement except to or
through one or more securities brokers or dealers who shall be a National
Association of Securities Dealers, Inc. or an American Stock Exchange, Inc.
(the "AMEX") member firm in good standing;
(c) Prior to giving a qualified broker or dealer an order
to sell some or all of the Shares or the Registrable Shares, the Shareholder
shall provide such broker or dealer with a copy of the Prospectus unless, with
respect to transactions effected on the AMEX, a copy thereof has been
previously delivered to the AMEX.
(d) The Shareholder will not sell, contract to sell,
cause or in any way permit to be sold, or otherwise dispose of any Shares or
Registrable Shares during the term of this Agreement, except as permitted under
Section 3 hereof; provided, however, that the Shareholder may make bona fide
gifts or bequests of Shares or Registrable Shares to donees or beneficiaries
who agree to be bound by the provisions of this Section 5(d) or transfers
pursuant to court decree;
(e) Neither the Shareholders nor any of their respective
Affiliated Purchasers (as defined in Rule 10b-6(c) (6) under the 1934 Act)
shall bid for or purchase for any account in which it has a beneficial interest
in shares of Common Stock of the Company (the "Common Stock") or any right to
purchase Common Stock or attempt to induce any person to purchase shares of
Common Stock or any right to purchase Common Stock during any period of time in
which the Shareholders is offering to sell or has in place an order to sell
some or all of its respective portion of the Registrable Shares and during
either of the following periods, whichever is applicable: two (2) business days
immediately preceding such period of time, or such greater period as may be
required under Rule 10b-6 of the 1934 Act unless in a transaction permitted by
Rule 10b-6 (a) (4) of the 1934 Act;
(f) The Shareholder shall not exercise any standardized
call options on the Common Stock during any period of time in which the
Shareholder is offering or selling or has in place an order to sell some or all
of the Shares or the Registrable Shares and during the five (5) business days
immediately preceding such period of time;
6
<PAGE> 13
(g) The Shareholder will not take, directly or
indirectly, any action designed to or which might reasonably be expected to
cause or result in the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Shares or the
Registrable Shares and, except as disclosed in writing to the Company prior to
the date hereof, and it has not effected any sales of securities of the Company
which, if effected by the Company, would be required to be disclosed in
response to Item 701 of Regulation S-X of the 1933 Act;
(h) At any time during the term of this Agreement, if
there is any material change in the Registration statement or the Prospectus
(as then amended or supplemented) relating to the Shareholders, the Shareholder
will immediately notify the Company of such change;
(i) The Shareholder has not distributed and will not
distribute any prospectus or other offering material in connection with the
offering and sale of the Shares or the Registrable Shares other than the
Prospectus or materials permitted by the 1933 Act;
(j) The Shareholder will not pay or offer or agree to
pay, directly or indirectly, to any person any compensation for soliciting
another to purchase any security of the Company on any national stock exchange,
or for purchasing any security of the Company on any national stock exchange
for any account except as may be permitted by Rule 10b-2 of the 1934 Act; and
(k) The Shareholder will not sell, offer to sell or
induce an offer to buy any security of the Company, or deliver such security
after sale, if; in connection with the sale of the Registrable Shares of, the
Shareholder has paid, or has offered or agreed to pay, directly or indirectly,
to any person, any compensation for soliciting another to purchase any security
of the Company on any such exchange, except as may be permitted by Rule 10b-2
of the 1934 Act.
6. Indemnification
(a) The Company agrees to indemnify and hold harmless
each Shareholder from and against any and all losses, claims, damages,
liabilities or expenses (including reasonable costs of investigation and
reasonable attorney's fees) arising out of or based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement or the Prospectus or in any amendment or supplement
thereto or any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
7
<PAGE> 14
therein not misleading, provided that the indemnification contained in this
Subsection 6(a) shall not apply in any respect to any information relating to
the Shareholders furnished to by the Shareholders expressly for inclusion in
the Registration Statement, the Prospectus, or any amendment or supplement
thereto, including, but not limited to, information so supplied by the
Shareholders in response to Items 7 and 8 of Form S-3; or (ii) the breach or
alleged breach by the Company of its covenants and agreements set forth in
Section 4 herein.
(b) If any action or claim shall be brought against the
Shareholders in respect of which indemnity may be sought against the Company in
accordance with Section 6(a), the Shareholders shall promptly notify the
Company in writing and the Company shall assume the defense thereof, including
the employment of counsel and payment of all fees and expenses. The
stockholder shall have the right to employ separate counsel in any such action
and participate in the defense thereof, but the reasonable fees and expenses of
such counsel shall be at the expense of the stockholder unless (i) has agreed
in writing to pay such fees and expenses, (ii) the Company has failed to assume
the defense and employ counsel, or (iii) the named parties to any such action
(including any impleaded party) include both the Shareholders and the Company
and the Shareholder shall have been advised by such counsel that there may be
one or more legal defenses available to it which are different from or
additional to those available to the Company (in which case, if the
Shareholders notifies the Company in writing that it elects to employ separate
counsel at the expense of the Company, the Company shall not have the right to
assume the defense of such action on behalf of the Shareholders, it being
understood, however, that the Company shall not, in connection with any such
action or separate but substantially related actions in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys for
all the persons named as Selling Shareholders in the Registration Statement,
which firm shall be designated in writing by the Shareholders. The Shareholders
shall not be liable for any settlement of any such action effected without the
written consent of stockholder, but if settled with such written consent, or if
there be a final judgment for the plaintiff in any such action, the Company
agrees to indemnify and hold harmless the Shareholders from and against any
loss, liability, damage or expense by reason of such settlement or judgment.
(c) Each Shareholder agrees, to indemnify and hold
harmless the other persons named as selling Shareholders in the Registration
statement ("Claiming Shareholders") and the Company and its officers of
directors (and each person, if any, who
8
<PAGE> 15
controls the Company within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act) from and against any and all losses, claims,
damages, liabilities or expenses (including reasonable costs of investigation
and reasonable attorney's fees) arising out of or based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement or the Prospectus or in any amendment or supplement
thereto or any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, but only with respect to information relating to the Shareholders
or the plan of distribution furnished to the Company by the Shareholders
expressly for inclusion in the Registration Statement, the Prospectus, or any
amendment or supplement thereto, or (ii) the breach or alleged breach by the
Shareholders of its covenants and agreements set forth in Section 5 herein. If
any action or claim shall be brought or asserted against a Claiming Shareholder
in respect of which indemnity may be sought against the Shareholders, the
Claiming Shareholders shall have the rights and duties given to the
Shareholders under Section 6(b) herein, and the Shareholders shall have the
rights and duties given to the Company under Section 6(b) herein. If any
action or claim shall be brought or asserted against the Company or its
officers or directors (or any such controlling person) in respect of which
indemnity may be sought against the Shareholders, the Company and its officers
or directors (and such controlling persons) shall have the rights and duties
given to the Shareholders under Section 6(b) herein, and the Shareholders shall
have the rights and duties given to the Company under Section 6(b) herein.
7. Miscellaneous
(a) Unless earlier terminated, this Agreement shall
remain in effect until the earlier of July 31, 1999 at 12:01 am. or the date
upon which all of the Registrable Shares have been sold by the Shareholders
under the Registration Statement; provided, however, that the indemnification
provisions contained or the date upon which all of the Registrable Shares have
been sold by the Shareholders under the Registration Statement in Section 6
hereof shall survive the termination of this Agreement.
(b) This Agreement (other than the provisions of Section
6) shall terminate upon the agreement in writing of the Company and the
Shareholders to a termination of this Agreement.
(c) If any provision of this Agreement shall be held or
deemed to be or shall, in part, be inoperative or unenforceable as applied in
any particular case in any jurisdiction or jurisdictions, or in all
jurisdictions or in all
9
<PAGE> 16
cases because of conflict with any provisions of any constitution or statute or
rule of public policy, or for any other reason, such circumstances shall not
have effect of rendering the provision in question inoperative or unenforceable
in any other case or circumstances, or of rendering any other provision or
provisions herein contained invalid, inoperative, or unenforceable to any
extent whatsoever. The invalidity of any one or more phrases, sentences,
clauses or paragraphs in this Agreement contained or in any agreement
supplemental hereto shall not affect the remaining portions of this Agreement
nor of said supplement agreement nor any part hereof or thereof, and in the
event that one or more of the phrases, sentences, clauses or paragraphs
contained herein or therein should be invalid this Agreement or such
supplemental agreement shall be construed as if such invalid phrase or phrases,
sentence or sentences, clause or clauses, paragraph or paragraphs had not been
inserted.
(d) Whenever in this Agreement one of the parties hereto
is named or referred to, the successors and assigns of such party shall be
included, and all covenants and agreements contained in this Agreement by or on
behalf of any of the parties, shall bind and inure to the benefit of and be
enforceable by their respective successors and assigns, whether so expressed or
not.
(e) Neither this Agreement nor any provisions hereof may
be changed, amended, modified, waived or discharged orally, but only as
permitted by this Agreement and by an instrument in writing signed by the party
against which enforcement of the change, amendment, modification, waiver or
discharge is sought.
(f) This Agreement may be simultaneously executed in any
number of counterparts, each of which when so executed and delivered shall
constitute but one and the same instrument, and each of such counterparts shall
for all purposes be deemed an original.
(g) This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania.
10
<PAGE> 17
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed on its behalf by its duly authorized Chief Executive Officer, and the
shareholders have affixed their signatures hereto all as of the day and year
first above written.
By:/s/ PAUL L. DEVINE
--------------------------
Paul L. Devine,
Chairman and President
Shareholders
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
11
<PAGE> 1
EXHIBIT 5.1
October 11, 1996
EPL Technologies, Inc.
2 International Plaza
Suite 245
Philadelphia, PA 19113-1507
Gentlemen:
We have acted as your counsel in connection with the proposed
sale of common stock by certain Selling Shareholders named in the Registration
Statement on Form S-3 filed with the Securities and Exchange Commission under
the Securities Act of 1933, as amended (Registration No. 333-09719).
In this connection, we have examined and relied upon such
corporate records and other documents, instruments and certificates and have
made such other investigation as we deemed appropriate as the basis for the
opinion set forth below.
Based upon the foregoing, we are of the opinion that the
shares of common stock to be sold by the Selling Shareholders have been duly
authorized and, when duly executed, delivered and paid for, will be duly and
validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement and to the reference to this firm under the
caption "Legal Matters" in the Prospectus forming a part thereof.
Very truly yours,
/s/ Ballard Spahr Andrews
& Ingersoll
<PAGE> 1
EXHIBIT 24.1
INDEPENDENT AUDITOR'S CONSENT
We consent to the incorporation by reference in this Amendment Number 1
to Registration Statement Number 333-09719 of EPL Technologies, Inc. of our
report dated March 21, 1994 appearing in the Annual Report on Form 10-K/A of
EPL Technologies, Inc. for the year ended December 31, 1995, and to the
reference to us under the heading "Experts" in the Prospectus which is part of
this Registration Statement.
/s/ SCHALLEUR & COMPANY
SCHALLEUR & COMPANY
Blue Bell, PA
October 10, 1996
<PAGE> 1
EXHIBIT 24.2
INDEPENDENT AUDITOR'S CONSENT
We consent to the incorporation by reference in this Amendment No. 1 to
Registration Statement No. 333-09719 of EPL Technologies, Inc. of our report
dated 7 August 1995, included on the EPL Technologies, Inc.'s current report
on Form 8-K dated 19 September 1995, as amended on 14 November 1995 and to the
reference to us under the heading "Experts" in the Prospectus, which is part
of this Registration Statement.
/s/ PORTER MATTHEWS & MARSDEN
PORTER MATTHEWS & MARSDEN
Blackburn, England
10 October 1996
<PAGE> 1
EXHIBIT 24.3
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Amendment No. 1 to
Registration Statement No. 333-09719 of EPL Technologies, Inc. of our report
dated April 2, 1996, appearing in the Annual Report on Form 10-K/A of EPL
Technologies, Inc. for the year ended December 31, 1995 and to the reference to
us under the heading "Experts" in the Prospectus, which is part of this
Registration Statement.
/s/ DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Philadelphia, Pennsylvania
October 10, 1996
