Exhibit 7
SECURITIES CONVERSION AGREEMENT
SECURITIES CONVERSION AGREEMENT (this "Agreement") dated as of December
9, 1999 by and among EPL Technologies, Inc., a Colorado corporation with
headquarters located at ▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇-▇▇▇▇ ("EPL") and GHM, Inc. (the "Holder").
WHEREAS, the Holder pursuant to a Securities Purchase Agreement dated
as of the date hereof (the "Purchase Agreement") purchased from either RGC
International Investors, LDC or Halifax Fund, L.P. ("Seller") 162 shares of
Series D Convertible Preferred Stock (the "Preferred Stock") (the Purchase
Agreement is attached hereto as Exhibit A);
WHEREAS, the preferences and rights of the Preferred Stock are set
forth in the Certificate of Designation of EPL attached hereto as Exhibit B (the
"Certificate"), which forms a part of EPL's Articles of Incorporation, as
amended.
WHEREAS, the Holder, pursuant to the Certificate and this Agreement,
wishes to convert the Preferred Stock into EPL's common stock, par value $.001
per share (the "Common Stock").
NOW, THEREFORE, in consideration of the premises and intending to be
legally bound hereby, EPL and the Holder hereby agree as follows:
1. CERTAIN DEFINITIONS. Except as otherwise provided herein, the
capitalized terms used in this Agreement shall have the meanings ascribed to
them in either the Purchase Agreement or the Certificate.
2. CONVERSION OF PREFERRED STOCK
(a) Notice of Conversion. The Holder hereby gives EPL notice
that as of the date hereof it intends to convert all of the Preferred Stock
owned both of record and beneficially into the shares of Common Stock is
issuable pursuant to the Certificate. Such conversion shall be effected pursuant
to the delivery by the Holder to EPL of Notice of Conversion in the form
attached to this Agreement as Exhibit C.
(b) Number of Shares of Common Stock. The Holder: (i)
acknowledges and agrees that the number of shares of Common Stock into which the
Preferred Stock shall be converted (the "Conversion Shares") has been calculated
pursuant to the Certificate; Holder (ii) represents that it (he/she) has read,
is fully familiar with and understands the Certificate in all respects
(including, without limitation, the optional conversion provisions included in
Article VI thereof); and (iii) agrees in all respects with the calculation of
the Conversion Shares (including the Premium Amount) set forth in Exhibit C.
(c) Premium Amount. Holder agrees that upon the conversion of
the Preferred Stock, Holder will contribute to EPL that number of Conversion
Shares equal to the
Premium Amount set forth in Exhibit C as an additional contribution to capital
by the Holder, to be held by EPL as treasury shares pursuant to the Colorado
Business Corporation Act. With respect to such contribution to capital, the
Holder agrees that upon the conversion of the Preferred Stock, EPL may retain in
its treasury the amount of Conversion Shares equal to the Premium Amount.
(d) Delivery of Conversion Shares. The Conversion Shares shall
be delivered by EPL to the Holder within the time periods and otherwise in
accordance with the provisions of Article VI E(b) and (c) of the Certificate.
(e) Terms of Certificate Shall Control. Except as expressly
otherwise provided in this Agreement, the terms and conditions of the
Certificate shall govern the conversion of the Preferred Stock hereunder.
3. HOLDER'S REPRESENTATIONS AND WARRANTIES. The Holder represents and
warrants to EPL that:
(a) Authorization; Enforcement. The Holder has all requisite
power and authority to enter into and perform this Agreement and to consummate
the transactions contemplated hereby. This Agreement has been duly and validly
authorized by all necessary corporate, partnership, LLC or individual action by
the Holder. This Agreement has been duly executed and delivered on behalf of the
Holder, and this Agreement constitutes valid and binding agreements of the
Holder enforceable in accordance with its terms.
(b) Information; Acknowledgment of Risk. EPL has furnished the
Holder with EPL's Form 10K for the year ended December 31, 1998, EPL's 1999
Proxy Statement, each Form 10-Q, 8-K or any other filing made by EPL during the
year 1999 (through the date hereof) pursuant to the filing and disclosure
requirements of the Securities Exchange Act of 1934 (the "1934 Act") (the
foregoing documents shall collectively be referred to herein as the "Current
1934 Act Filings"). EPL has also provided the Holder with the Registration
Statement on Form S-3 (the "Registration Statement") covering the Conversion
Shares. Holder acknowledges that Holder has had access to all other 1934 Act
filings made by EPL since it registered its Common Stock under Section 12(g) of
the 1934 Act (the "1934 Act Filings"). Holder has read and examined the Current
1934 Act Filings (and such of the 1934 Act Filings, if any, that it (he/she) has
deemed advisable) and the Registration Statement and fully understands the same.
Holder has made the decision to enter into this Agreement and to consummate the
transactions contemplated hereby (including, without limitation, the conversion
of the Preferred Stock into the Conversion Shares and the contribution to EPL of
Conversion Shares equal to the Premium Amount) on the basis of such examination
and understanding. On the basis of such examination and understanding the Holder
fully understands that its decision to convert the Preferred Stock into
Conversion Shares involves a significant degree of risk including the risk
factors set forth in the Registration Statement. The Holder is a sophisticated
investor with considerable experience in investments of this nature. Except for
the representations and warranties of EPL set forth in Section 4 below, the
Holder acknowledges that EPL makes no representations or warranties with respect
to either the Preferred Shares, the Conversion Shares, or the Common Stock of
EPL in general. In making its (his/her) decision to enter into this Agreement
and to convert the Preferred Shares into the Conversion Shares, the Holder has
in no way relied on upon any
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statement made by EPL, its officers, directors, employees or agents or any
company information provided by EPL except the Current 1934 Act Filings, the
1934 Act Filings (to the extent examined by the Holder) and the Registration
Statement. With full recognition of the foregoing, the Holder wishes to convert
the Preferred Stock to the Conversion Shares on the terms set forth herein.
(c) Investment Representations. The holder is an "accredited
investor" as that term is defined in Rule 501(a) of Regulation D promulgated
under the Securities Act of 1933 (the "1933 Act"). As of the date hereof, the
Holder intends to hold the Conversion Shares delivered to it (him/her) pursuant
to the terms and conditions of this Agreement for its (his/her) account and not
with a present view toward the public sale or distribution thereof, except (i)
pursuant to the Registration Statement (in accordance with the provisions of
Section 5 below) or (ii) sales exempt under the 1933 Act.
(d) Reliance on Exemptions. The Holder understands that the
Conversion Shares are being delivered to it (he/she) in reliance upon specific
exemptions from the registration requirements of the United States federal and
state securities laws and that EPL is relying upon the truth and accuracy of,
and the Holder's compliance with, the representations, warranties, agreements,
acknowledgments, and understandings of the Holder set forth herein in order to
determine the availability of such exemptions and the eligibility of the Holder
to acquire the Conversion Shares.
4. REPRESENTATIONS AND WARRANTIES OF EPL. EPL represents and warrants
to the Holder that:
(a) Authorization; Enforcement. EPL has all requisite power
and authority to enter into and perform this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
authorized by all requisite corporate action. This Agreement has been duly
executed and delivered on behalf of EPL, and this Agreement constitutes valid
and binding agreements of EPL enforceable in accordance with its terms.
(b) The Conversion Shares. Upon their issuance in accordance
with the Certificate and this Agreement, the Conversion Shares shall be fully,
paid and non-assessable shares of Common Stock and shall be free from all taxes,
liens, claims and encumbrances.
5. AMENDMENT OF THE REGISTRATION STATEMENT.
(a) Amendment to Include Holder. EPL shall within thirty (30)
business days from the date of this Agreement file with the U.S. Securities and
Exchange Commission an amendment to the Registration Statement (the
"Amendment"). The Amendment shall amend the list of Selling Shareholders
identified in the Registration Statement to include the Holder. EPL shall notify
the Holder when the Amendment is filed with the SEC (pursuant to Rule 424(b)(3)
under the 1933 Act, the Amendment will be effective on the date of its filing)
and shall furnish the Holder with a copy thereof or notify the Holder when the
Amendment is available on ▇▇▇▇▇ (▇▇▇.▇▇▇.▇▇▇).
(b) Sales of Conversion Shares Under the Registration
Statement. The Holder acknowledges that it (he/she) cannot, and the Holder will
not, sell any of the Conversion
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Shares covered by the Registration Statement unless and until the Amendment is
effective. Any sales of the Conversion Shares under the Registration Statement
and Amendment shall be made in strict compliance therewith, including, without
limitation, the prospectus delivery requirements as set forth therein and under
the 1933 Act.
6. GOVERNING LAW; MISCELLANEOUS.
(a) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania
applicable to agreements made and to be performed in the Commonwealth of
Pennsylvania (without regard to principles of conflict of laws). Both parties
irrevocably consent to the jurisdiction of the United States federal courts and
the state courts located in Pennsylvania with respect to any suit or proceeding
based on or arising under this Agreement, the agreements entered into in
connection herewith or the transactions contemplated hereby or thereby and
irrevocable agree that all claims in respect of such suit or proceeding may be
determined in such courts. Both parties irrevocably waive the defense of an
inconvenient forum to the maintenance of such suit or proceeding. Both parties
further agree that service of process upon a party mailed by first class mail
shall be deemed in every respect effective service of process upon the party in
any such suit or proceeding. Nothing herein shall affect either party's right to
serve process in any other manner permitted by law. Both parties agree that a
final non-appealable judgment in any such suit or proceeding shall be conclusive
and may be enforced in other jurisdictions by suit on such judgment or in any
other lawful manner.
(b) Counterparts; Signatures by Facsimile. This Agreement may
be executed in one or more counterparts, all of which shall be considered one
and the same agreement and shall become effective when counterparts have been
signed by each party and delivered to the other party. Agreement, once executed
by a party, may be delivered to the other party hereto by facsimile transmission
of a copy of this Agreement bearing the signature of the party so delivering
this Agreement.
(c) Headings. The headings of this Agreement are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.
(d) Severability. If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement or the validity or enforceability of this Agreement
in any other jurisdiction.
(e) Entire Agreement; Amendments. This Agreement and the
instruments referenced herein contain the entire understanding of the parties
with respect to the matters covered herein and therein and, except as
specifically set forth herein or therein, neither EPL nor the Holder makes any
representation, warranty, covenant or undertaking with respect to such matters.
No provision of this Agreement may be waived or amended other than by an
instrument in writing signed by the party to be charged with enforcement.
(f) Notices. Any notices required or permitted to be given
under the terms of this Agreement shall be sent by certified or registered mail
(return receipt requested) or delivered
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personally or by courier (including a recognized overnight delivery services) or
by facsimile and shall be effective five days after being placed in the mail, if
mailed by regular United States mail, or upon receipt, if delivered personally
or by courier (including a recognized overnight delivery service) or by
facsimile, in each case addressed to a party. The addresses for such
communications shall be:
If to EPL:
EPL Technologies, Inc.
▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, President
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
If to Holder:
GHM, Inc.
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile:____________________
Each party shall provide notice to the other party of any
change in address.
(g) Successors and Assigns. This agreement shall be binding
upon and inure to the benefit of the parties and their successors and assigns.
Neither EPL nor the Holder shall assign this Agreement or any rights or
obligations hereunder without the prior written consent of the other.
(h) Third Party Beneficiaries. This agreement is intended for
the benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any other person hereof enforce
any provision
(i) Publicity. Neither EPL nor the Holder shall issue any
press release or make any public statement concerning this Agreement and the
transactions contemplated hereby without the prior approval of the other party,
except as otherwise required by law, including any securities law.
(j) Further Assurances. Each party shall do and perform, or
cause to be done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates, instruments and
documents, as the other party may reasonably request in order to carry out the
intent and accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
(k) No Strict Construction. The language used in this
Agreement will be deemed to be the language chosen by the parties to express
their mutual intent, and no rules of strict construction will be applied against
any party.
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(l) Remedies. Each of the parties acknowledges that a breach
by it of its obligations hereunder will cause irreparable harm to the other
party by vitiating the intent and purpose of the transactions contemplated
hereby. Accordingly, each such party acknowledges that the remedy at law for a
breach of its obligations under this Agreement will be inadequate and agrees, in
the event of a breach or threatened breach by such party of the provisions of
this Agreement, that the non-breaching party shall be entitled, in addition to
all other available remedies in law or in equity, to an injunction or
injunctions to prevent or cure any breaches of the provisions of this Agreement
and to enforce specifically the terms and provisions of this Agreement, without
the necessity of showing economic loss and without any bond or other security
being required.
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IN WITNESS WHEREOF, the Holder and EPL have caused this Agreement to be
duly executed as of the date first above written.
GHM, INC.
By:__________________________
Name:
Title:
EPL TECHNOLOGIES, INC.
By:____________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President and Chief Executive Officer
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EXHIBIT C
NOTICE OF CONVERSION
(To be Executed by the Holder In order to Convert the Series D Preferred Stock)
The undersigned hereby irrevocably elects to convert shares of
Series D Preferred Stock, represented by stock certificate No(s). (the
"Preferred Stock Certificates") into shares of common stock ("Common Stock") of
EPL Technologies, Inc. (the "Corporation") according to the conditions of the
Certificate of Designation of Series D preferred Stock, as of the date written
below. If securities are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer taxes payable with respect
thereto and is delivering herein such certificates. No fee will be charged to
the holder for any conversion, except for transfer taxes, if any. A copy of each
Preferred Stock Certificate is attached hereto (or evidence of loss, theft or
destruction thereof).
The undersigned represents and warrants that all offers and
sales by the undersigned of the securities issuable to the undersigned upon
conversion of the Series D Preferred Stock shall be made pursuant to
registration of the securities under the Securities Act of 1933, as amended (the
"Act"), or pursuant to an exemption from registration under the Act.
Date of Conversion:___________________________________________
Market Price Days:____________________________________________
Applicable Conversion Price:__________________________________
Number of Shares of
Common Stock to be Issued:____________________________________
Number of Premium Shares
Included in Number of Shares
Of Common Stock to be Issued:_________________________________
Signature:____________________________________________________
Name:_________________________________________________________
Address:______________________________________________________
*The Corporation is not required to issue shares of Common Stock until the
original Series D Preferred Stock Certificate(s) (or evidence of loss, theft or
destruction thereof) to be converted are received by the Corporation or the
Transfer Agent. The Corporation shall issue and deliver shares of Common Stock
to an overnight courier not later than three (3) business days following receipt
of the original Preferred Stock Certificate(s) to be converted, and shall make
payments pursuant to the Certificate of Designation for the number of business
days such issuance and delivery is late.
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