Exhibit 2
EPL TECHNOLOGIES, INC.
SUBSCRIPTION AGREEMENT
GHM, INC.
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NAME
1
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NUMBER
THE SECURITIES OFFERED PURSUANT TO THIS SUBSCRIPTION AGREEMENT HAVE NOT
BEEN FILED OR REGISTERED WITH OR APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THE SUBSCRIPTION AGREEMENT. NO STATE SECURITIES LAW ADMINISTRATOR HAS PASSED
ON OR ENDORSED THE MERITS OF THIS OFFERING OR THE ACCURACY OR THE ADEQUACY OF
THE SUBSCRIPTION AGREEMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
IT IS INTENDED THAT THE SECURITIES OFFERED HEREBY WILL BE MADE
AVAILABLE ONLY TO ACCREDITED INVESTORS, AS DEFINED IN REGULATION D PROMULGATED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE
SECURITIES OFFERED HEREBY ARE BEING OFFERED PURSUANT TO AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES
LAWS, FOR NON-PUBLIC OFFERINGS. SUCH EXEMPTIONS LIMIT THE NUMBER AND TYPES OF
INVESTORS TO WHICH THE OFFERING WILL BE MADE AND RESTRICT SUBSEQUENT TRANSFERS
OF THE SECURITIES.
THE SECURITIES OFFERED HEREBY SHOULD BE CONSIDERED ONLY BY PERSONS WHO
CAN AFFORD TO SUSTAIN A LOSS OF THEIR INVESTMENT. INVESTORS WILL BE REQUIRED TO
REPRESENT THAT THEY ARE FAMILIAR WITH AND UNDERSTAND THE TERMS OF THIS OFFERING,
AND THAT THEY OR THEIR PURCHASER REPRESENTATIVES HAVE SUCH KNOWLEDGE AND
EXPERIENCE IN FINANCIAL AND BUSINESS MATTERS THAT THEY ARE CAPABLE OF EVALUATING
THE MERITS AND RISKS OF THIS INVESTMENT.
NO SECURITIES MAY BE RESOLD OR OTHERWISE DISPOSED OF BY AN INVESTOR
UNLESS IN THE OPINION OF COUNSEL FOR OR SATISFACTORY TO THE COMPANY,
REGISTRATION UNDER THE APPLICABLE FEDERAL OR STATE SECURITIES LAWS IS NOT
REQUIRED OR THERE IS COMPLIANCE WITH SUCH REGISTRATION REQUIREMENTS.
THE SUBSCRIPTION AGREEMENT IS SUBMITTED IN CONNECTION WITH THE PRIVATE
PLACEMENT OF THE SECURITIES AND DOES NOT CONSTITUTE AN OFFER OR SOLICITATION BY
ANYONE IN ANY JURISDICTION IN WHICH SUCH AN OFFER OR SOLICITATION IS NOT
AUTHORIZED. IN ADDITION, THE SUBSCRIPTION AGREEMENT CONSTITUTES AN OFFER ONLY IF
A NAME AND IDENTIFICATION NUMBER APPEAR IN THE APPROPRIATE SPACES PROVIDED ON
THE COVER PAGE AND CONSTITUTES AN OFFER ONLY TO THE PERSON WHOSE NAME APPEARS
THEREON.
IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE PERSON OR ENTITY CREATING THE SECURITIES AND THE TERMS OF THE
OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THESE SECURITIES HAVE NOT
BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY
AUTHORITY.
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FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR
DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER THE SECURITIES ACT AND THE APPLICABLE STATE SECURITIES LAWS,
PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT
THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME.
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Subject to the terms and conditions contained in this Agreement, the
undersigned (the "Subscriber") hereby subscribes for 1,450,677 shares of common
stock (the "Common Stock") of EPL Technologies, Inc. (the "Company").
In its sole discretion, the Company may accept or reject this Agreement
in whole or in part.
1. REPRESENTATIONS, WARRANTIES AND ACKNOWLEDGMENTS.
The Subscriber acknowledges that the Company is offering the
Common Stock in reliance upon the representations, warranties and other
information set forth by the Subscriber. The Subscriber undertakes to notify the
Company immediately of any changes in any of the representations, warranties and
other information contained herein.
(a) Sophistication. The Subscriber represents that he has such
knowledge and experience in financial and business matters that he is capable of
evaluating the merits and risks of acquiring the Common Stock and of making an
informed investment decision with respect thereto. The undersigned is a person
who is able to bear the economic risk of his investment in the Company and has
adequate means of providing for his current needs and possible personal
contingencies with no need for liquidity of this investment. In making this
statement, consideration has been given to whether the undersigned could afford
to hold his investment in the Company for an indefinite period of time and
whether, at this time, he could afford a complete loss of his investment.
(b) Access to Information About the Company. The Subscriber
acknowledges that he has received and read the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1998 and its Quarterly Reports on
Form 10-Q for the quarters ended March 31, 1999, June 30, 1999 and September 30,
1999. The Subscriber represents that he has had the opportunity to ask questions
of, and receive answers from, representatives of the Company concerning the
terms and conditions of this Offering. Any questions raised by the Subscriber
concerning the Offering have been answered to the satisfaction of the
Subscriber.
(c) Investment Representation. The Subscriber acknowledges
that the sale or resale of the Common Stock has not been registered under the
Securities Act of 1933, as amended (the "Act"), or any other Federal or state
law. The Subscriber represents that he is acquiring the securities hereunder for
investment purposes of his own account and not with a view to reselling or
otherwise distributing such securities in violation of any Federal or state
securities laws and understands and agrees that the securities to be issued
hereunder are restricted on transfer and must be held for an indefinite period
unless (i) they are registered under the Act or (ii) an exemption from
registration is available, and the issuer of the securities has received an
opinion of counsel, in form and substance satisfactory to it, to such effect.
(d) The Company shall deliver to the undersigned, certificates
representing the Common Stock which securities shall bear a legend in
substantially the following form:
"The securities represented by this
certificate have been acquired for investment and have not
been
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registered pursuant to the Securities Act of 1933, as
amended, or any applicable state statutes. Such securities
may not be sold, transferred, pledged, hypothecated or
otherwise disposed of without either an effective
registration statement relating to such disposition or any
opinion of counsel satisfactory to the Company that the
securities may be so disposed without being registered".
(e) The Company may deem and treat the undersigned as the
holder and owner of the Common Stock for all purposes and shall not be affected
by any notice to the contrary until the presentation to the Company of such
certificate for transfer pursuant to an effective registration statement under
the Act or pursuant to an opinion of counsel satisfactory to the Company that
such registration is unnecessary.
(f) The undersigned meets at least one of the following
criteria as an "Accredited Investor" (please check all that apply):
[ ] (a) The undersigned is a director or
executive officer of the Company;
[ ] (b) The undersigned is a natural person
whose individual net worth, or joint net
worth with that person's spouse, at the time
of purchase exceeds $1,000,000;
[ ] (c) The undersigned is a natural person
who had an individual income in excess of
$200,000 in each of the two most recent
years or joint income with that person's
spouse in excess of $300,000 in each of
those years and who reasonably expects the
same income level in the current year;
[ ] (d) The undersigned is an entity, and
all of the equity owners of such entity meet
the qualifications of either (a), (b) or (c)
above or (e) below; or
[ ] (e) The undersigned is a domestic bank,
whether acting in its individual or
fiduciary capacity; a domestic insurance
company; an investment company registered
under the Investment Company Act of 1940
(the "1940 Act"), or business development
company as defined in the 1940 Act; a Small
Business Investment Company licensed by the
United States Small Business Administration;
an employee benefit plan within the meaning
of Title I of the Employee Retirement
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Income Security Act of 1974, if the
investment decision is made by a plan
fiduciary which is either a bank, savings
and loan association, insurance company, or
registered investment advisor, or if the
employee benefit plan has total assets in
excess of $5,000,000, or if a self-directed
plan, with investment decisions made solely
by persons that meet the qualifications of
(a), (b), (c) or (d) above; a private
business development company as defined in
Section 202(a)(22) of the Investment
Advisors Act of 1940; an entity described in
Section 501(c)(3) of the Internal Revenue
Code, not formed for the purpose of
acquiring the securities offered, with total
assets in excess of $5,000,000; or a trust,
with total assets in excess of $5,000,000,
not formed for the specific purpose of
acquiring the securities offered, whose
purchase is directed by a sophisticated
person.
(g) Authority. The Subscriber represents that he has full
legal power and authority to enter into this Agreement and to purchase the
Common Stock subscribed for.
(h) No State Review. The Subscriber acknowledges that the
Common Stock is being sold pursuant to exemption from the registration
requirements of the state indicated as the Subscriber's state of residence, that
no securities commission or regulatory authority has approved, passed upon or
endorsed the merits of this Offering, nor is it intended that any such agency
will do so. Any representation to the contrary is unlawful.
(i) State Residence Status. Subscriber represents that he is a
resident and domiciliary (not a temporary or transient resident) of the state
and country set forth below, has no present intention to become a resident of
any other jurisdiction, and all communications, written or oral, concerning the
Common Stock have been directed to the Subscriber in, and received by him in,
such jurisdiction.
(j) Decision to Invest. In making his decision to purchase the
Common Stock the Subscriber has relied solely upon the information contained
and/or referred to herein and upon independent investigations made by him or his
legal counsel or investment advisor. He is not purchasing any Common Stock as a
result of or subsequent to (i) any advertisement, article, notice of other
communication published in any newspaper, magazine or similar media or broadcast
over television or radio or (ii) any seminar or meeting whose attendees,
including the Subscriber, were invited as a result of, subsequent to, or
pursuant to, any general solicitation.
(k) Irrevocable Agreement. The Subscriber hereby acknowledges
and agrees, except as provided by the law of the jurisdiction in which he
resides, that this Agreement is irrevocable and will survive the death or
disability of the undersigned; provided, however, that neither party shall have
any obligations unless and until the Agreement is executed by the Company.
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2. TERMS AND CONDITIONS.
The Subscriber acknowledges that this Offering is made by the
Company, subject to the following terms and conditions:
(a) Acceptance by the Company. Subscriptions for Common Stock
will be accepted, if at all, at the sole discretion of the Company.
(b) Share Certificates to be Delivered to Subscriber. As soon
as practicable upon the execution of this Agreement, the Company shall deliver
to the Subscriber certificates representing the Common Stock issued in the name
of the Subscriber. The securities issued hereunder, when delivered to the
Subscriber in accordance with the terms hereof, shall be duly authorized by
appropriate corporate action, shall be validly issued, fully paid and
non-assessable outstanding securities of the Company and shall be free from all
taxes, liens and charges with respect to the issuance thereof.
(c) Use of Proceeds. The Company shall use the proceeds of the
Offering to redeem 1,500 shares of Series D Convertible Preferred Stock of the
Company held by Heights Capital Management, Inc.
(d) Registration Statement. Within 30 days after the execution
of this Agreement, the Company agrees to file an S-3 registration statement
("Registration Statement") under the Securities Act of 1933, as amended (the
"Act"), covering both the Common Stock and all of the "Warrant Shares" issued
under the "Warrant Agreement", each as defined in Section 2(e) below, and shall
use its best efforts to cause such Registration Statement to be declared
effective by the Securities and Exchange Commission (`SEC").
(e) Covenants with Respect to the Registration Statement
(i) Obligation to Maintain Effectiveness. The Company
shall keep effective any registration or qualification contemplated hereunder
and shall from time to time amend or supplement each applicable Registration
Statement, preliminary prospectus, final prospectus, application, document, and
communication for a period of 270 days beginning from the effective date of the
Registration Statement, provided, however, that, if the Company is required to
keep any such registration or qualification in effect with respect to securities
other than the Common Stock and the Warrant Shares beyond such period, the
Company shall keep such registration or qualification in effect as it relates to
the Common Stock and the Warrant Shares for so long as such registration or
qualification remains or is required to remain in effect in respect of such
other securities.
(ii) Provision of Registration Statement. The Company
shall furnish to the Subscriber such reasonable number of copies of the
Registration Statement and of each amendment and supplement thereto (in each
case, including all exhibits), such reasonable number of copies of each
prospectus contained in such Registration Statement and each supplement or
amendment thereto (including each preliminary prospectus), all of which shall
conform to the requirements of the Act and the rules and regulations thereunder,
and such other
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documents, as such holder may reasonably request to facilitate the disposition
of the Common Stock and the Warrant Shares held by the Subscriber.
(iii) Opinion of Counsel. The Company shall furnish the
Subscriber with an opinion of its counsel, subject to ordinary and customary
qualifications and (reasonably acceptable to the Subscriber) to the effect that
(A) the Registration Statement has become effective under the Act and no order
suspending the effectiveness of the Registration Statement, preventing or
suspending the use of the Registration Statement, any preliminary prospectus,
and final prospectus, or any amendment or supplement thereto has been issued,
nor to the best knowledge of such counsel has the SEC or any securities or blue
sky authority of any jurisdiction instituted or threatened to institute any
proceedings with respect to such an order, (B) each document, if any,
incorporated by reference in the Registration Statement and the prospectus
included therein (except for financial statements and related schedules, as to
which such counsel need express no opinion) complied as to form when filed with
the SEC in all material respects with the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and the rules and regulations of the SEC
thereunder, and (C) the Registration Statement and the prospectus included
therein and any supplements or amendments thereto (except for financial
statements and related schedules, as to which such counsel need express no
opinion) comply as to form in all material respects with the Act and the rules
and regulations of the SEC thereunder. In addition, such counsel shall state
that it has participated in conferences with officers and other representatives
of the Company and representatives of independent accountants for the Company,
at which conferences such counsel made inquiries of such officers,
representatives and accountants; discussed the contents of the preliminary
prospectus; the Registration Statement; and the prospectus and related matters
were discussed and, although such counsel is not passing and does not assume any
responsibility for the accuracy, completeness or fairness, the statements
contained in the preliminary prospectus, the Registration Statement and the
prospectus, on the basis of the foregoing, no facts have come to the attention
of such counsel which lead it to believe that either the Registration Statement
or on any amendment thereto, at the time such Registration Statement or
amendment became effective or the preliminary prospectus or prospectus or
amendment or any supplement thereto as of the date of such opinion contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
(it being understood that such counsel need express no opinion with respect to
the financial statements and schedules and other financial and statistical data
included in the preliminary prospectus, the Registration Statement, or
prospectus).
(iv) Indemnification by the Company. Subject to the
conditions set forth below, the Company agrees to indemnify and hold harmless
the Subscriber, its officers, directors, partners, employees, agents, and
counsel, and each person, if any, who controls any such person within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, from and
against any and all loss, liability, charge, claim, damage, and expense
whatsoever (which shall include, for all purposes of this Agreement, without
limitation, reasonable attorney's fees and any and all expense whatsoever
incurred in investigating, preparing, or defending against any litigation,
commenced or threatened, or any claim whatsoever, and any and all amounts paid
in settlement of any claim or litigation), as and when incurred, arising out of,
based upon, or in connection with (A) any untrue statement or alleged untrue
statement of a material fact contained (1) in the Registration Statement,
preliminary prospectus, or final
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prospectus (as from time to time amended or supplemented), or any amendment or
supplement thereto, relating to the sale of any of the Common Stock or the
Warrant Shares or (2) in any application or other document or communication (in
this Agreement collectively called an "application") executed by or on behalf of
the Company or based upon written information furnished by or on behalf of the
Company filed in any jurisdiction in order to register or qualify any of the
Common Stock or the Warrant Shares under the securities or blue sky laws thereof
or filed with the SEC or any securities exchange; or necessary to make the
statements therein not misleading, unless such statement or omission was made in
reliance upon and in conformity with written information furnished to the
Company with respect to such holder of Common Stock or the Warrant Shares
included in the Registration Statement, preliminary prospectus, or final
prospectus, or any amendment or supplement thereto, or in any application, as
the case may be, or (B) any breach of any representation, warranty, covenant, or
agreement of the Company contained in this Agreement. The foregoing agreement to
indemnify shall be in addition to any liability the Company may otherwise have,
including liabilities arising pursuant to this Agreement.
The Company agrees promptly to notify each holder of
Common Stock or the Warrant Shares of the commencement of any litigation or
proceedings against the Company or any of its officers or directors in
connection with the sale of any Common Stock or Warrant Shares or any
preliminary prospectus, prospectus, the Registration Statement, or amendment or
supplement thereto, or any application relating to any sale of Common Stock or
Warrant Shares.
(f) Warrant Agreement. As an inducement to Subscriber to enter
into this Agreement, on the date of its execution, the Company agrees to issue a
warrant in favor of the Subscriber in substantially the form annexed hereto as
Exhibit A (the "Warrant Agreement") to purchase 500,000 shares of the common
stock of the Company (the "Warrant Shares"). If the Registration Statement is
not filed within 30 days after the execution of this Agreement, on the close of
business on such thirtieth day the Company will issue to the Subscriber under
the Warrant Agreement an additional 50,000 Warrant Shares. In addition, if the
Registration Statement is not declared effective by the SEC on the 61st day
after the execution of this Agreement, the Company, on such 61st day and at the
end of each thirty days thereafter during which the Registration Statement is
not effective, shall under the Warrant Agreement issue to the Subscriber an
additional 50,000 Warrant Shares. The exercise price applicable to the initial
500,000 Warrant Shares shall be the closing bid price of the Company's common
stock on the Nasdaq SmallCap Market, or the principal exchange upon which such
stock is then traded (the "Market Price"). Any additional Warrant Shares issued
under this Section 2(e) shall have an exercise price equal to the lower of such
Market Price or the Market Price on the date such additional Warrant Shares are
issuable under this Section 2(e).
3. MISCELLANEOUS PROVISIONS.
(a) Use of Speech. All pronouns contained herein and any
variations thereof, shall be deemed to refer to the masculine, feminine or
neuter, singular or plural, as the identity of the parties may require.
(b) Waiver. No waiver of any right under this Agreement shall
be deemed effective unless contained in a writing signed by the party charged
with such waiver, and no
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waiver of any right arising from any breach or failure to perform shall be
deemed to be a waiver of any future such right or of any other right arising
under this Agreement.
(c) Entire Agreement, Modification. This Agreement constitutes
the entire agreement between the parties and supersedes any prior understanding
or agreements concerning the subject matter hereof. This Agreement may be
amended, modified or terminated only by a written instrument signed by the
parties hereto.
(d) Severability. The invalidity or unenforceability of any
provision hereof shall in no way affect the validity or enforceability of any
other provision.
(e) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania
without regard to such state's principles of conflicts of laws.
(f) Notices. All notices, requests, demands, and
communications related to this Agreement will be deemed given if and when
delivered personally or sent by registered or certified mail, return receipt
requested, postage prepaid, to the addresses indicated on the last page of this
Agreement.
(g) Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective legal
representatives and successors.
(h) Headings. Headings contained in this Agreement are
inserted only as a matter of convenience and in no way define, limit, extend or
describe the scope of this Agreement or the intent of any provisions hereof.
(i) Unenforceability. If any provision of this Agreement is or
becomes or is deemed invalid, illegal, or unenforceable in any jurisdiction, to
the maximum extent permissible, such provision shall be deemed amended to
conform to applicable laws so as to be valid and enforceable or, if it cannot be
so amended without materially altering the intention of the parties, it shall be
stricken and the remainder of this Agreement shall remain in full force and
effect.
(j) Assignment. The Subscriber may not assign this Agreement
or its rights hereunder without the Company's prior written consent.
(k) Multiple Subscribers. If more than one person is signing
this Agreement, each representation, warranty, and undertaking stated herein
shall be the joint and several representation, warranty, and undertaking of each
such person. The Subscriber understands the meaning and legal consequence of the
representations and warranties contained in this Agreement.
4. SUBSCRIPTION.
Purchase.
Number of shares of Common Stock subscribed for: 1,450,677
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Total Purchase Price: $750,000
The Subscriber hereby subscribes for the Common Stock offered
by the Company in the amount as set forth above.
The Subscriber hereby agrees to pay the amount set forth above
to the Company upon execution of this Agreement.
GHM, INC.
By: ________________________________
Name:
Title:
________________________________
Date
00 Xxxxxxx Xxxxx
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Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
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City State Zip
United States
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Country
________________________________
Social Security Number or
Federal ID Number
________________________________
Telephone No. of Subscriber
(Home/Business)
AGREED TO AND ACCEPTED BY:
EPL TECHNOLOGIES, INC.
By:____________________________________
Its: President and Chief Executive Officer
Dated:_________________________________
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