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Exhibit 99.2
Agreement between EPL Technologies, Inc. and American National Can Company
to form a joint venture company, ANC-Respire L.L.C.
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AGREEMENT
This agreement is made as of the first day of February, 1998, by and between EPL
TECHNOLOGIES, INC. ("EPL"), with offices at 2 International Plaza, Suite 245,
Philadelphia, Pennsylvania 19113-1507 and AMERICAN NATIONAL CAN COMPANY
("ANCC"), with offices at 8770 W. Bryn Mawr Avenue, Chicago, Illinois
60631-3542.
1. RECITALS
(a) EPL possesses certain confidential and proprietary know-how and
technologies relating to the development and specification of food
science requirements of flexible packaging materials marketed to the
fresh produce industry (the "EPL Know-how"). The EPL Know-How
excludes EPL's proprietary know-how and technology in relation to
the perforation of flexible packaging materials, as well as EPL's
confidential and proprietary know-how and scientific resources that
facilitate the maintenance of fresh produce (the "Excluded
Know-how").
(b) EPL manufactures and markets perforated flexible packaging materials
(the "EPL Products") and provides services related to the
maintenance of fresh product (the "EPL Services").
(c) ANCC possesses certain confidential and proprietary know-how and
technologies relating to the development, manufacture and marketing
of flexible packaging materials (the "ANCC Know-how").
(d) ANCC manufactures and markets flexible packaging material (the "ANCC
Products").
(e) ANCC currently is not materially engaged in developing, marketing or
selling ANCC Products for the fresh produce market in the United
States (the "Market").
(f) EPL and ANCC desire to combine their expertise for the purpose of
developing and selling flexible packaging materials to the Market.
EPL acknowledges that ANCC will continue to market ANCC Products to
markets other than the Market, such activities to be outside the
scope of this Agreement. ANCC acknowledges that EPL will continue to
market the Excluded Know-how and EPL Services to the Market, as well
as EPL Products to markets other than the Market, and confirms that
such activities are outside the scope of this Agreement.
2. BUSINESS OPPORTUNITIES AND NON-COMPETITION
(a) Cooperative Marketing Arrangement
(1) EPL and ANCC agree to form an Illinois limited liability
company under the name "ANC-RESPIRE, L.L.C." ("ANC-RESPIRE")
for the purpose of marketing, promoting, and selling flexible
packaging materials incorporating the EPL Know-how, the EPL
Products and the ANCC Know-how and the ANCC Products (the
"ANC-RESPIRE Products") to the Market (the "Project").
(2) The Parties agree that ANC-RESPIRE is the intended and
exclusive vehicle for selling the ANC-RESPIRE Products to the
Market.
(3) EPL and ANCC will give first consideration to ANC-RESPIRE with
regard to the development and implementation of activities
which are within the scope of this Project. If any fresh
produce packaging opportunity, which is first offered to
ANC-RESPIRE, is refused by ANC-RESPIRE, then the Party which
offered the opportunity to ANC-RESPIRE shall be free to pursue
such opportunity, provided that such opportunity shall not be
performed under terms and conditions more favorable than those
on which the opportunity was offered to ANC-RESPIRE.
(4) The existing EPL US produce packaging business, which is
currently conducted through a wholly owned subsidiary of EPL
(Respire Films, Inc.) will be reviewed regularly with a view
to determining which, if any, of this business it would be
appropriate for the Project to handle.
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(b) Exclusivity and Other Activities.
(1) During the term of this Agreement ANCC shall be free to pursue
sales of ANCC Products other than to the Market.
(2) During the term of this Agreement EPL shall be free to pursue
sales of EPL Products other than to the Market.
(3) During the term of this Agreement and for a period of 60
months after the expiration or termination of this Agreement
by EPL or ANC pursuant to section 5(d) below, neither ANCC nor
EPL shall use the Know-how or other confidential information
conveyed to it by the other to make or to sell, either on its
own or in conjunction with any third party, any EPL or ANCC
Products to the Market or for any other purpose not
contemplated by this Agreement, except as otherwise provided
in Section 5(d).
(c) Establishment of ANC-RESPIRE Company
(1) In order to implement the Project, the parties shall form
ANC-RESPIRE pursuant to the Articles of Formation and
Operating Agreement attached as Exhibit A hereto.
(2) All activities of the Project shall be conducted through
ANC-RESPIRE.
(3) Each party shall own a 50% percentage interest in ANC-RESPIRE
and shall contribute $100,000 each initially in return for
such percentage interest.
(4) EPL hereby grants ANC-RESPIRE a royalty-free license to use
the EPL Know-How in connection with the Project from the date
hereof until the earlier of (A) three years from the date
hereof of (B) dissolution of ANC-RESPIRE. ANCC hereby grants
ANC-RESPIRE a royalty-free license to use the ANCC Know-How in
connection with the Project from the date hereof until the
earlier of (A) three years from the date hereof of
(B) dissolution of ANC-RESPIRE.
3. RESPONSIBILITIES OF PARTIES
(a) Responsibilities of ANCC. ANCC shall have the following principal
responsibilities:
(1) allow the use of the "ANC" name in connection with the
Project;
(2) designate sufficient personnel to the Project in accordance
with the marketing plan agreed upon by EPL and ANCC;
(3) assist the Project in marketing and promotion efforts;
(4) assist the Project with ANCC Know-how to address product
requirements in the Market;
(5) assist the Project with the supply of ANCC Products upon terms
and conditions mutually established from time to time by EPL
and ANCC, on a customer by customer basis, as more
particularly set forth in Section 4 below;
(6) liaise with EPL customer service to track progress of all
orders for ANCC Products; and
(7) bill the customer, collect outstanding billings and pay
expenses as detailed in section 4 below.
(b) Responsibilities of EPL. EPL shall have the following principal
responsibilities:
(1) allow the use of the "RESPIRE" name in connection with the
Project;
(2) assign its RESPIRE sales team to the Project in accordance
with the marketing plan agreed upon by EPL and ANCC;
(3) assist the Project in marketing and promotion efforts;
(4) assist the Project with EPL Know-how to address product
requirements in the Market;
(5) assist the Project with the supply of EPL Products upon terms
and conditions mutually established from time to time by EPL
and ANCC, on a customer by customer basis, as more
particularly set forth in Section 4 below; and
(6) bill any customers currently doing business through Respire
Films, Inc. that are not transferred into the Project, until
such time as the parties agree that the said customers should
be transferred into the Project and billed by ANCC.
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4. SALE OF PRODUCTS
(a) Supply and Pricing. The supply prices and terms for purchases of
products from ANCC and EPL and the prices and terms of sale of the
ANC-RESPIRE Products sold to ANC-RESPIRE customers in connection
with the Project shall be determined by unanimous decision of the
Managers of ANC-RESPIRE on a case-by-case basis, taking into account
the requirements of the Market, the respective production costs of
the EPL Products and the ANCC Products, the ANC-RESPIRE product
warranties and the payment and delivery terms.
(b) Sale Proceeds. The products will be sold and invoiced to customers
in the name of ANC-RESPIRE and the net proceeds from such sales
shall be deposited in an ANC-RESPIRE account at a mutually agreed
financial institution.
(c) Warranty and Liability. EPL and ANCC warrant that the ANC-RESPIRE
Products made by each of them and sold to ANC-RESPIRE shall conform
to the specifications agreed upon by ANC-RESPIRE with the
ANC-RESPIRE customers, shall be of good workmanship and materials,
and shall comply with the U.S. Food and Drug and Cosmetic Act of
1938, as amended, and all regulations and/or directives issued
thereunder. Each party shall bear its own costs and expenses arising
from the failure of any such Products made by it to conform to the
foregoing warranty.
5. TERM AND TERMINATION
(a) Initial Term. The term of this Agreement shall be for a period of
three(3) years from February 1, 1998, unless terminated in whole or
in part by either party on 60 days' prior written notice to the
other party, if the other party:
(1) fails to comply with any provisions of this Agreement,
provided that the defaulting party shall have been given
written notice of the default and shall not have corrected
such default within 30 days from receipt of such notice;
(2) becomes bankrupt or is insolvent or is wound up or liquidated
or enters into any arrangement with its creditors or takes or
suffers any similar action in consequence of debt; or
(3) causes, implements, or suffers any change in the ownership or
management control (either direct or indirect) of its
business, where such change results in an apparent conflict of
interest with a competitor of the terminating party.
(b) Extension. The term of this Agreement may be extended by written
agreement of EPL and ANCC within 30 days prior to the expiration
date.
(c) Joint Venture. Commencing on the earlier of 30 days prior to the
expiration date or when ANC-RESPIRE cumulative gross sales exceeds
one million dollars, EPL and ANCC agree to discuss the conversion of
ANC-RESPIRE into a longer term joint venture company and to
negotiate in good faith the terms and conditions of a revised
operating agreement. If the parties are unsuccessful in finalizing
such an agreement, then the parties shall be free to:
(1) extend this agreement on the same terms by written agreement
of both parties; or
(2) modify the arrangement between the parties on mutually
agreeable terms by written agreement of both parties; or
(3) terminate this Agreement and pursue fresh produce packaging
opportunities either on their own or in collaboration with
other parties.
(d) Effect of Termination.
(1) Any current customer of ANCC shall be referred to herein as an
"ANCC Customer." Any current customer of EPL shall be referred
to herein as an "EPL Customer." Upon termination of this
Agreement, the parties shall negotiate in good faith:
(A) to designate as either ANCC Customers or EPL Customers
those ANC-RESPIRE customers which are not ANCC Customers
or EPL Customers, and
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(B) an agreement by which each party will continue to supply
to the other or to the ANCC Customers or EPL Customers
respectively those elements of the ANC-RESPIRE products
and services as were provided by such party to
ANC-RESPIRE (including specifically the ANCC products
and ANCC know-how and the EPL Products and EPL Services
and EPL Know-how) prior to termination for an agreed
transition period to serve ANCC Customer and EPL
Customer, respectively.
(2) Upon termination of this Agreement, EPL hereby grants ANCC a
non-exclusive, royalty-free and perpetual license to the EPL
Know-How to use, manufacture, have manufactured and sell
ANC-RESPIRE Products to ANCC Customers. Upon termination of
this Agreement, ANCC hereby grants EPL a non-exclusive,
royalty-free and perpetual license to the ANCC Know-How to
use, manufacture, have manufactured and sell ANC-RESPIRE
Products to EPL Customers. Upon termination of this Agreement
neither party shall sell any products or services using or
under the "ANC-RESPIRE" name.
6. CONFIDENTIALITY
(a) EPL and ANCC agree to maintain all customer lists, prices, research
data, specifications, formulas, techniques, Know-how or other
similar information received from each other relating to the
development, production or sales of the EPL Products, the ANCC
Products and the ANC-RESPIRE Products as the Confidential
Information of ANCC or EPL respectively. Each party further agrees
not to disclose this information to any person other than those whom
it deems necessary for the effective performance of this Agreement
or as required by law.
(b) The obligations set forth above shall not apply when, and to the
extent that, such specific Confidential Information as a whole;
(1) is already in the Receiving Party's possession as of the date
hereof and was not acquired directly from the Disclosing
Party; or
(2) at the time of disclosure or thereafter becomes rightfully
available to the Receiving Party from a third party without
secrecy restriction and who has obtained the Confidential
Information through no fault of the Receiving Party; or
(3) at the time of disclosure is generally available to the public
as evidenced by generally available documents or publications
through no fault of the Receiving Party; or
(4) can be demonstrated to have been independently developed by
the Receiving Party; or
(5) is required to be disclosed, based on the good faith opinion
of the Receiving Party's counsel, pursuant to a lawful court
order or government mandate but, in such event, the Receiving
Party shall use its commercially reasonable efforts to
maintain the confidentiality of the Confidential Information
by means of a protective order or other similar protection.
(c) Neither party shall disclose the contents of this agreement to any
third party without the prior written consent of the other party.
7. MISCELLANEOUS
(a) Right of First Refusal. In the event that EPL receives an
unsolicited offer or initiates discussions with third parties to
purchase all or part of EPL's flexible packaging business or all or
substantially all of the assets of EPL during the term of this
Agreement, then EPL agrees to inform ANCC promptly of the terms of
such offer or discussions before any agreement for sale is
considered or approved by the shareholders of EPL and to allow ANCC
to submit an offer to purchase such business or assets on
substantially similar terms.
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(b) Publicity. With the exception of compliance with SEC rules and
regulations, all announcements and disclosures in relation to this
Agreement or activities thereunder will be agreed upon by the
parties prior to release.
(c) Prior Agreements. This Agreement constitutes the entire agreement
between the parties with respect to the within subject matter, and
to that extent terminates and supersedes all previous agreements,
whether written or oral, relating to the same subject matter,
including the terms and conditions of sale contained in any purchase
order issued by either of the parties.
(d) Indemnity. Each of the parties hereto (hereinafter the "Indemnifying
Party") respectively agrees to indemnify and hold harmless the other
party (hereinafter the "Indemnified Party") from and against (1) any
and all liabilities, losses, costs or actual damages (hereinafter
"Loss"), and (2) any and all reasonable attorneys' and accountants'
fees and expenses, court costs and other out-of-pocket expenses
(hereinafter "Expense"), incurred by the Indemnified Party in
connection with or arising from (A) any action taken in the name of
ANC-RESPIRE by such party or its representatives which is
inconsistent with the terms of this Agreement or the Operating
Agreement, (B) any claim of infringement by the EPL Know-How, in the
case of EPL or the ANCC Know-How, in the case of ANCC, or (C) the
failure by the Indemnifying Party to fulfill any of its respective
agreements set forth in this Agreement or the Operating Agreement.
The parties agree to secure and maintain commercial insurance
coverages sufficient to respond to their respective indemnity
obligations under this Section. Each party will cause the other
party to be named as an additional insured on its general and
product liability insurance and will from time to time upon request
of the other party provide a certificate of insurance or other
evidence to that effect. The indemnification provided for in this
Section shall be of a continuing nature and shall survive
termination of this Agreement.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on the day
and year first above written.
AMERICAN NATIONAL CAN COMPANY EPL TECHNOLOGIES, INC.
By: /S/ Dennis Kester By: /S/ Paul Devine
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Dennis Kester Paul L. Devine
Senior Vice President, Chairman and Chief Executive Officer
Plastic Packaging
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