AGREEMENT
This Agreement entered into as of the 29th day of March, 2004 between Air
Packaging Technologies, Inc., a Delaware corporation with offices in Valencia,
California (Air Packaging") and Oranco, Inc., a Nevada corporation with offices
in Las Vegas, Nevada. ("Oranco")
PRELIMINARY STATEMENT
Air Packaging in a public company engaged in the manufacture of a proprietary
form of plastic packaging. It has recently ceased all business operations for
lack of capital. During the past three years it has entered into a series of
agreements with 3M Corporation ("3M") pursuant to which 3M was, among other
things, granted the exclusive right to sell Air Packaging's products in the
industrial protective packaging market.
Air Packaging's current financial condition has resulted from 3M's failure to
sell products pursuant to its exclusive agreements. Air Packaging believes that
3M's failure to sell said products constitutes a breach of its agreements with
Air Packaging and desires to institute legal action against 3M. However, it
currently lacks funds to commence and prosecute such legal action.
Air Packaging has requested Oranco to finance such legal action against 3M and
Oranco has agreed to finance such legal action under the terms and conditions
set forth in this Agreement.
NOW THEREFORE, THE PARTIES AGREE AS FOLLOWS.
1. Oranco hereby agrees to lend to Air Packaging sufficient funds to commence
and prosecute legal action against 3M and to prosecute such action to a
conclusion, subject to its right to cease providing such funds as set forth
in Paragraph 4 hereof. It is understood that all funds provided by Oranco
pursuant to this Agreement shall be treated as loans, subject to repayment.
Each advance by Oranco shall bear interest at the rate of 12% per annum or
the highest legal rate of interest in the State of California, whichever
shall be lower. Advances shall include all amounts paid to outside legal
counsel or any other individual or company providing assistance to Air
Packaging, including but not limited to current or former employees of Air
Packaging and shall be evidenced by a note or series of notes in the form
of Exhibit A attached hereto.
2. In consideration for Oranco's providing the necessary funds as set forth on
Paragraph 1, Air Packaging shall repay such funds out of any and all
amounts received from 3M and shall further pay Oranco an amount equal to
60% of Air Packaging's "net recovery" from 3M, whether by settlement or
judgment and whether or not legal action against 3M has actually been
commenced. "Net recovery shall mean the gross amount which Air Packaging
shall receive from 3M as a result of the commencement or threat of
commencement of a legal action against 3M less all amounts paid by Air
Packaging in connection with the prosecution of such legal action.
3. In further consideration for Oranco's agreement to advance funds, Air
Packaging agrees that it shall not enter into any settlement with 3M
without Oranco's written consent. In the event that Air Packaging shall
nevertheless enter into a settlement with 3M without Oranco's consent,
Oranco's share of such settlement shall be increased to 80% of Air
Packaging's net recovery from 3M.
4. The parties acknowledge that the cost of litigation will be substantial and
somewhat unpredictable. Consequently, Oranco retains the right to terminate
its obligations under this Agreement at any time on 30 days written notice
to Air Packaging. In the event it shall terminate and its total payments at
such time shall be less than $50,000, its share of Air Packaging's net
recovery from 3M shall be reduced from 60% to 40%. In the event that it
shall terminate its payment after paying $50,000 or more, its share of Air
Packaging's net recovery shall remain at 60%.
5. Air Packaging agrees that it shall keep Oranco informed of all developments
in the legal action against 3M and shall consult regularly with Oranco and
request its advice and counsel as to strategy to be pursued in such legal
action. Oranco's representative for this purpose shall be Claudio Gianascio
until changed by Oranco in writing. All communications with Air Packaging
shall until further notice be to Xxxxxx Xxxxxxxx, Air Packaging's President
and Chief Executive Officer. Written communications to Xx. Xxxxxxxx shall
either be by email to xxxxxxxxx@xxx.xxx or by mail addressed to Xxxxxx X.
Xxxxxxxx, 0000 Xxxxx Xxxxxx, Xxxxxxxx Xxxxx, Xx 00000.
6. As security for the performance of Air Packaging's obligations under this
Agreement, including but not limited to the payment of all sums to which
Oranco may become entitled under this Agreement, Air Packaging grants to
Oranco a security interest in all of the assets of Air Packaging. Oranco is
hereby authorized to file, and Air Packaging hereby ratifies and approves
Oranco's filing of, any and all UCC financing statements and other
perfection certificates to perfect the security interest authorized hereby
and created by the Security Agreement to be entered into by gthe parties.
7. As a further condition for the financial obligations of Oranco under this
Agreement, Air Packaging shall deliver to Oranco the Subordination
Agreement in the form of Exhibit A hereto duly executed by the parties.
8. This Agreement represents the entire understanding of the parties hereto
IN WITNESS WHEREOF, the parties have entered into this Agreement as of the date
first above written.
AIR PACKAGING TECHNOLOGIES, INC. ORANCO, INC. .
By S/ Xxxxxx Xxxxxxxx By S/ Claudio Gianascio
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Xxxxxx Xxxxxxxx, President Claudio Gianascio, President
