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UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF FLORIDA ORLANDO DIVISION DESIGN PALLETS, INC.

, a Florida corporation, Plaintiff, vs. SHANDON VALLEY TRANSPORT SOLUTIONS USA, LLC a/kJa SVTS GLOBAL, a Colorado limited liability company, ADAM M. PENER, COLIN D. CLARK, STEVEN C. DAVIS, and DAVID W. FELL, Defendants. ) ) ) ) ) ) ) ) )
) ) )

CASE NO:

6:12cv669-Orl-31DAB

) ) )

VERIFIED COMPLAINT FOR INJUNCTIVE RELIEF AND DAMAGES Plaintiff, Design Pallets, Inc. (hereinafter "DPI" or "Plaintiff'), hereby sues Defendants, Shandon Valley Transport Solutions USA, LLC a/kJa SVTS Global ("SVTS"), Adam M. Pener ("Mr. Pener"), Colin D. Clark ("Mr. Clark"), Steven C. Davis ("Mr. Davis"), and David W. Fell ("Mr. Fell") and states: Parties, Jurisdiction and Venue 1. DPI is a Florida corporation incorporated January 31, 2000, with its principal

place of business in Apopka, Orange County, Florida. 2. SVTS is a Colorado limited liability company organized on February 20, 2009

with its principal place of business in Parker, Colorado. 3. Mr. Pener is a Colorado resident who is President of SVTS and Member of its

Board of Managers.

4. founder. 5. 6. 7.

Mr. Clark is a Colorado resident who is Chief Executive Officer of SVTS and a

Mr. Davis is a resident of Oklahoma and an investor in SVTS. Mr. Fell is a resident of Colorado and an investor in SVTS. This Court has subject matter jurisdiction under 28 U.S.C. 1332(a)(1) as the

parties are citizens of different States and the matter in controversy exceeds the sum or value of $75,000.00, excluding interest, attorneys' fees and costs. This Court also has federal question jurisdiction as this matter involves patents. 28 U.S.C. 1338(a). 8. This Court has personal jurisdiction over the Defendants under Florida's Long-

Arm Statute because they are committing tortious acts and breaching a contract within this State under section 48.193(l)(b) & (g), Florida Statutes. 9. Defendants have sufficient minimum contacts with Florida, as they were

selling products designed by Plaintiff in Florida, corresponding with shareholders of the Florida corporation on a daily or weekly basis, and sending payments to Plaintiff in Florida, so as to satisfy the due process requirements of the Fourteenth Amendment of the United States Constitution. 10. Venue is proper in the Middle District of Florida pursuant to a forum selection

clause in a contract, and under 28 U.S.C. 1391(b)(2) because this judicial district is where a substantial part of the events or omissions giving rise to the claim occurred. General Allegations 11. This is a case in which SVTS approached Plaintiff for an exclusive license to

distribute corrugated pallets in a certain territory, but set up a payment schedule it could not

make. Under pressure from investors who had contributed $1.6 million or more toward a distributorship that still had not made its initial payment under the contract, Defendants fraudulently induced Plaintiff to reduce the amount of the initial payment to the $1.6 million previously paid, and then alleged breaches of contract to excuse their non-performance as to future payments and claim the intellectual property for themselves. A. Plaintiff's Patented Inventions. 12. Plaintiff owns patented designs of shipping pallets that are made of corrugated

paper as opposed to traditional wood pallets. DPI's corrugated pallet designs are strong enough to transport the vast majority of shipments in interstate commerce. They are lighter, less expensive, safer, and more environmentally friendly than wood. 13. Plaintiffs intellectual property is extremely valuable. It incorporates years of

knowledge and know-how, and includes five issued U.S. patents, as well as several patents pending, and employs engineers who take features from those patents to custom-build in the dimensions that best suit the applications ofthe end user. 14. Plaintiff owns the copyright in its website content and written materials, claims

trademark rights in its "Loadek" brand of pallets, and developed certain trade secrets regarding engineering designs, customer information, savings calculators, pricing data, and other valuable business information that is not generally known to others who could use it. 15. When a distributor asks to do business with DPI, it is first required to sign a

non-disclosure agreement. The distributor will then execute a written license agreement to use DPI's intellectual property under specified terms, including royalty payments. Some

distributors are existing distributors of wood pallets who desire the option to offer corrugated pallets as an alternative. 16. In the typical distributorship arrangement, an end-user will place an order with

a distributor for corrugated pallets in particular dimensions, depending on the application (i.e., what products will be shipped on the pallets). The distributor fills out a DP-l form with detailed information and sends it to OPI to design the pallet. Designs are provided to the distributor, who sends them to a box plant or corrugator to cut a sample. After testing, the sample goes to a die manufacturer to create a die, which goes back to the box plant or corrugator so that the pallets can be mass produced. The pallets are then created, stacked, wrapped, and shipped by truck directly to the end user, who loads its products on the pallets for transport.
B.

DPI's License Agreement with 17.

svrs.

In 2009, Mr. Clark formed SVTS and approached DPI about becoming a

distributor in five U.S. states, with an emphasis on California, and in the country of Mexico. 18. When Mr. Clark offered to pay DPI $14 million plus a 13% royalty on the

sales of each pallet for the distribution rights to that territory, in the presence ofMr. Clark's counsel, Plaintiff in good faith told Mr. Clark his offer was much too high, as the market demand for corrugated pallets at that time would not produce sufficient revenues to sustain a 13% royalty, and that $14 million may be overly burdensome. The parties subsequently agreed to a $7 million payment, plus an 8% royalty, and SVTS had its counsel draft the contract.

19.

On or around March 19,2010, SVTS entered into an Exclusive License and A true and correct copy is

Distribution Agreement with DPI (the "License Agreement"). attached hereto as Exhibit "A." 20.

The License Agreement provides, in relevant part: a. SVTS had made a down payment of $295,000 and owed another $555,000 upon execution of the License Agreement (this was paid), with another $950,000 due on or before June 1,2010, which together would constitute a $1.8 million "Initial Payment" and serve as the "Funding Date." See sections 2.01 and 5.01. b. In the event that SVTS "fails to make the Initial Payment" then "at Manufacturer's option, this Agreement shall terminate and be of no further force or effect [except for terms that survive termination]." No notice was required. See section 2.01. c. The remaining four payments were to be made every six months over the next two years, each with a 10 day grace period, for a total of $7 million. See section 5.01. d. The Term of the patent license was until the last patent expiration date, covering the Territory of California, Texas, Arizona, Colorado, New Mexico, and the country of Mexico, which could be expanded if SVTS exercised certain options. See section 1 ("Term" and "Territory"). e. The patent license and distributorship rights were exclusive within the Territory and non-exclusive outside the Territory, including the right

to sublicense within the Territory. The parties made a special carveout for an existing distributor, Sonoco Products Company. sections 2.02 and 2.03. f. SVTS was only entitled to sell pallets to customers outside the Territory if it notified DPI of a customer contact at the executive level in writing and satisfied other requirements. See section 2.07. g. If SVTS defaulted on its payment schedule, after the Initial Payment, it still could retain a license, but only with respect to those portions of the Territory that had a cumulative monetary value (according to a chart) up to the amount paid, and nowhere outside the Territory. See section 5.02. h. SVTS had a minimum annual sales volume over the first five years and ifit could not make up the shortfall in the following year, DPI could require that SVTS terminate its exclusive rights with respect to specific states in the Territory, selected by SVTS, based on the percentage of missed sales volume. See section 5.03.
1.

See

SVTS had to pay DPI an 8% royalty on the production fee for all pallets sold by SVTS, payable no later than 30 days after the end of each fiscal quarter. See section 5.04.

J.

In partial consideration for the payments to be made by SVTS, DPI would issue SVTS 1,800,000 shares of common stock, and upon receipt of the Initial Payment, SVTS would receive 850,000 of those

shares, with the balance to be issued, if at all, on a prorated basis in accordance with additional payments made. See section 2.06. k. Neither party could use or disclose to others, either before or after the License Agreement ended, any technical or business information, manufacturing technique, process, experimental work, trade secret or other confidential matter relating to the other party. See section 11.01.

1.

SVTS could not apply for registration of any trademarks for the products in the Territory. See section 13.03.

m.

A breach of the terms of the License Agreement that was not cured within 30 days after written notice constituted a default, which gave the non-defaulting party the right to injunctive relief, specific performance or other rights at law or in equity. See sections IS.01(b) and 15.02.

n.

Upon termination of the License Agreement, all further rights of the parties ceased, except that the parties were not relieved of their obligations to pay amounts that were due or became due after termination, or of other surviving obligations. See section 15.03.

o.

Florida law governed, and the parties irrevocably submitted to jurisdiction and venue in Florida state courts or the U.S. District Court for the Middle District of Florida. See section 16.04.

21.

Soon after executing the License Agreement in March 2010, SVTS realized it

would not be able to make the $950,000 payment due June 1,2010.

22.

On June 1, 2010, to accommodate SVTS, the parties entered into a First

Amendment to Exclusive License and Distribution Agreement ("First Amendment") by which SVTS paid $410,000 and DPI agreed to accept the remaining $540,000 of the $950,000 by October 1,2010, as the new "Funding Date." A true and correct copy is attached hereto as Exhibit "B." 23. Apopka, FL. 24. On October 1,2010 SVTS failed to make the $540,000 payment when it came In September 2010, DPI provided a thorough training seminar for SVTS in

due or 10 days thereafter. Therefore, pursuant to section 2.01, DPI had the option to terminate the License Agreement without notice. 25. In November 2010, DPI elected to work with another distributor in New

Mexico, Pallets Unlimited, International ("PUI"), but gave SVTS another chance to raise the funds necessary to become an exclusive distributor, at least in some part of the Territory. C.

The May 2011 Second Amendment


26. Mr. Pener and Mr. Clark felt immense pressure from its investors because

SVTS had only a contract terminable at will by DPI, and no entitlement to any shares of DPI's stock. This pressure was communicated many times when Mr. Clark stated to several employees of DPI his fear of "going to jail" at the hands of disgruntled shareholders who many have been overpromised certain things. 27. By February 2011, SVTS had paid DPI $1.6 million but was still $200,000

short ofthe required Initial Payment. It had also filed two federal trademark applications for

"Green Ox" pallets, wherein SVTS indicated that it first sold these products in interstate commerce on December 16, 2010. 28. By March 2011, Mr. Pener and Mr. Clark had implemented a scheme to

fraudulently induce DPI into a Second Amendment that would reduce the Initial Payment to the $1.6 million already paid, claim certain contractual rights, and then never pay another dime to DP!. 29. Specifically, after consultations with investor Jim Russell, who allegedly had

already invested $1 million, Mr. Pener and Mr. Clark told DPI that Mr. Russell was willing to invest another $2.5 million following his review of an executed Second Amendment, and that 70% of that sum would be applied immediately toward the next installments. 30. On April 27, 2011, Mr. Pener wrote an e-mail to DPI, copying Mr. Clark,

stating that he had spoken with Mr. Russell that morning and confirmed "a Willingness to reengage on the DPI $2.5mm investment following his review of the executed Addendum." A true and correct copy of the e-mail is attached hereto as Exhibit "C.~~ 31. On May 11,2011, in reliance on that e-mail and similar telephone

conversations with Mr. Clark and Mr. Pener, DPI entered into a Second Amendment to the License Agreement with SVTS ("Second Amendment"). hereto as Exhibit "D." 32. The Second Amendment stated that DPI acknowledged the $1.6 million from A true and correct copy is attached

SVTS "satisfies all of SVTS's obligations under the Agreement with respect to the Initial Payment" and that the "Funding Date" shall mean May 11, 2011. The remaining payment dates were backed up to six month intervals from May 11, 2011, such that the next

installment of$1.25 million would be due November 11,2011, although SVTS had no intention or ability to make these future payments. 33. Upon information and belief, Mr. Russell did not invest the $2.5 million, nor

did he ever intend to invest.

D.

SVTS Distances Itselffrom DPI and Declares Breaches 34. With the Second Amendment executed, SVTS immediately began distancing

itself from DPI, marking a stark transition from a previously smooth course of dealing. For example, in June 2011, Mr. Clark flew to Orlando and told Doug Olvey, DPI's president, that another executive of DPI, Joe Danko, was damaging the relationship between the parties, particularly with Mr. Pener. 35. On June 16,2011, Mr. Danko wrote an e-mail to Mr. Pener stating this was "a

major shock" and on June 17,2011, Mr. Pener responded "I shared your shock," explaining the relationship had "always been positive, friendly, and I respect greatly the work you've done to advance the interests ofDPI and support SVTS." 36. On June 24, 2011, DPI and SVTS had a business meeting with Walmart at its

headquarters in Arkansas. Soon after it began, Mr. Clark boldly attempted to take over the meeting, offending the Walmart representative, and claimed to be the "exclusive distributor" of DPI's pallets, which was not true. 37. SVTS had also begun taking a number of actions that were detrimental to, or

competitive with, DPI, including, but not limited to: a. Doing business as "SVTS Global" with stylized lettering and a logo of a tree inside a circular arrow, which was not the name of the entity that

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had signed the License Agreement and gave the distinct misimpression that SVTS had global rights; b. c. Reproducing DPI's copyrighted website content onto its own website; Using its "Green Ox" trademarks to identify the source of the goods that were based on DPI's designs; d. Selling to customers outside the Territory without providing notice to DPI; e. Failing to complete DP-l forms so that DPI could not identify SVTS's end users; f. Forming partnerships with third-party distributors outside the Territory such as Paradigm Pallets, Inc., Reliable Pallet Marketing, and Global Transport Solutions; g. Providing another distributor outside the Territory, T.S.S. Global, with website material that contained DPI's confidential information and intellectual property; and h. 38. Otherwise disclosing DPI's confidential information to others.

SVTS never once paid royalties, and it failed to reach the minimum sales

volumes set forth in the License Agreement. 39. SVTS also began to complain about PUI, which it knew about prior to signing

the Second Amendment. PUI had not made a single sale for DPI, and DPI offered to assign PUI to be an SVTS distributor. Mr. Clark rejected the offer, telling DPI he "needed something to beat you over the head with."

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40.

Upon information and belief, SVTS was misrepresenting to its investors and

potential investors that it had, or was obtaining, the intellectual property rights necessary to expand its business globally, and was not a mere "distributor." E. SVTS Demands Joint Venture with Worldwide Rights and Threatens Lawsuit 41. On July 1, 2011, less than two months after the Second Amendment, Mr. Clark

wrote a lengthy e-mail to Mr. Olvey stating that Mr. Clark has not exhibited "one iota of guile or deceit" and that his goal was to fund a project "without allowing anyone to steal it from you." He said, "I am not trying to take advantage of you" and that he needed to "stay out of jail" because his "ass is on the line." Mr. Clark proposed a new "joint venture" so that he could "re-start" the venture with a "clean slate." Mr. Clark said this was "100% my idea" but he had to run it by Mr. Pener and legal. A true and correct copy of the e-mail is attached hereto as Exhibit "E." 42. On October 10,2011, Mr. Pener sent a letter with ajoint venture proposal, and

on October 14, 2011, DPI declined the proposal. 43. On October 14, 2011, Mr. Pener signed a Form D Notice of Exempt Offering

of Securities with the SEC, indicating a $1.2 million sale amount as of October 3, 2011. 44. On October 19,2011, having recently acquired a lawyer, Mr. Davis, as its

"newest investor," SVTS gave notice of breach to DP!. SVTS stated there were "some serious legal issues between the firms that must be addressed to SVTS's satisfaction should DPI stand by its decision not to move forward with the JV." Even ifthere could have been a breach, and if the Second Amendment had not been procured by fraud, SVTS would have missed its November 11,2011 payment before the end of DPI's 30-day cure period.

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45.

On December 29,2011, after formal letters were exchanged by the parties,

SVTS filed a lawsuit against DPI in Colorado state court, in contravention of the forum selection clause in the License Agreement. Mr. Fell, who was both an investor in SVTS and a lawyer negotiating the License Agreement, had initially drafted the forum selection clause for Colorado, then agreed to substitute the state of Florida for Colorado, only to then disregard the clause when his law firm filed the pleading. 46. SVTS did not notify DPI that a lawsuit was filed, and did not make any attempt

to serve process for months. SVTS and Mr. Fell had ex parte communications with the judge in Colorado, through motions requesting extensions of the service deadline, alleging that they were in "settlement negotiations" with DPI, leading the court to believe that DPI had knowledge of the lawsuit. 47. one ofSVTS's On February 14, 2012, representatives of the parties met at the law offices of investors, Mr. Davis, in Oklahoma City, OK. During the meeting, Mr. Davis

demanded worldwide licensing rights through a joint venture agreement and warned that, if DPI refused, he had "deep pockets" to bury DPI in expensive litigation. Both Mr. Davis and Mr. Fell, whose law firm had filed the complaint, effectively took Mr. Olvey's deposition at this meeting without giving any notice that a lawsuit was pending. 48. On February 16, 2012, Mr. Davis sent a follow-up e-mail stating that he had

absolutely no "hidden agenda" and that he was "certain there is nothing SVTS is holding in its back pocket as you say." He said there are no alleged "gotchas." He continued that "Again, I have no hidden agenda, and don't know of anything you are not already aware of." A true and correct copy of the e-mail is attached hereto as Exhibit "F."

13

F.

DPI Faces Two Lawsuits and Loss a/Intellectual Property 49. On April 3, 2012, after the Colorado judge had given a final extension of the

service deadline, DPI was served with process and first learned of the lawsuit. 50. On April S, 2012, SVTS, through counsel in Ft. Myers, FL, demanded

inspection of corporate documents under the Florida Statutes within 5 days, claiming SVTS was a shareholder ofDPl. Despite a request for an extension oftime to respond, SVTS

quickly filed another lawsuit, following through on Mr. Davis's promise of using the expense of litigation to force the SVTS agenda. 51. On April 10, 2012, SVTS sent a letter to DPI stating that, because DPI was

unable or unwilling to provide custom design services, in order to "mitigate" SVTS's damages, SVTS would be "designing, testing and producing its own custom designs for prospects and clients from this point forward." The letter states, "Please be informed that because these designs will have employed SVTS resources and SVTS intellectual property, we view such custom designs and improvements to be the confidential, and proprietary, intellectual property of SVTS." In boldfaced text, it continues "DPI is hereby strictly prohibited from sharing such designs with any distributor of DPl's pallets." A true and correct copy of the letter is attached hereto as Exhibit "G." 52. In summary, within approximately two years, SVTS had signed a contract in

March 2010 agreeing to payment terms it could not make, began selling its own "Green Ox" products as early as December 2010, fraudulently induced a Second Amendment in May 2011, and simply used DPI to become a competitor. Defendants also demanded worldwide rights, threatened protracted litigation to force DPI to comply with their demands, and

14

secretly filed a lawsuit in Colorado in contravention of the forum selection clause its own attorneys drafted. 53. As a result of these actions, Plaintiff has lost control of its intellectual property,

as well as multiple business opportunities, and spent enormous time, money and resources to, in effect, create its largest competitor. It has sustained a loss of valuable customers, specific and prospective sales leads, customer goodwill, and injury to business and reputation. 54. Plaintiff should be awarded significant punitive damages against Defendants

for their intentional, wanton, and egregious actions. 55. Plaintiff has retained the law firm of Dean, Mead, Egerton, Bloodworth,

Capouano & Bozarth, P.A., agreeing to pay a reasonable fee for services rendered. 56. All conditions precedent to the maintenance of this action have occurred, been

performed, or been waived.

COUNT I
Patent Infringement Against All Defendants 57. This is an action for temporary and permanent injunction, and damages, against

all Defendants for patent infringement. 58. 59. Plaintiff re-alleges and incorporates herein paragraphs 1-56 above. Plaintiff holds the patents to the corrugated pallet designs that were the subject

ofthe License Agreement. 60. 61. SVTS is no longer operating under the License Agreement. Defendants are continuing to promote, market and sell the goods that were

subject to the License Agreement and otherwise provided to them by Plaintiff, without authority, during the terms of the patents.

15

62.

As a direct and proximate result of the Defendants' acts, Plaintiff has suffered,

and continues to suffer, irreparable harm. 63. Money damages are insufficient to remedy the harm suffered by Plaintiff,

which includes, but is not limited to, loss of valuable customers, specific and prospective sales leads, customer goodwill, and injury to business and reputation. 64. 65. Plaintiff has no adequate remedy at law and is entitled to injunctive relief. Plaintiff has a substantial likelihood of success on the merits, and a temporary

injunction will serve the public interest. 66. As a direct and proximate result of these wrongful acts, Plaintiffhas suffered,

and will continue to suffer, substantial damages until the wrongful acts cease or are enjoined. WHEREFORE, Plaintiff, Design Pallets, Inc., respectfully requests that this Court grant temporary and permanent injunctive relief enjoining Defendants, Shandon Valley Transport Solutions USA, LLC, Adam Pener, Colin D. Clark, Steven C. Davis and David W. Fell, either themselves or through others, from directly or indirectly promoting, marketing or selling any products that were subject to the License Agreement, or using any confidential information that was disclosed in connection with the License Agreement, or were otherwise obtained from Plaintiff, and award damages to Plaintiff that are incurred through the date that the wrongful acts cease or are enjoined, as well as punitive damages, interest, attorneys' fees and costs, and such further relief as this Court deems just and appropriate. COUNT II Breach of License Agreement Against SVTS 67. 68. DPI re-alleges and incorporates herein paragraphs 1-56 above. The License Agreement constituted a valid contract between the parties.

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69. 70.

DPI fully performed under the License Agreement. As set forth above, SVTS breached various provisions of the License

Agreement, including, but not limited to: a. Section 2.01 for failing to make the Initial Payment "simultaneously with the execution of the License Agreement"; b. c. Section 2.01 for failing to make the $1.8 million Initial Payment; Section 2.02 for using the patents not "in accordance with the terms and conditions set forth herein"; d. Section 2.03 for exercising distribution rights not "in accordance with the terms and conditions set forth herein"; e. Section 2.07 for selling pallets with customers outside the Territory without notifying Plaintiff "of a customer contact at the executive level in writing" and obtaining "a letter of intent" with the required orders; f. Section 4.08 for making improvements to the products rather than requesting that Plaintiff "promptly make such improvements and modifications as requested by" SVTS; g. h. Section 5.01 for failing to make the scheduled payments; Section 5.02 for retaining exclusivity for portions of the Territory where no "cumulative payment has been made" prior to a payment default;
1.

Section 5.03 for retaining exclusivity for portions of the Territory after failing to meet the minimum sales volumes and not "selling an

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additional number of Pallets in the next succeeding year to eliminate the shortfall from the prior year";

J.

Section 5.04 by failing to "pay Manufacturer a royalty of 8% of the Production Fee fro all Pallets sold by" SVTS;

k.

Section 11.01 for failing to "hold in strict confidence" and not using or "disclosing to others" either before or after termination or expiration of the Agreement, "any technical or business information, manufacturing technique, process, experimental work, trade secret or other confidential matter relating to the other party";

1.

Section 13.03 for violating the covenant that it would "not apply for registration of any Trademarks in the Territory";

m.

Section 16.04 for violating the agreement to "consent to the jurisdiction" of the courts in Florida.

71.

As a direct and proximate result of the breaches, Plaintiff suffered damages.

WHEREFORE, Plaintiff, Design Pallets, Inc., demands judgment against Defendant Shandon Valley Transport Solutions USA, LLC for damages, interest, attorneys' fees, costs, and such further relief as this Court deems just and appropriate. COUNT III Misappropriation of Trade Secrets Against All Defendants 72. This is an action for misappropriation of trade secrets against all Defendants

under Fla. Stat. 688.001 et seq. 73. DPI re-alleges and incorporates herein paragraphs 1-56 above.

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74.

Throughout their affiliation with DPI, Defendants acquired trade secrets from

DPI and used them for their own exclusive benefit, and for the benefit of third parties, without express or implied consent of DPI. 75. The trade secrets (hereinafter "Trade Secrets") included, but were not limited

to, the methods of designing and building corrugated pallets using various elements from DPI's patented designs. 76. At the time Defendants used the Trade Secrets, they knew or had reason to

know their knowledge of the Trade Secrets was acquired under circumstances giving rise to a duty to maintain their secrecy or limit their use. 77. The Trade Secrets derived independent economic value, actual or potential,

from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from their disclosure or use. 78. The Trade Secrets were the subject of efforts that were reasonable under the

circumstances to maintain their secrecy. 79. As a direct and proximate result ofthe misappropriation, DPI has suffered, and

continues to suffer, irreparable harm. 80. Money damages are insufficient to remedy the harm suffered by DPI, which

includes, but is not limited to, loss of valuable customers, specific and prospective sales leads, customer goodwill, and injury to business and reputation. 81. 82. DPI has no adequate remedy at law and is entitled to injunctive relief. DPI has a substantial likelihood of success on the merits, and a temporary

injunction will serve the public interest.

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83.

As a direct and proximate result of these wrongful acts, DP! has suffered, and

will continue to suffer, substantial damages until the wrongful acts cease or are enjoined. 84. Defendants. 8S. 86. Pursuant to Fla. Stat. 688.004, DPI may recover damages against Defendants. Pursuant to Fla. Stat. 688.00S, DPI may recover an award of attorneys' fees Pursuant to Fla. Stat. 688.003, DPI is entitled to injunctive relief against

and costs against Defendants for willful and malicious misappropriation. WHEREFORE, Plaintiff, Design Pallets, Inc., respectfully requests that this Court grant temporary and permanent injunctive relief enjoining Defendants, Shandon Valley Transport Solutions USA, LLC, Adam Pener, Colin D. Clark, Steven C. Davis and David W. Fell, either themselves or through others, from directly or indirectly using any of Plaintiff's trade secrets, and award damages to Plaintiff that are incurred through the date that the wrongful acts cease or are enjoined, as well as punitive damages, interest, attorneys' fees and costs, and such further relief as this Court deems just and appropriate.

COUNT IV
Rescission and Fraudulent 87. 88. Inducement Against SVTS, Mr. Pener and Mr. Clark DPI re-alleges and incorporates herein paragraphs I-S6 above. As stated in paragraphs 26-33 above, SVTS, Mr. Pener and Mr. Clark made

false statements regarding a material fact that Jim Russell would provide a $2.S million investment ifDPI agreed to the Second Amendment in May 2011. 89, was false. SVTS, Mr. Pener and Mr. Clark knew or should have known the representation

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90. act on it. 91. 92.

SVTS, Mr. Pener and Mr. Clark intended that the representation induce DPI to

As a direct and proximate result of the representation, DPI has been damaged. DPI received no benefits from the Second Amendment and has given

notification that it is rescinded. 93. Amendment. WHEREFORE, Plaintiff, Design Pallets, Inc., demands rescission of the Second Amendment and an award of damages against Defendants Shandon Valley Transport Solutions USA, LLC, Adam Pener, and Colin D. Clark, as well as punitive damages, interest, attorneys' fees, costs, and such further relief as this Court deems just and appropriate. COUNT V Promissory Estoppel Against SVTS~Mr. Pener and Mr. Clark 94. 95. DPI re-alleges and incorporates herein paragraphs 1-56 above. As stated in paragraphs 26-33 above, SVTS, Mr. Pener and Mr. Clark made a DPI has no adequate remedy at law and is entitled to rescind the Second

representation of material fact that Jim Russell would provide a $2.5 million investment if Plaintiff agreed to the Second Amendment in May 2011. 96. such promise. 97. 98. DPI reasonably relied on the representation. DPI detrimentally changed its position due to its reasonable reliance on the This representation was contrary to a later-asserted position that they made no

representati on. 99. As a direct and proximate result ofthe representation, DPI has been damaged.

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WHEREFORE, Plaintiff, Design Pallets, Inc., demands rescission of the Second Amendment and an award of damages against Defendants Shandon Valley Transport Solutions USA, LLC, Adam Pener, and Colin D. Clark, as well as punitive damages, interest, costs, and such further relief as this Court deems just and appropriate. COUNT VI Fraudulent Inducement Against All Defendants 100. DPI re-alleges and incorporates herein paragraphs 1-56 above. 101. As stated in paragraphs 41-48 above, Defendants made purposeful misrepresentations and omissions regarding a material fact that a lawsuit had been filed against DPI in Colorado. Had DPI known ofthe lawsuit, the meeting in Oklahoma City, OK and multiple subsequent correspondences would not have occurred. 102. Defendants knew or should have known the misrepresentations and omissions were false. 103. Defendants intended that the misrepresentations and omissions induce DPI to act on them. 104. DPI suffered damages in justifiable reliance on the misrepresentations and emissions. WHEREFORE, Plaintiff, Design Pallets, Inc., demands an award of damages against Defendants Shandon Valley Transport Solutions USA, LLC, Adam Pener, Colin D. Clark, Steven C. Davis and David W. Fell, as well as punitive damages, interest, costs, and such further relief as this Court deems just and appropriate.

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COUNT VII Civil Conspiracy Against All Defendants 105. DPI re-alleges and incorporates herein paragraphs 1-56 above. 106. Defendants had a conspiracy to obtain global rights to Plaintiffs' intellectual property through unlawful means. 107. Defendants took numerous overt acts in pursuance of the conspiracy, including, but not limited to, fraudulently inducing the Second Amendment to extend the contract, misappropriating Plaintiffs trade secrets under the "Green Ox" label, and later meeting in Oklahoma City, OK to threaten Plaintiff with protracted litigation against "deep pockets" ifit would not cave in to Defendants' demands for global rights. 108. As a direct and proximate result of the conspiracy, Plaintiff has been damaged. WHEREFORE, Plaintiff, Design Pallets, Inc., demands an award of damages against Defendants, Shandon Valley Transport Solutions USA, LLC, Adam Pener, Colin D. Clark, Steven C. Davis and David W. Fell, as well as punitive damages, interest, attorneys' fees, costs, and such further relief as this Court deems just and appropriate. COUNT VIII Accounting Against SVTS 109. DPI re-alleges and incorporates herein paragraphs 1-56 above. 110. As a licensee and agent for DPI, SVTS had a confidential and fiduciary duty to account to DPI. 111. The parties had a complex contractual relationship involving extensive or complicated accounts. For example, SVTS was required to account for its sales and pay royalties to DPI.

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112. A remedy at law will not be as full, adequate or expeditious as in equity. 113. DPI is entitled to an accounting of SVTS, including any affiliates, partners, joint venturers, or spin-off entities, including but not limited to "SVTS Global." WHEREFORE, Plaintiff, Design Pallets, Inc., demands an accounting from Defendant Shandon Valley Transport Solutions USA, LLC, as well as costs and such further relief as this Court deems just and appropriate.

COUNT IX Unjust Enrichment Against All Defendants


114. DPI re-alleges and incorporates herein paragraphs 1-56 above. 115. By providing the intellectual property products to Defendants relating to the License Agreement, Plaintiff has conferred a benefit on the Defendants, who have knowledge thereof. 116. The Defendants voluntarily accepted and retained the benefits conferred. 117. The circumstances, as set forth in detail above, render the Defendants' retention of the benefit inequitable unless Defendants pay Plaintiff for the value of the benefits. 118. Defendants have been unjustly enriched at the expense of Plaintiff. WHEREFORE, Plaintiff, Design Pallets, Inc., demands an award of damages against Defendants Shandon Valley Transport Solutions USA, LLC, Adam Pener, Colin D. Clark, Steven C. Davis and David W. Fell, as well as punitive damages, interest, costs, and such further relief as this Court deems just and appropriate.

DEMAND FOR JURY TRIAL


Plaintiff demands a jury trial for all actions so triable.

24

Dated this

day of May, 2012.

Florida Bar No. 037841 Attorneys for Plaintiff Dean, Mead, Egerton, Bloodworth, Capouano & Bozarth, P.A. Post Office Box 2346 Orlando, Florida 32802-2346 Telephone: (407) 841-1200 Fax: (407) 423-1831 E-mail: dhathaway@deanmead.com mgriffin@deanmead.com

25

VERIFICATION STATE OF FLORIDA COUNTY OF ORANGE Before me, the undersigned authority, personally appeared Douglas A. Olvey, as President of Design Pallets, Inc., who after being first being duly sworn deposes and says that he has read the foregoing and states upon personal knowledge that the facts stated therein are true and correct unless stated upon information and belief, in which event such facts are believed to be correct.

26
00701957vl

EXHIBIT A

EXCLUSIVE

LICENSE

AND DlSTRI BUTlO~~\\k)t~~&1'f)iStl'iCl

Court ZndJD Filinr.: Dille: Dec 29 znll 10:4% \1 !'>1~T l'iliug II): 41613514

THIS exCLUSIVE LICENSE AND DJSTRrBUTJON A~E8M~tr ~t1\isr "~tffiWellt'} is made as of this ..l8.day of March (the "l::ffecJ.tY_pate"), by and between DESIGN PALLETS, INC., a Florida corporation ("Manufacturer"). and SHANDON VALLEY TRANSPORT SOLUTIONS VSA, LLC. u Colorado limited liability company ("Distributor"). Manufacturer and Distributor are sometimes referred to herein individually as a ~Party.' and collectively as the "Parties."
RECITALS

A. Manufacturer is the owner of various patents and patent applications for the production and assembly of pallets and derivatives thereof relating to such patents as further described herein. R Manufacturer and Distributor are entering into this Agreement regarding the licensing. of the patents. the right to hand assemble and sell pallets based Oil such patents, and the right to place machines (hat assemble pallets with end users. all as more particularly set forth here in.

AGREEMENT

NOW. THEREFORE. in consideration of the mutual covenants and agreements herein contained.
Manufacturer and Distributor do hereby agree as follows:

SECTION I. t)EFINITIONS. "Effective Date" shall mean the date set forth in the introductory paragraph of this Agreement.
"Fiscal Quarter" shall mean each three (3) month period ending
011

March 31. June 30. September 30 and

December 3 I of each calendar year. "Last


lL)

E."pin.: Lil.:ensed J'atel'l!" shall

mean

the last to expire of the Licensed Patents issued anywhere in

the world,

"Licensed Patents" shall mean the patents set forth on Exhibit A attached hereto. lilly new patents issued in connection with the Products (as defined below), and any patents issuing 011 divisions. continuations, continuations-in-part, reissues and extensions corresponding to any of the foregoing. and any trademarks. service marks or other intellectual property associated with such patents.
"Machines" shall mean collectively. any machine or equipment (other than the existing 582 Machine) developed by Manufacturer for the purpose of the automated or semi-automated assembly of a pallet

comprising dements of intellectual property owned by the Manufacturer before or during the term of this Agreement rehued to the Licensed Patents. as well as all modifications anti improvements thereon. <lndall accessories, attacbrncnts. and spare. renewal and replacement p<ll15 therefore. "582 M_acl]inelO"h.L11mean any machine designed. created or manufactured by Manufacturer to assemble s pallets designed in accordance with one or more claims of the 582 Patent, as well as all accessories, attachments. and spare. renewal and replacement parts therefore.

"PCJ'SQU" shall mean any individual. partnership, limited liability company, association. corporation at" other entity.

"PaU~(Sr: shall mean any pallet designed or created by or 011 behalf of Manufacturer in accordance wilh one or more of the Licensed Patents. whether assembled by hand or by any Machine (including, but not limited to the l.ondek Pallet (582). the Box Pallet (4D2). the Rackable Pallet (601). and the Diagonal Pallet (H55)) and all modifications and improvements thereon.
".Prod!l(j.ion

Fee" shall mean the fee charged hand or any Machine.

by

DIstributor to its customers for each Pallet assembled

by

"Products"

shall mean collectively the Machines and the Pallets,

"Term"' shnll mean the period commencing on the date of this Agreement and (i) tor the Licensed Patents, continuing until the expiration of the Last 10 Expire Licensed Patent. and for the OJ} distribution rights 10 the Products, continuing until terminated by mutual consent of the Parties, unless terminated sooner under any applicable provision of th is Agreement, In the event that any of the Licensed Patents may be extended, Manufacturer shall take all reasonable actions necessary to extend such Licensed Patents and the term 01' this Agreement with respect to the Licensed Patents shall be extended to be co-terminus with ,t.e Last to Expire Licensed Patent.

sl1<\11 mean the states of California. Texas. Arizona. Colorado and New Mexico. and the In the CVe)1! that Distributor exercises any of its options set forth herel 11_the Territory shall be automatically expanded to include those areas for which Distributor has exercised its option.
country of MeXICO.

'"Territory"

SECTION 2. LICENSE, DISTRIBUTORSHIP AND OWNERSHIP. 2.01. Agreement. This Agreement shall be subject to the payment by Distributor of the initial payment set forth in Section 5.0 I below (the "Initial PllYIllenl") simultaneously with the Parties execution of this Agreement. The date on which Distributor delivers the June 1.20]0 payment set forth in Section 5.01 below to Manufacturer shall be referred to he-rein as the "Funding Date." Distributor shall use commercially reasonable e mlrts to deliver 1he June I. 20 I0 payment as soon as possible after the dale this Agreement. In the event that Distributor receives any single financing in excess ()f$249.999 prior to
J line

or

outstanding balnnce or the June I, 20 I0 payment. III the event that Distributor receives any single Ilnancing prior to June L 20]() of which 70% of such financing is sufficient La pay the then outstanding balance of the June I. 2010 and the October I, 2010 payment. Distributor shall promptly pay such umounts to Manufacturer from the proceeds of suer; financing. In the event that Distributor fails to make the Initial Payment to Manufacturer as set forth above, at Manufacturer's option. this Agreement shall terminate and be of no further force or effect, except (or those provisions hereof that specifically survive Ih~ krminatil1ll \lfthi!.l\grl.:cmcnt. 2.02 Pntent License. MalHlfaclurer hereby grants 10 Distributor during the Term or this Agreement an c~clw;ivC' license: (subject 10 the terms of this Agreement) to ll!>e lind .-;ubliccnse till' Licensed Patents within th~ '( ertllory. <Iud iI non-exclusive liccllsC to usc the Licensed Patenrs outside the Territory. in l-Iccord~lI1cewith the terms and conditions set forth herein. All sublicensces must comply with the duties unci obligations of Distributor set forth in this Agreement Manufacturer acknoVvledg.es and agrees th<lt the exclw,iw rights granted to Distdbutor with re!>pect \(1 Ihe Licensed Patents indLldf."s a restriction 011 Manunlctmcr"!; or nny othcr party's rights I() lise the I jccnscd Patents within the Territory. subject to th..: cxo..:l.'ptions sp1.!cificnlly set Ii.irth herein.

I. 20 10. Distributor

shall promptly

pay Manufacturer

70%

of such

financing

up to the then

2.03. Grant of Distrlbuturshlp Righcs. Manufacturer hereby grants to Distributor the exclusive right to ~C-1Ithe Pallets and place the Machines during the Term to or with any party located within the Territory and a non-exclusive right 10 sell the Pallets and place the Machines during the Term to or with any end-user of tile Pallets Or Machines outside the Territory. in accordance with the terms and conditions set forth herein. Distributor hereby acknowledges that Manufacturer has entered into an agreement with SOL.OCO Products Company f'Sonoco'') whereby $OIlOCV has the right to sell hand assembled pallets pursuant to intellectual properties owned by Manufacturer to certain accounts that may have branch operations within the Territory. Manufacturer acknowledges and agrees that the exclusive rights granted tn Distributor with respect \0 the distribution of the Products includes a restriction 011 Manufacturer's or any other party's rights to distribute the Products within the Territory. 2.04. Right of First Refusal. Manufacturer hereby grants to Distributor a right of first refusa I (the -ROFR-) with respect to the grant or sale by Manufacturer to any third part} of' an exclusive, territorial right 10 sell the Pallets or sell. lease or place the Machines in any portion of {he world outside of the Territory (an "Exclusive Territorial Transaction"). If, at any time during the Term of this Agreement and from and uftl!r the date Distributor makes the final payment under Section 5.01 below, Manufacturer receives a bona Iidc written offer from. or wishes \0 initiate negotiations with. any third party with respect In an Exclusive Territorial Transaction. then, concurrent with entering 'into any discussions or negotiations with such third party. Manufacturer shall notify Distributor 111 writing {the "Notice") of the Exclusive Territorial Transaction, Distributor shall have seven (7) days from and after the receipt by Distributor ofthe Notice to deliver a written notice of its election to negotiate the terms for the Exclusive Territorial Transaction (the "Election N(.nice"). if Distributor fails to respond wtthin such 7-day period, Distributor "hall be deemed to have rejected [he Exclusive Territorial Transaction, If Distributor rejects. or is deemed (0 have rejected. the Exclusive Territorial Transaction. Manufacturer shall be entitled to enter inro any discussions. negotiations or transactions for such Exclusive Territorial Transaction with any third party. If Distributor elects to enter into negotiations with Manufacturer for such Exclusive Territorial Transaction within such 7-day period. Manufacturer shall, within seven (7) days at' receipt of the Electioll Notice. deliver the proposed terms for such Exclusive Territorial lransacrlon to Distributor (the "Ollh"). Distributor shall have thirty (30) days after receipt of the Offer tv exercise its option to enter into an agreement with Manufacturer tor such Exclusive Territorial Transaction on the terms of the Offer, If Distributor elects to exercise its ROrR. (i} Manufacture and Distributor shall enter into an agreement for such Exclusive Territorial Transaction ill accordance with the terms of the Offer. but using the form of this Agreement, and (ii) Distributor shall pay [he then outstanding balance of the amounts owed to Manufacturer set forth in Section 5.01 below, If Distributor does 110t respond within such 30-day period. Distributor shall be deemed to have rejected such Offer, if Distributor rejects. 01' is deemed to han: rejected such Offer, Manufacturer shall be entitled 10 enter intI) an agl'eemcllt WiIh any third party Oil Ihe Icnns of the.:OtTer. If Manufacturer fails (0 cnter inltl an agrccllll!l1\ with allY sllch third party on th~ same (erms of the Offer within ninety (90) days after Dislrihuto(s rejection or deemed rejection of the OtTer, Distributor's ROFR shnll be reinstated with respect to sllch Exclusive Territorial Transaction. Notwithstanding anything 10 the contrary, Manufacturer shaH insure that any agrecment entered inw hetween Manufacturer and any third party shall specifically acknow~edl.!e and rccogni7.c Distributor's rill-hlS herein, induding. without limitation, Distributor's ex.clusive lights with respect to any customers of [)istribu[or (including. without limitation. lilly future customers of Distributor), whether within thL: I'~rrit~)ry many mhl:r part ofthe world. 2.05 Kight tu Expand Territory. At allY time during the Term of this Agreement (art.d wilhl1Ul rl!dudng llI' atl~ctil1g Distributor's rights under Section 2.04 abovc) ami Ihll11 ami uncr till! date Distributor makes the tinal payment under Section 5,0 I below', Distributor may add the loilowiJ1g Slales 10 the definition {)f"Tcrrilory" in this Agl'\.'Clllcnl by delivering the s.um set forth tlext to cadi !;U1Cg.Ory to
the Manllt~lcturer:

Additional Territory and Price _ ...._ .. lind ldaho, Oregon


Washington-

-- .

Minimum Sales Volume


134,000

1,113.000

5.565:000
3.224,000

6.956.()OO

8.904.000

$1.500.000 Utah.

Wyoming. :

77.000

645,000

4,031.000
'- ...8.S41.000

5.159,000

Montana
$500.000 Oklahoma. Nebraska,

and N evadaKansas, 170.000 1.415,000


7.073.000 11.3217.000

North Dakota, Suuth Dakota and Minnesota, $1.000.000

.--..~ ...........

!
-~-.

Subject

10 any contracts between Manufacturer and third parties and to minimum sales requirements with respect to such areas. upon delivery of any of the amounts set forth above to Manufaciurcr by or Oil behalf

of Distributor, the applicable states shall be automatically added 111 the Territory and he subject to the lCn11S of this Agreement (including. without limitation. Section 5.05 below), Distributor shall specifically acknowledge ill writing the contracts Manufacturer is subject to ill any additional area added to the T erritory hereunder. 2.06 ()wnershil_ Interest in Manufacturer. In partial consideration of the payments to be made by Distributor hereunder and subject to the terms of this Agreement. Manufacturer shall issue 1.800,{)00 shares of common stock of Manufacturer, with all the same rights and benefits as provided La all other common stockholders of Manufacturer as of the date of this Agreement {the "Common Stock'} Simultaneously with the execution ofthis Agreement by the parties hereto upon Manufueturcr's receipt of the Initial Payment, Manufacturer shall issue to Distributor. and/or its designees, 850.000 shares of the Common Stock, The balance (If the Common Stock shall be issued. if at all. Oil a prorated basis ill accordance with the payments made by Distributor pursuant to Section 2.01 above.
Customers Outside. the Territory. Distributor shall be entitled to sell Pallets nd/or place Machines with customers outside of the Territory. and Manufacturer shall not solic it such customers, provided that (i) Distributor notifies Manufacturer of a customer contact at the executive level in writing. (ii) Manufacturer docs 1101 have an existing, written contract with such proposed customer, (iii) Di... ributor obtains a letter of intent or other indication t intcrcsi from such proposed customer within six (6) months of Distributor's meeting with such proposed customer, and (iv) such proposed customer places an order t(}l' Pallets or Machines within nine (9) months after Distri butor's meeting with such proposed 2.07

or

customer.

SECTION J. I'ALLETS. 3.01 Patents. Manufacturer shall. at its sole cost and expense, (i) maintain all Licensed Patents for the 11nnets and th.: Mm.:hines (to the extent Manufacturer elects to patent the Machines or any components thereof) in full force and effect, (il) promptly apply for. diligently pursue. and obtain and maintain all patents, tu th~ I,!'xtCIJ{ obtuinable, for any other Pallets 31\d Machines (to the eXlent M<U1Ufactun::r elects to patent tile Machines or any components thereof) \;reated by Manufacturer. and (tii) jlromptly apply for. di ligcmly pllrsue. and oblain and maintain an foreign patents for the Licensl:d [lalents. the Machines (10 the I!xLCI1tM!lRufacUircr elects to patent the Machines or any components thereot) and any other Pallets

and Machines (to the ex tent Manufacturer elects to patent the Machines or any components thereof) created by Manufacturer in. at least. those countries ill which the Licensed Patents have been filed. In the event thaI Manufacturer elects not to apply tor, diligently pursue or obtain and maintain any patents or foreign patents described above. Manufacturer will so apply for, diligently pursue and obtain and maintain those patents or foreign patents as requested by Distributor provided that Distributor pays all of the actual costs and expenses incurred by Manufacturer in connection with such requested patents or foreign patents, 3.02 Machine As.'l.embletl Pallets. After the Funding Date. if' the Distributor and Manufacturer determine that the pallet described below is structurally aad economically feasible, Manufacturer will use its best efforts, \..... in a reasonable time period after such decision by {he Parties, to design a pallet (in ith addition to the 582 Pallet) based on one or more of I he Licensed Patents, as requested by Distributor, that is capable of being machine assembled (tile "Machine Assembled Pallets"). and deliver 10 Distributor such design. drawings, blueprints and other information necessary for Distributor to produce and sell such Machine Assembled Pallet. In the event that Manufacturer elects not to design such Machine Assembled Pallet. Distributor Shill! have the right (0 design. 01' have such Machine Assembled Pullet designed on its behalf lIsing the- Licensed Patents (if applicable) by an alternative designer or manufacturer, provided that (i) Distributor pays all of the actual costs and expenses incurred ill connection with such design. and tii) \11 an ufact urcr shall have all rights to uny such design based on the Licensed Patents.
Additional Pallets. After the Funding Date. if the Distributor and Manufacturer determine that a pallet of a different size or design of any of the Pallets based on one or more of the Licensed Patents (all "Additional I~allen structurally and economically feasible, Manufacturer will lise Its best efforts, is within a reasonable amount of lime after the decision by the Parties. to design such Add itional Pallet and deliver 10 Distributor the design and an example of Stich Additional Pallet. including all drawings, blueprints and other information necessary for Distributor to produce and sell such Additional Pallet. In the event that Manufacturer elects not to design such Additional Pallet, Distributor shall have the right to design, Of have such Additional Pallet dl... signed on its behalf. using the Licensed Patents (if applicable) by ~II\ alternative designer or manufacturer, provided that (i) Distributor pays all of the actual costs and expenses incurred ill connection with such design, and (ii) Manufacturer shall hmie ul1 6ghts to any SllCh design bm;cd ~mthe Licensed Patents. 3.03 SECTlON~. .l.O1.

MACHINE SUOP AND MACHINES

Machim .. Shop, Within six (6) months after the Funding DOlle(:subjec[ to Force Majeure Events). ' M:ulltf'uctu('Cl'.,hall have a fully functional. fully equipped machine shop (the "Macbille Shop"), ,\ itll all required pe-l'So11l1el. that call p.rodllce the Machines. Sul~iec:tto force Majeure EYl,;nl~. MMlIra~tlln:1' shull h,1\'C tile capability to produce within twelve (12) monthli or the FUllding Dale a ~\lffjclcnl number of Machines \\ jthin a reasonable time period It} satisfy Di!itributor's orders from and allcr tlm\ dene. On or pri~)r to the first mmtyersary of the Funding Dale. Manutacturer shall provide Disll'ibull'H' in writing Wi1h \hl,; spec ifications and standards for each Machine then in production. Manufacturer's warmnty with respecl to tbe Machines .\.hal1include sllch specifications find standards. In the event that DIstributor has nrdcn; Ihal exceed Manufacturer's capability to produce lhe required number of Machines on a [ilndy basis. Mallu1~lclurer shill! promptly and diligently increase such capability by whatever means reasonabJ} I'c{luin.,(jt(l med such orders. which may include the creation or compollents for the Machines by other manufactllrers 1't!3sonably acceptable to Dlstriblltor. In the event that Manunu.:lun:r fa ils to pmmptly l!{,~mll1cncc.dHig.cnt[y purslIe alld fu Ifill each or Ihe cond ilions ()f th is Section 4.UI (aftcr written notice tium Distrihuhlr and a forty-five (45) day cure period). Manufacturer will grant l)[stributt)[ a temporary liccn~c tu nlltm Distributor to contract with another manufacturer fbr the creation 01' the \.1achincs in order 10 f'ill the production ShOlttal1. Manufactllrer shall cooperate hilly with Distributor and any sllch alternative nmnufucturcr 10 insure the completion of the Machines ordered by Distributor, including.

\\ ithout limitation. providing copies of all designs, blueprints and other information reasonably necessary for such alternative manufacturer to produce such Machines. Manufacturer hereby grants Distributor the right 10 sublicense to such alternative manufacturer the Licensed Patents, and otherwise provide all information necessary for such alternative manufacturer to manufacture and del iver the Machines to Distributor, At all limes during the Term, Distributor shall have the right upon reasonable notice to observe all operations or the Machine Shop. including the establishment of such Machine Shop. and to. 111 Distrihutors sole expense, without hindrance to Manufacturer's operations and using a mutually acceptable auditing agent, audit the operational records of Manufacturer tal Manufacturer' S oIfice , rdating solely to the Machine Shop.jhe operation thereof and the Products, 4.02 582 Machine. Manufacturer represents that it has received and js the sole owner of' the prototype 582 Machine created by Manufacturer and recently held by Carolina Container Corporation.

-\,03 Next Generation Machines, After the Funding Date. if the Distributor and Manufacturer determine that H new Machine is structurally and economically feasible. Manufacturer will use its best unixts. within a reasonable time period after such decision by the Parties. to design and create a Machine (other than the 582 Machine) that will assemble a Pallet or Additional Pallet comprising all clements of <It least one claim 01' the Licensed Patents. Simultaneously with the completion of the design and manufacture or such \1:lcilinc, Manu facturer will del iver to Distributor such design. draw ings, blueprints and other information necessary for Distributor to produce and sell such Machine. In the event that Manufacturer elects not to design such Machine. Distributor shall have the right to design. or have such Machine designed on its behalf, by an alternative designed or manufacturer. provided that (f) Distributor pays all of the actual costs and expenses incurred in connection w ith such design. and [ii) Manufacturer shall have all rights to any such design based on the Licensed Patents. Nothing. in this Section 4.03 shall be deemed to pre-dude Manufacturer from designing and/or producing any Machine that Manufacturer so
ChllU!>CS.

4.(14 Orders. Shipment and Installation, Distributor shall place written orders lor the Machines with Manufacturer, with such orders setting forth the quantity and types of the Machines ordered, the specifications therefor, and the desired delivery date. Manufacturer shall confirm an order on or before len ( 10) business days alter its actual rccei pt of such order and setting forth the del ive:y date and price or ~IICh order. Manufacturer, after its acknowledgnll::nt and <lccl!plancc of the order, shall deliver the \Ilaehines t~) Distributor (or its designees) ror placclllCIll with Distrihutor's customers based on Ihe deliver) d(IIC set rl)rth in Manufacturer's acc~ptance of the order, Manufacturer acknowledges and ,ag;n.'c::; 1hat nllL:L! an ordcr i:. .Iceepted, that no other orders by any Clistolllcr ~)r d isLribulor l}f Manufacturer :-.hall be acccpt~d in priority Distributor's order and the delivery date $1;:1 forth in the acceptance notice shall m>t bc changed. In the C\lCllt that Manufacturer fails to promptly commence. diligent]r pLirsue und fulfill each Dr thl" conditions or Section 4.01 (after written notice from Distributor and ~ lell (10) JU) CUI'!..' peri0u) or thi:; Section 4.04, Manufaclurer wil[ grant Distributor a temporary license lo allow Distributor to cOl1tract \Vilh Hlwthcr manufacturer filr the creal ion of tile Machines ill ordt'r to IiII the production )jhnn['aIL [n additil)[\. ill the evcnt or any Force M<ljculi: eV(.'1l1 which rcndcr~ ,vlanufilctllrcr's Illcilit:. Llllahk tn complete any orders for Machines. ManufaclllreJ' lW Distributor SIH~]1cnillcdintcl)' contract with i 11ll altcl'Ilatin! 1lIt1llu!:,cturer to supply the Machines on a timely basi~ and shall comply \\llil lh~ procc..'durcs sel rorlh in Section 4,0 I ilbove in conllection wjth 1m)' such alternative Illallllnu;turcr. Tllc terms and I.'onditiun!', of sa Ie shall be FOB the ~ustomer"s racilit)' (provided thnt Di!>lribulor pays the co~t l) f rreig.h1 and in:.unmcc for delivery of slIch Machines} otherwise the term::, and I,;ondilions 01' sale shall he FOB ;vtanlli~lc1u rer's facility. Manufnc[urer shall ~hip the Machilles to thi: location designated by Distributor, slndl insLall the Machilles. and shall train Distributor'S customer's desigllated employees to I}fOperiy Llremtc the Machines, Distribulor shall not bear the risk of los.<;or damag~ to the Machin.:s until the Miich illC's arc dclivered to the laclllion designated h) Distribuwr, are il1slal1eL1by Munujiu':lurL:r and

or

are properly functioning ill accordance with the speciflcations and standards approved by Manufacturer and Distrlbutor. this Agreement and the order placed by Distributor, Manufacturer represents and warrants to Distributor that as of the dale of delivery of each Machine \(1 Distributor or Distributor's designee, that Distributor or its designee. as applicable. will receive. good and marketahle title to such \1nchinc. tree and clear of all encumbrances or security interests. .. I5. U Cost. The sales price for each Machine shall be ibc actual. out of pocket manufacturing costs. comprising dirt-oct material costs, direct labor costs, and direct travel costs, plus twenty percent (20%). and

the tooling amortization cost (calculated on an hourly basis. straight line, five (5) year amortization on a 40 hour work week) (collectively. the "Actual Cost"). In addition. Distributor shall reimburse Manufacturer for the actual, out-of-pocket expenses pre-approved in writing by Distributor and incurred by Manufacturer to have its employees and/or agents travel (0 the location designated b)" Distributor to install a Machine and train the designated people It) operate such Machine, Distributor shall pay Manufacturer EI down payment equal to fifty percent (50%) of the purchase price ofeach ordered Machine within ten (I (l) days of Manufacturer's acceptance of any order. 40% upon shipment of Machine and remit payment for the ba lance of such purchase price to Manufacturer within thirty PO) days after the later of (i) the delivery and installation of such Machine as required above, and eii) receipt by Distributor of an invoice lor sLIL:hMachines from Manufacturer. -'.06. Maintenauce and Repair. Manufacturer shall provide all maintenance and repair for the

Machines.

Distributor

shall pay the actual. out-of-pocket

costs incurred

by

Manufacturer

plus twenty

percent (:!O%). to maintain and repair the Machines. unless such maintenance and repair is covered by any warranty Of indemnity of Manufacturer set forth herein or 011 lilly informat ion relating to [he Mach incs, 4.07. Warranty, 111addition to all other warranties covenants that each Machlue wili: for the Machines. Manufacturer warrants and

{a) perform ill accordance with Manufacturer's published, standard specifications (from and alter such time as the standard specifications arc established for each Machine as set forth in this Agreement):
(b) (c:)
(d)

be free from defects in workmanship be capable of producing the Pallets: be of mercuantable meet or exceed

and material:

quality and will be fit for the ordinary the spccificat ions and standards

purposes

for its usc; and Manufacturer and

(e)
Distributor.

agreed

10 by

In the event of a breach of the foregoing. and in addition to any other remedies available to Di>:tribUlnr. \o1alllli'aCtllrcr sImi!' at it~ sole cost and expense, provide repairs for sllch Machine or. if Manutill!'turer i!) unable to repair .'iuch Machine to Distriblllor'S reasonable satislaClion within lWo (2) days. then Manufacturer shall replace the Machine as :mon thcn:ancr I\S l'casonllbly practicable (without n~gnrd to any !'vlach inc orders or backlog). 4.08 [mp,uycments. Manufacturer shall use its commercially reasonahle bc~t cfliJrls to improve lh~ Products througbout the I"erm ill accordance with and to ll1uilltllin the Products standards at the higfu::'SI h:vcl ill the indus!r),. Distributor shatl hClvc tile right ttl rcqll~Sl improvements \JI' 11l~)djicmi~)ns to the t Pallets or M'lchincs at any time and Manufacturer shall promptly make sHch improvemellts or 1I1odifieatkHl~ as I'cqu(;:s{ed by Distl'ibutor tUlles::, :sucll unprovcl1l~nts or modifications shall violate any patcnts of other panics 111' shalljeop,lrdize the Licensed Patents.

SECTION~. 5.01.

PAYMI<:NT.

Payment. In consideration of the grant of the rights to Distributor as set forth herein. Distributor sha 11 pay Manufacturer the sum of Seven Million Dollars ($7,000.000) (the "Payment") as set forth below. Manufacturer acknowledges that it has received Two Hundred Ninety-Five Thousand Dollars ($295.000) from Distributor in connection with this Agreement {the 'Oo\.\l1.eaynwnn and such amount will be credited against the Payment as payment in fu Il for the Amended and Restated Option Agreement dated February 9. :!Dto. Subject 10 the terms of this Agreement (including. without limitation, Manufacturer's satisfaction of the conditions set forth in Section 4.{)I above}, the remainder of the Payment shall be paid as follows:

Simultaneously with the execution of [his Agreement On or before June I, 20 10 Sis (6) months following the Funding Date Twelve (I::!) months following the funding Dale Eighteen (18) months following the Funding Dale T\\cnty-I'our(24} months following the Funding Date

$555.000
$950,000 $1,350.000 $1.350.000

$1,250,000
$1,250,000

Menufacturer shall usc the Payment lor the funding for the design. creation, and manufacture of the Products. (the ~Design Center") as set forth on Exhibit B hereto. to insure that Manufacture meets or exceeds Manufacturer's obligations regarding the design. creation. manufacture and delivery of the Products tu Distributor Or its customers as set forth herein. As a condition to the requirement that Distributor make any Payment to Manufacturer. Manufacturer shall cause Doug Olvey. and such other qualiticd personnel. to be employed full time by Manufacturer and to focus his and their time III the design and creation of'the Products as required herein. S.02. l)eraul1 in Payment. In the event that Distributor fails to remit any portion or the Payment as set forth in Section 5.0 I within ten (10) business days after such payment is due and owing (a "Payment Default ..). Distributor shall only be entitled to retain (unless agreed to ill writing by Manufacturer to the contrary) the exclusivity with respect to those portions of the Territory for which cumulative payment has been made prior to such Payment Default by Distributor. Distributor and Manufacturer acknowle-dge and agree that the Payment shall be allocated (0 each portion of the Territory as 1'0110\"':;:
.

. -Stntc

.
,

% of Payment
41% 26% 20% 6%

Amount of

-- ----_ ........
California Texas

, ...

Payment _.. ~~880.000 ~


$1.814,000 $].418.000 $392.000 $375.000

Cumulative Pavment

Mexico ~ -- ---- .......


Arizona Colorado
,

--

.New Mexico "-. -~.


Total

5% 2%
100%

.-

$2.8&0.000 .. --- - ..-=~ - ..$4,694.000 $6.112.0()0 $6.504.000


$6.879.000

$12 t.OOO
..

$7.0()O.OOO

_.

_.$7 ,O~_O.OOO

5.03.

:\rUnimurn Sales Votllme. Distributor shall lise commercially reasonable efforts to sell the following volume of Products during the years set lorth below (the lirs! year to start upon del Ivery hy

Mnnufacturer to Distributor or any customer of the first Machine and each subsequent year shall begin on the next succeeding anniversary date of such delivery):

Year 1 Year 2
Year 3
Year 4

Year 5
I Jl the event that Distributor

1,120,000 10,000,000 50.000,000 62500.UOO 80,000.000

fails to meet the minimums set forth above for My year (unless such failure is due to Manufacturer's failure to provide Machines on a timely basis as set forth in this Agreement), and Distributor fails to cure such default by selling an additional number or Pallets ill the next succeeding ycar to eliminate the shortfall from the prior year. Manufacturer, at its option. may require that Distributor terminate its exclusive with respect to specific states (selected by Distributor) in [he Territory. Such selection made by Distributor shall be based on the percentage tnat Distributor misses the minimums set forth above. Each state and country shalt have a specific percentage allocated to such state and country as set forth above, Any additional areas, added to the Territory shall be incorporated into the chan above reflecting a re-vised distribution of values placed all each area comprising the Territory.
As

all example only. if. in a given year (and subject to the terms of this Agreement).

Distributor sells

eighty percent (80%) of the minimums ill such year (which is not cured in the immediately succeeding year). then Distributor shall select a state or country (01" states and country) that make up twenty percent (20%) 01' the overall Territory as set forth in the chart above and such state 01 country (or states and country) shall be removed from the definition of the Territory, provided that all other terms of this Agreement shall apply to such state and/or country once it is outside of the Territory, More specifically. if in Yenr 2. Distributor sells only 8,000.000 Pallets. and in Year 3. Distributor sells 40,000.000 Pallets. then Distributor's Territory shall be reduced in accordance with the terms of this Agreement by !8.3% (l.c. 49.120,000 divided by 60,120,000=.817). In the event that the Territory is reduced pursuant to the

terms

llf

this Agreement, the minimums for subsequent years will be reduced

011

accordingly.

5.04 Royalties and Reports. Distributor shall pay Manufacturer a royalty of 8% of the Production ree for all Pallets sold by Distributor (collectively. 'Royalties"). Royalties shall be calculated on the Production Fcc earned by Distributor during each Fiscal Quarter of this Agreement. Subject to the terms of this Agreement. no later than thirty (30) days ath;r the end of each Fi\cal Quarter. Dismbutur v.-Ill remit the Royalties to Manufacturer, along with a report setting fOl1h the number or Pullets sold and the Production Fcc earned by Distributor for the Pallets sold for the same period. Notwithstanding the foregoing. Manufacturer shall not enter into any agreement with (i) any distributor that hand assembles more than 500.000 Pallets per ycar. (ii) any party to whom Manufacturer grants an exclusive territory of any kind for the sale of Pallets or the sale, leasing or placement of Machines. and (iii) any party that is selling, leasing. or placing Machines, the terms of which could place Distributor at a competitive disadvantage with any such party, The foregoing sentence shall 110t apply to any transactions between Manufacturer and <111)' direct customers of Manufacturer,
S.05 Manufacturer's Customers. In the event that (i) Manufacturer grants an> other party a right to hccnsc the Licensed Patents and sell and/or place the Products outside of the Territory (and Distributor has failed to exercise its ROFR hereunder), and (H) such party has clients or customers for the Pallets that ~)peratc in lhe Territory and are not otherwi~e clients 0 r Distributor, then such party shall he entitled to sell ~llld/{)rplace Products lO or with such clients or CListomers for lise III the Territory and Mmmfaclurer and Distribulor shall share equally any royalty, other payment that is based on sales or any similal' pa~ 1l\\!11t method 1hat is generally characterized as a royalty. made by such party to Manufacturer of any hind, MHllufacturcr shall promptly notify Distributor of any such tmnSW,;lions, Manufacturer shall deliver

sllch puyll1cnls to IJistributor according to the payme1Jt terms pre~cribed above.

Lo

Distributor in Section 5,04

5.06 Recordkeeping, Inspection and Audit. Distributor shall keep and maintain records in sufficient detail to enable Royalties to be determined for two years following the date of payment covered by such records. Manufacturer shall have the right. at its sole expense, to inspect such records at Distributor's offices pertain ing to the sales of the Products during normal business hours and verify any reports and payments upon reasonable notice to Distributor through all auditor designated by Munufncturcr and approved by Distributor (which approval shall not be unreasonably withheld), provided that Manufacturer and its aud iter keep such informe: ion confidential.

en

5.07. Address for Payments. Distributor shall make all payments to Manufacturer at the addn .. set zss forth in Section 16.07 below or to such Person or at such other place as Manufacturer may from time to time designate by notice 10 Distributor. Manufacturer shall make all payments to Distributor at the address set forth in Section 16.07 be low or to such Person or at such other place as 0 istributor may from time to lime designate by notice [0 Manufacturer. 5.08 Additional Territories, If requested by Distributor and approved by Manufacturer in writing, Distributor shall have the right to negotiate the sale or Iicensc of cxc lusivc territories 011 Manufacturer's behalf. The tenus of such sale 01' license shall be determined by Manufacturer in its sole discretion. Manufacturer and Distributor shall determine the compensation payable to Distributor from any such sale. prior III the dosing of an) such transaction.
SF.CT10N 6. MARKETING AND ADVERTlSlNG.

6.01. Distrlbutor's Undertaking. Distributor shall exert commercially reasonable efforts 10 ~I"OIM(C the sale of the Products in the Territory and to develop a market demand for the same in the Territory.

Distributor ~hHIIadvertise the Products throughout the Territory in appropriate advertising media and in a manner insuring reasonable publicity for the Products. Manufacturer shall provide Distributor, at no cost 10 DislriOlltol". such sales materials with respect to the Products as Manufacturer generally makes available to its distributors, including technical specifications, drawings, advertisements and samples. and Distributor may reproduce such materials as reasonably required. provided that all copyright., trademark und other properly markings arc reproduced. Such materials remain the property of Manufacturer and. except insofar as they are distributed by Distributor in the course of its performance of its d uties under this Agreement. must be promptly returned to Manufacturer or destroyed upon the expiration or termination of this Agreement Manufacturer hereby acknowledges that Distributor intends to create and maintain a website for the Products and Mallufacture hereby Ilppruves (he ll::.C of !Ill Trademarks. Liccnsed Patents and othel' nun-confidential intbrmatiotl regarding the Products and Matlut!lr.:turer by Distributor.
SF.CTION Section 7. TRAINING.

7.01. Traill'"~ ror Distributor Personnel. As soon after the Funding Dale us i~ mUlunlly for the Parties, but no later than sixty (60) days aneT the Funding Dale. Manufacturer shall provide 'It its !ltd Iity in Orlando. Florida. without chHrging !lny consultation rees to Distributor. a two (2) cOllligllOll~ day reehn icDl/technical sales training session for up to eight (8) qualifil.-d personnel of Di!.1dbulor or ,U1)- ~}rits customers relating to the Products. I>rovidcd that Distributor shall be l'e~pon5ible I"r <til expenses ftlr its and its customers' persnnnel atlellciing. Stich Iraining s~s~ion. Ir requested by Dist fiou tnI', Man u IReHlrer sha \I praYide :t Iwo (2) con! igllous day tcchn icalftechn ical sales traini Ilg session as o.;ct!t)rth in the preceding ~elltellce nil an 81lmIH1basis at a time mutu,llIy acceputblu to Distributor and Manufacturer. From and titter Ihe second (till) year the lerm of till:' Agreemcnt YlLtilufacturcr shall provide. annual two (2) contiguolls day lechnical/lechnical sales training sessions as st!t fbrth ubove a1 a time mutually convenient for the Parties.
wllvcnicllt

or

10

Sectlun 7.02. Additional Training. I f requested in writing by Distributor, training in excess of thai described in Section 7.01 above or assistance ro support the installation Of maintenance of Products at Distributors customer's facilities, shall be provided al Distributor's request. at Manufacturer's reasonable. actual, out-of-pocket costs, plus twenty percent (2D%). Section 7.03. Additional Sale.~ Support. If requested in writing by Distributor. sales support of one qualified Manufacturer employee will be made available to accompany Distributor on ~i.ey account" opportuuit ies provided that Distributor shall be responsible for all reasonable travel and living expenses fix tile employee conducting such training session, Consultation fees of $25 per hour from port to port and $ roo per diem ill travel costs will apply to all sales support requiring travel. Sales SUppOI1 available for conference ca lis will always be made ava ilable provided written request is made in a reasonable amount ol'time before hand.
SECT]ON 8. REPRESENTATIONS AND WARRANTIES OF MANUFACTURER.

To induce Distributor 10 enter into and perform this Agreement. Manufacturer represents and ....arrants to Distributor m. follows: Organization, Gued Standillg, Power. Etc. Manufacturer is a corporation duly organized. existing and in good standing under the laws of the state of Florida and 11.1$ the full power and authority to execute. deliver and perform this Agreement.
validly

8.01.

8.02. Due Execution. This Agreement has been duly executed and delivered by Manufacturer and is a legal. valid and binding obligation of Manufacturer enforceable against Manufacturer in accordance with its terms. 8.1)3. No Approvals or Notices Required: No Conflicts With Instruments. The execution, delivery and performance of this Agreement by Manufacturer and the consummation by il or the transactions contemplated hereby <lilt! thereby have been authorized and approved by all requisite corporate action by Manufacturer lind will not (a) constitute a violation of any provision of law or any judgment, decree. order. regulation or rule of any court or other governmental authority applicable to Manufacturer which are material to the transactions contemplated hereby. (b) require any content. approval or authorization ot: or declaration. liIing or registration with. any Person or governmental or regulatory authority. the failure of which to obtain would have a material adverse effect upon the transactions contemplated hereby. (C) result in a default under (with or without the giving of notice or lapse of time or both). acceleration or termination 01'. or the creation in any party of the right to accelerate. term inate. modify or cancel any agreement. lease. note or other restriction, encumbrance. obhgation or liability TO which Mauutacturcr is a
party.

8.04.

Absence of Certain Changes or Events. Except as otherwise disclosed ill writing to Distributor w]..en any action or entered into Of agreed to entcr into any IranSllL.:tinll, agreement or other Ihan in the ordinary course of busincs5 and consistent with past practice. olher tlmn this

prior 10 the Effcctive OllIe, Manufacturer has Ill)t:


til) C\llmnitmCl1t

i\grel!menl: ur

(b) etl1~red into or agreed to enter into Hny l!llnsaction. agreement nr commitment, or. to Mmmlil(.:tun.:r'!) knowk:dgc, suffered the occurrence of any event or evenls l10t otherwise disclosed to Distrihutnr dllTing due diligence that (i) has interfered or could lnterfert! with Ihe num]al and usu<ll OpCl11tillns the ousiness (lr (ii) which has resulted of fIlay I'C'SUllin D I11lJlerialadverse ctl'e(.:1 on the linnncial cundilion. assets. liabilities. earnings. business or business prospects of Mnnufacturer.

or

II

8.05. Technology NOIl-lnfrinJ!cment. To the best of Manufacturer's knowledge, the making. having made. using or selling the subject matter of the Licensed Patents or Products, does not in fringe any rights of third parties includ ing, but not limited to. the claims or any exlsting patent owned by a third part). Manufacturer has not received any notice of any kind alleging an)' infringement set forth in the preceding sentence. To the best of Manufacturer's knowledge. no third parties have infringed any rights of Manufacturer with respect to any of the claims of the Licensed Patents.
8.06. Patent Validity and Enforcesbillty, Manufacturer has not engaged in any conduct, or omitted to perform any necessary act. the result of which could invalidate the Licensed Patents. or adversely affect [heir enforceability. and Manufacturer is not aware of My prior a11. facts or other matters which put into question the validity or the enforceability of the Licensed Patents, There are no other patents or other rights owned by or licensed to Manufacturer that arc necessary or requ ired for the LlSC and distribution the Products. Manufacturer has all rights to the Patents and all employees or contractors have executed agreements necessary to assign all intellectual property rights in the Products to Manufacturer, There (Ire no liens or encumbrances of any kind against any of the Machines or the Licensed Patents. Distributor acknowledges that [t is aware of(i) the claim by Michael Olvey regarding a change to the names of the Licensed Patent holders as described by counsel for Manul'acturer. and (ii) the rights of PK~I\ 10 disuibutc the machine assembled 582 Pallet within the United Slates from facilities other than Man II facturer s fac iIit>"and at the facilities of customers of Manufacturer.

or

8.07.

Taxes, In a 11material respects, Manufacturer has timely filed with the appropriate governmental

its business: Manufacturer has paid in full or made adequate provision for the payment or all taxes (including withholding obligations), interest and other governmental charges which have become due pursuant to the operation of its business; Manufacturer is not .1party to any action or proceeding pending or. to the best of its knowledge, threatened by any governmental authority for as~essm!;!nt or collection of tuxes, no unresolved claim for aSSI:SSmellt or collecti{l]) of such laxes ha~ been tlsscrled against MlIl1L1f:1cturcr !Ind. III [he br.:~tof its knowledge. 110 audit or investigation by governmenlal authorlties is und!!!' way. ttlI in Cl)l1nectioIl with Mal\tlfactllrer's operation its busint:ss or tilt !rulISilctions described

agencies all tax returns. information returns and reports required to have been tiled in connection with the

or

herein.

M.US. L~gal PIocccdillgS. There are no claims, actions. suits, arbitmtiolls.. procr.:cdillgs or im l.'sl igal ion!> pending. llr. to the hesl Manufacturer's km)\'w'Ir:dgr:. threatcned against Manufacturer. bdilrC or hy an)' gl)Vcrnlll CIltal or nongovernmental department. commission. board. bureau, agency or inslrmnenl(lIiLy. or any other Person. and there are no continuing. erJeelivC'. olltslnnding or \l11~atisfied jl1dgmcl1b. mucrs. dc;:cn;c~or stipulations 10 whid) Manufacturcr is a party_ which relate to the Lil.:enscd Palent .... lhe Mat:hincs or Manufacturer's bUSlnC!is. or lhe transadions COIUCnll>laled hcrdn <Ind \\hich would UIOllC m in the aggregate have a materia! adverse erred upon Manufacturer':, bL1~iness or the Inlll<;action described herein.

or

S.OIJ. Hermes. PermIts, Authorizations. Etc. M,lI1ufacturer has received and 1l1<lintained each governmental approval. authorization, consent, license. ol'dcl', registralioll or permit l)f all agencies. whether federal. state. k1cai or foreign. the failure of v..hich to obtain or mainwin \\ould have a mule! iHI lld,c(sC' clTcclllll the opcmtion of its business or the transacti()n described herein. A Ilplicabll' l;lw.\I. To the best of ils klllH\ Icd~c. ManLLIDxlun:r has I:nlllpli~'d and h in wilh ~aC'h lederal. state. local alld foreign [8",. rule. mdinance, dt:(;ree or other n.:quircmcilt appli~able to M~\nuractun;r in the.:conduct of ils business. Mallufactllrcr has received no notice of any alkgcd vlolaliOll of any such law. rule. ordinance. decree or order and doC's not know of nny n.. ~asl1!11tb[c basis for lilly 11I1a!:>scI1cd viulution thereof.
C()I1lI)lii'lt\c~,

8.10.

12

Information Furnished. No information furnished with this Agreement or prior to entering into this Agreement 111 connection with such information. Manufacturer has 110t or omitted III state a material fae! necessary in order to delivered. in the light of the circumstances under which they 8.11. SFTION 9. PATENT ENFORCEMENT

by Manufacturer to Distributor in connection is false or misleading in allY material respect. made any untrue statement of a material fact make such statements made or in formation were made. not misleading.

AND INDEMNITY.

9.01. J nfringemcnt Indemnity, Manufacturer shall defend, indemn ify, and hold Distri butor harmless from arid against any and all losses. costs, demands, damages. suits, claims, liabilities and expenses (including, without limitation, reasonable attorneys' fees and expenses). "rising in connection with any claim of patent infringement or other intellectual property infringement, or misuse or misappropriation arising I'Wll1. the lISC or the Products. 9,(1I. Patent Eul'nrcl:mcllt. Manufacturer shall use its best faith efforts 10 monitor Inlringement of the' Licensed Patents by others and shall promptly commence and diligently maintain al its own expense, actions. su its or other proceedings necessary 10 slop others from infringing the Licensed Patents Any settlements or awards of damages received by Manufacturer (less Manufacturer's attorneys' Ices and costs) [IS it result tIl" pursuing infringers shall be prorated on the basis of the sales of Pallets for the immediately pn... 'U:'ding 12 month period in the Territory (plus. any sales made by Distributor outside the Territory) to the sales of Pallets outside of the Territory (not made by Distributor). and such percentage of [J\C settlements or awards shall be paid 10 Distributor, In the event that Manufacturer fails to enforce its rights in the Licensed Patents at any time. Distributor shall be entitled. at its option and upon written 110t icc to Manu tacturer. to enforce any and all such rights 01\ behalf of Manufacturer. Manufacturer shall provide Distributor with full access to all relevant books and records of Manufacturer and full cooperation in connection with Distributors actions in enforcing such rights.
Patent Matters. In the event that Manufacturer assigns, trunsfurs, hypothecates or grants 0111) rights under or ownership to the Licensed Patents, it will do so subject to the terms of this Agreement. Manufacture!' further agrees that, during the Term of [his Agreement. it will not engage in any conduct or nl1llL to perfhrm any n~ccssHry act, the result oj' which could invalidate adn;rscly uflc{.:[ the cnl~)I'j':t:abiJi!y or the Liccnsed Patents. including the p1iymem of any required application and mailllcnal1e't: rt:c~ and the due proseclltiol' of any relevant applicati{)t)s. 9.03.
(}J'

9,0"" Indemllification by Mnnufacturer. Manllfadurer shall defend. indemnify. and hold [)istributor harllllc~:. [i-om and against !lny and all losses. costs. demands. damages. suits. claims. liobilities and npcllscs {including. wnIHluliimit<ltiGl1, reasonable attorneys' fees and expenses) (collectively, Claims"). I'l!sulling directly or indirectly from Mrlllufacturer's neg.ligence or proximately caused by (i) ManufliclIlI'Ct"}, hrclu:h ()("its Clwcnants or representations as set forlh in Ih is Agn.'ClllI:nt. or (ii) any desig.n or pmdllctioll !laws ill the Machines. In the event of slich negligence or hreach of covenant by MUl1l1factut'cr, [)i~!rihulol' shall be entitled 10 offset <lny alld nil Claim!> against all umounts owed by DislrihulUr tLl Mllilti nlCtllt"l.!r hereunder.
9,05, Intlenlllilic~lti()1l hy Distributor. Distributor shall defend. indemnify. and hold Manufacturer harm less ['rum anti against any and all Claims. resulting directly or indirectly from Distribulor's negligence 01" pmxiuwlcly c~\U~cdby Distribtttor's breach of its covemmls or reprcsell!ations as set f01111 ill lhis i\g.n.. -CI1lt;tlt. IIIan event of Distributors such negligence or breach of covenant. MallllliK:turcr shall be \.'ntitl~d to ~ln\ct an)' and oll Claims against all amounts owed by Mlmllt~lc;lllrcr 10 Distributor
hCI'l!lIlltlcl'.

9,(16 Survi\'al.

Th\.' lerms orthis Article 9 shall ~urvive the tenninati~1n ofthis Agn::cmcn1.

13

SEcrIO~

10. REI~RESENTA TIONS AND WARRANTIES

OF DlSTRlBUTOR.

To induce Manufacturer to enter into this Agreement, Distributor represents lind warrants. to Manufacturer as follows: IOJll. Organization, Good Standing, Power. Etc. Distributor is a limited liability company duly organized. validly existing and in good standing under the laws of the state of Colorado. Distributor has full power and authority to execute, deliver and perform this Agreement. 10.02. Execution. This Agreement has been duly executed and delivered by Distributor and is a legal, valid and binding obligation of Distributor, enforceable against Distributor in accordance with its terms.
10.03. No Appr(wals or Notices Required, No Conflicts With Instruments. The execution. delivery and performance of this Agreement and the consummation by it of the transactions contemp luted hereby and thereby have been authorized and approved by all requisite company action by Distributor and will nol (a) constitute a violation of any provision of law applicable to Distributor and material [0 the transactions coutemplated hereby, or (b) require any consent. approval or authorization of any Person or governmental authority. the failure of which (0 obtain would have a material adverse effect upon the lr:lI1<;actions contemplated hereby. SECTION 1I. CONI'IDENTlALlTY OF INf'ORMATION AND MATERiALS.

I1.U 1. Confidentiality. Each Party hereto shall hold in strict confidence and shall nor disclose to others or usc. either bcii.)re or after termination or expiration of this Agreement, any technical or business information. rnanufacturing technique, process, experimental work. trade secret or other confidential mutter reluting to the other party hereto. except to the extent disclosure is reasonably required in connection with Distributor's marketing activities. lnfonuation that becomes part or the public domain through no Iauh of either Party shall uo longer be subject to the confidentiality requi remerus or this
section. SF..CTION 12. INSlIRANCE.

12.01. DlstribulOl"s Insurance. Distributor shall secure and maintain during the Term an insurance policy 01' policies protecting the Distributor and Manufacturer against any loss, liability or expense \\ hatsoever, including product liability. worker's compensation, personal injury, fire. theft, death. property damage Of otherwise, arising from the Distributors business. Such policy or policies shall include general liability coverage in amounts deemed adequate by Distributor aud which shal I be comparable with coverage limits obtained by other distributors of pallets in the industry. DistribLUor shall furnish Manufacturer with certificates evidencing all such insurance. which cernflcates shall contain provisions requiring the insurance carriers to give the Manufacturer at least thirty (.JO} days' prior w riuen notice of :m) cancellation or materjal change in any such policy. Manufacturer shall be an additional named insured un such policy or policies. [2.01. Manufacturer's Insurance. Manufacturer shall secure and maintain in effect during the Term a bruad I,mn vendllr's liabil ity insurance with limits it~ amounts deemed auequate by Manufacturer and which !>haUbe comparable with coverage limits obtained by other manufacturers or pallets and Illnchines thnt :1!iJ.Cmh[c p~lll~ts or other corrllgated products. Manuf"ctmer shall furnish Distributor with cCI1ifit.:alc:'. cvit.lcnci!,g. such insurance, which certiticate shall contain provisiolls ftlquiring the insurance tarrier w g.ivc Distributor at least thirty (30) days' prior written notice of any cancellation or m..terial dmnb~ in all)' such policy. Distributor shall be all additional named insured 01\ such pOlicy or policies.

14

SECTION 13. TRA[)EMARKS

ANn OTHER INTELLECTUAL

PHOPERTY RJGlHS,

13,01. Acknowledgment of Right! in Trademarks, Distributor acknowledges that Manufacturer is (he owner of all right. title and interest in and to the names and certain related designs associated therewith {the "Trudcmarks'}. all as depicted in E.xh~pitC attached hereto. together with ally new or revised names or designs which Manufacturer may adopt to idC'lllify it or any Product during the I'erm. find Distributor agrees not to adopt or LlSC any of the Trademarks in any manner whatsoever except as expressly provided ill this Agreement, 13,02. License 10 Use Trademarks. Manufacturer hereby grants Distributor a license during the Term rn usc the Trademarks, provided that they are used solely il) connection with the marketing and sale of the Products- UpOIl expiration or termination of this Agreement. Distributor will luke nil action necessary to transfer and assign lO Manufacturer, or its nominee. any right. title or interest in Or to any of the Trademarks. and the goodwill related thereto, which Distributor may have acquired in any manner as II result of the handling and selling. of Products under this Agreement. and Distri butor shall cease to use any Trademark l)f Manufacturer, Distributor hereby lIgrl:c~ to promptly nOlit)," Manufucturer or any infringement or potential infringement 01" any Trademark in the Territor) Dr which the Distributor bas nctual knowledge.

1.3.03. 1{t.'~istrntiol1_ Distributor shall not apply for registration ~lr any Trademarks in the Territory 01' lor au)" mark confusing.l} xnnilar thereto. Manufacturer may elect to apply for registration of one or 1110fl.' of the Trademarks in the Territory at its expense. and. in such event. Manufacturer shall so notify Dlstributur and Distributor shall assist and cooperate with the Manufacturer in connection therewith.
SF.CTlON
(4,

RELATIONSHIP

OF IJARTlES,

Contractor Status, Nothing contained in this Agree-men! shall be construed to Part)' as II partner, employee or agent of the other, nor shall either PMt)- hold itself out as such, Neither Pm1), has ally right or authority to incur. assume or create. in writing or otherwise. any wurranty. liability or other obligation of any kind, express or Implied. in (he name of or Oll bchalf of the nthcl' P.lrty. it being. inh!ndcd that both Distriblltor and Manufacturer eae.:h shall remain an independent t:ulllntctor r[!spnnsihle fol' its own actions.
Independent
constitute either

1".01.

Nn I-'nlltchisc. Nothing. contained ill this Agreement slwll b~ conslfllcd to create 11 ['ranchise or thc fratll:iliscc of the other_ Distributor hereby rd~<lS~s any d[ljm~ Ill<ltManul'actllrcr h,[s yillialcd ;lny fral\chisc disclostll'e or other franchisor obligation in CL)llllt:t:liull \\ Ith the ct'calim1 of this Agreemcilt.
m:IKC

l.teI2.

either Pllrly

SECTION

15. EVENTS OF DEFAULT.


scI

IS.OI. En'Dts of Herault. b.cept as otl1erwise


an event of d"'('llUIL hereunder: (a) B~nkrUI)tcy.

forth in lhi,

Agt'ce1llCllL

the

fOllowing

shall

cOllslitllte

or

Etc. Proceedings in bankruptcy or insolvency at'C' illS1Ellltl!d b) ~Jr ,tg<linst tll~ otlli.'r pal1y. \'r H rccehw b appoinll.'d. or if any suhstantial part of the asst,:1s of til\.' lllhcl' parly is th~ object uUllchmcllt, ~cquc.str!1ti{)ll or other type of comparable proceeding.. and );ueh prOl;ceding I!>!lot

Vi\Cill~d

or terminated wiLhin

Stxty

(60) days afier ils

commel\cemcnt

or

institulioll_

(h) Ucfault.
n(ll

;\ bl"~<l{;h or any of the terms or provisions ol'this Agl'eement and the delimiting PU11y do~s curt: stich Dl-each within IhirlY (30) days (unless a ditTen:nl cure period is scI tbrth elsewhere in lhis i\gl1.'(!tnlCllt t(ll' any sllch breach). afier receipt ~Jrwrittcn notice g.ivcn hy the.:oliler ParlY.

IS

15.02. Remedies. ln the event of default by either Party hereto, the non-defaulting Party shall be en: itlcd to all of its rights and remedies at law or in equity, including the right 10 seek an injunction or the right 10 specific performance (except for Manufacturer's remedies for a breach by Distributor of the payment obligations are SCI forth in Section 5.0~ above). in addition, the non-delaulting Party sha 11be entitled. bUI not obligated. to cure any such default by the defaulting Party and to offset any costs and expenses incurred by the non-defaulting Party against any amounts owed by the non-defaulting Party 10 the defaulting Party. In addition to the foregoing, at! licenses granted pursuant to this Agreement arc. for pLtq)nse~ or Section 365(11) of the U.S. Bankruptcy Code, deemed to be licenses of rights to "intellectual property' as defined under Section 10 1 of the U.S. Bankruptcy Code. In any bankruptcy or insolvency proceeding involving Manufacturer, Distributor, as licensee such rights, will retain and fully exercise all of it.. rights and elections under the U.S. Bankruptcy Code, which will apply notwithstanding any conflict of 1.1W principles.

or

15.0J RiJ;hts '11'011 Termination. Upon termination of this Agreement. by expiration of the Term or otherwise. nil further rights and obligations of the parties shall cease. except that the Parties shall not be relieved of (i) their respective obligations 10 pay any amounts due or which become due (1<; uf or subsequent [0 the dale or termination. and (ii) any other respective obligations under this Agreement which speci fically survive or are 10 be performed a Iter the date of terminut ion. SF.CTJON I n. MISCELLANEOUS.

16,(}]. Force Majeure. If the performance of any obligation under this Agreement. is prevented. restricted or interfered with by reason of war. revolution, civil conunorion. acts ol' public enemies. blockade, emb a rgo, strikes. any law, order. proclamation. regulation, ordinance. demand. or requirement having is legal effect M any government Or any judicial authority or representative of any such g.ovemment. or any other act whatsoever, whether similar or dissimilar to those referred to in this Section 16.01. whkh is beyond the reasonable control of the party affected (excluding however the financial condiiion ot: or the unnvailabillty or cost of funds to. either party). then the party so affected shall. upon gi\ing. prior written noliL;e to the other party, be CXCUSI,.'d from slIch pcrlormall\;e to the c;..:tl;'nt of ~lIch pr\!yenl ion or inlcrferel1ct:. provided that the party so anected shall lise reasonable COI1lme rcia I efl'O!1S to <I\'oid tIl' rcnwn: such causes of nonperformance. and shall conlinue:: performance hereunder with n::lI!'tonllblt: di~IHlh;1l \\hcncvcl' such causes mc removed.

16.02. Assignment. 111t5 Agreemel\t may not be ilssigned to <lny other person or I.:ntity without the prior writh.!11 ug.rl.:l.'nlClll all the Parties~ provided. however. thai Distributor may freely assig,n it~ righls and obligatiom: UlldL't> this Agreement to any atlliiate nf Distributor. Any attempted assignment. delegation or tr;msfl..!r in vinlatillil of this Section 16.02 shall be null lind v()id. The tenm; of thi~ Ag:rccTlwnl shall not be <tflectL'd by em) ~ilk' by Mallufacturer of any righls to the Liccnsl!rl Patents ('Ir the Products, or any l-ll lc of all ~Hl'Ubslanlinlly nil ~lfthe Ilssets of Manufilcturer. or a controlling interest of' any kind ill MnlluraclUrer. ;111(1 lr<msle:l"ce ill any su!;h s'llc shalll1ssumc l1r mtitY. as applicable. this Ag.lcclllcnt ns <l condition to nlly 'JI1} such sale,

ur

Agreement. This Agrcclllcnt constitutes the entin~ agreement between the Pa11ics hereto all prCVi~}lIS negotiations, agreements and cotnm ilnl!!nls with rc~pcc( (herelo. al~J shall Imt be released. di~ch<lrgcd. changed or modified in any manner expect by instruments signed by duly :llnlmril.Ctl uflkcrs ur representatives of each oflhc Parties bercto.

16.0.3. F:nlirc

and supersedes

16.0-&. Governing Law and Venue. This Agreement shall be Cll1ls1rllcd in accmdancc with .ml! ~D\-crm .. by lhe 1<1\\s 'ti the State florida. Each Pany hereby il'rcvocal}I): (I) ag.rccs that allY ~llit, ..cti~ln. m ()thcr legal pi n~eeding arising t~ut of Ihi.' Ag.reeml;'nt nr out of any of the transactions I:Olll~ltlplatcu lu.m:hy Of lh<.:rcby. may be brougbt in any Florida slate court or United Slates federal court

or

or

16

located in the middle district of Florida: {2) consents to the j urisdiction of each such court in nny such suit. action. or legal proceeding: and (3) waives <lily objection which such party may have to 11wlaying. of venue of any sm:h suit. action, or legal proceeding in any of such courts.
16.05. Partial lIIeg:dity. If any provision of this Agreement or the application thereof III any part)' or circumstances snail be declared void, illegal or unenforceable, the remainder of this Agreement shall be valid and enforceable to the extent permitted by applicable law. In such event, the parties shall use their best efforts to replace the invalid or unenforceable provision by a provision that, to the extent permitted by the applicable law, achieves the purposes intended under the invalid or unenforceable provision. Any deviation by either part)' from the terms and provisions of this Agreement in order (0 comply with applicable laws. rules or regulations shall not be considered a breach ofthis Agreement. 16.06. WlalVCr of Compliance. Any failure by any party hereto at lilly time ttl enforce any term or condition under this Agreement shall not be considered a waiver of that party's right thereafter to enforce each and every term and condition of this Agreement.

16.07. Ntltkes. All notices and other communications in connection with this Agreement shall be ill writing. and shall be S~'11t to the respective parties at the following addresses. or to such other addresses as mar be designated by the parties in writing from time to time in accordance with this Section 16.07. by registered or cenified air mail. postage prepaid. or by express courier service. service lee prepaid. or by tclefax with a hard ,-=opy to follow via air mail or express courier service in accordance \\ ith this Section
\6,07. TO MANUFACTURER:

Design Pallets. Inc. 1300 SU7.8Jlne Way Longwood, Florida 82779 AUn: Doug Olvey Goldstein. Faucett & Prebeg, LLP
1177 West Loop South. Suite 400

With COllies to:

Houston. TX 77027 Attention: Christopher M. Faucett. Esq. Tel: {713) 8771515 Fax: (713) 8771145 TO DlSTRfIlUTOR: Shandon Valley Transport Solutions USA. LLC 35386 Cimarron Trail Elizabeth, Colorado 80107 Attn: Colin Clark Lowe. Fell & Skt"lgg.LtC Republic Plaza
]70 Seventeenth Street. Suite 4900 Denver. CO SO:W::!

With t:~IPk.Sio;

Attn: David W. Fell. Esq.


Phone; (720) 359-8200

Fax: (nO) 3598201


All notices shall be deemed received (i) if given by air mail. three (3) business Jays after posting. (il) if given by express courier service, the IlC:(! business Jay in the jurisdiction of [he recipient. or [iii) if given

17

upon receipt thereof by the recipient's telefax machine as ind icated either in the sender's line produced by the recipient's telefax machine, or in the sender's transmission confirmation report as produced electronically by the sender's telefax machine.
by Ide/ax.

identification

16.08. Heading!>. The headings of the sections of this Agreement an: provided only tor convenience of reference and shall not be considered in construing their contents.

16,09,

Amendment.

This

Agreement

may

not

be amended

or

modified except by a

writing.

signed by

all the Parties hereto. 16.10. Informed and Voluntary Acts. The Parnes have reviewed this Agreement \\ ith their respective legal, tax, or other advisors, and are fully aware of all of their respective rights and alternatives hereunder.

In executing this Agreement. the- Parties acknowledge that their respective decision and nction <Ireentirely voluntary anti free from any mental, physical. or economic duress. :"io Broken. or Finders. Each Party represents lind warrants ttl the other Party that no ..gent. Of' investment or commercial banker. or other Person or any of their respective affiliates in connection with tile negotiation, execution or performance of this Agreement or the transactions contemplated by this Agreement, is or will be entitled 10 any brokerage ur [inder's or similar fee or other commissiou as a re-sult of this Agreement or such transactions. Each Purl)' shall indcmn if} the other P,lI1y tor a breach of the previous sentence.
broker, flnder,

16.11.

16.12. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to he an original, and ali of which together shall he deemed 10 be one and the same instrument, Signatures may be exchanged by telecopy, with original signatures to follow. Each Party shall be bound by its own telecopied signature and shall accept the telecopied signature of the other Party.

18

The: partles have caused this Agreement as of the Eff~,i\'e Date.

10

be executed by their respective duly authorized representative

DESIGN PALLETS, INC., a Florida corporatlon

SRANDON VALLEY TRANSPORT

SOLUTIO~S

USA,

LLC, a Colorado limited liability company

By: _-,..,-_--=~ Name:~~~~~~~~~~_


Title:

_--=~~_----:= ........ _~

19

EXHIBIT B

FIRST AMENDMENT

TO EXCLVS1VE LICENSE AND DISTRIBUTION

AGREEME;\lT

EI IIXD Document

("Manufacturer").

THIS FlRST AMENDMENT TO EXCLUSIVE LICEl\SE A1\'"1)DI:KaW!.tTrl~n~ffiMi-.ll:MIiiw-n'db:iij) "Amendment") is made and entered into effective as of June I. 2lrillhd).I~~~H:~!nllS:nANJr)t5N VALLEY TRANSPORT SOLUTIONS USA, LLC {"Distriblltor"filli?allt),f!h'l~N6 t?,LL~TS, INC'.
ReI''''''' ('led.: 'yle
.ll~a son

RECJTALS: A Distributor and Manufacturer entered into that certain Exclusive License and Distribution Agreement dated as of March 19. 2010 (the 'Agreement"). Defined terms not otherwise defined herein shall have [he meaning given to such terms in the Agreement

B.

Distributor

and Manufacturer

desire to amend

the Agreement

upon the terms and

conditions and as more particularly set forth hereinbelow.


NOW, THEREFORE. in consideration of the mutual covenants and agreements set forth hereinbelow and of'other good and valuable consideration. the receipt and sufficiency of which are hereby acknowledged by the parties hereto, Distributor and Manufacturer, intending legally to be bound. hereby agree as follows:

1. Amendment to Funding Date. All references 10 June 1,2010 in Section 2.01 are hereby deleted and replaced with the phrase "October I, 2010:' In addition, the dates set forth in paragraph 4,01 of the Agreement concerning a machine shop (6 months) and machine production (12 months) are hereby
extended by 3 months each to 9 months and 15 months, respectively. 2. Extension of Payment Dates. The third sentence of Section 5.0 I of the Agreement is following language:

hereby deleted in its entirety and replaced

WIth the

"Subject 10 the terms of this Agreement (including. without limitation. Manufacturer's satisfaction of the conditions set forth in Section 4.0 I above), the remainder of the

Payment shall be paid as follows.


Simultaneously with the execution of'this Agreement
011 or before the Funding. Date

Six (6) months following the Funding Date

Twelve (!2) months following the Funding Date Eighteen (18) months following the Funding Date Twenty-four (24) months following. the Funding Date

$555,000 $540,000 $1,350,000 $1,350,000 $1.250,000

$1,250,000"

3.
4

R.e\:etpt of Payment.
Patents

Mal,ufactul'er acknow\ed@,cs receipt

of the sum of $4 HJ.OOO as

consideration for tllis Amendment.


iden~fi~d III t~le Pallet"' (U.S. Patent Application No. 611269,6~1 ~Publ1catlOn No. Ag . fil d At' 20] Q under a new provisional patent application number. DPt 2006/0248&55)), was re I e on ugus '+" . ., . h CSPTO will provide the application and publicat ion numbers to S V rs once receiv ed by t e . The provisional patent application for the pallet configuration

reeme!~t as tl~e "Rackablc

{#lOO1433t!

11)7111-01\15/1&'06

{l.Ut{PMI

5. Ratification. Except as otherwise expressly modified by the terms of this Amendment, the Agreement shall remain unchanged and continue in full force and effect,
6. Counterparts. This Amendment may be executed in multiple counterparts, each of'which shall be an original, hut nil ofwhich shall constitute one and the same Amendment. 7. Recitals. The foregoing recitals are intended to be n material pro'[ of this Amendment and

are incorporated herein by this reference,

ISlgnatlm: pagejo/(owsj

{#OO74.H2l I (l7tH.!\! 14 5/JOO6 0);28 PMI

N WITNESS WHEREOF, Distributor and Manufacturer have executed this Amendment


as of the date first above written.

DISTRIB{JTOR:
SHANDON VALLEY TRANSPORT

SOLUTIONS USA, LLC

:MANUFACTURER: DESIGN PALLETS. INC.

{!I[)(l7.!n:::u

U7ID-J.J 114 SiI&'O(> oa.zs PM)

EXHIBIT C

From: Sent:

To: Cc:
Subject:

Adam Pener [adam.pener@svtsglobal.comj Wednesday, April 27, 2011 4:45 PM Doug Olvey; Danko Colin Clark; Leonardo Jim Discussion

Hi Doug and Joe, We spoke with Jim this morning. He indicated a willingness to reengage on the DPI $2.5mm investment following his review of the executed Addendum. Joe: Got your message on the specs letter. Best, Adam Thanks. We'll look forward to the final from Larry.

EXHIBITD

i HI~ '>h(.'ONl.) .... HN!)Ml.NT ~ 1"0 llXCLU'>IV/.'. UCFN8F AN I) 1)~~'llUHlJT;O~ MilH'L'vIENT (Iii;. "Ao,~"dn)eil[") jt m~~~ >JJ<l onlere,1 into QITcr!"~ 4" "r MH~ 11, ~(IH1, hy liI\;l SI [AMOON VAI.L~\' rRANSl'URT ;j{)LtmONS USA., /J.e (~Qi~!rih!.!!Qt~laed l'>F$t:liJrt'DhbUledt'C

bOl''',""

C'Mo!!'t,f"ClIl"'t")

RECITAU;:

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v\. Ut-striltl,.tor nI"l ft.-1m\uftlchlrDr (.."t'iIC1'-t.~i""o ~h~lc..!r~i1' f. :tLdu::.t\'.:. I ,f-f,..'t,.'"n1i/': [)ilo.'tl lhLn,t1n :nl~! A):r'X'nI<'1l1 u:n<u as of MllI~11 lQ, ~i)IO. as &l",mk'<! hy thHI c~!U.in Firsi }\!]lCJlUIIWnl I" E.,~hl~"' I.ken sc uold J)r$\tiblitittt' A~,t>cnt {Ib~'~t.""n',"I'}, 1Je("",d wnn> ""L <ltile""';",, Jrh",.i" ohail h.n.'~ Uti... f"u:!JUli~s: t!l~u to ')1:11 't:Wl$ in .I;:c Ag2i~t"fucUt. .

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1. lIo",w,.It.lh","'ollt, uPt h.,,,[,y oc~nuwl~~e~ ~mJ .g",.. Ih..1 "10 P"Y"'('~l~ 1 iv",1 I,y ~ ..... 01'1 /ro'" SV1'S \W ollll.llt'lmU);n !l,e amoCnl of$l,60Q,MII horeb> >4uisfh,. ~U ,,!'SVI ~'~ t'ligaJion, urltlCl 'lIN: A~r~nlr.!p( \\itlh r~~pt.."""1Q.u~L: bULm:II~}mtfit t DI"1 .nl1~ 5V r~~, ... 1:HH,..1,--dg.1! . d ;'lg~'''1!1hjh lht." m iC<1I1' I D:n"n nH.'~n Muy I L 21)1 1

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~4.QI ;\lncnltlJ Shop, I,'Ibtribuwr ~cknllwledljL'l> II"" !\hauf;",1,,,,;r hus '~I;~lied ,be "bli~I,[io,,, '(' I"QV,de R 1'. 11)' n;n,lim I. rull), oquip;>:<! ,w.,ai,;"" sbop uh. "M~d,il)~ S~I~I'). . will! ~a ""iu",J p""w:lud, thaI ClIO prorl", ... IJIIl ~1.11;hlll(H.. a. I"') h~ 11K' A~""~l11"p(, ~llhj""l t,> M~.1C\lN h~IlI>, M,,"ufi,ulul't!r brnlli h~w II", ClIp:tbiHl}' to P'''''U~ Wi!MII eightccn ~. II) m~nlh$ "r Ih~ hn.!illll [l",u, ".ufr.eblll"""bc~ ",' Mnelwl"~ W,:l'lllll ",,,,,,,,,,,,b[,, Ilm~ 1'<'(;00 I() 51lH~j;'DI~trilKu,,(, (,lId~r> ;'m." "od al1cf dill' ~!II~, lilis w,d .11 N<ttdf"lllll"'" '11!~~1lQ lill'" c/'J'.:r dint> p l~cOO UP'''I I)Pf sha ,I b~ "xt~;)~"d P'I!-! Ih~ clgbt~l n\ollllI. 1h" humber (.f nlO!l~"1 pII'<I lite d"o doto .. ) Ihe 'l1..,.t ['uym>J:J "PO" whloh :he paytncm i. Icccivtd, ()I p";<>1I,\ Jill'" I, 21112. Mmlll':1~1"r~r 5b~1i 1"""'"1,, lh,tfit'uta: '" \1,'T~liflG: with dw iil.cei1katwns 1l.lld jj;~aH{lards tor (!';lcl, M~l1ifJl'= lhen in pi'odul..'dlJtI. 1\!1.~h'~1h.~t.mtli!t!}~(1}'tllillg ftCEcin ILl IIw ~Utnrury~,h~ iL'l"'m "~rllch~IU~~ shuU "'ll..S,:irtclIU}' ~t;,';Ic~ t}lJ: 5S2 )'-1achi$ltt .. i1n} lariatim, Ihemol WId lilly other MlIChlllJl$ tiosigIWti (.r cl"""I"pu~ II,. ~lnllc!a.:tu"'r "(!lUlc<,,'nn wj,~ !hi. A~rt:Clh~ut ~tuitlf&:~Uller4s\YDrhtn~ \.\'lth r~~tlL!'L"t toO thc M~h:h.n-c;:'"1h:;tfl i.~wJ'ldl!: ",:-ucl\ s?(Ji,.lfi(:n.:l1)~I'" .'lnd ~,"lIru.r.t<. in Iho evwt rb~ J)i~ri1.>IIlDl' has om..-m IhRt l:x~"old M:.,,,,fit,'1rner's "'1>111,,1;1:1'Ie> mcau,-" !iac ~~l"""'1l .\um.f~ ... .M:lo:biw;:I!; (\11- a fin~c',..b:_h.iS;-. Ailt~lUfucu:r...a- $~wtll'}{l'twpd) :tttul Jil,g~1 ;~I} int:fl-':t'1C 'IoUl ~I 11 clllmbil1~y tly w~1:.'llel,,-et -nU::il:U'; fCasonitbly ~}U.fl;'i.t to m("e! $ouoh omc..rs. which mHy inc!udc tho orea~ion or ~"mJA">Ilc"tihr II,., Macl!;nllS by OIhor mn'mlil~!'n ur:s ~$<>;>1b[y ""L1!lll~b'" ~~ Oi~lrilx*", h. cl", C,,,UI t dlil1 Mnntlf::.cturer fll;ih. to Pn..\\lIl,tly ~OI'ftnlt-~1~~~ inScn~?- ptl{'~lf'" :r.illU luJhlt ncl~ E'.-.;-.::o.nofl ~I.)l\.!; o.i th ..... tI of !\1...'CliPl~tOl (nfr~.r \\ril1~. .. ~~~}lj~{((Un Di~1f1bmor J1l1d.# ri..,ny"h~ {4:'1J d!C~-t'UI\! (lCrlml), ltIillll;l.:li:...:tmcr wW gJ~lt! OISlnl>u[or a l~nlp1lnlY liccll.iC ro ~n,)W l)",trlhtiK.,. t~ L~'"lrnc! with Unolhcr :n"nuI8<:1urer (,lr

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iniiln'l;t{inri feil'301l11b.ly
I~U~.fJry

for

Iud

tlllt..'1A1lth1: mnuufac.UIri.1f

p.mdtll;e

A1k."il "Math iut'>.

MM\lr~clI1W h~H;lly gmulb Di:s1rlilutor11~ tighl l~ "-'\llic:ell'~ to ~m:1i31t~rnalh'c III1l",,(ao;:l,'f<;f lhc I.i;:_~d l'ulcnts. ami 'It!terwlSc p<il~icteall ~jflm"atol'<1 nL'C~"'1ty for tuch ,,11~l1l1ldc waJ",focturur to 1Ild"ufHClllfC 111111 (,Hv~r rhe :.r~cl,i"e. to l)lmiblllor, AI ,.11 t'rn~. tI".j(\ji th T""", Ui>tril'ltlc.. ,J",U I.. , c d (he ri~h! "I""" reasonuble nOlie..- It> '!P$CtVC ;La o~rnlk"'! ,,!, the M~chiflc ')!II'>p. iudllllillt the cn"bli.hm~Jit (tf ~I~h M~o!tk.c !lhop, lind !tI, M m.l!'ibulQfS, .ole expense, wi\ht>ut hlod<lll,,"'" 1(1 ~1,murac1~,~r'~Iljl, ......t;",.w Md usiug mutuully a",,~pl.~W und illlig "l;ool, autlll Ih" operatilll1al ,,,,,....ros <of M:II1UlIlClorffC>1M.1)"I~el(lr.'T' "mec} ""l~liIlJlc ~ol~t}' ID Ih~ M.>chrn~ Shi>j1,Ih .. <lJK''l11\olt(lL~=r nnd tP~ r'wlhl~~,
3, !'.!:ro~l~fr,!W:i. TI,e third .enl"""" "fSc'Ct"", S.G ii, cnll'QTy.ltd 1L'pl~cc(l,~ilh 'h~ r"llowJnj; Ianl!"''Sl:'

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.:.r

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SI.250,{lOn )!1,250,OO() $"1."51.1,000 SI.4:W.OO()

.:, fultj,!j~'l. H.~t"pt~.~hrn'il.c e~pro!.Olly",,,dlf'iCd ~y 1I,~hmn~ I" tit;. i\l"'''~!m~nt. !1,e Asru<.u","t ,:.,H rul1.~ill ,.mcll~IIIl'-'<1 !IIId <}m}lin1l" in f ~11iorcc nu<ldlh.,..

<.1, 11

be,," "JigiMI. h,~ a1ll'lfwhkhsha!lcoJlSlilUt""lIu

5,

<;ollnJS'.m&\li

11,;. A~~dmc~1 mil)' be ''''Cl!h,d in multiple ""U'U~p"I1S, Jmd ~htiS3;IlCAw"...d'llcnJ.. to lit! /I


1Il"k,,&f

cllch .-.fwhi(n

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EXHIBITE

From: Colin Clark [mailto:Colin.Ciark@svtsglobal.com] 9:27 AM To: Doug Subject: RE: Next call, still expecting all communication to be just between you and 1.

Sent: Friday, July 01,2011

Doug: You know that I have my hands tied... I am talking about who knows on your end. Adam is not aware of this particular message, but I COULD NOT make an overture of this magnitude without running by the main gist with Adam and legal. I am the founder and CEO, but I do not have the ability to 100% do this on my own, and besides, WE have to corne up with the money, you just need to respond. I am making the overture, which was 100% my idea, but I have to be under advisement of my President, counsel, and potential investors, both old and new. The OLD are driving this, so you knew all along that! am not alone. This is you on your side, because you are THE man and pretty-much DPI is yours, no matter the board, because Dan, Joe, and Sean are not savvy enough for this type of consideration. I have the problem of investors, and potential ramifications that FAR exceed your potential penalties for failure. I am the one who took money from investors. Up to now, you are selling an exclusive license. ! do not have your autonomy to propose. You are not proposing, you are listening, then running it by your board ... The risk in making this proposal is all on me, and on SVTS ... I did not sleep until after 0200hrs. because of the strain on me as the suitor ... The whole weight of making sure this 2+-year relationship does not go to hell in a hand basket is on you and me both, Doug, but I am the one making the overture. If we are not going to solve this.] and my cornpanv/rnvestors are the ones who lose by too much time passing by ... And, 99% of the work in raising the money to get a JV done falls on me and Adam. Please let me know, but this is between you and me for discussion, not for the record, unless you want it to be. Best, Colin

From: Doug [mailto:dolvey@dl.rr.com]

Sent: Friday, July 01, 2011 3:21 AM


To: Colin Clark Subject: RE: Next call, still expecting all communication to be just between you and 1.
I am working up a response, but this you and I business, Adam has already emailed me on this.

From: Colin Clark [mailto;Colin.Ciark@svtsglobal.com] AM To: Doug (dolvey@cfI.rr.com) Subject: Next call, still expecting all communication to be just between you and 1.

Sent: Friday, July 01,20111:52

Doug:
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Just before the weekend, and I hope you have a good one, could you please set aside a little private time, say tomorrow early afternoon EST,to discuss your impressions? I have expended tremendous energies, have put an additional, large pa rt of my company up for sale just to fund the next 3 months of due diligence, legal, and the down payment we fully expect to be a part of your negotiations I am mobilizing many, ma ny people in several cities in 8 time zones and 3 countries to move this initiative forward And all are asking me, "what is up with Doug?". Right now, Adam is at the hospital with his wife Denise. They will induce labor sometime after midnight KCtime. He has Joe Danko on hold ... I would like to discuss that situation as well, especially regarding what Joe is asking ADAM(!} to provide him. Adam is out of pocket until next week welcoming his new baby, but he is asking me to let you know about this ticklish situation, while fervently praying for guidance and help for me to get this done with you for everyone's benefit. Everyone's. Doug, I have asked a couple of my closest advisors outside the company, including the Judge, if this is a reasonable and fair evolution/resolution for our relationship, and whether it is in both companies' best interests. I would not be burning the oil 16-18 hours a day to try and tee this up for you and me if I thought it were not the best solution and path forward together. If you have any questions or doubts as to my intentions or honorability, I would appreciate the chance to clear my good name. What we are offering you and your shareholders is fair for the immediate timeframe, and extremelylucrative for the long-haul, all while keeping the 10+ years of your hard work in the hands of people you care about. This will never stop being Doug Olvey's brainchild. Doug, I am laying 100% of my future and name on the line here. If this technology partnership choice, which I really made over four years ago, was a bad choice, then I am ruined. Everything is on the line for me. You will not find one iota of guile or deceit in my dealings OR my offer I am praying you see the wisdom of. I now own considerably-less of SVTS than you own of DPI, because I started SVTS with one goal, as I always told you: To fund the project and technology without allowing anyone to steal it from you. Going into a 3-day weekend I sure could use the news from you that we will somehow get this done ... Everything is riding on you and me coming to some sort of negotiated settlement and merger of interests. Please consider all I have given up to do this, and what my team and investors have gambled. I am not trying to take advantage of you and our history. I am trying to fix things, and make them become what your team in Orlando, by itself, ca nnot do. The refrain is the same from all suitors: Collapse or Combine the two operations into a clean, debt-free, and focused joint venture that should then become a juggernaut. This is the cleanest, fastest, and safest way to do so, especially from your point of view: You and yours are paid first... and quite a bit, aII the while remaining part of the tremendous upside my vision, my team, and the new money that is investing into my leadership will make it, whether the venture is for one or 25 years. If I have my say, it will be the latter. Again, Doug, open Kimono, you own more of your company than I now own of mine, and I could drop to less than 20%. have some pretty powerful investors in my company that are not at all happy with everything that has transpired over the past several months ... So I need to fix that. This is the best way possible, and the most lucrative way for both parties, because, against Wall Street's historical past, I am placing your interests on an equal, if not a higher, footing with that of the people with the money. Doug, you probably cannot find a precedence for anything I have done here, either in the past or with this proposal, and I ca n safely say I have lived up to my promises. Please recall why I, after 2 years of futile capital stalking, came up with this unheard-of way to finance oPt back in January, 2009: To protect you and your company, while buying an exclusive territory big enough so that I could, at the very least, pay my investors back and stay out of jail. From those bedrock principles now comes the need to change course slightly, but never deviating from them:

Protect Doug's interests, and take care of my investors. Doug, please search your heart and recall everything that has transpired ... I am only seeking to take care of everybody, re-starting the venture with the clean slate Joe Danko just recently suggested to Adam. My investors have trusted ME enough to give me the $1.6mill have given to you. My ass is on the line, so ] have to fix things, and there are some broken pieces causing extreme angst within my camp ... The fixed project you and I need to build must attract additional investors while placating the disgruntled early stakeholders (Jim and Maggie chief amongst them to the tune of $1.7mil.). Adam and] ALREADY have several targets asking if DP] is willing to go down this road with us, including Jim and Maggie. The royalties and upside that go to DP] do not come out of the investors' hide. It comes out of mine and my team's. After all of this sacrifice on both your and my part, please rest assured: Doug is going to make a lot more "guaranteed" than Colin. In fact, unless my team does what I tell the investors it will do, and that is explode this technology worldwide, ] will make next to nothing. Once again, I so believe in your invention and patents, I am willing to still take on the vast majority of the risk. Please hit reply to set a time for us to turn off the sidebar conversations and distractions in order to discuss this. Thanks, Doug ... With my best personal regards and wishes, and concern for your health and well-being, Colin

EXHIBITF

------------------~-. From: Steven c. Davis [mailto:sdavis@HartzogLaw.com] Sent: Thursday, February 16, 2012 11:05 AM To: Christopher Faucett; David W. Fell Cc: Doug Olvey Subject: RE: SVTS agreement lapsed

---------------- -.--.~---- ------~---

---

"

Chris: I'm under the gun on some things and must respond briefly. First, there was absolutely zero "hidden agenda" in my comment about past breaches, and I am certain there is nothing SVTS is holding in its back pocket as you say. There are no alleged "gotchas". What I meant by my comment was only that the pattern in the past when problems have developed has been similar to this one. Upon initial inquiry Doug was not even aware of IP's existence, then we were told that no drawings had been provided (when SVTS couldn't figure out where else the identical drawings sent to the corrugators could have originated), the NDA was described but no drawings had been provided, and then ultimately it was concluded that the drawings had originated with DPI. I strongly desire, and know that SVTS strongly desires, to put the past in the past. That's what I've been pushing from the time I became involved and was something I said Tuesday till you were probably tired of hearing it. Again,l have no hidden agenda, and don't know of anything you are not already aware of. If we can reach an agreement that has features along the lines we discussed, we should be able to get the parties' interests properly aligned. If we can't, there will be constant recurrences of this competitive tension, pricing will be driven down, the collective business model will degenerate further into active litigation, and everyone will lose. Any agreement reached would release past claims, so there couldn't be any "gotchas". Let me know if we need to discuss further later, as I've got to run now. SCD

Steven C. Davis
Hartzog Conger Cason & Neville

1600 Bank of Oklahoma Plaza 201 Robert S. Kerr Avenue Oklahoma City, OK 73 102 405-235- 7000 405-996-3403 facsimile sdavis@hartzoglaw.com www.hartzoglaw.com CONFIDENTIALITY NOTICE: This electronic mail transmission, and any attachments, contains information that is confidential and/or legally privileged. The information belongs to the sender and is intended only for the use ofthe person or entity to whom it is addressed. If you are not the named recipient, you are hereby notified that taking, copying or disclosing this information is strictly prohibited. If you have received this transmission in error, please immediately notify us by telephone at 405-235-7000 to arrange for the return of the message and any attachments. Thank you. IRS CIRCULAR 230 NOTICE: Any tax advice in this email was not intended or written to be used, and cannot be used, for the purpose of avoiding tax penalties.
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EXHIBIT G

s v t s @ g lob a IT~
April 10, 2012. Mr. Douglas Olvey Design Pallets, Inc. 2585 Clark Street Apopka, Florida 32.703 RE: Custom Pallets Designs Doug:

SVTS Proprietary & Confidential

Over the past year, SVTShas requested designs for custom pallets from DPI in accordance with the terms of the Exclusive License and Distribution Agreement (the "Agreement"). As noted in various correspondences from SVTSto DPI, and in the complaint filed by SVTSagainst DPI, DPI has failed to fulfill its obligations as set forth in the Agreement. Further, during the February 14 meetings between DPI and SVTScounsel, Steven Davis and David Fell, you personally committed to providing custom designs within two weeks of formal request by SVTS. In particular, on two occasions, SVTS submitted properly-formatted DPI-1 forms with regard to Reliance Products' need for a custom 72. x 66 design, one request following your commitment to SVTSon February 14. On both occasions, DPI provided a design that did not work when tested. Please be informed that, based on DPl's inability, or unwillingness, to provide a custom design to service this SVTSclient, and in order to mitigate the damages caused by DPl's failure to fulfill its obligations under the Agreement, SVTSwill be designing, testing and producing its own custom designs for prospects and clients from this point forward. SVTSwill not make any claim to any intellectual property rights of DPI in the pallets. Following the design and testing steps, SVTSwill provide to DPI, on a confidential basis, the design for DPl's review and appropriate comment. In the event that DPI fails to review or comment on such designs, or makes inappropriate comments in order to delay or hinder SVTS'sefforts to mitigate its damages, SVTSwill move forward with such designs. Enclosed is the custom 72 x 66 design SVTSintends to use with Reliance Products, pending potential adjustments following full-scale testing. Please be informed that because these designs will have employed SVTSresources and SVTSintellectual property, we view such custom designs and improvements to be the confidential, and proprietary, intellectual property of SVTS. Accordingly, while DPI may use these designs with customers, and DPI will own the rights to the underlying patents, DPI is hereby strictly prohibited from sharing such designs with any distributor of DPI's pallets.
15334 E Hinsdale Circle. Unit 1E
Centennial. CO 80112

800.9165360

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s v t s @ g lob

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SVTSProprietary & Confidential

DPI is also strictly prohibited from sharing such designs with Corrugated Pallets by Design (or any employee, owner, agent or contractor related to Corrugated Pallets by Design). until such time as DPI ---p-ro-v~ides SVTS with reasonable evidence thirtCorrugatedPallets 6y Design is a wholly owneaSu6siCfiary-~ of DPI, as represented during the February 14 meeting. SVTS hereby reserves the right to take any and all legal steps necessary to protect our rights and property in sharing these designs with DPI, and stipulating DPl's ownership of the underlying intellectual property.

Regards,

Adam Pener, President

SVTSGlobal

15334 E. Hinsdale Circle. Unit 1E Centennial CO 80112 800.916.5360

Prcudlq offering

GR.PEU\T ~

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www.greenoxpai!ets.com
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