design pallets v. shandon valley transport solutions et. al

8/2/2019 Design Pallets v. Shandon Valley Transport Solutions et. al.

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UNITED STATES DISTRICT COURTMIDDLE DISTRICT OF FLORIDAORLANDO DIVISIONDESIGN PALLETS, INC., aFlorida corporation,

Plaintiff,

)))))))))))))))

CASE NO:s.SHANDON VALLEY TRANSPORTSOLUTIONS USA, LLC a/kJa SVTSGLOBAL, a Colorado limited liabilitycompany, ADAM M. PENER, COLIND. CLARK, STEVEN C. DAVIS, andDAVID W. FELL,

Defendants.

VERIFIED COMPLAINT FOR INJUNCTIVE RELIEF AND DAMAGESPlaintiff, 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 Venue1. 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.

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

5. Mr. Davis is a resident of Oklahoma and an investor in SVTS.6. Mr. Fell is a resident of Colorado and an investor in SVTS.7. 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 valueof $75,000.00, excluding interest, attorneys' fees and costs. This Court also has federalquestion 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 thisState under section 48.193(l)(b) & (g), Florida Statutes.

9. Defendants have sufficient minimum contacts with Florida, as they wereselling 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 UnitedStates Constitution.

10. Venue is proper in the Middle District of Florida pursuant to a forum selectionclause in a contract, and under 28 U.S.C. 1391(b)(2) because this judicial district is where asubstantial part of the events or omissions giving rise to the claim occurred.

General Allegations11. 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

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make. Under pressure from investors who had contributed $1.6 million or more toward adistributorship that still had not made its initial payment under the contract, Defendantsfraudulently induced Plaintiff to reduce the amount of the initial payment to the $1.6 millionpreviously paid, and then alleged breaches of contract to excuse their non-performance as tofuture 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 corrugatedpaper as opposed to traditional wood pallets. DPI's corrugated pallet designs are strongenough 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. Itincorporates years ofknowledge and know-how, and includes five issued U.S. patents, as well as several patentspending, 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 secretsregarding engineering designs, customer information, savings calculators, pricing data, andother 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 anon-disclosure agreement. The distributor will then execute a written license agreement touse DPI's intellectual property under specified terms, including royalty payments. Some

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distributors are existing distributors of wood pallets who desire the option to offer corrugatedpallets as an alternative.

16. In the typical distributorship arrangement, an end-user will place an order witha 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 withdetailed information and sends it to OPI to design the pallet. Designs are provided to thedistributor, who sends them to a box plant or corrugator to cut a sample. After testing, thesample goes to a die manufacturer to create a die, which goes back to the box plant orcorrugator 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 palletsfor transport.B. DPI's License Agreement with svrs .

17. 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'scounsel, Plaintiff in good faith told Mr. Clark his offer was much too high, as the marketdemand for corrugated pallets at that time would not produce sufficient revenues to sustain a13% royalty, and that $14 million may be overly burdensome. The parties subsequentlyagreed to a $7 million payment, plus an 8% royalty, and SVTS had its counsel draft thecontract.

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19. On or around March 19,2010, SVTS entered into an Exclusive License andDistribution Agreement with DPI (the "License Agreement"). A true and correct copy isattached 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 togetherwould 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 "atManufacturer's option, this Agreement shall terminate and be of nofurther force or effect [except for terms that survive termination]." Nonotice was required. See section 2.01.

c. The remaining four payments were to be made every six months overthe next two years, each with a 10 day grace period, for a total of $7million. 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, NewMexico, and the country of Mexico, which could be expanded if SVTSexercised certain options. See section 1 ("Term" and "Territory").

e. The patent license and distributorship rights were exclusive within theTerritory and non-exclusive outside the Territory, including the right

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to sublicense within the Territory. The parties made a special carve-out for an existing distributor, Sonoco Products Company. Seesections 2.02 and 2.03.

f. SVTS was only entitled to sell pallets to customers outside theTerritory if it notified DPI of a customer contact at the executive levelin writing and satisfied other requirements. See section 2.07.

g. IfSVTS defaulted on its payment schedule, after the Initial Payment, itstill could retain a license, but only with respect to those portions ofthe Territory that had a cumulative monetary value (according to achart) up to the amount paid, and nowhere outside the Territory. Seesection 5.02.

h. SVTS had a minimum annual sales volume over the first five yearsand ifit could not make up the shortfall in the following year, DPI

could require that SVTS terminate its exclusive rights with respect tospecific states in the Territory, selected by SVTS, based on thepercentage of missed sales volume. See section 5.03.

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

J. In partial consideration for the payments to be made by SVTS, DPIwould issue SVTS 1,800,000 shares of common stock, and uponreceipt of the Initial Payment, SVTS would receive 850,000 of those

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shares, with the balance to be issued, if at all, on a prorated basis inaccordance with additional payments made. See section 2.06.

k. Neither party could use or disclose to others, either before or after theLicense Agreement ended, any technical or business information,manufacturing technique, process, experimental work, trade secret orother confidential matter relating to the other party. See section 11.01.

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

m. A breach of the terms of the License Agreement that was not curedwithin 30 days after written notice constituted a default, which gavethe non-defaulting party the right to injunctive relief, specificperformance 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 theparties ceased, except that the parties were not relieved of theirobligations to pay amounts that were due or became due aftertermination, or of other surviving obligations. See section 15.03.

o. Florida law governed, and the parties irrevocably submitted tojurisdiction and venue in Florida state courts or the U.S. District Courtfor the Middle District of Florida. See section 16.04.

21. Soon after executing the License Agreement in March 2010, SVTS realized itwould not be able to make the $950,000 payment due June 1,2010.

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22. On June 1, 2010, to accommodate SVTS, the parties entered into a FirstAmendment to Exclusive License and Distribution Agreement ("First Amendment") bywhich 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 isattached hereto as Exhibit "B."

23. In September 2010, DPI provided a thorough training seminar for SVTS inApopka, FL.

24. On October 1,2010 SVTS failed to make the $540,000 payment when it camedue or 10 days thereafter. Therefore, pursuant to section 2.01, DPI had the option toterminate the License Agreement without notice.

25. In November 2010, DPI elected to work with another distributor in NewMexico, Pallets Unlimited, International ("PUI"), but gave SVTS another chance to raise thefunds necessary to become an exclusive distributor, at least in some part of the Territory.C . The May 2 01 1 S ec on d Amen dm en t

26. Mr. Pener and Mr. Clark felt immense pressure from its investors becauseSVTS had only a contract terminable at will by DPI, and no entitlement to any shares ofDPI's stock. This pressure was communicated many times when Mr. Clark stated to severalemployees of DPI his fear of "going to jail" at the hands of disgruntled shareholders whomany have been overpromised certain things.

27. By February 2011, SVTS had paid DPI $1.6 million but was still $200,000short ofthe required Initial Payment. Ithad also filed two federal trademark applications for

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"Green Ox" pallets, wherein SVTS indicated that it first sold these products in interstatecommerce on December 16, 2010.

28. By March 2011, Mr. Pener and Mr. Clark had implemented a scheme tofraudulently induce DPI into a Second Amendment that would reduce the Initial Payment tothe $1.6 million already paid, claim certain contractual rights, and then never pay anotherdime to DP!.

29. Specifically, after consultations with investor Jim Russell, who allegedly hadalready invested $1 million, Mr. Pener and Mr. Clark told DPI that Mr. Russell was willingto invest another $2.5 million following his review of an executed Second Amendment, andthat 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 toreengage 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 telephoneconversations with Mr. Clark and Mr. Pener, DPI entered into a Second Amendment to theLicense Agreement with SVTS ("Second Amendment"). A true and correct copy is attachedhereto as Exhibit "D."

32. The Second Amendment stated that DPI acknowledged the $1.6 million fromSVTS "satisfies all of SVTS's obligations under the Agreement with respect to the InitialPayment" and that the "Funding Date" shall mean May 11, 2011. The remaining paymentdates were backed up to six month intervals from May 11, 2011, such that the next

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installment of$1.25 million would be due November 11,2011, although SVTS had nointention or ability to make these future payments.

33. Upon information and belief, Mr. Russell did not invest the $2.5 million, nordid he ever intend to invest.D . SVTS Distances Itselffrom DPI and Declares Breaches

34. With the Second Amendment executed, SVTS immediately began distancingitself from DPI, marking a stark transition from a previously smooth course of dealing. Forexample, in June 2011, Mr. Clark flew to Orlando and told Doug Olvey, DPI's president, thatanother 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 "amajor shock" and on June 17,2011, Mr. Pener responded "I shared your shock," explainingthe relationship had "always been positive, friendly, and I respect greatly the work you'vedone to advance the interests ofDPI and support SVTS."

36. On June 24, 2011, DPI and SVTS had a business meeting with Walmart at itsheadquarters in Arkansas. Soon after it began, Mr. Clark boldly attempted to take over themeeting, 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, orcompetitive with, DPI, including, but not limited to:

a. Doing business as "SVTS Global" with stylized lettering and a logo ofa 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 misimpressionthat SVTS had global rights;

b. Reproducing DPI's copyrighted website content onto its own website;c. 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 GlobalTransport Solutions;

g. Providing another distributor outside the Territory, T.S.S. Global, withwebsite material that contained DPI's confidential information andintellectual property; and

h. Otherwise disclosing DPI's confidential information to others.38. 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 assignPUI to be an SVTS distributor. Mr. Clark rejected the offer, telling DPI he "neededsomething to beat you over the head with."

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40. Upon information and belief, SVTS was misrepresenting to its investors andpotential investors that it had, or was obtaining, the intellectual property rights necessary toexpand 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. Clarkwrote a lengthy e-mail to Mr. Olvey stating that Mr. Clark has not exhibited "one iota ofguile or deceit" and that his goal was to fund a project "without allowing anyone to steal itfrom you." He said, "I am not trying to take advantage of you" and that he needed to "stayout of jail" because his "ass is on the line." Mr. Clark proposed a new "joint venture" so thathe 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 attachedhereto as Exhibit "E."

42. On October 10,2011, Mr. Pener sent a letter with ajoint venture proposal, andon October 14, 2011, DPI declined the proposal.

43. On October 14, 2011, Mr. Pener signed a Form D Notice of Exempt Offeringof 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 "someserious legal issues between the firms that must be addressed to SVTS's satisfaction shouldDPI stand by its decision not to move forward with the JV." Even ifthere could have been abreach, and if the Second Amendment had not been procured by fraud, SVTS would havemissed 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 forumselection clause in the License Agreement. Mr. Fell, who was both an investor in SVTS anda lawyer negotiating the License Agreement, had initially drafted the forum selection clausefor Colorado, then agreed to substitute the state of Florida for Colorado, only to thendisregard 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 attemptto serve process for months. SVTS and Mr. Fell had ex parte communications with the judgein Colorado, through motions requesting extensions of the service deadline, alleging that theywere in "settlement negotiations" with DPI, leading the court to believe that DPI hadknowledge of the lawsuit.

47. On February 14, 2012, representatives of the parties met at the law offices ofone ofSVTS's investors, Mr. Davis, in Oklahoma City, OK. During the meeting, Mr. Davisdemanded worldwide licensing rights through a joint venture agreement and warned that, ifDPI refused, he had "deep pockets" to bury DPI in expensive litigation. Both Mr. Davis andMr. Fell, whose law firm had filed the complaint, effectively took Mr. Olvey's deposition atthis 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 hadabsolutely no "hidden agenda" and that he was "certain there is nothing SVTS is holding inits 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."

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F. DPI Faces Two Lawsuits and Loss a/Intellectual Property49. 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 SVTSwas a shareholder ofDPl. Despite a request for an extension oftime to respond, SVTSquickly filed another lawsuit, following through on Mr. Davis's promise of using the expenseof litigation to force the SVTS agenda.

51. On April 10, 2012, SVTS sent a letter to DPI stating that, because DPI wasunable or unwilling to provide custom design services, in order to "mitigate" SVTS'sdamages, SVTS would be "designing, testing and producing its own custom designs forprospects and clients from this point forward." The letter states, "Please be informed thatbecause 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 strictlyprohibited from sharing such designs with any distributor of DPl's pallets." A true andcorrect copy of the letter is attached hereto as Exhibit "G."

52. In summary, within approximately two years, SVTS had signed a contract inMarch 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 May2011, and simply used DPI to become a competitor. Defendants also demanded worldwiderights, threatened protracted litigation to force DPI to comply with their demands, and

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secretly filed a lawsuit in Colorado in contravention of the forum selection clause its ownattorneys 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. Ithas sustained a loss of valuable customers, specificand prospective sales leads, customer goodwill, and injury to business and reputation.

54. Plaintiff should be awarded significant punitive damages against Defendantsfor 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, beenperformed, or been waived.

COUNT IPatent Infringement Against All Defendants

57. This is an action for temporary and permanent injunction, and damages, againstall Defendants for patent infringement.

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

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

subject to the License Agreement and otherwise provided to them by Plaintiff, withoutauthority, during the terms of the patents.

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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 prospectivesales leads, customer goodwill, and injury to business and reputation.

64. Plaintiff has no adequate remedy at law and is entitled to injunctive relief.65. 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 ValleyTransport 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 orselling any products that were subject to the License Agreement, or using any confidentialinformation that was disclosed in connection with the License Agreement, or were otherwiseobtained from Plaintiff, and award damages to Plaintiff that are incurred through the date thatthe wrongful acts cease or are enjoined, as well as punitive damages, interest, attorneys' feesand costs, and such further relief as this Court deems just and appropriate.

COUNT IIBreach of License Agreement Against SVTS

67. DPI re-alleges and incorporates herein paragraphs 1-56 above.68. The License Agreement constituted a valid contract between the parties.

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69. DPI fully performed under the License Agreement.70. 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. Section 2.01 for failing to make the $1.8 million Initial Payment;c. 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 levelin writing" and obtaining "a letter of intent" with the required orders;

f. Section 4.08 for making improvements to the products rather thanrequesting that Plaintiff "promptly make such improvements andmodifications as requested by" SVTS;

g. Section 5.01 for failing to make the scheduled payments;h. Section 5.02 for retaining exclusivity for portions of the Territory

where no "cumulative payment has been made" prior to a paymentdefault;

1. Section 5.03 for retaining exclusivity for portions of the Territory afterfailing to meet the minimum sales volumes and not "selling an

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

J . Section 5.04 by failing to "pay Manufacturer a royalty of 8% of theProduction 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 ofthe Agreement, "any technical or business information, manufacturingtechnique, process, experimental work, trade secret or otherconfidential matter relating to the other party";

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

m. Section 16.04 for violating the agreement to "consent to thejurisdiction" 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 IIIMisappropriation of Trade Secrets Against All Defendants

72. This is an action for misappropriation of trade secrets against all Defendantsunder 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 fromDPI 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 limitedto, the methods of designing and building corrugated pallets using various elements fromDPI's patented designs.

76. At the time Defendants used the Trade Secrets, they knew or had reason toknow their knowledge of the Trade Secrets was acquired under circumstances giving rise to aduty 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 thecircumstances to maintain their secrecy.

79. As a direct and proximate result ofthe misappropriation, DPI has suffered, andcontinues to suffer, irreparable harm.

80. Money damages are insufficient to remedy the harm suffered by DPI, whichincludes, but is not limited to, loss of valuable customers, specific and prospective salesleads, customer goodwill, and injury to business and reputation.

81. DPI has no adequate remedy at law and is entitled to injunctive relief.82. 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, andwill continue to suffer, substantial damages until the wrongful acts cease or are enjoined.

84. Pursuant to Fla. Stat. 688.003, DPI is entitled to injunctive relief againstDefendants.

8S. Pursuant to Fla. Stat. 688.004, DPI may recover damages against Defendants.86. Pursuant to Fla. Stat. 688.00S, DPI may recover an award of attorneys' fees

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 ValleyTransport 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'strade secrets, and award damages to Plaintiff that are incurred through the date that thewrongful acts cease or are enjoined, as well as punitive damages, interest, attorneys' fees andcosts, and such further relief as this Court deems just and appropriate.

COUNT IVRescission and Fraudulent Inducement Against SVTS, Mr. Pener and Mr. Clark87. DPI re-alleges and incorporates herein paragraphs I-S6 above.88. 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, SVTS, Mr. Pener and Mr. Clark knew or should have known the representation

was false.

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90. SVTS, Mr. Pener and Mr. Clark intended that the representation induce DPI toact on it.

91. As a direct and proximate result of the representation, DPI has been damaged.92. DPI received no benefits from the Second Amendment and has given

notification that it is rescinded.93. DPI has no adequate remedy at law and is entitled to rescind the Second

Amendment.WHEREFORE, Plaintiff, Design Pallets, Inc., demands rescission of the Second

Amendment and an award of damages against Defendants Shandon Valley TransportSolutions 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 VPromissory Estoppel Against SVTS~Mr. Pener and Mr. Clark

94. DPI re-alleges and incorporates herein paragraphs 1-56 above.95. As stated in paragraphs 26-33 above, SVTS, Mr. Pener and Mr. Clark made a

representation of material fact that Jim Russell would provide a $2.5 million investment ifPlaintiff agreed to the Second Amendment in May 2011.

96. This representation was contrary to a later-asserted position that they made nosuch promise.

97. DPI reasonably relied on the representation.98. DPI detrimentally changed its position due to its reasonable reliance on the

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 SecondAmendment and an award of damages against Defendants Shandon Valley TransportSolutions 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 VIFraudulent 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 filedagainst DPI in Colorado. Had DPI known ofthe lawsuit, the meeting in Oklahoma City, OKand multiple subsequent correspondences would not have occurred.

102. Defendants knew or should have known the misrepresentations and omissionswere false.

103. Defendants intended that the misrepresentations and omissions induce DPI toact on them.

104. DPI suffered damages in justifiable reliance on the misrepresentations andemissions.

WHEREFORE, Plaintiff, Design Pallets, Inc., demands an award of damages againstDefendants 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 suchfurther relief as this Court deems just and appropriate.

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COUNT VIICivil Conspiracy Against All Defendants105. 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 thecontract, misappropriating Plaintiffs trade secrets under the "Green Ox" label, and latermeeting in Oklahoma City, OK to threaten Plaintiff with protracted litigation against "deeppockets" 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 VIIIAccounting Against SVTS109. 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 payroyalties 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 furtherrelief as this Court deems just and appropriate.

COUNT IXUnjust Enrichment Against All Defendants114. 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 knowledgethereof.

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 thebenefits.

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 suchfurther relief as this Court deems just and appropriate.

DEMAND FOR JURY TRIALPlaintiff demands a jury trial for all actions so triable.

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~Dated thisLay of May, 2012.

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

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mailto:[email protected]:[email protected]:[email protected]:[email protected]


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VERIFICATIONSTATE OF FLORIDACOUNTY OF ORANGE

Before me, the undersigned authority, personally appeared Douglas A. Olvey, asPresident of Design Pallets, Inc., who after being first being duly sworn deposes and says thathe has read the foregoing and states upon personal knowledge that the facts stated therein aretrue and correct unless stated upon information and belief, in which event such facts arebelieved to be correct.

2600701957vl


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EXHIBIT A


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EXCLUSIVE LICENSE AND DlSTRI BUTlO~~\\k)t~~&1'f)iStl'iCl Court ZndJDF i li n r .: D i l le : Dec29 znll 10:4% \1 !'>1~Tl'iliug II): 41613514THIS exCLUSIVE LICENSE AND D JSTRrBUTJON 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 F lo rid a c or po ra ti on ("Manufacturer"). and SHANDON VALLEY TRANSPORT SOLUTIONS VSA,LLC. u Colorado lim it ed li ab il ity c om p a ny ("Distributor"). Manufacturer and Distributor a re sometimesreferred to herein individually as a ~Party.' andcollectively as the "Parties."

RECITALSA . Manufacturer is the owner of various p aten ts a nd p aten t applications f or th e p ro du c tio na nd a ssem bly o f p allets a nd d eriv ativ es th ere of relating to su ch p aten ts a s furth er d esc rib ed h erein .R M anufa c turer and D istributor a re en tering in to this Agreement re ga rd in g th e lic en sin g. o fthe p a tents. the right to hand assemble and sell p a llets ba sed Oi l such pa ten ts, and the right to p la ce

m ac hines (ha t a ssem ble p allets w ith end users. a ll a s m ore particularly se t f orth h ere in .

AGREEMENTNOW . T HE RE FO RE . in c onsid era tio n o f th e m utua l c oven an ts a nd a greem ents h erein c on ta in ed .Manufacturer and Distributor do hereby agree as follows:

SECTION I. t)EFINITIONS." Effec tiv e D ate" sha ll mean the da te set forth in the in troduc tory p ara gra ph of this Agreement."Fiscal Quarter" shall mean each three (3) month period ending 01 1 March 31. June 30. September 30 andD ec em ber 3 I of ea ch c alenda r yea r."Last lL) E."pin. : Li l. :ensed J 'a te l 'l !" sha l l mean the la st to exp ire of the Lic ensed Pa tents issued anyw here inthe world,"L ic ensed Pa ten ts" sha ll m ea n the p atents set forth on E xh ib it A a tta ch ed h ere to . lilly n ew p a te nts is su edin connection w ith the P ro duc ts (as d efin ed below ), a nd any p a te nts is su in g 01 1 d ivi si ons . con ti nua t ion s ,continuations-in-part, reissues and extensions corresponding to any of the foregoing. and any trademarks.service marks or other intellectual p ro pe rty a ss oc ia te d w ith s uc h p a te nts."Machines" sh all m ea n c ollec tiv ely . a ny machine or equipment (other than the existing 582 Machine)developed by Manufacturer for the p urp ose of the automa ted or sem i-automa ted a ssem bly of a p alletcomprising dements o f in te lle ctu al p ro pe rty own ed by the M anufa cturer before or during the term of thisAgreement rehued to the Licensed Patents. as well as all modifications anti improvements thereon.


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"PCJ'SQU" shall m ea n a ny in dividua l. p artn ership , lim ited lia bility c om pa ny, a ssoc ia tion . c orp ora tion a t"o th er e n ti ty ."PaU~(Sr: sha ll mean any p a llet designed or c rea ted by or 01 1 beha lf of M anufac turer in ac cordanc e w ilhone or more of th e Licensed Patents. whet he r a ss emb le d by hand or by a ny M a ch in e (in clu din g, bu t notlim ited to the l.ondek Pa llet (582). the Box Pa lle t (4D2). the R acka ble Pa lle t (601). a nd the D iagona lPa llet (H55)) and a ll modificat ions an d improvements thereon.".Prod!l(j.ion F ee" sha ll m ea n the fee c ha rged by D Istributor to its c ustom ers for ea ch Pa llet a ssem bled byhand or a ny M ac hine ." Produc ts" sha ll m ea n c ollec tively the M ac hin es a nd the P allets,"Term"' shnll mean the p e rio d c ommen cin g on the date of this Agreement and (i) tor th e L ic en se d P ate nts ,continuing until the exp ira tion of the Last 10 Exp ire Licensed Pa tent. and for the O J } d is tr ibu ti on r igh ts 10th e P ro du cts, c on tin uin g u ntil te rm in ate d by mutual consent of the P arties, un less term in ated soon er un de rany ap p lic able p rovision of th i s Agreement, In the event that any of the Licensed Pa tents may beextended, M anufac turer sha ll take a ll reasonable a ctions nec essa ry to extend such L ic en sed P aten ts a ndth e te rm 0 1 ' this A greem ent w ith resp ec t to the Licensed Pa tents sha ll be extended to be c o-te rm in us w ith,t.e Last to Exp ire L icensed Pa ten t.'"Territory" sl1e lin d .-;u blic c nse till' L ic en se d P ate ntsw ithin th~ '( ertl lory. pect \(1 Ih e L ic en se d P ate nts indLldf."s a r es tr ic t ion 01 1Manunlctmcr"!; or n ny othc r party's rights I() lise the I jccnscd P ate nts w ith in th e T erritory . su bje ct to th..:cxo .. :l .' p tions sp1 .!c if i cn lly se t I i. ir th he re in .


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2.03. G rant of D istrlbuturshlp Righcs. Ma nu fa ctu re r h ere by g ra nts to D is tr ib uto r th e e xc lu siv e r ig htto ~C-1Ithe Pa llets and p la c e the M a chines during the Term to or w ith any party loc ated w ithin theT erritory a nd a n on-ex clu siv e rig ht 10 sell the Pa llets and p la ce the M achines during the Term to or w itha ny en d-u ser o f tile P allets O rM a ch in es ou tsid e th e T errito ry. in a cc ord an ce w ith th e term s a nd c ond ition sset forth herein . D istributor hereby a cknow ledges tha t M anufa cturer ha s entered in to a n a greem ent w ithSOL.OCO Produc ts Com pa ny f 'Sonoc o'') w hereby $OIlOCV has the right to sell ha nd a ssem bled p alletsp ursu an t to in tellec tua l p rop erties ow ned by M anufa c turer to certa in a c counts tha t m ay have brancho pera tion s w ith in the T errito ry . M an ufa ctu rer a ckn ow led ges a nd a grees tha t the ex clusiv e rights grantedtn D i s tr ibu to r w i t h respec t \0 the distribution of the P roduc ts inc ludes a restriction 011 Ma nu fa ctu re r's o ra ny o th er p a rty 's rig hts to d istrib ute th e P ro du cts w ith in th e T errito ry .2 .04. Right of F irst Refusa l. M anufa c turer hereby gran ts to D istributor a right of first refusa I (the-ROFR-) w ith resp ec t to the gran t or sa le by M an ufa cturer to a ny th ird p art} o f' a n ex clu siv e, territo ria lright 10 sell the Pa llets or sell. lea se or p la c e the M achines in any portion of {he world outside of theTerritory (an "E xc lu si ve T e rr it or ia l Transaction"). If, at any tim e during the Term of this A greem ent a ndfrom and uftl!r the da te D istributor m akes the f ina l p ayment under Sec tion 5.01 below , Manufacturerreceives a bona Iidc written offer from. o r w is he s \0 initiate negotiations with. any third party with respec tIn an Exc lusive Territoria l Transaction. then , concurrent w ith entering 'in to any discussions orn eg otia tio ns w ith su ch th ird p arty . M an ufa cturer sha ll n otify D istrib uto r 1 1 1 w ritin g { th e " Notic e" ) of theEx clu sive T errito ria l T ra nsa ctio n, D istrib utor sha ll ha ve seven (7) days from and a fter the receip t byDistributor ofthe Notice to deliver a written notice of its election to negotiate the terms for the ExclusiveT errito ria l T ra nsa ctio n (th e "E le c tio n N (. ni ce " ). if D istrib uto r f ails to re sp on d wtthin suc h 7-d ay p eriod ,D istrib uto r " ha ll b e d eem ed to ha ve rejec ted [h e E xc lu sive T errito ria l T ra nsa ctio n, If D istribu to r rejec ts.or is deem ed (0 h av e re je cte d. th e E xc lu siv e T errito ria l T ra nsa c tio n. Manufac turer sha ll be entitled toe nte r in ro a ny d is cu ssio ns. n eg otia tio ns o r tra ns ac tio ns f or s uc h E xc lu siv e T errito ria l T ra ns ac tio n w ith a nythird pa rty . If D istributor elec ts to en ter in to negotia tions w ith Manufacturer for suc h Exc lusiveTe rrito ria l T ra nsa ctio n w ithin suc h 7-d ay p erio d. M anu fa ctu rer sh all, w ith in sev en (7) da ys a t' rec eip t ofthe E lec tio ll N otic e. deliver th e p rop osed term s fo r su ch E xc lu siv e T errito ria l lra nsa crlo n to D istrib utor(the "Ollh"). Distributor shall have th irty (30) days a f ter receip t of the O ffer tv exerc ise its op tion toen ter in to a n a greem en t w ith M an ufa ctu rer to r su ch E xc lu siv e T errito ria l T ra nsa ctio n o n th e term s of th eOffer, If D istributor elec ts to exerc ise its R OrR. (i} M anufa c ture and D istributor sha ll en ter in to anag reemen t f or s uc h E xc lu siv e T er ri to ria l T ra ns ac tio n ill a cc orda nc e w ith the term s of the O ffer. but usingthe form of this Agreement, and (ii) Distributor shall pay [he then outstanding ba la nc e of the amountsowe d to M a nu fa c tu re r set forth in S ec tio n 5.01 b elo w, If D istribu to r do es 110t re sp on d w ith in s uc h 3 0-d ayp eriod. D istributor sha ll be deem ed to ha ve rejec ted suc h O ffer, if D i st ri bu to r r eje c ts . 01 ' is deemed tohan: rejected such Offer, Manufacturer shall be e n ti tl ed 10 e nt er intI) an ag l 'e emc ll t WiIh a ny third p arty O ilIhe Ic nn s o f th e.:O tT er. If M a nu fa ctu re r f ails (0 cnter inltl an agrccllll!l1\ with a llY s ll c h third p a rty on th~sam e (erm s of the O ffer w ithin ninety (90) days a f ter Dislrihuto(s re je ctio n o r d ee me d rejection of theOtTer , D i s tr ibu to r 's ROFR shn ll be reinsta ted w ith resp ec t to sllc h Exc lusive Territoria l Transaction.No tw ith st an din g a n yth in g 10 the contra ry, M anufa c turer shaH insure tha t any agrecment en tered inwhetween M anufa c turer and any third p arty sha ll speci fical ly a c know~ed l. !e a n d rccogni7.c Distributor'sr i l l - h l S herein, induding. without lim ita tio n, D is trib uto r's e x.c lu siv e lig hts w ith re sp ec t to a ny c ustome rs o f[)is trib u[o r (in clu din g. w ith ou t lim ita tio n. lilly fu ture c usto mers of D istrib utor), whether w ithin thL:I'~ rrit~ )ry m a ny m hl:r p a rt o fth e w orld .2 .05 K ight tu Expand Territory. A t a llY tim e during th e Term of th is A g re em e nt (art .d wilhl1Ulrl!dudng llI' a tl~c til1g D istributor's rights under Sec tion 2.04 abovc ) am i Ihll11 am i uncr til l! d ateD istributor m akes the tina l p aym ent under Sec tion 5,0 I below ', D istributor m ay a dd the loilowiJ1g Slales10 t he d e fi ni ti on {)f"Tcrrilory" in t hi s Agl' \ . 'Cll lcnl by d eliv erin g th e s.um set forth tlex t to cadi ! ;U1Cg.Ory tothe Manllt~lcturer:


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-- .Add it io n a l T e rr it or y M in im um S ales V olu meand Price _ . . . . _ ..

5.565:000 Idaho, Oregon lind 134,000 1,113.000 6.956.()OO 8.904.000 :Washington-$1.500.000Utah. Wyoming. : 77.000 645,000 3.224,000 4,031.000 5.159 ,000M ontana and N evada -$500.000 ...-Oklahoma. Kansas , 170.000 1.415,000 7.073.000 8.S41.000 11.3217.000Nebraska,North Dakota , SuuthDakota and Minnesota- !, $ 1 .000 .000 . - - ..~. . . . . . . . . . -~-.Subject 10 any contracts between Ma nu fa ctu re r a nd th ird parties and to minimum sales requirements withrespect to such areas. upon delivery of any of the amounts set forth above to Manufaciurcr by or Oil behalfof D istributor, the a pp lic able sta tes sha ll be a utom atic ally a dded 1 1 1 the Territory and he subjec t to thelCn11S o f th is A gre em en t (in clu din g. w ith ou t lim ita tio n. S ec tio n 5.05 below), D i st ri bu to r s h al l s p ec if ic a ll yacknowledge il l writing th e c on tra cts M anufa cturer is subjec t to il l a ny a dditiona l a rea added to theT erritory hereunder.2.06 ()wnershil_ Interest in M anufa c turer. In p a rtia l considera tion of the p ayments to be made byD istributor hereunder and subjec t to the te rm s of this A greem ent. M anufa c turer sha ll issue 1.800,{)00shares of com mon stock of M anufa c turer, w ith a ll the sam e rights a nd benef its a s p rovided La a ll o th ercommon stockholders of M anufa c ture r a s of the da te of this Agreem ent {the "Common Stock '}S im ulta neo usly w ith th e ex ec utio n o fth is A gree men t by th e p artie s h ereto u po n M an ufu etu rc r's rec eip t ofthe In itia l P aym ent, M anufa cturer sha ll issue to D istributor. a nd/or its designees, 850.000 sha res of theCommon Stock, The ba lance (If the Common Stock sha ll be issued. if a t a ll. Oil a p rora ted ba sis illa cc orda nc e w ith the p aym ents m ade by D is trib uto r p ursu an t to S ec tio n 2 .0 1 a bo ve .2.07 Customers Outside. the Territory. Distributor shall be entitled to sell Pallets nd/or placeM achines w ith custom ers outside of the Territory. a nd M anufa c turer sha ll not solic it s uc h c u st om e rs ,p ro vid ed th at (i) D istrib uto r n otif ies M a nu fa cture r o f a c usto mer c on ta ct a t th e ex ec utiv e lev el in w ritin g.(ii) M anufa cturer doc s 1101 have a n existing, w ritten contra c t w ith suc h p rop osed custom er, (iii)D i...ribu tor o bta in s a letter o f in te nt o r o the r indication o r in tc rc si f rom suc h p ro po sed c usto mer w ith in six(6) m on th s o f D istrib uto r's m eetin g w ith su ch p ro po se d c usto mer, a nd (iv ) su ch p ro po sed c usto me r p la ce sa n o rde r t(}l' Pa llets or M ac hines w ithin n ine (9) m onths a fte r D istri butor's m eeting w ith suc h p rop osedcustomer.SECTION J. I'ALLETS.3.01 Pa ten ts. M anufa c turer sha ll. a t its sole cost and exp ense, (i) m ain ta in a ll L ic en sed P ate nts fo r th e11nnets a nd th.: Mm.:h ines (to th e ex ten t Manufacturer elec ts to p aten t th e M ac hines or a ny c om ponentsthereof) in full forc e and effect, (il) promptly apply for. diligently pursue. and obtain a nd m a in ta in allp aten ts, tu th ~ I, !'xtCIJ{ o btu in a ble , f or any o th e r P a ll et s 31\d M ac hines (to the eXlent M


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and Machines (to the e x tent M anufac turer e lec ts to p a tent the M achines or any componen ts thereof)created by Manufacturer in . a t least. those c oun tries ill w hic h the L icensed Pa ten ts ha ve been filed. In theevent tha I M anufac turer elec ts not to a p p ly tor, diligently p ursue or obta in and m ainta in any p atents orfore ign p atents desc ribed above. M anufa cturer will so ap p ly for, diligently p ursue and obta in andm ain ta in tho se p aten ts or f oreig n p ate nts a s req ue ste d by D is trib uto r p ro vid ed th at D is tr ib uto r pays a ll ofthe a c tua l c osts a nd exp enses incurred by M anufa c turer in connec tion w ith such requested p a ten ts orf or ei gn p a te n ts ,3.02 M achine As.'l.em bletl Pa lle ts. A fter the Funding D ate. if ' the D istributor and M anufa c turerdetermine that the p alle t de sc rib ed be low is struc tura lly a ad ec on om ic ally f ea sib le, M an ufa cture r w ill useits b est e ff orts, \.....th i n a rea sona ble tim e p eriod a f ter suc h dec ision by { h e P a rt ie s, to design a p a llet (inaddition to the 582 Pallet) based on on e or more of Ihe Licensed Patents, as requested by Di st ri bu to r, t ha tis c a p able of being machine a ssem bled (tile "M ac hin e A ssem bled Pa lle ts" ). a nd deliver 10 Distributorsuc h de sig n. dra win gs, b lue prin ts a nd o the r in form atio n n ec essa ry fo r D istributor to p rodu ce a nd se ll su chM ac hin e A ssem bled Pa llet. In the event tha t M an ufa cturer e lec ts n ot to design suc h M ac hine A ssem bledPa ll e t. D i s tr ibu to r Shill! ha ve the righ t (0 design. 01' ha ve suc h M achine A ssem bled Pulle t designed on itsbeha lf lIsing the- L ic e ns ed P ate nts (if app l i cab le) by an a l te r na ti ve designer or manufacturer, p ro vid ed th at(i) D istributor p ays a ll o f the a ctua l c osts an d exp enses inc urred ill connec tion w ith such design. a nd tii)\1 1 a n u fa ct urc r sha ll have a ll rights to un y such design ba sed on the Lic ensed Pa tents.3.03 Additional Pallets. After the Funding Date. if the D istribu tor a nd M an ufa cturer determ in e th at ap a lle t of a different size or design of any of the Pa llets based on one or more of the L icensed Pa tents (a ll"Addit ional I~allens struc tura lly a nd econom ic ally feasib le, M an ufac turer w ill lise Its b es t e ff or ts ,w ithin a reasona ble a mount of lim e a fter the dec ision by th e Parties. to de sign suc h A dd itio na l Pallet anddeliver 10 Distributor the design and an examp le of Stich Additional Pallet. in clu din g a ll d ra w in gs,bluep rin ts an d other in form ation nec essa ry for D istribu tor to p roduc e a nd sell suc h A dditiona l Pa lle t. Inthe event tha t M an ufa cturer elec ts not to design such A ddition al Pa lle t, D istributor sha ll ha ve the right todesign, O f h av e su ch A dd itio na l P alle t dl...ign ed on its be ha lf. usin g the L ic en se d P ate nts (if appl icable) by~II\ a ltern ative designer or m anufa cturer, p rovided tha t (i) D istributor p ays a ll o f the ac tua l costs a nde xp e ns es in cu rre d ill c on ne ction w ith suc h de sig n, a nd (ii) M an uf ac tu re r sha ll hmie ul1 6ghts to a ny SllChd es ig n bm ;c d ~m th e L ic en se d P ate nts.SECTlON~. MACHINE SUOP AND MACHINES .l.O1. Machim .. S hop , W ithin six (6) m on th s a fte r the F un din g D Olle(:su bje c[ to F orc e M aje ure Events).M:u ll tf 'u c tu ('C l' . ,h a ll h ave a fully functional . fully equip ped m achin e shop (the "M ac bille Shop "), ,\ itll a llrequired pe-l 'So11l1el. that call p .ro dllc e th e M a c hin es . S ul~ ie c :t to force Majeure EYl,;nl~. MM lIra~t l ln :1 ' shu llh,1\'C tile c ap ability to p roduc e w ithin tw elve (12) monthl i o r the FU llding D ale a ~\lffjclcnl num ber ofM achines \\ jthin a reasona ble tim e p eriod It} sa tisfy D i!itributo r's orde rs f ro m a nd a llc r tlm \ dene. On orpri~)r to the first m mtyersa ry of the Fundin g D ale . Manutacturer s ha ll p r ov id e Disll'ibull'H' i n wr it ing Wi1h\hl,; sp ec if ic atio ns a nd standards for each Machine then in p roduc tion. M anufa c turer's wa rmnty withre sp e cl to tb e M a c hin es .\.h al1 i nc lu de s llc h s pe cif ic a tio ns f ind sta ndards. In the event tha t D Istributor hasnrdcn; Iha l exc eed M anufac turer's c a p ability to p roduce lhe required num ber of M achines on a [ilndyba s is . Ma l lu1~ lc l ur e r shill! p ro mp tly a nd d ilig en tly in cre as e su ch c ap ab ility by w ha te ve r m ea ns re as on ab J}I'c{luin.,(jt(l m ed such orders. which m ay inc lude the c rea tion o r compollents fo r th e M a c hin es by otherm an uf ac tllrers 1't!3son ab ly a cc ep ta ble to D lstribllto r. In the e ve nt tha t Manunu.:lun:r fa ils to p mm ptlyl!{,~mll1cncc.dHig.cnt[y purslIe a lld fu Ifill ea ch or Ihe cond ilions ()f th is Section 4.U I (a ftc r w r it te n no ti cetium Distrihuhlr a nd a f orty-five (45) da y c ure p eriod). M an ufa ctu re r w ill g ra nt l)[stribu tt)[ a te mp ora rylic cn~c tu n lltm D istributor to contra c t w ith another m anufa c turer fbr the c rea tion 01' the \.1a chinc s inorder 10 f'ill t he p ro d uc ti on ShOlttal1. M anufac tllrer sha ll coop era te hilly w ith D istribu tor a nd a ny sllc ha lt er na ti ve nmnu fu c tu rc r 10 insure the com pletion of the M achines ordered by D istributor, in c luding .

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\\ ithout lim ita tion . p rovidin g c op ies of a ll design s, blue prin ts a nd othe r in form ation rea son ably n ec essa ryf or su ch a lte rn ativ e manufacturer to p roduc e suc h M ac hines. M anufa cturer hereby grants D istributor theright 10 sublic en se to such a lterna tive manufac turer the Licensed Pa tents, a nd otherw ise p rovide a llinform ation necessa ry for such a lterna tive m anufa c turer to m anufa c ture and del iver the M achines toD istributor, A t a ll lim es during the Term , D istributor sha ll have the right upon reasonable notice too bs er ve a ll o pe ra tio ns o r the M achine Shop . inc luding the esta blishm ent of such M achine Shop . a nd to. 111Distrihutors sole exp ense, w ithout hindrance to Manufac turer's opera tions and using a mutua llyac cep table auditing agent, audit the op era tiona l records of Manufacturer ta l Manufacturer ' S o I fic e ,rdating solely to the Machine Shop.jhe o pe ra tion th ere of a nd the Products,4.02 582 M achine . M anufac turer rep resents tha t it ha s rec eived and js the sole owner of' th eprototype 582 Ma c hin e c re ate d by Manufacturer and recently held by Carolina Container Corporation.-\,03 Next Generation Machines, A fter the Funding Date . if the Distributor and Manufac turerdeterm in e tha t H n ew M ac hin e is struc tura lly a nd e con om ic ally f ea sible. M an ufa cturer will use its bestunixts. within a reasonable time period after such decision by the Parties. to design and create a Machine(other than the 582 M achine) tha t will a ssemb le a P alle t o r A dd itio na l Pallet c om prisin g a ll clements of < Itlea st one c la im 0 1 ' the Licensed Pa tents. Simultaneously w ith the comp letion of the design andmanufacture o r su ch \1 :lc ilin c, M a nu f ac tu re r w ill d el iv er to D istrib uto r su ch d esig n. d ra w in gs, b lu ep rin tsand other informa tion nec essa ry for D istributor to p roduce and sell such M achine. In the event tha tM anufa cturer elec ts not to design such M ac hine . D istributor sha ll have the right to design. or have suchM ac hine designed on its beha lf , by a n a lte rn ative designe d or m an uf ac ture r. p rovided tha t (f ) Distributorp ays a ll of the ac tua l costs and exp enses incurred in connec tion w ith such design. a nd [ii) Manufacturershall have al l rights to any such design based on the Licensed Pa tents. N othing. in this Sec tion 4.03 sha llbe deemed to p re -du de M a nu fa ctu re r f ro m designing and/or producing any Machine that Manufacturer soChllU!>CS.4.(14 Orders. Shipment and Installation, D istributor sha ll p la ce w ritten orders lor the M ac hinesw ith M anufac turer, w ith such orders setting forth the quantity and typ es of the M achines ordered, thespecifications therefor, and the desired delivery da te. Manufacturer shal l confirm an order on or beforelen ( 1 0) b usin ess d ays a lte r its actual rccei p t of suc h order a nd setting forth the de l ive :y da te a nd p ric e or~IICh order. Manufacturer, after its acknowledgnll : :nt a nd < lc cl! pla nc c of the order, sha ll deliver the\Ilaehines t~) D istrib uto r (o r its d esig ne es) ror p la cc lllCIll w ith D istrihutor's custom ers ba sed on Ihedeliver) d(IIC se t rl)rth in Manufacturer's a cc ~p ta nc e of the orde r, M an ufa cturer a cknow le dges a nd ,ag;n.'c::;1hat nllL:L! a n o rd cr i: . .Iceepted, that no o th er o rd er s by any C l is to ll lc r ~)rd isLribulor l}f Manu fa c tu re r :- .h allbe a cc cp t~d in p riority o r Distributor's order a nd the delivery da te $1;:1 forth in the a ccep tance notice sha llm> t b c changed. In the C\lCllt tha t M an ufa cturer fa ils to p rom ptly c ommen ce . dilige nt]r p Lirsue un d fulfilleach Dr t hl " condi ti ons or Sec tion 4.01 (a fter written notic e from D istributor and ~ lell (10) JU) CUI'!. .'peri0u) o r th i:; S ec tio n 4 .0 4, Manufac lurer wil[ gra nt D istributor a te mp ora ry lic en se lo a l low Di st ri bu to rto c Ol1tra ct \V ilh H lw thc r m an uf ac turer filr th e c re al io n of tile Machines ill o rd t'r to Ii II th e p ro du ctio n)jhnn['aIL [n additil)[\. i ll the evc nt or any Force Mlribulor p ays the co~tl) f rreig.h1 a nd in :.u nm c c for d eliv ery o f slIc h M a ch in es} o th erw ise th e term::, and I,;ondil ions 01' sa le sha ll heFOB ;vtanll i~lc1u rer's facility. Manufnc[urer shall ~hip the Machilles to thi: loc ation design ated byDistributor, slndl insLall the M ac hilles. a nd sha ll tra in Distributor'S c ustom er's desiglla ted em ploye es toI}fOperiy Llremtc th e M a c hin es , D is trib ulo r shall n ot bea r the risk of los.< ;or da ma g~ to the M ac hin .:s un tilth e Miich i l l C ' s a rc dc livered to the lac lllion designa ted h) Distribuwr, a r e i l1 s la l 1eL1by Munujiu':lurL:r and

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a re p ro perly f un ctio nin g ill accordanc e w ith the sp ec iflc a tions and standa rds ap p roved by Manufacturerand D istrlbutor. th is Agreement and the order p la ced by D istributor, M anufac turer rep resen ts a ndwarrants to D istributor tha t a s of the da le of delivery of ea ch M ac hine \(1 D is trib uto r o r D is trib uto r'sdesignee, tha t D istributor or its designee. a s a pp lic able . w ill rec eive. good and ma rketahle title to such\1nchinc . tree and c lea r of a ll encum bra nc es or sec urity interests...U I5. Cost. The sa les p rice fo r each M achine sha ll be ib c ac tua l. out of pocket manufacturing costs.comp ri si ng d ir t- oc tma t e ri a l c osts, direc t la bor c osts, and d ire c t t ra v el c os ts , p lu s twenty percent (20%). andthe tooling a mortiza tion c ost (c alc ula ted on an hourly basis. stra ight line, f ive (5) yea r amortiza tion on a40 hour work week) (collec tively . the "Ac tua l Cost"). In addition. D istributor sha ll reimburseM anufac turer for the actual , out-of-p ocket exp enses p re-ap proved in writing by D istrib utor a nd in curredby M anufac turer to have its em p loyees and/or agen ts tra ve l (0 the loc ation design ated b)" D istributor toinsta ll a Machine and tra in the designa ted peop le It) opera te such M achine, D istributor sha ll p ayManufacturer E I down payment equa l to f if ty p ercen t (50%) of the purchase p rice ofeac h ordered M achinewithin ten (I (l) days of Manufac turer's a ccep ta nc e of any order. 40% upon shipment of M achine andrem it p a yment for the ba la nc e of such p urchase price t o Ma n uf a ct ur er within thirty PO) days a f te r thela ter of (i) the delivery and insta lla tion of such M achine as required above, a nd e i i ) rece ip t by Distributorof a n invoice lor sLIL:hMachines from Manufacturer .-'.06. Maintenauce and Repair. Manufacturer shall provide all maintenance and repair for theM achines. D istributor sha ll pa y the a ctua l. out-of-p ocket costs incurred by M anufa cture r p lus tw entypercent (:!O%). to ma in ta in and repa ir the M achines. un less such m ain tenance a nd rep air is c overed by anywarranty Of indemnity of M anufa c turer set forth here in or 011lilly in form at ion rela ting to [he M ac h incs,4.07. Warranty, 111 addition to a ll other warranties for the M ac hines. M anufac turer w arrants andcovenants that eac h M achlue w ili:

{a ) perform ill a cc orda nc e w ith M an ufa cturer's p ublished, standard sp ec if ic ations (from anda lte r such time as the sta nda rd sp ec ific a tions a rc established for each M achine as se t forth in thisAgreement) :

(b) be free from defec ts in workmanship and ma teria l:(c:) be cap able of producing t he P a ll et s:(d) be of mercuan ta ble qua lity and will be fi t fo r the ordina ry purposes for its usc ; a nd(e)

Distributor.m eet or exc eed the sp cc if ic a t ions and standa rds agreed 10 by Manufa c turer and

In the event of a brea ch of the foregoing. and in addition to any other remedies ava ilable toDi>:tribUlnr. \o1alllli 'aCtllrcr sIm i!' a t it~ sole cost a nd expense , provide rep a irs for sllch M achine or. ifManutill! ' turer i! ) unable to repair . ' iuch Ma chin e to D istrib lllo r'S reasonable satislaClion within lWo (2 )d ay s. th en M a nu fa ctu re r shall re pla ce th e M achine as :mon thcn:ancr I\S l 'casonllbly p ra ctic a ble (w ith ou tn~gnrd to any !'vlach in c orders or backlog).4.08 [mp,uycments. M anufac turer sha ll use its commerc ia lly reasonahle bc~t cfliJrls to imp rove lh~Produc ts througbout the I"erm il l accordance w ith and to l l1ui ll tl li n the Produc ts sta nda rds a t the h i g f u : : ' S Ih:vcl ill the in dus!r),. D istributor sha tl hClvc tile right ttl rcqll~Sl improvements \JI' 11l~)djic mi~)ns to thePa lle ts or M 'lchincs a t a ny time and M anufa c turer sha ll p romp tly make sHch improvemellts or1 I1odi fi ea tkH l~ a s I 'c q u (; :s { ed by Distl'ibutor tUlles::, :sucll unprovcl1l~nts or modifications sha ll viola te anypa tcn ts of other p anic s 1 1 1 ' shalljeop,lrdize the L ic en se d Pa te nts.

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Y ear 1Yea r 2Year 3Year 4Yea r 5

1,120,00010,000,00050.000,00062500.UOO80,000.000

I Jl th e e ve nt th at D is trib uto r fails to meet the minimums se t forth above fo r My year (unless suc h fa ilure isdue to M an ufa cturer's fa ilure to p rovide Mach ine s on a tim ely basis as set forth in this A gre em en t), a ndD i st ri bu to r f a il s to c ure suc h defa ult by se ll ing an addi t ional num ber or Pallets ill th e next succeeding yca rto elim ina te the shortfa ll from the p rior year. M anufac turer, a t its op tion. may require tha t D istributorterm ina te its exc lusive w ith respect to sp ec ific sta tes (selec ted by D istributor) in [he Territory. Suchse le ctio n m ad e by D istributor sha ll be ba sed on the p erc en ta ge tnat Di st ri bu to r m is se s the m in im um s se tforth above. Each sta te a nd country sha lt have a sp ec if ic p erc en ta ge al located to such sta te and country a sset forth a bove , Any additiona l a reas, a dded to the Territory sha ll be incorp ora ted into the chan abovere fle ctin g a r e -v i sed d i st ri bu ti on of va lues p lac ed a ll each area c ompr is in g th e T e rr it or y.As a ll exam ple only. if. in a given yea r (and subjec t to the term s of this Agreem ent). D istributor sellseighty percent (80%) of the m in im um s ill such year (which is not cured in the immediately succeedingyear). then Di st ri bu to r s ha ll select a state or country (01" states and country) tha t m ake up tw enty p ercent(20%) 01' th e overa ll Territory as se t forth in the cha rt a bove and suc h sta te 01 country (or states a ndcountry) shal l be rem oved from the def in ition of the Territory, p rovided tha t a ll other term s of thisA greem ent sha ll a pp ly to such sta te and/or country once it is outside of the T erritory, M ore speci f i cal ly . ifin Yenr 2. Distributor sells only 8,000.000 Pallets. a nd in Y ea r 3. Distributor s ell s 4 0,0 00 .0 00 Pallets.then Distributor's Territory sha ll be reduc ed in a cc ordanc e with th e terms o f this A greem en t by !.3%( l. c. 4 9 .1 20 ,0 00 divided by 60,120 ,000=.817). In the event that t he Terr it or y i s r ed uc e d pursuant to theterms llf th is A gre em en t, th e m in im um s for s ub sequ ent y ea rs will b e re du ce d 011 accordingly.5.04 Royalt ies and Reports. D istrib uto r sh all p ay Manufacturer a r oy a lty of 8% of the Production reefor a ll Pa llets sold by D istributor (collec tively. 'Roya lties" ). Roya lties sha ll be ca lc ula ted on theP ro du ctio n F cc e arn ed by D i st ri bu to r d ur in g each F isc al Q ua rter of this A greem en t. Subject to the term sof th is Agreement. n o la te r th an thirty (30) d ays a th;r the end of e ac h F i\c al Quarter. D ismb utu r v .-Ill remi tth e Roya lties to Manufac turer, a long with a report setting fOl1h the n um ber o r Pulle ts sold and theProduc tion F cc ea rned by D istributor for the Pa llets sold fo r the same period. Notw ithsta nding theforegoing. M anufac turer sha ll not enter in to any agreem ent w ith (i) a ny d istrib uto r th at h an d a ss em b le smore than 500.000 Pallets per ycar. (ii) any p a rty to whom Manufac turer grants a n exc lu si ve territo ry o fany kind for the sa le of Pa llets or the sa le , leasing or p la cement of M achines. and (iii) any p arty tha t isselling, leasing. or p la c ing M achines, the term s of which could p la ce D istributor a t a competitivedisa dvan ta ge w ith a ny such party, T he f ore go in g sentence shal l 110t app ly to a ny tra nsa ctions betw eenMa nu fa ctu re r a nd < 1 1 1 ) ' d ire ct c usto me rs o f Manufacturer,S.05 Manufacturer's Customers. In th e even t tha t (i) Manufacturer gra nts a n> other party a righ t tohc cnsc the L icensed Pa ten ts a nd sell a nd/or place th e P ro du cts outside of the Territory (and Distributorhas failed to exercise its R OF R he reun der), a nd (H ) suc h party ha s c lien ts or c ustom ers for the P allets tha t~)peratc in lhe Territory and are not otherwi~e clients 0 r Distributor, then such party sha ll he en titled tos e ll ~ l ll d/ {) rp la ce P ro du cts lO or w ith suc h c lien ts or C Listom ers f or lise III th e T errito ry a nd Mmmf ac lu re rand Distribulor sha ll sha re equa lly any roya lty, other p aym ent that is ba sed on sa les or any sim ila l'p a~ 1l\\!11t m ethod 1ha t is genera lly c ha ra cterized as a roya lty. m ade by suc h p arty to Manufac tu r e r of anyhind , MHllufacturcr sha ll p rom ptly n otif y D istributor of a ny suc h tmnSW,;lions, Manuf ac tu re r s ha ll d eliv ersllch puyll1cnls to IJistributor a cc ordin g to the p aym e1Jt te rm s p re~ cribe d Lo D istributor in Sec tion 5,04above.

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5.06 Recordkeeping, Inspection and A udit. D istributor sha ll keep a nd m ain ta in rec ords in suff icientdetai l to ena ble Roya lties to be determ ined for tw o e n yea rs follow ing the da te of p aym ent c overed bysuch records. M anufa c ture r sha ll have the right. a t its sole expense , to insp ec t such records a tDistributor 's offices p erta in ing to the sa les of the Products during norm al business hours and verify anyrep orts and p aym ents upon rea sonable notic e to D istributor through a ll auditor designa ted byMunu fn ctu rc r a nd a p pro ve d by D istrib uto r (w hic h a p pro va l s ha ll n ot b e u nre aso na bly w ith he ld ), p ro vid edthat Manufac ture r a nd it s a ud iter ke ep such in fo rm e: ion confidential .5 .07. Address for Payments. D istributor shal l make a ll p aym ents to Manufacturer a t the a ddn ..ss se tforth in Sec tion 16.07 be low or to such Person or a t such other p la ce a s M anufa c turer m ay from tim e totim e d es ig na te by notice 10 D istributor. M anufa c turer sha ll m ake a ll p aym ents to D istributor a t thea ddress set forth in S ec tio n 1 6.0 7 be low or to such Person or a t such other p la c e a s 0 istributor m ay fromtim e to lim e design ate by notice [0 Manufacturer .5.08 Additiona l Territories, I f r equ es te d by D istrib uto r a nd a p pro ve d by Ma nu fa ctu re r in w ritin g,D istributor sha ll ha ve the right to negotia te the sa le or Iic ensc of c xc lusivc territories 01 1 Manufacturer'sbeha lf . The tenus of suc h sa le 01 ' lic en se sh all b e d ete rm in ed by M a nu fa ctu rer in its so le d isc retio n.M a nu fa ctu rer a nd D istrib uto r sh all d eterm ine th e c om pen sa tio n p ay ab le to D istrib uto r from a ny su ch sa le .prior III th e dosing of an) such transaction.SF.CT10N 6. MARKETING AND ADVERTlSlNG.6.01. Distrlbutor's Undertaking. Distributor shall exert c omme rc ia lly r ea so na b le efforts 10 ~I"OIM(Cthe sale of the Produc ts in the Territory and to develop a market demand for the same in th e Terri tory.Di st ri bu to r ~hHII adve rt is e th e Products throughout th e Terri tory in a p pro pria te a dv ertisin g m ed ia and in am anner insuring rea sona ble p ublic ity for the P roduc ts. M anufa cturer sha ll p rovide D istributor, a t no c ost10 DislriOlltol". such sa les m a teria ls w ith resp ec t to the Produc ts a s M anufa c turer genera lly m akesa va ila ble to its distributors, in clu din g te ch nic a l s pe cif ic atio ns, d ra w in gs , a dv ertis em en ts a nd sam ple s. a ndD istrib uto r m ay re pro duc e su ch m ate ria ls a s rea so na bly required. p ro vid ed th at a ll c op yrig ht., tra de ma rkund other p rop erly m arkings a rc rep roduc ed. Such m ateria ls rem ain the p rop erty of M anufa cturer a nd.ex cep t in so fa r a s th ey a re d istrib uted by D istributor in the c ourse of its p erform ance of its d u ties underthis Agreem ent. m ust be p romp tly returned to Manufacturer or destroyed upon the expiration orterm in atio n of th is Agreement M anufa cturer hereby a cknow ledges tha t D istributor intends to c rea te a ndm ain ta in a w eb site for th e P ro du cts a nd Mallufacture hereby I lppruves (h e l l::.C o f ! Ill T ra d em a rk s. L ic c ns edP ate nts a nd o th el' n un -c on fid en tia l in tb rm a tio tl re ga rd in g th e P ro du cts a nd Matlut !l r. :tu rer by Distributor.SF.CTION 7. TRAINING.Section 7.01. Traill'"~ ro r Distributor Personnel. A s soon a f ter the Funding D a le us i~mUlunllywllvcnicllt for the Pa rties, but no la ter than sixty (60) days aneT the Funding D ale . M anufa cturer sha llp rovide 'It it s ! ltd I ity in O rla nd o. F lo rid a. without chHrging ! lny consul ta tion rees to D istribu to r. a tw o (2)cOllligllOll~ day reehn icD l/techn ic a l sa les tra in ing session for up to eight (8) qua lif il.-d p ersonne l ofD i! .1 db ulo r o r ,U1)- ~ }rits c us tom ers re la tin g to th e P ro du cts . I> ro vid cd th at D istrib uto r sh all b e l'e ~p on 5ib leI" r < t i l expenses ftlr its a nd its c ustom ers' p ersnnnel atlellciing. St ich I ra i n ing s~s~ion. Ir requested byD ist fiou tn I', M a n u IReHlrer sh a \ I p r aY id e :t Io (2) con! igllous da y tc c hn ic a lf te c hn i ca l s ale s tr ain i Ilg sessiona s o .; ct! t) rth in th e p re c ed in g ~elltellce n il a n 81lmIH1basis a t a tim e mutu,llIy a cc ep utb lu to D istrib uto r a ndM anufa c turer. From and titter Ihe sec ond (till) year o r th e lerm o f ti ll:' Agreemcn t YlL t il u fa c tu rc r sha llp rovide. a nnua l tw o ( 2) con ti guo ll s d ay le ch nic al/lec hn ic al sa les tra in in g sessio ns a s st!t fb rth ubove a1 atim e m utu ally c on ven ie nt fo r th e P arties.

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Sec tlun 7.02. Additiona l T ra in ing. I f re qu este d in writing by D istribu tor, tra in ing in exc ess of tha idesc ribed in Sec tion 7.01 above o r a ssista nc e ro su pp ort th e in sta lla tio n Of m ain te na nc e of Products a tD istributors custom er's fac ilities, sha ll be p rovided al D istributor's requ est. a t M an ufa ctu rer'sr ea s on a bl e. a c tu a l, out-of-pocket c os ts , p lu s twenty percent (2D%).Sec tion 7.03. A dditiona l Sa le .~ Sup port. If requested in w riting by Distributor. sales sup port of on equa lif ie d M an ufa cture r e mp lo yee w ill be m ade ava ila ble to a cc om pa ny D istributor on ~i.ey ac count"o p po rtu u it i es provided tha t D istrib uto r sha ll be re sp on sible f or a ll rea son able tra ve l a nd livin g exp en se sfix tile e mp loy ee c on duc tin g suc h training session, Consulta tion fees of $25 p er hour from p ort to p orta nd $ r o o p er die m il l tra ve l c osts w ill apply to a ll sales su pp ort re qu irin g tra ve l. S ale s SUppOI1 availablefor conference c a lis w ill a lw ays be made ava i la b le provided w ritten request is m ade in a reasonableam oun t o l'tim e before hand .SECT]ON 8. REPRESENTATIONS AND WARRANTIES OF MANUFACTURER.To i nd uc e D i stri bu to r 10 e nte r in to a nd p erf orm th is A gre em en t. M a nu fa ctu re r re pre se nts a nd ....a rra nts toDistributor m. follows:8.01. Organization, Gued Standillg, Power. Etc . M anufa c turer is a corporation d uly o rg an iz ed .v a l i d l y existing and in good standing under the laws of the sta te of F lorida and 1 1 . 1 $ the full p ow er andauthority to e xe cu te . d el iv er a nd perform t hi s Agr eemen t.8.02. D ue Execution. This Agreement h as b ee n duly e xe cu te d a n d d eli ve re d by Manufac turer and is ale ga l. va lid a nd b in din g ob liga tio n o f M an ufa ctu rer e nforc ea ble a ga in st M an ufa cture r in a cc orda nc e w ithi ts t erms .8 .1)3. No App rova ls or Notices Required: N o C on flic ts W ith In strum en ts. The execution, deliverya nd p erform anc e of th is A greem en t by Ma nu fa ctu re r a nd th e c on summ a tio n by il o r t he t ra ns a c ti onsc on temp la te d h er eb y < l i l t ! th ere by h ave b ee n a uthorize d a nd a pp rov ed by a ll re qu is ite c orp o ra te a c ti on byManufacturer lind will no t (a ) constitu te a v iola tion of a ny p rovision of law or any judgment, decree.order. regula tion or rule of a ny court or other g ov ernm en ta l a uth ority a p plic ab le to M a nu fa ctu re r w hic ha re m ate ria l to the tra nsa ction s c on tem p la ted hereby . (b) requ ire a ny c on ten t. a pp ro va l or a uthoriza tion ot:or declaration. liIing or re gistra tion w ith. a ny P erson or gov ern me nta l or reg ula to ry a uth ority. th e fa ilureof w hich to obta in w ould have a m ateria l adverse effec t upon th e tra nsa ctio ns c on tem pla te d h ere by . (C )result in a default under (w ith or w ithout the giving of notic e or lap se of tim e or both). a c ce lera tion ortermination 0 1 ' . or the creation in any party of the right to accelerate. term ina te. modify or canc el a nya gre em e nt. le ase . n ote o r o th er re stric tio n, e nc um bra nc e. o bh ga tio n o r liability TO w hic h M au uta cturc r is aparty.8.04. Absenc e of Certa in Changes or Events. Excep t a s otherw ise d isc losed il l wr iti ng t o D i st ri bu to rprior 10 the Effcctive OllIe, Manufac turer has Ill)t:

til) w ]..en a ny ac tion or en tered in to Of agreed to en tc r in to any IranSllL.:tinll, a gree men t orC\llmnitmCl1t other Ihan in th e o rd in ary c ou rse o f b usin cs5 a nd c on siste nt w ith p a st p ra ctic e. olher t lmn t hi si\grel!menl: ur

(b ) etl1~red into or agreed to enter in to Hn y l!llnsac tion . a greem ent nr commitm ent, or. toMm mlil( .:tun.:r' ! ) knowk:dgc , suffered th e occurrence of any event or evenls l10t o th erw ise d isc lo se d toDistr ihutnr dllTing due d ilig en ce th at (i) has interfered or could ln terfert! w ith Ihe num ]a l a nd usu< llOpCl11ti l lns o r th e o us in es s (l r (ii) w hich ha s resulted of fI lay I 'C'SUlln D I11lJlerialadverse ctl'e(.:1 on thelin nn cia l c un dilio n. a sse ts. lia bilitie s. e arn in gs. b usin ess o r b usin ess p ro sp ec ts o f Mnnufacturer.

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8.05 . Technology NOIl-lnfrinJ!cment. To the best of M anufa cturer's know ledge, the m aking. ha vingmade. using or selling the subjec t m atter of the Licensed Pa ten ts or Produc ts, does not in fringe a ny ri gh tsof third p a rties inc lud ing, but not lim ited to . the c la im s or a ny exlsting p aten t ow ned by a third p art).M an ufa cturer h as not re ce iv ed a ny notice of a ny kind a lleging a n)' in fringem ent set forth in th e p re ce din gsentence. To the best of Manufacturer's knowledge. no third parties have in frin ged a ny rights ofM an ufa ctu rer w ith resp ec t to a ny of the c la im s of th e Lic en sed P atents.8.06. Patent Validity and E nf orc esb illty , M a nu fa ctu re r has not engaged in any conduct , or omittedto p erform a ny n ec essa ry a ct. th e resu lt o f w hic h c ou ld in va lida te th e L ic ensed P atents. o r a dv ersely affect[heir en forc ea bility. a nd M anufa cturer is not a wa re of My prior a11. fa c ts or other m atters which put in toquestion the validity or the enforceability of the Licensed Patents, There are no other patents or otherrig hts own ed by or lic ensed to M anufa cturer tha t a rc nec essa ry or requ ired fo r th e LlSC and distribution o rthe Produc ts. M anufa c turer ha s a ll rights to the Pa tents and a ll emp loyees or contractors have executeda greem ents nec essa ry to a ssign a ll in tellec tua l p rop erty rights in the Produc ts to M anufa cturer, There (Ireno liens or encumbrances of any kind aga inst any of the M achines or the Licensed Pa tents. D istributoracknowledges that [t is aware of(i) the c la im by M ic hael O lvey regarding a change to the names of theLicensed Patent ho lders a s d esc rib ed by counsel fo r M anu l'a cturer. a nd (ii) th e rights of PK~I\ 10disuibutc the machine a ssembled 582 Pa llet w ithin the United Sla tes from fac ilities other thanMan IIfacturer s fac iIit>"and at t he f a c il it ie s of c us tom er s o f M a n u fa c tu re r.8.07. Taxes, In a 11m ateria l resp ec ts, M anufa c turer ha s timely f ile d w ith th e a pp ro pria te g ov ern me nta lagencies a ll tax returns. information returns a nd rep orts required to ha ve been tiled in connec tion w ith theits b us in es s: Manufacturer has p a id in full or m ade adequa te p rovision for the p ayment o r al l taxes(inc lu ding w ithh old in g o bliga tio ns), interest a nd o th er governmental cha rges which have become duep ursua nt to the op era tion of its business; M anufa cturer is not .1 p arty to a ny a ction or p roc eeding pendingor. to th e best o f its kn ow ledg e, th rea tened by a ny g ov ern me nta l a uth ority fo r a s~ essm !;!n t o r c olle ctio n o ftuxes, no unresolved claim for aSSI:SSmell t o r c olle cti{ l]) of such laxes ha~ been tlsscrled againstMlIl1L1f:1cturcr !Ind. III [ he b r. :~ to f its knowledge. 110 audit or i nve st iga ti on by g ov ern me nla l a uth orltie s isu nd !!!' w ay . ttl I in Cl)l1nectioIl w it h Ma l \t lf a c tl lr er 's o p er a ti on o r its b us in t:ss o r tilt ! rulISi lc t ions descr ibedherein.M.US. L~ga l PIocccdillgS. There a re no claims, a ction s. suits, a rb itm ti ol ls .. p r oc r. :c d il lg s orim l.'sl igal ion!> pending. llr. to the hesl o r Manufacturer 's km)\'w'Ir:dgr:. th re atc ne d a ga in st M a nu fa ctu re r.bdilrC or hy an) ' gl)Vcrnlll CIlta l or nongovernm enta l dep artm ent. c om mission. boa rd. burea u, a genc y orin slrmn en l( lIi Ly . o r a n y o th er Person. a nd there a re no c ontinuing. erJeelivC'. o ll ts ln n di ng o r \ l1 1~a ti sf ie djl1dgmcl1b. mucrs. dc; :cn ;c~or s t ipula t ions 10 whid) M anufa c turc r is a party_ w hic h re la te to t he L i l. :e n scdPalent ....lhe Mat:hincs or Manufacturer's bUSlnC!is. or lhe transadions COIUCnll>laled hcrdn


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8.11. Information Furnished. No i nf o rm a t io n f u rn is he d by Man uf ac tu re r to D is tr ib uto r in connectionw ith this A greem ent or p rior to en tering in to this A greem ent is fa lse or m islea ding in allY ma t er ia l r es p ec t.11 1 c on nec tio n w ith su ch in fo rm atio n. M a nu fa ctu rer h as 110t m ade any untrue sta tem ent of a m ate ria l fa c to r omitte d II I sta te a material fa e! necessa ry in order to make such statements made or in formationdelivered. in the light of t he c i rcums tan ce s under which they w ere m ade. not misleading.SFTION 9. PATENT ENFORCEMENT AND INDEMNITY.9.01. J nfringemcnt In dem nity , M an ufa ctu rer sh all d efe nd , indemn ify, a nd hold Distri butor harmlessf rom arid aga inst any a nd a ll losses. costs, dem ands, dam ages. suits, c la im s, liabilitie s a nd exp enses(in clu din g, w ith ou t lim ita tio n, re aso na ble a ttorneys' fees a nd exp enses). " rising in connection w ith a nyc la im of p atent infringement o r o th er in te llec tu al p rop erty in frin gem ent, o r m isu se o r m isa pp ro pria tio narising I'Wll1. th e lISC o r t he P roduc ts .9,(1I. Paten t Eul'nrcl:mcllt. Manufacturer sh all u se its b est faith efforts 10 mon ito r In lrin ge me nt o f the'L ic en se d P a te nts by others and sha ll p rom ptly c om menc e a nd diligen tly m ain ta in al its o wn ex pen se ,actions. su i ts o r o th er p ro cee din gs n ec essa ry 1 0 slo p others from infringing the Licensed Pa ten ts Anysettlem ents or a wa rds of dam ages received by Ma nu fa ctu re r (le ss M a nu fa c tu re r's a tto rn ey s' Ices andcosts) [IS it result tIl" pursuing infringers shall be p rora ted on the basis of th e sales of Pallets fo r th eimm ed ia te ly p n ...U:'ding 1 2 m on th p eriod in the Terri tory (p lus. any sa les made by D istrib uto r o uts id e th eTerritory) to the sales of Pa l le ts ou ts ide of the Territory (not made by Distributor). and such percentage of[J\C s ettle me nts o r awards sha ll be p aid 10 D istributor, In the even t tha t M anufa cturer fa ils to enforc e it srights in the Licensed Pa ten ts a t any tim e. D istributor sha ll be en titled . a t its op tion and up on w ritten110t ic c to M anu tacturer. to enforce any a nd a ll such rights 01\ b eh alf o f M a nufa ctu rer. M a nu fa ctu rer sh allp rovide D istributor w ith full access to al l relevant books a nd rec ords of Manufacturer and full coopera t ioni n conne c ti

design pallets v. shandon valley transport solutions et. al

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