-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Ex2lQNTOvypUXzkSLA9YYP6Z3nvdaNq3UV4h9XF33DMerWhzK1Q9FZ/pUCzzNB18 lbhJ2fTc7r8YIBArsyS7QA== 0001072613-07-000528.txt : 20070227 0001072613-07-000528.hdr.sgml : 20070227 20070227154021 ACCESSION NUMBER: 0001072613-07-000528 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20070207 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Termination of a Material Definitive Agreement ITEM INFORMATION: Completion of Acquisition or Disposition of Assets ITEM INFORMATION: Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant ITEM INFORMATION: Unregistered Sales of Equity Securities ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20070227 DATE AS OF CHANGE: 20070227 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GREYSTONE LOGISTICS, INC. CENTRAL INDEX KEY: 0001088413 STANDARD INDUSTRIAL CLASSIFICATION: SPECIAL INDUSTRY MACHINERY, NEC [3559] IRS NUMBER: 752954680 FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-26331 FILM NUMBER: 07653217 BUSINESS ADDRESS: STREET 1: 1613 EAST 15TH STREET CITY: TULSA STATE: OK ZIP: 74120 BUSINESS PHONE: 918-583-7441 MAIL ADDRESS: STREET 1: 1613 EAST 15TH STREET CITY: TULSA STATE: OK ZIP: 74120 FORMER COMPANY: FORMER CONFORMED NAME: PALWEB CORP DATE OF NAME CHANGE: 19990610 8-K 1 form8-k_14973.txt FORM 8-K DATED FEBRUARY 7, 2007 ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION ------------------------------ WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): FEBRUARY 7, 2007 GREYSTONE LOGISTICS, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) OKLAHOMA 000-26331 75-2954680 (STATE OR OTHER JURISDICTION (COMMISSION FILE NUMBER) (I.R.S. EMPLOYER OF INCORPORATION) IDENTIFICATION NO.) ` 1613 E. 15TH, TULSA, OKLAHOMA 74120 (Address of principal executive offices) (Zip Code) (918) 583-7441 (Registrant's telephone number, including area code) NOT APPLICABLE (Former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ================================================================================ ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT. On February 7, 2007, a subsidiary of the registrant, Greystone Manufacturing, L.L.C., an Oklahoma limited liability company ("Greystone Manufacturing"), entered into that certain Yorktown Management & Financial Services, LLC Molds, Grinder, Ancillary Resin Handling Equipment, Bumper Contract, Raw Materials and Finished Goods Inventory Purchase Agreement and Bill of Sale (the "Purchase Agreement"), with Yorktown Management & Financial Services, LLC, an Oklahoma limited liability company ("Yorktown"), pursuant to which Yorktown purchased from Greystone Manufacturing existing finished goods inventory (including certain Coors Brewing inventory) and certain of the Greystone Manufacturing's raw materials, grinding and peripheral equipment, resin contracts and molds for a total purchase price of $2.2 million. In connection with the Purchase Agreement, on February 8, 2007, the registrant issued a warrant to a third party to purchase up to 250,000 shares of the registrant's common stock at an exercise price of $0.15 per share in consideration of providing certain financing and consulting services, which facilitated the transaction with Yorktown. Also in connection with the Purchase Agreement, Greystone Manufacturing and Yorktown have entered into that certain pallet molds lease agreement dated as of February 7, 2007 (the "Pallet Molds Lease"), whereby for a period of seven years, Yorktown will lease back to Greystone Manufacturing the molds and resin equipment purchase from Greystone Manufacturing at the lease rate of $1.00 per pallet manufactured using the molds and $0.03 per pound of resin provided using the resin equipment. Yorktown is owned by the registrant's Chief Executive Officer, Warren Kruger. The assets sold pursuant to the Purchase Agreement were sold to Yorktown at their fair market value and the transactions described above were approved by the disinterested member of the registrant's Board of Directors. On February 8, 2007, the registrant entered into that certain Settlement Agreement and Release (the "Settlement Agreement"), by and among the registrant, 1607 Commerce Limited Partnership, a Texas limited partnership ("1607"), Plastic Pallet Production, Inc., a Texas corporation and subsidiary of the registrant ("Plastic Pallet"), and Greystone Manufacturing, whereby, for full, final and complete settlement of any and all claims that 1607 has asserted, or could have asserted, in its lawsuit regarding an alleged default in the payment of rent pursuant to terms of the Equipment Lease (defined below) and the enforcement of certain guaranties of such payment of rent entered into by and between the registrant and 1607 and Greystone Manufacturing and 1607, the registrant has agreed to (i) make a one time payment to 1607 of $1,048,000.00, (ii) make monthly payments to 1607 of $24,000.00 for a term of 24 months commencing March 1, 2007, which payments can be used towards the purchase price of pallets purchased from 1607 as further described below, (iii) transfer to 1607 2,000,000 shares of the registrant's common stock, par value $0.0001 per share, and (iv) enter into an agreement with 1607 whereby, among other things, 1607 will be given floor space, utilities and regrind resin in the registrant's Iowa facility and the registrant, Plastic Pallet and Greystone Manufacturing will be required to purchase up to 200,000 Granada pallets at $8.00 per pallet and 200,000 nestable pallets at $3.00 per pallet from 1607 over a two year term. Also pursuant to the Settlement Agreement, the monthly payments to be made by the registrant will be credited against the purchase price of any Granada pallets purchased by 1607; provided, however, 1607 is not obligated to produce any pallets, but has agreed to use it best efforts to do so. The Settlement Agreement also included an immediate termination of that certain equipment lease dated as of September 8, 2003, by and between 1607 and Plastic Pallet (the "Equipment Lease"), whereby the registrant leased, for a term of 130 months commencing September 8, 2003, certain equipment for $48,000.00 per month. The foregoing summary of the Purchase Agreement, Pallet Molds Lease and Settlement Agreement is qualified in its entirety by reference to the full terms and conditions of such agreements, copies of which are filed as Exhibits 10.1, 10.2 and 10.3, respectively, to this Current Report on Form 8-K and are incorporated herein by reference. ITEM 1.02. TERMINATION OF A MATERIAL DEFINITIVE AGREEMENT. The description of the termination of the Equipment Lease set forth under Item 1.01 of this Current Report on Form 8-K is incorporated by reference herein. ITEM 2.01. COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS. The description of the sale of certain assets of the registrant set forth under Item 1.01 of this Current Report on Form 8-K is incorporated by reference herein. ITEM 2.03. CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT. The description of the monthly payment obligations of the registrant pursuant the Settlement Agreement set forth under Item 1.01 of this Current Report on Form 8-K is incorporated by reference herein. ITEM 3.02. UNREGISTERED SALES OF EQUITY SECURITIES. The description of the issuance of the warrant to a third party in connection with the Purchase Agreement set forth under Item 1.01 of this Current Report on Form 8-K is incorporated by reference herein. The description of the issuance of 2,000,000 shares of common stock, par value $0.0001 per share, issued to 1607 pursuant to the Settlement Agreement set forth under Item 1.01 of this Current Report on Form 8-K is incorporated by reference herein. The securities described above were issued pursuant to the exemption from registration under Section 4(2) of the Securities Act of 1933, as amended. The parties described above are either a sophisticated person or entity and there was no underwriting and no commissions paid to any party in connection with the transactions described above. ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS. (c) The following exhibits are furnished herewith: Exhibit No. Description - ----------- ----------- 10.1 Yorktown Management & Financial Services, LLC Molds, Grinder, Ancillary Resin Handling Equipment, Bumper Contract, Raw Materials and Finished Goods Inventory Purchase Agreement and Bill of Sale dated as of February 7, 2007, by and between the registrant and Yorktown. 10.2 Pallet Molds Lease Agreement dated as of February 7, 2007, by and between Greystone Manufacturing and Yorktown. 10.3 Settlement Agreement and Release dated as of February 8, 2007, by and among the registrant, 1607, Plastic Pallet and Greystone Manufacturing. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. GREYSTONE LOGISTICS, INC. Date: February 27, 2007 By: /s/ Warren F. Kruger -------------------------- Warren F. Kruger President and Chief Executive Officer EXHIBIT INDEX ------------- Exhibit No. Description - ----------- ----------- 10.1 Yorktown Management & Financial Services, LLC Molds, Grinder, Ancillary Resin Handling Equipment, Bumper Contract, Raw Materials and Finished Goods Inventory Purchase Agreement and Bill of Sale dated as of February 7, 2007, by and between the registrant and Yorktown. 10.2 Pallet Molds Lease Agreement dated as of February 7, 2007, by and between Greystone Manufacturing and Yorktown. 10.3 Settlement Agreement and Release dated as of February 8, 2007, by and among the registrant, 1607, Plastic Pallet and Greystone Manufacturing. EX-10.1 2 exh10-1_14973.txt PURCHASE AGREEMENT EXHIBIT 10.1 ------------ YORKTOWN MANAGEMENT & FINANCIAL SERVICES, LLC MOLDS, GRINDER, ANCILLARY RESIN HANDLING EQUIPMENT, BUMPER CONTRACT, RAW MATERIALS AND FINISHED GOODS INVENTORY PURCHASE AGREEMENT AND BILL OF SALE This AGREEMENT dated February 7, 2007, (the "Agreement"), is between Greystone Manufacturing LLC, an Oklahoma Limited Liability Company ("Greystone") and Yorktown Management & Financial Services, LLC an Oklahoma Limited Liability Company ("Yorktown"). 1.1 THE PURCHASE. On this Closing Date Yorktown has purchased from GREYSTONE and GREYSTONE has conveyed, transferred, sold and assigned to Yorktown 5 molds, resin handling equipment, grinding and ancillary equipment, Keystone Automotive bumper contract, raw materials and finished goods inventory described in Schedule A to this Agreement ("Purchased Assets"). 1.2 PURCHASE PRICE. The purchase price to be paid by Yorktown to Greystone for the Purchased Assets is $2,200,000.00 payable at Closing. (a) GREYSTONE will deliver to Yorktown good title free of liens and encumbrances. (b) Yorktown will deliver to GREYSTONE good funds in U.S. Dollars. ARTICLE II. REPRESENTATIONS OF GREYSTONE Except as otherwise previously disclosed to Yorktown in writing, GREYSTONE represents to Yorktown as follows: 2.1 ORGANIZATION; ETC. GREYSTONE is a company duly formed, validly existing and in good standing under the laws of the State of Oklahoma. 2.2 AUTHORIZATION; ETC. GREYSTONE has the requisite power and authority to enter into this Agreement and to carry out the transactions contemplated hereby. The management of GREYSTONE has duly authorized the execution and delivery of this Agreement and no further proceedings by GREYSTONE are necessary to authorize this Agreement. F&M Bank and Trust in Tulsa, OK has duly authorized the release of security in any items in this Agreement. These Agreements have been validly executed and delivered by GREYSTONE and are legal, valid and binding agreements of GREYSTONE. 2.3 NO VIOLATION. Neither the execution and delivery of this Agreement, the performance by GREYSTONE of its obligations under this Agreement, nor the consummation of the transactions contemplated by this Agreement will (a) violate any obligation of GREYSTONE; (b) violate or be in conflict with, or constitute a default under, or permit the 1 termination of, or cause the acceleration of the maturity of any debt or other obligation of GREYSTONE. 2.4 GOOD WORKING ORDER. The Purchased Assets are in good working order and GREYSTONE has no knowledge of any defect. ARTICLE III. MICELAENEOUS PROVISIONS 3.1 GOVERNING LAW. This Agreement and the legal relations among the parties shall be governed by and construed in accordance with the laws of the State of Oklahoma. 3.2 COUNTERPARTS. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same agreement. 3.3 HEADINGS. The headings in this Agreement are inserted for convenience only and shall not constitute a part of this Agreement. 3.4 ENTIRE AGREEMENT. This Agreement, including the schedules, lists and other documents referred to in this Agreement which form a part of this Agreement, embody the entire agreement and understanding of the parties in respect of the subject matter contained in this Agreement. There are no restrictions, promises, warranties, covenants or undertakings, other than those set forth or referred to in this Agreement. This Agreement supersedes all prior agreements and understandings between the parties with respect to each subject matter. IN WITNESS WHEREOF, the parties have signed this Agreement on the dates first above written. Greystone Manufacturing LLC Yorktown Management & Financial Services, LLC /s/ Robert Nelson /s/ Warren F. Kruger - ---------------------------- ---------------------------- Robert Nelson, CFO Warren F. Kruger, Manager 2 EX-10.2 3 exh10-2_14973.txt LEASE AGREEMENT EXHIBIT 10.2 ------------ PALLET MOLDS LEASE AGREEMENT This Lease Agreement is made this 7th day of February 2007 (Effective Date), by and between Yorktown Management & Financial Services, LLC, having its principal place of business at 1613 E. 15th Street, Tulsa, OK 74120 ("Lessor"), and Greystone Manufacturing, LLC, 2601 Shoreline Drive Bettendorf, IA 52722 ("Lessee"). In consideration of the mutual agreements herein made and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: 1. LEASE. Lessor agrees to lease to Lessee, and Lessee agrees to lease from Lessor, the equipment set forth in Schedule 1 (the Equipment) hereto at the lease rates and under the terms and conditions hereinafter provided. 2. LEASE PAYMENT. The Lease Payments will be paid monthly as follows: PALLET MOLDS @ $1.00 per pallet manufactured from any one of the five (5) PALLET MOLDS (48x40-three molds, 44x48-one mold, 37x37-one mold) RESIN EQUIPMENT will be leased by Lessee on the basis of Lessor receiving a payment equal to $0.03 per pound of resin provided from the resin regrinding facility. 3. PAYMENT DUE DATE. All Lease Payments shall be due monthly on the 1st day of each month (Payment Date) following the month of production on mold. Lessee shall pay Lessor at Lessor's address or to the followings bank account F&M Bank #304603. If a Payment Date falls on a weekend or holiday, then payment is due on the immediately preceding business day. Lease Payments not received within five (5) days of the Payment Date shall be delinquent and are subject to a late charge equal to 18% per annum. 4. OWNERSHIP OF THE EQUIPMENT. Lessor shall at all times hereunder be the sole owner of the Equipment and this Lease Agreement is for leasing purposes only, and it shall not be construed as a sale or a contract for the sale of the Equipment, and Lessee shall not have or acquire any right, title or interest in or to the Equipment except the right to use it on a day to day week to week basis, as provided for herein. Lessee has an option to purchase the Equipment at the pricing set forth in Schedule 2. 5. CONDITION OF THE EQUIPMENT. The Equipment is being accepted by Lessee for use under this Lease Agreement on an "as is where is" basis and shall be conclusively presumed to be in good repair and working order when mobilized by the Lessee. Upon acceptance, Lessee's obligations to pay all lease amounts when due for the Equipment, and otherwise to perform as required under this Lease Agreement, are unconditional and irrevocable. 6. LIMIT OF LESSOR'S LIABILITY. Lessor shall not be liable for any failure of the Equipment when operated by Lessee, or in performing any provision hereof, for any other cause beyond Lessor's control. Lessee will maintain a worker compensation policy and name Lessor under it's general liability insurance in the amount of not less than $1,000,000.00 per occurrence. In addition Lessee shall indemnify and hold Lessor harmless from any and all claims or losses asserted by Lessee or third parties arising or resulting from Lessee's use of the Equipment. Lessee shall be responsible for keeping molds in working condition and exercise prudent judgment in the servicing, maintenance, and upkeep of molds and is responsible for damage caused by accident or misuse. IN NO EVENT SHALL LESSOR BE LIABLE FOR ANY LOSS OF PROFITS, OTHER CONSEQUENTIAL OR INCIDENTAL DAMAGES OR INCONVENIENCE DUE TO ANY THEFT, CONVERSION, DAMAGE, LOSS, DEFECT OR FAILURE OF THE EQUIPMENT OR THE TIME CONSUMED IN RECOVERING, REPAIRING, SERVICING OR REPLACING THE SAME, AND THERE SHALL BE NO ABATEMENT OR APPORTIONMENT OF LEASE PAYMENTS TO LESSOR DURING SUCH TIME. 7. TERMINATION. This Lease Agreement shall have a term of 7 years and may be terminated only as follows: A. TERMINATION BY LESSOR. Lessor may terminate this Lease Agreement forthwith and without notice if Lessee fails to perform any of the covenants, conditions, provisions or terms hereof. This 1 Lease Agreement shall terminate, at the option of Lessor, upon the occurrence of any of the following events: (i) the appointment of a receiver for any part of the property of Lessee, (ii) assignment for the benefit of creditors by Lessee, (iii) the dissolution or insolvency of Lessee or the entry of an order of relief under any bankruptcy law against Lessee, (iv) Lessee's failure to pay any sums due hereunder within ten (10) days of the due date, (v) Lessee makes a general admission of its inability to pay its debts or obligations as they become due, or (vi) any other default by Lessee hereunder which remains uncured for five (5) days. 8. ACCELERATION. Upon termination of this Lease Agreement, all amounts due or to become due hereunder shall, at the option of Lessor, be immediately due and payable. 9. NO WARRANTY. LESSEE ACCEPTS THE DELIVERY OF THE MOLDS IN AN AS IS WHERE IS CONDITION. 10. VENUE. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the state of Oklahoma. The parties agree that jurisdiction and venue for any matter arising out of or pertaining to this Agreement shall be proper only in the state and federal courts located in Tulsa County, OK and the parties hereby consent to such venue and jurisdiction. 11. ENTIRE AGREEMENT. This Lease Agreement, together with any Schedules and amendments executed herewith constitutes the full, complete, absolute and entire agreement between Lessor and Lessee with respect to the subject matter hereof. There are neither oral agreements nor understandings affecting this instrument, and any further agreement, understanding or waiver to be binding upon the parties hereto, must be in writing, signed by the party against whom such agreement is sought to be enforced. 12. WAIVER. The failure of either party hereto in one or more instances to insist upon the performance of any of the terms or conditions of this Lease Agreement or the failure of either party hereto to exercise any right or privilege by this Lease Agreement, shall not be construed as thereafter waiving any such terms or conditions, rights or privileges, but the same shall continue to remain in full force and effect the same as if no forbearance or waiver had occurred. 13. PARAGRAPH HEADINGS. Paragraph headings are for convenience only, and have no independent meaning. 14. COUNTERPARTS. The parties on separate counterparts, all of which together shall constitute a single lease, may execute this Lease Agreement in any number of counterparts and. 15. MISCELLANEOUS. This Lease Agreement shall not become effective and binding upon the parties hereto until accepted and executed by a duly authorized Officer and/or Director of Lessor and Lessee. Lessor can assign this Lease Agreement to any third party at any time without the consent or approval of Lessee. ACCORDINGLY, the parties hereto have caused this instrument to be duly executed the day and year first above written. LESSOR: LESSEE: YORKTOWN MANAGEMENT AND FINANCIAL GREYSTONE MANUFACTURING, LLC SERVICES, LLC By: /s/ Warren F. Kruger By: /s/ Robert Nelson ------------------------------- --------------------------- 2 EX-10.3 4 exh10-3_14973.txt SETTLEMENT AGREEMENT AND RELEASE EXHIBIT 10.3 ------------ SETTLEMENT AGREEMENT AND RELEASE -------------------------------- This Agreement ("Agreement"), effective as of the 8th of February 2007, is entered by and among 1607 COMMERCE LIMITED PARTNERSHIP, a Texas Limited Partnership (sometimes "Plaintiff" and sometimes "1607"), PLASTIC PALLET PRODUCTION, INC., a Texas Corporation (sometimes "Plastic Pallet"); GREYSTONE LGOISTICS, INC., an Oklahoma Corporation, f/k/a PALWEB CORPORATION (sometimes "Greystone Logistics"), and GREYSTONE MANUFACTURING, L.L.C., an Oklahoma Limited Liability Company (sometimes "Greystone Manufacturing"). Hereinafter, Plastic Pallet, Greystone Logistics and Greystone Manufacturing are sometimes referred to collectively as "Defendants." The purpose of the Agreement is to memorialize an agreement that settles all disputes, claims and lawsuits now existing between the parties. RECITALS -------- The parties have entered into this Agreement under the following circumstances and to affect the following aims and purposes: A. 1607 has filed a lawsuit in the District Court of Cleveland County, State of Oklahoma, Case No. CJ-2006-489W, styled 1607 COMMERCE LIMITED PARTNERSHIP, A TEXAS LIMITED PARTNERSHIP, PLAINTIFF V. PLASTIC PALLET PRODUCTION INC., A TEXAS CORPORATION; GREYSTONE LOGISTICS, INC., AN OKLAHOMA CORPORATION, F/K/A PALWEB CORPORATION, AND GREYSTONE MANUFACTURING, L.L.C., AN OKLAHOMA LIMITED LIABILITY COMPANY, DEFENDANTS (the "Lawsuit"). B. The lawsuit alleges that Plastic Pallet has defaulted in the payment of rent pursuant to the terms of an Equipment Lease dated September 8, 2003 (the "Lease"), and that there is allegedly due and owing Plaintiff the sum of $576,000.00. the Lawsuit also seeks to 1 enforce a certain Guaranty against Greystone Logistics' predecessor, PalWeb Corporation, and Greystone Manufacturing that was executed in conjunction with the transaction and to foreclose a security interest in certain accounts, inventory, equipment and other personal property of the Defendants. C. The Defendants have answered and denied the allegations contained in the Lawsuit. D. In order to resolve the litigation, forego the risks and expenses associated with litigation and buy their peace, the parties have agreed to settle their disputes according to the terms of this Settlement Agreement. IT IS THEREFORE AGREED 1. CONSIDERATION. The parties acknowledge the adequacy of consideration as expressed by the recitations and mutual covenants in this Agreement. 2. GENERAL WARRANTIES. (i) In addition to the specific warranties contained hereinafter, if any, each party warrants (a) that it has been fully informed and has full knowledge of the terms, conditions and effects of this Agreement; (b) that it, either personally or through its independently retained attorneys, has fully investigated to its satisfaction all facts surrounding the various claims, controversies and disputes and is fully satisfied with the terms and effects of this Agreement; (c) that no promise or inducement has been offered or made to it except as expressly stated in this Agreement, and 2 (d) that this Agreement is executed without reliance on any statement or representation by any other party or any other party's agent except as set forth herein. 3. 1607 COMMERCE LIMITED PARTNERSHIP SETTLEMENT AND RELEASE. As a full, final and complete settlement of any and all claims that it has asserted, or could have asserted in the Lawsuit, 1607 agrees to accept the following: (i) a payment of $1,048,000.00 at Closing (as hereinafter defined); (ii) payment of the sum of $24,000.00 per month for a term of twenty-four (24) months commencing March 1, 2007, and on the first day of each month thereafter (the "Monthly Payment"); (iii) the transfer at Closing of two (2) million unregistered common shares of Greystone Logistics Inc. free and clear of all encumbrances and/or restrictions; (iv) a Pallet Supply Agreement ("PSA") under the terms of which Defendants agree to provide floor space, utilities and the regrind resin in their facility in Iowa for the production by 1607 of the Granada pallet and the nestable pallet shall be executed by the parties within thirty (30) days after the execution of this Agreement. The PSA shall further provide: (a) The Defendants will purchase all Granada pallets produced by 1607 during the two (2) year term commencing on the first day of the month following the expiration of sixty (60) days after the complete execution of this Agreement and the PSA; provided, however, the Defendant shall not be required to purchase in excess 3 of 200,000 Granada pallets during the two (2) year term. The purchase price shall be $8.00 per pallet. The Defendants shall be given credit toward the purchase price for all Monthly Payments made; provided, however, this does not obligate 1607 to produce any pallets, it only agrees to use its best efforts to do so. (b) The Defendants will purchase all of the nestable pallets produced by 1607 during the two (2) year term commencing on the date the mold for the nestable pallets is completed, but no earlier than the first day of the month following the expiration of sixty (60) days after the complete execution of this Agreement and the PSA; provided, however, the Defendants shall not be required to purchase in excess of 200,000 nestable pallets during the two 92) year term. The purchase price shall be $3.00 per pallet. (iv) its receipt of a complete and effective release executed in its favor by the Defendants. In consideration of the terms of the above terms of settlement, 1607, on behalf of itself and its assigns does hereby release, discharge and acquit Plastic Pallet, Greystone Logistics (and its predecessor PalWeb Corporation) and Greystone Manufacturing, and each of them, and their agents, representatives and assigns, officers, directors, employees, successors, corporate parents, subsidiaries, affiliated entities, divisions, insurers, members, and their attorneys from any and all causes of actions, claims, or demands that existed prior to the date hereof; notwithstanding the foregoing, this release does not release Plastic Pallet, Greystone Logistics, and Greystone 4 Manufacturing from the obligations and duties of this Agreement, or from their obligations and duties under the PSA. 4. PLASTIC PALLET SETTLEMENT AND RELEASE. As a full, final and complete settlement of any and all claims against Plaintiff that that it has asserted or may have asserted in the Lawsuit, Plastic Pallet agrees to accept the following: (i) its receipt of a complete and effective release executed in its favor by 1607. In consideration of the terms of the above terms of settlement, Plastic Pallet Production, Inc., on behalf of itself and its assigns does hereby release, discharge and acquit 1607 and its agents, representatives and assigns, officers, directors,employees, successors, corporate parents, subsidiaries, affiliated entities, divisions, insurers, members, predecessors and attorneys from any and all causes of actions, claims, or demands that existed prior to the date hereof; notwithstanding the foregoing, this release does not release 1607 from the obligations and duties of this Agreement. 5. GREYSTONE LOGISTICS SETTLEMENT AND RELEASE. As a full, final and complete settlement of any and all claims against Plaintiff that that it has asserted or may have asserted in the Lawsuit, Greystone Logistics agrees to accept the following: (i) its receipt of a complete and effective release executed in its favor by 1607. In consideration of the terms of the above terms of settlement, Greystone Logistics, Inc., on behalf of itself and its predecessor PalWeb Corporation and their assigns does hereby release, discharge and acquit 1607 and its agents, representatives and assigns, officers, directors, 5 employees, successors, corporate parents, subsidiaries, affiliated entities, divisions, insurers, members, predecessors and attorneys from any and all causes of actions, claims, or demands that existed prior to the date hereof; notwithstanding the foregoing, this release does not release 1607 from the obligations and duties of this Agreement. 6. GREYSTONE MANUFACTURING SETTLEMENT AND RELEASE As a full, final and complete settlement of any and all claims against Plaintiff that that it has asserted or may have asserted in the Lawsuit, Greystone Manufacturing agrees to accept the following: (i) its receipt of a complete and effective release executed in its favor by 1607. In consideration of the terms of the above terms of settlement, Greystone Manufacturing L.L.C., on behalf of itself and its assigns does hereby release, discharge and acquit 1607 and its agents, representatives and assigns, officers, directors, employees, successors, corporate parents, subsidiaries, affiliated entities, divisions, insurers, members, predecessors and attorneys from any and all causes of actions, claims, or demands that existed prior to the date hereof; notwithstanding the foregoing, this release does not release 1607 from the obligations and duties of this Agreement. 7. CLOSING. This transaction shall be closed in the offices of F&M Bank on February ____, 2007 (the "Closing"). 8. LEASE AND EQUIPMENT. The Lease is hereby terminated and all equipment included in the Lease (as itemized on Exhibit A hereto and referenced herein as the "Equipment") is hereby tendered to 1607 in its location in Iowa, where 1607 is authorized to use 6 same pursuant to PSA. Defendants warrant that no one claims any interest in the Equipment by or through the Defendants. 9. CONDITION. Prior to the effectiveness of this Agreement, F&M Bank must have consented thereto and agreed to release all security interests in the Equipment and subordination agreement related to loans by F&M Bank to the Defendants. 1607 acknowledges that the Equipment will be secured by its loan from F&M Bank. 10. OTHER RELEASE DOCUMENTS. Upon the execution hereof, each party agrees that it will execute such additional documents necessary to effectuate the dismissal, without prejudice, of the Lawsuit, the release of any and all security interests in the pledged collateral. 11. PSA NEGOTIATION; ARBIGRATION. The parties agree to negotiate the provisions of the PSA in good faith. In the event the parties are unable to agree to the terms of a PSA within thirty (30) days 1607 shall have the option to remove the Equipment from the Defendants' facility in Iowa or submit the issues related to the PSA to three (3) attorneys practicing commercial law in Oklahoma City, Oklahoma, for them to determine a reasonable, commercial resolution to the open issues in the negotiation. Each party shall select one arbitrator and the two (2) arbitrators so selected shall select a third. Costs of the arbitration shall be borne equally. The conclusions reached by the arbitrators shall be final and binding on all parties. 12. POST CLOSING MATTERS. In addition to negotiating the terms of the PSA, the parties post closing hereunder agree to do the following: (i) Defendants will execute and deliver to 1607, or its designee, an assignment of the patents described on Exhibit B hereto, free and clear of all encumbrances. 7 (ii) The parties will inventory the Equipment at the Defendants' plant in Iowa and place a tag or other identifying mark on each item of Equipment to avoid confusion with equipment owned by Defendants. (iii) The Defendants will deliver to 1607 a lien waiver and/or subordination agreement from the owner of the real estate where the plant is located in Iowa, the mortgage lender on that property and all lenders on the personal property of the Defendants acknowledging that they have no interest in the Equipment. The parties agree to satisfy these matters within thirty (30) days after the date of Closing. 13. ATTORNEYS' FEES AND COSTS. Each party agrees to be responsible to pay such party's respective attorneys' fees and costs of Court incurred in connection with the Lawsuit and the preparation and execution of this Agreement. 14. APPLICABLE LAW. This Agreement shall be construed under and in accordance with the laws of the State of Oklahoma. 15. MERGER AND MODIFICATIONS. Except as specified herein, this Agreement supersedes and replaces any prior agreements and understandings of the parties, and contains the entire agreement between the parties, with respect to matters set forth herein. No variation, modification, or changes hereof shall be binding upon any party hereto unless set forth in a document executed by all parties hereto or duly authorized agent or representative thereof. 16. ATTORNEY FEES FOR BREACH. In the event it is necessary to file an action or lawsuit to enforce any provision of this Agreement, including the implied covenant of cooperation, or for damages relating to the Agreement's breach, the prevailing party in such litigation shall be entitled to be awarded a reasonable attorneys' fee. 8 17. FURTHER ASSURANCES. Each party agrees to do all things necessary and to execute such other documents as may be necessary to effectuate the purposes of this Agreement. 18. SIGNATURES. This Agreement may be signed and delivered by facsimile or otherwise, in one or more identical counterparts (or with counterpart signature pages) each of which shall be deemed an original and all of which, taken together, shall constitute a fully executed Agreement and shall be considered a single document. 19. MISCELLANEOUS. It is expressly understood and agreed that the terms of this Settlement Agreement are contractual and not merely recitals. In the event any one or more of the provisions contained herein for any reason shall be held to be invalid or unenforceable in any respect, such invalidity or unenforceability shall not affect any other provision, but this Agreement shall continue as if such invalid or unenforceable provision had never been contained herein. In witness whereof the undersigned have executed this Agreement on this ___ day of February 2007, effective as of the date set forth above. (the remainder of this page is left blank intentionally) 9 1607 COMMERCE LIMITED PARTNERSHIP, a Texas Limited Partnership, by its General Partner 1607 COMMERCE, LLC, an Oklahoma Limited Liability Company /s/ Paul A. Kruger ---------------------------------------- BY: Paul A. Kruger, Manager PLASTIC PALLET PROUDCTION, INC., a Texas Corporation /s/ Warren F. Kruger ---------------------------------------- BY: Warren F. Kruger, Authorized Officer of PLASTIC PALLET PRODUCTION INC., a Texas Corporation GREYSTONE LOGISTICS, INC., an Oklahoma Corporation, f/k/a PALWEB CORPORATION /s/ Warren F. Kruger ---------------------------------------- BY: Warren F. Kruger, Authorized Officer of GREYSTONE LOGISTICS, INC., an Oklahoma Corporation, f/k/a PALWEB COPRORATION GREYSTONE MANUFACTURING, L.L.C., an Oklahoma Limited Liability Company /s/ Warren F. Kruger ---------------------------------------- BY: Warren F. Kruger, Authorized manager or Member of GREYSTONE MANUFACTURING, L.L.C., an Oklahoma Limited Liability Company 10 -----END PRIVACY-ENHANCED MESSAGE-----