EXHIBIT 10.3
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SETTLEMENT AGREEMENT AND RELEASE
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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
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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
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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
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(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
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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 th
