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 the date hereof; notwithstanding the foregoing,
this release does not release Plastic Pallet, Greystone Logistics, and Greystone
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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,
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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
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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.
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(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.
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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)
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1607 COMMERCE LIMITED PARTNERSHIP, a
Texas Limited Partnership, by its
General Partner 1607 COMMERCE, LLC, an
Oklahoma Limited Liability Company
/s/ Paul A. Kruger
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BY: Paul A. Kruger, Manager
PLASTIC PALLET PROUDCTION, INC.,
a Texas Corporation
/s/ Warren F. Kruger
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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
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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
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BY: Warren F. Kruger, Authorized manager
or Member of GREYSTONE MANUFACTURING,
L.L.C., an Oklahoma Limited Liability
Company
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