UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-QSB

(Mark One)

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED FEBRUARY 28, 2005

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT FOR
THE TRANSITION PERIOD FROM __________ TO __________

Commission file number 000-26331

GREYSTONE LOGISTICS, INC.

(Exact name of small business issuer as specified in its charter)

          OKLAHOMA                                             75-2954680
--------------------------------------------------------------------------------
(State or other jurisdiction of                            (I.R.S. Employer
 incorporation or organization)                           Identification No.)

1613 EAST 15TH STREET, TULSA, OKLAHOMA 74120

(Address of principal executive offices)

(918) 583-7441

(Issuer's telephone number)

PALWEB CORPORATION

(Former name, former address and former fiscal year,
if changed since last report)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: April 8, 2005 - 22,888,344

TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT (CHECK ONE): Yes [ ] No [X]


GREYSTONE LOGISTICS, INC.
FORM 10-QSB
FOR THE PERIOD ENDED FEBRUARY 28, 2005

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS                                                PAGE

            Condensed Consolidated Balance Sheets as of February 28,
            2005 and May 31, 2004                                             1

            Condensed Consolidated Statement of Operations For the
            Nine Month Periods Ended February 28, 2005 and 2004               2

            Condensed Consolidated Statement of Operations For the
            Three Month Periods Ended February 28, 2005 and 2004              3

            Condensed Consolidated Statements of Cash Flows For the
            Nine Month Periods Ended February 28, 2005 and 2004               4

            Notes to Financial Statements                                     5

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION            6

ITEM 3.  CONTROLS AND PROCEDURES                                             12


PART II.  OTHER INFORMATION

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS         13

ITEM 5.  OTHER INFORMATION                                                   13

ITEM 6.  EXHIBITS                                                            14

SIGNATURES                                                                   16


PART 1. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

GREYSTONE LOGISTICS, INC.
Condensed Consolidated Balance Sheets

                                                                 FEBRUARY 28,      MAY 31,
                                                                     2005            2004
                                                                 ------------    ------------
                                              ASSETS
                                              ------
CURRENT ASSETS:
       Cash                                                      $    128,618    $    274,085
       Accounts receivable                                          1,309,855         951,596
       Inventory                                                      916,160         521,376
                                                                 ------------    ------------
            TOTAL CURRENT ASSETS                                    2,354,633       1,747,057

PROPERTY, PLANT AND EQUIPMENT, at cost                              8,248,699       7,330,179
       Less: Accumulated depreciation                              (1,064,815)       (741,151)
                                                                 ------------    ------------
            TOTAL PROPERTY, PLANT AND EQUIPMENT                     7,183,884       6,589,028

OTHER ASSETS:
       Goodwill                                                     6,164,435       6,164,435
       Receivable from related parties                                678,626              --
       Other                                                          532,258         490,441
                                                                 ------------    ------------
            TOTAL OTHER ASSETS                                      7,375,319       6,654,876
                                                                 ------------    ------------
TOTAL ASSETS                                                     $ 16,913,836    $ 14,990,961
                                                                 ============    ============


                              LIABILITIES AND STOCKHOLDERS' EQUITY
                              ------------------------------------
CURRENT LIABILITIES:
       Current portion of long-term debt                         $  4,912,285       1,503,612
       Notes payable to bank                                        1,395,459         899,980
       Notes payable to related parties                               757,372       1,452,687
       Accounts payable and accrued liabilities                     2,249,919       1,578,917
       Preferred dividends payable                                     68,596          60,582
                                                                 ------------    ------------
            TOTAL CURRENT LIABIITIES                                9,383,631       5,495,778

LONG-TERM DEBT, net of current portion                              3,076,656       6,390,499

STOCKHOLDERS' EQUITY:
       Preferred stock, $0.0001 par value, 20,750,000 shares
          authorized, 50,000 shares of Series 2003 outstanding              5               5
       Common stock, $0.0001 par value, 5,000,000,000 shares
          authorized, 22,888,344 and 12,790,451 outstanding,
          respectively                                                  2,289           1,279
       Additional paid-in capital                                  51,798,749      48,265,496
       Deficit                                                    (47,347,494)    (45,162,096)
                                                                 ------------    ------------
            TOTAL STOCKHOLDERS' EQUITY                              4,453,549       3,104,684
                                                                 ------------    ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                       $ 16,913,836    $ 14,990,961
                                                                 ============    ============

The accompany notes are an integral part of this consolidated financial statement.

1

GREYSTONE LOGISTICS, INC.
Condensed Consolidated Statements of Operations

                                                                      NINE MONTHS ENDED
                                                                       FEBRUARY 28/29,
                                                                 ----------------------------
                                                                     2005            2004
                                                                 ------------    ------------
Sales                                                            $  6,588,376    $  4,681,654

COST OF SALES, including depreciation of
$347,746 and $263,932                                               6,552,889       4,292,643
                                                                 ------------    ------------

GROSS PROFIT                                                           35,487         389,011

EXPENSES:
     General and administrative expenses                            1,408,220       1,067,074
                                                                 ------------    ------------

OPERATING LOSS                                                     (1,372,733)       (678,063)

OTHER INCOME (EXPENSE):
     Other income                                                      17,578         131,350
     Interest expense                                                (539,387)       (489,339)
                                                                 ------------    ------------
            TOTAL OTHER INCOME (EXPENSE)                             (521,809)       (357,989)
                                                                 ------------    ------------

NET LOSS                                                           (1,894,542)     (1,036,052)

PREFERRED DIVIDENDS                                                   290,856         566,241
                                                                 ------------    ------------

NET LOSS TO COMMON STOCKHOLDERS                                  $ (2,185,398)   $ (1,602,293)
                                                                 ============    ============

NET LOSS PER COMMON SHARE                                        $      (0.14)   $      (0.15)
                                                                 ============    ============

WEIGHTED AVERAGE SHARES OUTSTANDING                                15,907,000      10,432,000
                                                                 ============    ============

The accompany notes are an integral part of this consolidated financial statement.

2

GREYSTONE LOGISTICS, INC.
Condensed Consolidated Statements of Operations

                                                                      THREE MONTHS ENDED
                                                                        FEBRUARY 28/29,
                                                                 ----------------------------
                                                                     2005            2004
                                                                 ------------    ------------
Sales                                                            $  2,479,559    $  2,390,720

COST OF SALES, including depreciation of
$121,453 and $116,204                                               2,328,256       2,033,953
                                                                 ------------    ------------

GROSS PROFIT                                                          151,303         356,767

EXPENSES:
     General and administrative expenses                              595,445         453,613
                                                                 ------------    ------------

OPERATING LOSS                                                       (444,142)        (96,846)

OTHER INCOME (EXPENSE):
     Other income                                                         157         112,717
     Interest expense                                                (170,895)       (154,881)
                                                                 ------------    ------------
            TOTAL OTHER INCOME (EXPENSE)                             (170,738)        (42,164)
                                                                 ------------    ------------

NET LOSS                                                             (614,880)       (139,010)

PREFERRED DIVIDENDS                                                   102,568          90,625
                                                                 ------------    ------------

NET LOSS TO COMMON STOCKHOLDERS                                  $   (717,448)   $   (229,635)
                                                                 ============    ============

NET LOSS PER COMMON SHARE                                        $      (0.03)   $      (0.02)
                                                                 ============    ============

WEIGHTED AVERAGE SHARES OUTSTANDING                                22,244,000      12,790,000
                                                                 ============    ============

The accompany notes are an integral part of this consolidated financial statement.

3

GREYSTONE LOGISTICS, INC.
Condensed Consolidated Statements of Cash Flows

                                                                  NINE MONTHS ENDED
                                                                    FEBRUARY 28/29,
                                                             ----------------------------
                                                                 2005            2004
                                                             ------------    ------------
Cash Flows from Operating Activities
            NET CASH USED IN OPERATIONS                      $ (2,249,099)   $ (1,891,136)

CASH FLOWS FROM INVESTING ACTIVITIES
     Purchase of property and equipment                          (173,045)       (212,749)
     Acquisition of the assets of Greystone Plastics, Inc.             --      (3,700,676)
     Other                                                             --          (1,300)
                                                             ------------    ------------
            NET CASH USED IN INVESTING ACTIVITIES                (173,045)     (3,914,725)

CASH FLOWS FROM FINANCING ACTIVITIES
     Proceeds from borrowings                                   1,670,479       1,394,078
     Payments on debt                                            (952,946)       (451,774)
     Preferred dividends                                         (290,856)             --
     Proceeds from issuande of preferred and common stock       1,850,000       5,000,000
                                                             ------------    ------------
            NET CASH PROVIDED BY FINANCING ACTIVITIES           2,276,677       5,942,304
                                                             ------------    ------------

NET INCREASE (DECREASE) IN CASH                                  (145,467)        136,443
CASH, BEGINNNING OF PERIOD                                        274,085           6,209
                                                             ------------    ------------

CASH, END OF PERIOD                                          $    128,618    $    142,652
                                                             ============    ============

NONCASH ACTIVITIES:
     Issuance of common stock for accounts payable,
       advances and debt                                     $  1,684,263    $    900,000
     Issuance of common stock in lieu of cash payment of
       preferred dividends                                             --         396,987
     Sale of equipment in exchange for debt                       259,000       7,060,698
     Debt issued in exchange for equipment                      1,025,475              --
     Debt issued in exchange for acquisition of assets of
       Greystone Plastics, Inc.                                        --       8,299,454

SUPPLEMENTAL INFORMATION:
     Interest paid                                                482,020         378,502

The accompanying notes are an integral part of this consolidated financial statement.

4

GREYSTONE LOGISTICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. In the opinion of the Company, the accompanying unaudited consolidated financial statements contain all adjustments and reclassifications, which are of a normal recurring nature, necessary to present fairly its financial position as of February 28, 2005, and the results of its operations for the nine month periods and three month periods ended February 28/29, 2005 and 2004 and its cash flows for the nine month periods ended February 28/29, 2005 and 2004. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements as of and for the year ended May 31, 2004 and the notes thereto included in the Company's Form 10-KSB. The financial statements have been prepared assuming that Greystone will continue as a going concern. The working capital deficit of approximately $7,029,000 at February 28, 2005, reflects the uncertain financial condition of Greystone and its inability to obtain long term financing until it is able to attain profitable operations.

2. The results of operations for the nine month periods and three month periods ended February 28/29, 2005 and 2004 are not necessarily indicative of the results to be expected for the full year.

3. The computation of loss per share is computed by dividing the loss available to common shareholders by the weighted average shares outstanding for the periods. Loss available to common shareholders is determined by adding preferred dividends for the periods to the net loss. For the nine month periods ended February 28, 2005 and February 29, 2004, the weighted average common shares outstanding are 15,907,000 and 10,432,000. For the three month periods ended February 28, 2005 and February 29, 2004, the weighted average common shares outstanding are 22,244,000 and 12,790,000. Convertible preferred stock and warrants are not considered as their effect is antidilutive.

4. On January 3, 2005, Greystone Manufacturing, LLC ("GSM"), entered into a letter agreement with Greystone Plastics, Inc. ("Greystone Plastics"), pursuant to which GSM agreed to pay, on or before March 8, 2005, all amounts owed by it under and pursuant to that certain Senior Secured Promissory Note dated September 3, 2003, issued by GSM to Greystone Plastics in the principal amount of $5,000,000 (the "Secured Note") and that certain Wraparound Promissory Note dated September 3, 2003, issued by GSM to Bill Hamilton in the principal amount of $799,454 (the "Wraparound Note"). The total amount of principal and interest owed by GSM under the Secured Note and the Wraparound Note is approximately $4,648,000 as of February 28, 2005.

5. Effective October 31, 2004, NYOK, a general partnership owned by Marshall Cogan, Non-Executive Chairman, and Warren Kruger, President and CEO, purchased certain grinding equipment from Greystone Manufacturing, LLC, at its net book value of $259,000 which approximates market in exchange for the cancellation of a like amount of indebtedness of Greystone to Bill Hamilton, Vice President of Greystone. NYOK used the equipment as a trade-

5

in to acquire another grinder with greater capacity which it then leased to Greystone Manufacturing, LLC, at the rate of $0.06 per processed pound of plastic material.

6. As of February 28, 2005, Greystone sold 10,097,893 shares of common stock plus warrants to purchase an additional 1,359,096 shares of common stock (533,476 shares at $0.6625 per share; 444,564 at $0.795 per share; and 381,056 at $0.927 per share) for a total of $3,534,263. The sale included 5,285,712 shares of common stock for cash of $1,850,000, 2,642,857 shares of common stock in exchange for advances of $925,000, 67,883 shares in exchange for cancellation of accounts payable of $23,759, 1,473,347 shares of common stock to Warren Kruger, CEO, in exchange for cancellation of debt and accrued interest of $515,671, and 628,094 shares of common stock to Robert Rosene, a director of Greystone, in exchange for cancellation of debt and accrued interest of $219,833.

7. Effective March 4, 2005, Greystone entered into a loan agreement with The F&M Bank and Trust Company for a $5,500,000 loan secured by a majority of the equipment of GSM. The loan is a three year loan at the prime rate of interest plus 2 percentage points, due March 15, 2008, and is guaranteed by Messrs. Marshall Cogan, Robert Nelson, Robert Rosene and Warren Kruger, all officers and/or directors of Greystone. The loan proceeds were used in part to meet the note maturity requirements discussed above in Note 4.

ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

RESULTS OF OPERATIONS

GENERAL TO ALL PERIODS

Effective as of March 18, 2005, the registrant caused its name to be changed from PalWeb Corporation to Greystone Logistics, Inc., in connection with the merger of a wholly-owned subsidiary of the registrant with and into itself.

The consolidated statements include Greystone Logistics, Inc., or Greystone, and its wholly-owned subsidiaries, Greystone Manufacturing, LLC, or GSM, and Plastic Pallet Production, Inc., or PPP.

Greystone has incurred significant losses from operations, and there is no assurance that it will achieve profitability or obtain funds necessary to finance its operations.

References to fiscal year 2005 refer to the nine and three month periods ended February 28, 2005. References to fiscal year 2004 refer to the nine and three month periods ended February 29, 2004.

SALES

Greystone's primary business is the manufacturing and selling of plastic pallets through

6

its wholly owned subsidiaries, GSM and PPP. GSM was formed as a subsidiary of Greystone for the purpose of acquiring substantially all the assets and operations of Greystone Plastics, Inc., or Greystone Plastics, effective as of September 8, 2003. GSM manufactures pallets for the beverage industry, operates at full capacity and sells its product to one customer. Greystone distributes its pallets through the combination of a network of independent contractor distributors and sales by Greystone's officers and employees.

Greystone also markets its own design of injection molding machine, the PIPER 600, through a licensing agreement with ForcePro, LLC, which gives ForcePro the exclusive right to market and sell the PIPER 600. Pursuant to the terms of the licensing agreement, Greystone will receive a royalty of 5% of the gross proceeds from sales of the PIPER 600. In March, 2005, Greystone received its first royalty in the amount of $100,000 from the sale of a PIPER 600 by Force Pro.

PERSONNEL

Greystone has approximately 62 full-time employees as of February 28, 2005 compared to 58 full-time employees as of February 29, 2004.

TAXES

For all years presented, Greystone's effective tax rate is 0%. Greystone has generated net operating losses since inception, which would normally reflect a tax benefit in the statement of operations and a deferred asset on the balance sheet. However, because of the current uncertainty as to Greystone's ability to achieve profitability, a valuation reserve has been established that offsets the amount of any tax benefit available for each period presented in the consolidated statement of operations.

NINE MONTH PERIOD ENDED FEBRUARY 28, 2005, COMPARED TO NINE MONTH PERIOD ENDED
FEBRUARY 29, 2004

Sales for fiscal year 2005 are $6,588,376 compared to $4,681,654 in fiscal year 2004. The increase of $1,906,722 is primarily attributable to the acquisition of the assets of Greystone Plastics effective as of September 8, 2003. Greystone currently utilizes a total of six production lines to produce its plastic pallets, of which one of two production lines is being partially utilized by PPP and four are fully utilized by GSM (of which the fourth began production in November 2004). An additional production line is expected to commence operation in July 2005, which will be utilized by GSM and which Greystone expects will operate at approximately full capacity.

Cost of sales in fiscal year 2005 was $6,552,889, or 99% of sales, compared to $4,292,643, or 92% of sales, in fiscal year 2004. Increased material cost is the primary cause of the increase in cost of sales. Greystone has revised its pricing structure to compensate for the higher cost of materials.

7

General and administrative expenses increased $341,146 from $1,067,074 in fiscal year 2004 to $1,408,220 in fiscal year 2005. The increase is primarily attributable to an increase in payroll costs. During the first quarter of fiscal year 2004, Greystone's administrative payroll costs were abnormally low, approximately $62,000. The acquisition of the assets of Greystone Plastics, Inc., effective September 8, 2003, had a major effect on Greystone's need for additional time from Greystone's President and Chief Executive Officer and additional management personnel. As such, Greystone began paying a salary to Warren Kruger, Greystone's President and Chief Executive Officer, effective August 23, 2003, and added Marshall Cogan as Non-Executive Chairman of the Board of Directors effective July 19, 2004, and Robert Nelson as Chief Financial Officer effective October 1, 2004.

Interest expense increased $50,048 from $489,339 in fiscal year 2004 to $539,387 in fiscal year 2005.

The net loss increased $858,490 from $(1,036,052) in fiscal year 2004 to $(1,894,542) in fiscal year 2005 for the reasons discussed above.

Preferred dividends decreased $275,385 from $566,241 in fiscal year 2004 to $290,856 in fiscal year 2005. This is primarily attributable to a decrease in dividends payable by Greystone related to the conversion of all $7,500,000 of Greystone's Series 2001 Preferred Stock, which paid dividends at the rate of 12% per annum, into common stock effective September 8, 2003, offset by interest payable on $5,000,000 of Greystone's Series 2003 Preferred Stock, which was issued as of September 8, 2003 and has a dividend rate equal to the prime rate of interest plus 3.25%.

After deducting preferred dividends, the net loss available to common shareholders is $(2,185,398), or $(0.14) per share, in fiscal year 2005 compared to $(1,602,293), or $(0.15)
per share, in fiscal year 2004 for an increase of $583,105.

THREE MONTH PERIOD ENDED FEBRUARY 28, 2005, COMPARED TO THREE MONTH PERIOD ENDED
FEBRUARY 29, 2004

Sales for fiscal year 2005 are $2,479,559 compared to $2,390,720 in fiscal year 2004, for a increase of $88,839. The increase is primarily attributable to the addition of the fourth GSM production line during the quarter.

Cost of sales in fiscal year 2005 are $2,328,256, or 94% of sales, compared to $2,033,953 or 85% of sales, in fiscal year 2004. Increased material costs are the primary cause of the increase in cost of sales. Greystone has revised its pricing structure to compensate for the higher cost of materials.

General and administrative expenses increased $141,832 from $453,613 in fiscal year 2004 to $595,445 in fiscal year 2005. The increase is due to additional payroll as discussed in

8

the above section, "Nine Month Period Ended February 28, 2005, Compared to Nine Month Period Ended February 29, 2004" plus costs associated with management's effort to raise capital funding.

Interest expense increased $16,014 from $154,881 in fiscal year 2004 to $170,895 in fiscal year 2005.

The net loss increased $475,870 from $(139,010) in fiscal year 2004 to $(614,880) in fiscal year 2005 for the reasons discussed above.

Preferred dividends increased $11,943 from $90,625 in fiscal year 2004 to $102,568 in fiscal year 2005. The dividend rate on the Series 2003 preferred stock is the prime rate of interest plus 3.25%. The increase in the prime rate of interest is the basis for the increase.

After deducting preferred dividends, the net loss available to common shareholders is $(717,448), or $(0.03) per share, in fiscal year 2005 compared to $(229,635), or $(0.02)
per share, in fiscal year 2004 for an increase of $487,813.

LIQUIDITY AND CAPITAL RESOURCES

GENERAL

Greystone's cash requirements for operating activities consist principally of accounts receivable, inventory, accounts payable, operating leases and scheduled payments of interest on outstanding indebtedness. Greystone is currently dependent on outside sources of cash to fund its operations. As of February 28, 2005, revenues from sales remain insufficient to meet current liabilities.

A summary of cash flows for the nine months ended February 28, 2005 is as follows:

Cash used in operating activities             $(2,249,099)

Cash used in investing activities                (173,045)

Cash provided by financing activities           2,276,677

The cash provided by financing activities included proceeds from the sale of 5,285,712 shares of common stock in the amount of $1,850,000. In addition to the cash provided by financing activities, Greystone issued 4,812,181 shares of common stock for a total value of $1,684,263 in exchange for the cancellation of a like amount of accounts payable, advances payable and notes payable.

9

The contractual obligations of Greystone are as follows:

                                   LESS THAN                                   OVER
                       TOTAL         1 YEAR      1-3 YEARS     4-5 YEARS      5 YEARS
                       -----         ------      ---------     ---------      -------
Long-term debt     $ 7,988,941    $4,912,285    $1,415,582    $  383,336    $1,277,738
Operating leases     5,614,500       814,500     1,728,000     1,152,000     1,920,000
                   -----------    ----------    ----------    ----------    ----------
Total              $13,603,441    $5,726,785    $3,143,582    $1,535,336    $3,197,738
                   ===========    ==========    ==========    ==========    ==========

Greystone anticipates that the cash necessary for funding its operating activities will continue to decline based on projected increases in sales activity for the remainder of fiscal year 2005. To provide for the additional cash to meet Greystone's operating activities and contractual obligations for fiscal 2005, Greystone is exploring various options including long-term debt and equity financing. However, there is no guarantee that Greystone will be able to raise sufficient capital to meet these obligations.

Greystone has accumulated a working capital deficit of approximately $7,029,000 at February 28, 2005, which includes approximately $7,065,000 of notes payable and current portion of long-term debt and $2,318,000 in accounts payable and accrued liabilities. As discussed below under the heading "Acceleration of Long Term Debt," the notes payable include approximately $4,501,000 of principal on two notes due March 8, 2005. The working capital deficit reflects the uncertain financial condition of Greystone resulting from its inability to obtain long term financing until such time as it is able to achieve profitability. There is no assurance that Greystone will secure such financing.

Greystone has had difficulty in obtaining financing from traditional financing sources. Substantially all of the financing that Greystone has received through February 28, 2005, has been provided by loans from entities controlled by Mr. Paul Kruger, a significant shareholder, entities affiliated with Warren Kruger, President and Chief Executive Officer of Greystone, through the offering of preferred stock to essentially the same persons and advances from individual investors principally through contacts of Warren Kruger. Greystone has traditionally been reliant on funds provided by Warren Kruger and its board of directors through loans or the purchase of equity securities. There is no assurance that Warren Kruger will continue to provide loans or loan guarantees or purchase of equity securities of Greystone in the future.

ACCELERATION OF LONG TERM DEBT

As previously reported under in Part II, Item 5 of Greystone's Quarterly Report on Form 10-QSB for the period ended November 30, 2004, on December 23, 2004, GSM received a notice of default from Greystone Plastics relating to a note issued by GSM. In the notice, GSM was informed by Greystone Plastics that, among other things, unless GSM paid all amounts owed by GSM under two notes issued by it, Greystone Plastics would exercise its rights under the security agreement between GSM and Greystone Plastics relating to one of the notes. In accordance with an agreement between GSM and Greystone Plastics, effective March 8, 2005, GSM paid Greystone Plastics $4,648,413 to retire the two notes. The payment was made from the proceeds

10

of a loan made to Greystone by The F&M Bank and Trust Company as described below under the heading "Loan Agreement" below.

SALE OF GREYSTONE COMMON STOCK

As of February 28, 2005, Greystone sold 10,097,893 shares of common stock plus warrants to purchase an additional 1,359,096 shares of common stock (533,476 shares at $0.6625 per share; 444,564 at $0795 per share; and 381,056 at $0.927 per share) for a total of $3,534,263. The sale included 5,285,712 shares of common stock for cash of $1,850,000, 2,642,857 shares of common stock in exchange for the cancellation of advances to Greystone of $925,000, 67,883 shares in exchange for the cancellation of Greystone's accounts payable of $23,759, 1,473,347 shares of common stock to Warren Kruger, CEO, in exchange for the cancellation of debt and accrued interest of $515,671 owed to Mr. Kruger by Greystone, and 628,094 shares of common stock to Robert Rosene, a director of Greystone, in exchange for the cancellation of debt and accrued interest of $219,833 owed to Mr. Rosene by Greystone.

LOAN AGREEMENT

On March 4, 2005, Greystone and GSM entered into a loan agreement with The F&M Bank & Trust Company, which, among other things, set forth certain terms applicable to a $1,500,000 revolving loan extended by F&M to GSM on or about December 18, 2004, or the revolving loan, and a new $5,500,000 term loan extended by F&M to GSM on March 4, 2005, or the term loan.

Amounts borrowed under the revolving loan are represented by a promissory note, which bears interest at the prime rate plus 1%. As of March 9, 2005, GSM had borrowed approximately $1,395,000 under the revolving note and such funds have generally been used for working capital purposes. Amounts borrowed under the term loan are represented by a promissory note, which bears interest at the prime rate plus 2%. Substantially all of the proceeds from the term loan have been used to refinance certain short-term debt of GSM, including the repayment of the notes described under "Acceleration of Long Term Debt" above.

GSM's obligations under the loan agreement are secured by a lien in favor of F&M on substantially all of GSM's assets pursuant to the terms of a security agreement and second mortgage. Also, pursuant to the terms of a guaranty agreement, Greystone has absolutely and unconditionally guaranteed GSM's performance and payment under the notes. In addition, in order to induce F&M to enter into the loan agreement, certain officers and directors of the Company (Messrs. Cogan, Kruger, Rosene and Nelson) entered into a limited guaranty agreement with F&M and Mr. Rosene entered into a pledge agreement with F&M. For more information regarding the loan agreement, revolving note, term note, security agreement, second mortgage, guaranty agreement, limited guaranty agreement and the pledge agreement, see Greystone's Current Report on Form 8-K, which was filed with the SEC on March 10, 2005.

11

FORWARD LOOKING STATEMENTS AND MATERIAL RISKS

This Quarterly Report on Form 10-QSB includes certain statements that may be deemed "forward-looking statements" within the meaning of federal securities laws. All statements, other than statements of historical facts, that address activities, events or developments that Greystone expects, believes or anticipates will or may occur in the future, including decreased costs, the profitability of Greystone, potential sales of pallets or other possible business developments, are forward-looking statements. Such statements are subject to a number of assumptions, risks and uncertainties. The forward-looking statements contained in the Quarterly Report on Form 10-QSB could be affected by any of the following factors: Greystone's prospects could be affected by changes in availability of raw materials, competition, rapid technological change and new legislation regarding environmental matters; Greystone may not be able to secure additional financing necessary to sustain and grow its operations; and a material portion of Greystone's business is and will be dependent upon a few large customers and there is no assurance that Greystone will be able to retain such customers. These risks and other risks that could affect Greystone's business are more fully described in Greystone's Form 10-KSB for the fiscal year ended May 31, 2004, which was filed on August 30, 2004. Actual results may vary materially from the forward-looking statements. Greystone undertakes no duty to update any of the forward-looking statements contained in this Quarterly Report on Form 10-QSB.

ITEM 3. CONTROLS AND PROCEDURES

As of the end of the period covered by this Current Report on Form 10-QSB, Greystone carried out an evaluation under the supervision of Greystone's Chief Executive Officer and Chief Financial Officer of the effectiveness of the design and operation of Greystone's disclosure controls and procedures pursuant to the Securities Exchange Act Rules 13a-15(e) and 15d-15(e). Based on this evaluation, Greystone's Chief Executive Officer and Chief Financial Officer believed that the disclosure controls and procedures as of the end of the period covered by this Current Report on Form 10-QSB were ineffective. Greystone has recently failed to timely file several Current Reports on Form 8-K and, as such, in the opinion of Greystone's Chief Executive Officer and Chief Financial Officer, there are material weaknesses in Greystone's disclosure controls and procedures.

In an effort to address the material weaknesses in Greystone's disclosure controls and procedures, Greystone has taken the following actions:

o caused its outside legal counsel provide Greystone's officers and directors with a summary of the new Form 8-K requirements and other reporting requirements and responsibilities applicable to public companies;

o designated Greystone's Chief Financial Officer as the representative of Greystone responsible for coordinating with Greystone's outside legal counsel in connection with determining if any developments relating to Greystone require a filing with the SEC; and

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o implemented new accounting software and hired additional accounting and operational employees in an effort to relieve some of the current burdens of Greystone's Chief Financial Officer, which will allow him to focus more time Greystone's design and operation of its disclosure controls and procedures.

During the quarter ended February 28, 2005, there was no change in Greystone's internal controls over financial reporting that has materially affected, or that is reasonably likely to materially affect, Greystone's internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

For information relating to sales of unregistered securities during the period covered by Quarterly Report on Form 10-QSB, see "Sales of Unregistered Securities to Accredited Investors in January and February of 2005" under Part II, Item 5 of this Quarterly Report on Form 10-QSB.

ITEM 5. OTHER INFORMATION

SALES OF UNREGISTERED SECURITIES TO ACCREDITED INVESTORS IN JANUARY AND FEBRUARY OF 2005

In January and February 2005, Greystone privately placed with certain accredited investors 1,142,856 shares of its common stock, par value $0.0001 per share ("Common Stock"), and warrants to purchase an additional 153,821 shares of Common Stock (the "Warrants"). The aggregate sales price was $400,000, all of which was paid in cash. Pursuant to the terms of the securities purchase agreements entered into with the accredited investors, Greystone agreed to cause a registration statement relating to the Common Stock and the common stock underlying the Warrants to be filed with the SEC. The Warrants are immediately exercisable at exercise prices of $0.6625, $0.795 and $0.9275 per share for 60,378, 50,315 and 43,128 shares, respectively, and contain anti-dilution protection in certain events. The private placement is a continuation of the private placement described under Part II, Item 5 of Greystone's Quarterly Form 10-QSB for the period ended November 30, 2004.

The offer and sale of the shares of the Common Stock and Warrants was not registered under the Securities Act of 1933, as amended, in reliance upon the exemption from the registration requirements of that act provided by
Section 4(2) thereof and Regulation D promulgated by the Securities and Exchange Commission thereunder. Each of the investors in the private placement is a sophisticated accredited investor with the experience and expertise to evaluate the merits and risks of an investment in the Common Stock and Warrants and the financial means to bear the risks of such an investment, and was provided access to all of the material information regarding Greystone that such investor would have received if the offer and sale of the securities had been registered.

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AGREEMENTS WITH NYOK

Effective as of October 31, 2004, NYOK Partners, a general partnership owned by Marshall Cogan, Non-Executive Chairman, and Warren Kruger, President and CEO, purchased certain grinding equipment from GSM, at its net book value of $259,000, which approximates the market value of such equipment, in exchange for the cancellation of a like amount of indebtedness of Greystone to Bill Hamilton, Vice President of Greystone. NYOK used the equipment as a trade-in to acquire a grinder with greater capacity. Effective as of November 1, 2004, NYOK entered into an equipment rental contract with GSM, pursuant which NYOK has agreed to lease the grinding equipment to GSM for a period of one year at the rate of $0.06 per pound of plastic material processed utilizing the equipment.

Effective as of November 1, 2004, NYOK entered into an equipment rental contract with GSM to lease a Cincinnati Milacron Plastics Injection Molding Machine for a five-year term at the rate of $21,136 per month. At the end of such five-year term, GSM has the right to purchase the machine from NYOK for $100,000. The lease is reflected on the financial statements of Greystone as a capitalized lease.

AGREEMENT WITH GREYSTONE PROPERTIES, LLC

Effective as of July 1, 2004, Greystone Properties, LLC, a limited liability company owned by Robert B. Rosene, Jr., a director of Greystone, and Warren Kruger, President and CEO, entered into an industrial lease with GSM, pursuant to which Greystone Properties has agreed to lease a building containing 60,000 square feet of space to GSM for ten years in exchange for lease payments of $25,000 per month beginning November 30, 2004. Greystone paid to Greystone Properties, LLC, rent of $20,000 per month for the period from August 1, 2004 to October 31, 2004. The industrial building is located adjacent to Greystone's plant in Bettendorf, Iowa.

ITEM 6. EXHIBITS

10.1 Industrial Lease dated as of July 1, 2004, by and between Greystone Properties, LLC, and Greystone Manufacturing, L.L.C. (submitted herewith).

10.2 Equipment Rental Contract dated as of November 1, 2004, by and between NYOK Partners and Greystone Manufacturing, L.L.C. relating to certain grinding equipment (submitted herewith).

10.3 Equipment Rental Contract dated as of November 1, 2004, by and between NYOK Partners and Greystone Manufacturing, L.L.C. relating to plastic injection molding machine (submitted herewith).

11.1 Computation of Loss per Share is in Note 3 in the Notes to the financial statements.

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31.1 Certification of Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended, and Item 601(b)(31) of Regulation S-B, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (submitted herewith).

31.2 Certification of Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended, and Item 601(b)(31) of Regulation S-B, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (submitted herewith).

32.1 Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (submitted herewith).

32.2 Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (submitted herewith).

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SIGNATURE

In accordance with the requirements of the Exchange Act, the registrant caused this report to be singed on its behalf by the undersigned, thereunto duly authorized.

GREYSTONE LOGISTICS, INC.
(Registrant)

Date: April 20, 2005                             /s/ Robert H. Nelson
                                                 ----------------------------
                                                 Chief Financial Officer

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EXHIBIT 10.1

INDUSTRIAL LEASE

RIVERSIDE INDUSTRIAL PARK I

1. LEASED PREMISES, BUILDING, PROPERTY, COMMON AREAS, AND TERM. This Lease Agreement is made and entered into by and between GREYSTONE PROPERTIES, LLC an OKLAHOMA Corporation ("Landlord") and GREYSTONE MANUFACTURING, LLC an OKLAHOMA Corporation ("Tenant"). The Landlord does hereby demise and lease unto the Tenant approximately 60,000 square feet of space which is the property known as RIVERSIDE INDUSTRIAL PARK, said space which is located at 2600 SHORELINE DRIVE, BETTENDORF, IOWA (hereinafter referred to as the "Leased Premises"). The building in which the Leased Premises is situated (hereinafter referred to as the "Building") comprises a portion of the property that is legally described in the attached Exhibit A ("Property"). In addition to the Building and the land upon which the Building is situated, the Property also includes parking areas, loading areas and roadways ("Common Areas"). The Term of this Lease shall be for a period of TEN (10) YEARS, commencing on JULY 1, 2004 OR UPON CLOSING OF THE SALE OF THE PROPERTY, excepting delays due to strikes, acts of God, failure in delivery of materials and events beyond Landlord's control, and ending 120 MONTHS LATER, unless said Term shall be terminated sooner as hereinafter provided.

2. BASE RENT AND SECURITY DEPOSIT.

(a) In consideration of said Lease, the Tenant, without prior notice or demand, agrees to pay to the Landlord on a monthly basis a Base Rent for said Leased Premises for the term of the Lease as follows:

FROM 11/01/04 TO 06/30/14 $25,000.00 PER MONTH

In addition, Tenant shall also be responsible for payment of personal property taxes and Rent taxes, if any. For the purpose of this Lease, the term ("Rent") shall include all Base Rent and any Additional Rent owed by Tenant to Landlord as provided for herein. Said Rent shall be due and payable in advance on the first day of each month during the Term of this Lease at the office of the Landlord's Management Agent, or such other place as the Landlord from time to time, in writing, may designate. Rent not received on or before the tenth (10th) day of each month during the Term of this Lease shall be considered delinquent and subject to the Late Charges as enumerated in Paragraph 3 of this Lease. With the execution of this Lease, Tenant has deposited with the Landlord the sum of $25,000.00.

(b) Security Deposit is defined as monies pledged as security for the payment of Rent and other charges herein agreed to be paid, and for the faithful performance of all the terms, conditions, and covenants of this Lease. If at any time during the term of this Lease, Tenant shall be in default in performance of any provision of this

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Lease, and shall fail to remedy or cure said default after having received ten (10) days written Notice of same, then the Landlord may, at its option, apply monies held as partial or full satisfaction of said default or declare said Security Deposit to be forfeited. If Landlord applies all or a portion of Tenant's Security Deposit to cure said default, Tenant agrees to pay to Landlord within ten (10) days of said Notice an equal amount so that the Landlord has at all times a Security Deposit equal to the original amount herein agreed to. Tenant's failure to do so constitutes a default of this Lease. Within sixty (60) days after the Tenant's satisfactory completion of this Lease, Landlord shall refund the Tenant's Security Deposit in full and without interest.

(c) No dispute between the Landlord and the Tenant as to Landlord or Tenant obligations under this Lease shall excuse payment of Rent or the faithful performance of any other conditions of this Lease by either Party.

3. LATE CHARGE. Tenant acknowledges that late payment to Landlord of Rent or other sums due hereunder will cause Landlord to incur costs not contemplated by this Lease. the exact amount of which would be extremely difficult and impractical to ascertain. Such costs include, but are not limited to, processing and accounting charges, and late charges that may be imposed on Landlord by the terms of any mortgage or trust deed covering the Property. Therefore, in the event Tenant should fail to pay any installment of Rent or any sum due hereunder after such amount is due, Tenant shall, upon demand, pay to Landlord as Additional Rent, a late charge equal to 10% of each such installment or other sum due and payable, or $50.00 per day said installment of Rent or sum due hereunder is past due, whichever is greater. Said late charge shall be assessed on the 11th day of each month. Tenant shall be assessed a $25.00 charge for each check that is returned due to insufficient funds in the Tenant's account.

4. PROPERTY OPERATING EXPENSES.

(a) REAL PROPERTY TAXES AND PROPERTY INSURANCE PREMIUMS: Tenant agrees to pay to the Landlord as Additional Rent its pro rata share of the estimated real property taxes and property insurance premiums incurred during each calendar year. Said payment shall be made in advance to the Landlord, in monthly installments and due and payable on the first day of each month during the term of this Lease. As used in this paragraph, ("real property tax") shall mean any form of assessment (both general and special), levy, penalty, or tax (other than estate or inheritance tax) imposed by any authority having direct or indirect power to tax any legal or equitable interest of Landlord in the Property, including any tax on rent (other than income tax) in lieu of, or in addition to normal real property taxes or assessment.

(b) OPERATING COSTS: Tenant agrees to pay to the Landlord as Additional Rent its pro rata share of the maintenance, repairs and operating costs for the Property ("Operating Costs") incurred by Landlord during each calendar year. Said payment shall be made to the Landlord in advance, in monthly installments and

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due and payable on the first day of each month during the term of this Lease. Said Operating Costs shall include, but not be limited to, the maintenance, replacement, and repair of HVAC equipment, electrical fixtures and systems, the replacement of light fixtures and ballasts, plumbing fixtures and systems, ceiling tile replacement, building equipment maintenance and repairs, landscaping and grounds maintenance, maintenance and repairs to walks and parking areas (including sealcoating, striping, patching and overlay), electricity, gas, sewer, water, and any other utilities furnished to the Property, including any taxes thereon (see Paragraph 3(c) below), management services, roof repairs, exterior painting, pest control, and any other property maintenance expenses which may be required from time to time in maintaining the Property in a prudent manner. In the event Landlord makes an investment for improvements to the Property which has the effect of reducing operating costs, these expenditures will be amortized over the asset's useful life as determined by the Landlord and such amortization shall be included as an additional component of Operating Costs.

(c) PROPERTY OPERATING EXPENSES: Real Property Taxes, Property Insurance Premiums, and Operating Costs ("Property Operating Expenses") associated with the operation of the Property are currently estimated to be $1.20 PER SQUARE FOOT. The Tenant's pro-rata share of Property Operating Expenses is equal to $6,000.00, per month. Payment shall be made by Tenant to Landlord in monthly installments, and said installments shall be due and payable on the first day of each month during the term of this Lease. Said monthly payments will be in addition to Base Rent and reviewed annually by Landlord, and adjustments required to compensate for any overpayment or underpayment will be made at that time. Landlord's records relating to Property Operating Expenses for the preceding calendar year shall be made available for Tenant's inspection upon the Tenant's written request.

(d) UTILITIES: The Tenant shall pay all charges incurred for any utility services metered to the Leased Premises and shall cause all utility services provided to the Leased Premises to be placed in its name with the respective vendor for direct billing. Such utilities shall include but are not limited to: water, wastewater, storm water, sewer, electricity, gas, cable television and telecommunications ("Utility Services"). Tenant shall pay all such billings within ten (10) days of receipt thereof. The Tenant shall not, without the written consent of Landlord, connect with electric current, except through existing electrical outlets in the Leased Premises. If Tenant shall require water, gas, or electric current in excess of that normally supplied for use of the Leased Premises as general office/warehouse space, Tenant shall first obtain the written consent of the Landlord, which Landlord shall not unreasonably refuse to grant. Any additional expense in monitoring the water, gas, and electric current consumed will be paid for by the Tenant. Costs of any meters, and the installation, maintenance, and repair thereof, shall be paid for by the Tenant.

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(e) MAINTENANCE & REPAIRS BY TENANT. Tenant agrees to be responsible for all repairs, replacements, and maintenance to the Leased Premises other than those specifically required to be performed by Landlord during the term of this Lease. In such cases, Tenant agrees to comply with all of the applicable government laws, ordinances, regulations, and any other requirements. Tenant shall promptly pay for the costs of all work performed and shall indemnify and hold harmless the Landlord against liens, costs, damages, or expenses incurred in connection therewith, including attorney's fees, incurred by the Landlord if Landlord shall be joined in any action or proceeding involving such work. Under no circumstances shall Tenant commence any such work until Landlord has been provided with evidence that the contractor is licensed to do the desired repairs in the state in which the Leased Premises is situated, that the contractor carries adequate worker's compensation as required by the laws of the State in which the Leased Premises is situated, and that the contractor carries public liability and builder's risk insurance in amounts deemed satisfactory by the Landlord. Tenant shall not be required to make structural repairs or alterations which may be required by governmental rules, orders, or regulations unless resulting from the business operations maintained by Tenant within the Leased Premises. In addition, Tenant shall not be responsible for the repair of any damage caused by the gross negligence of the Landlord, its employees, or agents. Landlord or Landlord's agents and representatives shall have the right to enter and inspect the Leased Premises at any time during reasonable business hours for the purpose of ascertaining the condition of the Leased Premises or to make such repairs, additions, or alterations as may be required to be made by the Tenant or the Landlord under the terms of this Lease. Tenant shall pay the Landlord a reasonable charge for any cleaning of the Leased Premises required because of the carelessness or indifference of Tenant, or because of the nature of Tenant's business, and for any special cleaning done at the request of Tenant. Any janitorial services to be provided to the Leased Premises shall be at the Tenant's sole option and expense.

(f) MAINTENANCE & REPAIRS BY LANDLORD: Landlord shall be responsible for implementing the maintenance and repairs associated with the operation and management of the Property, including but not limited to those items listed in Paragraph 3(b) herein. Landlord shall be responsible for the cost associated with the replacement of the roof (if it becomes necessary to do so) and the maintenance and repair of the foundation and the structural soundness of the exterior walls of the Building. Landlord shall commence to make all repairs required as per this Lease within a reasonable time period of receipt of said Notice from Tenant. Landlord's liability hereunder shall be limited to the cost of such repairs or corrections.

(g) LANDLORD DISCLAIMER: Tenant agrees that Landlord shall not be held liable for failure to supply to the Leased Premises any plumbing, heating, air conditioning service or Utility Services as herein defined unless such failure is due to gross negligence on the Landlord's part. Landlord reserves the right to

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temporarily discontinue such services due to accidents, repairs, alterations or improvements, strikes, lockouts, riots, acts of God, or any event in which Landlord is unable to furnish same.

5. PRORATION. Whenever the term "pro-rata" or any other similar term or phrase appears in this Lease, it shall refer to the square footage of the Tenant's Leased Premises (as stated in Paragraph One of this Lease) as a percentage of the total square footage of the Building of which the Leased Premises is a part and all other buildings that may be situated upon the Property, Landlord and Tenant agree that the total rentable area of the building(s) situated upon the Property is equal to 60,000 square feet, resulting in the Leased Premises accounting for 100.00% of the total rentable area contained within the building(s). Said percentage shall be used in calculating Additional Rent, if any, owed by Tenant per the terms and provisions contained herein.

6. TENANT DEFAULT / LANDLORD REMEDIES.

(a) The following events shall be deemed to be events of default by Tenant under this Lease:

(1) Tenant fails to pay any installment of the Rent or other charges hereby reserved and such failure continues for a period of five
(5) days after receipt of written Notice;

(2) Tenant fails to comply with any term, provision, or covenant of the Lease other than the payment of Rent or other charges, and does not cure such failure within ten (10) days after receipt of written Notice, or as otherwise prescribed in this Lease;

(3) Tenant becomes insolvent, or makes a transfer in fraud of creditors, or makes an assignment for the benefit of creditors;

(4) Tenant files petition under any section or chapter of the National Bankruptcy Act, as amended, or under any similar law or statute of the United States or any state thereof; or Tenant is adjudged bankrupt or insolvent in proceedings filed against Tenant thereunder;

(5) A receiver or trustee is appointed for all or substantially all of the assets of Tenant;

(6) Tenant supplies false or misleading information to the Landlord or its agents or representatives in the form of personal or business data;

(7) Tenant fails to vacate any substantial portion of the Leased Premises as herein agreed;

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(8) Tenant fails to comply with provisions or reporting requirements of either the Subordination Clause, the Attornment Clause, or the Estoppel Clause contained within this Lease and such failure to comply continues for a period of ten (10) days after receipt of written Notice;

(9) Tenant fails to discharge any lien that is placed against the Property, said lien being the result of the Tenant's actions, within five (5) days after such lien is filed against the Property.

(b) Upon the occurrence of any such events of default, Landlord shall have, in addition to normal remedies provided by law, the option to pursue any one or more of the following remedies without having to provide to the Tenant any notice or demand whatsoever. In addition, the Landlord shall not be liable for any damages incurred by the Tenant due to the Landlord's actions whether such damages were caused by the gross negligence of the Landlord or otherwise:

(1) Terminate this Lease, in which event Tenant shall immediately surrender the Leased Premises to Landlord. If the Tenant fails to surrender the leased Premises to the Landlord, then Landlord, without prejudice to any other remedy which it may have for possession or arrearage in Rent, may take possession of the Leased Premises and expel or remove the Tenant or any other person or entity occupying the Leased Premises or any part thereof. Tenant agrees to pay the Landlord on demand the amount of all loss and damage that the Landlord may suffer by reason of such termination, whether through liability to relet the Leased Premises on satisfactory terms or otherwise, including damages the Landlord may incur due to special sums expended for fixing up the Leased Premises;

(2) Enter the Leased Premises without terminating the Lease and perform the Tenant's obligations per the terms of this Lease. The Tenant agrees to reimburse the Landlord on demand for all expenses incurred by the Landlord in performing the Tenant's obligations under this Lease, including the amount of Rent due and payable by the Tenant per the terms of this Lease;

(3) Relet the Leased Premises or any part or parts thereof, either in the name of the Landlord or as an agent for the Tenant, for a term or terms which may, at the Landlord's option, be less than or exceed the period of the remainder of the Lease term hereof or which otherwise would have constituted the balance of the Lease term. The Landlord shall receive the rents for such reletting and shall apply the same as follows: first, to the payment of any indebtedness other than rent due hereunder from Tenant to Landlord; second, to the payment of such expenses as Landlord may have incurred in connection with reentering, ejecting, removing, dispossessing, reletting, altering, repairing, redecorating, sub-dividing, or otherwise preparing the Leased Premises for reletting, including brokerage and

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reasonable attorney's fees; and third, to the fulfillment of the terms, covenants and conditions of this Lease to be performed by the Tenant hereunder. The Tenant hereby agrees to waive all claims to any surplus rents, if any. The Tenant shall be and hereby agrees to be liable for and to pay to the Landlord any deficiency arising between the rents, additional rents and other charges due and payable per this Lease and the net rentals received by the Landlord due to the reletting the Leased Premises. The deficiency shall be for each month of the period which otherwise would have constituted the balance of the Lease term. The Tenant hereby agrees to pay such deficiency to the Landlord in monthly installments on the rent day specified in this Lease. Any suit or proceeding brought to collect the deficiency for any month, either during the Lease term or after any termination thereof, shall not prejudice or preclude in any way the rights of the Landlord to collect the deficiency for any subsequent month by similar suit or proceeding. The Landlord shall in no event be liable in any way whatsoever for the failure to relet the Leased Premises or, in the event of such reletting, for failure to collect the rents due and payable thereunder. The Landlord is hereby authorized and empowered to make such repairs, alterations, declarations, subdivisions, or other preparations for the reletting of the Leased Premises as the Landlord shall deem necessary without in any way releasing the Tenant from any liability under this Lease. No such re-entry or taking possession of the Leased Premises by the Landlord shall be construed as an election on the Landlord's part to terminate this Lease and the Tenant hereby specifically waives any law, statue, rule, decree or judgment of any court to the contrary.

(c) Pursuit of any of the foregoing remedies shall not preclude pursuit of any of the other remedies herein provided or any other remedies provided by law, nor shall pursuit of any remedy herein provided constitute a forfeiture or waiver of any Rent due to Landlord hereunder or of any damages accruing to Landlord by reason of the violation of any of the terms, provisions, and covenants herein contained. No waiver by the Landlord of any violation or breach of any terms, provisions or covenants herein contained shall be deemed or construed to constitute a waiver of any other violation or breach. Upon an event of default by the Tenant, forbearance by the Landlord to enforce one or more of the remedies herein provided shall not be deemed or construed to constitute a waiver of such default.

(d) The Tenant acknowledges and agrees that should it become necessary for the Landlord to serve a notice for the demand for the payment of Rent or a notice for possession of the Leased Premises ("Notice") in accordance with applicable state statutes, the Notice shall not terminate the Tenant's obligations to pay future Rents and this Lease, at the sole option of the Landlord, may continue in full force and effect;

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(e) The laws of the state in which the Property is located shall govern this Lease and any interpretations or constructions thereof. Further, the place of performance and transaction of business shall be deemed to be in the county of SCOTT, state of IOWA, and in the event of any litigation, the exclusive venue and place of jurisdiction shall be as heretofore prescribed.

7. LANDLORD'S LIEN AND UNIFORM COMMERCIAL CODE. As security for payment of Rent, damages, and all other payments to be made by Tenant as required herein, Tenant hereby grants to Landlord a lien upon all goods, wares, equipment, fixtures, and furniture of Tenant now or subsequently located upon the Leased Premises or Property. If Tenant abandons or vacates any portion of the Property, or is in default of the payment of any Rent, damage, or other payments as required herein, Landlord may enter upon the Leased Premises, by force if necessary, and take possession of all or part of the aforesaid items. Landlord may sell all or part of the aforesaid items at a public or private sale, in one or successive sales, with or without Notice, to the highest bidder for cash. In addition, Landlord may, on behalf of Tenant, sell and convey all or part of aforesaid items to the bidder, and deliver to the bidder all of the Tenant's title and interest in said items. The proceeds of the sale shall be applied by the Landlord toward the cost of the sale and then toward the payment of all sums then due by Tenant to Landlord under the terms of this Lease. The statutory lien for Rent is not hereby waived, the express contractual lien herein granted being in addition and supplementary thereto, to the extent, if any, this Lease grants Landlord or recognizes in Landlord any lien or lien rights greater than provided by the laws of the state in which the Property is located. At Landlord's option, this Lease may be intended as a security agreement within the meaning of the Uniform Commercial Code. Landlord, in addition to the rights prescribed in this Lease, shall have all the rights, titles, liens, and interests in and to Tenant's property now or hereafter located upon the Leased Premises which are granted a secured party, as that term is defined under the Uniform Commercial Code, to secure the payment to Landlord of the various amounts provided for in this Lease and in compliance with same.

8. COSTS AND ATTORNEY'S FEES. If it becomes necessary for either the Landlord or Tenant to employ an attorney due to the default or breach of a provision of this Lease, to gain possession of the Leased Premises, or to further protect its interest as granted per the terms and provisions herein contained, the non-prevailing party shall pay, in addition to its own costs and expenses, a reasonable attorney's fee and all costs and expenses expended or incurred by the prevailing party in connection with such default or action.

9. ALTERATIONS TO THE LEASED PREMISES, BUILDING, PROPERTY AND COMMON AREAS.

(a) To Leased Premises. Tenant shall not make any alterations, additions, or improvements to the Leased Premises without the prior written consent of Landlord, which shall not be unreasonably withheld or delayed. Tenant may, at its own cost and expense, make such minor alterations such as shelves, bins, and trade fixtures as it may deem advisable, without altering the basic character of the Property or Leased Premises, provided it is accomplished in a good, workmanlike

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manner. In such cases, Tenant agrees to comply with all of the applicable governmental laws, ordinances, regulations, and any other requirements including, but not limited to, the application for building permits, request for inspections, etc. Tenant shall promptly pay for the costs of all work performed and shall indemnify and hold harmless the Landlord against liens, costs, damages, or expenses incurred in connection therewith, including attorney's fees, incurred by the Landlord if Landlord shall be joined in any action or proceeding involving such work. Under no circumstances shall Tenant commence any such work until Landlord has been provided with evidence that the contractor is licensed to do the desired repairs in the state in which the Leased Premises is situated, that the contractor carries adequate worker's compensation as required by the laws of the state in which the Leased Premises is situated, that the contractor is adequately bonded and that the contractor carries public liability and builder's risk insurance in amounts deemed satisfactory by the Landlord.

Upon Lease termination, Tenant shall remove all alterations, additions, improvements, shelves, bins, equipment, and trade fixtures and partitions erected by Tenant and restore the Leased Premises to its original condition, wear and tear excepted, if so desired by Landlord; otherwise, such improvements shall become a part of the Leased Premises and shall be delivered to the Landlord along with the Leased Premises upon Lease termination. Any such removals and restorations shall be accomplished in a workmanlike manner so as not to damage the primary structure or structural qualities of the Leased Premises, the Property, the Common Areas or any other improvements situated on the Property.

(b) To Building, Common Areas and Property. Landlord reserves the right to change from time to time the dimensions and location of the Common Areas, as well as the dimensions, identity, and type of any building situated on the Property, including constructing a new building(s) on and/or removing an existing building(s) from the Property. Landlord shall also be permitted to make changes to the Building, unless doing so would reasonably interfere with the Tenant's use of the Leased Premises, in which case the Landlord must first reach agreement with the Tenant about those changes that are to be made to the Building prior to commencing work on any such changes to the Building. Landlord also reserves the right to dedicate portions of the Common Areas for streets, parks, utilities, and other public purposes as well as to utilize portions thereof for other such uses as the Landlord may from time to time deem profitable or desirable, provided that in doing so does not unreasonably interfere with the Tenant's use thereof. The Common Areas shall be subject to rules and regulations as Landlord deems reasonable and appropriate. Landlord reserves the right to designate specific areas in which vehicles owned by the Tenant, its employees, sublessee(s), concessionaires, and licensees shall be parked. Upon Landlord's request, the Tenant agrees to furnish to Landlord a complete list of the license numbers of all vehicles operated by the Tenant. The Landlord reserves the right to temporarily close any part of the Common Areas for such periods of time as may be necessary to prevent the public from obtaining prescriptive rights thereto or to make repairs

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or alterations. The Tenant shall not take any action that would interfere with the rights of the Landlord or of any other tenants of the Property, including their respective employees, agents, contractors, vendors or invitees.

10. SIGNS, WINDOW COVERINGS. No sign, placard, picture, advertisement, name, notice, lettering, door sign, window covering, awning, or other projection ("Signage") visible from the exterior of the Leased Premises shall be exhibited, inscribed, painted, or otherwise displayed by the Tenant on any part of the inside or outside of the Leased Premises, including all windows and doors which comprise a portion of the Leased Premises, or on any building(s) situated upon the Property without first obtaining the consent of the Landlord. If the Landlord shall have given said consent, whether before or after the execution of this Lease, said consent shall in no way operate as a waiver or release of any of the provisions of this Lease and shall be deemed to relate only to that particular Signage consented to by the Landlord and shall not be construed as dispensing with the necessity of obtaining the specified written consent of the Landlord with respect to any other such Signage. Tenant shall remove all Signage at the termination of this Lease. Signage installation and removal shall be made in such a manner as to avoid injury, defacement, or overloading the Building and any other improvements thereto. Drawings for all Tenant identification Signage shall be approved by Landlord before the manufacture and installation thereof. The cost and installation of all Signage shall be at the sole expense of the Tenant.

11. MECHANIC'S LIENS. Tenant agrees that it will not permit any mechanic's liens to attach to the Property.

12. CHARACTER OF OCCUPANCY. The Leased Premises shall be used exclusively for MANUFACTURING, WAREHOUSE AND OFFICE USE. Tenant shall at its own cost and expense obtain any and all licenses and permits necessary for such use. Tenant shall comply with all governmental laws, ordinances, and regulations applicable to the use of the Leased Premises. The Tenant, at its own cost and expense, shall comply with all laws, rules, and regulations applicable to the peculiar nature of the Tenant's use of the Leased Premises. The Tenant's obligation to comply with laws, rules, and regulations applicable to the peculiar nature of the Leased Premises shall include the obligation to locate furniture and fixtures in accordance with the Americans With Disabilities Act (A.D.A.) and the rules and regulations adopted thereunder. The Tenant shall promptly comply with all Landlord or governmental orders and directives for the correction, prevention, and abatement of nuisances in or upon, or connected with the Leased Premises, all at Tenant's sole expense. Tenant agrees to pay, on demand, costs for any damage or repairs to the Leased Premises or Property caused by the misuse of same by the Tenant, its agents, or employees. Tenant shall not permit the Leased Premises to be used in any way which would, in the opinion of the Landlord, be extra hazardous or which would in any way increase the insurance premiums upon the Property or cause the cancellation of any insurance policy covering the Leased Premises or the Property, nor shall Tenant sell or permit to be kept, used, or sold in or about the Leased Premises any articles which may be prohibited by a standard form policy of fire or other hazard insurance. If Tenant's use of the Leased Premises results in any increase in premiums for

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insurance, Tenant will promptly reimburse Landlord for the cost of such increase. Tenant's acts which might result in insurance premium increases include, without limiting the generality of the foregoing, such things as storing or using flammable substances, stocking materials too close to the ceiling or sprinklers, failure to maintain adequate aisles, or failure to impose or enforce smoking rules. Any conduct of Tenant which causes an increase in fire or other hazard insurance premiums, or which is in violation of recommendations by Landlord's insurance carrier, or failure by Tenant to promptly take any corrective action recommended by Landlord's insurance carrier shall be a material default under this Lease and Landlord shall be entitled to all of the remedies in Paragraph Six of this Lease.

Tenant shall not use the Leased Premises or permit anything to be done in or about the Leased Premises which will in any way conflict with any law, statute, zoning restriction, ordinance or governmental rule or regulation or requirement of duly constituted public authorities now in force or which may hereafter be enacted or promulgated. Tenant shall, at its sole cost and expense, promptly comply with all applicable laws, statutes, ordinances, and governmental rules, regulations, or requirements now in force or which may hereafter be in force, and with the requirements of any board of fire underwriters or other similar body now or hereafter constituted relating to or affecting the condition, use or occupancy of the Leased Premises. The judgment of any court of competent jurisdiction or the admission of Tenant in any action against Tenant, whether Landlord be a party thereto or not, that Tenant has violated any law, statute, ordinance or governmental rule, regulation or requirement, shall be conclusive of that fact as between Landlord and Tenant.

This Paragraph applies particularly and specifically, without limiting the generality thereof, to any act that is in violation of that body of law generally referred to as The Hazardous Substances Law. At the time this Lease is made, such body of law includes, but is not limited to, the Atomic Energy Act, the Clean Air Act, the Comprehensive Environmental Response Compensation and Liability Act of 1980 (known as "Superfund"), the Clean Water Act, the Federal Insecticide, Fungicide and Rodenticide Act, the Occupational Safety and Health Act, the Resource Conservation and Recovery Act of 1976 (Amended), the Solid Waste Disposal Act, the Toxic Substances Control Act, and the Used Oil Recycling Act. Tenant will indemnify Landlord against all cost, expense, or loss, including attorney's fees, which Landlord may sustain as a result of Tenant's violation of its obligations under this Paragraph. Any violation by Tenant of its duties contained herein shall be a material default under this Lease that will entitle Landlord to all of its remedies under this Lease. All obligations of Tenant shall survive termination of this Lease.

13. POSSESSION.

(a) If Landlord cannot deliver possession of the Leased Premises to the Tenant upon the commencement of the term hereof, this Lease shall not be void or voidable, nor shall Landlord be liable to Tenant for any loss or damage resulting therefrom. The term of the Lease shall be amended to commence on the date when Landlord

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can deliver possession of the Leased Premises to the Tenant and the expiration date shall be extended accordingly. If permission is given to Tenant to occupy the Lease Premises prior to the commencement date of the Lease, such occupancy shall be subject to all provisions of this Lease and the Rent shall be prorated to the date of the Tenant's occupancy of the Leased Premises. If the term hereof commences on the date later than said commencement date pursuant to the provisions set forth above, Landlord and Tenant agree to execute and acknowledge a written statement setting forth the actual commencement date and termination date of this Lease. This Lease shall be in full force and effect even though either Landlord or Tenant may fail or refuse to execute such Statement.

(b) The taking of possession of the Leased Premises by the Tenant shall be conclusive evidence that said Leased Premises was in good and satisfactory condition when possession of same was taken.

14. LEASE ASSIGNMENT OR SUBLETTING.

(a) Landlord's Consent Required. Tenant shall not have the right to assign, sell, encumber, pledge, sublease, or otherwise transfer all or any part of Tenant's leasehold estate herein (any of the preceding constituting a "Transfer"), or permit the Leased Premises to be occupied by anyone other than the Tenant or its employees, or to sublet the Leased Premises or any portion thereof without first obtaining prior written consent of Landlord. Consent by Landlord to one or more Transfers shall not be deemed to be a consent to any subsequent Transfer. The Tenant shall not change the ownership of the business in order to avoid this provision, and will, at the request of the Landlord, provide whatever documentation is necessary to establish that the Tenant is in compliance with this provision.

(b) Tenant's Request For Landlord Consent. If Tenant desires at any time during the term of this Lease to Transfer its interest, or any portion thereof, it shall first notify Landlord of its desire to do so and shall submit to the Landlord in writing the name and address of the proposed assignee, the nature of the proposed assignee's work or business to be conducted at the Leased Premises, the proposed sublease, assignment, and other Transfer documentation, all in reasonable detail as Landlord may request, along with a non-refundable processing fee equal to the greater of one thousand five hundred dollars ($1,500.00) or one-half (1/2) of the then monthly Base Rent. In addition, Tenant agrees to reimburse Landlord for all legal fees and other expenses associated with any proposed Transfer.

(c) Landlord's Rights. At any time within thirty (30) days after Landlord is in receipt of the above-referenced items, Landlord may by written notice to Tenant elect to consent to the Transfer of the Lease upon the terms and to the assignee as proposed, refuse to give its consent to the proposed Transfer, terminate this Lease and enter directly into a new lease with the proposed assignee, or terminate this Lease effective as of the date such proposed Transfer would have become

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effective. If the Landlord allows Tenant to Transfer its Lease or to sublet the Leased Premises, then in the event of default as herein defined, Landlord may collect all Rent and other sums due hereunder directly from such assignee or subtenant and apply said Rent against any sums due the Landlord by the Tenant hereunder. Tenant or any other assignor or sublessor may not collect Rent in excess of the existing Lease rates and any such sums received by the Tenant or other assignor or sublessor must be immediately paid to the Landlord. The Landlord shall also have the right to assign any of its rights under this Lease.

(d) No Release of Liability. No Transfer, even with the consent of Landlord, shall relieve Tenant of its obligations to pay Rent and to perform all other obligations to be performed by Tenant under this Lease. The acceptance by Landlord of any payment due hereunder from any other person shall not be deemed to be a waiver by Landlord of any provision of this Lease or to be a consent to any Transfer.

15. INSURANCE, LIABILITY, INDEMNITY AND WAIVER OF SUBROGATION.

(a) Insurance and Liability. Tenant shall throughout the Lease Term, at its sole cost and expense, provide and keep in force with responsible insurance companies satisfactory to Landlord and to any mortgagee under a mortgage constituting a lien upon the Property, public liability and property damage insurance. The liability limits of all said insurance shall be a minimum of $2,000,000 Bodily Injury, $1,000,000 Property Damage, or a combined single limit of $2,000,000 protecting Landlord and any such mortgagee, as well as Tenant, against liability to any employees or servants of Tenant or to any other person whomsoever arising out of or in connection with Tenant's use of the Leased Premises or Property or the condition of the Leased Premises. Tenant shall furnish Landlord a Certificate of Insurance prior to the commencement of this Lease naming Landlord as an additional insured. Tenant shall also furnish Landlord's Management Agent a Certificate of Insurance prior to the commencement of this Lease naming Landlord's Management Agent as an additional insured. Landlord, at its sole option, may procure and maintain at times during the term of this Lease a policy or policies of insurance covering loss or damage to the Property (exclusive of Tenant's trade fixtures, equipment, and personal property), providing protection against those perils as Landlord deems appropriate.

(b) Indemnity.

(1) Tenant hereby agrees to defend, pay, indemnify, and save free and harmless Landlord, from and against any and all claims, demands, fines, suits, actions, proceedings, orders, decrees, and judgments of any kind or nature by or in favor of anyone whomsoever and from and against any and all costs and expenses, including reasonable attorney's fees, resulting from or in connection with loss of life, bodily or personal injury or property damage arising, directly or indirectly, out of or from or on account of any occurrence in, upon at or from the Leased Premises or occasioned wholly or

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in part through the use and occupancy of the Leased Premises or any improvements therein or appurtenances thereto, or by any act or omission or negligence of Tenant, or any subtenant, concessionaire, or licensee of Tenant or their respective employees, agents, or contractors in, upon, at or from the Leased Premises, or its appurtenances.

(2) Tenant and all those claiming by, through or under Tenant shall store their property in and shall occupy and use the Leased Premises and any improvements therein and appurtenances thereto, solely at their own risk and hereby release Landlord to the full extent permitted by law, from all claims of every kind, including loss of life, personal, or bodily injury, damage to merchandise, equipment, fixtures, or other property, or damage to business or for business interruption, arising, directly or indirectly, out of or from or on account of such occupancy and use or resulting from any present or future condition, state of repair thereof.

(3) Landlord shall not be responsible or liable for damages at any time to Tenant, or those claiming by, through or under Tenant, for any loss of life, bodily, or personal injury, or damage to property or business, or for business interruption that may be occasioned by or through the acts, omissions or negligence of any other person.

(4) Landlord shall not be responsible or liable for damages at any time for defects, latent or otherwise, in any building(s), in any improvements within the Leased Premises or in any of the equipment, machinery, utilities, appliances or apparatus therein. Landlord shall not be responsible or liable for damages at any time, for loss of life, or injury or damage to any person or any property or business of Tenant, or those claiming by, through or under Tenant, caused by or resulting from the bursting, breaking, leaking, running, seeping, overflowing or backing up of water, steam, gas, sewage, snow or ice in any part of the Leased Premises or Property or which is caused by, or resulting from, acts of nature or the elements, or resulting from any defect or negligence in the occupancy, construction, operation or use of the Leased Premises or any of the equipment, fixtures, machinery, appliances, or apparatus therein.

(c) Waiver of Subrogation. In the event that any portion of the Property or any portion of the Leased Premises is damaged or destroyed by fire, explosion or other casualty, and to the extent that any such loss is covered by insurance in force and recovery is made for such loss, whether or not such damage or destruction is caused, or claimed to be caused, by the negligence or misconduct of Landlord or Tenant, or any of their respective officers, employees, agents, contractors or invitees, Landlord and Tenant hereby mutually release each other from liability and waive all right of recovery against each other for any loss from perils insured against under their respective fire insurance policies (including extended coverage). Both Landlord and Tenant shall cause its insurance company

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to waive all right of recovery by way of subrogation against the other party in connection with any such damage. In addition, during or after Tenant's occupancy of the Leased Premises, Landlord and Tenant shall indemnify and hold each other harmless from any claim made by way of subrogation by either the Landlord's or Tenant's fire and extended coverage insurance carrier(s).

16. DAMAGE OR DESTRUCTION.

(a) In the event improvements to the Leased Premises or the Property are damaged by any casualty which is insured, then Landlord may either repair such damage as soon as is reasonably possible at Landlord's expense, in which event this Lease shall continue in full force and effect, or give written Notice to the Tenant within thirty (30) days after the date of such occurrence of the Landlord's intention to cancel and terminate this Lease. If the Leased Premises is totally destroyed during the term of this Lease from any cause whether or not covered by the insurance required herein, including any destruction required by any authorized public authority, this Lease may automatically terminate, at the option of the Landlord, as of the date of such total destruction.

(b) If the Leased Premises is partially destroyed or damaged and Landlord makes repairs pursuant to this Lease, the Rent payable hereunder for the period during which such damage and repair continues shall be abated in proportion to the extent which Tenant's use of the Leased Premises is impaired. Except for abatement of Rent, if any, Tenant shall have no claim against Landlord for any damage suffered by reason of such damage, destruction, repair, or restoration.

17. EMINENT DOMAIN. If the Property shall be taken by right of eminent domain, in whole or substantially in part, for public purposes, then this Lease, at the option of the Landlord, shall forthwith cease and terminate, and the current Rent shall be properly apportioned to the date of such taking. In such event, Landlord shall receive the entire award for the lands and improvements so taken, and Tenant shall make no claim against Landlord for compensation in connection with said taking.

18. SUBORDINATION. This Lease, and all of the rights of Tenant hereunder, are and shall be subject and subordinate to any sale and/or lien of any mortgage now or hereafter placed on the Property or any part thereof, and to any and all renewals, modifications, consolidations, replacements, extensions, or substitutions of said sale and/or mortgage. Tenant agrees to execute any documents required to effectuate such subordination or to make this Lease subordinate to the lien of any mortgage, deed of trust, or ground lease, as the case may be.

19. ATTORNMENT. If a successor landlord under the sale or the holder of the mortgage shall succeed to the rights of the Landlord under this Lease, whether through possession or foreclosure action or delivery of a new lease or deed, then Tenant, upon the request of such successor landlord, shall attorn to and recognize such successor landlord as Tenant's Landlord under this Lease, and shall promptly execute and deliver any instrument that

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such successor landlord may request to further evidence such attornment. Tenant hereby irrevocably appoints Landlord or the successor landlord as attorney-in-fact of Tenant to execute and deliver such instrument on behalf of Tenant, should Tenant refuse or fail to do so promptly after request. Upon such attornment, this Lease shall continue in full force and effect as if it were a direct lease between the successor landlord and Tenant, upon all of the terms, conditions, and covenants as set forth herein.

20. ESTOPPEL CERTIFICATES. The Tenant shall be obligated to duly execute and deliver to the Landlord within seven (7) days after receipt of written notice an Estoppel Certificate that certifies the following information:

(a) that the attached Lease, together with all amendments, modifications, extensions and renewals thereof, comprise a complete copy of the entire Lease Agreement, and that the Lease is presently in full force and effect and has not been otherwise modified or amended, that there are no oral agreements existing as to the terms of the Lease or the use or occupancy of the Leased Premises, that the Lease contains all of the understandings and agreements between the Tenant and Landlord and their predecessors, if any;

(b) the Lease is correctly identified by the date as stated therein;

(c) the commencement date and the expiration date of the Lease

(d) the Tenant does or does not have the right to renew the Lease

(e) the Tenant does or does not have the right to terminate the Lease;

(f) the amount of the monthly Base Rent (not including any percentage rent or expense pass through) presently payable under the Lease and the date through which such Base Rent has been paid;

(g) the amount of the security deposit the Tenant deposited with the Landlord, if any;

(h) that the Landlord is not in default of any terms or conditions of the Lease, the Landlord has observed and performed all of its obligations and has fulfilled all of its warranties and representations, if any, with respect to the Lease and that the Tenant is not asserting any offsets, counterclaims or defenses against the Landlord;

(i) that the Tenant is not in default of any terms or conditions of the Lease;

(j) that the Tenant is in possession of Leased Premises and that the Leased Premises is in conformity with that stated in the Lease;

(k) the Tenant does or does not have an option or a first right of refusal (FRR) to purchase the Property in which the Leased Premises is situated.

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(1) the guarantor of the Lease, if any.

(m) the square footage of the Leased Premises, the total square footage of the Property and the Tenant's pro-rata share of the Property;

(n) that the statements contained therein are made for the purpose of verifying the current status of the Tenant's Leasehold interest in Leased Premises and may be relied upon by the Landlord and any successor(s) and/or assignee(s).

At the Landlord's option, the Tenant's failure to deliver such written instrument within the allotted time period shall constitute a material breach of this Lease or shall be conclusive upon the Tenant that: 1) this Lease is in full force and effect, without modification except as may be represented by Landlord; 2) there are no uncured defaults pertaining to Landlord's performance of this Lease; and 3) that the Tenant has not paid in advance more than one (1) month's Base Rent.

21. HOLDING OVER. Should Tenant, or any of its successors-in-interest, hold over the Leased Premises, or any part thereof, after the expiration of the term of this Lease, unless otherwise agreed to in writing by Landlord, such holding over shall constitute and be construed as tenancy from month-to-month only, at a Base Rent equal to 150% of the monthly Base Rent paid during the last month of the Term prior to the holdover.

22. QUIET ENJOYMENT. Landlord warrants that it has full right to execute and to perform this Lease and to grant the estate leases, and, that Tenant, upon payment of the required Rent and performing the terms, conditions, covenants, and agreements contained in this Lease, shall peaceably and quietly have, hold, and enjoy the Leased Premises during the full term of this Lease as well as any extension or renewal thereof. However, Tenant accepts this Lease subject and subordinate to any underlying lease, mortgage, deed of trust, or other lien presently existing upon the Property. Landlord hereby is irrevocably vested with full power and authority to subordinate Tenant's interest under this Lease to any underlying lease, mortgage, deed of trust, or other lien hereafter placed on the Property, and Tenant agrees upon demand to execute additional instruments subordinating this Lease as Landlord may require. If the Landlord's interest under this Lease shall be transferred by reason of foreclosure or other proceedings for enforcement of any lien, deed of trust, or mortgage on the Property, Tenant shall be bound to the transferee (sometimes called "Purchaser") under the terms, covenants, and conditions of this Lease for the balance of the term remaining, and any extensions or renewals thereof, with the same force and effect as if the Purchaser were the Landlord under this Lease. Tenant agrees to attorn to the Purchaser, as its Landlord, the attornment to be effective and self-operative without the execution of any further instruments upon the Purchase succeeding to the interest of the Landlord under this Lease. The respective rights and obligations of Tenant and the Purchaser upon the attornment, to the extent of the then remaining balance of the term of this Lease, and any extensions and renewals thereof, shall be the same as those herein contained.

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23. SEVERABILITY CLAUSE. If any clause or provision of this Lease is illegal, invalid, or unenforceable under present or future laws effective during the term of this Lease, it is the intention of Landlord and Tenant that the remainder of this Lease shall not be affected thereby. The caption of each paragraph hereof is added as matter of convenience only and shall be considered to be of no effect in the construction of any provision or provisions of this Lease.

24. SURRENDER OF POSSESSION. The Tenant agrees to deliver, upon the surrender to the Landlord, possession of the Leased Premises, along with all keys thereto, at the expiration or termination of this Lease, by lapse of time or otherwise, in as good repair as when the Tenant obtained the same at the commencement of said term, normal wear and tear excepted, and except damage by the elements (occurring without the fault of the Tenant or other persons permitted by the Tenant to occupy or enter the Leased Premises or any part thereof), or by act of God, or by insurrection, riot, invasion, or of military or usurped power.

25. REMOVAL OF TENANT'S PROPERTY. If the Tenant shall fail to remove all effects from said Leased Premises or Property upon the abandonment thereof, or upon the termination of this Lease for any cause whatsoever, the Landlord, at its option, may remove the same in any manner that it shall choose, and store the said effects without liability to the Tenant for loss thereof. Tenant agrees to pay Landlord on demand for any and all expenses incurred in such removal, including court costs, attorney's fees, and storage charges on such effects. If Landlord is forced to sell any of the same at public or private sale to collect any amounts due under this Lease from Tenant, or simply to dispose of Tenant's effects, the Landlord agrees to render any surplus to Tenant after deducting all costs and expenses associated with such sale.

26. CONSENT NOT UNREASONABLY WITHHELD. Unless otherwise provided, whenever consent or approval of Landlord or Tenant is required under the terms of this Lease, such consent shall not be unreasonably withheld or delayed. Tenant's sole remedy, if Landlord unreasonably withholds or delays consent or approval, shall be an action for specific performance and the Landlord shall not be liable for damages.

27. TENANT FINANCIAL STATEMENTS. Tenant shall furnish to Landlord, upon Landlord's request but not more than once per any given calendar year (except in the event of a sale of the Property, in which case upon the Landlord's request, the Tenant shall furnish to Landlord copies of the Tenant's most current Financial Statements), copies of various financial reports, including but not limited to, a Statement of Income and Expense, a Statement of Financial Position, a Statement of Cash Flows, a Statement of Change in Financial Position, a copy of the Tenant's Federal Income Tax Return and a report enumerating any important information not contained in any of the financial statements ("Tenant Financial Statements").

28. ENTIRE AGREEMENT. Tenant acknowledges and agrees it has not relied upon any agreements, conditions, representations, statements, or warranties except those expressed and contained herein. Tenant acknowledges and agrees that no amendment or

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modification of this Lease shall be valid or binding unless expressed in writing and executed by the Landlord and Tenant in the same manner as the execution of this Lease.

29. IMPLIED ACCEPTANCE/SURRENDER.

(a) No act or thing done by Landlord or Landlord's agents during the Term hereof or any extension thereof, shall be deemed an acceptance or a surrender of the Leased Premises, and no agreement to accept such surrender shall be valid unless in writing and signed by Landlord or its designated representative.

(b) The delivery of keys to any employee of the Landlord, or of Landlord's agents, shall not operate as a termination of this Lease or a surrender of the Leased Premises. No partial payment of Rent by Tenant shall be deemed to be other than a payment on account, nor shall any endorsement or statement on any check or any letter accompanying any check or payment as Rent be deemed an accord and satisfaction. Landlord may accept any such payment of Rent without prejudice to Landlord's right to recover the balance of any Rent due or pursue any other remedy available to Landlord.

30. FORCE MAJEURE. In the event Landlord or Tenant shall be delayed, hindered, or prevented from the performance of any act required herein by reason of strikes, lockouts, labor troubles, inability to procure materials, failure of power, restrictive governmental laws or regulations, riots, insurrection, war, or any other reason of a like nature ("Event") that is not the fault of the Party delayed in performing the work or doing the acts required under the terms of this Lease, then said performance of any such act shall be excused for the period of time the Event takes place. The period for the performance of any such act shall be extended for a period of time equivalent to the time period of the Event. The provisions of this section shall not operate to excuse Tenant from prompt payment of the Base Rent and any other Rent required by the terms of this Lease.

31. SUCCESSORS. The terms, provisions, covenants, and conditions contained in this Lease shall apply to, inure to the benefit of, and be binding upon the parties, hereto and upon their respective successors in interest and legal representatives except as otherwise herein expressly provided.

32. GENDER. Words of any gender used in this Lease shall be held and construed to include any other gender, and words in the singular number shall be held to include the plural, unless the context otherwise requires.

33. CORPORATE AUTHORITY. If Tenant is a corporation, Tenant warrants that it has legal authority to operate and is authorized to do business in the state in which the Property is situated. Tenant also warrants that the person or persons executing this Lease on behalf of Tenant has authority to do so and to fully obligate Tenant to all terms and provisions of this Lease. Tenant shall, upon request from Landlord, furnish Landlord with a certified copy of resolutions of the Board of Directors authorizing this Lease and

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granting authority to execute it to the person or persons who have executed it on Tenant's behalf.

34. NOTICES.

(a) Each provision of this Lease or of any applicable governmental laws, ordinances, regulation, or other requirements with reference to the sending, mailing, or delivery of any payment of Rent by Tenant to Landlord or vice-versa, shall be deemed to be complied with if and when the following steps are taken:

(1) All Rent and other payments required to be made by Tenant to Landlord hereunder shall be payable to Landlord's Management Agent at the address hereinbelow set forth or at such other address as Landlord may specify from time to time by written notice delivered in accordance herewith.

(2) All payments required to be made by Landlord to Tenant hereunder shall be payable to Tenant at the address hereinbelow set forth, or at such other address within the United States as Tenant may specify from time to time by written notice delivered in accordance herewith.

(b) All Notices required or permitted under this Lease shall be in writing and shall be deemed to be properly served if sent by personal delivery, special delivery, overnight delivery, certified mail, or by facsimile transmission. Notices to the Tenant may be sent to either of the addresses delineated herein. Notices to the Landlord shall be to the address as specified below. The effective date of any Notice shall be the date on the shipping invoice for all personal deliveries, special deliveries, or overnight deliveries, the date of the postmark stamped on the envelope by the U.S. Postal Service, or the date a facsimile transmission is sent. The parties hereto shall not refuse to accept delivery of said Notices.

As of the effective date of this Lease, the Landlord's address, the Landlord's Leasing Agent's address, the Landlord's Management Agent's address, and the Tenant's address are as follows:

LANDLORD'S MAILING ADDRESS:             LANDLORD'S PHYSICAL ADDRESS:

1613 E. 15th
Tulsa, OK
74120

LANDLORD'S LEASING AGENT:
Ruhl & Ruhl Commercial Company
c/o Mr. Robert M. Young, SIOR
5111 Utica Ridge Road
Davenport, Iowa 52807

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TENANT'S MAILING ADDRESS:               TENANT'S PHYSICAL ADDRESS:
Greystone Manufacturing                 Greystone Manufacturing
28439 Great River Road                  2601 Shoreline Drive
Princeton, IA 52768                     Bettendorf, IA 52722
Attn: JoAnn Hamilton

(c) If and when included within the term "Landlord" as used in this instrument, there is more than one person, firm, or corporation, all shall jointly arrange among themselves for their joint execution of such a Notice specifying some individual at some specific address for the receipt of Notices and payments of Rent to Landlord; if and when, included within the term "Tenant" as used in this instrument, there is more than one person, firm or corporation, all shall jointly arrange among themselves for their joint execution of such a Notice specifying some individual at some specific address within the continental United States for receipt of Notices and payments to Tenant. All Parties included within the terms "Landlord" and "Tenant", respectively, shall be bound by Notices given in accordance with the provisions of this paragraph to the same effect as if each had received such Notice.

35. AMENDMENT, ADDENDUM, MODIFICATION. Any Amendments, Addenda, Exhibits, Modifications, and/or other Supplements, which are attached hereto and made a part hereof shall be binding upon the Parties hereto. If any provision of said Addenda shall conflict in any manner with other provisions of this Lease, the provisions contained in the Addenda shall prevail. Landlord and Tenant hereby acknowledge and agree that Exhibits A, B, C AND D are attached hereto and made part of this Lease.

36. DRAFTING. This Lease shall not be construed as being prepared by one party to the exclusion of the other party.

37. PROPERTY RULES AND REGULATIONS. The Tenant hereby agrees to abide by the following rules and regulations:

(a) no animal or motorcycle shall be allowed within the Leased Premises or on the Property at any time;

(b) activities such as canvassing, soliciting and peddling by non-tenants of the Property shall not be allowed to occur on the Property at any time;

(c) no radio or television antenna, loudspeaker, or other device shall be allowed to be installed on the roof or any of the exterior walls of the Property in which the Leased Premises is a part without the prior written consent of the Landlord; no television, radio, recorder, or electrical device shall be played in such a manner as to cause a nuisance;

21

(d) smoking shall not be allowed in the Leased Premises that in any way shall cause irritation or discomfort to any other Tenants of the Building; the Landlord reserves the right to declare and designate the Leased Premises as a "non-smoking area" if any complaint is not addressed and remedied within three (3) days after Notice is given to the Tenant.;

(e) the Landlord shall be allowed to place a "For Rent" sign upon the Property throughout the one hundred eighty (180) day period of time prior to the termination of the Lease; in addition, the Landlord shall be allowed, upon reasonable notice, to show the Leased Premises to a prospective third party tenant;

(f) the Landlord, at any reasonable hour of the day, shall be allowed to enter into, upon, or go through and view and inspect the Leased Premises;

(g) the Tenant shall keep all windows and doors in the Leased Premises clean and free from unauthorized signage;

(h) the Tenant shall not utilize any illegal or unethical method of business operation;

(i) the Tenant shall not use or permit to be used any apparatus for sound reproduction or the transmission of any musical instrument in such a manner that the sounds so produced, reproduced or otherwise transmitted shall be unreasonably audible beyond the interior of the Leased Premises;

(j) the Tenant shall not cause or permit any objectionable odors to be emanated or unreasonably dispelled from the Leased Premises;

(k) the Tenant shall not load, unload or permit the loading or unloading of furniture, equipment, supplies, inventories, or any other property outside the areas so designated; in addition, the Tenant shall comply with the Landlord's reasonable rules for delivery and shipping of products, materials and supplies;

(l) the Tenant shall not store or stack any furniture, fixtures, equipment, supplies, inventories, or any other personal or business property outside the Leased Premises or in any other manner clutter the Common Areas; in addition, the Tenant shall use its best efforts to prevent the parking or storage of trucks, trailers or other vehicles or equipment engaged in such loading or unloading as referenced herein;

(m) the Tenant shall not solicit business or distribute handbills or other advertising matter anywhere on the Property;

(n) the Tenant shall maintain the Leased Premises at a temperature sufficient to prevent the freezing of water lines and any fixtures situated therein.

22

38. LEASE MEMORANDUM/RECORDATION. At Landlord's sole option, Landlord and Tenant shall execute a Lease Memorandum. Said Memorandum shall be in recordable form and contain those Lease provisions as specified by Landlord. Said Memorandum shall be recorded solely at Landlord's option and expense.

39. CONFIDENTIALITY. All terms, covenants, conditions and provisions of this Lease shall remain strictly confidential and shall not be disclosed to any third party (other than the brokers or advisors representing the Landlord and Tenant in the Lease negotiations) unless disclosure of such information is required pursuant to a local, state or federal statute and the third party requiring the disclosure of such information has the proper authority under such statute to obtain such information.

40. AGENCY RELATIONSHIPS. None.

41. SPECIAL PROVISIONS. None

IN WITNESS WHEREOF, this Lease is executed to be effective as of the date and year specified in Paragraph 1.

LANDLORD:                           GREYSTONE PROPERTIES, LLC


                                    /s/ Warren Kruger
                                    Warren Kruger, Managing Member

                                    Date: November 1, 2004

TENANT:                             GREYSTONE MANUFACTURING, LLC


                                    /s/ Robert H. Nelson
                                    ---------------------------------
                                    (signature)


                                    Robert H. Nelson
                                    ---------------------------------
                                    By (print or type name)

CFO
Title (print or type name)

Date: November 1, 2004

23

                                    State of Oklahoma                        )
                                    ) ss
County of Tulsa                     )

This instrument was acknowledged before me on this ____ day of ___________, _____, by ________________________________________________ as _________________.


Notary Public

My Commission Expires:



State of                )
         ---------------
                        ) ss
County of               )
          --------------

This instrument was acknowledged before me on this ____ day of ___________, _____, by ________________________ as ________________________ of ________________________, a _______________ Corporation.


Notary Public

My Commission Expires:


24

EXHIBIT A

LEGAL DESCRIPTION

Lot 2, Riverside Development Park, 3rd Addition to the City of Bettendorf, Scott County, Iowa

25

EXHIBIT B

FLOOR PLAN

26

EXHIBIT C

LEASE GUARANTY

EXHIBIT D

TENANT IMPROVEMENTS

LANDLORD SHALL PROVIDE GENERAL OFFICE AREA INCLUDING RESTROOMS FOR TENANT USE AT LANDLORDS SOLE EXPENSE.

27

EXHIBIT 10.2

EQUIPMENT RENTAL CONTRACT

1. NAMES

Greystone Manufacturing, L.L.C., an Oklahoma limited liability company (Renter), and NYOK Partners, an Oklahoma general partnership (Owner), agree to the following rental.

2. EQUIPMENT BEING RENTED

Owner agrees to rent to Renter, and Renter agrees to rent from Owner, the following Equipment:

Retech Grinder/Shredder

Cumberland Grinder (Equipment).

3. DURATION OF RENTAL PERIOD

The rental will begin at 9:00 a.m. on November 1, 2004 and will end at 8:59 on October 31, 2005.

4. RENTAL AMOUNT

The rental amount is $0 per month.

5. PAYMENT

Renter has paid $0 to Owner to cover the rental period specified in paragraph 3.

6. DELIVERY

Owner will deliver the Equipment to Renter on November 1, 2004 at:

2600 Shoreline Drive
Bettendorf, Iowa 52722

7. LATE RETURN

If Renter returns the Equipment to Owner after the time and date the rental period ends, Renter will pay Owner a rental charge of $100 per day for each day or partial day beyond the end of the rental period until the Equipment is returned. Owner can subtract these rental charges from the security deposit.

8. DAMAGE OR LOSS

1

Renter acknowledges receiving the Equipment in good condition.

Renter will return the Equipment to Owner in good condition except as noted above. If the Equipment is damaged while in Renter's possession, Renter will be responsible for the cost of repair, up to the current value of the Equipment. If the Equipment is lost while in Renter's possession, Renter will pay Owner its current value.

9. CURRENT VALUE OF EQUIPMENT

Owner and Renter agree that the current value of the Equipment is $380,000.

10. USE OF EQUIPMENT

Renter acknowledges that use of the Equipment creates some risk of personal injury to Renter and third parties, as well as a risk of damage to property, and Renter expressly assumes that risk. Renter therefore agrees to use the Equipment safely and only in the manner for which it is intended to be used. Owner is not responsible for any personal injury or property damage resulting from Renter's misuse, unsafe use or reckless use of the Equipment. Renter will indemnify and defend Owner from and against any injury or damage claims arising out of Renter's misuse, unsafe use or reckless use of the Equipment.

11. OTHER TERMS AND CONDITIONS

Renter will pay $.06 per pound for plastic ground on either piece of equipment. The cost of blades and sharpening plus cost of service work are the responsibility of NYOK Partners, however, Greystone is responsible for arranging.

12. ENTIRE AGREEMENT

This is the entire agreement between the parties. It replaces and supersedes any and all oral agreements between the parties, as well as any prior writings.

13. SUCCESSORS AND ASSIGNEES

This agreement binds and benefits the heirs, successors and assignees of the parties.

14. NOTICES

All notices must be in writing. A notice may be delivered to a party at the address that follows a party's signature or to a new address that a party designates in writing. A notice may be delivered:

in person
by certified mail, or
by overnight courier.

2

15. GOVERNING LAW

This agreement will be governed by and construed in accordance with the laws of the state of Oklahoma.

16. COUNTERPARTS

The parties may sign several identical counterparts of this agreement. Any fully signed counterpart shall be treated as an original.

17. MODIFICATION

This agreement may be modified only by a writing signed by the party against whom such modification is sought to be enforced.

18. WAIVER

If one party waives any term or provision of this agreement at any time, that waiver will be effective only for the specific instance and specific purpose for which the waiver was given. If either party fails to exercise or delays exercising any of its rights or remedies under this agreement, that party retains the right to enforce that term or provision at a later time.

19. SEVERABILITY

If any court determines that any provision of this agreement is invalid or unenforceable, any invalidity or unenforceability will affect only that provision and will not make any other provision of this agreement invalid or unenforceable and shall be modified, amended or limited only to the extent necessary to render it valid and enforceable.

RENTER

Greystone Manufacturing, L.L.C.,
an Oklahoma limited liability company
2601 Shoreline Drive
Bettendorf, Iowa 52722

Dated:      November 1, 2004

By:         /s/ Robert H. Nelson
            Robert Nelson, CFO

3

OWNER

NYOK Partners, an Oklahoma general partnership 1613 E. 15th Tulsa, Oklahoma 74120

Dated:      November 1, 2004

By:         /s/ Warren F. Kruger
            Warren Kruger, Partner

4

EXHIBIT 10.3

EQUIPMENT RENTAL CONTRACT

1. NAMES

Greystone Manufacturing, L.L.C., an Oklahoma limited liability company (Renter), and NYOK Partners, an Oklahoma general partnership (Owner), agree to the following rental.

2. EQUIPMENT BEING RENTED

Owner agrees to rent to Renter, and Renter agrees to rent from Owner, the following Equipment:

Cincinnati Milacron 1760-1054 WP Plastics Injection Molding Machine Serial # H35A0300004 (Equipment).

3. DURATION OF RENTAL PERIOD

The rental will begin at 9:00 a.m. on November 1, 2004 and will end at 8:59 on February 18, 2009.

4. RENTAL AMOUNT

The rental amount is $21,136.13 per month.

5. PAYMENT

Renter has paid $1,111,706.4 to Owner to cover the rental period specified in paragraph 3.

6. DELIVERY

Owner will deliver the Equipment to Renter on November 1, 2004 at:

2601 Shoreline Drive
Bettendorf, Iowa 52722

7. LATE RETURN

If Renter returns the Equipment to Owner after the time and date the rental period ends, Renter will pay Owner a rental charge of $200 per day for each day or partial day beyond the end of the rental period until the Equipment is returned. Owner can subtract these rental charges from the security deposit.

8. DAMAGE OR LOSS

Renter acknowledges receiving the Equipment in good condition.

1

Renter will return the Equipment to Owner in good condition except as noted above. If the Equipment is damaged while in Renter's possession, Renter will be responsible for the cost of repair, up to the current value of the Equipment. If the Equipment is lost while in Renter's possession, Renter will pay Owner its current value.

9. CURRENT VALUE OF EQUIPMENT

Owner and Renter agree that the current value of the Equipment is $1,281,465.

10. USE OF EQUIPMENT

Renter acknowledges that use of the Equipment creates some risk of personal injury to Renter and third parties, as well as a risk of damage to property, and Renter expressly assumes that risk. Renter therefore agrees to use the Equipment safely and only in the manner for which it is intended to be used. Owner is not responsible for any personal injury or property damage resulting from Renter's misuse, unsafe use or reckless use of the Equipment. Renter will indemnify and defend Owner from and against any injury or damage claims arising out of Renter's misuse, unsafe use or reckless use of the Equipment.

11. OTHER TERMS AND CONDITIONS

At the end of the rental period, Greystone Manufacturing, L.L.C. may buy the equipment for $100,000.

12. ENTIRE AGREEMENT

This is the entire agreement between the parties. It replaces and supersedes any and all oral agreements between the parties, as well as any prior writings.

13. SUCCESSORS AND ASSIGNEES

This agreement binds and benefits the heirs, successors and assignees of the parties.

14. NOTICES

All notices must be in writing. A notice may be delivered to a party at the address that follows a party's signature or to a new address that a party designates in writing. A notice may be delivered:

in person
by certified mail, or
by overnight courier.

2

15. GOVERNING LAW

This agreement will be governed by and construed in accordance with the laws of the state of Oklahoma.

16. COUNTERPARTS

The parties may sign several identical counterparts of this agreement. Any fully signed counterpart shall be treated as an original.

17. MODIFICATION

This agreement may be modified only by a writing signed by the party against whom such modification is sought to be enforced.

18. WAIVER

If one party waives any term or provision of this agreement at any time, that waiver will be effective only for the specific instance and specific purpose for which the waiver was given. If either party fails to exercise or delays exercising any of its rights or remedies under this agreement, that party retains the right to enforce that term or provision at a later time.

19. SEVERABILITY

If any court determines that any provision of this agreement is invalid or unenforceable, any invalidity or unenforceability will affect only that provision and will not make any other provision of this agreement invalid or unenforceable and shall be modified, amended or limited only to the extent necessary to render it valid and enforceable.

RENTER

Greystone Manufacturing, L.L.C.,
an Oklahoma limited liability company
2601 Shoreline Drive
Bettendorf, Iowa 52722

Dated:      November 1, 2004

By:         /s/ Robert H. Nelson
            Robert Nelson, CFO

3

OWNER

NYOK Partners, an Oklahoma general partnership 1613 E. 15th Tulsa, Oklahoma 74120

Dated:      November 1, 2004

By:         /s/ Warren F. Kruger
            Warren Kruger, Partner

4

EXHIBIT 31.1

CERTIFICATION

I, Warren F. Kruger, Chief Executive Officer of Greystone Logistics, Inc., certify that:

1. I have reviewed this quarterly report on Form 10-QSB of Greystone Logistics, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;

4. The small business issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c) Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and

5. The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of small business issuer's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting.

April 20, 2005                         /s/ Warren F. Kruger
                                       -------------------------------
                                       Warren F. Kruger, Chief Executive Officer


EXHIBIT 31.2

CERTIFICATION

I, Robert H. Nelson, Chief Financial Officer of Greystone Logistics, Inc., certify that:

1. I have reviewed this quarterly report on Form 10-QSB of Greystone Logistics, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;

4. The small business issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c) Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and

5. The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of small business issuer's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting.

April 20, 2005                         /s/ Robert H. Nelson
                                       ---------------------------------
                                       Robert H. Nelson, Chief Financial Officer


EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Greystone Logistics, Inc. (the "Company"), on Form 10-QSB for the period ending February 28, 2005, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Warren F. Kruger, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

April 20, 2005                        /s/ Warren F. Kruger
                                      --------------------------------
                                      Warren F. Kruger, Chief Executive Officer

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

The foregoing certification is being furnished to the Securities and Exchange Commission as an exhibit to the Report and shall not be considered filed as part of the Report.


EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Greystone Logistics, Inc. (the "Company"), on Form 10-QSB for the period ending February 28, 2005, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Robert H. Nelson, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

April 20, 2005                         /s/ Robert H. Nelson
                                       -------------------------------
                                       Robert H. Nelson, Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

The foregoing certification is being furnished to the Securities and Exchange Commission as an exhibit to the Report and shall not be considered filed as part of the Report.