EXHIBIT
10.3


 


PROMISSORY
NOTE

(Term Loan E)


 


	$1,000,000.00	January
    10, 2018


 


THIS
PROMISSORY NOTE (as amended, modified, replaced, restated, extended or renewed from time to time, this “Note”)
is made as of the date indicated above and evidences indebtedness of GREYSTONE LOGISTICS, INC., an Oklahoma corporation,
and GREYSTONE MANUFACTURING, L.L.C., an Oklahoma limited liability company (collectively, the “Borrowers”
and each individually, a “Borrower”), to INTERNATIONAL BANK OF COMMERCE, an Oklahoma state banking corporation
(together with any and all of its successors and assigns and/or any other holder of this Note, the “Lender”).


 


Borrowers
jointly and severally promise to pay to the order of Lender the principal sum of $1,000,000.00, or so much thereof as has been
advanced and is outstanding, in legal and lawful money of the United States of America, with interest as it accrues on the outstanding
principal balance from the date of this Note until paid. This Note is executed pursuant to, and is the “Term Note E”
described in, the Loan Agreement dated January 31, 2014 among the Borrowers and the Lender, as amended five times, most recently
by the Fifth Amendment to Loan Agreement of even date herewith among Borrowers and the Lender (as so amended, and as further amended,
modified or restated from time to time, the “Loan Agreement”). Capitalized terms used but not defined in this
Note have the meanings assigned to them in the Loan Agreement.


 


Interest
will accrue on the outstanding principal balance of this Note at an annual interest rate equal to the greater of (a) the floating
“Prime Rate” (defined below) as it fluctuates from time to time, plus 0.5%, or (b) 4.75%, but will not
exceed the highest non-usurious rate of interest permitted by (i) Oklahoma Law or (ii) United States Federal Law, if and only
if Federal Law permits a higher interest rate (the “Maximum Rate”). The rate of interest due on this Note will
be recomputed as of the date of any change in the Prime Rate.


 


Borrowers
shall make payments of accrued but unpaid interest on the principal balance of this Note on February 10, 2018 and on the 10th
day of each following month until January 10, 2019 (the “Amortization Start Date”). On the Amortization Start
Date and on the 10th day of each following month until January 10, 2022 (this date, or any earlier date on which this Note’s
principal balance is accelerated in full in accordance with the Loan Documents, the “Maturity Date”), Borrowers
shall make combined payments of principal and interest. Borrowers’ first payment of principal and interest will be in an
amount sufficient to amortize the outstanding principal balance of this Note as of the Amortization Start Date over a 48 months
(the “Amortization Period”) at the interest rate applicable on the Amortization Start Date. Borrowers’
monthly payment will be recalculated as of the first day of the month after any change in the applicable interest rate (each a
“Recalculation Date”), subject to the provisions below. Each recalculation will be based upon the outstanding
principal balance of this Note on the Recalculation Date, the remaining portion of the Amortization Period as of the Recalculation
Date, and the interest rate then in effect. Notwithstanding the fixed monthly payments due and payable under this paragraph between
each Recalculation Date, principal sums due and outstanding will continue to bear interest at all times at the interest rate applicable
to this Note. If the actual amount applied to principal at any time is less than the amount that would have been applied to principal
if the indebtedness evidenced by this Note were amortized over the Amortization Period, with adjustments to the payment amount
occurring on the same date as any changes in the applicable interest rate, then Lender may include such amount in the recalculation
of the monthly payment on the Recalculation Date. Amounts repaid under this Note (including prepaid amounts) may not be reborrowed.


 




    	 



    	 



    

 


Lender
will apply sums paid in excess of the amount sufficient to cause the indebtedness hereunder to be amortized over the Amortization
Period to reduce principal sums outstanding. Lender shall notify Borrowers of revisions in payment amounts, and Lender’s
determinations with respect thereto will be conclusive in the absence of manifest error. Any failure by Lender to revise the payment
amount hereunder at any time does not constitute a waiver of Lender’s ability to do so thereafter, whether with respect
to an immediately preceding increase in the applicable interest rate or a subsequent increase in such rate, and regardless of
any lapse of time between such increase and the notice of a revision in a payment amount. Subsequent decreases in the rate will
not obligate Lender to reduce the amount of any monthly installments hereunder. Regardless, Borrowers shall pay all unpaid principal
and accrued interest on the Maturity Date, if not previously paid in full.


 


Lender
will apply each payment as of its scheduled due date and in the order of application as Lender elects in its sole discretion.
All payments will be made to the Lender by mailing payment to P.O. Box 26020, Oklahoma City, OK 73126-0020 or by delivering
payment in person at 2250 E. 73rd Street, Tulsa, OK 74136. 


 


The
principal of this Note may be prepaid in whole or in part at any time, without premium or penalty.


 


The
“Prime Rate” is the NEW YORK PRIME RATE, which for purposes of this Note means the annual lending rate of interest
announced from time to time by JPMorgan Chase Bank, N.A. as its prime rate. If JPMorgan Chase Bank, N.A. does not announce its
prime rate, then the IBC Prime Rate minus one percent (1%) will be the Prime Rate. The IBC Prime Rate is the annual lending rate
of interest announced from time to time by International Bank of Commerce as its prime rate.


 


Use
of either the New York Prime Rate or the IBC Prime Rate is not a warranty or representation by Lender that such rate is more favorable
than another rate or index, that rates on other loans or credit facilities may not be based on other indices or that rates on
loans to others may not be made below such prime rate.


 


Interest
under this Note is calculated on a 360-day factor applied on a 365-day year or a 366-day year (if the year is a leap year) on
the unpaid principal to the date of each installment paid. Notwithstanding anything to the contrary contained in this Note or
the other Loan Documents, interest under this Note shall not exceed the Maximum Rate. If the calculation of interest on the principal
sum of this Note results in the interest rate in effect under this Note exceeding the Maximum Rate, then such interest will be
recalculated on the basis of the actual number of days elapsed in the period for which interest is being calculated and a year
of 365 or 366 days, as applicable.


 


To
the extent allowed by Law, matured unpaid amounts will bear interest computed on a full calendar year 365/365 days basis, or on
a 366/366 days basis (if the year is a leap year), at a rate of interest equal to the lesser of (a) four percent (4%) per annum
above the rate then in effect, or (ii) the Maximum Rate.


 


If
any payment required under this Note is not made within ten (10) days from the due date, Lender may in its sole discretion, to
the extent permitted by law, require the Borrowers to pay a one-time “late charge” per late payment equal to five
percent (5%) of the amount of the past due principal and interest of such payment, with a minimum of $10.00 and a maximum of $1,500.00
per late payment. The “late charge” may be assessed without notice, and shall be immediately due and payable. This
provision is inapplicable if the outstanding indebtedness under the Note is accelerated in full.


 




    	 	2	 



    	 



    

 





The
Borrowers shall pay all outstanding unpaid principal, all accrued and unpaid interest, and all fees accrued and unpaid late charges,
and/or other charges incurred in this transaction by, or for the benefit of the Borrowers, that remain due and owing, on the Maturity
Date.


 


If
all or a part of the indebtedness represented by this Note is collected at Law or in equity or in bankruptcy, receivership or
other court proceedings or if this Note is placed in the hands of attorneys for collection after default, each Borrower and any
endorser or guarantor hereof agree to pay hereunder, in addition to the principal and interest due and payable hereon, reasonable
attorneys’ fees, court costs and other collection expenses incurred by the holder hereof.


 


Each
Borrower and any endorser or guarantor hereof hereby waive presentment for payment, demand, notice of nonpayment, protest and
notice of protest with respect to any payment hereunder and agree to any extension of time with respect to any payment due hereunder,
to any substitution or release of the security or collateral described in the Security Instruments and to the addition or release
of any party liable hereunder. No delay on the part of the holder hereof in exercising any rights hereunder shall operate as a
waiver of such rights.


 


This
Note and the indebtedness evidenced hereby shall be construed and enforced in accordance with and governed by the Law of the State
of Oklahoma, without regard to any conflict-of-law principles that would apply the Law of any other jurisdiction.


 


Each
of the undersigned, as a Borrower, and all others who are or become parties primarily or secondarily liable on this Note, whether
as endorsers, guarantors or otherwise, hereby agree that this Note may be renewed one or more times, the time for payment of this
Note or any renewal Note extended, the interest rate or other terms of the indebtedness evidenced hereby changed, any party released,
or any action taken or omitted with respect to any collateral security, including surrender of such security or failure to perfect
any lien thereon, without notice or without releasing any of them, except as otherwise expressly agreed in writing, and the obligation
of such party shall survive whether or not the instrument evidencing such obligation shall have been surrendered or canceled.
All such parties waive presentment, demand for payment, protest and notice of nonpayment or dishonor and agree that failure of
this holder to exercise any of its rights hereunder in any instance shall not constitute a waiver thereof in that or any other
instance.


 


This
Note is non-assumable by any successor to or assignee of the Borrowers without the Lender’s prior written approval. If the
Lender approves any such assumption, the terms of this Note shall be binding upon the Borrowers’ respective successors and
assigns. The terms of this Note shall inure to the benefit of the Lender and its successors and assigns.


 


EACH
BORROWER HEREBY AGREES TO SUBMIT TO THE JURISDICTIONAL PROVISIONS SET FORTH IN SECTION 10.17 OF THE LOAN AGREEMENT, INCORPORATED
HEREIN BY REFERENCE AND EXPRESSLY MADE APPLICABLE IN ITS ENTIRETY TO THIS NOTE AND THE BORROWERS.


 




    	 	3	 



    	 



    

 


EACH
BORROWER AGREES THAT ANY AND ALL CONTROVERSIES OR CLAIMS ARISING OUT OF THIS NOTE, ITS NEGOTIATION AND/OR THE BREACH THEREOF,
WILL BE RESOLVED AS SET FORTH IN SECTION 10.16 OF THE LOAN AGREEMENT, INCORPORATED HEREIN BY REFERENCE AND EXPRESSLY MADE
APPLICABLE IN ITS ENTIRETY TO THIS NOTE AND THE BORROWERS.


 


WITHOUT
INTENDING IN ANY WAY TO LIMIT THE PARTIES’ AGREEMENT TO ARBITRATE ANY DISPUTE AS SET FORTH IN THE LOAN AGREEMENT (AND INCORPORATED
BY REFERENCE INTO THIS NOTE), TO THE EXTENT ANY DISPUTE IS NOT SUBMITTED TO ARBITRATION OR IS DEEMED BY THE ARBITRATOR OR BY ANY
COURT WITH JURISDICTION TO BE NOT ARBITRABLE OR NOT REQUIRED TO BE ARBITRATED, EACH BORROWER WAIVES TRIAL BY JURY IN RESPECT OF
ANY SUCH DISPUTE AND ANY ACTION ON SUCH DISPUTE. THIS WAIVER IS KNOWINGLY, WILLINGLY AND VOLUNTARILY MADE BY EACH BORROWER, AND
EACH BORROWER HEREBY REPRESENTS THAT NO REPRESENTATIONS OF FACT OR OPINION HAVE BEEN MADE BY ANY PERSON OR ENTITY TO INDUCE THIS
WAIVER OF TRIAL BY JURY OR TO IN ANY WAY MODIFY OR NULLIFY ITS EFFECT. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES
ENTERING INTO THE LOAN DOCUMENTS. LENDER IS AUTHORIZED TO FILE A COPY OF THIS SECTION IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE
OF THIS WAIVER OF JURY TRIAL. EACH BORROWER FURTHER REPRESENTS AND WARRANTS THAT IT HAS BEEN REPRESENTED IN THE SIGNING OF THIS
AGREEMENT AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL, OR HAS HAD THE OPPORTUNITY TO BE REPRESENTED BY INDEPENDENT
LEGAL COUNSEL SELECTED OF ITS OWN FREE WILL, AND THAT IT HAS HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL.


 


EACH
BORROWER ACKNOWLEDGES EXECUTION OF THIS NOTE AND HAVING READ ALL OF ITS PROVISIONS AND AGREES TO ITS TERMS.


 


THIS
WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS,
OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.


 


[Signature
Page Attached]





 




    	 	4	 



    	 



    

 





THIS
PROMISSORY NOTE is dated and effective as of the first date indicated on the first page.


 




	 	BORROWERS:
	 	 	 
	 	GREYSTONE LOGISTICS, INC., 
	 	an Oklahoma corporation
	 	 	 
	 	By:	/s/
    Warren F. Kruger
	 	 	Warren
    F. Kruger, President/CEO
	 	 	 
	 	GREYSTONE MANUFACTURING, L.L.C., 
	 	an Oklahoma limited liability company
	 	 	 
	 	By:	/s/
    Warren F. Kruger
	 	 	Warren
    F. Kruger, Manager




 


Signature
Page


Promissory
Note - Term Loan E