Document:

Exhibit 10(h)

Exhibit
10(h)

SETTLEMENT
AGREEMENT

This
Settlement Agreement (“Agreement”) is by and between Merit Audio Visual, Inc.
(“Merit”), a New York corporation with its principal place of business at 132
West 21st Street,
New York, New York 10011 and doing business as Merit Software, and Siboney
Corporation (“Siboney”), a Maryland corporation with its principal place of
business at 325 North Kirkwood Road, Suite 300, St. Louis, Missouri 63122,
Siboney Learning Group Inc. (“SLG”), a Texas corporation with its principal
place of business at 325 North Kirkwood Road, Suite 300, St. Louis, Missouri
63122, and Ernest R. Marx (“Marx”), the president of Siboney Corporation and
Siboney Learning Group, who resides in St. Louis, Missouri. Merit, Siboney, SLG
and Marx may be referred to individually as a “Party” or collectively as the
“Parties”.

WHEREAS,
on or about September 4, 1996, Merit and Siboney entered into a Software
Distribution and License Agreement. On or about November 12, 1996, Merit and
Siboney entered into an Amendment of that Software Distribution and License
Agreement. The Software Distribution and License Agreement and its Amendment
will be collectively referred to as the “License Agreement” and copies of
thereof are attached hereto as Exhibit A; 

WHEREAS,
Merit represents and warrants that it owns U.S. Copyright Registrations TX
4-436-008, TX 4-436-009, TX 4-436-010, TX 4-436-011, TX 4-436-012, TX 4-436-014,
TX 4-436-019, TX 4-436-020, TX 3-738-555, TX 4-444-245 and TX 4-446-214 (“Merit
Registrations”) protecting certain software including “Word Demons,” “Writing
Demons,” “Grammar Demons,” “Write It Right,” “Developing Critical Thinking
Skills for Effective Reading,” “Writing About Reading,” “Accu-Reading,”
“Diagnostic Prescriptive Reading,” and “Paragraph Punch” (hereinafter entitled
“Merit Software” in this Agreement);

WHEREAS,
on or about June 25, 2004, Merit sued Siboney, SLG and Marx in the United States
District Court for the Eastern District of Missouri, No.
4:04-CV-00785-

1

 

ERW (the
“Current Action”), alleging infringement of the above-referenced copyrights and
breach of the License Agreement;

WHEREAS,
on or about September 9, 2004, Siboney, SLG, and Marx counter-sued Merit in the
Current Action, seeking declaratory judgments of copyright invalidity,
noninfringement, and that they (Siboney, SLG, and Marx) did not breach the
License Agreement and alleging breach of the License Agreement by
Merit;

WHEREAS,
in the Current Action plaintiff moved for a preliminary injunction and the
Parties agreed to a Consent Order which was signed and entered on July 12, 2004
by Judge E. Richard Webber, a copy of which is Exhibit B hereto, and the Parties
wish to continue said Consent Order in full force and effect, to the extent
stated herein below;

WHEREAS,
defendants warrant and represent that, to the best of their knowledge and
belief, they have complied fully with the terms of the Consent Order of July 12,
2004, and intend to do so in the future;

WHEREAS,
defendants warrant and represent that, to the best of their knowledge and
belief, all sales of products containing Merit Software, sold in the U.S. or
anywhere in the world by any of the defendants, up to and including sales
reported in the latest royalty report from SLG to Merit, have been truly and
accurately reported to Merit;

WHEREAS,
defendants warrant and represent that, to the best of their knowledge and
belief, they have not licensed or facilitated the use, manufacturing or copying
by others of any Licensed or Converted Software, or any Merit Software, in the
U.S. or anywhere in the world except as a result of sales reported to
Merit;

WHEREAS,
Merit warrants and represents that, to the best of its knowledge and belief, it
is not aware of (1) any failure by the defendants to comply fully with the terms
of the Consent Order of July 12, 2004, (2) any failure by the defendants to
report all sales of products containing Merit Software, sold in the U.S. or
anywhere in the world by any of the defendants, up to and including sales
reported in the latest royalty report from SLG to Merit, (3) any license by the
defendants or facilitation by the defendants of the use, manufacturing or
copying by others of any Licensed or Converted Software, or any

2

Merit
Software, in the U.S. or anywhere in the world except as a result of sales
reported to Merit;

WHEREAS,
the Parties hereto desire to have the Court retain jurisdiction over this matter
for the purposes of enforcing the Consent Order and enforcing this Settlement
Agreement;

WHEREAS,
the Parties wish to terminate the License Agreement and the sale of products by
the defendants using Merit Software, but wish to do so in an orderly fashion and
without excessive damage or inconvenience to the defendants’ then existing
customers and without diminishing their right to receive maintenance, support,
and upgrades from SLG regarding products containing Merit Software as provided
herein;

WHEREAS,
the Parties acknowledge that the termination of the License Agreement herein
does not affect, diminish, or terminate Siboney’s rights in the Converted
Software as recognized by paragraph 4.2 of the License Agreement;

WHEREAS,
defendants wish to continue selling products pursuant to the license granted in
the License Agreement for a time sufficient to enable them to facilitate the
replacement of the Merit Software contained in their products with other
software;

WHEREAS,
Merit is willing to grant an extension of the License Agreement to the extent
necessary to serve these purposes; and

WHEREAS,
the Parties now desire to settle and resolve all claims relating to the License
Agreement, including the Current Action, according to the terms and conditions
set forth herein.

NOW
THEREFORE, in consideration of the warranties and representations, and the
mutual covenants and promises contained herein, the sufficiency of which the
Parties irrevocably acknowledge, the Parties agree as set forth
below.

3

ARTICLE
1

Payment
and Royalties

1.1
Effectiveness. This
Agreement shall be effective the date on which this Agreement is fully executed
by the Parties (the “Effective Date”).

 

1.2
Payment. SLG
shall make payments to Merit as set forth in paragraphs 1.2.1-1.2.3. Merit shall
return to SLG within ten (10) days of the Effective Date the two checks in the
respective amounts of Forty-seven thousand Five hundred and three 00/100 U.S.
Dollars ($47,503.00) and Two thousand Five hundred and Forty-eight 00/100 U.S.
Dollars ($2,548.00) that were delivered by SLG to Merit in July 2004 for payment
of royalties on SLG’s Orchard Home software products.

1.2.1
Immediate
Payment of Certain Amount. Within
ten (10) days of the Effective Date of this Agreement, SLG will pay to Merit the
sum of Four Hundred and Sixty-five Thousand and 00/100 U.S. Dollars
($465,000.00). Payment will be made by cashier’s check payable and delivered to
Merit at its principal place of business. 

1.2.2 Future
Payments of Certain Amounts. SLG will
pay to Merit two additional payments in the amounts of One Hundred Thousand and
00/100 U.S. Dollars ($100,000.00) each. Each of these additional payments will
be made by cashier’s check and delivered to Merit at its principal place of
business on or before September 30, 2005 and September 30, 2006, respectively.

1.2.3
Royalties. SLG will
continue to pay to Merit royalties required under the License Agreement through
its termination date as provided in this Agreement. The royalties will be
calculated based upon “Net Sales” as provided in the License Agreement without
any deduction ($1000 or other amount) from the price of the

4

software
products for any assessment. SLG guaranties that the total amount of royalties
to be paid for the fourth quarter of 2004, the first quarter of 2005, the second
quarter of 2005, and the third quarter of 2005, collectively, shall not be less
than Eighty Thousand and 00/100 U.S. Dollars ($80,000.00) , and the total amount
of royalties to be paid for the fourth quarter of 2005 shall be not less than
Ten Thousand and 00/100 U.S. Dollars ($10,000).

ARTICLE
2

Termination
of the License Agreement and Continuing Rights

2.1
Termination.
Subject
to the continuing rights set forth in Article 2.2 of this Agreement, the Parties
agree that the License Agreement will terminate at 11:59 p.m. E.D.T. on December
31, 2005. 

2.2
Continuing
Rights. The
Parties recognize that customers of SLG who have purchased or will purchase
products from SLG containing Licensed Software or any Merit components of the
Converted Software (as defined in the License Agreement) (hereinafter “Merit
Software”) prior to termination of the License Agreement (“Existing Customers”)
are entitled to be given continuing service for their products by SLG for some
period of time after termination of the License Agreement. Therefore,
notwithstanding termination of the License Agreement under Article 2.1 of this
Agreement or otherwise, SLG shall have the following continuing, non-exclusive
rights:

2.2.1 to
repackage, copy, make and distribute Merit Software and to use the source code
and documentation therefor, solely for the purpose of providing such Existing
Customers with ongoing service, maintenance or support, including, without
limitation, (a) honoring Existing Customers’ warranty claims regarding products
from SLG containing Merit Software (including without limitation, warranty
claims relating to bugs or other software defects, defective media, operating
system compatibility, etc.); or

5

(b)
providing upgrades to Existing Customers for products from SLG containing Merit
Software that were sold prior to termination of the License Agreement, which may
interface or integrate with the Merit Software contained therein, so long as
such upgrades (i) are for non-Merit components of the products (e.g., assessment
component, management tools, non-Merit instructional content, non-Merit Software
portions of the Converted Software, etc.), and (ii) themselves contain no Merit
Software. No royalties shall apply to SLG’s exercise of these continuing rights,
it being recognized that Merit has or will have already received a royalty for
the original sale of the products from SLG containing Merit Software being
serviced, maintained or supported.

2.3 Consent
Order

The
parties hereto hereby agree that the Consent Order (Exhibit B hereto) shall
remain in full force and effect after the effective date of this Agreement,
except for paragraph 6, which is to be replaced by provisions of this Settlement
Agreement.

2.4 Modification
of Marketing Materials

Defendants
agree to remove references to products created with software licensed from Merit
from their web sites and print catalogs by September 30, 2005.

2.5 Upgrades

Defendants
will stop making upgrades of Merit Software by December 31, 2006. The parties
acknowledge that the foregoing sentence does not restrict or terminate the
defendants’ on-going right to upgrade non-Merit Software portions of the
Converted Software beyond December 31, 2006. 

2.6 Cessation
of Support

Defendants
agree to stop all support of Merit Software as provided by paragraph 2.2.1(a) by
December 31, 2010. The parties acknowledge that the foregoing sentence does not
restrict or terminate the defendants’ on-going right to support non-Merit
Software portions of the Converted Software beyond December 31, 2010, provided
that after December 31, 2010, all Merit Software has been removed from all of
Defendants’ patches, bugfixes, upgrades, installation programs, and
recordkeeping programs.

6

2.7 Notification
of Resellers

By no
later than June 30, 2005, Defendants must notify all SLG Resellers that Merit
Software will not be supported any later than December 31, 2010.

2.8 Samples
of Replacement Software

Defendants
agree to deliver to Merit one (1) copy of each of the following software
products:

(a) Orchard
Home Software, as sold before July 16, 2004;

(b) Orchard
Home Software after replacement of all Merit Software;

(c) Orchard
Software, after replacement of all Merit Software;

(d) Educational
Activities or any other software, after replacement of all Merit
Software;

Each of
such samples will be delivered to Merit upon the latest of:

Thirty
(30) days after the effective date of this Settlement Agreement, or thirty (30)
days after the replacement has been completed.

Within
thirty (30) days of Merit’s receipt of the samples, Merit shall notify
Defendants by certified mail, effective upon receipt, of any objections relating
thereto. If Merit does not provide such notice to Defendants, then the samples
shall be deemed acceptable and conforming to all requirements of the Consent
Order and this Agreement. Any notice provided by Merit shall be governed by
paragraph 5.11 of this Agreement.

 

ARTICLE
3

Mutual
Releases

 

3.1
Merit.
Merit,
for itself, its successors, and assigns, releases and forever discharges Siboney
(including its past and present directors, officers, shareholders, employees,
successors, assigns, customers, and other transferees), SLG (including its past
and present directors, officers, shareholders, employees, successors, assigns,
customers, and other transferees), and Marx (individually and in his capacity as
an officer and director of Siboney and SLG, and including his heirs, successors,
and

assigns)
from any and all suits, liabilities, promises, causes of action, claims,
and

7

demands
whatsoever in law or in equity whether known or unknown, liquidated or
contingent that were or could have been alleged in the Current Action,
including, but not limited to, those matters arising or claimed to arise out of
any copyrightable work, registered or unregistered (including, but not limited
to, the Merit Registrations), the License Agreement, or both, at any time up to
the Effective Date of this Agreement. 

3.2
Siboney. Siboney,
for itself, its successors, and assigns, releases and forever discharges Merit
(including its past and present directors, officers, shareholders, employees,
successors, assigns, customers, and other transferees) from any and all suits,
liabilities, promises, causes of action, claims, and demands whatsoever in law
or in equity whether known or unknown, liquidated or contingent that were or
could have been alleged in the Current Action, including, but not limited to,
those matters arising or claimed to arise out of any copyrightable work,
registered or unregistered (including, but not limited to, the Merit
Registrations), the License Agreement, or both, at any time up to the Effective
Date of this Agreement.

3.3
SLG. SLG, for
itself, its successors, and assigns, releases and forever discharges Merit
(including its past and present directors, officers, shareholders, employees,
successors, assigns, customers, and other transferees) from any and all suits,
liabilities, promises, causes of action, claims, and demands whatsoever in law
or in equity whether known or unknown, liquidated or contingent that were or
could have been alleged in the Current Action, including, but not limited to,
those matters arising or claimed to arise out of any copyrightable work,
registered or unregistered (including, but not limited to, the Merit
Registrations), the License Agreement, or both, at any time up to the Effective
Date of this Agreement.

3.4.
Marx. Marx,
for himself, his heirs, and assigns, releases and forever discharges Merit
(including its past and present directors, officers, shareholders, employees,
successors, assigns, customers, and other transferees) from any and
all

8

suits,
liabilities, promises, causes of action, claims, and demands whatsoever in law
or in equity whether known or unknown, liquidated or contingent that were or
could have been alleged in the Current Action, including, but not limited to,
those matters arising or claimed to arise out of any copyrightable work,
registered or unregistered (including, but not limited to, the Merit
Registrations), the License Agreement, or both, at any time up to the Effective
Date of this Agreement.

ARTICLE
4

Dismissal
of Current Action

4.1
Within ten (10) days of the Effective Date, Merit and Siboney, SLG, and Marx
shall dismiss the Current Action, with prejudice, with the Parties to bear their
own costs, in the form attached hereto as Exhibit C.

ARTICLE
5

General
Provisions

5.1
Assignment. No Party
may assign this Agreement or any right, license, or privilege under this
Agreement without the non-assigning Party’s or Parties’, as the case may be,
prior written consent, which shall not be unreasonably withheld; except that a
Party or Parties, as the case may be, can assign his/its/their rights to a
purchaser or transferee of substantially all assets of that Party’s/Parties’
business(es) to which the License Agreement relates, if the purchaser or
transferee agrees in writing to be bound by the obligations of the assignor set
forth herein. 

5.2
Severability. Any
invalidity, in whole or in part, of any provision of this Agreement shall not
affect the validity of any other of its provisions.

9

5.3
Waiver. No term
or provision of this Agreement shall be deemed waived or any breach excused
unless such waiver or consent is in writing and signed by the Party claimed to
have waived or consented.

5.4
Amendments. Any
changes to this Agreement must be in a writing specifically stating an intention
to modify this Agreement and executed by the Party/Parties to be bound.

5.5
Relationship
of the Parties. This
Agreement shall not create or be deemed to create any relationship of agency,
partnership, or joint venture between Merit and Siboney, SLG, and
Marx.

5.6
No
Third Party Beneficiaries. This
Agreement is made and entered into for the sole protection and benefit of the
Parties, and no other person or entity shall be a direct or indirect beneficiary
of or shall have any direct or indirect cause of action or claim in connection
with this Agreement, unless the other person or entity qualifies as assignee as
set forth herein.

5.7
Notices. Any
notice or other communication required or permitted under this Agreement shall
be given in writing by certified mail, effective upon receipt, addressed as
follows.

5.7.1
Notices to Merit shall be addressed to:

 

Mr.
Benjamin Weintraub

Merit
Audio Visual, Inc.

132 West
21st
Street

New York,
New York 10011

 

with a
copy to:

 

Gregor N.
Neff, Esq.

Kramer
Levin Naftalis & Frankel LLP

919 Third
Avenue

New York,
New York 10022-3852

10

5.7.2
Notices to Siboney, SLG, and Marx shall be satisfied by a single notice
addressed to:

 

Mr. Bodie
Marx

Siboney
Learning Group Inc.

325 North
Kirkwood Road, Suite 200

St.
Louis, Missouri 63122

with
a copy
to:

 

Nicholas
B. Clifford, Esq.

Thompson
Coburn LLP

One U.S.
Bank Plaza

St.
Louis, Missouri 63101

5.8
Force
Majeure. Any
delays in or failure by any of the Parties in the performance of any obligations
herein shall be excused in and to the extent such delay is caused by occurrences
beyond its control, including, but not limited to, acts of God, strikes or other
labor disturbances, war, whether declared or not, sabotage, and any other cause
or causes, whether similar or dissimilar to those herein specified, that cannot
reasonably be controlled by such Party.

5.9  Warranties
And Representations

The
Parties hereby incorporate by reference the representations and warranties set
forth above in this Settlement Agreement.

5.10
Signature
Warranty. By
affixing their signature hereto, the Parties acknowledge that they have read and
fully understand this Agreement, that they have consulted with their counsel and
fully understand the legal ramifications of this Agreement, that they intend to
be legally bound by this Agreement, and that they are fully and duly authorized
to enter into and execute this Agreement.

11

5.11
Material Breach. Upon
material breach of this Agreement, the non-breaching party shall have the right
to recover for such breach only upon giving the breaching party at least thirty
(30) days’ notice by certified mail, effective on receipt. Such notice of breach
shall specify the reason(s) for the breach. Such right shall not become
effective before the expiration of the thirty day period. During the thirty day
period, the breaching party shall not file suit or institute any action or
proceeding against the non-breaching party for any claim or matter arising
under, in connection with, or incident to this Agreement. The breaching party
may cure the breach during the thirty day-period. If the breaching party fails
to cure the breach, the non-breaching party may terminate this Agreement.

 

5.12
Applicable
Law, Choice of Forum, Jurisdiction. This
Agreement shall be governed by and construed under the laws of the State of
Missouri, without regard to its conflict of laws provisions. 

Further,
it is agreed that the Court will retain jurisdiction over both the Consent Order
of July 12, 2004 and enforcement of this Settlement Agreement, and that all
disputes and matters whatsoever arising under, in connection with, or incident
to this Agreement shall be litigated, if at all, before the same court that the
Current Action is before (i.e., the United States District Court for the Eastern
District of Missouri (Eastern Division), the “Court”). The Parties irrevocably
and unconditionally waive and agree not to plead or claim any objection to venue
of any action, suit, or proceeding concerning such disputes or matters in the
Court, and that any such action, suit, or proceeding brought before the Court
has been brought in an inconvenient forum.

Also, the
Parties irrevocably consent to personal jurisdiction in the Court with respect
to all disputes and matters whatsoever arising under, or in connection with, or
incident to this Agreement. 

5.13
No
Strict Construction. The
Parties and their counsels have reviewed this Agreement, and, accordingly, the
normal rule of construction that any ambiguities

12

are to be
resolved against the drafting party shall not be employed in the interpretation
of this Agreement. 

5.14
Headings. All
headings in this Agreement are used for convenience only and shall not affect
the interpretation of this Agreement.

5.15
Counterparts. This
Agreement may be executed in any number of counterparts, including those
transmitted to and among the Parties via facsimile or electronic mail with the
signatures, including electronic signatures, having the same effect as if the
signatures on each counterpart were upon a single document. All counterparts,
taken together, shall constitute this Agreement.

5.16
Confidentiality. Merit,
Siboney, SLG, and Marx may disclose to third parties the fact that the Current
Action has been settled and dismissed with prejudice under a confidential
settlement agreement without any party admitting liability. Otherwise, the
Parties shall keep the terms of this Agreement confidential and shall not now or
hereafter divulge these terms to any third party except for the following
permitted disclosures: 

5.16.1
with prior written consent of the other Party;

5.16.2 to
any governmental body having jurisdiction to call therefore, provided, however,
that prior to any such disclosure the disclosing party shall notify the
non-disclosing party and both parties shall cooperate in good faith to prepare
the relevant disclosures with the goal of minimizing unnecessary disclosure to
the governmental body or to any other third parties; 

13

5.16.3 as
otherwise may require by law (including any applicable tax or securities laws)
or legal process, including legal and financial advisors in their capacity of
advising a party in such matters; 

5.16.4
during the course of litigation so long as the disclosure of such terms and
conditions are restricted in the same manner as is the confidential information
of other litigating parties and so long as (a) the restrictions are embodied in
a court-entered Protective Order and (b) the disclosing party informs the other
party in writing at least ten (10) days in advance of the
disclosure;

5.16.5 in
confidence to legal counsel, accountants, banks, financing sources, and their
advisors solely in connection with complying with financial transactions or
legal reporting requirements;

5.16.6
any disclosure required pursuant to any applicable securities or taxation
regulations or laws; or

5.16.7
Siboney may issue the press release attached hereto as Exhibit D.

5.16.8 Merit may
issue the Press Release attached hereto as Exhibit E .

5.17.
No
Admission. This
Agreement, its existence, and any provision herein is not an admission of
liability, in whole or in part, by any Party. Accordingly, this Agreement, its
existence, and any provision herein shall not be considered, construed, or
interpreted by, or presented to a court and its officers, a mediator, an
arbitrator or other alternative dispute resolution professional, a juror, or
other third party as an admission of liability. 

14

5.18
Entire
Agreement. This
Agreement contains the entire understanding between the Parties and supersedes
all earlier or contemporaneous communications, understandings, and agreements of
and among the Parties with respect to the subject matter of this
Agreement.

IN
WITNESS WHEREOF, intending to be legally bound, Merit, Siboney, and SLG hereto
have caused this Agreement to be executed by their duly authorized
representatives and Marx has hereto executed this Agreement as of the dates set
forth below.

	
      Merit
      Audio Visual, Inc.
	
      Siboney
      Corporation

	 	 
	 	
	 	 
	/s/ Benjamin
      Weintraub                       
        	
      /s/
      Timothy J.
      Tegeler                                       
      

	 	 
	
      Name:
      Benjamin
      Weintraub                  
      
	
      Name:
      Timothy J.
      Tegeler                                

	 	 
	
      Title:
      CEO                                               
      
	
      Title:
      CEO                                                         

	 	 
	
      Date:
      12/14/2004                                   
      
	
      Date:
      12/14/2004                                             

	 	
	 	 
	 	 
	 	
	
      Siboney
      Learning Group Inc.
	
      Ernest
      R. Marx

	 	 
	 	 
	 	 
	
      /s/
      Ernest R.
      Marx                                  
      
	
      /s/
      Ernest R.
      Marx                                           
      

	 	 
	
      Name:
      Ernest R.
      Marx                           
	
      Name:
      Ernest R.
      Marx                                    
      

	 	 
	
      Title:
      President                                      
      
	 
	 	 
	
      Date:
      12/14/2004                                  
      
	
      Date:
      12/14/2004                                          
      

15

EXHIBIT
A

(September
4, 1996 Software Distribution and License Agreement 

and
November 12, 1996 Amendment)

16

EXHIBIT
B

(July 12,
2004 Consent Order)

17

 

 

EXHIBIT C

UNITED
STATES DISTRICT COURT

EASTERN
DISTRICT OF MISSOURI

EASTERN
DIVISION

	
       

      MERIT
      AUDIO VISUAL, INC.

      d/b/a
      MERIT SOFTWARE,

       

                                                                                                                  
      Plaintiff,

       

      v.

       

      SIBONEY
      CORPORATION,

      SIBONEY
      LEARNING GROUP INC.,

      and
      ERNEST R. MARX,

       

                                                                                                                 
      Defendants.
	
      )

      )

      )

      )

      )

      )

      )

      )

      )

      )

      )

      )

      )

      )
	
       

       

       

       

       

       

      Case
      No. 4:04-cv-00785-ERW

STIPULATED
ORDER OF DISMISSAL

It is
hereby by stipulated by and between Plaintiff Merit Audio Visual, Inc. and
Defendants
Siboney Corporation, Siboney Learning Group, Inc., and Ernest R.
Marx as
follows:

1. All
claims and counterclaims herein are dismissed with prejudice.

2. Each
party to the litigation will bear his or its own attorneys fees and
costs.

3. This suit
is settled pursuant to the terms of a confidential Settlement Agreement. This
Court shall retain jurisdiction over the enforcement of the Settlement
Agreement.

4. The
Consent Order entered on July 12, 2004 in this case will remain in full force
and effect, except as to paragraph six thereof, which will be governed by the
applicable terms of the Settlement Agreement, and this Court will retain
jurisdiction over its enforcement.

18

	 	
      KRAMER
      LEVIN NAFTALIS & FRANKEL LLP

		 
	 	 
		 
	
      Dated: January
      18, 2005.
	
      By:
      /s/                                                                              
         

	 	
      Gregor
      N. Neff

	 	
      Theodore
      J. Mlynar

	 	
      Jessica
      L. Turko

	 	
      919
      Third Avenue

	 	
      New
      York, New York 10022-3852

	 	
      Phone:
      (212) 715-9100

	 	
      Fax:
      (212) 715-8000

	 	 
	 	
      Attorneys
      for Plaintiff

		 
	 	 
	 	
      THOMPSON
      COBURN LLP

		 
	 	 
		 
	 	 
	
      Dated:
      January 18, 2005.
	
      By:
      /s/                                                                               
      

	 	
      Richard
      E. Haferkamp, # 3300

	 	
      Nicholas
      B. Clifford, # 36551

	 	
      Jacob
      S. Wharton, #106793

	 	
      One
      US Bank Plaza

	 	
      St.
      Louis, Missouri 63101

	 	
      314-552-6000

	 	
      314-552-7000
      - facsimile

	 	 
	 	
      Attorneys
      for Defendants

	 	 
	 	  
	
      SO
      ORDERED:
	 
	 	 
	 	
	
      Date:
      January 18, 2005
	
      /s/                                                                                   
       

	 	
      Judge
      E. Richard Webber

19

CERTIFICATE
OF SERVICE

I hereby
certify that on ______________________, a true and accurate copy of the
foregoing was served by facsimile and first class mail upon the
following:

	 	
      Hardy
      C. Menees

	 	
      Joann
      Trog

	 	
      Menees,
      Whitney, Burnet & Trog

	 	
      121
      West Adams

	 	
      Kirkwood,
      Missouri, 63122

	 	 
	 	
      -and-

	 	 
	 	
      Gregor
      Neff

	 	
      Theodore
      J. Mlynar

	 	
      Jessica
      L. Turko

	 	
      Kramer,
      Levin, Naftalis & Frankel, LLP

	 	
      919
      Third Avenue

	 	
      New
      York, New York 10022-3852

20

EXHIBIT
D

December
16, 2004

Company
Press Release

 

Siboney
Settles Claims in License Agreement Dispute

 

St. Louis
- (Business Wire) - December 16, 2004 - Siboney Corporation (OTC BB: SBON) today
reported that it has settled a lawsuit filed in federal court in St. Louis by
Merit Software, involving breach of contract and copyright infringement claims
against Siboney and breach of contract claims against Merit. Under the
settlement agreement, none of the parties admitted liability for any of the
claims and agreed to terminate their software licensing agreement as of December
31, 2005. Furthermore, Siboney agreed to continue to pay royalties due under the
licensing agreement through its termination and to pay to Merit $465,000 upon
execution of the settlement agreement plus additional payments of $100,000 for
each of the next two years. In respect of the settlement, Siboney will record a
pre-tax charge to earnings of $615,000 in its income statement for the quarter
ended September 30, 2004. 

Ernest R.
“Bodie” Marx, President of Siboney Learning Group, commented “Based upon our
review of the claims, as well as the uncertainties and expenses of continuing
the litigation, we believe that it is in Siboney’s best interest to resolve all
of these matters now, without admitting any liability.”

Contact:

Bodie
Marx, 314-909-1670 ext. 110 

Any
forward-looking statement is necessarily subject to significant uncertainties
and risks. The words “believes”, “anticipates”, “intends”, “expects” and similar
expressions are intended to identify forward-looking statements. Actual results
could be materially different due to various factors, including the level of
education funding provided by federal and state governments, regulatory
developments, product development and pricing strategies undertaken by our
competitors and our ability to attract and retain key personnel. The Company
undertakes no obligation to publicly release the results of any revisions to
these forward-looking statements which may be made to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.

21

EXHIBIT
E

LAWSUIT
SETTLEMENT ENDS

EDUCATIONAL
SOFTWARE LICENSE AGREEMENT

New York,
New York December __, 2004

Merit
Software, a New York educational software developer, announced today that its
lawsuit against Siboney Corporation has been settled, with Siboney agreeing to
pay Merit in excess of $600,000 over the next two years, agreeing to stop
selling Merit’s software outside of the “schools” market, and agreeing to
termination of Siboney’s license from Merit to sell its software in other
markets. Under the settlement agreement, none of the parties admitted liability
for any of the claims or counterclaims.

Merit had
sued Siboney in June of this year in the Federal District Court in St. Louis for
copyright infringement and breach of contract, and asked for damages and
termination of the license. The charge of infringement was due to Siboney’s
selling Orchard Home software containing Merit’s products. Merit alleged that
Siboney’s license did not permit this because the license was limited to the
“schools” market. Siboney filed a counterclaim against Merit, alleging numerous
breaches of the license agreement and seeking damages.

Siboney
agreed in July to immediately stop including Merit software in its Orchard Home
products, and now has agreed to stop selling Merit software and to stop
including Merit Software in any Siboney products in late 2005.

The
current Orchard products that contain Merit Software include ESL Renegades,
Grammar Renegades, Word Renegades, Paragraph Power, Reading Concepts and Reading
for Critical Thinking.

The
corresponding Merit products, which will continue to be sold by Merit are: ESL
Fitness, Grammar Fitness, Vocabulary Fitness, Paragraph Punch, Accu-Reading,
Reading Shape-Up, and Developing Critical Thinking Skills for Effective
Reading.

 

 

 

 

22EXHIBIT 4.1
                                                                     -----------

                       CERTIFICATE OF OWNERSHIP AND MERGER

                                     MERGING
                           GREYSTONE LOGISTICS, INC.,
                             AN OKLAHOMA CORPORATION
                                      INTO
                               PALWEB CORPORATION,
                             AN OKLAHOMA CORPORATION
       (PURSUANT TO SECTION 1083 OF THE OKLAHOMA GENERAL CORPORATION ACT)

         PalWeb Corporation, an Oklahoma corporation ("Parent"),

         DOES HEREBY CERTIFY:

         FIRST: That Greystone Logistics, Inc., an Oklahoma corporation
("Subsidiary") was incorporated on the 2nd day of March, 2005, pursuant to the
Oklahoma General Corporation Act (the "OGCA"), the provisions of which permit
the merger of two or more corporations organized and existing under the laws of
Oklahoma.

         SECOND: That Parent owns 100% of the outstanding capital stock of
Subsidiary.

         THIRD: That Parent, by the following preambles and resolutions of its
Board of Directors, duly adopted at a meeting of such Board held on March 7,
2005, duly authorized and approved the merger of Subsidiary with and into Parent
on the conditions set forth in such preambles and resolutions:

                  WHEREAS, Subsidiary desires to merge into Parent pursuant to
         Section 1083 of the OGCA;

                  NOW, THEREFORE, BE IT RESOLVED, that Subsidiary be merged with
         and into Parent (the "Merger");

                  BE IT FURTHER RESOLVED, that, in connection with the
         implementation of the Merger, as authorized and approved in the
         immediately preceding resolution, the officers of Parent be, and each
         of them individually hereby is, authorized and directed for and on
         behalf of Parent to execute, deliver, record, file and certify all such
         certificates, agreements, documents and other instruments, including
         without limitation this Certificate of Ownership and Merger as required
         under the OGCA, and to do such further acts and things as the officer
         or officers so acting may consider and determine necessary, advisable
         or convenient, as shall be conclusively evidenced by his or her
         signature affixed thereon;
<PAGE>

                  BE IT FURTHER RESOLVED, that at the Effective Time of the
         Merger, Parent shall succeed to all of the assets and properties of
         Subsidiary and it shall be liable for all of the indebtedness and
         obligations of Subsidiary. This Certificate of Ownership and Merger
         shall constitute, as of the Effective Time of the Merger, an assignment
         and conveyance to Parent of all of the assets and properties, real,
         personal and intangible, of Subsidiary and an assumption by Parent, as
         of the Effective Time of the Merger, of all indebtedness, obligations
         and liabilities of Subsidiary;

                  BE IT FURTHER RESOLVED, that the Certificate of Incorporation
         and the Bylaws of Parent, as in effect immediately prior to the
         Effective Time of the Merger, shall be the Certificate of Incorporation
         and Bylaws of Parent, as the surviving corporation, from and after the
         Effective Time of the Merger until amended in accordance with Oklahoma
         law; provided such Certificate of Incorporation and Bylaws shall be
         amended to change the name of Parent to "Greystone Logistics, Inc.";

                  BE IT FURTHER RESOLVED, that the officers and directors of
         Parent in office immediately prior to the Effective Time of the Merger
         shall be the officers and directors of Parent, as the surviving
         corporation, from and after the Effective Time of the Merger, until
         changed in accordance with Oklahoma law;

                  BE IT FURTHER RESOLVED, that the Merger shall be effective
         upon the filing of this Certificate of Ownership and Merger, in
         accordance with the requirements of Oklahoma law, in the office of the
         Secretary of State of Oklahoma (the "Effective Time of the Merger").

         FOURTH: That the Merger has been adopted, approved, certified, executed
and acknowledged by Subsidiary in accordance with the OOCA.

         IN WITNESS WHEREOF, Pal Web Co oration has caused this Certificate to
be signed by Warren F. Kruger, its President as of the 14th day of March, 2005.

                                       PAL WEB CORPORATION,
                                       an Oklahoma corporation

                                       By:  /s/ Warren F. Kruger
                                            --------------------------------
                                            Warren F. Kruger, President

                                       2

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