Exhibit 10.1
ASSIGNMENT OF LOANS, LIENS
AND LOAN DOCUMENTS
     THIS ASSIGNMENT OF LOANS, LIENS AND LOAN DOCUMENTS (this “Agreement”) dated
as of February 9, 2007 by and among LAURUS MASTER FUND, LTD, a Cayman Islands
company (“Assignor”), MASS FINANCIAL CORP., a Barbados company (“Assignee”),
Stonepath Group, Inc., a Delaware corporation (“Stonepath”), and the other
entities appearing on the signatures pages hereof.
BACKGROUND
     Stonepath, Stonepath Logistics Domestic Services, Inc., a Minnesota
corporation (“SLDS”), Stonepath Offshore Holdings, Inc., a Delaware corporation
(“SLOS”), Stonepath Logistics Government Services, Inc., a Virginia corporation
(“SLGS”), Stonepath Logistics International Services, Inc., a Delaware
corporation (“SLIS”), M.G.R., Inc., a Minnesota corporation (“MGR”),
Distribution Services, Inc., a Minnesota corporation (“DSI”), United American
Acquisitions and Management, Inc., a Michigan corporation (“United”) (Stonepath,
SLDS, SLOS, SLGS, SLIS, MGR, DSI and United, each a “Borrower” and,
collectively, the “Borrowers”), and Assignor are parties to a Security Agreement
dated as of August 31, 2005 (as amended, restated, modified and/or supplemented
from time to time, the “Security Agreement”). Borrowers and certain subsidiaries
are indebted to Assignor pursuant to (a) the Security Agreement and (b) the
notes, guarantees, agreements, instruments and documents set forth on Schedule A
attached hereto (together with the Security Agreement, as each may be amended,
restated modified and/or supplemented from time to time, collectively, the “Loan
Documents”).
     Assignor has agreed to sell and assign all of its respective right, title,
and interest in and to the Loans (as defined in the Security Agreement) and the
Loan Documents to Assignee and Assignee has agreed to purchase the Loans and the
Loan Documents from Assignor on the terms and conditions herein contained.
     NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
     1. Definitions. Capitalized terms not otherwise defined herein shall have
the meanings set forth in the Security Agreement.
     2. Assignment and Assumption.
          (a) As of the Effective Date (as defined in Section 6 of this
Agreement), Assignor hereby TRANSFERS, ASSIGNS, SELLS, GRANTS and CONVEYS,
WITHOUT RECOURSE, REPRESENTATION OR WARRANTY OF ANY NATURE WHATSOEVER (except as
expressly set forth in Section 4(a) of this Agreement) unto Assignee all of
Assignor’s right, title, and interest in and to the Loans and the Loan
Documents, together with all attendant liens, rights, claims, title, assignments
and interests (including security interests), pertaining to or arising from the
Loan Documents (the “Assigned Rights”).

 

--------------------------------------------------------------------------------

 

          (b) As of the Effective Date, Assignee hereby PURCHASES all of the
Assigned Rights and ASSUMES all of Assignor’s obligations under and with respect
to the Loans and the Loan Documents as of the Effective Date (including, without
limitation, all of Assignor’s commitments expressed in the Loan Documents, if
any, and the obligations owing to Assignor thereunder). It is expressly
understood, and Assignor, the Borrowers and the Guarantors agree that Assignee
assumes no obligations that are not expressly stated within the Loan Documents,
provided, however, that Assignee has agreed to waive (i) any provision in the
Loan Documents calling for a prepayment penalty and (ii) any provision of
Section 2(b) of the Minimum Borrowing Note Registration Rights Agreement to the
extent that it requires the Borrowers to pay liquidated damages upon an “Event”
as described therein.
          (c) Assignor, Borrowers and Guarantors hereby agree that the aggregate
outstanding principal amount of the Loans as of the commencement of business on
February 9, 2007 together with interest accrued through 5:00 p.m. (New York
time) on February 9, 2007, due from Borrowers to Assignor in accordance with the
terms of the Loan Documents is $3,688,163.00.
     3. Payment of Purchase Price. In consideration for the Assigned Rights,
Assignee shall on the Effective Date pay to Assignor an amount equal to
$3,688,163.00 (the “Purchase Price”). The Purchase Price shall be paid by wire
transfer to Assignor of immediately available funds in the lawful currency of
the United States of America in accordance with Assignor’s wire transfer
instructions set forth on the signature page hereto. If the Purchase Price is
not received by Assignor by 5:00 p.m. (New York time) on February 9, 2007, the
Purchase Price shall be adjusted by Laurus to reflect any change in the balance
of the Loans.
     4. Representations and Warranties of Assignor.
          (a) Assignor represents and warrants that (i) upon the assignment
hereby, the Assigned Rights are free and clear of any lien or encumbrance
created by Assignor; (ii) this Agreement has been duly authorized, executed and
delivered by Assignor, and is the legal, valid and binding obligation of
Assignor enforceable in accordance with its terms; (iii) it has title to the
Assigned Rights, (iv) it has not previously assigned, sold, sold a participation
interest in, hypothecated or otherwise transferred any interest that it had or
may have in the Assigned Rights or the Loan Documents, (v) no Loan Document has
been modified or amended in any manner, (vi) Assignor has performed each
obligation required to be performed by it under any Loan Document, (vii) it has
not declared in writing the occurrence of any Default or Event of Default,
(viii) no sweep is conducted to any account of Assignor except for sweeps from
accounts maintained with KeyBank National Association (“KeyBank”) and (ix) no
documents have been entered into by Assignor in connection with the Security
Agreement other than the documents listed on Schedule A and the documents
reflected on the closing checklist delivered by Assignor to Assignee (the
“August 2005 Checklist”). Borrowers and Guarantors agree that the waiver by
Assignor contained in the immediately preceding sentence shall be without
prejudice to the right of Assignee to declare an Event of Default upon its
determination that any breach has occurred, including one previously waived by
Assignor, other than a default arising from the interpleader action involving
Home Depot in the U.S. District Court for the Southern District of Indiana,
provided that Borrowers shall have provided to Assignee a complete copy of the
docket for such case for Assignee’s evaluation within five business days
following the Effective Date.

2

--------------------------------------------------------------------------------

 

          (b) Assignor represents and warrants that it is an accredited investor
within the meaning of Regulation D under the Securities Act.
          (c) Assignor makes no representation or warranty and assumes no
responsibility with respect to (i) any statements, warranties or representations
made by any Borrower or any Person guaranteeing the Loans (each a “Guarantor”
and collectively, “Guarantors”) in or in connection with the Security Agreement,
any other Loan Document or any other agreement, instrument or document furnished
pursuant thereto, (ii) the legality, validity, enforceability, genuineness,
sufficiency or value of the Security Agreement, any other Loan Document or any
other instrument or document furnished pursuant thereto or any liens granted by
any such Loan Document; (iii) except as expressly set forth in Section 4(a)
above, the occurrence or existence of any Default or Event of Default under the
Security Agreement or any other Loan Document; or (iv) the financial condition
of any Borrower, any Guarantor or any other obligor or the performance or
observance by any Borrower, any Guarantor or any other obligor of any of its
obligations under any Loan Document or any other agreement, instrument or
document furnished pursuant thereto.
          (d) Assignee hereby acknowledges that it is taking the Loan Documents
as is, without recourse to Assignor, without the benefit of any representations
or warranties from Assignor, except as expressly stated in Section 4(a) above.
          (e) Assignee represents and warrants that this Agreement has been duly
authorized, executed and delivered by it, and is the legal, valid and binding
obligation of the Assignee enforceable in accordance with its terms.
     5. Representations, Warranties and Agreements of Borrowers and Guarantors.
          (a) As of the Effective Date, Borrowers and Guarantors jointly and
severally represent and warrant as follows: (a) each and every representation
and warranty of any Borrower or Guarantor contained in the Security Agreement
(including all schedules attached thereto) or in any other Loan Document is
hereby repeated on the Effective Date, and is true, correct and complete except
as otherwise set forth in the Schedule B attached hereto; (b) no Borrower and no
Guarantor has any claim or defense against Assignor that would or might affect
(i) the validity or enforceability of any provisions of the Loan Documents,
(ii) the collectibility of any sums owing by any Borrower or Guarantor,
(iii) result in a right of offset against Assignee; (c) on the close of the
Business Day immediately preceding the Effective Date, accounts receivable owing
by customers of Borrowers and Guarantors and not more than ninety (90) days past
due are not less than $6,574,000; (d) this Agreement has been duly authorized,
executed and delivered by each Borrower and Guarantor, and is the legal, valid
and binding obligation of such Borrower or Guarantor enforceable in accordance
with its terms; (e) any corporate action required in order to authorize any
Borrower or any Guarantor to enter into this transaction has been duly taken;
(f) no documents have been entered into by any Borrower or Guarantor in
connection with the Loans other than the Security Agreement and the documents
listed on Schedule A and the documents reflected on the August 2005 Checklist;
(g) no Loan Document has been modified or amended in any manner prior to the
Effective Date; and (h) no Default or Event of Default has occurred and is
continuing.

3

--------------------------------------------------------------------------------

 

          (b) Each of the Borrowers and Guarantors agrees that the re-issuance
of the Secured Convertible Minimum Borrowing Note and the Secured Revolving Note
does not constitute a repayment and re-borrowing of the funds evidenced by such
note and does not in any manner whatsoever effect the validity or enforceability
of any Loan Documents.
     6. Effective Date; Conditions Precedent. This Agreement shall become
effective as of the date on which all of the following conditions have been
fulfilled (the “Effective Date”):
          (a) Each Borrower, each Guarantor, Assignor and Assignee shall each
have executed and delivered counterparts of this Agreement to one another.
          (b) Assignor shall have received payment in full of the Purchase
Price.
          (c) Assignor shall have received confirmation from Assignee that
Borrowers and Guarantors shall have delivered to Assignee the following:
originals of the re-issued Secured Convertible Minimum Borrowing Note, the
re-issued Secured Revolving Note, a certified copy of any evidence of corporate
action by Borrowers and Guarantors that Assignee in its discretion requests, a
fully executed copy of the side-letter dated February 6, 2007 between Assignor
and Stonepath as company agent and a true copy of the opinion letter from
Buchanan Ingersoll PC rendered in connection with the August 31, 2005 loan
transaction.
          (d) Assignor shall have caused Loeb & Loeb to deliver an executed Loeb
& Loeb’s Undertaking letter with respect to the documents described in Section 7
below.
     7. Conditions Subsequent. Within 24 hours following the Effective Date,
Assignor shall cause to be delivered to Assignee the original Secured
Convertible Minimum Borrowing Note marked “replaced”, the original Secured
Revolving Note marked “replaced”, the original stock certificates listed on
Schedule C hereto together with the related stock powers executed in blank and a
notice to KeyBank (the “KeyBank Notice”) advising KeyBank that the Third Party
Lockbox Agreement identified on Schedule A has been assigned by Assignor to
Assignee and directing KeyBank to cease any daily sweep to a Laurus account, but
instead to accept the instructions of Assignee with respect to disposition of
funds in such account. On the Effective Date, Assignor shall cause to be
delivered to KeyBank a copy of the KeyBank Notice with the original to follow
within 24 hours following the Effective Date.
     8. Other Obligations. As of the Effective Date (a) Assignee shall be a
party to the Loan Documents and, to the extent provided herein, shall have the
rights and obligations under the Security Agreement of Assignor thereunder and
(b) Assignor shall and hereby does assign to Assignee all of its rights, under
the Security Agreement and the other Loan Documents. Following the Effective
Date, in the event that Assignor receives any sum in connection with the Loans,
Assignor shall promptly remit to Assignee such sum according to the wire
transfer instructions appearing below the Assignee’s signature block below, or
in such other manner as Assignee may from time to time request.
     9. Further Assurances. Assignor, Borrowers and Guarantors each agree to
execute and deliver all such further documents, to do or cause to be done all
such further acts and things, and to obtain all consents reasonably requested by
Assignee, in order to effect the transactions contemplated by this Agreement and
to otherwise grant to the Assignee the intended benefit of

4

--------------------------------------------------------------------------------

 

this Agreement. Such actions include without limitation (a) filing of
assignments sufficient to transfer Assignor’s security interest filed with the
United States Patent and Trademark Office to Assignee, (b) instructing
depositary banks to accept the instructions of Assignee with respect to
disbursements from bank accounts, (c) effecting the transfers or re-issuances of
the Secured Convertible Minimum Borrowing Note and the Secured Revolving Note,
(d) notifying Honk Kong League Central Credit Union of the transfer effected by
this Agreement and (e) delivering any documents necessary to effect the
transactions contemplated by this Agreement and to otherwise grant to Assignee
the intended benefit of this Agreement, the delivery of which Assignee expressly
waives on the Effective Date. Assignor, Borrowers and Guarantors hereby
authorize Assignee to file assignments of those UCC financing statements
currently naming Assignor as secured party and Borrowers and/or Guarantors as
debtors so long as Assignor shall have approved the form thereof.
     10. Indemnities. For and in consideration of Assignor’s agreements
contained herein, each Borrower and Assignee jointly and severally hereby
indemnify Assignor from, and hold Assignor harmless against, all losses,
liabilities, charges, expenses and fees (i) which Assignor may incur as a result
of any non-payment, claim or refund or charge back of any checks or other items
which have been credited by Assignor to Borrowers’ account with Assignor,
together with all expenses and other charges incident thereto, (ii) de minimis
charges which Assignor may have incurred or may now or hereafter incur in
connection with the transactions contemplated by this letter which have not as
yet been reflected in Borrowers’ account which any Borrower is, or may be,
required to bear pursuant to the Security Agreement, and (iii) which Assignor
may incur as a result of errors in calculation of any amounts due Assignor by
any Borrower.
     11. Consent to Assignment. Each Borrower and each Guarantor and their
respective officers, directors, employees, representatives, agents, executors,
heirs, administrators, successors and assigns (each Borrower, each Guarantor and
each such other party, collectively, the “Releasing Parties”) consents to this
Assignment and agrees to be bound by its terms and conditions to the extent
applicable to it. Each Releasing Party represents and warrants to Assignee that
there are no defenses, offsets or counterclaims to any such party’s obligations
under any of the Loan Documents. For and in consideration of Assignor’s
agreements contained herein the Releasing Parties hereby release Assignor and
each of its officers, directors, representatives, employees, agents,
attorneys-in-fact, affiliates and successors and assigns (collectively, the
“Assignor Parties”) from any and all claims, demands, agreements, actions,
expenses, damages, judgments, liabilities and obligations which any of the
Releasing Parties has or ever had against any of the Assignor Parties pursuant
to the Loan Documents or any of the transactions relating thereto and hereby
agrees to indemnify the Assignor Parties from, and hold the Assignor Parties
harmless against the same. For and consideration of Assignee’s agreements
contained herein the Releasing Parties hereby release Assignee and each of its
officers, directors, representatives, employees, agents, attorneys-in-fact,
affiliates and successors and assigns (collectively, the “Assignee Parties”)
from any and all claims, demands, agreements, actions, expenses, damages,
judgments, liabilities and obligations which any of the Releasing Parties has or
ever had arising in connection with the Loan Documents or any of the
transactions relating thereto and hereby agrees to indemnify the Assignee
Parties from, and hold the Assignee Parties harmless against, the same. If any
Borrower or Guarantor has or ever had any claim against Assignor for any act or
unperformed obligation under the Loan Documents or otherwise, the

5

--------------------------------------------------------------------------------

 

Borrowers’ and Guarantors’ remedies are solely against Assignor and Assignee is
hereby released from any such liability.
     12. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW
YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
     13. WAIVER OF JURY TRIAL. EACH OF ASSIGNOR, ASSIGNEE, EACH BORROWER AND
EACH GUARANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN
ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
     14. Counterparts. This Agreement may be executed in one or more
counterparts, each of which when so executed shall be deemed to be an original,
but all of which when taken together shall constitute one and the same
agreement. Any signature delivered by facsimile transmission shall be deemed an
original signature hereto.
[Signatures appear on the following page.]

6

--------------------------------------------------------------------------------

 

     IN WITNESS WHEREOF, this Assignment of Loans, Liens and Loan Documents has
been executed by the parties hereto on the date first written above.

                      ASSIGNOR:       ASSIGNEE:    
 
                    LAURUS MASTER FUND, LTD.       MASS FINANCIAL CORP.    
 
                   
By:
  /s/ Eugene Grin       By:   /s/ James M. Carter    
 
                   
Name:
  Eugene Grin       Name:   James M. Carter    
 
                   
Title:
  Director       Title:   Vice President    
 
                   

                      Wire Transfer Instructions:   Wire Transfer Instructions:
 
                   
Bank:
  North Forth Bank   Bank:   HSBC Bank USA
 
  404 Fifth Avenue       One HSBC Center
 
  New York, NY 10018       Buffalo, NY 14203
ABA #:
  021407912     ABA #:   021001088  
Account Name:
  Laurus Master Fund P&I   Swift Code:   MRMDUS33
Acct. #:
  2704048053     Acct. #:   000050881  
For the Credit of:
  STG Payoff                         For further credit to:
 
                   
 
          Bank:   HSBC Bank Canada
 
              885 West Georgia Street
 
              Vancouver, BC
 
              CANADA V6C 3G1
 
          Account Name:   Clark Wilson LLP
 
          US Trust Acct #:   491689-002  
 
          Transit No.:   10020  
 
          Bank Code:   16  
 
          Swift No.:   HKBCCATT
 
          Re:   Mass Financial Corp. and
 
              File No. 27894-0001/VZH

[Signature Page to Assignment of Loans, Liens and Loan Documents]

7

--------------------------------------------------------------------------------

 

ACKNOWLEDGED AND AGREED BY:
STONEPATH GROUP, INC.

         
By:
  /s/ Robert Arovas    
Name:
 
 
Robert Arovas    
Title:
  Chief Executive Officer    
 
       

STONEPATH LOGISTICS DOMESTIC SERVICES, INC.

         
By:
  /s/ Robert Arovas    
Name:
 
 
Robert Arovas    
Title:
  President    
 
       

STONEPATH OFFSHORE HOLDINGS, INC.

         
By:
  /s/ Robert Arovas    
Name:
 
 
Robert Arovas    
Title:
  President    
 
       

STONEPATH LOGISTICS GOVERNMENT SERVICES, INC.

         
By:
  /s/ Robert Arovas    
Name:
 
 
Robert Arovas    
Title:
  President    
 
       

STONEPATH LOGISTICS INTERNATIONAL SERVICES, INC.,
a Delaware corporation

         
By:
  /s/ Robert Arovas    
Name:
 
 
Robert Arovas    
Title:
  President    
 
       

UNITED AMERICAN ACQUISITIONS
AND MANAGEMENT, INC.

         
By:
  /s/ Robert Arovas    
Name:
 
 
Robert Arovas    
Title:
  President    
 
       

M.G.R., INC.

         
By:
  /s/ Robert Arovas    
Name:
 
 
Robert Arovas    
Title:
  President    
 
       

[Signature Page to Assignment of Loans, Liens and Loan Documents]

8

--------------------------------------------------------------------------------

 

DISTRIBUTION SERVICES, INC.

         
By:
  /s/ Robert Arovas    
Name:
 
 
Robert Arovas    
Title:
  President    
 
       

CONTRACT AIR, INC.

         
By:
  /s/ Robert Arovas    
Name:
 
 
Robert Arovas    
Title:
  President    
 
       

STONEPATH OPERATIONS, INC.

         
By:
  /s/ Robert Arovas    
Name:
 
 
Robert Arovas    
Title:
  President    
 
       

NET VALUE, INC.

         
By:
  /s/ Robert Arovas    
Name:
 
 
Robert Arovas    
Title:
  President    
 
       

CD TRANSFER TECHNOLOGY, LLC

         
By:
  /s/ Robert Arovas    
Name:
 
 
Robert Arovas    
Title:
  President    
 
       

AIR PLUS LIMITED DE PUERTO RICO, INC.

         
By:
  /s/ Robert Arovas    
Name:
 
 
Robert Arovas    
Title:
  President    
 
       

[Signature Page to Assignment of Loans, Liens and Loan Documents]

9

--------------------------------------------------------------------------------

 

SCHEDULE A
Loan Documents
1. Secured Revolving Note dated as of August 31, 2005 made by Borrowers in favor
of Laurus in the original principal amount of $25,000,000.
2. Secured Convertible Minimum Borrowing Note dated as of August 31, 2005 (the
“Minimum Borrowing Note”) made by Borrowers in favor of Laurus in the original
principal amount of $10,000,000.
3. Registration Rights Agreement dated as of August 31, 2005 (the “RRA”) by and
between Stonepath and Laurus but solely to the extent the RRA relates to the
Minimum Borrowing Note.
4. Subsidiary Guaranty dated as of August 31, 2005 executed by each Guarantor in
favor of Laurus.
5. Guarantor Security Agreement dated as of August 31, 2005 executed by each
Guarantor in favor of Laurus.
6. Stock Pledge Agreement dated as of August 31, 2005 by and among Stonepath,
SLIS, MGR, Stonepath Logistics International Services, Inc., a Washington
corporation, and Laurus.
7. Member Pledge Agreement dated as of August 31, 2005 by and between Stonepath
and Laurus.
8. Intellectual Property Security Agreement dated as of August 31, 2005 by and
among Borrowers, Guarantors and Laurus.
9. Subordination Agreement dated as of August 31, 2005 executed by Hong Kong
League Central Credit Union in favor of Laurus.
10. Any UCC financing statements filed by Laurus in connection with the Loan
Documents naming any Borrower or Guarantor as a debtor.
11. 3rd Party Lockbox Agreement made by Borrowers, Guarantors, Assignor and
KeyBank National Association dated as of September 12, 2005.
12. The overadvance side letter among Borrowers, Guarantors and Assignor dated
April 4, 2006.
13. The overadvance side letter among Borrowers, Guarantors and Assignor dated
October 19, 2006.

 

--------------------------------------------------------------------------------

 

SCHEDULE C
Original Stock Certificates Delivered by Assignor

                                  Stock                 Class of   Certificate  
    Number of Shareholder   Issuer   Stock   Number   Par Value   Shares
 
  Stonepath Logistics                

  Domestic Services, Inc.                
Stonepath Group, Inc.
  (f/k/a Stonepath   Common   1   $.001   100
 
  Logistics, Inc.)                
 
                   
Stonepath Group, Inc.
  Stonepath Logistics                
 
  International Services, Inc.   Common   1   $.001   100
 
                   
Stonepath Group, Inc.
  Stonepath                
 
  Operations, Inc.   Common   1   $.001   100
 
                   
Stonepath Group, Inc.
  Stonepath Offshore                
 
  Holdings, Inc.   Common   1   $.001   100
 
                   
Stonepath Group, Inc.
  Net Value, Inc.   Common   C-1   $ .01   100
 
                   
Stonepath Logistics Domestic Services, Inc.
  M.G.R., Inc.   Common   C-1   No Par Value   17,700
 
                   
Stonepath Logistics Domestic Services, Inc.
  Distribution
Services, Inc.   Common   C-1   No Par Value   10,000
 
                   
Stonepath Logistics Domestic Services, Inc.
  Contract Air, Inc.   Common   C-1   No Par Value   17,700
 
                   
Stonepath Logistics
  United American                
Domestic Services, Inc.
  Acquisitions and   Common   2   $1.00   7,500
 
  Management, Inc.                
 
                   
Stonepath Logistics
  Stonepath Logistics                
Domestic Services, Inc.
  Government Services,                
 
  Inc.(f/k/a Transport   Common   3   $1.00   100
 
  Specialists, Inc.)