Exhibit 10.26

 

THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS
WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES LAWS.  THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON
EXERCISE OF THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS
WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT
UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO STONEPATH GROUP, INC. THAT SUCH REGISTRATION IS NOT
REQUIRED.

 

Right to Purchase up to 2,500,000 Shares of Common Stock of
Stonepath Group, Inc.
(subject to adjustment as provided herein)

 

COMMON STOCK PURCHASE WARRANT

 

No.                                   

 

Issue Date: August 31, 2005

 

STONEPATH GROUP, INC., a corporation organized under the laws of the State of
Delaware (the “Company”), hereby certifies that, for value received, LAURUS
MASTER FUND, LTD., or assigns (the “Holder”), is entitled, subject to the terms
set forth below, to purchase from the Company (as defined herein) from and after
the Issue Date of this Warrant and at any time or from time to time before
5:00 p.m., New York time, through the close of business on August 30, 2010 (the
“Expiration Date”), up to 2,500,000 fully paid and nonassessable shares of
Common Stock (as hereinafter defined), $0.001 par value per share, at the
applicable Exercise Price per share (as defined below).  The number and
character of such shares of Common Stock and the applicable Exercise Price per
share are subject to adjustment as provided herein.

 

As used herein the following terms, unless the context otherwise requires, have
the following respective meanings:

 

(a)                                  The term “Common Stock” includes (i) the
Company’s Common Stock, par value $0.001 per share; and (ii) any other
securities into which or for which any of the securities described in the
preceding clause (i) may be converted or exchanged pursuant to a plan of
recapitalization, reorganization, merger, sale of assets or otherwise.

 

(b)                                 The term “Company” shall include Stonepath
Group, Inc. and any person or entity which shall succeed, or assume the
obligations of, Stonepath Group, Inc. hereunder.

 

(c)                                  The “Exercise Price” applicable under this
Warrant shall be as follows:

 

(i)                                     a price of $1.13 for the first 900,000
shares acquired hereunder;

 

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(ii)                                  a price of $1.41 for the next 700,000
shares acquired hereunder;

 

(iii)                               a price of $4.70 for the next 450,000 shares
acquired hereunder; and

 

(iv)                              a price of $7.52 for the last 450,000 shares
acquired hereunder.

 

(d)                                 The term “Other Securities” refers to any
stock (other than Common Stock) and other securities of the Company or any other
person (corporate or otherwise) which the holder of the Warrant at any time
shall be entitled to receive, or shall have received, on the exercise of the
Warrant, in lieu of or in addition to Common Stock, or which at any time shall
be issuable or shall have been issued in exchange for or in replacement of
Common Stock or Other Securities pursuant to Section 4 or otherwise.

 

1.                                       EXERCISE OF WARRANT.

 

1.1.                              NUMBER OF SHARES ISSUABLE UPON EXERCISE.  FROM
AND AFTER THE DATE HEREOF THROUGH AND INCLUDING THE EXPIRATION DATE, THE HOLDER
SHALL BE ENTITLED TO RECEIVE, UPON EXERCISE OF THIS WARRANT IN WHOLE OR IN PART,
BY DELIVERY OF AN ORIGINAL OR FAX COPY OF AN EXERCISE NOTICE IN THE FORM
ATTACHED HERETO AS EXHIBIT A (THE “EXERCISE NOTICE”), ACCOMPANIED BY PAYMENT OF
THE THEN APPLICABLE EXERCISE PRICE, SHARES OF COMMON STOCK OF THE COMPANY,
SUBJECT TO ADJUSTMENT PURSUANT TO SECTION 4.

 

1.2.                              FAIR MARKET VALUE.  FOR PURPOSES HEREOF, THE
“FAIR MARKET VALUE” OF A SHARE OF COMMON STOCK AS OF A PARTICULAR DATE (THE
“DETERMINATION DATE”) SHALL MEAN:

 

(A)                                  IF THE COMPANY’S COMMON STOCK IS TRADED ON
THE AMERICAN STOCK EXCHANGE OR ANOTHER NATIONAL EXCHANGE OR IS QUOTED ON THE
NATIONAL OR SMALLCAP MARKET OF THE NASDAQ STOCK MARKET, INC. (“NASDAQ”), THEN
THE CLOSING OR LAST SALE PRICE, RESPECTIVELY, REPORTED FOR THE LAST BUSINESS DAY
IMMEDIATELY PRECEDING THE DETERMINATION DATE.

 

(B)                                 IF THE COMPANY’S COMMON STOCK IS NOT TRADED
ON THE AMERICAN STOCK EXCHANGE OR ANOTHER NATIONAL EXCHANGE OR ON THE NASDAQ BUT
IS TRADED ON THE NASD OVER THE COUNTER BULLETIN BOARD, THEN THE MEAN OF THE
AVERAGE OF THE CLOSING BID AND ASKED PRICES REPORTED FOR THE LAST BUSINESS DAY
IMMEDIATELY PRECEDING THE DETERMINATION DATE.

 

(C)                                  EXCEPT AS PROVIDED IN CLAUSE (D) BELOW, IF
THE COMPANY’S COMMON STOCK IS NOT PUBLICLY TRADED, THEN AS THE HOLDER AND THE
COMPANY AGREE OR IN THE ABSENCE OF AGREEMENT BY ARBITRATION IN ACCORDANCE WITH
THE RULES THEN IN EFFECT OF THE AMERICAN ARBITRATION ASSOCIATION, BEFORE A
SINGLE ARBITRATOR TO BE CHOSEN FROM A PANEL OF PERSONS QUALIFIED BY EDUCATION
AND TRAINING TO PASS ON THE MATTER TO BE DECIDED.

 

(D)                                 IF THE DETERMINATION DATE IS THE DATE OF A
LIQUIDATION, DISSOLUTION OR WINDING UP, OR ANY EVENT DEEMED TO BE A LIQUIDATION,
DISSOLUTION OR WINDING UP PURSUANT TO THE COMPANY’S CHARTER, THEN ALL AMOUNTS TO
BE PAYABLE PER SHARE TO HOLDERS OF THE COMMON STOCK PURSUANT TO THE CHARTER IN
THE EVENT OF SUCH LIQUIDATION, DISSOLUTION OR WINDING UP, PLUS ALL OTHER AMOUNTS
TO BE PAYABLE PER SHARE IN RESPECT OF THE COMMON

 

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STOCK IN LIQUIDATION UNDER THE CHARTER, ASSUMING FOR THE PURPOSES OF THIS CLAUSE
(D) THAT ALL OF THE SHARES OF COMMON STOCK THEN ISSUABLE UPON EXERCISE OF THE
WARRANT ARE OUTSTANDING AT THE DETERMINATION DATE.

 

1.3.                              COMPANY ACKNOWLEDGMENT.  THE COMPANY WILL, AT
THE TIME OF THE EXERCISE OF THIS WARRANT, UPON THE REQUEST OF THE HOLDER
ACKNOWLEDGE IN WRITING ITS CONTINUING OBLIGATION TO AFFORD TO THE HOLDER ANY
RIGHTS TO WHICH SUCH HOLDER SHALL CONTINUE TO BE ENTITLED AFTER SUCH EXERCISE IN
ACCORDANCE WITH THE PROVISIONS OF THIS WARRANT.  IF THE HOLDER SHALL FAIL TO
MAKE ANY SUCH REQUEST, SUCH FAILURE SHALL NOT AFFECT THE CONTINUING OBLIGATION
OF THE COMPANY TO AFFORD TO THE HOLDER ANY SUCH RIGHTS.

 

1.4.                              TRUSTEE FOR WARRANT HOLDERS.  IN THE EVENT
THAT A BANK OR TRUST COMPANY SHALL HAVE BEEN APPOINTED AS TRUSTEE FOR THE HOLDER
OF THIS WARRANT PURSUANT TO SUBSECTION 3.2, SUCH BANK OR TRUST COMPANY SHALL
HAVE ALL THE POWERS AND DUTIES OF A WARRANT AGENT (AS HEREINAFTER DESCRIBED) AND
SHALL ACCEPT, IN ITS OWN NAME FOR THE ACCOUNT OF THE COMPANY OR SUCH SUCCESSOR
PERSON AS MAY BE ENTITLED THERETO, ALL AMOUNTS OTHERWISE PAYABLE TO THE COMPANY
OR SUCH SUCCESSOR, AS THE CASE MAY BE, ON EXERCISE OF THIS WARRANT PURSUANT TO
THIS SECTION 1.

 

2.                                       PROCEDURE FOR EXERCISE.

 

2.1.                              DELIVERY OF STOCK CERTIFICATES, ETC., ON
EXERCISE.  THE COMPANY AGREES THAT THE SHARES OF COMMON STOCK PURCHASED UPON
EXERCISE OF THIS WARRANT SHALL BE DEEMED TO BE ISSUED TO THE HOLDER AS THE
RECORD OWNER OF SUCH SHARES AS OF THE CLOSE OF BUSINESS ON THE DATE ON WHICH
THIS WARRANT SHALL HAVE BEEN SURRENDERED AND PAYMENT SHALL HAVE BEEN MADE FOR
SUCH SHARES IN ACCORDANCE HEREWITH.  AS SOON AS PRACTICABLE AFTER THE EXERCISE
OF THIS WARRANT IN FULL OR IN PART, AND IN ANY EVENT WITHIN THREE (3) BUSINESS
DAYS THEREAFTER, THE COMPANY AT ITS EXPENSE (INCLUDING THE PAYMENT BY IT OF ANY
APPLICABLE ISSUE TAXES) WILL CAUSE TO BE ISSUED IN THE NAME OF AND DELIVERED TO
THE HOLDER, OR AS THE HOLDER (UPON PAYMENT BY THE HOLDER OF ANY APPLICABLE
TRANSFER TAXES) MAY DIRECT IN COMPLIANCE WITH APPLICABLE SECURITIES LAWS, A
CERTIFICATE OR CERTIFICATES FOR THE NUMBER OF DULY AND VALIDLY ISSUED, FULLY
PAID AND NONASSESSABLE SHARES OF COMMON STOCK (OR OTHER SECURITIES) TO WHICH THE
HOLDER SHALL BE ENTITLED ON SUCH EXERCISE, PLUS, IN LIEU OF ANY FRACTIONAL SHARE
TO WHICH THE HOLDER WOULD OTHERWISE BE ENTITLED, CASH EQUAL TO SUCH FRACTION
MULTIPLIED BY THE THEN FAIR MARKET VALUE OF ONE FULL SHARE, TOGETHER WITH ANY
OTHER STOCK OR OTHER SECURITIES AND PROPERTY (INCLUDING CASH, WHERE APPLICABLE)
TO WHICH SUCH HOLDER IS ENTITLED UPON SUCH EXERCISE PURSUANT TO SECTION 1 OR
OTHERWISE.

 

2.2.                              EXERCISE.  PAYMENT MAY BE MADE, IN THE
HOLDER’S DISCRETION, EITHER IN CASH OR BY CERTIFIED OR OFFICIAL BANK CHECK
PAYABLE TO THE ORDER OF THE COMPANY EQUAL TO THE APPLICABLE AGGREGATE EXERCISE
PRICE, FOR THE NUMBER OF COMMON SHARES SPECIFIED IN SUCH EXERCISE NOTICE (AS
SUCH EXERCISE NUMBER SHALL BE ADJUSTED TO REFLECT ANY ADJUSTMENT IN THE TOTAL
NUMBER OF SHARES OF COMMON STOCK ISSUABLE TO THE HOLDER PER THE TERMS OF THIS
WARRANT) AND THE HOLDER SHALL THEREUPON BE ENTITLED TO RECEIVE THE NUMBER OF
DULY AUTHORIZED, VALIDLY ISSUED, FULLY-PAID AND NON-ASSESSABLE SHARES OF COMMON
STOCK (OR OTHER SECURITIES) DETERMINED AS PROVIDED HEREIN.

 

3

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3.                                       EFFECT OF REORGANIZATION, ETC.;
ADJUSTMENT OF EXERCISE PRICE.

 

3.1.                              REORGANIZATION, CONSOLIDATION, MERGER, ETC. 
IN CASE AT ANY TIME OR FROM TIME TO TIME THE COMPANY SHALL (A) EFFECT A
REORGANIZATION, (B) CONSOLIDATE WITH OR MERGE INTO ANY OTHER PERSON, OR
(C) TRANSFER ALL OR SUBSTANTIALLY ALL OF ITS PROPERTIES OR ASSETS TO ANY OTHER
PERSON UNDER ANY PLAN OR ARRANGEMENT CONTEMPLATING THE DISSOLUTION OF THE
COMPANY, THEN, IN EACH SUCH CASE, AS A CONDITION TO THE CONSUMMATION OF SUCH A
TRANSACTION, PROPER AND ADEQUATE PROVISION SHALL BE MADE BY THE COMPANY WHEREBY
THE HOLDER, ON THE EXERCISE HEREOF AS PROVIDED IN SECTION 1 AT ANY TIME AFTER
THE CONSUMMATION OF SUCH REORGANIZATION, CONSOLIDATION OR MERGER OR THE
EFFECTIVE DATE OF SUCH DISSOLUTION, AS THE CASE MAY BE, SHALL RECEIVE, IN LIEU
OF THE COMMON STOCK (OR OTHER SECURITIES) ISSUABLE ON SUCH EXERCISE PRIOR TO
SUCH CONSUMMATION OR SUCH EFFECTIVE DATE, THE STOCK AND OTHER SECURITIES AND
PROPERTY (INCLUDING CASH) TO WHICH SUCH HOLDER WOULD HAVE BEEN ENTITLED UPON
SUCH CONSUMMATION OR IN CONNECTION WITH SUCH DISSOLUTION, AS THE CASE MAY BE, IF
SUCH HOLDER HAD SO EXERCISED THIS WARRANT, IMMEDIATELY PRIOR THERETO, ALL
SUBJECT TO FURTHER ADJUSTMENT THEREAFTER AS PROVIDED IN SECTION 4.

 

3.2.                              DISSOLUTION.  IN THE EVENT OF ANY DISSOLUTION
OF THE COMPANY FOLLOWING THE TRANSFER OF ALL OR SUBSTANTIALLY ALL OF ITS
PROPERTIES OR ASSETS, THE COMPANY, CONCURRENTLY WITH ANY DISTRIBUTIONS MADE TO
HOLDERS OF ITS COMMON STOCK, SHALL AT ITS EXPENSE DELIVER OR CAUSE TO BE
DELIVERED TO THE HOLDER THE STOCK AND OTHER SECURITIES AND PROPERTY (INCLUDING
CASH, WHERE APPLICABLE) RECEIVABLE BY THE HOLDER PURSUANT TO SECTION 3.1, OR, IF
THE HOLDER SHALL SO INSTRUCT THE COMPANY, TO A BANK OR TRUST COMPANY SPECIFIED
BY THE HOLDER AND HAVING ITS PRINCIPAL OFFICE IN NEW YORK, NY AS TRUSTEE FOR THE
HOLDER (THE “TRUSTEE”), IN EACH CASE AGAINST PAYMENT OF THE EXERCISE PRICE BY
THE HOLDER.

 

3.3.                              CONTINUATION OF TERMS.  UPON ANY
REORGANIZATION, CONSOLIDATION, MERGER OR TRANSFER (AND ANY DISSOLUTION FOLLOWING
ANY TRANSFER) REFERRED TO IN THIS SECTION 3, THIS WARRANT SHALL CONTINUE IN FULL
FORCE AND EFFECT AND THE TERMS HEREOF SHALL BE APPLICABLE TO THE SHARES OF STOCK
AND OTHER SECURITIES AND PROPERTY RECEIVABLE ON THE EXERCISE OF THIS WARRANT
AFTER THE CONSUMMATION OF SUCH REORGANIZATION, CONSOLIDATION OR MERGER OR THE
EFFECTIVE DATE OF DISSOLUTION FOLLOWING ANY SUCH TRANSFER, AS THE CASE MAY BE,
AND SHALL BE BINDING UPON THE ISSUER OF ANY SUCH STOCK OR OTHER SECURITIES,
INCLUDING, IN THE CASE OF ANY SUCH TRANSFER, THE PERSON ACQUIRING ALL OR
SUBSTANTIALLY ALL OF THE PROPERTIES OR ASSETS OF THE COMPANY, WHETHER OR NOT
SUCH PERSON SHALL HAVE EXPRESSLY ASSUMED THE TERMS OF THIS WARRANT AS PROVIDED
IN SECTION 4.  IN THE EVENT THIS WARRANT DOES NOT CONTINUE IN FULL FORCE AND
EFFECT AFTER THE CONSUMMATION OF THE TRANSACTIONS DESCRIBED IN THIS SECTION 3,
THEN THE COMPANY’S SECURITIES AND PROPERTY (INCLUDING CASH, WHERE APPLICABLE)
RECEIVABLE BY THE HOLDER WILL BE DELIVERED TO THE HOLDER OR THE TRUSTEE AS
CONTEMPLATED BY SECTION 3.2.

 

4.                                       EXTRAORDINARY EVENTS REGARDING COMMON
STOCK.  IN THE EVENT THAT THE COMPANY SHALL (A) ISSUE ADDITIONAL SHARES OF THE
COMMON STOCK AS A DIVIDEND OR OTHER DISTRIBUTION ON OUTSTANDING COMMON STOCK OR
ANY PREFERRED STOCK ISSUED BY THE COMPANY, (B) SUBDIVIDE ITS OUTSTANDING SHARES
OF COMMON STOCK, OR (C) COMBINE ITS OUTSTANDING SHARES OF THE COMMON STOCK INTO
A SMALLER NUMBER OF SHARES OF THE COMMON STOCK, THEN, IN EACH SUCH EVENT, THE
EXERCISE PRICE SHALL, SIMULTANEOUSLY WITH THE HAPPENING OF SUCH EVENT, BE
ADJUSTED BY MULTIPLYING THE THEN EXERCISE PRICE BY A FRACTION, THE NUMERATOR OF
WHICH SHALL BE THE NUMBER OF SHARES OF COMMON STOCK OUTSTANDING IMMEDIATELY
PRIOR TO SUCH EVENT AND THE DENOMINATOR OF WHICH SHALL BE THE NUMBER OF SHARES
OF COMMON STOCK OUTSTANDING IMMEDIATELY AFTER SUCH EVENT, AND THE PRODUCT SO
OBTAINED SHALL THEREAFTER BE THE EXERCISE PRICE THEN IN EFFECT. THE EXERCISE

 

4

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PRICE, AS SO ADJUSTED, SHALL BE READJUSTED IN THE SAME MANNER UPON THE HAPPENING
OF ANY SUCCESSIVE EVENT OR EVENTS DESCRIBED HEREIN IN THIS SECTION 4.  THE
NUMBER OF SHARES OF COMMON STOCK THAT THE HOLDER SHALL THEREAFTER, ON THE
EXERCISE HEREOF AS PROVIDED IN SECTION 1, BE ENTITLED TO RECEIVE SHALL BE
ADJUSTED TO A NUMBER DETERMINED BY MULTIPLYING THE NUMBER OF SHARES OF COMMON
STOCK THAT WOULD OTHERWISE (BUT FOR THE PROVISIONS OF THIS SECTION 4) BE
ISSUABLE ON SUCH EXERCISE BY A FRACTION OF WHICH (A) THE NUMERATOR IS THE
EXERCISE PRICE THAT WOULD OTHERWISE (BUT FOR THE PROVISIONS OF THIS SECTION 4)
BE IN EFFECT, AND (B) THE DENOMINATOR IS THE EXERCISE PRICE IN EFFECT ON THE
DATE OF SUCH EXERCISE (TAKING INTO ACCOUNT THE PROVISIONS OF THIS SECTION 4).

 

5.                                       CERTIFICATE AS TO ADJUSTMENTS.  IN EACH
CASE OF ANY ADJUSTMENT OR READJUSTMENT IN THE SHARES OF COMMON STOCK (OR OTHER
SECURITIES) ISSUABLE ON THE EXERCISE OF THIS WARRANT, THE COMPANY AT ITS EXPENSE
WILL PROMPTLY CAUSE ITS CHIEF FINANCIAL OFFICER OR OTHER APPROPRIATE DESIGNEE TO
COMPUTE SUCH ADJUSTMENT OR READJUSTMENT IN ACCORDANCE WITH THE TERMS OF THIS
WARRANT AND PREPARE A CERTIFICATE SETTING FORTH SUCH ADJUSTMENT OR READJUSTMENT
AND SHOWING IN DETAIL THE FACTS UPON WHICH SUCH ADJUSTMENT OR READJUSTMENT IS
BASED, INCLUDING A STATEMENT OF (A) THE CONSIDERATION RECEIVED OR RECEIVABLE BY
THE COMPANY FOR ANY ADDITIONAL SHARES OF COMMON STOCK (OR OTHER SECURITIES)
ISSUED OR SOLD OR DEEMED TO HAVE BEEN ISSUED OR SOLD, (B) THE NUMBER OF SHARES
OF COMMON STOCK (OR OTHER SECURITIES) OUTSTANDING OR DEEMED TO BE OUTSTANDING,
AND (C) THE EXERCISE PRICE AND THE NUMBER OF SHARES OF COMMON STOCK TO BE
RECEIVED UPON EXERCISE OF THIS WARRANT, IN EFFECT IMMEDIATELY PRIOR TO SUCH
ADJUSTMENT OR READJUSTMENT AND AS ADJUSTED OR READJUSTED AS PROVIDED IN THIS
WARRANT.  THE COMPANY WILL FORTHWITH MAIL A COPY OF EACH SUCH CERTIFICATE TO THE
HOLDER AND ANY WARRANT AGENT OF THE COMPANY (APPOINTED PURSUANT TO SECTION 11
HEREOF).

 

6.                                       RESERVATION OF STOCK, ETC., ISSUABLE ON
EXERCISE OF WARRANT.  THE COMPANY WILL AT ALL TIMES RESERVE AND KEEP AVAILABLE,
SOLELY FOR ISSUANCE AND DELIVERY ON THE EXERCISE OF THIS WARRANT, SHARES OF
COMMON STOCK (OR OTHER SECURITIES) FROM TIME TO TIME ISSUABLE ON THE EXERCISE OF
THIS WARRANT.

 

7.                                       ASSIGNMENT; EXCHANGE OF WARRANT. 
SUBJECT TO COMPLIANCE WITH APPLICABLE SECURITIES LAWS, THIS WARRANT, AND THE
RIGHTS EVIDENCED HEREBY, MAY BE TRANSFERRED BY ANY REGISTERED HOLDER HEREOF (A
“TRANSFEROR”) IN WHOLE OR IN PART.  ON THE SURRENDER FOR EXCHANGE OF THIS
WARRANT, WITH THE TRANSFEROR’S ENDORSEMENT IN THE FORM OF EXHIBIT B ATTACHED
HERETO (THE “TRANSFEROR ENDORSEMENT FORM”) AND TOGETHER WITH EVIDENCE REASONABLY
SATISFACTORY TO THE COMPANY DEMONSTRATING COMPLIANCE WITH APPLICABLE SECURITIES
LAWS, WHICH SHALL INCLUDE, WITHOUT LIMITATION, THE PROVISION OF A LEGAL OPINION
FROM THE TRANSFEROR’S COUNSEL (AT THE TRANSFEROR’S EXPENSE) THAT SUCH TRANSFER
IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF APPLICABLE SECURITIES LAWS, THE
COMPANY AT ITS EXPENSE (BUT WITH PAYMENT BY THE TRANSFEROR OF ANY APPLICABLE
TRANSFER TAXES) WILL ISSUE AND DELIVER TO OR ON THE ORDER OF THE TRANSFEROR
THEREOF A NEW WARRANT OF LIKE TENOR, IN THE NAME OF THE TRANSFEROR AND/OR THE
TRANSFEREE(S) SPECIFIED IN SUCH TRANSFEROR ENDORSEMENT FORM (EACH A
“TRANSFEREE”), CALLING IN THE AGGREGATE ON THE FACE OR FACES THEREOF FOR THE
NUMBER OF SHARES OF COMMON STOCK CALLED FOR ON THE FACE OR FACES OF THE WARRANT
SO SURRENDERED BY THE TRANSFEROR.

 

8.                                       REPLACEMENT OF WARRANT.  ON RECEIPT OF
EVIDENCE REASONABLY SATISFACTORY TO THE COMPANY OF THE LOSS, THEFT, DESTRUCTION
OR MUTILATION OF THIS WARRANT AND, IN THE CASE OF ANY SUCH LOSS, THEFT OR
DESTRUCTION OF THIS WARRANT, ON DELIVERY OF AN INDEMNITY AGREEMENT OR SECURITY

 

5

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reasonably satisfactory in form and amount to the Company or, in the case of any
such mutilation, on surrender and cancellation of this Warrant, the Company at
its expense will execute and deliver, in lieu thereof, a new Warrant of like
tenor.

 

9.                                       REGISTRATION RIGHTS.  THE HOLDER HAS
BEEN GRANTED CERTAIN REGISTRATION RIGHTS BY THE COMPANY.  THESE REGISTRATION
RIGHTS ARE SET FORTH IN A REGISTRATION RIGHTS AGREEMENT ENTERED INTO BY THE
COMPANY AND HOLDER DATED AS OF THE DATE HEREOF, AS THE SAME MAY BE AMENDED,
MODIFIED AND/OR SUPPLEMENTED FROM TIME TO TIME.

 

10.                                 MAXIMUM EXERCISE.  NOTWITHSTANDING ANYTHING
CONTAINED HEREIN TO THE CONTRARY, THE HOLDER SHALL NOT BE ENTITLED TO EXERCISE
THIS WARRANT IN CONNECTION WITH THAT NUMBER OF SHARES OF COMMON STOCK WHICH
WOULD EXCEED THE DIFFERENCE BETWEEN (I) 4.99% OF THE ISSUED AND OUTSTANDING
SHARES OF COMMON STOCK AND (II) THE NUMBER OF SHARES OF COMMON STOCK
BENEFICIALLY OWNED BY THE HOLDER.  FOR THE PURPOSES OF THE IMMEDIATELY PRECEDING
SENTENCE, BENEFICIAL OWNERSHIP SHALL BE DETERMINED IN ACCORDANCE WITH
SECTION 13(D) OF THE EXCHANGE ACT, AS AMENDED, AND REGULATION 13D-3 THEREUNDER. 
THE CONVERSION LIMITATION DESCRIBED IN THIS SECTION 10 SHALL AUTOMATICALLY
BECOME NULL AND VOID FOLLOWING NOTICE TO THE COMPANY UPON THE OCCURRENCE AND
DURING THE CONTINUANCE OF AN EVENT OF DEFAULT UNDER AND AS DEFINED IN THE NOTE
MADE BY THE COMPANY AND CERTAIN SUBSIDIARIES OF COMPANY TO THE HOLDER DATED THE
DATE HEREOF (AS AMENDED, MODIFIED OR SUPPLEMENTED FROM TIME TO TIME, THE
“NOTE”), OR UPON 75 DAYS PRIOR NOTICE TO THE COMPANY, EXCEPT THAT AT NO TIME
SHALL THE NUMBER OF SHARES OF COMMON STOCK BENEFICIALLY OWNED BY THE HOLDER
EXCEED 19.99% OF THE OUTSTANDING SHARES OF COMMON STOCK.  NOTWITHSTANDING
ANYTHING CONTAINED HEREIN TO THE CONTRARY, THE NUMBER OF SHARES OF COMMON STOCK
ISSUABLE BY THE COMPANY AND ACQUIRABLE BY THE HOLDER AT A PRICE BELOW $0.91 PER
SHARE PURSUANT TO THE TERMS OF THIS WARRANT, THE NOTE, THE SECURITY AGREEMENT
(AS DEFINED IN THE NOTE), ANY ANCILLARY AGREEMENT (AS DEFINED IN THE SECURITY
AGREEMENT) OR OTHERWISE, SHALL NOT EXCEED AN AGGREGATE OF 8,738,173 SHARES OF
COMMON STOCK (SUBJECT TO APPROPRIATE ADJUSTMENT FOR STOCK SPLITS, STOCK
DIVIDENDS, OR OTHER SIMILAR RECAPITALIZATIONS AFFECTING THE COMMON STOCK) (THE
“MAXIMUM COMMON STOCK ISSUANCE”), UNLESS THE ISSUANCE OF COMMON STOCK HEREUNDER
IN EXCESS OF THE MAXIMUM COMMON STOCK ISSUANCE SHALL FIRST BE APPROVED BY THE
COMPANY’S SHAREHOLDERS.  IF AT ANY POINT IN TIME AND FROM TIME TO TIME THE
NUMBER OF SHARES OF COMMON STOCK ISSUED PURSUANT TO THE TERMS OF THIS WARRANT,
THE NOTE, THE SECURITY AGREEMENT OR ANY ANCILLARY AGREEMENT, TOGETHER WITH THE
NUMBER OF SHARES OF COMMON STOCK THAT WOULD THEN BE ISSUABLE BY THE COMPANY TO
THE HOLDER IN THE EVENT OF A CONVERSION OR EXERCISE PURSUANT TO THE TERMS OF
THIS WARRANT, THE NOTE, THE SECURITY AGREEMENT, ANY ANCILLARY AGREEMENT OR
OTHERWISE, WOULD EXCEED THE MAXIMUM COMMON STOCK ISSUANCE BUT FOR THIS
SECTION 10, THE COMPANY SHALL PROMPTLY CALL A SHAREHOLDERS MEETING TO CONSIDER
THE SHAREHOLDER APPROVAL.  THE HOLDER SHALL NOT BE ENTITLED TO VOTE ITS SHARES
FOR ANY PROPOSAL FOR THE ISSUANCE OF SHARES OF COMMON STOCK IN EXCESS OF THE
MAXIMUM COMMON STOCK ISSUANCE.

 

11.                                 WARRANT AGENT.  THE COMPANY MAY, BY WRITTEN
NOTICE TO THE HOLDER OF THE WARRANT, APPOINT AN AGENT FOR THE PURPOSE OF ISSUING
COMMON STOCK (OR OTHER SECURITIES) ON THE EXERCISE OF THIS WARRANT PURSUANT TO
SECTION 1, EXCHANGING THIS WARRANT PURSUANT TO SECTION 7, AND REPLACING THIS
WARRANT PURSUANT TO SECTION 8, OR ANY OF THE FOREGOING, AND THEREAFTER ANY SUCH
ISSUANCE, EXCHANGE OR REPLACEMENT, AS THE CASE MAY BE, SHALL BE MADE AT SUCH
OFFICE BY SUCH AGENT.

 

6

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12.                                 TRANSFER ON THE COMPANY’S BOOKS.  UNTIL THIS
WARRANT IS TRANSFERRED ON THE BOOKS OF THE COMPANY, THE COMPANY MAY TREAT THE
REGISTERED HOLDER HEREOF AS THE ABSOLUTE OWNER HEREOF FOR ALL PURPOSES,
NOTWITHSTANDING ANY NOTICE TO THE CONTRARY.

 

13.                                 NOTICES, ETC.  ALL NOTICES AND OTHER
COMMUNICATIONS FROM THE COMPANY TO THE HOLDER SHALL BE MAILED BY FIRST CLASS
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, AT SUCH ADDRESS AS MAY HAVE BEEN
FURNISHED TO THE COMPANY IN WRITING BY THE HOLDER FROM TIME TO TIME.

 

14.                                 MISCELLANEOUS.  THIS WARRANT AND ANY TERM
HEREOF MAY BE CHANGED, WAIVED, DISCHARGED OR TERMINATED ONLY BY AN INSTRUMENT IN
WRITING SIGNED BY THE PARTY AGAINST WHICH ENFORCEMENT OF SUCH CHANGE, WAIVER,
DISCHARGE OR TERMINATION IS SOUGHT.  THIS WARRANT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF STATE OF NEW YORK WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAWS.  ANY ACTION BROUGHT CONCERNING THE TRANSACTIONS
CONTEMPLATED BY THIS WARRANT SHALL BE BROUGHT ONLY IN THE STATE COURTS OF NEW
YORK OR IN THE FEDERAL COURTS LOCATED IN THE STATE OF NEW YORK; PROVIDED,
HOWEVER, THAT THE HOLDER MAY CHOOSE TO WAIVE THIS PROVISION AND BRING AN ACTION
OUTSIDE THE STATE OF NEW YORK.  THE INDIVIDUALS EXECUTING THIS WARRANT ON BEHALF
OF THE COMPANY AGREE TO SUBMIT TO THE JURISDICTION OF SUCH COURTS AND WAIVE
TRIAL BY JURY.  THE PREVAILING PARTY SHALL BE ENTITLED TO RECOVER FROM THE OTHER
PARTY ITS REASONABLE ATTORNEYS’ FEES AND COSTS.  IN THE EVENT THAT ANY PROVISION
OF THIS WARRANT IS INVALID OR UNENFORCEABLE UNDER ANY APPLICABLE STATUTE OR
RULE OF LAW, THEN SUCH PROVISION SHALL BE DEEMED INOPERATIVE TO THE EXTENT THAT
IT MAY CONFLICT THEREWITH AND SHALL BE DEEMED MODIFIED TO CONFORM WITH SUCH
STATUTE OR RULE OF LAW.  ANY SUCH PROVISION WHICH MAY PROVE INVALID OR
UNENFORCEABLE UNDER ANY LAW SHALL NOT AFFECT THE VALIDITY OR ENFORCEABILITY OF
ANY OTHER PROVISION OF THIS WARRANT.  THE HEADINGS IN THIS WARRANT ARE FOR
PURPOSES OF REFERENCE ONLY, AND SHALL NOT LIMIT OR OTHERWISE AFFECT ANY OF THE
TERMS HEREOF.  THE COMPANY ACKNOWLEDGES THAT LEGAL COUNSEL PARTICIPATED IN THE
PREPARATION OF THIS WARRANT AND, THEREFORE, STIPULATES THAT THE RULE OF
CONSTRUCTION THAT AMBIGUITIES ARE TO BE RESOLVED AGAINST THE DRAFTING PARTY
SHALL NOT BE APPLIED IN THE INTERPRETATION OF THIS WARRANT TO FAVOR ANY PARTY
AGAINST THE OTHER PARTY.

 

[BALANCE OF PAGE INTENTIONALLY LEFT BLANK;
SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the Company has executed this Warrant as of the date first
written above.

 

 

 

STONEPATH GROUP, INC.

 

 

WITNESS:

 

 

By:

 

 

Name:

 

 

 

Title:

 

 

8

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Exhibit A

 

FORM OF SUBSCRIPTION
(To Be Signed Only On Exercise Of Warrant)

 

TO:                            Stonepath Group, Inc.
1930 6th Avenue S., Suite 401
Seattle, Washington 98134

Attention:                                         Chief Financial Officer

 

The undersigned, pursuant to the provisions set forth in the attached Warrant
(No.        ), hereby irrevocably elects to purchase :

 

                 shares of the Common Stock covered by such Warrant.

 

The undersigned herewith makes payment of the full Exercise Price for such
shares at the price per share provided for in such Warrant, which is
$                      .  Such payment takes the form of:

 

$                     in lawful money of the United States.

 

 

The undersigned requests that the certificates for such shares be issued in the
name of, and delivered to
                                                                                            
whose address is
                                                                                                                                                      .

 

The undersigned represents and warrants that all offers and sales by the
undersigned of the securities issuable upon exercise of the within Warrant shall
be made pursuant to registration of the Common Stock under the Securities Act of
1933, as amended (the “Securities Act”) or pursuant to an exemption from
registration under the Securities Act.

 

Dated:

 

 

 

 

(Signature must conform to name of holder as
specified on the face of the Warrant)

 

 

 

Address:

 

 

 

 

 

A-1

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Exhibit B

 

FORM OF TRANSFEROR ENDORSEMENT
(To Be Signed Only On Transfer Of Warrant)

 

For value received, the undersigned hereby sells, assigns, and transfers unto
the person(s) named below under the heading “Transferees” the right represented
by the within Warrant to purchase the percentage and number of shares of Common
Stock of Stonepath Group, Inc. into which the within Warrant relates specified
under the headings “Percentage Transferred” and “Number Transferred,”
respectively, opposite the name(s) of such person(s) and appoints each such
person attorney to transfer its respective right on the books of Stonepath
Group, Inc. with full power of substitution in the premises.

 

Transferees

 

Address

 

Percentage
Transferred

 

Number
Transferred

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dated:

 

 

 

 

(Signature must conform to name of holder as
specified on the face of the Warrant)

 

 

 

Address:

 

 

 

 

 

 

 

 

 

SIGNED IN THE PRESENCE OF:

 

 

 

 

 

(Name)

 

 

ACCEPTED AND AGREED:

 

[TRANSFEREE]

 

 

 

 

 

 

 

 

(Name)

 

 

 

B-1

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