Exhibit 10.22


 


TENTH AMENDMENT TO LOAN AND SECURITY
AGREEMENT


 


This Tenth Amendment to Loan and Security Agreement (“Amendment”) is made as of the 12th day of
May, 2005 by and among ZOHAR II 2005-1, LIMITED, a Cayman Islands exempted
company (successor by assignment to LASALLE BUSINESS CREDIT, LLC) (“Lender”), PATRIARCH PARTNERS AGENCY
SERVICES, LLC, a Delaware limited liability company, as agent for the Lender
(the “Agent”), and STONEPATH
GROUP, INC., a Delaware corporation (“Stonepath”),
CONTRACT AIR, INC., a Minnesota corporation (“Contract Air”), DISTRIBUTION SERVICES, INC., a
Minnesota corporation (“Distribution
Services”), GLOBAL CONTAINER LINE, INC., a Washington
corporation (“Global Container”),
M.G.R., INC., d/b/a AIR PLUS LIMITED, a Minnesota corporation (“Air Plus”), NET VALUE, INC., a
Delaware corporation (“Net Value”), STONEPATH LOGISTICS DOMESTIC
SERVICES, INC., a Delaware corporation (“Logistics”),
STONEPATH LOGISTICS GOVERNMENT SERVICES, INC., f/k/a Transport Specialists, Inc.,
a Virginia corporation (“Government Services”),
STONEPATH LOGISTICS INTERNATIONAL SERVICES, INC., a Delaware corporation (“International Services I”), STONEPATH
LOGISTICS INTERNATIONAL SERVICES, INC., f/k/a Global Transportation
Services, Inc., a Washington corporation (“International Services II”), STONEPATH OFFSHORE
HOLDINGS, INC., a Delaware corporation (“Offshore
Holdings”), STONEPATH OPERATIONS INC., a Delaware corporation (“Operations”), and UNITED AMERICAN
ACQUISITIONS AND MANAGEMENT, INC. d/b/a UNITED AMERICAN FREIGHT
SERVICES, INC., a Michigan corporation (“United
American”, and together with Stonepath, Contract Air, Distribution
Services, Global Container, Air Plus, Net Value, Logistics, Government
Services, International Services I, International Services II, Offshore
Holdings and Operations are referred to herein collectively as the “Loan Parties” and each individually as a “Loan Party”).


 


BACKGROUND


 


A. Loan Parties and Lender are parties to a certain Loan and Security
Agreement dated May 15, 2002 (as it may heretofore have been or may
hereafter be from time to time modified, amended, restated or replaced, the “Loan Agreement”), pursuant to which Loan
Parties established certain financing arrangements with Lender. All capitalized
terms not otherwise defined herein shall have the meanings ascribed thereto in
the Loan Agreement.


 


B. Loan Parties and Lender have agreed that certain modification should
be made to the terms and provisions of the Loan Agreement on the terms and
conditions set forth in and according to the provisions of this Amendment.


 


NOW, THEREFORE, with the foregoing Background incorporated by reference
and made a part hereof and intending to be legally bound, the parties agree as
follows:


 


1.                                       Confirmation
of Indebtedness. Loan Parties confirm and agree that as of the close of
business on May 11, 2005, they are indebted to Lender under the Loan
Agreement and Other Agreements, without any deduction, defense, setoff, claim
or counterclaim of any nature whatsoever, in the aggregate principal amount of
$12,979,565.56 outstanding with respect to the principal amount of the
Revolving Credit Loans plus all
accrued interest, fees, costs and expenses (including attorneys’ fees) incurred
to date in connection with the Loan Agreement, Other Documents and related agreements.


 


2.                                       Amendments
to Loan Agreement. The Loan Agreement is hereby amended as follows:


 


a.                                       Amendments
to Definitions. Section 1
of the Loan Agreement shall be amended as follows:


 


(i)                                     The following new
definitions shall be added to Section 1
of the Loan Agreement in the appropriate alphabetical order:


 


“‘Tenth Amendment’ means the Tenth Amendment to Loan and Security
Agreement, dated as of May 12, 2005, among the Loan Parties, the Lender
and the Agent.”


 





















 


“‘Tenth Amendment Date’ means the date on which the Tenth Amendment
becomes effective pursuant to the terms therein.”


 


(ii)                                  The definition of the
term “Projected Restructuring Charges” shall be amended to read in its entirety
as follows:


 


“‘Projected Restructuring Charges’ means the charges resulting from the
costs incurred by the Loan Parties in reducing their personnel, systems,
facilities and equipment in connection with their efforts to integrate their
businesses, estimated at the time of the Tenth Amendment Date to be an
aggregate of approximately $3,850,000 for the first three calendar quarters of
2005.”


 


b.                                      Amendment
to Use of Proceeds Provision. The last sentence of Section 12(g) of the Loan
Agreement is hereby amended to read in its entirety as follows:


 


“Notwithstanding anything to the contrary in the preceding sentence,
the Loan Parties shall not be permitted to use the proceeds of the Loans: (i) for
the payment of interest and principal with respect to any Subordinated Debt,
other than Subordinated Debt to Lender, its affiliates, or their successors or
assigns, or (ii) to finance in any way any action, suit, arbitration,
proceeding, application, motion or other litigation of any type adverse to the
interests of Lender and Agent or their rights and remedies under this Loan
Agreement or the Other Agreements.”


 


c.                                       Amendment
of Financial Covenants. Section 14(e) of
the Loan Agreement shall be deleted in its entirety and replaced with the
following (it being understood that for the purpose of calculations made in
respect of Section 14(e), Consolidated EBITDA shall exclude Projected
Restructuring Charges):


 


“(e) (1) Stonepath shall have a Consolidated EBITDA in the
following minimum amounts for the following periods:


 


	
  Period

  	
   

  	
  Minimum Amount

  	
   

  
	
  3 months ended 3/31/05

  	
   

  	
  (2,036,000

  	
  )

  
	
  6 months ended 6/30/05

  	
   

  	
  (817,000

  	
  )

  
	
  9 months ended 9/30/05

  	
   

  	
  2,480,000

  	
   

  
	
  12 months ended 12/31/05

  	
   

  	
  6,246,000

  	
   

  
	
  12 months ended 3/31/06

  	
   

  	
  9,687,000

  	
   

  
	
  12 months ended 6/30/06

  	
   

  	
  9,909,000

  	
   

  
	
  12 months ended 9/30/06

  	
   

  	
  11,128,000

  	
   

  
	
  12 months ended 12/31/06

  	
   

  	
  11,634,000

  	
   

  
	
  12 months ended 3/31/07

  	
   

  	
  11,332,000

  	
   

  



 


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(2) Stonepath shall have a Consolidated EBITDA, without taking
into account the performance and financial results of all Foreign Subsidiaries,
in the following minimum amounts for the following periods:


 


	
  Period

  	
   

  	
  Minimum Amount

  	
   

  
	
  3 months ended 3/31/05

  	
   

  	
  (2,676,000

  	
  )

  
	
  6 months ended 6/30/05

  	
   

  	
  (2,289,000

  	
  )

  
	
  9 months ended 9/30/05

  	
   

  	
  (504,000

  	
  )

  
	
  12 months ended 12/31/05

  	
   

  	
  1,694,000

  	
   

  
	
  12 months ended 3/31/06

  	
   

  	
  5,015,000

  	
   

  
	
  12 months ended 6/30/06

  	
   

  	
  5,369,000

  	
   

  
	
  12 months ended 9/30/06

  	
   

  	
  6,620,000

  	
   

  
	
  12 months ended 12/31/06

  	
   

  	
  7,086,000

  	
   

  
	
  12 months ended 3/31/07

  	
   

  	
  6,676,000

  	
   

  



 


(3) Logistics shall have a Consolidated EBITDA in the following
minimum amounts for the following periods:


 


	
  Period

  	
   

  	
  Minimum Amount

  	
   

  
	
  3 months ended 3/31/05

  	
   

  	
  (1,794,000

  	
  )

  
	
  6 months ended 6/30/05

  	
   

  	
  (1,776,000

  	
  )

  
	
  9 months ended 9/30/05

  	
   

  	
  (1,389,000

  	
  )

  
	
  12 months ended 12/31/05

  	
   

  	
  (77,000

  	
  )

  



 


(4) International Services shall have a Consolidated EBITDA in the
following minimum amounts for the following periods:


 


	
  Period

  	
   

  	
  Minimum Amount

  	
   

  
	
  3 months ended 3/31/05

  	
   

  	
  647,000

  	
   

  
	
  6 months ended 6/30/05

  	
   

  	
  1,335,000

  	
   

  
	
  9 months ended 9/30/05

  	
   

  	
  2,783,000

  	
   

  
	
  12 months ended 12/31/05

  	
   

  	
  3,719,000

  	
   

  



 


The parties intend this amendment to Section 14(e) of
the Loan Agreement to be effective for all purposes of the Loan Agreement as if
it had occurred on March 30, 2005.”


 


d.                                      Amendment
of Section 15. The following proviso at the end of Section 15 of the Loan Agreement is
hereby deleted in its entirety:


 


“; provided that,
notwithstanding the foregoing, no Event of Default shall arise as a result of
the Loan Parties’ inability to make a payment prohibited by Section 12(g)(iii) of this
Agreement.”


 


3.                                       Amendment
Fee. In consideration for the agreements of Lender contained herein, Loan
Parties shall pay to Agent for the ratable benefit of the Lenders an amendment
fee (the “Amendment Fee”) (a) equal
to $50,000 on the Tenth Amendment Date and (b) in the event the
Consolidated EBITDA is less than $2,000,000 for three month period ending June 30,
2005, an additional Amendment Fee equal to $200,000, which additional Amendment
Fee shall be deemed to be earned as of the Tenth Amendment Date, but which
additional Amendment Fee shall be due and payable in full on the last day of
the Term. The fees required by this Section shall be excluded from the
calculation of Consolidated EBITDA for all purposes of the Loan Agreement and
this Amendment (including, without limitation, clause (b) of this 


 


3





















 


Section). The additional Amendment Fee under clause (b) of
this Section, if any, shall be entitled to the security interests, collateral
and other rights and benefits provided pursuant to the Loan Agreement and Other
Agreements and shall constitute a Liability under the Loan Agreement.


 


4.                                       Financial
Adviser. Loan Parties covenant and agree that as soon as practicable, but
in any event no later than thirty (30) days following the Tenth Amendment
Date, Loan Parties shall retain, at their sole expense, an outside financial
adviser acceptable to the Lender in its reasonable discretion to conduct an
evaluation of the business of the Loan Parties, which evaluation shall include,
but not be limited to, evaluation of the Loan Parties’ projections, Borrowing
Base under the Loan Agreement and material contracts (including any acquisition
and/or seller note agreements), and a valuation of the Loan Parties’ business
enterprise. Loan Parties further agree that they shall deliver to Agent any reports,
memoranda, projections and other work product received by Loan Parties from the
financial adviser and any other written reports and work product of the
financial adviser that Agent and/or Lender may reasonably request. The failure
of the Loan Parties to comply with the requirements of this Section shall
constitute an Event of Default under Section 15(b) of the Loan
Agreement.


 


5.                                       Representations
and Warranties. Each Loan Party represents and warrants to Lender that:


 


a.                                       All warranties
and representations made to Lender under the Loan Agreement, as amended or
otherwise modified by the additional disclosures set forth in Schedule I to the Ninth Amendment,
and related agreements and documents are true and correct as to the date
hereof.


 


b.                                      The execution and
delivery by each Loan Party of this Amendment and the performance by each such
Loan Party of the transactions herein contemplated (i) are and will be
within its powers, (ii) have been authorized by all necessary corporate
action, and (iii) are not and will not be in contravention of any order of
any court or other agency of government, or of any law, or be in conflict with,
result in a breach of, or constitute (with due notice and/or lapse of time) a
default under any such indenture, agreement or undertaking or result in the
imposition of any lien, charge or encumbrance of any nature on any of the
properties of such Loan Party or under the articles or certificate of
incorporation or bylaws or other corporate governance document of any such Loan
Party.


 


c.                                       This Amendment
and any related agreement or document will be valid and binding on and
enforceable against each Loan Party in accordance with its respective terms.


 


6.                                       Effectiveness.
Subject to the effectiveness provision of Section 2(c) of this
Amendment, this Amendment shall become effective upon receipt by the Agent of (a) counterparts
of this Amendment duly executed and delivered by each of the Loan Parties and
the Lender and (b) the $50,000 Amendment Fee owed pursuant to Section 3(a) above.


 


7.                                       Collateral.
As security for the payment of all Liabilities now or in the future existing,
each Loan Party hereby confirms and agrees that all security interests and
liens granted to Lender and Agent by any one of them continue in full force and
effect and shall continue to secure all such Liabilities. All Collateral
remains free and clear of any liens other than Permitted Liens. Nothing herein
contained is intended in any way to impair or limit the validity, priority and
extent of the existing security interest of Lender or Agent in and liens upon
the Collateral of any Loan Party.


 


8.                                       Release.
Each Loan Party hereby releases the Lender and Agent and each of their
respective subsidiaries, affiliates, members, partners, officers, employees,
representatives, agents, managers, counsel, directors, successors and assigns,
both present and former, from any and all actions, causes of action, claims,
demands, damages and liabilities of whatever kind or nature, in law or in
equity, now known or unknown, suspected or unsuspected to the extent that any
of the foregoing arises from any action or failure to act on or prior to the
date hereof.


 


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9.                                       Ratification
of Loan Agreement and Payment of Expenses. Except as expressly set forth
herein, all of the terms and conditions of the Loan Agreement are hereby
ratified and confirmed and continue unchanged and in full force and effect. All
references to the Loan Agreement shall mean the Loan Agreement as modified by
this Amendment. No modification hereof shall be binding or enforceable unless
in writing and signed by the party against whom enforcement is sought. Without
limiting the terms of the Loan Agreement and the Other Agreements, Loan Parties
shall pay all costs and expenses incurred by or on behalf of Agent and Lender
(including reasonable attorneys’ fees and expenses) arising under or in
connection with this Amendment or the Other Agreements, including without
limitation, in connection with the negotiation, preparation, execution, and
delivery of this Amendment and any and all consents, waivers, or other
documents or instruments relating thereto.


 


10.                                 Governing
Law. THIS AMENDMENT, AND ALL MATTERS RELATING HERETO OR ARISING HEREFROM,
SHALL BE GOVERNED AND CONTROLLED BY THE INTERNAL LAWS OF THE COMMONWEALTH OF
PENNSYLVANIA (WITHOUT REGARD TO PENNSYLVANIA’S OTHERWISE APPLICABLE PRINCIPLES
OF CONFLICTS OF LAWS) AS TO INTERPRETATION, ENFORCEMENT, VALIDITY,
CONSTRUCTION, EFFECT, AND IN ALL OTHER RESPECTS, EXCLUDING PERFECTION OF THE
SECURITY INTERESTS IN COLLATERAL LOCATED OUTSIDE OF THE COMMONWEALTH OF
PENNSYLVANIA, WHICH SHALL BE GOVERNED AND CONTROLLED BY THE LAWS OF THE
RELEVANT JURISDICTION IN WHICH SUCH COLLATERAL IS LOCATED. If any provision of
this Amendment shall be held to be prohibited by or invalid under applicable
law, such provision shall be ineffective only to the extent of such prohibition
or invalidity, without invalidating the remainder of such provision or
remaining provisions of this Amendment.


 


11.                                 Counterparts.
This Amendment may be executed in any number of counterparts, each of which
when so executed shall be deemed to be an original, and such counterparts
together shall constitute one and the same respective agreement. Signature by
facsimile shall bind the parties hereto.


 


[SIGNATURES ON FOLLOWING PAGE]


 


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IN WITNESS WHEREOF, the parties have executed this Tenth Amendment to
Loan and Security Agreement the day and year first written above.


 


	
   

  	
  LENDER:

  
	
   

  	
   

  
	
   

  	
  ZOHAR II 2005-1, LIMITED

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Patriarch Partners XIV, LLC,

  its Collateral Manager

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Lynn Tilton

  
	
   

  	
   

  	
  Name: Lynn Tilton 

  
	
   

  	
   

  	
  Title: Manager

  
	
   

  	
   

  
	
   

  	
  AGENT:

  
	
   

  	
   

  
	
   

  	
  PATRIARCH PARTNERS AGENCY SERVICES, LLC

  
	
   

  	
   

  
	
   

  	
  BY:

  	
  /s/ Lynn Tilton

  
	
   

  	
   

  	
  Name: Lynn Tilton 

  
	
   

  	
   

  	
  Title: Manager

  



 


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  LOAN PARTIES:

  
	
   

  	
   

  
	
   

  	
  STONEPATH GROUP, INC.

  
	
   

  	
   

  
	
   

  	
  CONTRACT AIR, INC.

  
	
   

  	
   

  
	
   

  	
  DISTRIBUTION SERVICES, INC.

  
	
   

  	
   

  
	
   

  	
  GLOBAL CONTAINER LINE, INC.

  
	
   

  	
   

  
	
   

  	
  M.G.R. INC., d/b/a AIR PLUS LIMITED

  
	
   

  	
   

  
	
   

  	
  NET VALUE, INC.

  
	
   

  	
   

  
	
   

  	
  STONEPATH LOGISTICS DOMESTIC SERVICES, INC.

  
	
   

  	
   

  
	
   

  	
  STONEPATH LOGISTICS GOVERNMENT SERVICES, INC., f/k/a Transport
  Specialists, Inc.

  
	
   

  	
   

  
	
   

  	
  STONEPATH LOGISTICS INTERNATIONAL

  SERVICES, INC, a Delaware Corporation

  
	
   

  	
   

  
	
   

  	
  STONEPATH LOGISTICS INTERNATIONAL SERVICES, INC., f/k/a/ Global
  Transportation Services, Inc., a Washington Corporation

  
	
   

  	
   

  
	
   

  	
  STONEPATH OFFSHORE HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
  STONEPATH OPERATIONS, INC.

  
	
   

  	
   

  
	
   

  	
  UNITED AMERICAN ACQUISITIONS AND MANAGEMENT, INC. d/b/a UNITED
  AMERICAN

  FREIGHT SERVICES, INC.

  
	
   

  	
   

  
	
   

  	
  BY:

  	
  /s/ Robert Arovas

  
	
   

  	
   

  	
  Name: Robert Arovas 

  
	
   

  	
   

  	
  Title: President

  



 


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TENTH AMENDMENT TO LOAN AND SECURITY AGREEMENT BACKGROUND