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                                                                    Exhibit 4.20



                           PLACEMENT AGENCY AGREEMENT


         This Placement Agency Agreement (this "Agreement") is made and entered
into as of October 16, 2002 (the "Effective Date"), by and between Stonepath
Group, Inc., a Delaware corporation (the "Company"), and Stonegate Securities,
Inc., a Texas corporation ("Stonegate").

         WHEREAS, the Company desires to retain Stonegate as its non-exclusive
placement agent, and Stonegate is willing to act in such capacity, in each case
subject to the terms and conditions of this Agreement.

         NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the Company and Stonegate (each a "Party" and
collectively, the "Parties") hereby agree as follows:

1.       RETENTION OF STONEGATE; SCOPE OF SERVICES.

         (a)  Subject to the terms and conditions set forth herein, the Company
              hereby retains Stonegate to act as the non-exclusive placement
              agent to the Company during the Contract Period (as defined in
              Section 2 below), and Stonegate hereby agrees to be so retained.

         (b)  As the non-exclusive placement agent to the Company, Stonegate
              will have the non-exclusive right during the Contract Period to
              identify for the Company prospective purchasers (collectively, the
              "Purchasers" and each individually, a "Purchaser") in one or more
              placements of debt and/or equity securities to be issued by the
              Company, the type and dollar amount being as mutually agreed to by
              the Parties (the "Securities"). Each placement of securities in
              which Stonegate acts as a placement agent is sometimes referred to
              as a "Placement" and collectively as the "Placements".

         (c)  Terms of the Placements shall be as set forth in subscription
              documents, including any stock purchase or subscription agreement,
              escrow agreement, registration rights agreement, warrant agreement
              and/or other documents to be executed and delivered in connection
              with each Placement (collectively, the "Subscription Documents").
              The Placements are intended to be exempt from the registration
              requirements of the Securities Act of 1933, as amended (the
              "Securities Act"), pursuant to Regulation D ("Regulation D") of
              the rules and regulations of the Securities and Exchange
              Commission (the "SEC") promulgated under the Securities Act.

         (d)  Stonegate will act on a best efforts basis and will have no
              obligation to purchase any of the Securities offered in any
              Placement. During the Contract Period, Stonegate shall have the
              non-exclusive right to arrange for all sales of securities of the
              Company by the Company, including without limitation the
              non-exclusive right to identify potential buyers for such
              securities. All sales of Securities in the Placements shall be
              subject to the approval of the Company, which approval may be
              withheld in the Company's sole discretion.

2.       CONTRACT PERIOD AND TERMINATION.

         (a)  Stonegate shall act as the Company's non-exclusive placement agent
              under this Agreement for a period commencing on the Effective
              Date, and continuing until terminated by either Party upon 10 days
              notice to the other Party (the "Contract Period").

         (b)  Upon termination, neither party will have any further obligation
              under this Agreement, except as provided in Sections 6, 7, 8, 9,
              10 and 11 hereof.

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3.       REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

         The representations and warranties of the Company made to the
         Purchasers as set forth in the Subscription Documents are hereby
         incorporated by reference as of the date of consummation of the sale of
         the Securities (the "Closing") and all such representations and
         warranties are hereby deemed made by the Company directly to Stonegate
         as though set forth in full herein.

4.       COVENANTS OF THE COMPANY.

         The Company covenants and agrees as follows:

         (a)  Neither the Company nor any affiliate of the Company (as defined
              in Rule 501(b) of Regulation D) will sell, offer for sale or
              solicit offers to buy or otherwise negotiate in respect of any
              security (as defined in the Securities Act) of the Company which
              will be integrated with the sale of the Securities in a manner
              which would require the registration under the Securities Act of
              the Securities.

         (b)  Any and all filings and documents required to be filed in
              connection with or as a result of the Placements pursuant to
              federal and state securities laws are the responsibility of the
              Company and will be filed by the Company.

         (c)  Any press release to be issued by the Company announcing or
              referring to any Placement shall be subject to the prior review of
              Stonegate, and each such press release shall, at the request of
              Stonegate, identify Stonegate as the placement agent. Stonegate
              shall be permitted to publish a tombstone or similar advertisement
              upon completion of each Placement identifying itself as the
              Company's placement agent with respect thereto. This Agreement
              shall not be filed publicly by the Company without the prior
              written consent of Stonegate, unless required by applicable law or
              regulation.

5.            FURNISHING OF COMPANY INFORMATION; CONFIDENTIALITY.

         (a)  In connection with Stonegate's activities hereunder on the
              Company's behalf, the Company shall furnish Stonegate with all
              reasonable information concerning the Company and its operations
              that Stonegate deems necessary or appropriate (the "Company
              Information") and shall provide Stonegate with reasonable access
              to the Company's books, records, officers, directors, employees,
              accountants and counsel. The Company acknowledges and agrees that,
              in rendering its services hereunder, Stonegate will be using and
              relying upon the Company Information without independent
              verification thereof or independent appraisal of any of the
              Company's assets and may, in its sole discretion, use additional
              information contained in public reports or other information
              furnished by the Company or third parties.

         (b)  Stonegate agrees that the Company Information will be used solely
              for the purpose of performing its services hereunder. Subject to
              the limitations set forth in subsection (c) below, Stonegate will
              keep the Company Information provided hereunder confidential and
              will not disclose such Company Information or any portion thereof,
              except (i) to a third party contacted by Stonegate on behalf of,
              and with the prior approval of, the Company pursuant hereto who
              has agreed to be bound by a confidentiality agreement satisfactory
              in form and substance to the Company, or (ii) to any other person
              for which the Company's consent to disclose such Company
              Information has been obtained.

         (c)  Stonegate's confidentiality obligations under this Agreement shall
              not apply to any portion of the Company Information which (i) at
              the time of disclosure to Stonegate or thereafter is generally
              available to and known by the public (other than as a result of a
              disclosure directly or indirectly by Stonegate in violation of
              this Agreement); (ii) was available to Stonegate on a
              non-confidential basis from a source other than the Company,
              provided that such source is not and was not bound by a
              confidentiality agreement with the Company; (iii) has been
              independently acquired or developed by Stonegate without violating
              any of its obligations under this Agreement; or (iv) the
              disclosure of which is legally compelled (whether by deposition,
              interrogatory, request for documents, subpoena, civil or
              administrative investigative demand or other similar process). In
              the event that Stonegate becomes legally compelled to disclose any
              of the Company Information, Stonegate shall provide the Company
              with prompt prior written notice of such requirement so that the
              Company may seek a protective order or other appropriate remedy
              and/or waive compliance with the terms of this Agreement.

<PAGE>

         (d)  The obligations of the Parties under this Section 5 shall survive
              the termination of this Agreement for 12 months.

6.       REPRESENTATIONS AND WARRANTIES OF STONEGATE.

         Stonegate represents and warrants to the Company that Stonegate is duly
         registered, pursuant to the applicable provisions of the Securities
         Exchange Act of 1934, as amended, as a dealer and as a member in good
         standing of the National Association of Securities Dealers, Inc.

7.       FEES AND EXPENSES.

         (a)  As compensation for services rendered by Stonegate in connection
              with the Placements, the Company agrees to pay Stonegate a fee
              (the "Agency Fee") of: (i) six percent (6%) of the gross proceeds
              from the sale of Securities for the first $10 million of
              Securities sold in the Placements (on a cumulative basis); and
              (ii) five percent of the gross proceeds from the sale of
              Securities for any Securities sold in the Placements over the
              initial $10 million (on a cumulative basis). The Agency Fee shall
              be paid immediately upon the closing of each sale of Securities by
              the Company.

         (b)  Upon execution of this Agreement by the Parties, the Company shall
              deliver to Stonegate $25,000 as a non-accountable and
              non-refundable expense allowance to compensate Stonegate for its
              initial diligence efforts, including preparation and printing of
              reports and/or other materials to be used by the Company and
              Stonegate in connection with a series of investor meetings. The
              Company shall also promptly reimburse Stonegate for all reasonable
              out-of-pocket expenses incurred by Stonegate and its directors,
              officers and employees in connection with the performance of
              Stonegate's services under this Agreement. For these purposes,
              "out-of-pocket expenses" shall include, but not be limited to,
              attorney's fees and costs, long distance telephone, facsimile,
              courier, mail, supplies, travel and similar expenses. Except for
              bills for long distance telephone, facsimile, federal express,
              courier, mail and supplies, Stonegate will not incur any expenses
              without the prior consent of the Company; and the Parties shall
              attempt to have the Company direct billed as often as possible for
              such expenses.

         (c)  The Company agrees to issue to Stonegate a Warrant, in
              substantially the form attached hereto as Exhibit A (the "Initial
              Warrant"). The exercise price of the Initial Warrant shall be
              $1.23 per share. The Initial Warrant will be granted to Stonegate
              on the earlier of: (i) November 1, 2002; or (ii) such earlier date
              that the Company has approved such grant (the "Grant Date");
              provided that the Company has not otherwise notified Stonegate in
              writing prior to the Grant Date that the Company has terminated
              this Agreement pursuant to Section 2(a) above. The Initial Warrant
              shall be dated as of the Grant Date and such Initial Warrant shall
              promptly be delivered to Stonegate (but in no event later than
              five business days following the Grant Date).
<PAGE>


         (d)  Upon each closing of the Placements, the Company agrees to issue
              to Stonegate a Securities Purchase Warrant (the "Representative's
              Warrant") entitling the holder(s) thereof to purchase an amount of
              Securities equal to (i) (1) ten percent (10%) of the total number
              of Securities sold in the Placements for the first $10 million of
              Securities sold in the Placements (on a cumulative basis); plus
              (2) six percent (6%) of the total number of Securities sold in the
              Placements over the initial $10 million of Securities sold in the
              Placements (on a cumulative basis); less (ii) the number of shares
              of Common Stock underlying the Initial Warrant. The
              Representative's Warrant shall be for a period of five (5) years,
              have an exercise price per share equal to 110% of the price at
              which the Securities are sold to Purchasers in the applicable
              Placement, and shall otherwise be substantially in the form of
              Exhibit B attached hereto.

         (e)  The obligations of the Parties under this Section 7 shall survive
              the termination of this Agreement for any reason.

8.       INDEMNIFICATION.

         (a)  The Company agrees to indemnify and hold Stonegate harmless from
              and against any and all losses, claims, damages or liabilities (or
              actions, including security holder actions, in respect thereof)
              related to or arising out of Stonegate's engagement hereunder or
              its role in connection herewith, and will reimburse Stonegate for
              all reasonable expenses (including reasonable costs, expenses,
              awards and counsel fees and/or judgments) as they are incurred by
              Stonegate in connection with investigating, preparing for or
              defending any such action or claim, whether or not in connection
              with pending or threatened litigation in which Stonegate is a
              party; provided, however, that the Company will not be responsible
              for any claims, liabilities, losses, damages or expenses which are
              finally judicially determined to have resulted primarily from the
              bad faith, gross negligence or willful misconduct of Stonegate.
              The Company also agrees that Stonegate shall not have any
              liability to the Company for or in connection with such
              engagement, except for any such liability for losses, claims,
              damages, liabilities or expenses incurred by the Company that
              result primarily from the bad faith, gross negligence or willful
              misconduct of Stonegate. In the event that the foregoing indemnity
              is unavailable (except by reason of the bad faith or gross
              negligence of Stonegate), then the Company shall contribute to
              amounts paid or payable by Stonegate in respect of its losses,
              claims, damages and liabilities in such proportion as
              appropriately reflects the relative benefits received by, and
              fault of, the Company and Stonegate in connection with the matters
              as to which such losses, claims, damages or liabilities relate,
              and other equitable considerations. The foregoing shall be in
              addition to any rights that Stonegate may have at common law or
              otherwise and shall extend upon the same terms to and inure to the
              benefit of any director, officer, employee, agent or controlling
              person of Stonegate; provided, however, that the Company shall
              only be obligated to pay the fees and expenses of one counsel for
              all of the persons to be indemnified. The Company hereby consents
              to personal jurisdiction, service and venue in any court in which
              any claim which is subject to this agreement is brought against
              Stonegate or any other person entitled to indemnification or
              contribution under this subsection (a).

         (b)  Stonegate agrees to indemnify and hold the Company harmless from
              and against any and all losses, claims, damages or liabilities (or
              actions, including security holder actions, in respect thereof)
              which are finally judicially determined to have resulted primarily
              from the bad faith, gross negligence or willful misconduct of
              Stonegate, and will reimburse the Company for all reasonable
              expenses (including reasonable costs, expenses, awards and counsel
              fees and/or judgments) as they are incurred by the Company in
              connection with investigating, preparing for or defending any such
              action or claim, whether or not in connection with pending or
              threatened litigation in which the Company is a party. In the
              event that the foregoing indemnity is unavailable, then Stonegate
              shall contribute to amounts paid or payable by the Company in
              respect of its losses, claims, damages and liabilities in such
              proportion as appropriately reflects the relative benefits
              received by, and fault of, the Company and Stonegate in connection
              with the matters as to which such losses, claims, damages or
              liabilities relate, and other equitable considerations. The
              foregoing shall be in addition to any rights that the Company may
              have at common law or otherwise and shall extend upon the same
              terms to and inure to the benefit of any director, officer,
              employee, agent or controlling person of the Company; provided,
              however, that Stonegate shall only be obligated to pay the fees
              and expenses of one counsel for all of the persons to be
              indemnified. Stonegate hereby consents to personal jurisdiction,
              service and venue in any court in which any claim, which is
              subject to this agreement, is brought against the Company or any
              other person entitled to indemnification or contribution under
              this subsection (b).

<PAGE>


         (c)  Each party entitled to indemnification under this Section 8 (the
              "Indemnified Party") shall give notice to the party required to
              provide indemnification (the "Indemnifying Party") promptly after
              such Indemnified Party has actual knowledge of any claim as to
              which indemnity may be sought, and shall permit the Indemnifying
              Party to assume the defense of any such claims or any litigation
              resulting therefrom; provided, however, that counsel for the
              Indemnifying Party, who shall conduct the defense of such claim or
              litigation, shall be approved by the Indemnified Party (which
              approval shall not be unreasonably withheld), and the Indemnified
              Party may participate in such defense at such Indemnified Party's
              expense; provided, however, that the failure of any Indemnified
              Party to give notice as provided herein shall not relieve the
              Indemnifying Party of its obligations under this Agreement unless
              the failure to give such notice is materially prejudicial to an
              Indemnifying Party's ability to defend such action; provided,
              further, however, that the Indemnifying Party shall not be
              entitled to assume the defense for such matters as to which there
              is, in the opinion of counsel to the Indemnifying Party, a
              conflict of interest or separate and different defenses and the
              representation of both the Indemnifying Party and the Indemnified
              Parties would be improper. No Indemnifying Party, in the defense
              of any such claim or litigation, shall, except with the consent of
              each Indemnified Party, consent to entry of any judgment or enter
              into any settlement which does not include as an unconditional
              term thereof the giving by the claimant or plaintiff to such
              Indemnified Party of a release from all liability in respect of
              such claim or litigation. Each Indemnified Party shall furnish
              such information regarding itself or the claim in question as an
              Indemnifying Party may reasonably request in writing and as shall
              be reasonably required in connection with the defense of such
              claim and the litigation resulting therefrom.

         (d)  The obligations of the Parties under this Section 7 shall survive
              the termination of this Agreement.

9.       NON-CIRCUMVENTION.

         The Company hereby agrees that during the Contract Period and for a
         period of one year after the end of the Contract Period, the Company
         will not enter into any agreement, transaction or arrangement with any
         of the institutions (including their agents, principals and affiliates
         and the accounts and funds which they manage or advise (excluding,
         however, any account that did not directly or indirectly make an
         investment in the Company following an introduction, referral or
         passing of information by, any such institution)) which Stonegate has
         introduced to the Company as prospective purchasers of securities of
         the Company (collectively, the "Stonegate Contacts"), regardless of
         whether a transaction is consummated with such prospective purchasers,
         unless the Company notifies Stonegate in writing of the agreement,
         transaction or arrangement, and pays Stonegate a fee equal to the
         Agency Fee for securities of the Company sold to Stonegate Contacts.
         Stonegate agrees to periodically deliver to the Company in writing
         updates on its progress with prospective purchasers; it being agreed
         and understood that such prospective purchasers shall be deemed to be
         Stonegate Contacts unless the Company objects thereto in writing within
         three (3) days following its receipt of the update first disclosing
         such prospective purchaser.

<PAGE>


10.      GOVERNING LAW.

         THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
         THE LAWS OF THE STATE OF TEXAS, WITHOUT GIVING EFFECT TO ANY CONFLICT
         OF LAWS PROVISIONS THEREOF.

11.      ARBITRATION.

         Stonegate and the Company will attempt to settle any claim or
         controversy arising out of this Agreement through consultation and
         negotiation in good faith and a spirit of mutual cooperation. Any
         dispute which the parties cannot resolve may then be submitted by
         either party to binding arbitration in Dallas, Texas under the rules of
         the American Arbitration Association for resolution. Nothing in this
         paragraph will prevent either party from resorting to judicial
         proceedings if (a) good faith efforts to resolve the dispute under
         these procedures have been unsuccessful or (b) interim relief from a
         court is necessary to prevent serious and irreparable injury.

12.      NO WAIVER.

         The failure or neglect of any party hereto to insist, in any one or
         more instances, upon the strict performance of any of the terms or
         conditions of this Agreement, or waiver by any party of strict
         performance of any of the terms or conditions of this Agreement, shall
         not be construed as a waiver or relinquishment in the future of such
         term or condition, but the same shall continue in full force and
         effect.

13.      SUCCESSORS AND ASSIGNS.

         The benefits of this Agreement shall inure to the benefit of the
         Parties, their respective successors, assigns and representatives, and
         the obligations and liabilities assumed in this Agreement by the
         Parties shall be binding upon their respective successors and assigns.
         This Agreement may not be assigned by either Party without the express
         written consent of the other Party, which consent shall not be
         unreasonably withheld.

14.      NOTICES.

         All notices and other communications required or permitted to be given
         under this Agreement shall be in writing and shall be delivered
         personally or sent by certified mail, return receipt requested,
         recognized overnight delivery service, or facsimile as follows:

                   If to the Company:
                   ------------------

                   Stonepath Group, Inc.
                   Two Penn Center Plaza, Suite 605
                   Philadelphia, Pennsylvania  19102
                   Facsimile: (215) 564-3133
                   Attention: Bohn Crain, Chief Financial Officer
                                Stephen Cohen, General Counsel

<PAGE>



                   If to Stonegate:
                   ------------------

                   Stonegate Securities, Inc.
                   5940 Sherry Lane, Suite 410
                   Dallas, Texas  75225
                   Facsimile: (214) 987-1981
                   Attention: Scott Griffith, President

         Either Party may change its address or facsimile number set forth above
         by giving the other Party notice of such change in accordance with the
         provisions of this Section 13. A notice shall be deemed given (a) if by
         personal delivery, on the date of such delivery, (b) if by certified
         mail, on the date shown on the applicable return receipt, (c) if by
         overnight delivery service, on the day after the date delivered to the
         service, or (d) if by facsimile, on the date of transmission.

15.      NATURE OF RELATIONSHIP.

         The Parties intend that Stonegate's relationship to the Company and the
         relationship of each director, officer, employee or agent of Stonegate
         to the Company shall be that of an independent contractor and not as an
         employee of the Company or an affiliate thereof. Nothing contained in
         this Agreement shall constitute or be construed to be or create a
         partnership or joint venture between Stonegate and the Company or their
         respective successors or assigns. Neither Stonegate nor any director,
         officer, employee or agent of Stonegate shall be considered to be an
         employee of the Company by virtue of the services provided hereunder.

16.      MISCELLANEOUS

         Stonegate's obligations under this Agreement are subject to the
         following general conditions:

         (a)  All relevant terms, conditions, and circumstances relating to the
              Placements will be reasonably satisfactory to Stonegate and its
              counsel.

         (b)  Stonegate reserves the right to solicit the assistance of outside
              dealers ("Dealers") to assist in the offer and sale of the
              Placements; provided, however, that any such Dealers agree in
              writing to be bound by the terms of the applicable Placement. It
              is understood that Stonegate, in its sole discretion, shall be
              entitled to pay over to any such Dealers any portion of the
              compensation received by Stonegate hereunder. The Company shall
              have no financial liability for any fees or expenses of any such
              Dealers.

17.      CAPTIONS.

         The Section titles herein are for reference purposes only and do not
         control or affect the meaning or interpretation of any term or
         provision hereof.

18.      AMENDMENTS.

         No alteration, amendment, change or addition hereto shall be binding or
         effective unless the same is set forth in a writing signed by a duly
         authorized representative of each Party.

19.      PARTIAL INVALIDITY.

         If it is finally determined that any term or provision hereof is
         invalid or unenforceable, (a) the remaining terms and provisions hereof
         shall be unimpaired, and (b) the invalid or unenforceable term or
         provision shall be replaced by a term or provision that is valid and
         enforceable and that comes as close as possible to expressing the
         intention of the invalid or unenforceable term or provision.

<PAGE>


20.      ENTIRE AGREEMENT.

         This Agreement embodies the entire agreement and understanding of the
         Parties and supersedes any and all prior agreements, arrangements and
         understandings relating to the matters provided for herein.

21.      COUNTERPARTS.

         This Agreement may be executed in one or more counterparts, each of
         which shall be an original, but all of which together shall be
         considered one and the same agreement.

         IN WITNESS WHEREOF, this Agreement has been executed as of the date
first written above by duly authorized representatives of the Company and
Stonegate.

                                           STONEPATH GROUP, INC.



                                           By:__________________________________

                                           Title:_______________________________




                                           STONEGATE SECURITIES, INC.



                                           By:__________________________________

                                           Title:_______________________________