Document:

Exhibit 10.30

 

PREFERRED SHARES EXCHANGE
AGREEMENT

 

PREFERRED SHARES EXCHANGE AGREEMENT (this “Agreement”)
dated as of the 26th day of October, 2005 by and among STONEPATH GROUP, INC., a
Delaware corporation (“Group”), STONEPATH HOLDINGS (HONG KONG) LIMITED, a
company incorporated under the laws of Hong Kong (“Holdings”), HONG KONG LEAGUE
CENTRAL CREDIT UNION, a company incorporated under the laws of Hong Kong (“Lender”),
and SBI ADVISORS, LLC, a California limited liability company, in its capacity
as agent for Lender (“Agent”).

WITNESSETH:

 

WHEREAS, Stonepath Holdings (Hong Kong) Limited (“Holdings”),
Group, Lender, and Agent  are parties to
an Exchange Agreement dated as of October 7, 2005 pursuant to which, among
other things, Holdings has issued Preferred Shares of Holdings (the “Preferred
Shares”) to Lender on the date hereof; and

 

WHEREAS, the parties hereto have entered into this
Agreement to provide for the terms upon which the Preferred Shares are
exchangeable for shares of Common Stock of Group.

 

NOW, THEREFORE, the parties, intending to be legally
bound, agree as follows:

 

1.             Definitions.
The following terms shall have the following meanings when used in this
Agreement:

 

“Closing Price” means the closing price of the Common Stock
(or other securities which are at the time issuable upon the exchange of a
Preferred Share pursuant to this Agreement) as reported by Bloomberg, L.P. on
the Principal Market.

“Common Stock”
means Common Stock, $0.001 par value, of Group.

 

“Exchange Notice”
means a notice in the form of Exhibit A to this Agreement.

 

“Excluded
Shares” means (i) shares of Common Stock issued or issuable pursuant
to this Agreement or Warrants issued to Lender, specifically including all
shares of Common Stock which may be issued upon exchange hereunder or exercise
thereof, (ii) shares of Common Stock issuable upon the exercise of any options
or warrants outstanding on the date of this Agreement, (iii) shares of Common
Stock issuable pursuant to or upon the conversion of any note, debenture, debt instrument
and all other written agreements to which Group is a party on the date of this
Agreement; (iv) shares of Common Stock (including grants, options and warrants)
issuable pursuant to or in accordance with any plan for the benefit of
employees, directors, officers, or consultants approved by Group’s Board of
Directors; and (v) shares of Common Stock issued or issuable in connection with
acquisitions made by Group or any of its directly or indirect subsidiaries.

 

 

“Original Issue Price”
means One Hundred Dollars ($100).

 

“Preferred Share”
means a Preferred Share of Holdings.

 

“Principal Market” means the New York Stock Exchange, the
American Stock Exchange, the Nasdaq National Market or SmallCap Market., the
OTC Bulletin Board or the Pink Sheets LLC.

“Securities Act”
means the United States Securities Act of 1933, as amended and the rules and
regulations promulgated thereunder.

 

“Trading Day”
means a day on which the Principal Market shall be open for business.

 

2.             Exchange

 

(a)           Optional Exchange

(i)            Subject
to and upon compliance with the provisions of this Section 2, each Preferred
Share shall, at the option of the holder thereof, be exchangeable at any time
for that number of fully paid and non-assessable shares of Common Stock
(calculated as to each conversion to the nearest 1/100th of a share) as is
determined by dividing the Original Issue Price by the Exchange Price (as
defined in 2(d)) in effect at the time of conversion).

(ii)           To
exchange Preferred Shares, the holder shall surrender the certificate or
certificates representing such shares at any of the offices or agencies to be
maintained for such purpose by Group and shall deliver an Exchange Notice to
Group at such office or agency that the holder elects to exchange the Preferred
Shares specified in said notice. Such notice shall also state the name or
names, together with address or addresses, in which the certificate or
certificates for shares of Common Stock, which shall be issuable in such
exchange, shall be issued. Each certificate representing a Preferred Share
surrendered for conversion shall, unless the shares issuable on exchange are to
be issued in the same name as the name in which such share is registered, be
accompanied by (A) instruments of transfer, in form satisfactory to Group, duly
executed by the holder or his duly authorized attorney, (B) an amount sufficient
to pay any transfer or similar tax, and (C) an opinion of counsel satisfactory
to Group that the issuance of the shares issuable on exchange is exempt from
the registration requirements of the Securities Act. Within three (3) Trading
Days after the surrender of certificates representing such Preferred Shares and
the receipt of such Exchange Notice, instruments of transfer, opinion,  and funds, if any, as aforesaid, Group shall
issue and shall deliver at such office or agency to such holder, or as
designated in such holder’s written instructions, a certificate or certificates
for the number of full shares of Common Stock issuable upon the exchange of
such Preferred Shares in accordance with the provisions of this Section 2 and a
check or cash in respect of any fractional interest in a share of Common Stock
arising upon such conversion, as provided in Section 2(c).

(iii)          Each
exchange shall be deemed to have been effected immediately prior to the close
of business on the date on which certificates representing such Preferred
Shares shall have been surrendered and such Exchange Notice (and any applicable
instruments of transfer and any required taxes) received by Group as aforesaid,
and the person or persons in whose name or names any certificate or
certificates for shares of Common Stock shall be issuable upon such exchange
shall be deemed to have become the holder or holders of record of the shares
represented thereby at such time on such date, and such exchange shall be based
upon the Exchange Price in effect at such time on such date, unless the stock
transfer books of the Group shall be closed on that date, in which event such
person or persons shall be deemed to have become such holder or holders of
record at the close of business on the next succeeding day on which such stock
transfer books are open, but such exchange shall be based upon the Exchange
Price in effect on the date upon which certificates representing such Preferred
Shares shall have been surrendered and such Exchange Notice received by Group.

(iv)          Notwithstanding
anything contained in this Section 2(a) to the contrary, a holder of Preferred
Shares shall not be entitled to exchange such shares for a number of shares of
Common Stock which would exceed the difference between (i) 9.99% of the issued
and outstanding shares of Common Stock and (ii) the number of shares of Common
Stock beneficially owned by such 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.  .

 

(b)           Mandatory Exchange

                (i)            Each
Preferred Share outstanding on the Mandatory Exchange Date (as defined herein)
shall automatically and without any action on the part of the holder thereof,
be exchanged for that number of fully paid and non-assessable shares of Common
Stock (calculated as to each conversion to the nearest 1/100th of a share) as
is determined by dividing the Original Issue Price by the Exchange Price (as
defined in 

2

Section 2(d)) in effect
at the time of conversion.  The term “Mandatory
Exchange Date” is the date, if any, as of 
which all of the following has occured:

(A)          The average Closing Price for the
shares of Common Stock has been 200% or more than the Exchange Price for at
least twenty (20) consecutive Trading Days (the “Triggering Period”);

(B)           The average daily trading volume for
any twenty (20) Trading Days during the Triggering Period has been 250,000 or
more shares;

(C)           The Common Stock is listed on the
American Stock Exchange or the NASDAQ National Market System or SmallCap
Market; and

(D)          The Common Stock receivable upon such
mandatory exchange may, at the time of the mandatory exchange, be resold either
(i) pursuant to an effective registration statement under the Securities Act
which the holder of such Preferred Share is entitled to use or (iii) under Rule
144(K) under the Securities Act.

 

(ii)           On
the Mandatory Exchange Date, all outstanding Preferred Shares shall be deemed
to be exchanged automatically without any further action by the holders of such
shares and whether or not the certificates representing such shares are surrendered
to Group; provided, however, that Group shall not be obligated to issue
certificates evidencing the shares of Common Stock issuable upon exchange of
any Preferred Shares unless certificates evidencing such Preferred Shares are
either delivered to Group or the holder notifies Group or Holdings that such
certificates have been lost, stolen, or destroyed, and executes an agreement
satisfactory to Group and Holdings to indemnify them from any loss incurred by
them in connection therewith. Upon the occurrence of the automatic exchange of
the Preferred Shares pursuant to this Section 2(b), the holders of the
Preferred Shares shall surrender the certificates representing the Preferred
Shares for which the Mandatory Exchange Date has occurred to Group, together
with stock powers signed in blank, and Group shall deliver certificates for the
shares of Common Stock issuable upon such exchange as soon as practicable
following the holder’s delivery of the applicable certificates for the
Preferred Shares.

(c)           No
Fractional Shares

No fractional shares or scrip
representing fractions of shares of Common Stock shall be issued upon exchange
of the Preferred Shares. In lieu of any fractional interest in a share of
Common Stock which would otherwise be deliverable upon the conversion of any
Preferred Share, Group shall pay to the holder of such shares an amount in cash
(computed to the nearest cent) equal to the Closing Price on the Trading Day
next preceding the day of exchange multiplied by the fractional interest that
otherwise would have been deliverable upon exchange of such share.

(d)           Exchange Price

The “Exchange Price” shall mean and be
One Dollar and Eight Cents ($1.08), subject to adjustment from time to time by
Group as follows:

(i)            In
case Group shall (a) pay a dividend or make a distribution on its Common Stock,
each in shares of Common Stock, (b) subdivide its outstanding shares of Common
Stock into a greater number of shares, (c) combine its outstanding shares of
Common Stock into a smaller number of shares, or (d) issue by reclassification
of its Common Stock any shares of capital stock of Group, then in each such
case the Exchange Price in effect immediately prior to such action shall be
adjusted so that the holder of any Preferred Share thereafter surrendered for
conversion shall be entitled to receive the number of shares of Common Stock or
other capital stock of Group which such holder would have owned or been
entitled to receive immediately following such action had such share been
exchanged immediately prior to the occurrence of such event. An adjustment made
pursuant to this subsection (i) shall become effective immediately after the
record date, in the case of a dividend or distribution, or immediately after
the effective date, in the case of a subdivision, combination or
reclassification. If, as a result 

 

3

 

of
an adjustment made pursuant to this subsection (i), the holder of any Preferred
Share shall become entitled to receive shares of two or more classes of capital
stock or shares of Common Stock and other capital stock of Group, the Board of
Directors of Group (whose determination shall be conclusive) shall determine
the allocation of the adjusted Exchange Price between or among shares of such
classes of capital stock or shares of Common Stock and other capital stock.

(ii)           In
case Group shall, by dividend or otherwise, distribute to all holders of its
outstanding Common Stock any capital stock (other than Common Stock), cash,
evidences of its indebtedness or assets or rights or warrants to subscribe for
or purchase securities of Group (excluding those referred to in subsection
(iii) of this Section 2(d) and excluding dividends or distributions payable in
stock for which adjustment is made pursuant to subsection (i) of this Section
2(d)) then in each such case the Exchange Price shall be adjusted so that the
same shall equal the price determined by multiplying the Exchange Price in
effect immediately prior to the record date of such distribution by a fraction
of which the numerator shall be the average Closing Price of the Common Stock
for the twenty (20) consecutive Trading Days preceding the record date less the
fair market value on such record date (as determined by the Board of Directors,
whose determination shall be conclusive) of the portion of the capital stock or
assets or the evidences of indebtedness or assets so distributed to the holder
of one share of Common Stock or of such subscription rights or warrants
applicable to one share of Common Stock, and of which the denominator shall be
such average Closing Price of the Common Stock for the twenty (20) consecutive
Trading Days preceding the record date. Such adjustment shall become effective
immediately after the record date for the determination of stockholders
entitled to receive such distribution.

(iii)          If
Group, at any time after the date of this Agreement and while any Preferred
Share is outstanding (other than in a transaction resulting in an adjustment
pursuant to Section 2(d)(i) or 2(d)(ii)):

(A)          issues or sells, or
is deemed to have issued or sold, any Common Stock, other than Excluded Shares;

(B)           in any manner
grants, issues or sells any rights, options, warrants, options to subscribe for
or to purchase Common Stock or any stock or other securities convertible into
or exchangeable for Common Stock other than Excluded Shares (such rights,
options or warrants being herein called “Options” and such convertible or
exchangeable stock or securities being herein called “Convertible Securities”);
or

(C)           in any manner issues
or sells any Convertible Securities other than Excluded Shares;

for (1) with respect to
paragraph (A) above, a price per share, or (2) with respect to paragraphs (B)
or (C) above, a price per share (including the consideration per share paid on
issuance of the Option or Convertible Securities) for which Common Stock
issuable upon the exercise of such Options or upon conversion or exchange of
such Convertible Securities is less than the Exchange Price in effect
immediately prior to such issuance, sale or grant, then, immediately after such
issuance, sale or grant, the Exchange Price shall be reduced to the amount
determined by dividing (1) the sum of (x) the product derived by multiplying
the Exchange Price in effect immediately prior to such issue or sale by the
number of shares of Common Stock Deemed Outstanding immediately prior to such
issue or sale, plus (y) the consideration, if any, received or deemed to have
been received by the Company upon such issue or sale, by (2) the number of
shares of Common Stock Deemed Outstanding immediately after such issue or sale.
No modification of the issuance terms shall be made upon the actual issuance of
such Common Stock upon exercise, conversion or exchange of such Options or
Convertible Securities. If there is a change at any time in (i) the exercise
price provided for in any Options, (ii) the additional consideration, if any,
payable upon the issuance, conversion or exchange of any Convertible Securities
or (iii) the rate at which any Convertible Securities are convertible into or
exchangeable for Common Stock, then immediately after such change the Exchange
Price shall be adjusted to the Exchange Price which would have been in effect
at such time had such Options or Convertible Securities still 

 

4

 

outstanding provided for
such changed exercise price, additional consideration or changed conversion
rate, as the case may be, at the time initially granted, issued or sold;
provided that no adjustment shall be made if such adjustment would result in an
increase of the Exchange Price then in effect. However, upon the expiration of
any such Options or Convertible Securities, the issuance of which resulted in
an adjustment in the Exchange Price pursuant to this Section 2(d)(iii), if all
or any portion of any such Options or Convertible Securities shall not have
been exercised, the Exchange Price shall immediately upon such expiration be
increased to the price which it would have been after the issuance of such
Options or Convertible Securities on the basis of Group offering for
subscription, purchase, conversion, exchange or acquisition only that number of
shares of Common Stock (if any) actually purchased upon the exercise of such
Options or Convertible Securities actually exercised. For the purposes of this
Section 2(d)(iii), the term “Common Stock Deemed Outstanding” means, at any
given time, the sum of the number of shares of Common Stock actually
outstanding at such time plus the number of shares of Common Stock issuable
upon the exercise of all options, rights and warrants and the conversion or
exchange of convertible or exchangeable securities outstanding at such time,
whether or not such options, rights, or warrants, or convertible or
exchangeable securities are actually exercisable, convertible or exchangeable
at such time. For the purposes of this Section 2(d)(iii), the consideration for
the issue or sale of any securities of Group shall, irrespective of the
accounting treatment of such consideration, (x) insofar as it consists of cash,
be computed at the net amount of cash received by Group, without deducting any
expenses paid or incurred by Group or any commissions or compensations paid or
concessions or discounts allowed to underwriters, dealers or others performing
similar services in connection with such issue or sale, and (y) insofar as it
consists of property (including securities) other than cash, be computed at the
fair value thereof at the time of such issue or sale, as determined in good faith
by the Board of Directors of Group.

(iv)          No
adjustment in the Exchange Price shall be required to be made unless such
adjustment would require an increase or decrease of at least one percent of
such price; provided, however, that any adjustment which by reason of this
subsection (iv) is not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this Section
2(d) shall be made to the nearest cent or to the nearest 1/100th of a share, as
the case may be.  Anything in this
Section 2(d) to the contrary notwithstanding, Group shall be entitled to make
such reduction in the Exchange Price, in addition to those required by this
Section 2(d), as it in its discretion shall determine to be advisable in order
that any stock dividend, subdivision of shares, distribution of rights to
purchase stock or securities, or distribution of securities convertible into or
exchangeable for stock hereafter made by Group to its stockholders shall not be
taxable to the recipients.

(v)           Whenever
the Exchange Price is adjusted as herein provided, Group shall mail or cause to
be mailed by first class mail, postage prepaid, as soon as practicable to each
holder of record of Preferred Shares a notice stating that the Exchange Price
has been adjusted and setting forth the adjusted Exchange Price.

(vi)          In
the event that at any time, as a result of an adjustment made pursuant to
subsection (i) of this Section 2(d), the holder of any Preferred Share
thereafter surrendered for conversion shall become entitled to receive any
shares of Group other than shares of Common Stock, thereafter the Exchange
Price of such other shares so receivable upon conversion of any Preferred Share
shall be subject to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with respect to Common Stock
contained in this Section.

(e)           Notice

In
case:

(i)            Group
shall take any action which would require an adjustment in the Exchange Price
pursuant to Section 2(d); or

 

5

 

(ii)           Group
shall authorize the granting to the holders of its Common Stock generally of
rights or warrants to subscribe for or purchase any shares of stock of any
class or of any other rights; or

(iii)          there
shall be any reorganization or reclassification of the Common Stock or any
merger or consolidation to which Group is a party or any sale or transfer of
all or substantially all of the property and assets of Group; or

(iv)          there
shall be a voluntary or involuntary dissolution, liquidation or winding-up of
Group;

then
in each such case Group shall cause to be given to the holders of Preferred
Shares as promptly as possible, but in any event at least fifteen (15) days
prior to the applicable date hereinafter specified, a notice stating (i) the
date on which a record is to be taken for the purpose of such action or
granting of rights or warrants, or, if a record is not to be taken, the date as
of which the holders of Common Stock of record to be entitled to such
distribution, rights or warrants are to be determined, or (ii) the date on
which such reorganization, reclassification, merger, consolidation, sale,
transfer, dissolution, liquidation or winding-up is expected to become
effective or occur, and the date as of which it is expected that holders of
Common Stock of record shall be entitled to exchange their shares of Common
Stock for securities, cash or other property deliverable upon such
reorganization, reclassification, merger, consolidation, sale, transfer,
dissolution, liquidation or winding-up.

(f)            Reservation of Shares

Group covenants that it will at all
times reserve and keep available, free from preemptive rights, out of the
aggregate of its authorized but unissued shares of Common Stock or its issued
shares of Common Stock held in its treasury, or both, for the purpose of
effecting exchanges of Preferred Shares, the full number of shares of Common
Stock deliverable upon the exchange of all outstanding Preferred Shares not
theretofore converted and on or before (and as a condition of) taking any
action that would cause an adjustment of the Exchange Price resulting in an
increase in the number of shares of Common Stock deliverable upon exchange
above the number thereof previously reserved and available therefor, Group
shall take all such action so required. For purposes of this Section 2(f), the
number of shares of Common Stock which shall be deliverable upon the exchange
of all outstanding Preferred Shares shall be computed as if at the time of computation
all outstanding Preferred Shares were held by a single holder.

                (g)           Adjustment Below Par Value

Before taking any action which would cause an
adjustment reducing the Exchange Price below the then par value (if any) of the
shares of Common Stock deliverable upon conversion of the Preferred Shares,
Group shall take such corporate action which may, in the opinion of its
counsel, be necessary in order that Group may validly and legally issue fully
paid and non-assessable shares of Common Stock at such adjusted Exchange Price.

(h)           Status of Common Stock

Group covenants that all shares of
Common Stock which may be delivered upon exchange of Preferred Shares will upon
delivery be duly and validly issued and fully paid and non-assessable.

(i)            Cooperation by Holdings

 

Holdings
agrees to take all such action as may be reasonably requested by the other
parties to this Agreement to complete the transactions contemplated hereby.

 
 
6

 

                3.             Miscellaneous.

 

(a)           Notices.  Except as otherwise expressly provided
herein, any notice herein required or permitted to be given shall be in writing
and shall be deemed effective when personally delivered, mailed, telecopied
(with a confirming copy sent by mail) or delivered by telex to the appropriate
party at the address set forth below (or at such other address as may be
designated by either party in a written notice sent in accordance with this
Section):

 

	
  If to Group:

  
	
   

  
	
  Stonepath
  Group, Inc.

  
	
  World Trade Center

  
	
  2200 Alaskan Way, Suite 200

  
	
  Seattle, Washington 98134

  
	
  Attention: Mr. Robert Arovas, President

  
	
  Telecopier
  No. (206) 356-5401

  
	
   

  
	
  With a copy to:

  
	
   

  
	
  Brian S. North, Esquire

  
	
  Buchanan Ingersoll PC

  
	
  1835 Market Street, 14th Floor

  
	
  Philadelphia, PA 19103

  
	
  Telecopier No. (215) 665-8760

  
	
   

  
	
  If to Holdings:

  
	
   

  
	
  Stonepath Holdings (Hong
  Kong) Limited

  
	
  Unit
  2602, 26th Floor, Miramar Tower

  
	
  132
  Nathan Road

  
	
  Tsimshatsui,
  Kowloon

  
	
  Hong
  Kong

  
	
  Telecopier No. (852) -
  2377 0909.

  
	
   

  
	
  With a copy to:

  
	
   

  
	
  Brian S. North, Esquire

  
	
  Buchanan Ingersoll PC

  
	
  1835 Market Street, 14th Floor

  
	
  Philadelphia, PA 19103

  
	
  Telecopier No. (215) 665-8760

  
	
   

  
	
  If to Lender:

  
	
   

  
	
  Hong Kong League
  Central Credit Union

  
	
  Party Room 1-2, G/F Kam
  Wah House

  
	
  Choi Hung Estate

  
	
  Kowloon, Hong Kong

  
	
  Telecopier No: 852 3101
  0332

  
	
   

  
	
  With copies to:

  
	
   

  
	
  David L.
  Ficksman, Esquire

  
	
  Troy & Gould

  
	
  1801 Century
  Park East, 16th Floor

  
	
  Los Angeles,
  California 90067

  
	
  Telecopier No.
  (310) 201-4746

  
	
   

  
	
   

  	
  and

  
	
   

  
	
  SBI Advisors, LLC

  
	
  2361 Campus Drive,
  Suite 210

  
	
  Irvine, CA 92612

  
	
  Telecopier No.: 949-679-7280

  

 

7

 

(b)           Severability.  In case any provision in this Agreement shall
be invalid, illegal or unenforceable, such provision shall be severable from
the remainder of such contract and the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.

 

                (c)           Applicable Law. 
This Agreement shall be governed by the laws of Delaware, exclusive of
its conflicts of laws and choice of laws rules that would or may cause the
application of the laws of any jurisdiction other than Delaware.

 

                (d)           Counterparts; Facsimile Signatures.  This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which together
shall constitute one and the same instrument. Facsimile signatures to this
Agreement shall be deemed to be original signatures.

 

                                (e)           Section Headings.  The various headings used in this Agreement
are inserted for convenience only and shall not affect the meaning or
interpretations of this Agreement or any provision hereof.

 

                                (f)            Attorneys’ Fees.  In the event any party institutes any action
or proceeding to enforce the terms and conditions of this Agreement, the
prevailing party shall be entitled to reasonable attorneys’ fees and costs.

 

                                (g)           WAIVER OF TRIAL BY JURY.  EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES
AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR
OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE,
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS
AGREEMENT, THE NOTES, OR THE SECURITY AGREEMENT, THE SUBJECT MATTER HEREOF AND
THEREOF OR ANY DOCUMENT RELATING HERETO OR THERETO, IN EACH CASE WHETHER NOW
EXISTING OR HEREAFTER ARISING OR WHETHER IN CONTRACT, TORT OR OTHERWISE.

 

                (h)           Further Assurances. From time
to time on and after the date of this Agreement, each party hereto will
promptly execute and deliver all such further instruments and assurances, and
will promptly take all such further actions, as the other party may reasonably
request in order more effectively to effect or confirm the transactions
contemplated by this Agreement and/or any of the Ancillary Agreements (as
defined in the Exchange Agreement) and to carry out the purposes hereof and
thereof.

IN
WITNESS WHEREOF, the parties hereto do execute this Agreement as of the date
first above written.

 

	
   

  	
  STONEPATH HOLDINGS

  
	
   

  	
  (HONG KONG) LIMITED

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  Robert Arovas

  
	
   

  	
  Name: 

  	
  Robert Arovas

  
	
   

  	
  Its:

  	
   Director

  
	
   

  	
   

  	
   

  
	
   

  	
  STONEPATH GROUP, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  Robert Arovas

  
	
   

  	
  Name: 

  	
  Robert Arovas

  
	
   

  	
  Its:

  	
  President

  
				

 

8

 

 

	
   

  	
  SBI ADVISORS, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  Shelly Singhal

  
	
   

  	
  Name: 

  	
  Shelly Singhal

  
	
   

  	
  Its: 

  	
  Manager

  
	
   

  	
   

  	
   

  
	
   

  	
  HONG KONG LEAGUE CENTRAL
  CREDIT UNION

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  Shelly Singhal

  
	
   

  	
  Name: 

  	
  Shelly Singhal

  
	
   

  	
  Its: 

  	
  Agent

  

9

 

EXHIBIT A

EXCHANGE
NOTICE

(To be executed by a
holder of Preferred Shares in order to exchange them for Common Stock)

The undersigned hereby
elects to exchange _________ of the Preferred Shares of Stonepath Holdings
(Hong Kong) Limited represented by the certificate accompanying this Exchange
Notice for shares of Common Stock of Stonepath Group Inc.

 

	
  Date of Exchange:

  	
   

  
	
   

  	
   

  
	
  Exchange Price:

  	
   

  
	
   

  	
   

  
	
  Shares of Common

  	
   

  
	
  Stock to be Delivered:

  	
   

  
	
   

  	
   

  
	
  Signature:

  	
   

  
	
   

  	
   

  
	
  Print Name:

  	
   

  
	
   

  	
   

  
	
  Address:

  	
   

  

The
undersigned represents and warrants that all offers and sales by the
undersigned of the Common Stock issuable upon exchange of the attached Preferred
Shares 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.

 

10Exhibit 10.31

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 277,778 Shares of Common Stock of

Stonepath Group, Inc.

(subject to adjustment as provided herein)

COMMON STOCK PURCHASE
WARRANT

 

	
  No. HKLCCU-1

  	
   

  	
  Issue Date:
  October 26, 2005

  

STONEPATH GROUP, INC., a
corporation organized under the laws of the State of Delaware (the “Company”),
hereby certifies that, for value received, Hong Kong League Central Credit Union,
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 October 25, 2009 (the “Expiration Date”),
up to Two Hundred Seventy Seven Thousand Seven Hundred Seventy Eight (277,778)
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 term “Excluded Shares” means (i)
shares of Common Stock issued or issuable pursuant to this Warrant or the
Preferred Shares Exchange Agreement, specifically including all shares of
Common Stock which may be issued upon exercise hereof or upon exchange
thereunder, (ii) shares of Common Stock issuable upon the exercise of any
options or warrants outstanding on the date of this Agreement, (iii) shares of
Common Stock issuable pursuant to or upon the conversion of any note,
debenture, debt instrument and all other written agreements to which Group is a
party on the date of this Agreement; (iv) shares of Common Stock (including
grants, options and warrants) issuable pursuant to or in accordance with any
plan for the benefit of employees, directors, officers, or consultants approved
by Group’s Board of Directors; and (v) shares of Common Stock issued or
issuable in connection with acquisitions made by Group or any of its direct or
indirect subsidiaries.

(c)           The “Exercise Price” shall be $1.13 per
share.

(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.

(e)           The term “Preferred Shares Exchange
Agreement” means the Preferred Shares Exchange Agreement dated as of October
26, 2005 by and among Stonepath Holdings (Hong Kong) Limited, Group, Hong Kong
League Central Credit Union, and SBI Advisors, LLC.

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 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, 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.

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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
pursuant to 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.             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 

3

cash, where applicable) receivable by the Holder will
be delivered to the Holder or the Trustee as contemplated by Section 3.2.

3.4           Other Adjustments.  If the Company, at any time after the date of
this Warrant is outstanding (other than in a transaction subject to Section 3.1
or 4):

(A)          issues or sells, or is deemed to have
issued or sold, any Common Stock, other than Excluded Shares;

(B)           in any manner grants, issues or sells
any rights, options, warrants, options to subscribe for or to purchase Common
Stock or any stock or other securities convertible into or exchangeable for
Common Stock other than Excluded Shares (such rights, options or warrants being
herein called “Options” and such convertible or exchangeable stock or
securities being herein called “Convertible Securities”); or

(C)           in any manner issues or sells any
Convertible Securities other than Excluded Shares;

for (1) with respect to
paragraph (A) above, a price per share, or (2) with respect to paragraphs (B)
or (C) above, a price per share (including the consideration per share paid on
issuance of the Option or Convertible Securities) for which Common Stock
issuable upon the exercise of such Options or upon conversion or exchange of
such Convertible Securities is less than the Exercise Price in effect
immediately prior to such issuance, sale or grant, then, immediately after such
issuance, sale or grant, the Exercise Price shall be reduced to the amount
determined by dividing (1) the sum of (x) the product derived by multiplying
the Exercise Price in effect immediately prior to such issue or sale by the
number of shares of Common Stock Deemed Outstanding immediately prior to such
issue or sale, plus (y) the consideration, if any, received or deemed to have
been received by the Company upon such issue or sale, by (2) the number of
shares of Common Stock Deemed Outstanding immediately after such issue or sale.
No modification of the issuance terms shall be made upon the actual issuance of
such Common Stock upon exercise, conversion or exchange of such Options or
Convertible Securities. If there is a change at any time in (i) the exercise
price provided for in any Options, (ii) the additional consideration, if any,
payable upon the issuance, conversion or exchange of any Convertible Securities
or (iii) the rate at which any Convertible Securities are convertible into or
exchangeable for Common Stock, then immediately after such change the Exercise
Price shall be adjusted to the Exercise Price which would have been in effect
at such time had such Options or Convertible Securities still outstanding
provided for such changed exercise price, additional consideration or changed
conversion rate, as the case may be, at the time initially granted, issued or
sold; provided that no adjustment shall be made if such adjustment would result
in an increase of the Exercise Price then in effect. However, upon the
expiration of any such Options or Convertible Securities, the issuance of which
resulted in an adjustment in the Exercise Price pursuant to this Section 3.4,
if all or any portion of any such Options or Convertible Securities shall not
have been exercised, the Exercise Price shall immediately upon such expiration
be increased to the price which it would have been after the issuance of such
Options or Convertible Securities on the basis of the Company offering for
subscription, purchase, conversion, exchange or acquisition only that number of
shares of Common Stock (if any) actually purchased upon the exercise of such
Options or Convertible Securities actually exercised. For the purposes of this
Section 3.4, the term “Common Stock Deemed Outstanding” means, at any given
time, the sum of the number of shares of Common Stock actually outstanding at
such time plus the number of shares of Common Stock issuable upon the exercise
of all options, rights and warrants and the conversion or exchange of
convertible or exchangeable securities outstanding at such time, whether or not
such options, rights, or warrants, or convertible or exchangeable securities
are actually exercisable, convertible or exchangeable at such time. For the
purposes of this Section 3.4, the consideration for the issue or sale of any
securities of the Company shall, irrespective of the accounting treatment of
such consideration, (x) insofar as it consists of cash, be computed at the net
amount of cash received by the Company, without deducting any expenses paid or
incurred by the Company or any commissions or compensations paid or concessions
or discounts allowed to underwriters, dealers or others performing similar
services in connection with such issue or sale, and (y) insofar as it consists
of property 

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(including securities)
other than cash, be computed at the fair value thereof at the time of such
issue or sale, as determined in good faith by the Board of Directors of the
Company.

                3.5           Minimum
Adjustment.  No adjustment in the
Exercise Price shall be required to be made unless such adjustment would
require an increase or decrease of at least one percent of such price;
provided, however, that any adjustment which by reason of this Section 3.5 is
not required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 3 shall be made to
the nearest cent or to the nearest 1/100th of a share, as the case may be.  Anything in this Section 3.5 to the contrary
notwithstanding, the Company shall be entitled to make such reduction in the
Exercise Price, in addition to those required by this Section 3.5, as it in its
discretion shall determine to be advisable in order that any stock dividend,
subdivision of shares, distribution of rights to purchase stock or securities,
or distribution of securities convertible into or exchangeable for stock
hereafter made by the Company to its stockholders shall not be taxable to the
recipients.

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
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 

5

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
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 initial
holder of this Warrant has been granted certain registration rights by the
Company.  These registration rights are
set forth in an Exchange Agreement entered into by the Company, Holder, and
others 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) 9.99%
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.

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.

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 DELAWARE 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 DELAWARE OR IN THE FEDERAL COURTS
LOCATED IN THE STATE OF DELAWARE.  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.

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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:

  	
  Robert Arovas

  
	
   

  	
   

  	
  Name:

  	
  Robert Arovas

  
	
  Caroly Yi

  	
   

  	
  Title:

  	
  President

  

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Exhibit 10.31

Exhibit A

FORM OF SUBSCRIPTION

(To Be Signed Only On Exercise Of Warrant)

 

	
  TO:

  	
  Stonepath Group,
  Inc.

  
	
   

  	
  World
  Trade Center

  
	
   

  	
  2200
  Alaskan Way, Suite 200

  
	
   

  	
  Seattle,
  Washington 98121

  
	
   

  	
   

  
	
   

  	
  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

Exhibit
10.31

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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