Document:

exv10w1

 

Exhibit
10.1

ASSIGNMENT OF LOANS, LIENS

AND LOAN DOCUMENTS

     THIS ASSIGNMENT OF LOANS, LIENS AND LOAN DOCUMENTS (this “Agreement”) dated as of
February 9, 2007 by and among LAURUS MASTER FUND, LTD, a Cayman Islands company
(“Assignor”), MASS FINANCIAL CORP., a Barbados company (“Assignee”), Stonepath
Group, Inc., a Delaware corporation (“Stonepath”), and the other entities appearing on the
signatures pages hereof.

BACKGROUND

     Stonepath, Stonepath Logistics Domestic Services, Inc., a Minnesota corporation
(“SLDS”), Stonepath Offshore Holdings, Inc., a Delaware corporation (“SLOS”),
Stonepath Logistics Government Services, Inc., a Virginia corporation (“SLGS”), Stonepath
Logistics International Services, Inc., a Delaware corporation (“SLIS”), M.G.R., Inc., a
Minnesota corporation (“MGR”), Distribution Services, Inc., a Minnesota corporation
(“DSI”), United American Acquisitions and Management, Inc., a Michigan corporation
(“United”) (Stonepath, SLDS, SLOS, SLGS, SLIS, MGR, DSI and United, each a
“Borrower” and, collectively, the “Borrowers”), and Assignor are parties to a
Security Agreement dated as of August 31, 2005 (as amended, restated, modified and/or supplemented
from time to time, the “Security Agreement”). Borrowers and certain subsidiaries are
indebted to Assignor pursuant to (a) the Security Agreement and (b) the notes, guarantees,
agreements, instruments and documents set forth on Schedule A attached hereto (together
with the Security Agreement, as each may be amended, restated modified and/or supplemented from
time to time, collectively, the “Loan Documents”).

     Assignor has agreed to sell and assign all of its respective right, title, and interest in and
to the Loans (as defined in the Security Agreement) and the Loan Documents to Assignee and Assignee
has agreed to purchase the Loans and the Loan Documents from Assignor on the terms and conditions
herein contained.

     NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:

     1. Definitions. Capitalized terms not otherwise defined herein shall have the
meanings set forth in the Security Agreement.

     2. Assignment and Assumption.

          (a) As of the Effective Date (as defined in Section 6 of this Agreement), Assignor hereby
TRANSFERS, ASSIGNS, SELLS, GRANTS and CONVEYS, WITHOUT RECOURSE, REPRESENTATION OR WARRANTY OF ANY
NATURE WHATSOEVER (except as expressly set forth in Section 4(a) of this Agreement) unto Assignee
all of Assignor’s right, title, and interest in and to the Loans and the Loan Documents, together
with all attendant liens, rights, claims, title, assignments and interests (including security
interests), pertaining to or arising from the Loan Documents (the “Assigned Rights”).

 

 

          (b) As of the Effective Date, Assignee hereby PURCHASES all of the Assigned Rights and ASSUMES
all of Assignor’s obligations under and with respect to the
Loans and the Loan Documents as of the Effective Date (including, without limitation, all of
Assignor’s commitments expressed in the Loan Documents, if any, and the obligations owing to
Assignor thereunder). It is expressly understood, and Assignor, the Borrowers and the Guarantors
agree that Assignee assumes no obligations that are not expressly stated within the Loan Documents,
provided, however, that Assignee has agreed to waive (i) any provision in the Loan
Documents calling for a prepayment penalty and (ii) any provision of Section 2(b) of the Minimum
Borrowing Note Registration Rights Agreement to the extent that it requires the Borrowers to pay
liquidated damages upon an “Event” as described therein.

          (c) Assignor, Borrowers and Guarantors hereby agree that the aggregate outstanding principal
amount of the Loans as of the commencement of business on February 9, 2007 together with interest
accrued through 5:00 p.m. (New York time) on February 9, 2007, due from Borrowers to Assignor in
accordance with the terms of the Loan Documents is $3,688,163.00.

     3. Payment of Purchase Price. In consideration for the Assigned Rights, Assignee
shall on the Effective Date pay to Assignor an amount equal to $3,688,163.00 (the “Purchase
Price”). The Purchase Price shall be paid by wire transfer to Assignor of immediately
available funds in the lawful currency of the United States of America in accordance with
Assignor’s wire transfer instructions set forth on the signature page hereto. If the Purchase
Price is not received by Assignor by 5:00 p.m. (New York time) on February 9, 2007, the Purchase
Price shall be adjusted by Laurus to reflect any change in the balance of the Loans.

     4. Representations and Warranties of Assignor.

          (a) Assignor represents and warrants that (i) upon the assignment hereby, the Assigned Rights
are free and clear of any lien or encumbrance created by Assignor; (ii) this Agreement has been
duly authorized, executed and delivered by Assignor, and is the legal, valid and binding obligation
of Assignor enforceable in accordance with its terms; (iii) it has title to the Assigned Rights,
(iv) it has not previously assigned, sold, sold a participation interest in, hypothecated or
otherwise transferred any interest that it had or may have in the Assigned Rights or the Loan
Documents, (v) no Loan Document has been modified or amended in any manner, (vi) Assignor has
performed each obligation required to be performed by it under any Loan Document, (vii) it has not
declared in writing the occurrence of any Default or Event of Default, (viii) no sweep is conducted
to any account of Assignor except for sweeps from accounts maintained with KeyBank National
Association (“KeyBank”) and (ix) no documents have been entered into by Assignor in
connection with the Security Agreement other than the documents listed on Schedule A and
the documents reflected on the closing checklist delivered by Assignor to Assignee (the “August
2005 Checklist”). Borrowers and Guarantors agree that the waiver by Assignor contained in the
immediately preceding sentence shall be without prejudice to the right of Assignee to declare an
Event of Default upon its determination that any breach has occurred, including one previously
waived by Assignor, other than a default arising from the interpleader action involving Home Depot
in the U.S. District Court for the Southern District of Indiana, provided that Borrowers shall have
provided to Assignee a complete copy of the docket for such case for Assignee’s evaluation within
five business days following the Effective Date.

2

 

          (b) Assignor represents and warrants that it is an accredited investor within the meaning of
Regulation D under the Securities Act.

          (c) Assignor makes no representation or warranty and assumes no responsibility with respect to
(i) any statements, warranties or representations made by any Borrower or any Person guaranteeing
the Loans (each a “Guarantor” and collectively, “Guarantors”) in or in connection
with the Security Agreement, any other Loan Document or any other agreement, instrument or document
furnished pursuant thereto, (ii) the legality, validity, enforceability, genuineness, sufficiency
or value of the Security Agreement, any other Loan Document or any other instrument or document
furnished pursuant thereto or any liens granted by any such Loan Document; (iii) except as
expressly set forth in Section 4(a) above, the occurrence or existence of any Default or Event of
Default under the Security Agreement or any other Loan Document; or (iv) the financial condition of
any Borrower, any Guarantor or any other obligor or the performance or observance by any Borrower,
any Guarantor or any other obligor of any of its obligations under any Loan Document or any other
agreement, instrument or document furnished pursuant thereto.

          (d) Assignee hereby acknowledges that it is taking the Loan Documents as is, without recourse
to Assignor, without the benefit of any representations or warranties from Assignor, except as
expressly stated in Section 4(a) above.

          (e) Assignee represents and warrants that this Agreement has been duly authorized, executed
and delivered by it, and is the legal, valid and binding obligation of the Assignee enforceable in
accordance with its terms.

     5. Representations, Warranties and Agreements of Borrowers and Guarantors.

          (a) As of the Effective Date, Borrowers and Guarantors jointly and severally represent and
warrant as follows: (a) each and every representation and warranty of any Borrower or Guarantor
contained in the Security Agreement (including all schedules attached thereto) or in any other Loan
Document is hereby repeated on the Effective Date, and is true, correct and complete except as
otherwise set forth in the Schedule B attached hereto; (b) no Borrower and no Guarantor has any
claim or defense against Assignor that would or might affect (i) the validity or enforceability of
any provisions of the Loan Documents, (ii) the collectibility of any sums owing by any Borrower or
Guarantor, (iii) result in a right of offset against Assignee; (c) on the close of the Business Day
immediately preceding the Effective Date, accounts receivable owing by customers of Borrowers and
Guarantors and not more than ninety (90) days past due are not less than $6,574,000; (d) this
Agreement has been duly authorized, executed and delivered by each Borrower and Guarantor, and is
the legal, valid and binding obligation of such Borrower or Guarantor enforceable in accordance
with its terms; (e) any corporate action required in order to authorize any Borrower or any
Guarantor to enter into this transaction has been duly taken; (f) no documents have been entered
into by any Borrower or Guarantor in connection with the Loans other than the Security Agreement
and the documents listed on Schedule A and the documents reflected on the August 2005
Checklist; (g) no Loan Document has been modified or amended in any manner prior to the Effective
Date; and (h) no Default or Event of Default has occurred and is continuing.

3

 

          (b) Each of the Borrowers and Guarantors agrees that the re-issuance of the Secured
Convertible Minimum Borrowing Note and the Secured Revolving Note does not constitute a repayment
and re-borrowing of the funds evidenced by such note and does not in any manner whatsoever effect
the validity or enforceability of any Loan Documents.

     6. Effective Date; Conditions Precedent. This Agreement shall become effective as of
the date on which all of the following conditions have been fulfilled (the “Effective
Date”):

          (a) Each Borrower, each Guarantor, Assignor and Assignee shall each have executed and
delivered counterparts of this Agreement to one another.

          (b) Assignor shall have received payment in full of the Purchase Price.

          (c) Assignor shall have received confirmation from Assignee that Borrowers and Guarantors
shall have delivered to Assignee the following: originals of the re-issued Secured Convertible
Minimum Borrowing Note, the re-issued Secured Revolving Note, a certified copy of any evidence of
corporate action by Borrowers and Guarantors that Assignee in its discretion requests, a fully
executed copy of the side-letter dated February 6, 2007 between Assignor and Stonepath as company
agent and a true copy of the opinion letter from Buchanan Ingersoll PC rendered in connection with
the August 31, 2005 loan transaction.

          (d) Assignor shall have caused Loeb & Loeb to deliver an executed Loeb & Loeb’s Undertaking
letter with respect to the documents described in Section 7 below.

     7. Conditions Subsequent. Within 24 hours following the Effective Date, Assignor
shall cause to be delivered to Assignee the original Secured Convertible Minimum Borrowing Note
marked “replaced”, the original Secured Revolving Note marked “replaced”, the original stock
certificates listed on Schedule C hereto together with the related stock powers executed in
blank and a notice to KeyBank (the “KeyBank Notice”) advising KeyBank that the Third Party
Lockbox Agreement identified on Schedule A has been assigned by Assignor to Assignee and
directing KeyBank to cease any daily sweep to a Laurus account, but instead to accept the
instructions of Assignee with respect to disposition of funds in such account. On the Effective
Date, Assignor shall cause to be delivered to KeyBank a copy of the KeyBank Notice with the
original to follow within 24 hours following the Effective Date.

     8. Other Obligations. As of the Effective Date (a) Assignee shall be a party to the
Loan Documents and, to the extent provided herein, shall have the rights and obligations under the
Security Agreement of Assignor thereunder and (b) Assignor shall and hereby does assign to Assignee
all of its rights, under the Security Agreement and the other Loan Documents. Following the
Effective Date, in the event that Assignor receives any sum in connection with the Loans, Assignor
shall promptly remit to Assignee such sum according to the wire transfer instructions appearing
below the Assignee’s signature block below, or in such other manner as Assignee may from time to
time request.

     9. Further Assurances. Assignor, Borrowers and Guarantors each agree to execute and
deliver all such further documents, to do or cause to be done all such further acts and things, and
to obtain all consents reasonably requested by Assignee, in order to effect the transactions
contemplated by this Agreement and to otherwise grant to the Assignee the intended benefit of

4

 

this Agreement. Such actions include without limitation (a) filing of assignments sufficient
to transfer Assignor’s security interest filed with the United States Patent and Trademark Office
to Assignee, (b) instructing depositary banks to accept the instructions of Assignee with respect
to disbursements from bank accounts, (c) effecting the transfers or re-issuances of the Secured
Convertible Minimum Borrowing Note and the Secured Revolving Note, (d) notifying Honk Kong League
Central Credit Union of the transfer effected by this Agreement and (e) delivering any documents
necessary to effect the transactions contemplated by this Agreement and to otherwise grant to
Assignee the intended benefit of this Agreement, the delivery of which Assignee expressly waives on
the Effective Date. Assignor, Borrowers and Guarantors hereby authorize Assignee to file
assignments of those UCC financing statements currently naming Assignor as secured party and
Borrowers and/or Guarantors as debtors so long as Assignor shall have approved the form thereof.

     10. Indemnities. For and in consideration of Assignor’s agreements contained herein,
each Borrower and Assignee jointly and severally hereby indemnify Assignor from, and hold Assignor
harmless against, all losses, liabilities, charges, expenses and fees (i) which Assignor may incur
as a result of any non-payment, claim or refund or charge back of any checks or other items which
have been credited by Assignor to Borrowers’ account with Assignor, together with all expenses and
other charges incident thereto, (ii) de minimis charges which Assignor may have incurred or may now
or hereafter incur in connection with the transactions contemplated by this letter which have not
as yet been reflected in Borrowers’ account which any Borrower is, or may be, required to bear
pursuant to the Security Agreement, and (iii) which Assignor may incur as a result of errors in
calculation of any amounts due Assignor by any Borrower.

     11. Consent to Assignment. Each Borrower and each Guarantor and their respective
officers, directors, employees, representatives, agents, executors, heirs, administrators,
successors and assigns (each Borrower, each Guarantor and each such other party, collectively, the
“Releasing Parties”) consents to this Assignment and agrees to be bound by its terms and
conditions to the extent applicable to it. Each Releasing Party represents and warrants to
Assignee that there are no defenses, offsets or counterclaims to any such party’s obligations under
any of the Loan Documents. For and in consideration of Assignor’s agreements contained herein the
Releasing Parties hereby release Assignor and each of its officers, directors, representatives,
employees, agents, attorneys-in-fact, affiliates and successors and assigns (collectively, the
“Assignor Parties”) from any and all claims, demands, agreements, actions, expenses,
damages, judgments, liabilities and obligations which any of the Releasing Parties has or ever had
against any of the Assignor Parties pursuant to the Loan Documents or any of the transactions
relating thereto and hereby agrees to indemnify the Assignor Parties from, and hold the Assignor
Parties harmless against the same. For and consideration of Assignee’s agreements contained herein
the Releasing Parties hereby release Assignee and each of its officers, directors, representatives,
employees, agents, attorneys-in-fact, affiliates and successors and assigns (collectively, the
“Assignee Parties”) from any and all claims, demands, agreements, actions, expenses,
damages, judgments, liabilities and obligations which any of the Releasing Parties has or ever had
arising in connection with the Loan Documents or any of the transactions relating thereto and
hereby agrees to indemnify the Assignee Parties from, and hold the Assignee Parties harmless
against, the same. If any Borrower or Guarantor has or ever had any claim against Assignor for any
act or unperformed obligation under the Loan Documents or otherwise, the

5

 

Borrowers’ and Guarantors’ remedies are solely against Assignor and Assignee is hereby
released from any such liability.

     12. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES.

     13. WAIVER OF JURY TRIAL. EACH OF ASSIGNOR, ASSIGNEE, EACH BORROWER AND EACH
GUARANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

     14. Counterparts. This Agreement may be executed in one or more counterparts, each of
which when so executed shall be deemed to be an original, but all of which when taken together
shall constitute one and the same agreement. Any signature delivered by facsimile transmission
shall be deemed an original signature hereto.

[Signatures appear on the following page.]

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

	 	 	 	 	 	 	 	 	 	 	 
	ASSIGNOR:	 	 	 	ASSIGNEE:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	LAURUS MASTER FUND, LTD.	 	 	 	MASS FINANCIAL CORP.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Eugene Grin	 	 	 	By:	 	/s/ James M. Carter	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	Name:

	 	Eugene Grin	 	 	 	Name:	 	James M. Carter	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	Title:

	 	Director	 	 	 	Title:	 	Vice President	 	 
	 

	 	 
	 	 	 	 	 	 	 	 

	 	 	 	 	 	 	 	 	 	 	 
	Wire Transfer Instructions:	 	Wire Transfer Instructions:
	 
	 	 	 	 	 	 	 	 	 	 
	Bank:

	 	North Forth Bank
	 	Bank:
	 	HSBC Bank USA

	 

	 	404 Fifth Avenue
	 	 	 	One HSBC Center

	 

	 	New York, NY 10018
	 	 	 	Buffalo, NY 14203

	ABA #:

	 	 021407912	 	 	ABA #:
	 	021001088	 
	Account Name:

	 	Laurus Master Fund P&I
	 	Swift Code:
	 	MRMDUS33

	Acct. #:

	 	2704048053	 	 	Acct. #:
	 	000050881	 
	For the Credit of:

	 	STG Payoff
	 	 	 	 	 	 
	 	 	 	 	 	 	For further credit to:
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Bank:
	 	HSBC Bank Canada

	 

	 	 	 	 	 	 	 	885 West Georgia Street

	 

	 	 	 	 	 	 	 	Vancouver, BC

	 

	 	 	 	 	 	 	 	CANADA V6C 3G1

	 

	 	 	 	 	 	Account Name:
	 	Clark Wilson LLP

	 

	 	 	 	 	 	US Trust Acct #:
	 	491689-002	 
	 

	 	 	 	 	 	Transit No.:
	 	10020	 
	 

	 	 	 	 	 	Bank Code:
	 	16	 
	 

	 	 	 	 	 	Swift No.:
	 	HKBCCATT

	 

	 	 	 	 	 	Re:
	 	Mass Financial Corp. and

	 

	 	 	 	 	 	 	 	File No. 27894-0001/VZH

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

7

 

ACKNOWLEDGED AND AGREED BY:

STONEPATH GROUP, INC.

	 	 	 	 	 
	By:
	 	/s/ Robert Arovas	 	 
	Name:

	 	 

Robert Arovas
	 	 
	Title:
	 	Chief Executive Officer	 	 
	 

	 	 	 	 

STONEPATH LOGISTICS DOMESTIC SERVICES, INC.

	 	 	 	 	 
	By:
	 	/s/ Robert Arovas	 	 
	Name:

	 	 

Robert Arovas
	 	 
	Title:
	 	President	 	 
	 

	 	 	 	 

STONEPATH OFFSHORE HOLDINGS, INC.

	 	 	 	 	 
	By:
	 	/s/ Robert Arovas	 	 
	Name:

	 	 

Robert Arovas
	 	 
	Title:
	 	President	 	 
	 

	 	 	 	 

STONEPATH LOGISTICS GOVERNMENT SERVICES, INC.

	 	 	 	 	 
	By:
	 	/s/ Robert Arovas	 	 
	Name:

	 	 

Robert Arovas
	 	 
	Title:
	 	President	 	 
	 

	 	 	 	 

STONEPATH LOGISTICS INTERNATIONAL SERVICES, INC.,

a Delaware corporation

	 	 	 	 	 
	By:
	 	/s/ Robert Arovas	 	 
	Name:

	 	 

Robert Arovas
	 	 
	Title:
	 	President	 	 
	 

	 	 	 	 

UNITED AMERICAN ACQUISITIONS

AND MANAGEMENT, INC.

	 	 	 	 	 
	By:
	 	/s/ Robert Arovas	 	 
	Name:

	 	 

Robert Arovas
	 	 
	Title:
	 	President	 	 
	 

	 	 	 	 

M.G.R., INC.

	 	 	 	 	 
	By:
	 	/s/ Robert Arovas	 	 
	Name:

	 	 

Robert Arovas
	 	 
	Title:
	 	President	 	 
	 

	 	 	 	 

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

8

 

DISTRIBUTION SERVICES, INC.

	 	 	 	 	 
	By:
	 	/s/ Robert Arovas	 	 
	Name:

	 	 

Robert Arovas
	 	 
	Title:
	 	President	 	 
	 

	 	 	 	 

CONTRACT AIR, INC.

	 	 	 	 	 
	By:
	 	/s/ Robert Arovas	 	 
	Name:

	 	 

Robert Arovas
	 	 
	Title:
	 	President	 	 
	 

	 	 	 	 

STONEPATH OPERATIONS, INC.

	 	 	 	 	 
	By:
	 	/s/ Robert Arovas	 	 
	Name:

	 	 

Robert Arovas
	 	 
	Title:
	 	President	 	 
	 

	 	 	 	 

NET VALUE, INC.

	 	 	 	 	 
	By:
	 	/s/ Robert Arovas	 	 
	Name:

	 	 

Robert Arovas
	 	 
	Title:
	 	President	 	 
	 

	 	 	 	 

CD TRANSFER TECHNOLOGY, LLC

	 	 	 	 	 
	By:
	 	/s/ Robert Arovas	 	 
	Name:

	 	 

Robert Arovas
	 	 
	Title:
	 	President	 	 
	 

	 	 	 	 

AIR PLUS LIMITED DE PUERTO RICO, INC.

	 	 	 	 	 
	By:
	 	/s/ Robert Arovas	 	 
	Name:

	 	 

Robert Arovas
	 	 
	Title:
	 	President	 	 
	 

	 	 	 	 

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

9

 

SCHEDULE A

Loan Documents

1. Secured Revolving Note dated as of August 31, 2005 made by Borrowers in favor of Laurus in the
original principal amount of $25,000,000.

2. Secured Convertible Minimum Borrowing Note dated as of August 31, 2005 (the “Minimum
Borrowing Note”) made by Borrowers in favor of Laurus in the original principal amount of
$10,000,000.

3. Registration Rights Agreement dated as of August 31, 2005 (the “RRA”) by and between
Stonepath and Laurus but solely to the extent the RRA relates to the Minimum Borrowing Note.

4. Subsidiary Guaranty dated as of August 31, 2005 executed by each Guarantor in favor of Laurus.

5. Guarantor Security Agreement dated as of August 31, 2005 executed by each Guarantor in favor of
Laurus.

6. Stock Pledge Agreement dated as of August 31, 2005 by and among Stonepath, SLIS, MGR, Stonepath
Logistics International Services, Inc., a Washington corporation, and Laurus.

7. Member Pledge Agreement dated as of August 31, 2005 by and between Stonepath and Laurus.

8. Intellectual Property Security Agreement dated as of August 31, 2005 by and among Borrowers,
Guarantors and Laurus.

9. Subordination Agreement dated as of August 31, 2005 executed by Hong Kong League Central Credit
Union in favor of Laurus.

10. Any UCC financing statements filed by Laurus in connection with the Loan Documents naming any
Borrower or Guarantor as a debtor.

11. 3rd Party Lockbox Agreement made by Borrowers, Guarantors, Assignor and KeyBank
National Association dated as of September 12, 2005.

12. The overadvance side letter among Borrowers, Guarantors and Assignor dated April 4, 2006.

13. The overadvance side letter among Borrowers, Guarantors and Assignor dated October 19, 2006.

 

 

SCHEDULE C

Original Stock Certificates Delivered by Assignor

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

	 	Domestic Services, Inc.	 	 	 	 	 	 	 	 
	Stonepath Group, Inc.
	 	(f/k/a Stonepath	 	Common	 	1	 	$.001	 	100
	 
	 	Logistics, Inc.)	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Stonepath Group, Inc.
	 	Stonepath Logistics	 	 	 	 	 	 	 	 
	 
	 	International Services, Inc.	 	Common	 	1	 	$.001	 	100
	 
	 	 	 	 	 	 	 	 	 	 
	Stonepath Group, Inc.
	 	Stonepath	 	 	 	 	 	 	 	 
	 
	 	Operations, Inc.	 	Common	 	1	 	$.001	 	100
	 
	 	 	 	 	 	 	 	 	 	 
	Stonepath Group, Inc.
	 	Stonepath Offshore	 	 	 	 	 	 	 	 
	 
	 	Holdings, Inc.	 	Common	 	1	 	$.001	 	100
	 
	 	 	 	 	 	 	 	 	 	 
	Stonepath Group, Inc.
	 	Net Value, Inc.	 	Common	 	C-1	 	$ .01	 	100
	 
	 	 	 	 	 	 	 	 	 	 
	Stonepath Logistics
Domestic Services,
Inc.
	 	M.G.R., Inc.	 	Common	 	C-1	 	No Par Value	 	17,700
	 
	 	 	 	 	 	 	 	 	 	 
	Stonepath Logistics
Domestic Services, Inc.
	 	Distribution 
Services, Inc.	 	Common	 	C-1	 	No Par Value	 	10,000
	 
	 	 	 	 	 	 	 	 	 	 
	Stonepath Logistics
Domestic Services,
Inc.
	 	Contract Air, Inc.	 	Common	 	C-1	 	No Par Value	 	17,700
	 
	 	 	 	 	 	 	 	 	 	 
	Stonepath Logistics
	 	United American	 	 	 	 	 	 	 	 
	Domestic Services, Inc.
	 	Acquisitions and	 	Common	 	2	 	$1.00	 	7,500
	 
	 	Management, Inc.	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Stonepath Logistics
	 	Stonepath Logistics	 	 	 	 	 	 	 	 
	Domestic Services, Inc.
	 	Government Services,	 	 	 	 	 	 	 	 
	 
	 	Inc.(f/k/a Transport	 	Common	 	3	 	$1.00	 	100
	 
	 	Specialists, Inc.)exv10w2

 

Exhibit 10.2

February 9, 2007

Stonepath Group, Inc.

2200 Alaskan Way, Suite 200

Seattle, Washington

Attention: Mr. Bob Arovas

Dear Sirs:

			
	RE:	 	Proposed Financing by Mass Financial Corp.

     The following letter agreement sets out the terms upon which Mass Financial Corp. or one of
its affiliates (“Mass”) will provide financing to Stonepath Group, Inc. (“Stonepath”). The terms
are as follows:

	1.	 	Assignment: Mass expects to purchase from Laurus Master Fund. Ltd. (“Laurus”) all
the amounts loaned by Laurus to Stonepath together with all of the various security granted by
Stonepath to Laurus (the “Assignment”).

	2.	 	Financing: Mass will provide or arrange a revolving line of credit in the amount of
$20 million (the “LOC”), which LOC will be convertible into common shares of Stonepath at a
conversion rate equal to 85% of the per share of common stock value to be established by a
third party

	 	 	 	 	 	 	 
	 

	 	Unit 803 — 8th Floor
	 	 	1	 
	 

	 	Dina House, Ruttonjee Centre	 	 	 	 
	 

	 	11 Duddell Street, Central	 	 	 	 
	 

	 	Hong Kong	 	 	 	 
	 

	 	Phone + 852 2537 3613 Facsimile + 852 2537 3689	 	 	 	 

 

 

independent valuator jointly appointed by Mass and Stonepath. Any advances may only be drawn
down against Stonepath’s receivables meeting acceptable credit standards, or such other purpose as
approved in advance by Mass, all as determined by Mass in its sole discretion. The LOC will
contain terms and provisions customary for lines of credit made in a transaction of a similar
nature to that contemplated herein.

	3.	 	Additional Financing: Mass will be granted a right of first refusal to arrange any
additional financing required by Stonepath for a period of three (3) years following the date
of this Letter Agreement, at applicable market rates in the circumstances at the time, and
upon terms and conditions to be negotiated in good faith.

	4.	 	Security: All security granted to Laurus will continue to act as security for and
will be assigned to Mass in connection with the Assignment. As further security for Mass
agreeing to complete the Assignment and the LOC, Stonepath agrees, subject to consent by SBI
Brightline, LLC, (“Asia Lender”), that it will assign, pledge and grant a continuing security
interest, in second position behind the Asia Lender, in and upon all of the assets and
collateral owned by Stonepath Holdings (Hong Kong) Limited, Stonepath Freight Express (Hong
Kong) Limited, G-Link Express Logistics (Singapore) Pte. Ltd., G-Link Express Logistics
(Cambodia) Pte. Ltd., G-Link Express Logistics (Penang) Sdn. Bhd., G-Link Express Logistics
(KL) Sdn. Bhd., G-Link Express Logistics (JB) Sdn. Bhd., Planet Logistics Express (Singapore)
Pte. Ltd., Group Logistics Pte. Ltd., Shaanxi Sunshine Cargo Services International Co. Ltd.,
Shaanxi Sunshine Cargo Services (Hong Kong) Co., Ltd., Stonepath Logistics (China) Limited,
Glink Express Freight (Asia Pacific) Pte. Ltd., Stonepath Logistics (Asia Pacific) Pte. Ltd.
and Stonepath Logistics (Hamburg) GmbH (collectively, the “Asian Companies”). If a second
position security interest cannot be

	 	 	 	 	 	 	 
	 

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obtained, Stonepath agrees to grant a negative pledge that it will not grant any other
security interest over the assets or shares of the Asian Companies.

	5.	 	Pledge: As further security for Mass agreeing to complete the Assignment and the
LOC, Stonepath agrees that it will also cause all shares of stock of its subsidiaries, which
were previously pledged under a Stock Pledge Agreement dated August 31, 2005, to be registered
in the name of Mass.

	6.	 	Board: Within two (2) days following the closing of the Assignment, Stonepath will
reduce the number of directors on its board of directors to three (3), which persons will
consist of independent non-management representatives with qualifications acceptable to Mass.
At closing of the transactions contemplated by this Letter Agreement, Stonepath will purchase
a tail directors and officers liability policy, provided that the cost of such policy is
reasonable and Stonepath has sufficient funds to purchase such policy.

	7.	 	Management: Stonepath shall use its best efforts to ensure each of Bob Arovas and
Bob Christensen continues their employment with Stonepath for a period of at least one (1)
year from the date of this Letter Agreement.

	8.	 	Transaction Fees: In connection with the Assignment and the LOC, Stonepath will pay
to Mass a transaction fee of $2,500,000 (the “Transaction Fee”). The Transaction Fee will be
payable on closing of the LOC and may be paid from an advance on the LOC. At the sole
discretion of Mass, the Transaction Fee will be convertible into common shares of Stonepath at
the same rate as under the LOC.

	9.	 	Merchant Banking Fees: In connection with arranging the LOC, Stonepath will pay to
Mass a non-refundable commitment fee of

	 	 	 	 	 	 	 
	 

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$1,200,000 (the “Merchant Banking Fee”), which may be
paid from an advance on the LOC. At the sole discretion of Mass, the Merchant Banking Fee
will be convertible into common shares of Stonepath at the same rate as under the LOC.
Stonepath acknowledges and agrees that the Merchant Banking Fee is payable to Mass as
consideration for the time, effort and expenses of Mass and its employees and agents to:

	 	(a)	 	review and/or study documents pertaining to the transaction(s) contemplated
hereby (including but not limited to any credit reports and financial statements);
	 
	 	(b)	 	underwrite the LOC;
	 
	 	(c)	 	reserve funds in contemplation of the LOC; and
	 
	 	(d)	 	forego any opportunities to use the funds elsewhere.

Stonepath agrees that the actual determination of the costs and expenses so incurred by Mass
is not feasible, and the Merchant Banking Fee represents a reasonable estimate thereof and is
payable to Mass in the manner set out below without set-off, abatement or deduction.

Stonepath further agrees that the Merchant Banking Fee will be earned and payable by Mass on
its issuance of the LOC to Stonepath.

	10.	 	Break Fees: Should Stonepath elect to enter into an alternative financing
transaction with a third party within three (3) months after signing this Letter Agreement, a
break-up fee of $750,000 in cash will immediately become due and payable to Mass.

	11.	 	Access to Information: The parties hereto agree that immediately upon execution of
this Letter Agreement, Mass and its respective advisors will have full access during normal
business hours to, or Stonepath will deliver

	 	 	 	 	 	 	 
	 

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to Mass, such information and copies of all
documents as reasonably requested by Mass, all upon reasonable notice to Stonepath.

	12.	 	Condition(s) Precedent for Mass: The obligation of Mass to proceed with the
transactions contemplated by this Letter Agreement will be subject to satisfaction or written
waiver by Mass of conditions precedent customary for loan transactions like the LOC, including
without limitation the following condition(s) (the “Conditions Precedent”):

	 	•	 	review and approval of all materials in the possession and control of Stonepath which
are germane to the decision to complete the Assignment and the LOC;
	 
	 	•	 	loan and security documentation and guarantees appropriate to the risks identified by
due diligence conducted by Mass and its advisors;
	 
	 	•	 	Mass and its solicitors having had a reasonable opportunity to perform the searches
and other due diligence reasonable or customary in a transaction of a similar nature to
that contemplated herein and that both the solicitors and Mass are satisfied with the
results of such due diligence;
	 
	 	•	 	Mass having had a reasonable opportunity to review the audited financial statements
(including corporate tax returns, general ledger listings, adjusting entries and opening
trial balances) of Stonepath, prepared in accordance with generally accepted accounting
principles and that Mass are satisfied with the content of such financial statements;

	 	 	 	 	 	 	 
	 

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	 	•	 	satisfactory arrangements being made to continue the employment of Bob Arovas and Bob
Christensen with Stonepath for at least one year from the date of this Letter Agreement;
	 
	 	•	 	Mass consummating the Assignment;
	 
	 	•	 	Stonepath obtaining consent from any parties from whom consent to any of the
transactions contemplated by this Letter Agreement is required;
	 
	 	•	 	no material adverse change having occurred in connection with the business of
Stonepath;
	 
	 	•	 	no legal proceedings pending or threatened to enjoin, restrict or prohibit the
transactions contemplated in this Letter Agreement;
	 
	 	•	 	a satisfactory legal opinion being available from counsel for Stonepath;
	 
	 	•	 	approval of the Board of Directors of Mass being obtained; and
	 
	 	•	 	approval of the Board of Directors of Stonepath and, if required, approval of all of
the securityholders of Stonepath being obtained.

	13.	 	Expenses: At the date of the first advance under the LOC, Stonepath will pay all
legal fees incurred by Mass to date.

	14.	 	Closing: The closing (the “Closing”) of the transactions contemplated by this Letter
Agreement will occur not later than 30 days following the satisfaction or written waiver by
Mass of the Conditions Precedent. The Closing may take place by exchange of the appropriate
solicitor’s undertakings, which will involve each party’s solicitors delivering to his or her
counterpart all required cash and documentation, to be held in trust

	 	 	 	 	 	 	 
	 

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	 	 	and not released until
all such cash and documentation has been executed and delivered to the respective parties
hereto.
	 
	15.	 	Confidentiality: All negotiations regarding this Letter Agreement will be
confidential and will not be disclosed to anyone other than respective advisors and internal
staff of the parties and necessary third parties, such as lenders approached for financing.
No press or other publicity release will be issued to the general public concerning the
proposed transaction without mutual consent unless required by law, and then only upon prior
written notice to the other party.

	16.	 	Binding Agreement: Mass and Stonepath agree that this Letter Agreement creates a
binding and enforceable contract which will be enforceable.

	17.	 	Proper Law: This Letter Agreement will be governed by and construed in accordance
with the law of the Province of British Columbia and the parties hereby attorn to the
jurisdiction of the Courts of competent jurisdiction of the Province of British Columbia in
any proceeding hereunder.

	18.	 	Currency: All references to “$” in this Letter Agreement shall refer to currency of
the United States of America.

	19.	 	Counterparts and Electronic Means: This Letter Agreement may be executed in several
counterparts, each of which will be deemed to be an original and all of which will together
constitute one and the same instrument. Delivery to us of an executed copy of this Letter
Agreement by electronic facsimile transmission or other means of electronic communication
capable of producing a printed copy will be deemed to be execution and delivery to us of this
Letter Agreement as of the date of successful transmission to us.

	 	 	 	 	 	 	 
	 

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	20.	 	Further Assurances: The parties will execute and deliver all such further documents,
do or cause to be done all such further acts and things, and give all such further assurances
as may be necessary to give full effect to the provisions and intent of this Letter Agreement.

	21.	 	Assignment: This Letter Agreement and any benefits hereunder may not be transferred,
assigned or otherwise disposed of by Stonepath to any other party without the prior written
consent of Mass. Mass may assign any portion of this Letter Agreement to any of its
affiliates.

	22.	 	Damages Inadequate: Each of the parties hereto acknowledges and agrees that damages
at law may be an inadequate remedy for a breach or threatened breach of this Letter Agreement
and hereby agrees that, in the event of a breach or threatened breach of any provision hereof,
the respective rights and obligations hereunder will be enforceable by specific performance,
injunction, or other equitable remedy.

	23.	 	Electronic Means: Delivery of an executed copy of this Letter Agreement by
electronic facsimile transmission or other means of electronic communication capable of
producing a printed copy will be deemed to be execution and delivery of this Letter Agreement
as of the date set forth on page one of this Letter Agreement.

	24.	 	Enurement: This Agreement will enure to the benefit of and be binding upon the
parties and their respective heirs, executors, administrators, successors, and assigns.

	25.	 	Notices: Any notice required or permitted to be given to any of the parties to this
Agreement will be in writing and may be given by prepaid registered post, electronic facsimile
transmission or other means of electronic communication capable of producing a printed copy to
the address of such party first above stated or such other address as any party may specify by

	 	 	 	 	 	 	 
	 

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	 	Phone + 852 2537 3613 Facsimile + 852 2537 3689	 	 	 	 

 

 

	 	 	notice in writing to the other parties and any such notice will be deemed to have been given
and received by the party to whom it was addressed if mailed, on the third day following the
mailing thereof, if by facsimile or other electronic communication, on successful
transmission, or, if delivered, on delivery; but if at the time of mailing or between the time
of mailing and the third business day thereafter there is a strike, lockout, or other labour
disturbance affecting postal service, then the notice will not be effectively given until
actually delivered.
	 
	26.	 	Acceptance: If you are agreeable to the foregoing terms, please sign and return a
duplicate copy of this Letter Agreement by no later than by 4:00 p.m. on February 9, 2007.
Facsimile is acceptable.

Yours truly,

MASS FINANCIAL CORP.

James M. Carter

Vice President

The above
terms are accepted this 9th day of February, 2007.

STONEPATH GROUP, INC.

Bob Arovas

Chief Executive Officer

	 	 	 	 	 	 	 
	 

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