Document:

Exhibit 10.29

 

EXCHANGE AGREEMENT

 

EXCHANGE AGREEMENT
(this “Agreement”) dated as of the 7th day of October, 2005 by and among
STONEPATH HOLDINGS (HONG KONG) LIMITED, a company incorporated under the laws
of Hong Kong (“Holdings”), STONEPATH GROUP, INC., a Delaware corporation (“Group”),
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, Holdings,
Lender, and Agent are parties to the Term Credit Agreement dated October 27,
2004 (the “Term Credit Agreement”) pursuant to which Lender has agreed to make
loans to Holdings in the aggregate principal amount of $10,000,000;

 

WHEREAS, term
loans are outstanding under the Term Credit Agreement in the aggregate
principal amount of $5,000,000;

 

WHEREAS, the
outstanding loans under the Term Credit Agreement are secured by (i) a
Floating Charge Over Accounts Receivables dated October 27, 2004 by and
among Stonepath Logistics (Hong Kong) Limited, Lender, and Agent; (ii) a
Floating Charge Over Accounts Receivables dated October 27, 2004 by and
among G Link Express Logistics (Singapore) Pte. Ltd., Lender and Agent; and (iii) a
Floating Charge Over Accounts Receivables dated October 27, 2004 by and
among Planet Logistics Express (Singapore) Pte. Ltd., Lender, and Agent
(collectively, the “Floating Charges”); and

 

WHEREAS, Group has
guaranteed the obligations of Holdings under the Term Credit Agreement and the
obligations of the chargors under the Floating Charges pursuant to the terms of
a Guaranty dated October 27, 2004 (the “Guaranty”) in favor of Lender; and

 

WHEREAS, Holdings,
Group, Lender, and Agent, have agreed to (i) exchange $3,000,000 of the
principal amount outstanding under the Term Credit Agreement for newly issued
preferred shares of Holdings which are exchangeable for shares of common stock
of Group, (ii) extend the date for the repayment of $1,000,000 of the
remaining $2,000,000 principal amount outstanding under the Term Credit
Agreement, (iii) terminate the Floating Charges and the security interests
created thereby, and (iv) have Group issue to Lender warrants to purchase
shares of Group’s common stock, all upon the terms and conditions set forth in
this Agreement and the agreements and documents attached as exhibits to this
Agreement.

 

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:

 

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

 

 

“Amendment to Term Credit Agreement” means the Amendment to
Term Credit Agreement attached to this Agreement as Exhibit A.

 

“Ancillary Agreements” means the Amendment to Term Credit
Agreement, Preferred Shares Exchange Agreement, and Warrants.

 

“Business Day” means a day (a) other than a Saturday or
Sunday and (b) on which commercial banks are open for business in New
York, New York and Los Angeles, California.

 

“Common Stock” means the shares of common stock of Group.

 

“Exchange Shares” means the shares of Common Stock of Group
issuable pursuant to the Preferred Shares Exchange Agreement.

 

“Person” means an individual, a
partnership (general or limited), corporation, limited liability company, joint
venture, business trust, cooperative, association or other form of business
organization, whether or not regarded as a legal entity under applicable law, a
trust (inter vivos or testamentary), an estate of a deceased, insane or
incompetent person, a quasi-governmental entity, a government or any agency,
authority, political subdivision or other instrumentality thereof, or any other
entity.

 

“Preferred Shares Exchange Agreement” means the Preferred
Shares Exchange Agreement attached to this Agreement as Exhibit B.

 

“Preferred Shares” means the preferred shares of Holdings,
having the rights, designation, number, powers, preferences, limitations, and
restrictions set forth in Exhibit C to this Agreement.

 

“Registrable
Securities” means the Exchange Shares and the Warrant Shares, but
the term “Registrable Securities” excludes (i) any securities that have
been publicly sold or may be immediately, freely sold without registration
under the Act either pursuant to Rule 144 under the Act or otherwise, (ii) any
securities sold by a person in a transaction pursuant to a registration
statement filed under the Act or (iii) any securities that are at the time
subject to an effective registration statement under the Act.

 

“SEC” means the United States Securities and Exchange
Commission.

 

“Shares” means the Preferred Shares, Exchange Shares, and
Warrant Shares.

 

“Warrant Shares” means the shares of Common Stock of Group
issuable pursuant to the Warrant.

 

“Warrant” means the warrant to purchase Common Stock of Group
attached to this Agreement as Exhibit D.

 

2

 

2.                                       Exchange
Transactions.

 

Subject to the terms and conditions hereof, the parties shall, on a
date within two (2) Business Days after the date that the Preferred Shares
may be issued under Hong Kong law or on such later date as the parties may
agree, take the following actions, each of which shall be deemed to have
occurred simultaneously with the others:

 

(a)                                  Holdings
will issue Thirty Thousand (30,000) Preferred Shares to Lender;

 

(b)                                 Group,
Holdings, Lender, and Agent will enter into the Preferred Shares Exchange
Agreement;

 

(c)                                  Group
will issue a Warrant to purchase Two Hundred Seventy Seven Thousand Seven
Hundred Seventy Eight (277,778) Warrant Shares of Group to Lender;

 

(d)                                 The
outstanding principal balance of the Term Loans (as that term is defined in the
Term Credit Agreement) will be reduced from $5,000,000 to $2,000,000 and the
Lender will reflect such reduction in its internal records pursuant to
paragraph 2 of the Term Note (as that term is defined in the Term Credit
Agreement);

 

(e)                                  The
maturity date of $1,000,000 of the remaining outstanding principal amount under
the Term Credit Agreement will be extended to November 4, 2007 in
consideration of the payment of a $10,000 extension fee by Holdings;

 

(f)                                    The
Floating Charges and the floating charges granted thereunder will terminate and
Lender and Agent will take all such action is necessary to terminate those
charges of record;

 

(g)                                 Group,
Holdings, Lender, and Agent will enter into the Amendment to Term Credit
Agreement; and

 

(h)                                 Group
will pay Agent a fee of $25,000 and reimburse its legal expenses up to a
maximum amount of $10,000.

 

2.                                       Representations
and Warranties of Group and Holdings.

 

Holdings and Group hereby represent and warrant to Agent and Lender as
follows:

 

(a)                                  Legal
Status.  Holdings is a corporation
with limited liability and validly existing under the laws of Hong Kong and has
full power to carry on its business as it is now being conducted. Group is a
corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization and has full power to carry on its business
as it is now being conducted.

 

3

 

(b)                                 Authorization
and Validity.  This Agreement and the
Ancillary Agreements have been duly authorized, and upon their execution and
delivery in accordance with the provisions hereof and thereof will constitute
legal, valid and binding agreements and obligations of Group and Holdings, as
the case may be, enforceable in accordance with their respective terms.

 

(c)                                  No
Conflict.  The execution, delivery,
and performance by Holdings and Group of this Agreement and the Ancillary
Agreements to which they are a party do not and will not conflict with the
terms of the charter documents of Holdings or Group, as the case may be;
violate any provision of any judgment, decree or order of any court or
governmental authority by which Holdings or Group, as the case may be, is
bound, or any provision of any law or regulation applicable to Holdings or
Borrower, as the case may be; or result in a breach of or constitute a default
under any material contract, obligation, indenture, or other instrument to
which Holdings or Group, as the case may be, is a party or by which Holdings or
Group, as the case may be, may be bound.

 

(d)                                 No Consents.  The execution, delivery, and performance by
Holdings and Group of this Agreement and the Ancillary Agreements to which they
are a party do not and will not require any authorization, approval, or other
action by, or notice to or filing with, any governmental authority, regulatory
body, or any other person or entity, except such filings as may be required
under Federal or state securities laws or regulations.

 

(e)                                  Reservation
and Issuance of Exchange Shares and Warrant Shares.  The requisite number of Exchange Shares and
Warrant Shares issuable pursuant to the Preferred Shares Exchange Agreement and
the Warrants has been duly authorized and reserved for issuance and no further
corporate action is required for the valid issuance of such Exchange Shares or
Warrant Shares. Upon issuance pursuant to the Preferred Shares Exchange
Agreement or the Warrants, the Exchange Shares and Warrant Shares, as the case
may be, will be validly issued, fully paid, and non-assessable.

 

3.                                       Representations
and Warranties of Lender and Agent .

 

Lender and Agent represent and warrant to Holdings and Group as
follows:

 

(a)                                  Legal
Status.  Lender is a corporation with
limited liability and validly existing under the laws of Hong Kong and has full
power to carry on its business as it is now being conducted. Agent is a limited
liability company duly organized, validly existing and in good standing under
the laws of its jurisdiction of formation and has full power to carry on its
business as it is now being conducted.

 

(b)                                 Authorization
and Validity.  This Agreement and the
Ancillary Agreements  have been duly
authorized, and upon their execution and delivery in accordance with the
provisions hereof and thereof will constitute legal, valid and binding
agreements and obligations of Lender and Agent, as the case may be, enforceable
in accordance with their respective terms.

 

4

 

(c)                                  No
Conflict.  The execution, delivery,
and performance by Lender and Agent of this Agreement and the Ancillary
Agreements to which they are a party do not and will not conflict with the
terms of the charter documents of Lender or Agent, as the case may be; violate
any provision of any judgment, decree or order of any court or governmental
authority by which Lender or Agent, as the case may be, is bound, or any
provision of any law or regulation applicable to Lender or Agent, as the case
may be, or result in a breach of or constitute a default under any material
contract, obligation, indenture, or other instrument to which Lender or Agent,
as the case may be, is a party or by which Lender or Agent, as the case may be,
may be bound.

 

(d)                                 No Consents.  The execution, delivery, and performance by
Lender and Agent of this Agreement and the Ancillary Agreements to which they
are a party do not and will not require any authorization, approval, or other
action by, or notice to or filing with, any governmental authority, regulatory
body, or any other person or entity, except such filings as may be required
under Federal or state securities laws or regulations.

 

(e)                                  Accredited
Investor.  Each of Lender and Agent
has such knowledge and experience in business and financial matters such that
it is capable of evaluating the merits and risks of purchasing the Shares.  Each of Lender and Agent is an “accredited
investor” as that term is defined in Rule 501 of Regulation D of the Act.

 

(f)                                    Loss
of Investment.  Lender’s (i) overall
commitment to investments which are not readily marketable is not
disproportionate to its net worth; (ii) investment in the Shares will not
cause such overall commitment to become excessive; (iii) can afford to
bear the loss of its entire investment in the Shares; and (iv) has
adequate means of providing for its current needs and has no need for liquidity
in its investment in the Shares.

 

(g)                                 Investment
Intent.

 

(i)                                     Each
of Lender and Agent hereby acknowledges that it has been advised that the offer
and sale of the Shares covered by this Agreement and the Ancillary Agreements
has not been registered with, or reviewed by, the SEC because it is intended to
be a non-public offering pursuant to Section 4(2) and Rule 506
of Regulation D of the Act.  Each of
Lender and Agent represents that the Shares are being, and will be, purchased
for Lender’s own account and not on behalf of any other person, for investment
purposes only and not with a view towards distribution or resale to others.
Each of Lender and Agent agrees that it will not attempt to sell, transfer,
assign, pledge or otherwise dispose of all or any portion of the Shares unless
they are registered under the Act or unless in the opinion of counsel an
exemption from such registration is available, such counsel and such opinion to
be satisfactory to Holdings or Group, as the case may be.  Each of Lender and Agent understands that the
Shares have not been registered under the Act by reason of a claimed exemption
under the provisions of the Act which depends, in part, upon the investment
intention of Lender; and

 

(ii)                                  The
Shares and any certificates issued in replacement therefor or upon conversion
thereof shall bear the following legend, in addition to any other legend
required by law or otherwise:

 

5

 

“THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED.  THE SECURITIES REPRESENTED BY
THIS CERTIFICATE HAVE BEEN TAKEN BY THE REGISTERED OWNER FOR INVESTMENT, AND
WITHOUT A VIEW TO RESALE OR DISTRIBUTION THEREOF, AND MAY NOT BE
TRANSFERRED OR DISPOSED OF WITHOUT AN OPINION OF COUNSEL SATISFACTORY TO THE
ISSUER THAT SUCH TRANSFER OR DISPOSITION DOES NOT VIOLATE THE SECURITIES ACT OF
1933, AS AMENDED, OR THE RULES AND REGULATIONS THEREUNDER.”

 

(h)                                 State
Securities Laws.  Each of Lender and
Agent understands that no securities administrator of any state has made any finding
or determination relating to the fairness of an investment in the Shares and
that no securities administrator of any state has recommended or endorsed, or
will recommend or endorse, the offering of the Shares.

 

(i)                                     Access
to Information.  Lender and Agent
have had access to, and an opportunity to review all material and relevant
information concerning Holdings and Group, its management, financial condition,
capitalization, market information, properties and prospects, including all
reports, registration statements, and other filings with the SEC filed since
January, 2005, necessary to enable them to make an informed investment decision
with respect to its investment in the Shares. 
Lender and Agent each acknowledge that it has had the opportunity to ask
questions of and receive answers from, and to obtain additional information
from, representatives of Holdings and Group concerning the terms and conditions
of the acquisition of the Shares and the present and proposed business and
financial condition of Group and Holdings, and has had all such questions
answered to its satisfaction and has been supplied all information requested.

 

(j)                                     Understanding
of Investment Risks.    Prior to
making an investment in the Shares, Lender and Agent have fully considered,
among other things, the business risks enumerated in Group’s Form 10-K for
the year ended December 31, 2004, and any other risk factors that have
been included within any reports or registration statements filed with the SEC.

 

4.                                       Registration
Rights.

 

(a)           Piggyback Registration.  If Group shall determine to register for sale
for cash any shares of its Common Stock, for its own account or for the account
of others, other than (i) a registration relating solely to employee
benefit plans or securities issued or issuable to employees, directors, or  consultants (to the extent the securities
owned or to be owned by such consultants could be registered on Form S-8),
(ii) a registration relating solely to a transaction pursuant to Rule 145
under the Securities Act, or (iii) a registration on Form S-4 in
connection with a merger, acquisition, divestiture, reorganization or similar
event, Group shall promptly give to Lender and Agent written notice thereof
(and in no event shall such notice be given less than 10 Business Days prior to
the filing of such registration statement), and shall, subject to Section 4(b) hereof,
include in such registration (a “Piggyback Registration”), all of the
Registrable Securities specified in a written request or requests, made within
five days after 

 

6

 

receipt of such written notice from Group, by Lender or Agent. However,
Group may, without the consent of the Lender or Agent, withdraw such
registration statement prior to its becoming effective if Group or such other
stockholders have elected to abandon the proposal to register the securities
proposed to be registered thereby.

 

(b)                                 Underwriting. 
If a Piggyback Registration is for a registered public offering
involving an underwriting, Group shall so advise Lender and Agent in writing or
as a part of the written notice given pursuant to Section 4(a) hereof.  In such event, the right of Lender to
registration pursuant to Section 4(a) hereof shall be conditioned
upon its participation in such underwriting and the inclusion of its
Registrable Securities in the underwriting to the extent provided herein.  In the event Lender proposes to distribute
its securities through such underwriting, it shall (together with Group and any
other stockholders of Group distributing their securities through such
underwriting) enter into an underwriting agreement in customary form with the
underwriters selected for such underwriting by Group or selling stockholders,
as applicable.  Notwithstanding any other
provision of this Section 4(b), if the lead underwriter or Group
determines that marketing factors require a limitation of the number of shares
to be underwritten, the lead underwriter or Group may exclude some or all of
the Registrable Securities from such registration and underwriting.  The Company shall so advise Lender and Agent,
and the number of shares of Registrable Securities that may be included in the
registration and underwriting, if any, shall be allocated as follows:

 

(i)                                     In the event of a
Piggyback Registration that is initiated by Group, the number of shares that
may be included in the registration and underwriting shall be allocated first
to Group and then, subject to obligations and commitments existing as of the
date hereof, to all selling stockholders, including Lender, who have requested
to sell in the registration on a pro rata basis according to the number of
shares requested to be included; and

 

(ii)                                  In the event of a
Piggyback Registration that is initiated by the exercise of demand registration
rights by a stockholder or stockholders of Group, then the number of shares
that may be included in the registration and underwriting shall be allocated
first to such selling stockholders who exercised such demand and then, subject
to obligations and commitments existing as of the date hereof, to all other
selling stockholders, including Lender, who have requested to sell in the
registration, on a pro rata basis according to the number of shares requested
to be included.

 

No Registrable Securities excluded from the underwriting by reason of
marketing limitations shall be included in such registration.  If Lender or Agent disapproves of the terms
of any such underwriting, it may elect to withdraw its Registrable Securities
therefrom by written notice to Group and the lead underwriter.

 

(c)                                  Registration
Procedures. In the event Registrable Securities of Lender are included in a
registration statement (the “Registration Statement”) pursuant to this Section 4,
Group shall:

 

(i)                                     furnish
to Lender such number of copies of the Registration Statement and the
prospectus included therein (including each preliminary prospectus), as it may 

 

7

 

reasonably request in order to facilitate the public
sale or other disposition of the Registrable Securities covered by such
Registration Statement;

 

(ii)                                  use
all commercially reasonable efforts to register or qualify the Registrable
Securities covered by such Registration Statement under the securities or blue
sky laws of such jurisdictions as Lender shall reasonably request; provided,
however, that Group shall not for any such purpose be required to qualify
generally to transact business as a foreign corporation in any jurisdiction
where it is not so qualified or to consent to general service of process in any
such jurisdiction;

 

(iii)                               immediately notify the
Lender and Agent at any time when a prospectus is required to be delivered
under the Act, of the happening of any event as a result of which the
prospectus contained in such Registration Statement, as then in effect,
includes an untrue statement of a material fact or omits to state any material
fact required or necessary to be stated therein in order to make the statements
contained therein not misleading in light of the circumstances under which they
were made;

 

 (iv)                           if the
common stock of Group is listed on any securities exchange or automated
quotation system, Group shall use commercially reasonable efforts to list (with
the listing application being made at the time of the filing of such
Registration Statement or as soon thereafter as is reasonably practicable) the
Registrable Securities covered by such Registration Statement on such exchange
or automated quotation system;

 

(v)                                 notify
Lender if there are any amendments to the Registration Statement, any requests
by the SEC to supplement or amend the Registration Statement, or any threat by
the SEC or state securities commission to undertake a stop order with respect
to sales under the Registration Statement; and

 

(vi)                              cooperate
in the timely removal of any restrictive legends from the certificates for the
Registrable Securities in connection with the resale of such shares covered by
an effective Registration Statement.

 

(d)                                 Expenses.

 

(i)                                     For
the purposes of this Section 4(d), the term “Registration Expenses” shall
mean: all expenses incurred by Group in complying with Sections 4(a), (b), and (c) of
this Agreement, including, without limitation, all registration and filing
fees, printing expenses, fees and disbursements of counsel for Group and
independent public accountants for Group, blue sky fees, fees of the National
Association of Securities Dealers, Inc., fees and expenses of listing the
Registrable Securities on any securities exchange or automated quotation system
on which Group’s shares are listed and fees of transfer agents and
registrars.  The term “Selling Expenses”
shall mean: all underwriting discounts and selling commissions applicable to
the sale of the Registrable Securities and any fees of counsel to Lender or Agent.

 

(ii)                                  Except
as otherwise provided herein, Group will pay all Registration Expenses in
connection with the Registration Statements filed pursuant to Section 4(a) of
this Agreement.  All Selling Expenses in
connection with any Registration Statements filed pursuant to Section 4(a) of
this Agreement shall be borne by Lender and Agent.

 

8

 

(e)                                  Obligations
of Lender.

 

(i)                                     In
connection with each registration hereunder, Lender will furnish to Group in
writing such information with respect to it and the securities held by it, and
the proposed distribution by it as shall be reasonably requested by Group in
order to assure compliance with Federal and applicable state securities laws,
as a condition precedent to including such party’s Registrable Securities in
the Registration Statement. Lender shall also promptly notify Group of any
changes in such information included in the Registration Statement or
prospectus as a result of which there is an untrue statement of material fact
or an omission to state any material fact required or necessary to be stated
therein in order to make the statements contained therein not misleading in
light of the circumstances then existing.

 

(ii)                                  In
connection with any registration pursuant to this Section, any party whose
shares are included therein will not effect sales thereof until notified by
Group of the effectiveness of the Registration Statement, and thereafter will
suspend such sales after receipt of telegraphic or written notice from Group to
suspend sales either (A) to permit Group to correct or update a
Registration Statement or prospectus, or (B) because such sales would
require the disclosure of material non-public information.

 

(f)                                    Indemnification

 

(i)                                     Group
agrees to indemnify, to the extent permitted by law, Lender, its officers and
directors and each Person who controls them (within the meaning of the Act)
against all losses, claims, damages, liabilities and expenses caused by any
untrue statement of material fact contained in any Registration Statement,
prospectus or preliminary prospectus or any amendment thereof or supplement
thereto or any omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided, however,
that Group will not be liable in any such case if and to the extent that (A) any
such loss, claim, damage or liability or expense arises out of or is based upon
an untrue statement or alleged untrue statement or omission or alleged omission
so made in conformity with information furnished by or on behalf of Lender or
any such other Person in writing specifically for use in any such document, (B) if
the Person asserting any such loss, claim, damage, liability who purchased the
Registrable Securities that are the subject thereof did not receive a copy of
an amended preliminary prospectus or the final prospectus (or the final
prospectus as amended or supplemented) at or prior to the written confirmation
of the sale of such Registrable Securities to such person because of the
failure of Lender to so provide such amended preliminary or final prospectus
(or final prospectus as amended or supplemented) and the untrue statement or
alleged untrue statement or omission or alleged omission of a material fact made
in such preliminary prospectus or final prospectus was corrected in the amended
preliminary or final prospectus (or the final prospectus as amended or
supplemented), or (C) to the extent that the Lender failed to comply with
the terms of the plan of distribution mechanics described in the applicable
prospectus.

 

(ii)                                  In
connection with any Registration Statement in which Lender is participating,
each such party shall furnish to Group in writing such information and
affidavits as Group reasonably requests for use in connection with any such
Registration Statement or prospectus and, to the extent permitted by law, shall
indemnify Group, its directors and officers 

 

9

 

and each Person who controls Group (within the meaning
of the Act) against any losses, claims, damages, liabilities and expenses
resulting from: (A) an untrue statement or alleged untrue statement or
omission or alleged omission so made in conformity with information furnished
by or on behalf of Lender or any such other person in writing specifically for
use in any Registration Statement, prospectus or preliminary prospectus or any
amendment thereof or supplement thereto, (B) the failure by Lender to
furnish a copy of an amended preliminary prospectus or the final prospectus (or
the final prospectus as amended or supplemented) at or prior to the written
confirmation of the sale of such Registrable Securities or (C) the failure
by Lender to comply with the terms of the plan of distribution mechanics described
in the applicable prospectus.

 

(iii)                               Any Person entitled to
indemnification hereunder shall (x) give prompt written notice to the
indemnifying party of any claim with respect to which it seeks indemnification
(provided that the failure to give prompt notice shall not impair any Person’s
right to indemnification hereunder to the extent such failure has not
prejudiced the indemnifying party) and (y) unless in such indemnified party’s
reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist with respect to such claim, permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party. 
If such defense is assumed, the indemnifying party shall not be subject
to any liability for any settlement made by the indemnified party without its
consent (but such consent shall not be unreasonably withheld).  An indemnifying party who is not entitled to,
or elects not to, assume the defense of a claim shall not be obligated to pay
the fees and expenses of more than one counsel for all parties indemnified by
such indemnifying party with respect to such claim, unless in the reasonable
judgment of any indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to
such claim.

 

(g)                                 Assignment.
The rights of Lender under this Section 4 may be assigned to a party to
which Lender has transferred its Shares; provided, that
no such assignment shall be effective until such assignee has entered into an
agreement, satisfactory in form and substance to Group, agreeing to be bound by
the provisions of this Section 4; provided further,
that Group shall have no obligation to amend any Registration Statement to
reflect such assignment.

 

5.                                       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):

 

10

 

In the
case of  Group:

 

Stonepath
Group, Inc.

World
Trade Center

2200
Alaskan Way, Suite 200

Seattle,
Washington 98121

Attention:  Mr. Robert Arovas, President

Telecopier
No. (206) 336-5401

 

With a
copy to:

 

Brian
S. North, Esquire

Buchanan
Ingersoll PC

1835
Market Street, 14th Floor

Philadelphia,
PA  19103

Telecopier
No. (215) 665-8760

 

In the
case of Holdings:

 

Stonepath
Holdings (Hong Kong) Limited

Unit
2602, 26th Floor, Miramar Tower

132
Nathan Road

Tsimshatsui,
Kowloon

Hong
Kong

Telecopier
No. [*]

 

With a
copy to:

 

Brian
S. North, Esquire

Buchanan
Ingersoll PC

1835
Market Street, 14th Floor

Philadelphia,
PA  19103

Telecopier
No. (215) 665-8760

 

In the
case of 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

 

11

 

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

 

In the
case of the Agent:

 

SBI
Advisors, LLC

2361
Campus Drive, Suite 210

Irvine,
CA  92612

Telecopier
No.: 949-679-7280

 

With a
copy to:

 

David
L. Ficksman, Esquire

Troy & Gould

1801
Century Park East, 16th Floor

Los Angeles, California 90067

Telecopier No. (310) 201-4746

 

(b)                                 Severability.  In case any provision in this Agreement or
the Ancillary Agreements 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.

 

12

 

(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 OR THE ANCILLARY AGREEMENTS, 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 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:

  	
  /s/ Robert Arovas

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Robert Arovas

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  Director

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  STONEPATH GROUP, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert Arovas

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
  Robert Arovas

  	
   

  
	
   

  	
   

  
	
   

  	
  Its:

  	
  President

  	
   

  
					

 

13

 

	
   

  	
  SBI ADVISORS, LLC,
  solely in its capacity as

  Agent hereunder

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Shelly Singhal

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
  Shelly Singhal

  	
   

  
	
   

  	
   

  
	
   

  	
  Its:

  	
  Manager

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HONG KONG LEAGUE
  CENTRAL CREDIT

  UNION

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Shelly Singhal

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
  Shelly Singhal

  	
   

  
	
   

  	
   

  
	
   

  	
  Its:

  	
  Advisor

  	
   

  
					

 

14

 

EXHIBIT A

 

AMENDMENT TO

 

TERM CREDIT AGREEMENT

 

THIS AMENDMENT TO TERM
CREDIT AGREEMENT (this “Amendment”) is made and entered into as of October    ,
2005 by and among STONEPATH HOLDINGS (HONG KONG) LIMITED a company incorporated
under the laws of Hong Kong (“Borrower”), HONG KONG LEAGUE CENTRAL CREDIT
UNION, in its capacity as a lender hereunder (“Lender”) and SBI ADVISORS, LLC,
a California limited liability company, in its capacity as agent for Lender (“Agent”),
with reference to the following:

 

WITNESSETH:

 

WHEREAS, Lender,
Agent, and Borrower are parties to the Term Credit Agreement dated October 27,
2004 (the “Initial Term Credit Agreement”) pursuant to which Lender agreed to
make term loans to Borrower in an aggregate amount not to exceed $10 million,
of which the aggregate principal amount of $5,000,000 is outstanding; and

 

WHEREAS, pursuant
to the terms of an Exchange Agreement dated the date hereof (the “Exchange
Agreement”) by and among Lender, Agent, Borrower and Stonepath Group, Inc.
(“Group”) have agreed to (i) exchange $3,000,000 of the principal amount
outstanding under the Initial Term Credit Agreement for newly issued preferred
shares of Borrower which are exchangeable for shares of common stock of Group, (ii) extend
the date for the repayment of $1,000,000 of the remaining $2,000,000 principal
amount outstanding under the Initial Term Credit Agreement, (iii) terminate
the Security Agreements and the security interests created thereby, and (iv) have
Group issue to Lender a warrant to purchase shares of Group’s common stock; and

 

WHEREAS, the
parties have agreed to amend the Initial Term Credit Agreement to give effect
to these transactions.

 

NOW, THEREFORE,
in consideration of the mutual covenants and agreements contained herein, and
for other good and valuable consideration, the delivery, receipt, and
sufficiency of which are hereby acknowledged, the parties hereby agree to amend
the Initial Term Credit Agreement as follows:

 

1.                                       Defined
Terms. Capitalized terms used herein and not otherwise defined shall have
the meanings assigned to such terms in the Initial Term Credit Agreement.

 

2.                                       Amendments.

 

(a)                                  Definitions.
The definitions “Advance Request,” “Collateral,” “Lien,” “Permitted Lien,” and “Secured
Obligations” are hereby deleted from Section 1 of the Initial Term Credit
Agreement. The definition of “Maturity Date” is hereby replaced with the
following definition:

 

 

“‘Maturity Dates’ has the
meaning set forth in SECTION 2(B).”

 

(b)                                 Term
Loan Advances. Section 2(a) of the Initial Term Credit Agreement
is revised to read in its entirety as follows:

 

“Term Loan Advances.
Lender has made term loans to Borrower in the aggregate principal amount of
Five Million Dollars ($5,000,000) (the “Term Loans”). Contemporaneously with
the execution and delivery of the Amendment to Term Credit Agreement, Lender
has exchanged Three Million Dollars ($3,000,000) of the outstanding principal
amount of the Term Loans for preferred shares of Borrower, thereby reducing the
remaining principal amount of the Term Loans to Two Million Dollars
($2,000,000). The Term Loans may be repaid at any time prior to the Maturity
Dates without premium or penalty, but may not be reborrowed once repaid. No
further Term Loans shall be advanced by Lender. “

 

(c)                                  Term.                  Section 2(b) of
the Initial Term Credit Agreement is revised to read in its entirety as
follows:

 

“Term. One Million
Dollars ($1,000,000) in outstanding principal amount of the Term Loans, and
accrued but unpaid interest on such principal amount shall, subject to Section 2(c) below,
be payable on November 4, 2005 (the “First Maturity Date”). All remaining
unpaid principal and accrued, but unpaid interest of the Term Loans and other
amounts payable hereunder shall, subject to Section 2(c) below, be
payable in full on November 4, 2007 (the “Second Maturity Date” and
collectively with the First Maturity Date, the “Maturity Dates”).”

 

(d)                                 Events
of Default. Section 8(c) of the Initial Term Credit Agreement is
revised to read in its entirety as follows: “[INTENTIONALLY OMITTED].”

 

(e)                                  Notices.
The address for Borrower in Section 11(c) of the Initial Term Credit
Agreement is hereby revised to read as follows:

 

If
to Borrower:                                                               Stonepath
Holdings (Hong Kong) Limited

Unit
2602, 26th Floor,  Miramar Tower

132
Nathan Road, Tsimshatsui, Kowloon,

Hong
Kong

 

with copies to:                  Stonepath Group, Inc.

World Trade Center

2200 Alaskan Way, Suite 200

Seattle, Washington 98121

Attention: 
Mr. Robert Arovas, President

Telecopier No.: 206-336-5401

 

and

 

2

 

Brian S. North, Esquire

Buchanan Ingersoll PC

1835 Market Street, 14th Floor

Philadelphia, PA  19103

Telecopier No. (215) 665-8760

 

3.                                       Termination
of Security Agreements; Release of Collateral.  All Security Agreements, including, without
limitation, the Floating Charge Over Accounts Receivables dated October 27,
2004 between Stonepath Logistics (Hong Kong) Limited, Lender, and Agent, the
Floating Charge Over Accounts Recievables dated October 27, 2004 between G
Link Express Logistics (Singapore) Pte.Ltd, Lender and Agent, and the Floating
Charge Over Accounts Recievables dated October 27, 2004 between Planet
Logistics Express (Singapore) Pte Ltd., Lender, and Agent are hereby
terminated.  Lender and Agent hereby
release any and all security interests, liens, charges, and other interests
they have in any collateral, whether granted under the Security Agreements or
otherwise, and agree to take all such action as may be reasonably requested by
Borrower to terminate such security interests, liens, charges, and other
interests of record.

 

4.                                       Ratification  of Initial Term Credit Agreement.  Except as expressly set forth herein, all of
the terms and conditions of the Initial Term Credit Agreement are hereby
ratified and confirmed and continue unchanged and in full force and effect. All
references to the Term Credit Agreement shall mean the Term Credit Agreement as
modified by this Amendment. No modification hereof shall be binding or
enforceable unless in writing and signed by the party against whom enforcement
is sought.

 

5.                                       Counterparts;
Facsimile Signatures.  This Amendment
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.

 

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

 

	
   

  	
  STONEPATH HOLDINGS

  
	
   

  	
  (HONG KONG) LIMITED

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  
						

 

3

 

	
   

  	
  SBI ADVISORS, LLC, solely in
  its capacity as

  Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HONG KONG LEAGUE CENTRAL CREDIT

  UNION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  
						

 

4

 

EXHIBIT B

 

PREFERRED SHARES EXCHANGE AGREEMENT

 

PREFERRED SHARES
EXCHANGE AGREEMENT (this “Agreement”) dated as of the     
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).

 

2

 

(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 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

 

3

 

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 

 

4

 

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 

 

5

 

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 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 

 

6

 

(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

 

(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, 

 

7

 

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.

 

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 

 

8

 

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. [*]

 

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

 

9

 

 

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

 

(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 

 

10

 

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:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  STONEPATH GROUP, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SBI ADVISORS, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HONG KONG LEAGUE
  CENTRAL CREDIT UNION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  
					

 

11

 

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.

 

12

 

EXHIBIT C

 

Company
No.:816242

 

THE
COMPANIES ORDINANCE

 

(CHAPTER
32)

 

 

ORDINARY
AND SPECIAL RESOLUTIONS

 

OF

 

STONEPATH
HOLDINGS (HONG KONG) LIMITED

(the
“Company”)

 

 

PASSED
ON OCTOBER 7, 2005

 

 

By resolutions in writing signed by all
Shareholders of the Company pursuant to the Articles of Association of the
Company on October 7, 2005, the following resolutions were duly passed as
Ordinary and Special Resolutions:-

 

As Ordinary Resolution

 

“THAT
the authorised capital of the Company be increased from HK$10,000.00 ordinary
shares of HK$1.00 each to HK$58,000.00 by the creation of 48,000 Preferred
Shares of HK$1.00 each which shall carry the rights and be subject to the
restrictions set forth in the new Article 11 of the Articles of
Association of the Company as adopted by Special Resolution (II) below.”

 

As Special Resolutions

 

“THAT:-

 

(I)                                    the Articles of
Association of the Company be amended by deleting the definition of “business
day” in its entirety and adding thereto the following as new definitions in the
existing Article 2:-

 

“Business Day” means any day except a
Saturday, a Sunday, or any day on which banking institutions in Hong Kong are
required or authorized by law or other governmental action to be closed.

 

“Exchange Agreement” means the Exchange
Agreement dated as of October 7, 2005 by an among the Company, Stonepath
Group, Inc., Hong Kong League Central Credit Union and SBI Advisors, LLC.

 

 

“Market Value” means the average closing
price of the Common Stock of Stonepath Group, Inc. (or other securities
which are at the time issuable upon the exchange of a Preferred Share pursuant
to the Preferred Shares Exchange Agreement) as reported by Bloomberg, L.P. on
the Principal Market for the five (5) trading days immediately preceding a
Triggering Event.

 

“Person” means any individual, corporation,
partnership, joint venture, association, joint stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.

 

“Preferred Shares Exchange Agreement” has the
meaning set forth in the Exchange Agreement.

 

“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.

 

“Triggering Event” means any
of the following:

 

(A)                              the
occurrence of any default (or similar term) in the observance or performance of
any other agreement or condition relating to any indebtedness for borrowed
money of the Company which in the aggregate exceeds US$500,000 beyond the
period of grace (if any), the effect of which default is to cause, or permit
the holder or holders of such indebtedness to cause, such indebtedness to become
due prior to its stated maturity;

 

(B)                                attachments
or levies in excess of US$100,000 in the aggregate are made upon the Company’s
assets or a judgment is rendered against any Company’s property involving a
liability of more than US$100,000 which shall not have been vacated,
discharged, stayed or bonded within ninety 
(90) days from the entry thereof;

 

(C)                                the
failure to perform under, and/or committing any breach of, in any material
respect, the terms of the Preferred Shares (other than the payment of a
dividend), which failure or breach shall continue without remedy for a period
of thirty (30) days after the occurrence thereof; or

 

(D)                               the
material breach or default by the Company of any of the material provisions
or  material obligations of the Company
under the Term Credit Agreement dated October 27, 2004 by and among the
Company, Hong Kong League Central Credit Union, and SBI Advisors, LLC (as
amended by the Amendment to Term Credit Agreement) or any of  the Ancillary Agreements (as defined in the Exchange
Agreement).

 

(II)                                the Articles of
Association of the Company be amended by adding thereto the following as new Article 11
and the existing Article 11 to 135 be renumbered accordingly as Article 12
to 136:-

 

2

 

Preferred
Shares

 

The following are the rights, designation, number,
powers, preferences, limitations, restrictions, and relative rights and other
matters relating to the Preferred Share of Company:

 

(i)                                     Designation
and Number

 

A series of shares designated the “Preferred
Shares,” is hereby established.  The
number of shares of the Preferred Shares shall be forty eight thousand
(48,000). The original issue price of the Preferred Shares shall be One Hundred
Dollars (US$100.00)
per share (the “Original Issue Price”). 
The rights, preferences, privileges, and restrictions granted to and
imposed on the Preferred Shares are as further set forth below.

 

(ii)                                  Ranking

 

The Preferred Shares shall rank, with respect
to dividend distributions and distributions upon the liquidation, winding-up
and dissolution of the Company, (i) senior to the ordinary shares of the
Company (the “Ordinary Shares”) and to each other class or series of stock of
the Company the terms of which do not expressly provide that it ranks senior to
or on a parity with the Preferred Shares as to dividend distributions and
distributions upon the liquidation, winding-up and dissolution of the Company
(collectively referred to as “Junior Securities”); (ii) on a parity with
any equity security, the terms of which expressly provide that such class or
series will rank on a parity with the Preferred Shares as to dividend
distributions and distributions upon the liquidation, winding-up and
dissolution of the Company (collectively referred to as “Parity Securities”);
and (iii) junior to any equity security, the terms of which expressly
provide that such class or series will rank senior to the Preferred Shares as
to dividend distributions and distributions upon liquidation, winding-up and
dissolution of the Company (collectively referred to as “Senior Equity
Securities”).  Nothing in this Section (ii) shall be deemed to limit
the approval rights in Section (v)(B).

 

(iii)                               Dividends

 

(A)                              Each
holder of Preferred Shares shall be entitled to receive dividends, accruing
from the date of issuance (the “Preferred Shares Issue Date”) or the most
recent Dividend Payment Date (as defined herein) on which dividends have been
paid at an annual rate of twelve percent (12%) of the Original Issue Price for
each Preferred Share held by such holder (as adjusted for splits, reverse
splits, stock dividends, share combinations and the like), payable monthly in
arrears on the first day of each calendar month (each, a “Dividend Payment Date”)
to holders of record as of the twenty-fifth (25th) day of the preceding
calendar month (the “Record Date”). Dividends on the Preferred Shares will be
computed on the basis of a 360-day year consisting of twelve 30-day months.
Holders of the Preferred Shares at the close of business on a Record Date will
be entitled to receive an amount equal to the dividend payable on such shares
on the corresponding Dividend Payment Date notwithstanding the exchange of 

 

3

 

such shares following such Record Date
pursuant to the Preferred Shares Exchange Agreement.

 

(B)                                Dividends
on the Preferred Shares shall be paid, at the option of the Company, in either (i) immediately
available funds or (ii) in additional Preferred Shares. In the event the
Company elects to pay a dividend in additional Preferred Shares, it shall
deliver a number of Preferred Shares equal to the amount obtained by dividing
the amount of the dividend payable by the Original Issue Price. The Company
shall pay such dividend, including all shares (and any cash adjustment) within
three (3) Business Days of the Dividend Payment Date for which such
payment in additional Preferred Shares is elected.  In lieu of any fractional Preferred Share
which would otherwise be issued in payment of a dividend on a Dividend Payment
Date, the Company shall pay a cash adjustment in respect of such fractional
interest in an amount in cash (computed to the nearest cent) equal to the
Original Issue Price multiplied by the fractional interest to the nearest
1/100th of a percent that otherwise would have been issued in payment of such
dividend.  On each Dividend Payment Date,
all dividends which shall have accrued on each share of Preferred Shares
outstanding on such Dividend Payment Date shall accumulate and be deemed to
become due whether or not there shall be funds legally available for payment
thereof.  No interest, sum of money in
lieu of interest, other property or other securities shall be payable on or as
a result of any dividend payment or payments being past due. Dividends paid on
Preferred Shares in an amount less than the total amount of such dividends at
the time accumulated and payable on such shares shall be allocated pro rata on
a share-by-share basis among all such shares at the time outstanding.

 

(C)                                If
dividends are not paid in full, or declared in full and sums set aside for the
payment thereof, upon the Preferred Shares and any Parity Securities, subject
to the prior rights of holders of any Senior Equity Securities, all dividends
declared upon shares of the Preferred Shares and such Parity Securities will
when, as and if declared, be declared pro rata so that in all cases the amount
of dividends declared and paid per share on the Preferred Shares and such
Parity Securities will bear to each other the same ratio that accumulated
dividends per share on the shares of Preferred Shares and such Parity
Securities bear to each other. Except as set forth above, unless full
cumulative dividends on the Preferred Shares have been paid, or declared and
sums set aside for the payment thereof, dividends (other than in Ordinary
Shares or other Junior Securities) may not be paid, or declared and sums set
aside for payment thereof, and other distributions may not be made upon the
Ordinary Shares or other Junior Securities, subject to the additional
limitations contained in Section (v)(B); and no Ordinary Shares nor any
other Junior Securities may be redeemed, purchased or otherwise

 

4

 

acquired for any consideration by the Company
(except by conversion into or exchange for other Junior Securities).

 

(D)                               Dividends
on the Preferred Shares shall accrue whether or not the Company has earnings or
profits, whether or not there are funds legally available for the payment of
such dividends and whether or not dividends are declared.  Dividends will accumulate to the extent they
are not paid on the Dividend Payment Date for the period to which they relate.

 

(E)                                 Any
reference to “distribution” contained in this Section (iii) shall not
be deemed to include any distribution made in connection with any liquidation,
winding-up or dissolution of the Company, as to which Section (v) shall
apply.

 

(iv)                              Liquidation Rights

 

Upon any voluntary or involuntary
liquidation, dissolution or winding-up of the Company, each holder of Preferred
Shares will be entitled to payment out of the assets of the Company available
for distribution of an amount equal to the Original Issue Price for each
Preferred Share held by such holder, plus an amount equal to accrued and unpaid
dividends, if any, to the date fixed for liquidation, dissolution or
winding-up, in each case after any distribution is made on any Senior Equity
Securities, but before any distribution is made on any Junior Securities,
including, without limitation, the Ordinary Shares. After payment in full of
the Original Issue Price and all other amounts to which holders of Preferred
Shares are entitled pursuant to this Section (iv), such holders will not be
entitled to any further participation in any distribution of assets of the
Company.  If, upon any voluntary or
involuntary liquidation, dissolution or winding-up of the Company, the amounts
payable with respect to the Preferred Shares and all other Parity Securities
are not paid in full, the holders of the Preferred Shares and the Parity
Securities will share equally and ratably in any distribution of assets of the
Company in proportion to the full liquidation preference and accumulated and
unpaid dividends, if any, to which each is entitled (including, in the case of
the Preferred Shares, all amounts payable pursuant to the first sentence of
this Section (iv).

 

(v)                                 Voting Rights

 

(A)                              Except
as otherwise provided herein or required by law, the holders of the Preferred
Shares shall have no voting rights.

 

(B)                                In
addition to any other vote or consent required by law, the vote or written
consent of the holders of at least fifty-one percent (51%) of the outstanding
Preferred Shares, voting together as a single class, shall be necessary for
effecting any of the following actions:

 

(i)                                     authorizing,
creating, or issuing (by reclassification, merger, consolidation,
reorganization or otherwise) any Parity Securities or Senior Equity Securities;

 

5

 

(ii)                                  repurchasing,
redeeming or otherwise acquiring, or authorizing, designating or agreeing to
any redemption terms relating to, any shares of capital stock of the Company;

 

(iii)                               amending, altering, or
repealing (including by merger, consolidation, reorganization or otherwise) the
Company’s Memorandum of Association or Articles of Association (whether by
merger, consolidation, recapitalization or otherwise)  as to adversely affect the preferences,
rights or privileges of, or the restrictions provided for the benefit of, the
Preferred Shares;

 

(iv)                              altering or changing
(including by merger, consolidation, reorganization or otherwise) the rights,
preferences or privileges (whether by merger, consolidation, recapitalization
or otherwise) of, or the restrictions provided for the benefit of, the
Preferred Shares; or

 

(v)                                 increasing or
decreasing the authorized number of Preferred Shares.

 

Each of the foregoing covenants and approval
rights is separate and independent.

 

(vi)                              Mandatory
Redemption

 

After the occurrence of a Triggering Event,
each holder of a Preferred Share shall have the right, at such holder’s option,
to require the Company to redeem such Preferred Shares at a price per share
equal to the greater of (A) US$120 and (B) the Market Value of the
number of shares of Common Stock of Stonepath Group, Inc. or other
securities which are at the time issuable upon the exchange of such Preferred
Share pursuant to the Preferred Shares Exchange Agreement.

 

(vii)                           Headings
of Subdivisions

 

The headings of the various subdivisions hereof
are for convenience of reference only and shall not affect the interpretation
of any of the provisions hereof.

 

(viii)                        Severability
of Provisions

 

If any of the voting powers, preferences and
relative, optional and other special rights of the Preferred Shares and
qualifications, limitations and restrictions thereof set forth herein is
invalid, unlawful or incapable of being enforced by reason of any rule of
law or public policy, all other voting powers, preferences and relative,
optional and other special rights of Preferred Shares and qualifications,
limitations and restrictions thereof set forth herein which can be given effect
without the invalid, unlawful or unenforceable voting powers, preferences and
relative, optional and other special rights of Preferred Shares and
qualifications, limitations and

 

6

 

restrictions thereof shall, nevertheless, remain in full force and
effect, and no voting powers, preferences and relative optional or other
special rights of Preferred Shares and qualifications, limitations and
restrictions thereof herein set forth shall be deemed dependent upon any other
such voting powers, preferences and relative, optional or other special rights
of Preferred Shares and qualifications, limitations and restrictions thereof
unless so expressed herein.

 

(ix)           Reissuance of
Preferred Shares

 

Preferred Shares that have been issued and
reacquired by the Company in any manner, including shares purchased or
exchanged, shall (upon compliance with any applicable provisions of the laws of
Hong Kong) have the status of
authorized but unissued shares of the Company undesignated as to series and may
be designated or redesignated and issued or reissued; provided that any
issuance of such shares must be in compliance with the terms hereof.

 

(x)            Mutilated or
Missing Preferred Shares Certificates; Office

 

If any Preferred Share certificate shall be
mutilated, lost, stolen or destroyed, the Company shall issue, in exchange and in
substitution for and upon cancellation of the mutilated Preferred Share
certificate, or in lieu of and substitution for the Preferred Share certificate
lost, stolen or destroyed, a new Preferred Share certificate of like tenor and
representing an equivalent number of Preferred Shares, but only upon receipt of
evidence of such loss, theft or destruction of such Preferred Share certificate
and indemnity, if requested, satisfactory to the Company.  The Company will, so long as any Preferred
Shares are outstanding, maintain an office or agency where such shares may be
presented for registration.  Any holder
of Preferred Shares may inspect the register of holders and their addresses at
such office or agency.

 

(xi)           No Impairment; No
Issuance of Senior Equity Securities

 

The Company will not, by amendment of its
Memorandum of Association or Articles of Association, or through any
reorganization, recapitalization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities, or any other voluntary action, avoid
or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Company, but will at all times in good
faith assist in the carrying out of all the provisions hereof and in the taking
of all such action as may be necessary or appropriate in order to protect the
rights of the holders of the Preferred Shares against impairment.  The Company shall not issue any Senior Equity
Securities without the prior written consent of the holders of the Preferred
Shares pursuant to Section v(B).

 

7

 

(III)         the New Memorandum and New Articles of Association in the form Appendix
I attached hereto in substitution for the existing Memorandum and Articles of
Association of the Company.”

 

 

	
   

  	
   

  	
   

  	
   

  
	
  Stonepath Group, Inc.

  	
   

  	
  Dennis Lindsay PELINO

  	
   

  
	
  Shareholder

  	
   

  	
  Shareholder

  	
   

  
	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Jason Fayez TOTAH

  	
   

  	
   

  
	
   

  	
  Shareholder

  	
   

  	
   

  
						

 

8

 

Draft of October 14,
2005

 

EXHIBIT D

 

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.

  	
  Issue Date: October [*], 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 [*], 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:

 

1.             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.

 

2.             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.

 

3.             The “Exercise
Price” shall be $1.13 per share.

 

4.             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.

 

5.             The term
“Preferred Shares Exchange Agreement” means the Preferred Shares Exchange
Agreement dated as of October [*], 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 

 

2

 

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.

 

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 

 

3

 

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 

 

4

 

transactions described in this Section 3,
then the Company’s securities and property (including cash, where applicable)
receivable by the Holder will be delivered to the Holder or the Trustee as
contemplated by Section 3.2.

 

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 Excercise 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 

 

5

 

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 (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 

 

6

 

such exercise by
a fraction of which (a) the numerator is the Exercise Price that would
otherwise (but for the provisions of this Section 4) be in effect, and (b) the
denominator is the Exercise Price in effect on the date of such exercise
(taking into account the provisions of this Section 4).

 

5.             Certificate
as to Adjustments.  In each case of
any adjustment or readjustment in the shares of Common Stock (or Other
Securities) issuable on the exercise of this Warrant, the Company at its
expense will promptly cause its Chief Financial Officer or other appropriate
designee to compute such adjustment or readjustment in accordance with the
terms of this Warrant and prepare a certificate setting forth such adjustment
or readjustment and showing in detail the facts upon which such adjustment or
readjustment is based, including a statement of (a) the consideration
received or receivable by the Company for any additional shares of Common Stock
(or Other Securities) issued or sold or deemed to have been issued or sold, (b) the
number of shares of Common Stock (or Other Securities) outstanding or deemed to
be outstanding, and (c) the Exercise Price and the number of shares of
Common Stock to be received upon exercise of this Warrant, in effect
immediately prior to such adjustment or readjustment and as adjusted or
readjusted as provided in this Warrant. 
The Company will forthwith mail a copy of each such certificate to the
Holder and any Warrant agent of the Company (appointed pursuant to Section 11
hereof).

 

6.             Reservation
of Stock, Etc., Issuable on Exercise of Warrant.  The Company will at all times reserve and
keep available, solely for issuance and delivery on the exercise of this Warrant,
shares of Common Stock (or Other Securities) from time to time issuable on the
exercise of this Warrant.

 

7.             Assignment;
Exchange of Warrant.  Subject to
compliance with applicable securities laws, this Warrant, and the rights
evidenced hereby, may be transferred by any registered holder hereof (a “Transferor”)
in whole or in part.  On the surrender
for exchange of this Warrant, with the Transferor’s endorsement in the form of Exhibit B
attached hereto (the “Transferor Endorsement Form”) and together with evidence
reasonably satisfactory to the Company demonstrating compliance with applicable
securities laws, which shall include, without limitation, the provision of a
legal opinion from the Transferor’s counsel (at the Transferor’s expense) that
such transfer is exempt from the registration requirements of applicable
securities laws, the Company at its expense (but with payment by the Transferor
of any applicable transfer taxes) will issue and deliver to or on the order of
the Transferor thereof a new Warrant of like tenor, in the name of the
Transferor and/or the transferee(s) specified in such Transferor Endorsement Form (each
a “Transferee”), calling in the aggregate on the face or faces thereof for the
number of shares of Common Stock called for on the face or faces of the Warrant
so surrendered by the Transferor.

 

8.             Replacement
of Warrant.  On receipt of
evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of this Warrant and, in the case of any such loss, theft or
destruction of this Warrant, on delivery of an indemnity agreement or security
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.

 

7

 

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 

 

8

 

drafting party
shall not be applied in the interpretation of this Warrant to favor any party
against the other party.

 

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

 

 

	
   

  	
  STONEPATH GROUP, INC.

  
	
   

  	
   

  
	
  WITNESS:

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
					

 

9

 

Draft of October 14,
2005

 

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 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)

  	
   

  	
   

  
								

 

A-1Exhibit 10.1

 

EIGHTH AMENDMENT TO CREDIT AGREEMENT

 

THIS
EIGHTH AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) is made and entered
into as of October 20, 2005, by and among SUPERIOR ESSEX COMMUNICATIONS L.P., a Delaware limited partnership
(“Superior”), ESSEX GROUP, INC., a
Michigan corporation (“Essex”) (Superior and Essex being referred to
collectively as “Borrowers,” and individually as a “Borrower”); various
financial institutions (“Lenders”); FLEET
CAPITAL CORPORATION, a Rhode Island corporation with an office at
300 Galleria Parkway, Suite 800, Atlanta, Georgia 30339, in its capacity
as collateral and administrative agent for the Lenders (together with its
successors and assigns in such capacity, “Administrative Agent”); and GENERAL ELECTRIC CAPITAL CORPORATION, a
Delaware corporation, in its capacity as syndication agent for the Lenders
(together with its successors in such capacity, “Syndication Agent”;
Administrative Agent and Syndication Agent are each hereafter referred to from
time to time individually as an “Agent” and collectively as “Agents”).

 

Recitals:

 

Borrowers,
Lenders and Agents are parties to a certain Credit Agreement, dated November 10,
2003, as amended by that certain First Amendment to Credit Agreement dated February 20,
2004, that certain Second Amendment to Credit Agreement dated March 18,
2004, that certain Third Amendment to Credit Agreement and Consent to Specific
Transactions dated as of April 2, 2004, that certain Fourth Amendment to
Credit Agreement dated April 30, 2004, that certain Fifth Amendment to
Credit Agreement and Consent to Specific Transactions dated June 16, 2004,
that certain Sixth Amendment to Credit Agreement dated March 11, 2005, and
that certain Seventh Amendment to Credit Agreement dated June 27, 2005 (as
at any time amended, restated or otherwise modified, the “Credit Agreement”),
pursuant to which Lenders have made certain revolving credit loans and other
extensions of credit to Borrowers.

 

Borrowers
have requested that Agents and Lenders consent to certain amendments contained
herein and Agents and Lenders are willing to consent to such amendments, subject
to the terms and conditions contained herein.

 

NOW,
THEREFORE, for TEN DOLLARS ($10.00) in hand paid and other good and valuable
consideration, the receipt and sufficiency of which are hereby severally
acknowledged, the parties hereto, intending to be legally bound hereby, agree
as follows:

 

1.                                      Definitions.  All
capitalized terms used in this Amendment, unless otherwise defined herein,
shall have the meaning ascribed to such terms in the Credit Agreement.

 

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

 

(a)                                  By deleting clauses (i) and (ii) of
Section 9.1.3 in its entirety and substituting the following in lieu
thereof: 

 

(i) as soon as available, and in any event
within 90 days after the close of each Fiscal Year, audited balance sheets of
New Parent (including its Subsidiaries and S.E. Holding, C.V. and its
subsidiaries) as of the end of such Fiscal Year and the related statements of
income, shareholders’ equity and cash flow, on a Consolidated and consolidating
basis, together with, with respect to Consolidated Statements, an unqualified
opinion issued by a firm of independent certified public accountants of
recognized national standing selected by Borrowers but reasonably acceptable to

 

 

Administrative
Agent (except for a qualification for a change in accounting principles with
which the accountant concurs and except for qualifications which are acceptable
to Administrative Agent in its reasonable business judgment), and, with respect
to New Parent and its Subsidiaries, setting forth in each case in comparative
form the corresponding Consolidated figures for the preceding Fiscal Year;

 

(ii)                                  as soon as available, and in any event within
45 days after the end of each Fiscal Quarter hereafter (other than the fourth
Fiscal Quarter of any Fiscal Year), unaudited balance sheets of New Parent
(including its Subsidiaries and S.E. Holding, C.V. and its subsidiaries) as of
the end of such Fiscal Quarter and the related unaudited statements of income
and cash flow for such Fiscal Quarter, on a Consolidated and consolidating
basis, setting forth in each case in comparative form the corresponding figures
for the preceding Fiscal Year and certified by the principal financial officer
of Borrowers as prepared in accordance with GAAP and fairly presenting the
Consolidated financial position and results of operations of New Parent and its
Subsidiaries and S.E. Holding, C.V. and its subsidiaries for such Fiscal
Quarter and period subject only to changes from audit and year end adjustments
and except that such statements need not contain notes;

 

(b)                                 By deleting the last sentence of Section 9.1.15
and substituting the following in lieu thereof:

 

Essex shall, no later than January 13, 2006,
pledge to Administrative Agent 66% of the Equity Interests held by Essex in
S.E. Holding, C.V.

 

(c)                                  By deleting clause (i) of Section 9.2.2
in its entirety and substituting the following in lieu thereof:

 

(i)                                     to an officer or employee of a Borrower, a
Subsidiary or JV Europe (or any subsidiary thereof) for salary, travel
advances, moving and other relocation expenses, advances against commissions
and other similar advances in the Ordinary Course of Business.

 

(d)                                 By deleting clauses (vii) and (viii) of
Section 9.2.4 and substituting the following in lieu thereof:

 

; (vii) transactions pursuant to which a
Borrower or a Subsidiary licenses intellectual property to or from S.E. Holding, C.V. or JV Europe or any of their respective
Affiliates; and (viii) transactions pursuant to which a Borrower or
a Subsidiary (A) sells, assigns or otherwise transfers Equipment having a
book value not to exceed (1) $5,000,000 in the aggregate to S.E. Holding, C.V. or any of its subsidiaries in connection
with the Foreign Venture Investment or (2) $5,000,000 in the aggregate to
S.E. Holdings, C.V. or any of its subsidiaries in connection with the JV Europe
Investment, or (B) sells Inventory in the Ordinary Course of
Business to S.E. Holding, C.V. or any of its subsidiaries;

 

(e)                                  By deleting clause (iv) of
Section 9.2.10 in its entirety and substituting the following in lieu
thereof:

 

2

 

(iv) non-exclusive
licenses of technology and other Intellectual Property by and among any
Borrower, any of its Subsidiaries, S.E. Holding, C.V., and/or any of its
subsidiaries, including, without limitation, JV Europe,

 

(f)                                    By deleting the text of
Section 9.2.14 in its entirety and substituting the following in lieu
thereof:

 

File or consent to the
filing of any consolidated income tax return with any Person other than a
Subsidiary, New Parent, New Subsidiary, S.E. Holding, C.V. and any subsidiary
thereof.

 

(g)                                 By deleting the
definitions of “Acquisition,” “Consolidated,” “Consolidated Fixed Charge
Coverage Ratio,” “Foreign Venture Investment”, “Restricted Investment” and “Subsidiary”
in their entirety and substituting the following in lieu thereof:

 

Acquisition - any transaction, or any series of transactions, by which a Borrower
or any Subsidiary Guarantor directly or indirectly (a) acquires any
ongoing business or all or substantially all of the assets of any Person,
whether through the purchase of assets, merger or otherwise, (b) acquires
(in one transaction or as the most recent transaction in a series of
transactions) control of at least a majority in voting power of the Equity
Interests of any Person or (c) acquires control of 50% or more ownership
interest in any partnership or joint venture (excluding any Foreign Venture
Investment and JV Europe Investments).

 

Consolidated - the consolidation in accordance with GAAP
of the accounts or other items as to which such term applies, but excluding, to
the extent consolidated under GAAP, the accounts or other items of S.E.
Holding, C.V. and its subsidiaries.

 

Consolidated Fixed Charge Coverage Ratio - with respect to any period, the ratio of (a) the
sum of (i) Consolidated EBITDA for such period minus (ii) Unfinanced
Capital Expenditures made during such period minus (iii) cash
expended on Foreign Venture Investment during such Period minus (iv) Tax
Distributions during such period minus (v) Catch-up Pension
Contributions made during such period minus (vi) any dividend or
distribution by any Borrower directly or indirectly to New Subsidiary the
proceeds of which are used by New Subsidiary to make payment of dividends with
respect to the New Preferred Stock, to (b) all principal and cash interest
payments on Money Borrowed for such period.

 

Foreign
Venture Investment – investments made in
any Person by one or more Borrowers in connection with the development,
construction and operation of a joint venture which will produce magnet wire in
China; provided, however, that (i) the total investment of
Borrowers in any such joint venture shall not exceed $30,000,000 in the
aggregate at any time, and (ii) Administrative Agent shall be granted a
perfected, first priority Lien in certain Equity Interests in S.E. Holding,
C.V. as Collateral for the Obligations as provided in Section 9.1.15.

 

Restricted Investment - any acquisition of Property by a Borrower
or any of its Subsidiaries in exchange for cash or other Property, whether in
the form of an acquisition of Equity Interests or Debt, or the purchase or
acquisition by such Borrower or any of its Subsidiaries of any other Property,
or a loan, advance, capital contribution or subscription, except acquisitions
of the following: (i) fixed assets to be used in the

 

3

 

Ordinary
Course of Business of such Borrower or any of its Subsidiaries so long as the
acquisition costs thereof constitute Capital Expenditures permitted
hereunder; (ii) goods held for sale or lease or to be used in
the manufacture of goods or the provision of services by such Borrower or
any of its Subsidiaries in the Ordinary Course of Business (including
inventory); (iii) current assets arising from the sale or lease of goods
or the rendition of services in the Ordinary Course of Business of such
Borrower or any of its Subsidiaries; (iv) investments in Subsidiaries and
Essex Electric Inc. to the extent existing on the Closing Date (such
investments in Subsidiaries being the only investments permitted to be made by
a Borrower in any Subsidiary pursuant to this definition (except as set forth
in clause (vi) below)), and distributions
made by Subsidiaries of New Parent to New Parent in an amount not to exceed
$1,000,000 in the aggregate to pay the exercise price under the warrant to
purchase shares of the common stock of Essex Electric Inc.; and (v) Cash Equivalents to the
extent they are not subject to rights of offset in favor of any Person other
than Administrative Agent or a Lender; (vi) loans and other advances of
money to the extent not prohibited by Section 9.2.2;
(vii) investments in any
Securities received in satisfaction or partial satisfaction thereof from
financially troubled Account Debtors, (viii) Foreign Venture Investment
and JV Europe Investments; (ix) deposits,
prepayments and other credits to suppliers, lessors and landlords made in the
Ordinary Course of Business; and (x) Permitted Acquisitions.

 

Subsidiary – any Person in which
more than 50% of its outstanding Voting Securities or more than 50% of all
Equity Interests is owned directly or indirectly by a Borrower, by one or more
Subsidiaries of such Borrower or by a Borrower and one or more other
Subsidiaries; provided, however, that none of S.E. Holding, C.V.,
JV Europe, nor any of their subsidiaries shall be deemed a Subsidiary; or

 

(h)                                 By adding definitions
of “Contribution Agreement,” “JV Europe Investment,” “JV Europe” and “Nexans”
at the appropriate alphabetical location in Appendix A to the Credit Agreement
as follows:

 

Contribution Agreement - that certain
Contribution and Formation Agreement, dated July 27, 2005, between Essex,
Nexans and the other parties named therein.

 

JV
Europe Investment – investments made in
any Person by one or more Borrowers in connection with the development,
construction and operation of a joint venture with Nexans which will produce
magnet wire in various European countries; provided, however,
that (i) the total investment of Borrowers in any such joint venture shall
not exceed $30,000,000 in the aggregate at any time (not including any amounts
which are contributed and then used to repay all or any portion of the Essex UK
Debt (as defined in the Contribution Agreement)), plus the contribution of the
stock of Essex International Ltd., Essex Pension Trustees Limited, the transfer
of the Essex UK Debt, and the forgiveness of any Essex UK Debt or Essex closing
Indebtedness (as defined in the Contributions Agreement) owed to a Borrower and
(ii) Administrative Agent shall be granted a perfected, first priority
Lien in certain Equity Interests in S.E. Holding, C.V. as Collateral for the
Obligations as provided in Section 9.1.15.

 

JV Europe - Altensys SAS, a société
par actions simplifée organized under the laws of France, of which 60% of its
equity will initially be owned by S.E. Holding, C.V. and 40% of its equity will
initially be owned by Nexans.

 

Nexans - a société anonyme
organized under the laws of France.

 

4

 

(h)                                 By deleting Exhibit E
to the Credit Agreement and substituting in lieu thereof an Exhibit E in
the form attached to this Amendment.

 

3.                                      JV Europe Investment.  Borrowers have informed Administrative Agent
that they intend to invest up to $30,000,000 and contribute the stock of Essex
International Ltd. and Essex Pension Trustees Limited, transfer the Essex UK
Debt (as defined in the Contribution Agreement), and forgive Essex UK Debt and
Essex Closing Indebtedness (as defined in the Contribution Agreement) owed to a
Borrower in connection with the formation of JV Europe pursuant to the
Contribution Agreement.  Administrative
Agent and the Lenders (i) acknowledge that such investment, to the extent
consistent with the Contribution Agreement, shall constitute JV Europe Investments
for purposes of the Credit Agreement, and otherwise consent to the transactions
described in Sections 2.1 and 2.2 of the Contribution Agreement, (ii) consent
to the execution, delivery and performance by Essex and its affiliates of the
Ancillary Agreements (as defined in the Contribution Agreement) to which they
are a party, and (iii) consent to Superior’s issuance of additional common
stock to Nexans upon Nexans’ exercise of its put option with respect to its
equity in JV Europe pursuant to the Shareholders Agreement between JV Europe,
Superior, S.E. Holding, C.V., Nexans and Nexans Participations.

 

4.                                      Ratification and
Reaffirmation.  Each Borrower hereby ratifies and reaffirms
the Obligations, each of the Loan Documents and all of such Borrower’s
covenants, duties, indebtedness and liabilities under the Loan Documents.

 

5.                                      Acknowledgments and Stipulations.  Each
Borrower acknowledges and stipulates that the Credit Agreement and the other
Loan Documents executed by Borrowers are legal, valid and binding obligations
of Borrowers that are enforceable against Borrowers in accordance with the
terms thereof; all of the Obligations are owing and payable without defense,
offset or counterclaim (and to the extent there exists any such defense, offset
or counterclaim on the date hereof, the same is hereby waived by each Borrower);
and the security interests and liens granted by Borrowers in favor of Administrative
Agent, for the benefit of itself and Lenders, are duly perfected, first
priority security interests and liens.

 

6.                                      Representations and
Warranties.  Each Borrower represents and warrants to
Agents and Lenders, to induce Agents and Lenders to enter into this Amendment, that
(a) after giving effect to this Amendment, no Default or Event of Default
exists on the date hereof; (b) the execution, delivery and performance of
this Amendment have been duly authorized by all requisite company action on the
part of each Borrower and this Amendment has been duly executed and delivered
by each Borrower; and (c) all of the representations and warranties made
by Borrowers in the Credit Agreement are true and correct, in all material
respects, on and as of the date hereof, except those representations and
warranties made as of a specific date in which such case such representations
and warranties were true and correct as of such date.

 

7.                                      Reference to Credit
Agreement.  Upon the effectiveness of this Amendment,
each reference in the Credit Agreement to “this Agreement,” “hereunder,” or
words of like import shall mean and be a reference to the Credit Agreement, as
amended by this Amendment.

 

8.                                      Breach of Amendment.  This
Amendment shall be part of the Credit Agreement and a breach of any
representation, warranty or covenant herein shall constitute an Event of
Default.

 

9.                                      Conditions Precedent.  The effectiveness of the amendments contained in Section 2 and 3 hereof
are subject to the receipt by Administrative Agent of a duly executed
counterpart of this Amendment from Borrowers, together with a Consent and
Reaffirmation duly signed by the Guarantors.

 

5

 

10.                               Expenses of Agents. 
Borrowers agree to pay, on demand,
all costs and expenses incurred by Agents in connection with the preparation,
negotiation and execution of this Amendment and any other Loan Documents
executed pursuant hereto and any and all amendments, modifications, and
supplements thereto, including, without limitation, the reasonable costs and
fees of Agents’ legal counsel and any taxes or expenses associated with or
incurred in connection with any instrument or agreement referred to herein or
contemplated hereby.

 

11.                               Miscellaneous.  This
Amendment shall be effective upon acceptance by Agents and Lenders, whereupon
the same shall be governed by and construed in accordance with the internal
laws of the State of Georgia.  This
Amendment shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. 
This Amendment may be executed in any number of counterparts and by
different parties to this Amendment on separate counterparts, each of which,
when so executed, shall be deemed an original, but all such counterparts shall
constitute one and the same agreement. 
Any signature delivered by a party by facsimile transmission shall be
deemed to be an original signature hereto. 
Section titles and references used in this Amendment shall be
without substantive meaning or content of any kind whatsoever and are not a
part of the agreements among the parties hereto.

 

12.                               No Novation, etc. 
Except as otherwise expressly provided in this Amendment, nothing herein
shall be deemed to amend or modify any provision of the Credit Agreement or any
of the other Loan Documents, each of which shall remain in full force and
effect.  This Amendment is not intended
to be, nor shall it be construed to create, a novation or accord and
satisfaction, and the Credit Agreement as herein modified shall continue in
full force and effect.

 

13.                               Further Assurances.  Each
Borrower agrees to take such further actions as Agents and Lenders shall
reasonably request from time to time in connection herewith to evidence or give
effect to the amendments set forth herein or any of the transactions
contemplated hereby.

 

14.                               Release of Claims.  To induce Agents and Lenders to enter into this Amendment, each
Borrower hereby releases, acquits and forever discharges Agents and Lenders,
and all officers, directors, agents, employees, successors and assigns of
Agents and Lenders, from any and all liabilities, claims, demands, actions or
causes of action of any kind or nature (if there be any), whether absolute or
contingent, disputed or undisputed, at law or in equity, or known or unknown,
that any Borrower now has or ever had against Agents or Lenders arising under
or in connection with any of the Loan Documents or otherwise.  Each Borrower represents and warrants to Agents
and Lenders that such Borrower has not transferred or assigned to any Person
any claim that such Borrower ever had or claimed to have against Agents or Lenders.

 

15.                               Waiver of Jury Trial.  To the fullest extent permitted by applicable law, the
parties hereto each hereby waives the right to trial by jury in any action,
suit, counterclaim or proceeding arising out of or related to this Amendment.

 

 

[Remainder of page intentionally left blank;
signatures on the following page]

 

6

 

IN
WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed under seal and delivered by their respective duly authorized officers
on the date first written above.

 

	
   

  	
  BORROWERS:

  
	
   

  	
   

  
	
   

  	
  SUPERIOR
  ESSEX COMMUNICATIONS L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name: David S. Aldridge

  
	
   

  	
   

  	
  Title: Senior Vice President and Chief Financial

  Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ESSEX GROUP, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name: David S. Aldridge

  
	
   

  	
   

  	
  Title: Vice President and Treasurer

  

 

 

[Signatures continued on following page]

 

 

	
   

  	
  LENDERS:

  
	
   

  	
   

  
	
  Revolver
  Commitment: $60,000,000.00

  	
  FLEET CAPITAL CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Revolver
  Commitment: $60,000,000.00

  	
  GENERAL ELECTRIC CAPITAL

  CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Revolver
  Commitment: $55,000,000.00

  	
  WACHOVIA BANK, NATIONAL ASSOCIATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  

 

 

[Signatures continued on the following page]

 

 

	
   

  	
  ADMINISTRATIVE AGENT:

  
	
   

  	
   

  
	
   

  	
  FLEET CAPITAL CORPORATION,

  as
  Administrative Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SYNDICATION AGENT:

  
	
   

  	
   

  
	
   

  	
  GENERAL ELECTRIC CAPITAL

  CORPORATION, as Syndication Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  

 

 

CONSENT AND REAFFIRMATION

 

Each
of the undersigned guarantors of the Obligations of Borrowers at any time owing
to Agents and Lenders hereby (i) acknowledges receipt of a copy of the foregoing
Eighth Amendment to Credit Agreement; (ii) consents to Borrowers’
execution and delivery thereof; (iii) agrees to be bound thereby; and (iv) affirms
that nothing contained therein shall modify in any respect whatsoever its
guaranty of the Obligations and reaffirms that such guaranty is and shall
remain in full force and effect.

 

IN
WITNESS WHEREOF, the undersigned has executed this Consent and Reaffirmation as
of the date of such Eighth Amendment to Credit Agreement.

 

 

	
   

  	
  SUPERIOR ESSEX INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  David S. Aldridge, Vice President,

  
	
   

  	
   

  	
  Treasurer
  and CFO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SUPERIOR ESSEX HOLDING CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  David S. Aldridge, Vice President and

  
	
   

  	
   

  	
  Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ESSEX INTERNATIONAL INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  David S. Aldridge, Vice President,

  
	
   

  	
   

  	
  Treasurer,
  Assistant Secretary and CFO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ESSEX GROUP, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  David S. Aldridge, Vice President,

  
	
   

  	
   

  	
  Treasurer
  and Assistant Secretary

  

 

 

[Signatures continued on the following page]

 

 

	
   

  	
  ESSEX TECHNOLOGY, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  David S. Aldridge, Vice President,

  	
   

  
	
   

  	
   

  	
  Treasurer
  and Assistant Secretary

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ESSEX MEXICO HOLDINGS, L.L.C.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  David S. Aldridge, Vice President,

  	
   

  
	
   

  	
   

  	
  Treasurer
  and Assistant Secretary

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ESSEX WIRE CORPORATION

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  David S. Aldridge, Vice President,

  	
   

  
	
   

  	
   

  	
  Treasurer
  and Assistant Secretary

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ESSEX CANADA INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  David S. Aldridge, Vice President,

  	
   

  
	
   

  	
   

  	
  Treasurer
  and Assistant Secretary

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ESSEX GROUP MEXICO INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  David S. Aldridge, Vice President,

  	
   

  
	
   

  	
   

  	
  Treasurer
  and Assistant Secretary

  	
   

  

 

 

EXHIBIT E

 

COMPLIANCE CERTIFICATE

 

[Letterhead of Borrower Agent]

 

                                    ,
20    

 

Fleet
Capital Corporation, as Administrative Agent

300
Galleria Parkway, N.W.

Suite 800

Atlanta,
Georgia 30339

 

The undersigned, the chief financial officer
of Superior Essex Communications LLC, a
Delaware limited liability company (“Borrower Agent”), as Borrower Agent, on
behalf of itself and the other Borrowers, gives this certificate to Fleet Capital Corporation (“Administrative
Agent”) in accordance with the requirements of Section 9.1.3 of that certain Credit Agreement dated               ,
20    , among Borrowers, Administrative Agent, as
collateral and administrative agent (in such for itself and the financial
institutions from time to time parties thereto as lenders (“Lenders”), such
Lenders and the other parties named therein (as at any time amended, the “Credit
Agreement”).  Capitalized terms used in
this Certificate, unless otherwise defined herein, shall have the meanings
ascribed to them in the Credit Agreement.

 

1.                                       Based upon my review of the balance sheets
and statements of income of Borrowers and their Subsidiaries for the [Fiscal Year]  [quarterly
period] ending                                     ,
20    , copies of which are attached hereto, I hereby
certify that:

 

(a)                     Consolidated Fixed
Charge Coverage Ratio was          to         ;

 

(b)                   Average
Availability during the period was $                        ;

 

(c)                    Capital
Expenditures for Borrowers during the period and for the Fiscal Year to date
total $                  
and $                    ,
respectively;

 

(d)                   Foreign Venture
Investment during the period and for the Fiscal Year to date total $                  
; and

 

(e)                  JV Europe
Investments during the period and for the Fiscal Year to date total $                  .

 

2.                                       No Default exists on the date hereof, other
than:                                     
                                                                                                
[if none, so state]; and

 

3.                                       No Event of Default exists on the date
hereof, other than                     
                                                                                                        
[if none, so state].

 

4.                                       As of the date hereof, each Borrower is
current in its payment of all accrued rent and other charges to Persons who own
or lease any premises where any of the Collateral is located, and there are no
pending disputes or claims regarding any Borrower’s failure to pay or delay in
payment of any such rent or other charges.

 

 

5.                                       Attached hereto is a schedule showing
the calculations that support Borrowers’ compliance [non-compliance] with the financial covenants, as shown
above.

 

	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  
	
   

  	
  SUPERIOR
  ESSEX COMMUNICATIONS LLC,

  
	
   

  	
  as
  Borrower Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Chief
  Financial Officer

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00092-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00092-of-00352.parquet"}]]