FOURTH AMENDMENT AND CONSENT AGREEMENT TO LOAN AND SECURITY AGREEMENT
This Fourth Amendment and Consent Agreement to Loan and Security
Agreement ("Consent") is made this 30th day of January, 2004 by and among
LASALLE BUSINESS CREDIT, LLC, a Delaware limited liability company, successor by
merger to LaSalle Business Credit, Inc., a Delaware corporation, ("Lender"),
0000 Xxxxxx Xxxxxx, 0xx Xxxxx, Xxxxxxxxxxxx, XX 00000, and STONEPATH GROUP,
INC., a Delaware corporation ("Stonepath"), CONTRACT AIR, INC., a Minnesota
corporation ("Contract Air"), DISTRIBUTION SERVICES, INC., a Minnesota
corporation ("Distribution Services"), GLOBAL CONTAINER LINE, INC., a Washington
corporation ("Global Container"), M.G.R., INC., d/b/a AIR PLUS LIMITED, a
Minnesota corporation ("Air Plus"), NET VALUE, INC., a Delaware corporation
("Net Value"), STONEPATH LOGISTICS DOMESTIC SERVICES, INC., a Delaware
corporation ("Logistics"), STONEPATH LOGISTICS GOVERNMENT SERVICES, INC., f/k/a
Transport Specialists, Inc., a Virginia corporation ("Government Services"),
STONEPATH LOGISTICS INTERNATIONAL SERVICES, INC., a Delaware corporation
("International Services I"), STONEPATH LOGISTICS INTERNATIONAL SERVICES, INC.,
f/k/a Global Transportation Services, Inc., a Washington corporation
("International Services II"), STONEPATH OPERATIONS INC., a Delaware corporation
("Operations"), and UNITED AMERICAN ACQUISITIONS AND MANAGEMENT, INC. d/b/a
UNITED AMERICAN FREIGHT SERVICES, INC., a Michigan corporation ("United
American", and together with Stonepath, Contract Air, Distribution Services,
Global Container, Air Plus, Net Value, Logistics, Government Services,
International Services I, International Services II and Operations, collectively
the "Loan Parties" and individually each a "Loan Party").
BACKGROUND
A. Loan Parties and Lender are parties to a certain Loan and Security
Agreement dated as of May 15, 2002 (as it may otherwise heretofore have been and
may hereafter be modified and amended from time to time, the "Loan Agreement")
pursuant to which Loan Parties established certain financing arrangements with
Lender, including a Revolving Loan facility and a Letter of Credit subfacility.
The Loan Agreement and the Other Agreements (as defined in the Loan Agreement)
are referred to herein collectively as the "Existing Credit Documents". All
capitalized terms not otherwise defined herein shall have the meaning ascribed
thereto in the Loan Agreement.
B. Loan Parties have advised Lender that International Services II
and/or Stonepath Holdings (Hong Kong) Limited, a corporation organized under the
laws of the Hong Kong Special Administrative Region of the People's Republic of
China and a wholly-owned subsidiary of Stonepath Offshore Holdings, Inc.
("Holdings (Hong Kong)"), wish to purchase the assets and/or the stock of
certain entities related to the business operated in the People's Republic of
China by a certain Xx. Xxxx Xxxx under the name "Shaanxi Sunshine Express
International Co., Ltd. (Shanghai Branch)" (the "Shaanxi Business"), which
transaction is currently prohibited pursuant to the terms of Section 1(e) of the
Third Amendment and Consent Agreement to Loan and Security Agreement by and
among Lender and Loan Parties executed in December 2003 (the "Third Amendment
and Consent"), and Lender has agreed to consent to this asset and/or stock
acquisition transaction concerning the Shaanxi Business subject to and on the
terms and conditions set forth in this Consent.
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NOW, THEREFORE, with the foregoing Background incorporated by reference
and made a part hereof and intending to be legally bound, the parties agree as
follows:
1. Consents to Foreign Acquisitions.
(a). Loan Parties acknowledge and agree that the terms of Section
1(e) of the Third Amendment and Consent prohibit any Loan Party and/or any
Subsidiary (direct or indirect) of any Loan Party from making any acquisition
transactions prior to May 14, 2004 without the prior written consent of Lender.
Furthermore, Loan Parties acknowledge and agree that to the extent that the
transactions contemplated by the Loan Parties in connection with the acquisition
related to the Shaanxi Business would involve an acquisition transaction by
Holdings (Hong Kong), such transaction would be prohibited by the terms of
Section 13(d) of the Loan Agreement, which prohibit any Subsidiary of any Loan
Party that is not itself also a Loan Party from purchasing any of the stock or
equity interests or all or a material portion of the assets of any Person or any
division of such Person.
(b). Notwithstanding the prohibitions of Section 1(e) of the Third
Amendment and Consent and, to the extent applicable, Section 13(d) of the Loan
Agreement, but without establishing any "course of conduct" or "course of
dealing" binding upon Lender in the future or waiving or in any way limiting its
rights to decline to permit any such transactions by Loan Parties and/or their
Subsidiaries prior to May 14, 2004 and/or by any Foreign Subsidiaries at any
time in the future, Lender hereby gives its consent to and agrees to the
purchase by either International Services II or Holdings (Hong Kong) of (i)
substantially all of the assets used in the operation of the Shaanxi Business
and (ii) either (x) certain cash, rights to payment and cash and deposit
accounts owned by Shaanxi Sunshine Express International Co., Ltd., a company
organized under the laws of the Hong Kong Special Administrative Region of the
People's Republic of China ("Shaanxi HK") or (y) fifty-five percent (55%) of the
capital stock of Shaanxi HK (all of such transactions, the "Shaanxi Foreign
Acquisition"), provided that, such Shaanxi Foreign Acquisition shall be made
upon the terms and conditions of the draft Contract for the Sale of Assets
provided by Loan Parties to Lender prior to the date of this Consent, without
substantial alterations to such terms and conditions (it being understood that
neither an assignment of the Contract of Sale of Assets from International
Services II to Holdings (Hong Kong) or an alteration to the Contract for Sale of
Assets providing for the purchase of cash, rights to payment and cash and
deposit accounts owned by Shaanxi HK instead of the purchase of 55% of the
capital stock of Shaanxi HK shall not be considered a substantial alteration to
the terms and conditions of the Contract for the Sale of Assets for the purposes
of this paragraph).
(c). Loan Parties acknowledge and agree that, although the Shaanxi
Foreign Acquisition does not constitute a "Permitted Acquisition" under the
definition of that term as set forth in the Loan Agreement because such
transaction is currently prohibited by the provisions of Section 1(e) of the
Third Amendment and Consent, (x) any aggregate cash consideration paid in
relation to such Shaanxi Foreign Acquisition (exclusive of all earn-out payments
made in connection therewith) shall be treated as though such cash consideration
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constituted cash consideration paid in connection with a Permitted Acquisition
and (y) all earn-out payments paid in relation to such Shaanxi Foreign
Acquisition shall be treated as though such earn-out payments constituted
Foreign Earn-Out Payments paid in connection with Permitted Acquisitions, in
each such case for all purposes under the Existing Credit Documents.
Furthermore, Loan Parties acknowledge and agree that if Loan Parties elect to
designate any Reserved Outside Source Funds as the source of any funds to be
used to make any cash consideration payments in connection with the Shaanxi
Foreign Acquisition, then the Reserved Outside Source Funds shall be deemed to
have been permanently reduced by the amount of all funds so used in connection
with such Shaanxi Foreign Acquisition and such funds shall no longer be
available to fund Permitted Acquisitions.
(d). Loan Parties hereby reaffirm the agreement set forth in
Section 1(e) of the Third Amendment and Consent providing that that,
notwithstanding the otherwise applicable provisions of Section 13(d) of the Loan
Agreement and/or the provisions of and consents given under this Consent, none
of the Loan Parties or any of their Subsidiaries, direct or indirect, shall make
any further acquisition transactions, including without limitation any purchase
of any of the stock or equity interests of or all or a material portion of the
assets of any Person or any division of such Person, and whether or not such
acquisition transaction would otherwise fall within the definition of a
"Permitted Acquisition", prior to May 14, 2004 without the prior written consent
of Lender. After May 14, 2004, Loan Parties may again make "Permitted
Acquisitions" as permitted under and in compliance with the provisions of
Section 13(d) of the Loan Agreement.
2. Representations and Warranties. Each Loan Party represents and
warrants to Lender that:
(i). All warranties and representations made to Lender under
the Loan Agreement and the other Existing Credit Documents are true and correct
as to the date hereof.
(ii). The execution and delivery by each Loan Party of this
Consent and the performance by it of the transactions herein contemplated (i)
are and will be within its powers, (ii) have been authorized by all necessary
corporate action and will not contravene any provision of the certificate or
articles of incorporation or bylaws or other similar entity governance documents
of such Loan Party, and (iii) are not and will not be in contravention of any
order of any court or other agency of government, of law or any other indenture,
agreement or undertaking to which such Loan Party is a party or by which the
property of such Loan Party is bound, or be in conflict with, result in a breach
of, or constitute (with due notice and/or lapse of time, if applicable) a
default under any such indenture, agreement or undertaking or result in the
imposition of any lien, charge or encumbrance of any nature on any of the
properties of such Loan Party.
(iii). This Consent and any assignment, instrument, document,
or agreement executed and delivered in connection herewith, will be valid and
binding on and enforceable against each Loan Party in accordance with its
respective terms.
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(iv). No Event of Default, or event or circumstance that with
the giving of notice or passage of time or both would become an Event of
Default, has occurred under the Loan Agreement or any of the other Existing
Credit Documents.
(v). The name, office and signature of the officer(s) of each
Loan Party signing this Consent have previously been certified to Lender in the
incumbency and signature certificates of such Loan Party heretofore delivered to
Lender.
3. Confirmation of Security Interest. As security for the payment of
all Loans now or in the future made by Lender to Loan Parties hereunder and for
the payment or other satisfaction of all other Liabilities, each Loan Party
hereby reconfirms the assignment and grant of a continuing perfected first
priority (subject only to Permitted Liens which Lender has expressly agreed may
be senior to the security interests of Lender) lien and security interest in and
to the Collateral (specifically including the Property described in Section 5 of
the Loan Agreement), whether now owned or hereafter acquired, created or arising
and wherever located, granted to Lender by such Loan Party under the Existing
Credit Documents. Each such Loan Party hereby confirms and agrees that all such
security interests and liens granted to Lender under the Existing Credit
Documents continue in full force and effect and shall continue to secure the
Obligations. All Collateral remains free and clear of any liens other than liens
in favor of Lender, except for Permitted Liens. Nothing herein contained is
intended to in any way impair or limit the validity, priority and extent of
Lender's existing security interest in and liens upon the Collateral.
4. Effectiveness Conditions. This Consent shall be effective upon
execution and delivery of this Consent by all parties hereto and payment by Loan
Parties to Lender of all fees and expenses (specifically including without
limitation attorneys' fees) incurred in relation to the preparation and
execution of this Consent.
5. Confirmation of Indebtedness. Loan Parties hereby acknowledge and
confirm that as of the close of business on January 29, 2004, there are no
Revolving Loans outstanding under the Loan Agreement, and there are Letters of
Credit in the undrawn face amount of $160,000 outstanding under the Loan
Agreement.
6. Ratification of Existing Loan Documents. Except as expressly set
forth herein, all of the terms and conditions of the Loan Agreement and the
other Existing Credit Documents are hereby ratified and confirmed and continue
unchanged and in full force and effect. All references to the Loan Agreement
shall mean the Loan Agreement as modified by this Consent.
7. Consent as Loan Document. Loan Parties hereby acknowledge and agree
that this Consent constitutes an "Other Agreement" under the Loan Agreement.
Accordingly, it shall be an Event of Default under the Loan Agreement if (i) any
representation or warranty made by Loan Parties under or in connection with this
Consent shall have been untrue, false or misleading in any material respect when
made, or (ii) Loan Parties shall fail to perform or observe any term, covenant
or agreement contained in this Consent.
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8. Governing Law. THIS CONSENT, AND ALL MATTERS RELATED TO AND/OR
ARISING OUT OF THIS CONSENT, SHALL BE GOVERNED AND CONTROLLED BY THE INTERNAL
LAWS OF THE COMMONWEALTH OF PENNSYLVANIA AS TO INTERPRETATION, ENFORCEMENT,
VALIDITY, CONSTRUCTION, EFFECT, AND IN ALL OTHER RESPECTS.
9. Waiver of Jury Trial. EACH LOAN PARTY AND LENDER EACH HEREBY WAIVES
ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING WHICH PERTAINS DIRECTLY
OR INDIRECTLY TO THIS CONSENT, THE LOAN AGREEMENT, THE NOTES, ANY OF THE OTHER
AGREEMENTS, THE LIABILITIES, THE COLLATERAL, ANY ALLEGED TORTIOUS CONDUCT BY A
LOAN PARTY OR LENDER OR WHICH, IN ANY WAY, DIRECTLY OR INDIRECTLY, ARISES OUT OF
OR RELATES TO THE RELATIONSHIP BETWEEN A LOAN PARTY AND A LENDER. IN NO EVENT
SHALL LENDER BE LIABLE FOR LOST PROFITS OR OTHER SPECIAL OR CONSEQUENTIAL
DAMAGES.
10. Successors and Assigns. This Consent, along with each of the
Existing Credit Documents, shall be binding upon and shall benefit Loan Parties
and Lender and their respective successors and permitted assigns (as permitted
under the Loan Agreement).
11. Counterparts. This Consent may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original,
and such counterparts together shall constitute one and the same respective
agreement.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties hereto have duly executed this Third
Amendment and Consent to Loan and Security Agreement as of the date first
written above.
LENDER:
LASALLE BUSINESS CREDIT, LLC
By:
-----------------------------------
Name: Xxxxxxx X. Xxxx, Xx.
Title: Vice President
[Signatures Continued on Following Page]
[Signature Page S-1 to Stonepath Consent Re Shanghai Acquisitions -
January 2004]
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LOAN PARTIES:
STONEPATH GROUP, INC.
CONTRACT AIR, INC.
DISTRIBUTION SERVICES, INC.
GLOBAL CONTAINER LINE, INC.
M.G.R. INC., d/b/a AIR PLUS LIMITED
NET VALUE, INC.
STONEPATH LOGISTICS DOMESTIC
SERVICES, INC.
STONEPATH LOGISTICS GOVERNMENT
SERVICES, INC., f/k/a Transport
Specialists, Inc.
STONEPATH LOGISTICS INTERNATIONAL
SERVICES, INC, a Delaware Corporation
STONEPATH LOGISTICS INTERNATIONAL
SERVICES, INC., f/k/a/ Global
Transportation Services, Inc.,
a Washington Corporation
STONEPATH OPERATIONS, INC.
UNITED AMERICAN ACQUISITIONS AND
MANAGEMENT, INC. d/b/a UNITED
AMERICAN FREIGHT SERVICES, INC.
BY:_______________________
Name: Xxxx X. Xxxxx
Title: Treasurer
[Signature Page S-2 to Stonepath Consent Re Shanghai Acquisitions -
January 2004]
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