MANAGEMENT AGREEMENT Between MASS FINANCIAL, CORP. Secured Creditor in Possession and RADIANT LOGISTICS GLOBAL SERVICES, INC. Manager For the Operations of UNITED AMERICAN FREIGHT SERVICES, INC Dated as of May 21, 2007
Between
MASS
FINANCIAL, CORP.
Secured
Creditor in Possession
and
RADIANT
LOGISTICS GLOBAL SERVICES, INC.
Manager
For
the
Operations of
UNITED
AMERICAN FREIGHT SERVICES, INC
Dated
as
of May 21, 2007
This
Management Agreement (“Agreement”), is made and entered into this 21st day of
May, 2007 (“Effective Date”), by and between Mass Financial Corp., a Barbados
company (“Mass”) in its capacity as a secured creditor in possession pursuant to
Mass’ foreclosure on the assets of United American Freight Services, Inc., a
Michigan corporation (“UAFS”) (and other collateral) as provided in Article 9 of
the Uniform Commercial Code and Radiant Logistics Global Services, Inc., a
Delaware corporation (“Radiant”).
RECITALS
WHEREAS,
by virtue of an Assignment of Loans, Liens and Loan Documents dated as of
February 9, 2007, Mass is the assignee of certain loan agreements, promissory
notes and security agreements (“Loan Documents”) dated as of August 21, 2005
issued in favor of Laurus Master Fund Limited by Stonepath Group, Inc., a
Delaware corporation (“Stonepath”), UAFS and other subsidiaries of Stonepath
(the “Subs”);
WHEREAS,
pursuant to the Loan Documents Mass has a perfected first priority security
interest in certain assets of Stonepath and UAFS to secure the prompt payment,
performance and discharge in full of all of the Stonepath and Subs’ obligations
under the Loan Documents;
WHEREAS,
Stonepath and the Subs defaulted under the Loan Documents and various events
of
default existed thereunder ;
WHEREAS,
Mass has foreclosed on the assets of UAFS in a manner consistent with Mass’ and
such Subs’ right and duties, including those under the Uniform Commercial
Code;
WHEREAS,
Mass has taken possession of the assets formerly used by UAFS in its operations
for disposition by Mass as a secured party under the Uniform Commercial Code
as
in effect under applicable law ( the “UCC”);
WHEREAS,
Radiant desires to acquire from Mass, and Mass desires to transfer to Radiant,
certain of the assets used in the operations of UAFS, all of which are
identified as “Collateral” in the Loan Documents, and all of which are included
in the description of Purchased Assets in the Asset Purchase Agreement the
parties are executing in conjunction with the Agreement ( hereinafter “Purchased
Assets” or “Asset Base”);
WHEREAS,
an involuntary bankruptcy has been commenced against Stonepath, but not UAFS,
and the parties to this Agreement are concerned about and cognizant of the
impact of the automatic stay imposed by the provisions of 11 U.S.C. Section
362
on the proposed sale of the Purchased Assets of UAFS;
WHEREAS,
the parties realize that the value of the Purchased Assets of UAFS will decrease
dramatically if UAFS should cease operation, but that Mass is not in the
business of providing the freight forwarding and transportation logistic
services provided by UAFS, services in which Radiant is experienced and skilled;
and that the best way to maximize the value of the UAFS Asset Base is for
Radiant to operate the company pending Mass obtaining relief from the automatic
stay of the Stonepath bankruptcy so as to allow Mass to conclude the disposition
of the UAFS Asset Base to Radiant,
1
NOW,
THEREFORE, in consideration of the mutual agreements, covenants, representations
and warranties contained herein, and in reliance thereon, Mass and Radiant,
intending to be legally bound, hereby agree as follows:
ARTICLE
I
Appointment;
Term of Agreement
Section
1.1. Appointment
and Acceptance.
Mass
hereby appoints Radiant as the Manager of the UAFS Asset Base during the term
of
this Agreement to operate and manage the business formerly known as UAFS for
its
own account upon the terms and conditions hereinafter set forth. Radiant hereby
accepts such appointment.
Section
1.2. Term.
The
term of the appointment shall be for the shorter of: (a) a period ending
December 31, 2007 or (b) such sooner time as Mass may obtain a final order
from
the bankruptcy court in the Stonepath Group Inc. bankruptcy granting Mass relief
from stay to proceed with the disposition of the Purchased Assets pursuant
to
Mass’ foreclosure on same . In the event Mass obtains such an order, the
purchase and sale transaction of the Purchased Assets presently contemplated
by
the parties to the Agreement shall close within 10 business days of entry of
the
final order granting Mass relief from the automatic stay, or the sooner
dismissal of the Stonepath Group Inc. involuntary bankruptcy.
Section
1.3. No
Agency or Partnership.
This
Agreement will not be construed to create a partnership or joint venture between
the parties. Nothing in this Agreement shall be deemed to give Radiant authority
to bind Mass, it being understood that Radiant is acting as an independent
contractor and not an agent of Mass.
ARTICLE
II
General
Obligations Of The Manager
Section
2.1. Management.
The
Manager shall manage the daily operations represented by the Asset Base of
UAFS
using its best business judgment. Manager shall have full authority to operate
the Asset Base in its sole and absolute discretion, including if necessary
in
Radiant’s judgment, operating the Asset Base under a name other than Stonepath
Logistics Automotive Services, Inc.
Section
2.2. Books
and Records.
The
Manager shall maintain a complete system of records, books and accounts with
respect to the business conducted using the Asset Base in accordance with
generally accepted accounting principles and make all records, books and
accounts relating to the operation available for examination by Mass during
regular business hours at the corporate offices of Radiant upon five (5)
business day’s notice. The Manager further agrees to prepare and submit to Mass
at the address given in Section 5.5, by the 20th day of each month, a financial
statement and balance sheet of its business conducted using the Asset Base
for
the preceding month prepared according to generally accepted accounting
principals.
2
Section
2.3. Receipts
and Liabilities.
Manager
shall be entitled to all revenues generated and shall be solely responsible
for
all liabilities accrued as a result of business conducted using the Asset Base
after the Effective Date. Mass shall be entitled to receipt of all income
generated prior to the Effective Date and shall be solely responsible for all
liabilities accrued from April 17, 2007 to the Effective Date as a result of
business conducted using the Asset Base. The parties will work together to
identify those receivables and payables accrued as of the Effective Date .
The
ship date of the cargo will determine which party is entitled to the revenue
of
that shipment and which party will bear the costs of generating that revenue.
Each party shall segregate payments received by it after the Effective Date
that
are otherwise due the other party and shall promptly remit them to that party.
The parties shall reconcile the accounts on a not less than weekly basis.
Section
2.4. Indemnification.
The
Manager agrees to indemnify and hold harmless Mass from expenses, claims and
damages arising from the willful misconduct and the acts and omissions of
Manager or its agents or employees which are reckless or grossly negligent
and
further agrees to provide comprehensive general public liability insurance,
covering acts and/or omissions of itself and its agents and employees, with
deductibles and limits acceptable to Mass and naming Mass as an insured. Manager
additionally agrees to provide worker’s compensation insurance for its employees
as well as property and casualty insurance in such amounts as are standard
and
customary for the business in which the Asset Base is being used, naming Mass
as
an insured.
Section
2.5. Additional
Covenants of Manager.
The
Manager hereby further covenants and agrees that it will:
(a) not
do
anything which will cause the violation of any statute, ordinance, law, rule,
regulation, order or requirement of any federal, state or municipal government,
and appropriate departments, commissions, boards and officers having
jurisdiction over the use or manner of use of the Asset Base or the maintenance
or operation thereof that would have a material adverse effect on the Asset
Base;
(b) be
available at all reasonable times to consult with Mass on matters covered by
this Agreement;
(c) provide
cargo insurance for any freight transported or received by or on behalf of
Manager; and
(d) use
reasonable care to assure that invoices relating to the pre-Effective Date
period are promptly and accurately entered into the accounting system and copies
of all relevant documentation (e.g., bills of lading and proof of delivery)
are
provided to Mass in a timely fashion.
Section
2.6. Personnel.
The
Manager shall hire and discharge employees as it deems fit.
Section
2.7. Market
and Operations.
The
Manager shall use the Asset Base in its efforts to service the automotive
industry in a manner consistent with the reasonable business judgment of
Manager.
3
Section
2.8. Conduct
of Business.
The
Asset Base shall be used in business conducted by Manager in its name and at
its
expense. All contracts for the purchase of goods and services shall be in
Manager’s name.
ARTICLE
III
Agreements
Of Mass
Section
3.1. Access
to Premises and Records.
Promptly upon the Effective Date, Mass will make available to Manager the
business premises and all books and records of UAFS to the extent such are
in
the control of Mass.
Section
3.2. Limitation
of Liability; Hold Harmless.
Mass
shall hold Radiant, Radiant Logistics Partners, LLC, a Delaware limited
liability company, Air Group Corporation, a Washington corporation, Radiant
Logistics, Inc., a Delaware corporation, and the officers, directors and
employees of each (collectively, the “Radiant Released Parties”) harmless from,
and no Radiant Released Party shall be liable to Mass for any expenses, claims
and damages resulting from, arising out of or relating to any act or omission
of
any Radiant Released Party arising out of or related in any way to its use
or
operation of the Asset Base or the provision of any services hereunder except
for any claim based solely on the intentional willful misconduct of
Radiant
Section
3.3. No
Restrictions.
Mass
covenants and agrees that it shall have no right to impose, and shall not seek
to enforce or impose any restriction of any kind on any Radiant Released Party
which limits in any way any Radiant Released Party’s ability to (i) solicit or
conduct business with any Person (as that term is defined in the Asset Purchase
Agreement) whether or not such Person was or is a customer or prospective
customer of UAFS, Stonepath, any of the Subs or Mass, (ii) solicit, hire or
retain any Person to serve as an employee, consultant or agent of any Radiant
Released Party whether or not such Person was or is a current or former
employee, agent or consultant of UAFS, Stonepath, any of the Subs or Mass or
(iii) conduct operations in the freight forwarding, logistics or related
business anywhere in the world whether or not such actions are competitive
with
UAFS, Stonepath, any of the Subs or Mass.
Section
3.4. Indemnification.
Mass
shall indemnify, defend and hold harmless the Radiant Released Parties , from
and against any and all expenses, claims and damages resulting from, arising
out
of or relating to: (a) any use by any Radiant Released Party of the Asset Base
(unless due to the intentional misconduct of any Radiant Released Party or
their
employees or agents); (b) the operation of the business utilizing the Asset
Base
(unless due to the intentional misconduct of any Radiant Released Party or
their
employees or agents); (d) any breach of any representation made by Mass in
this
Agreement, or any failure of Mass to completely and timely perform any covenant
or agreement to be performed by Mass under this Agreement; or (e) any
third-party claim seeking to hold any Radiant Released Party liable for any
act
or omission of Mass.
4
ARTICLE
IV
Termination
Of Agreement; Events Of Default
Section
4.1. Termination
by Manager.
This
Agreement may be terminated at any time by the Manager upon thirty (30) days’
advance written notice to Mass.
Section
4.2. Termination
by Mass.
This
Agreement may be terminated at any time by Mass if:
(i) Manager
fails to adequately perform any of its obligations hereunder as reasonably
determined by Mass; or
(ii) Mass
reasonably determines that Manager is not performing its obligations hereunder
according to the performance standard required by Article II
hereof.
Such
termination shall not be effective until thirty (30) days after notice from
Mass
to Manager of the occurrence of any of the foregoing, during which thirty (30)
day period Manager shall have the opportunity to cure such
occurrence.
Section
4.3. Automatic
Termination.
This
Agreement shall automatically terminate if Mass does not obtain a final order
granting it relief from the automatic stay in the bankruptcy proceeding of
Stonepath Group Inc. by December 31, 2007.
ARTICLE
V
General
Section
5.1. Expenses.
Except
as otherwise provided in this Agreement, and whether or not the transactions
herein contemplated shall be consummated, Manager and Mass shall pay their
own
fees, expenses and disbursements, in connection with the subject matter of
this
Agreement and all other costs and expenses incurred in performing and complying
with all conditions to be performed under this Agreement.
Section
5.2. Publicity.
All
notices to third parties and all other publicity concerning the transactions
contemplated by this Agreement shall be jointly planned and coordinated by
and
between Mass and Manager. Except as may be required by law, no Party shall
act
unilaterally in this regard without the prior written approval of the other
Party, such approval not to be unreasonably withheld.
Section
5.3. Waivers.
The
waiver by either Party hereto of a breach of any provision of this Agreement
shall not operate or be construed as a waiver of any subsequent
breach.
Section
5.4. Binding
Effect; Benefits.
This
Agreement shall inure to the benefit of, and be binding upon, the Parties hereto
and their respective successors and assigns. Nothing in this Agreement, express
or implied, is intended to confer on any Person other than the Parties hereto,
or their respective successors and assigns, any rights, remedies, obligations
or
liabilities under or by reason of this Agreement.
5
Section
5.5. Notices.
All
notices, requests, demands, elections and other communications which either
Party to this Agreement may desire or be required to give hereunder shall be
in
writing and shall be deemed to have been duly given if delivered personally,
by
a reputable courier service which requires a signature upon delivery, by mailing
the same by registered or certified first class mail, postage prepaid, return
receipt requested, or by telecopying with receipt confirmation (followed by
a
first class mailing of the same) to the Party to whom the same is so given
or
made. Such notice, request, demand, waiver, election or other communication
will
be deemed to have been given as of the date so delivered or electronically
transmitted or seven days after mailing thereof.
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If
to Seller to:
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Mass Financial Corp. | ||
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Xxxx
000, 0xx Fl,. Xxxx Xxxxx
Xxxxxxxxx
Xxxxxx, 00 Xxxxxxx Xx.
Xxxxxxx
Xxxx
Xxxx
x000
0000 0000 (facsimile)
x000
0000 0000 (phone)
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|||
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With
a copy to:
|
Xxxxxx X. Xxxxx | ||
|
Xxxxxxxx
Xxxxxxx
000
Xxxxx Xx., #0000
Xxxxxxx,
XX 00000
xxxxxx@xxxxxxxxxxxxxxx.xxx
000-000-0000
(facsimile)
000-000-0000
(phone)
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|||
|
If
to Buyer, to:
|
Radiant Logistics Global Services, Inc. . | ||
|
0000
000xx Xxxxxx X.X.
Xxxxxxxx,
Xxxxxxxxxx 00000
Attn:
Xxxx X. Xxxxx, Chief Executive Officer
xxxxxxx@xxxxxxx-xxxxxxxxx.xxx
000-000-0000
(facsimile)
000-000-0000
(phone)
Attn:
Xxxxxxx X. Xxxxx, General Counsel
SMC
Capital Advisors, Inc.
Two
Xxxxx Square
00xx
& Xxxx Xxxxxxx, Xxxxx 0000
Xxxxxxxxxxxx,
Xxxxxxxxxxxx 00000
xxxxxx@xxxxxxxxxxx.xxx
000-000-0000
(facsimile)
000-000-0000
(phone)
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|||
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With
copy to:
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Xxxxxxx X. Xxxxxx , Esquire | ||
|
Fox
Rothschild LLP
000
Xxxxx Xxxxx, Xxxxxxxx 0
Xxxxxxxxxxxxx,
Xxx Xxxxxx 00000-0000
xxxxxx@xxxxxxxxxxxxx.xxx
000-000-0000
(facsimile)
000-000-0000
(phone)
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6
or
to
such other address as such Party shall have specified by notice to the other
Party hereto.
Section
5.6. Entire
Agreement.
This
Agreement (including the Exhibits and Schedules hereto) constitutes the entire
agreement and understanding between the Parties hereto as to the matters set
forth herein and supersedes and revokes all prior agreements and understandings,
oral and written, between the Parties hereto or otherwise with respect to the
subject matter hereof (including any letter of intent). No change, amendment,
termination or attempted waiver of any of the provisions hereof shall be binding
upon any Party unless set forth in an instrument in writing signed by the Party
to be bound or their respective successors in interest.
Section
5.7. Counterparts.
This
Agreement may be executed simultaneously in two or more counterparts, each
of
which shall be deemed an original and all of which together shall constitute
but
one and the same instrument.
Section
5.8. Headings.
The
article, section and other headings contained in this Agreement are for
reference purposes only and shall not be deemed to be a part of this Agreement
or to affect the meaning or interpretation of this Agreement.
Section
5.9. Construction.
Within
this Agreement, the singular shall include the plural and the plural shall
include the singular, and any gender shall include all other genders, all as
the
meaning and the context of this Agreement shall require. Each party warrants
that it has consulted with its own counsel and each has participated in the
drafting of this Agreement and that accordingly the rule of construction of
“construe against the drafter” does not apply.
Section
5.10. Governing
Law and Choice of Forum.
Any
proceeding arising out of or relating to this Agreement or any transaction
contemplated hereby may be brought in the courts of the State of Washington,
County of King, or, if it has or can acquire jurisdiction, in the United States
District Court for the Western District of Washington, and each of the parties
irrevocably submits to the exclusive jurisdiction of each such court in any
such
Proceeding, waives any objection it may now or hereafter have to venue or to
convenience of forum, agrees that all claims in respect of the proceeding shall
be heard and determined only in any such court and agrees not to bring any
proceeding arising out of or relating to this Agreement or any Contemplated
Transaction in any other court. The parties agree that either or both of them
may file a copy of this paragraph with any court as written evidence of the
knowing, voluntary and bargained agreement between the parties irrevocably
to
waive any objections to venue or to convenience of forum. EACH PARTY HEREBY
WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED
IN
ANY PROCEEDING AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER
PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH PARTY
AT
THE ADDRESS SET FORTH IN THE NOTICE SECTION OF THIS AGREEMENT AND THAT SERVICE
SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF SUCH PARTY’S ACTUAL
RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER
POSTAGE PREPAID. Process in any Proceeding referred to in the first sentence
of
this Section may be served on any party anywhere in the world.
7
Section
5.11. Cooperation.
The
Parties hereto shall cooperate fully at their own expense, except as otherwise
provided in this Agreement, with each other and their respective counsel and
accountants in connection with all steps to be taken as part of their
obligations under this Agreement.
Section
5.12. Severability.
If any
term, covenant, condition or provision of this Agreement or the application
thereof to any circumstance shall be invalid or unenforceable to any extent,
the
remaining terms, covenants, conditions and provisions of this Agreement shall
not be affected thereby and each remaining term, covenant, condition and
provision of this Agreement shall be valid and shall be enforceable to the
fullest extent permitted by law. If any provision of this Agreement is so broad
as to be unenforceable, such provision shall be interpreted to be only as broad
as is enforceable.
Section
5.13. Assignment.
This
Agreement may not be assigned by any Party Manager without the prior written
consent of the other Party hereto.
DATED
the
date first above written.
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MASS
FINANCIAL CORP.
By:
/s/ Xxxxxxx
Xxxxx
Name:
Xxxxxxx Xxxxx
Title:
President
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MANAGER:
RADIANT
LOGISTICS GLOBAL SERVICES, INC., a Delaware corporation
By:
/s/ Xxxx X.
Xxxxx
Name:
Xxxx X. Xxxxx
Its:
Chief Executive Officer
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8
