Contract analysis

I. Executive Summary and Purpose The purpose of this memorandum is to analyze the amendment, waiver, and consent provisions under the two principal debt instruments governing Stonefield Logistics Group Inc.'s (the "Company") funded indebtedness in order to identify the consent thresholds and procedural requirements the Company must satisfy to effectuate the contemplated consensual out-of-court restructuring. This ana

II. Overview of the Capital Structure and Relevant Instruments A. First Lien Credit Agreement The Credit Agreement was entered into on December 15, 2017, among Stonefield Logistics Group Inc., as Borrower, Pinnacle National Bank, N.A., as Administrative Agent and Collateral Agent, and the Lenders from time to time party thereto. The Credit Agreement is governed by the laws of the State of New York. The Credit Agreeme

III. Amendment and Consent Mechanics Under the First Lien Credit Agreement A. Definition of "Required Lenders" The Credit Agreement defines "Required Lenders" using the standard formulation found in syndicated leveraged loan agreements: Lenders holding more than 50% of the aggregate outstanding principal amount of the Term Loans and unfunded Revolving Commitments, excluding Defaulting Lenders. This definition aggrega

1. Extension of Maturity. Extending the maturity date of the TLB or the Revolver, or extending the date of any scheduled amortization or other mandatory payment, requires the consent of each affected Lender (not merely the Required Lenders). This is the single most critical sacred right implicated by the contemplated restructuring. The proposed transaction extends the TLB maturity from December 15, 2024 to December 1

2. Reduction of Interest Rates or Fees. Reducing the rate of interest (or the applicable margin or spread), or reducing mandatory commitment fees, letter of credit fees, or other fees payable to any Lender, requires the consent of each affected Lender. This sacred right is not implicated by the contemplated restructuring with respect to the interest rate modification, because the proposed amendments increase the appl

3. Reduction of Principal. Any reduction, forgiveness, or write-down of the principal amount of any Loan, or any forgiveness of accrued and unpaid interest, requires the consent of each affected Lender. The contemplated restructuring does not contemplate any reduction of TLB principal — the $285.0 million outstanding TLB balance remains at par — and accordingly this sacred right is not implicated. If the restructurin

4. Reduction of Commitment. Reducing any Lender's Revolving Commitment without its consent is typically a sacred right requiring each affected Lender's consent. The proposed restructuring reduces the aggregate Revolving Credit Facility commitment from $50.0 million to $35.0 million. This reduction requires the consent of each Revolver Lender whose commitment is being reduced. As noted above, the Revolving Credit Faci

5. Amendment of Pro Rata Sharing Provisions. Amendments to the Credit Agreement's pro rata sharing and waterfall provisions — which govern the allocation of payments, prepayments, and collateral proceeds among the Lenders — typically require the consent of all Lenders (100%). The contemplated restructuring does not, on its face, propose to modify the pro rata sharing mechanics within the first lien facility. However,

6. Amendment of the Definition of "Required Lenders." Modifying the definition of "Required Lenders" — whether by changing the percentage threshold, altering the composition of the denominator, or otherwise — is typically an all-Lender consent item. The contemplated restructuring does not propose to amend this definition.

7. Release of All or Substantially All Collateral. Releasing all or substantially all of the Collateral securing the obligations under the Credit Agreement is typically an all-Lender consent item, although some credit agreements permit collateral releases with the consent of the Required Lenders in connection with dispositions permitted under the Credit Agreement. The contemplated restructuring does not propose a rel

8. Release of All or Substantially All Guarantors. Similarly, releasing all or substantially all of the guarantors from their guarantee obligations is typically an all-Lender consent item (or, in some drafting, a Required Lenders consent item). The contemplated restructuring does not propose any guarantor releases.

9. Subordination of Liens. To the extent the contemplated super-priority facility (provided by Belvedere Credit Opportunities Fund LP in a principal amount of $55.0 million) would alter the lien priority of existing first lien Lenders, this could implicate the sacred rights provision relating to subordination or priming of liens. If the super-priority facility is structured to hold a first-priority lien on all or sub

IV. Amendment and Consent Mechanics Under the Mezzanine Indenture A. Overview of Trust Indenture Act Applicability An initial threshold question is whether the Mezzanine Notes were issued in a transaction exempt from registration under the Securities Act of 1933, as amended (the "Securities Act"), and whether the Mezzanine Indenture is a "qualified indenture" under the Trust Indenture Act of 1939, as amended (the "TI

V. Interaction Between the Two Instruments — Cross-Acceleration and Other Cross-Default Provisions A. Cross-Default / Cross-Acceleration The Credit Agreement and the Mezzanine Indenture each contain cross-default and/or cross-acceleration provisions that create interdependencies between the two instruments. These provisions are of critical importance to the sequencing and coordination of the restructuring. Credit Agr