Contract analysis

I. OPENING REMARKS AND PURPOSE OF MEETING Samuel Eklund opened the meeting at approximately 10:00 a.m. CT by stating the purpose of the session: to conduct a comprehensive factual download from the Stonefield team regarding the full history of the Vantor/VTS relationship, the events and circumstances leading to the termination of the Transportation Services Agreement (the "TSA"), and to discuss the key documents, pri

II. OVERVIEW OF THE VANTOR RELATIONSHIP AND THE TSA A. Background of the Relationship Tobias Wren provided an overview of Stonefield Logistics Group Inc. ("Stonefield" or "SLG") for purposes of the record. Stonefield is a mid-market freight brokerage and managed transportation company headquartered in Fort Worth, Texas. The company is incorporated in the State of Delaware. Stonefield generated approximately $1.42 bil

III. TIMELINE OF VTS PERFORMANCE FAILURES A. Contract Years 1 and 2 — Generally Satisfactory Performance (April 2019 – March 2021) Janet Kirkwood stated that VTS's performance was generally within the SLO thresholds during Contract Year 1 (April 2019 through March 2020) and the early portion of Contract Year 2. The relationship during this period was described as productive, with regular operational calls occurring b

IV. THE CURE NOTICE AND TERMINATION PROCESS A. The Cure Notice (January 18, 2022) Raymond Hess explained the process by which the Cure Notice was prepared and issued. After the Q4 2021 performance metrics were compiled in early January 2022, Hess discussed the results with Kirkwood and Wren. Given the severity and breadth of the performance failures across all five SLO categories, the team determined that a formal Cu

1. On-time pickup rate: actual 78.2% versus SLO threshold of 95%;

2. On-time delivery rate: actual 81.6% versus SLO threshold of 93%;

3. Tender acceptance rate: actual 71.4% versus SLO threshold of 90%;

4. Equipment availability: actual 62% of committed fleet capacity (approximately 248 tractors) versus SLO threshold of 85% (minimum 340 tractors);

5. Cargo claims ratio: actual 1.07% versus SLO maximum of 0.5%; and

6. Failure to provide substitute equipment or surge capacity as required under Section 7.4 of the TSA. The Cure Notice cited the specific metric figures for each category, the corresponding contractual thresholds, and the sections of the TSA in which each obligation was established. The notice invoked Section 13.1(a) and stated that VTS had 30 calendar days from receipt to cure the identified material breaches. The c

V. DISCUSSION OF THE KIRKWOOD EMAIL (SEPTEMBER 22, 2021) — KEY RISK AREA A. Context and Content Eklund raised what he identified as a significant risk document for the defense. The document in question is an internal Stonefield email from Janet Kirkwood to Carlos Medina, dated September 22, 2021. The email states: "VTS is a mess. We're already moving volume to Cascade and Briarwood on Lanes 8–14. If VTS doesn't get i

VI. DISCUSSION OF THE RATE ADJUSTMENT MOTIVE A. The April 2022 Rate Adjustment Patrick Gallagher asked the Stonefield team about the company's awareness of the upcoming April 2022 rate adjustment under Section 5.3 of the TSA and the extent to which the financial impact of that adjustment was a factor in the termination decision. Priya Ramachandran provided the financial details. Under the Rate Adjustment Mechanism in

VII. DISCUSSION OF VANTOR'S VOLUME SHORTFALL ALLEGATIONS A. CY2 Volume (April 2020 – March 2021) Vantor's Amended Complaint alleges that Stonefield tendered only $31.8 million in freight volume to VTS during Contract Year 2 (April 2020 through March 2021), compared to the $43.2 million ACV, resulting in an alleged shortfall of $11.4 million. Tobias Wren reiterated the force majeure defense that is central to Stonefie

VIII. DISCUSSION OF VANTOR'S EXCLUSIVITY VIOLATION ALLEGATIONS Vantor's Amended Complaint alleges that Stonefield diverted freight to Cascade Freight Systems Inc. and Briarwood Trucking Co. in violation of the exclusivity provisions contained in Schedule C to the TSA. Vantor alleges that this diversion constitutes a material breach of Stonefield's obligations and, in the alternative, contributed to VTS's alleged inab

IX. DISCUSSION OF VANTOR'S DAMAGES CLAIMS ($95.4 MILLION) A. Breakdown of Claimed Damages Patrick Gallagher summarized the total damages claimed by Vantor, as set forth in the demand letter dated April 8, 2022, which was sent by Harrison Caldwell of Caldwell Royce & Shapiro LLP. The total claimed damages are $95.4 million, broken down as follows: B. Defense Team's Assessment Eklund stated that the claimed damages of

X. PRE-LITIGATION PROCEDURAL HISTORY Eklund confirmed the pre-litigation timeline for the record, summarizing the key events in chronological order: March 4, 2022: Stonefield terminates the TSA by formal letter from Tobias Wren to Vantor Holdings Corp. and VTS, effective immediately, citing VTS's failure to cure the material breaches identified in the January 18, 2022 Cure Notice. April 8, 2022: Vantor sends a formal

XI. INSURANCE COVERAGE STATUS Tobias Wren reported on the status of Stonefield's efforts to obtain insurance coverage for the defense costs and potential liability in connection with the litigation. Directors and Officers Liability Policy. Stonefield maintains a Directors and Officers liability insurance policy with Graymark Insurance Company, Policy No. GLG-DO-1025-00008, with a $15 million aggregate limit. A tender

XII. LENDER NOTIFICATION Priya Ramachandran confirmed that Stonefield notified Lakeshore National Bank, as Administrative Agent under Stonefield's senior secured credit facility, of the commencement of the litigation on August 24, 2022. The notification was sent eight business days after the Complaint was served on Stonefield, within the ten-business-day notification requirement under Section 6.03(b) of the Credit Ag