Contract analysis

1. Executive Summary July 2023 was a deposition-intensive month in which substantial progress was made in developing Stonefield's factual record for summary judgment and trial. Three fact depositions were completed during the reporting period: Derek Pruitt (VP, Business Development, Vantor) on July 10, Janet Kirkwood (VP, Carrier Relations, Stonefield) on July 14, and Raymond Hess (Director, Contract Compliance, Ston

2. Case Background (Standing Section — Abbreviated) This section is included for continuity across monthly reports and provides a summary of the case background and procedural history. Vantor Holdings Corp. ("Vantor" or "Plaintiff") filed this action on August 12, 2022, in the United States District Court for the Southern District of New York, alleging that Stonefield Logistics Group Inc. ("Stonefield" or "SLG") wron

3. Depositions Completed During Reporting Period Three fact depositions were completed during July 2023. Each is discussed in detail below, including a summary of key testimony, assessment of witness performance, and implications for Stonefield's defense. 3.1 Deposition of Derek Pruitt (VP, Business Development, Vantor Holdings Corp.) — July 10, 2023 Duration: Approximately 7 hours (full day, with breaks) Location: O

1. Fleet Capacity Acknowledgment. Mr. Pruitt acknowledged that VTS "struggled" to maintain the committed fleet capacity of 400 tractors during Q4 2021. While he attempted to attribute this to broader industry-wide driver shortages, he was unable to point to any specific external data or analysis supporting that characterization when pressed. This admission is consistent with the fleet capacity data in the Cure Notice

2. Failure to Identify Mitigation Steps. When asked to identify specific, concrete steps taken by Vantor after the March 4, 2022 termination to replace the Stonefield volume, Mr. Pruitt was unable to do so. He referenced "general business development efforts" and "outreach to potential new customers," but could not identify any particular customer, contract, or revenue stream that Vantor pursued as a replacement. He

3. Acknowledgment of Stonefield Complaints. Mr. Pruitt acknowledged receiving complaints from SLG's carrier relations team — specifically from Janet Kirkwood — regarding tender rejections by VTS in Q3 and Q4 2021. He conceded that these complaints were communicated to him both orally and in writing, though he characterized them as "routine operational discussions" rather than formal complaints.

4. On-Time Pickup Rate Concession. Mr. Pruitt conceded that VTS's on-time pickup rate fell below the 95% SLO threshold during Q4 2021. He attempted to contextualize this by referencing weather disruptions and holiday-season volume spikes, but acknowledged that the metric was, in fact, below the contractual threshold. Assessment: Mr. Pruitt's testimony was, on the whole, favorable for Stonefield's defense. His inabili

1. Volume Diversion to Secondary Lanes. Ms. Kirkwood maintained that the diversion of freight volume to Cascade and Briarwood was limited to Lanes 8–14, which are classified as "Secondary Lanes" under Schedule C to the TSA. She testified that Secondary Lanes are expressly excluded from the exclusivity restrictions that apply to the "Primary Lane Network" defined in Schedule B. This testimony, if credited, defeats Van

2. Operational Necessity of Diversion. Ms. Kirkwood explained that the diversion to Cascade and Briarwood was operationally necessary because VTS was rejecting tenders on Lanes 8–14 at an unacceptable rate. She cited the Q4 2021 tender acceptance rate of 71.4%, which was well below the 90% SLO threshold. She testified that Stonefield could not leave freight sitting at origin without alternative carrier coverage, and

3. Rate Adjustment Awareness. Ms. Kirkwood acknowledged awareness of the upcoming April 2022 rate adjustment but denied that it influenced the termination decision. She testified that the termination was driven by VTS's sustained operational failures across all five SLO metrics during Q4 2021, and that the rate adjustment was not discussed in any of the internal meetings or communications in which the termination dec

4. Termination Decision Rationale. Ms. Kirkwood stated that the decision to terminate was driven by VTS's sustained operational failures, not cost considerations. She pointed to the consistent pattern of underperformance across Q3 and Q4 2021, the lack of any meaningful remediation by VTS during the cure period, and the operational harm that VTS's failures were causing to Stonefield's own customer relationships. Asse

1. Metrics Derived from VTS's Own Portal. Mr. Hess confirmed that all Q4 2021 performance metrics cited in the Cure Notice were derived from VTS's own Carrier Performance Portal, not from Stonefield's internal tracking systems. This is a significant point because it demonstrates that Stonefield relied on Vantor's own self-reported data in making the determination that VTS had failed to meet its SLOs. It substantially

2. Specific Metrics. Mr. Hess confirmed the specific Q4 2021 metrics cited in the Cure Notice as follows:

3. VTS Did Not Dispute the Metrics. Mr. Hess testified that VTS did not dispute the accuracy of the performance metrics in its February 14, 2022 response to the Cure Notice. Rather, Vantor's response acknowledged "operational challenges" but did not contest the underlying data. This testimony is critical, as it eliminates a potential defense argument that the termination was based on disputed or inaccurate performanc

4. Ashford Meridian Involvement. Mr. Hess testified that the Cure Notice was drafted with input from Ashford Meridian LLP, Stonefield's then-outside counsel. Mr. Hess preserved attorney-client privilege throughout his testimony — he acknowledged the involvement of outside counsel but did not disclose the substance or content of any legal advice received. Mr. Whitford pressed on this point, but Patrick Gallagher's obj

5. Cure Period and Determination. Mr. Hess explained the 30-day cure period established by Section 13.1(a) of the TSA (cure deadline: February 17, 2022). He described the process by which Stonefield evaluated whether VTS had achieved cure, including the review of updated performance data for the period following the issuance of the Cure Notice. Mr. Hess testified that VTS's performance did not meaningfully improve du

4. Depositions Completed or Scheduled After Reporting Period 4.1 Deposition of Sandra Milescu (COO, Vantor Holdings Corp. / Vantor Transport Services LLC) — August 4, 2023 Note: This deposition occurred on August 4, 2023, after the close of the July reporting period. It is included in this report because of its proximity and its significant implications for Stonefield's defense. A full deposition summary memorandum w

1. Confirmation of 85-Tractor Reassignment. Ms. Milescu confirmed that 85 tractors were reassigned from SLG-dedicated lanes to the Northwind Distribution Co. account in October 2021. This is a critical admission that directly corroborates the November 12, 2021 email and the fleet management documents identified in Vantor's supplemental production.

2. Characterization as "Temporary." Ms. Milescu characterized the reassignment as "temporary" and stated that it was driven by "commercial necessity" due to what she described as Stonefield's volume shortfalls. She asserted that SLG was not providing sufficient freight volume to justify maintaining the full committed fleet of 400 tractors on SLG-dedicated lanes, and that Vantor had to redeploy assets to maintain driv

3. Failure to Notify Stonefield. Ms. Milescu could not explain why Stonefield was not notified of the fleet reassignment, despite the TSA's express requirement that VTS maintain a minimum fleet capacity of 400 tractors and 1,200 trailers dedicated to the SLG account. She acknowledged that no written notice was provided to SLG and was unable to identify any oral communication in which SLG was informed of the redeploym

4. Timing Undermines Causation Argument. Ms. Milescu acknowledged, under questioning, that the reassignment of the 85 tractors occurred in October 2021 — that is, before the Q4 2021 performance failures cited in the Cure Notice and before the period in which Vantor claims that Stonefield's alleged volume shortfalls caused VTS's underperformance. This chronology directly undermines Vantor's argument that SLG's conduct

5. Discovery Update 5.1 Document Productions — Status The document production status as of the end of July 2023 is summarized below: Stonefield's Productions: Stonefield completed its first (and to date, only) document production on April 14, 2023, comprising 42,387 documents (approximately 186,000 pages). The documents bear Bates numbers SLG-000001 through SLG-042387 and are hosted on the Pinnacle Forensics platform

1. Completion of the Nikolai Vantorovich deposition (scheduled August 18, 2023)

2. Receipt and analysis of subpoena responses from Cascade Freight Systems Inc. and Briarwood Trucking Co. (expected early August)

3. Any supplemental interrogatory responses from Vantor, if compelled (no pending motion at this time) We do not anticipate any difficulty in completing the remaining discovery within the September 29, 2023 deadline. Should any issues arise — for example, if Cascade or Briarwood fail to comply with the subpoenas — we will promptly assess the need for enforcement action.

6. Expert discovery Update 6.1 Plaintiff's Expert — Dr. Philip Trask (Trask Greystone & Associates) Vantor served the expert report of Dr. Philip Trask of Trask Greystone & Associates on May 15, 2023. Dr. Trask opines on Vantor's claimed damages of $95.4 million, broken down as follows: Calderwood & Harkness completed a detailed 15-page analysis of Dr. Trask's report on May 22, 2023 (prepared by Patrick Gallagher and

7. Upcoming Key Deadlines and Action Items The following table summarizes the key deadlines and action items for the coming months: We will closely manage the August timeline to ensure that all deadlines are met, particularly given the overlap between the Vantorovich deposition (August 18) and the rebuttal expert report review and service (August 10–25).

8. Budget and Fees Update Reference Budget: The Preliminary Litigation Budget dated September 12, 2022 estimated total fees of $3.5 million to $5.2 million and total costs/disbursements of $400,000 to $750,000 through summary judgment. Cumulative Fees Through Q2 2023: Per the July 15, 2023 quarterly billing summary, cumulative professional fees incurred through the end of Q2 2023 (June 30, 2023) are approximately $1,

9. Risk Assessment Update Overall Case Posture: The overall case posture remains favorable for Stonefield. The developments during July 2023 — and the Milescu deposition on August 4 — have materially strengthened Stonefield's factual position on several key issues. Key Favorable Developments This Period: (a) Pruitt's Inability to Identify Mitigation Efforts. Derek Pruitt's inability to identify any concrete post-term

10. Lender Reporting Stonefield's Credit Agreement with Lakeshore National Bank (Ref. LNB-SLG-2017-CA-4402) requires quarterly reporting of material litigation developments pursuant to Section 6.03(b). The quarterly litigation update to Lakeshore National Bank for Q2 2023 was sent on July 10, 2023 by Tobias Wren, General Counsel of Stonefield. The update was reviewed by Patrick Gallagher prior to transmission. The up

11. Next Steps and Recommendations Based on the developments during the reporting period, we recommend the following next steps:

1. Vantorovich Deposition. Complete preparation for and take the deposition of Nikolai Vantorovich on August 18, 2023. Key focus areas include his knowledge of VTS's fleet redeployment decisions in October 2021, his response to the November 12, 2021 Milescu email (VHC-008417), his involvement in post-termination mitigation efforts (or the lack thereof), and Vantor's overall corporate decision-making regarding the TSA

2. Rebuttal Expert Report. Review and finalize Dr. Rosser's rebuttal expert report for service by the August 25, 2023 deadline. Given the compressed review timeline, the Gallagher/Eklund review team should be prepared to begin immediately upon receipt of the draft, currently expected around August 10.

3. Third-Party Subpoena Responses. Analyze the subpoena responses from Cascade Freight Systems Inc. and Briarwood Trucking Co. upon receipt (expected early August). These responses are critical to confirming that Stonefield's use of alternative carriers was limited to Secondary Lanes and to supporting the non-exclusivity defense.

4. Summary Judgment Roadmap. Begin preparation of a summary judgment roadmap memorandum to guide our dispositive motion strategy. This internal memorandum should identify the specific grounds for summary judgment, assess the strength of each argument in light of the deposition testimony and documentary evidence obtained to date, and propose a briefing strategy. Target circulation: September 2023. 5. *Daubert* Challen

6. Privilege Log Defense. Continue monitoring the status of Vantor's informal challenge to privilege log entries 312–318. Be prepared to file a response brief if Vantor files a formal motion to compel. Our internal analysis supports the privilege designations, and we are confident in our position.

7. Semi-Annual Risk Assessment. Prepare the updated semi-annual litigation status and risk assessment memorandum for September 2023 distribution to the client and Ridgeline Capital Partners, LP. The memorandum should incorporate the full deposition record (including Vantorovich), the rebuttal expert report, and an updated damages exposure analysis. Closing This report was prepared by Patrick Gallagher, Lead Associate