Contract analysis

I. Opening and Reference to Prior Correspondence I am writing on behalf of Stonefield Logistics Group Inc. to provide Lakeshore National Bank ("Lakeshore"), in its capacity as Administrative Agent under the Credit Agreement referenced above, with the Company's quarterly litigation status update for the fourth quarter of 2023 (covering the period from October 1, 2023 through December 31, 2023) with respect to the abov

II. Summary of Case Background For completeness, and for the benefit of any new members of Lakeshore's loan administration team who may not have reviewed prior correspondence, the following provides a brief summary of the case background. Vantor Holdings Corp. filed this action on August 12, 2022, in the United States District Court for the Southern District of New York, alleging that Stonefield wrongfully terminated

III. Developments During Q4 2023 The fourth quarter of 2023 was marked by a significant and, from Stonefield's perspective, potentially case-dispositive development: the withdrawal of Vantor's counsel and Vantor's subsequent failure to retain substitute counsel within the period ordered by the Court. The specific developments are described below. A. Withdrawal of Plaintiff's Counsel On October 3, 2023, Caldwell Royce

IV. Potential for Dismissal for Failure to Prosecute As noted above, Stonefield's defense counsel at Calderwood & Harkness is actively evaluating and preparing a motion to dismiss Vantor's claims for failure to prosecute pursuant to Federal Rule of Civil Procedure 41(b). Rule 41(b) provides that, upon a defendant's motion, an action may be dismissed "[i]f the plaintiff fails to prosecute or to comply with [the Federa

V. Exposure Assessment Stonefield's exposure assessment with respect to this litigation remains unchanged from the assessments provided in prior quarterly updates. Management continues to believe, based on the advice of Calderwood & Harkness and the Company's own internal review, that Vantor's claims lack merit and that the Company has strong defenses on both liability and damages grounds. As stated in prior updates,

VI. Legal Fees and Costs In accordance with Lakeshore's request for periodic reporting on defense costs associated with this litigation, the Company provides the following summary of fees and costs incurred through the end of Q4 2023. Total fees and costs incurred to date for the defense of this matter are approximately $4,420,000, broken down as follows: It should be noted that fees and costs during Q4 2023 were sub

VII. Insurance Coverage Status As previously reported in Stonefield's initial notification letter and subsequent updates, the Company has no available insurance coverage for this litigation matter. Graymark Insurance Company declined coverage under Stonefield's directors and officers liability insurance policy (Policy No. GLG-DO-2022-04871, with a $15 million aggregate limit) by letter dated October 3, 2022. Graymark

VIII. Next Steps and Anticipated Timeline Looking ahead, the Company anticipates the following next steps and timeline with respect to this matter:

1. Court Filing Regarding Failure to Retain Counsel. Calderwood & Harkness will file a letter (or, if necessary, a formal motion) with Judge Calloway in the coming days — anticipated on or about January 8, 2024 — formally bringing Vantor's failure to comply with the Court's October 18, 2023 order to the Court's attention and requesting appropriate relief, including a status conference and consideration of dismissal f

2. Continued Monitoring. Stonefield will continue quarterly docket monitoring through Calderwood & Harkness and will report any material developments to Lakeshore promptly upon their occurrence, without waiting for the next scheduled quarterly update.

3. Preparedness for Resumption of Litigation. In the event that Vantor does retain new counsel and the Court lifts the current stay, Stonefield is fully prepared to proceed to the dispositive motion phase. Calderwood & Harkness has assessed the evidentiary record developed during fact and expert discovery and believes that Stonefield has strong grounds for summary judgment on both liability and damages. Preparation o

4. Next Quarterly Update. The next quarterly litigation update will be provided to Lakeshore in approximately April 2024, covering the first quarter of 2024, or sooner if material developments occur in the interim — including, in particular, any ruling by Judge Calloway on the pending request for dismissal or any appearance of new counsel on behalf of Vantor.

IX. Closing The Company hereby confirms that it remains in full compliance with all notification, reporting, and disclosure obligations under Section 6.03(b) of the Credit Agreement (Ref. No. LNB-SLG-2017-CA-4402), and that this letter is being provided in satisfaction of those obligations with respect to the fourth quarter of 2023. Should you have any questions regarding this update, or should you require additional