1012-00001 · Client 1012 · Closing

borrowing-request-funding-notice.docx DOCUMENT Finance & Banking

1 / 35 → ✕

Contract analysis Extract to table

IRREVOCABLE BORROWING REQUEST

Delivered pursuant to Section 2.02(a) of the Mezzanine Credit Agreement dated as of September 14, 2023

among

STONEFIELD LOGISTICS GROUP INC. (as Borrower)

RIDGELINE MEZZANINE CAPITAL FUND III, LP (as Mezzanine Lender)

and

THE GUARANTORS PARTY THERETO

September 26, 2023

From:

Stonefield Logistics Group Inc. 4800 Commerce Parkway, Suite 1200 Fort Worth, Texas 76107

To:

Ridgeline Mezzanine Capital Fund III, LP 767 Lexington Avenue, 22nd Floor New York, New York 10065

Attention: Katherine M. Stroud, Managing Director

cc:

Archer Blackwell & Moss LLP 1585 Broadway, 34th Floor New York, New York 10036

Attention: Harrison T. Moss / Angela N. Whitford

(Counsel to Mezzanine Lender)

Calderwood & Harkness LLP 601 Lexington Avenue New York, New York 10022

Attention: Stephanie Okafor / Daniel Obi

(Counsel to Borrower)

1. Introductory Provisions; Defined Terms

Reference is made to that certain Mezzanine Credit Agreement, dated as of September 14, 2023 (as the same may be amended, restated, supplemented, or otherwise modified from time to time, the "Mezzanine Credit Agreement"), among Stonefield Logistics Group Inc., a Delaware corporation (the "Borrower"), Ridgeline Mezzanine Capital Fund III, LP, a Delaware limited partnership (the "Mezzanine Lender"), and the guarantors party thereto from time to time (collectively, the "Guarantors", and together with the Borrower, the "Loan Parties").

Capitalized terms used but not otherwise defined in this Borrowing Request shall have the meanings ascribed to such terms in the Mezzanine Credit Agreement. To the extent that any term defined herein is also defined in the Mezzanine Credit Agreement, the definition set forth in the Mezzanine Credit Agreement shall govern for all purposes.

This notice constitutes the "Borrowing Request" delivered by the Borrower to the Mezzanine Lender pursuant to Section 2.02(a) of the Mezzanine Credit Agreement. This Borrowing Request is delivered to the Mezzanine Lender in accordance with the notice provisions set forth in Section 11.01 of the Mezzanine Credit Agreement, and a copy is being contemporaneously delivered to counsel for the Mezzanine Lender and counsel for the Borrower, each as identified above.

This Borrowing Request is irrevocable. The Borrower acknowledges and agrees that, upon delivery of this Borrowing Request to the Mezzanine Lender, this Borrowing Request may not be withdrawn, rescinded, or revoked by the Borrower under any circumstances, and the Mezzanine Lender is entitled to rely upon the representations, certifications, and other statements contained herein in connection with the funding of the Mezzanine Term Loan.

2. Request for Mezzanine Term Loan Advance

The Borrower hereby irrevocably requests that the Mezzanine Lender make a Mezzanine Term Loan to the Borrower on the terms and conditions set forth in the Mezzanine Credit Agreement and on the following specific terms:

(a) Requested Funding Date (Closing Date). The Borrower requests that the Mezzanine Term Loan be funded on September 29, 2023 (the "Closing Date"), which date is not less than three (3) Business Days following the date of delivery of this Borrowing Request, as required by Section 2.02(a) of the Mezzanine Credit Agreement.

(b) Aggregate Principal Amount of Mezzanine Term Loan Requested. The aggregate principal amount of the Mezzanine Term Loan requested hereby is $120,000,000 (One Hundred Twenty Million Dollars), which amount represents the full amount of the Mezzanine Commitment. The Borrower acknowledges that, upon the funding of the Mezzanine Term Loan on the Closing Date, the Mezzanine Commitment shall be permanently and irrevocably reduced to zero in accordance with Section 2.04 of the Mezzanine Credit Agreement.

(c) Type of Loan. The Mezzanine Term Loan requested hereby is a Mezzanine Term Loan, as defined in Section 1.01 of the Mezzanine Credit Agreement. The Mezzanine Term Loan shall be a single advance made in full on the Closing Date and shall not be subject to reborrowing once repaid.

(d) Interest Rate. The Mezzanine Term Loan shall bear interest at a rate of 1,100 basis points (11.00%) per annum, consisting of the following components:

(i) Cash Interest: 850 basis points (8.50%) per annum, payable in cash quarterly in arrears on each Interest Payment Date, as defined below; and

(ii) Payment-in-Kind ("PIK") Interest: 250 basis points (2.50%) per annum, payable in kind by compounding quarterly and being added to the outstanding principal balance of the Mezzanine Term Loan on each Interest Payment Date, in accordance with Section 2.06(b) of the Mezzanine Credit Agreement. PIK Interest so capitalized shall thereafter bear interest at the same rate applicable to the Mezzanine Term Loan (including both the Cash Interest and PIK Interest components).

(e) Day Count Convention. Interest on the Mezzanine Term Loan shall be calculated on the basis of the actual number of days elapsed in each interest period over a 360-day year (Actual/360), in accordance with Section 2.06(d) of the Mezzanine Credit Agreement.

(f) Interest Payment Dates. Interest on the Mezzanine Term Loan shall be due and payable on the last Business Day of each calendar quarter (each, an "Interest Payment Date"), commencing on December 29, 2023, and continuing on each successive Interest Payment Date thereafter until the Maturity Date or such earlier date on which the Mezzanine Term Loan is repaid in full. To the extent any scheduled Interest Payment Date falls on a day that is not a Business Day, such payment shall be made on the next succeeding Business Day, and interest shall continue to accrue through and including the date of actual payment.

(g) Maturity Date. The Mezzanine Term Loan shall mature on September 29, 2029 (the "Maturity Date"), at which time the entire outstanding principal balance of the Mezzanine Term Loan (including all accrued and capitalized PIK Interest), together with all accrued and unpaid cash interest and all other amounts owing thereunder, shall be due and payable in full.

3. Purpose of Borrowing

The proceeds of the Mezzanine Term Loan will be used solely for the purposes specified in Section 6.10 of the Mezzanine Credit Agreement, namely: (a) to fund capital expenditures in connection with the Borrower's fleet expansion program, including the acquisition of additional Class 8 tractors, dry van trailers, and refrigerated trailers; (b) to fund the construction and buildout of terminal facilities located in Dallas-Fort Worth, Texas, Memphis, Tennessee, and Atlanta, Georgia; (c) to fund the Borrower's technology upgrade program, including investments in its proprietary transportation management system, fleet telematics infrastructure, and driver safety and compliance platforms; and (d) to pay fees, costs, and expenses incurred in connection with the negotiation, documentation, and closing of the mezzanine financing transaction, including the transaction costs described in Section 4 below. No portion of the proceeds of the Mezzanine Term Loan will be used, directly or indirectly, for any purpose not permitted under the Mezzanine Credit Agreement, the Senior Credit Agreement, or applicable law.

4. Disbursement and Wire Instructions

The Borrower requests that the Mezzanine Lender disburse the proceeds of the Mezzanine Term Loan on the Closing Date in accordance with the Closing Funds Flow Memorandum dated September 29, 2023 (the "Funds Flow Memorandum"), a substantially final draft of which is attached hereto as Enclosure 1 and a final, fully executed copy of which will be delivered to the Mezzanine Lender, the Senior Agent, and respective counsel on or prior to the Closing Date. The Borrower acknowledges that the Mezzanine Lender shall have no obligation to fund the Mezzanine Term Loan unless and until the final Funds Flow Memorandum has been agreed upon by the parties and all wire transfer instructions have been confirmed. Net proceeds of the Mezzanine Term Loan (after deduction of fees and expenses payable at closing as set forth below) shall be wired to the Borrower's account in accordance with the instructions set forth in this Section 4.

The Borrower hereby directs the Mezzanine Lender to disburse the gross proceeds of the Mezzanine Term Loan as follows:

4(a). Net Proceeds to Borrower

Beneficiary: Stonefield Logistics Group Inc. Bank: Whitmore National Bank, N.A. ABA Routing Number: 111000614 SWIFT Code: WNTBUS33 Account Number: 8872-4410-6639 Account Type: Corporate Operating Account Reference: Mezzanine Term Loan — Closing Proceeds

The net amount to be wired to this account is $115,437,500, representing the gross proceeds of the Mezzanine Term Loan less all transaction costs and closing disbursements described below.

4(b). Commitment Fee to Mezzanine Lender

Payee: Ridgeline Mezzanine Capital Fund III, LP Amount: $2,400,000 (representing 2.00% of the $120,000,000 Mezzanine Commitment, payable at closing in accordance with Section 2.08(a) of the Mezzanine Credit Agreement) Bank: Greaves Bancorp ABA Routing Number: 021000021 Account Number: 7234-0091-8856 Reference: Commitment Fee — Mezzanine Credit Agreement dated September 14, 2023

The Borrower acknowledges that the Commitment Fee has been fully earned by the Mezzanine Lender upon execution of the Mezzanine Credit Agreement and is nonrefundable. The Commitment Fee shall be deducted from the gross proceeds of the Mezzanine Term Loan at closing and paid directly to the Mezzanine Lender's account as set forth above.

4(c). Financial Advisory Fee

Payee: Zynvaro Thornton Advisory Group, LLC Amount: $900,000 (representing 0.75% of the $120,000,000 Mezzanine Commitment, payable at closing pursuant to the Engagement Letter dated July 11, 2023, between the Borrower and Zynvaro Thornton Advisory Group, LLC) Bank: Ridgeway Capital Markets ABA Routing Number: 021000089 Account Number: 5561-3387-2204 Reference: Financial Advisory Fee — Stonefield Mezzanine Financing

4(d). Borrower's Counsel Fees and Disbursements

Payee: Calderwood & Harkness LLP Amount: $675,000 (representing the fee cap amount agreed upon in the engagement letter dated August 2, 2023, between the Borrower and Calderwood & Harkness LLP, plus disbursements as invoiced through the Closing Date; final disbursement amount to be confirmed in the final Funds Flow Memorandum) Bank: Adriatic Savings Bank ABA Routing Number: 026009593 Account Number: 4483-7721-0095 Reference: Legal Fees — Matter No. 1012-00001 (Stonefield Logistics / Mezzanine Financing)

4(e). Mezzanine Lender's Counsel Expense Reimbursement

Payee: Archer Blackwell & Moss LLP Amount: $450,000 (representing the expense reimbursement cap established under Section 11.03(b) of the Mezzanine Credit Agreement, plus disbursements as invoiced through the Closing Date; final disbursement amount to be confirmed in the final Funds Flow Memorandum) Bank: Ostrander Financial ABA Routing Number: 021200025 Account Number: 6690-2218-4437 Reference: Legal Expense Reimbursement — Ridgeline / Stonefield Mezzanine (Archer Blackwell Ref. No. 88214-007)

The Borrower acknowledges that, pursuant to Section 11.03(b) of the Mezzanine Credit Agreement, the Borrower is obligated to reimburse the Mezzanine Lender for the reasonable and documented out-of-pocket fees and expenses of its counsel incurred in connection with the negotiation, preparation, and execution of the Mezzanine Loan Documents.

4(f). Senior Agent Consent / Amendment Fee

Payee: Whitmore National Bank, N.A., as Administrative Agent under the Senior Credit Agreement Amount: $137,500 (representing 0.05% of the $275,000,000 Senior Credit Facility, payable in connection with Amendment No. 3 to the Senior Credit Agreement and the consent of the Senior Agent to the incurrence of the Mezzanine Term Loan) Bank: Whitmore National Bank, N.A. ABA Routing Number: 111000614 Account Number: 2201-5578-3341 Reference: Amendment Fee — Amendment No. 3 to Amended and Restated Credit Agreement dated April 7, 2022 (Stonefield Logistics Group Inc.)

4(g). Summary of Closing Disbursements

The following table summarizes the allocation of gross proceeds of the Mezzanine Term Loan at closing:

The foregoing amounts are preliminary and are subject to final confirmation in the Funds Flow Memorandum to be delivered on or prior to the Closing Date. To the extent that the actual amounts of legal fees and disbursements differ from the estimates set forth above, the net proceeds delivered to the Borrower shall be adjusted accordingly. Any post-closing adjustments required with respect to legal fees and disbursements shall be settled directly between the relevant parties within thirty (30) days following the Closing Date.

5. Certifications by the Borrower

The Borrower hereby certifies and represents to the Mezzanine Lender that, as of the date hereof and as of the Closing Date (September 29, 2023), after giving effect to the making of the Mezzanine Term Loan and the application of the proceeds thereof, the following statements are true and correct:

5(a). Representations and Warranties

All representations and warranties of the Borrower and each Guarantor — including Cascade Ridge SLG Holdings, LLC, a Delaware limited liability company, Stonefield Intermodal Services, Inc., a Texas corporation, Stonefield Fleet Management, LLC, a Texas limited liability company, and Stonefield Freight Brokerage, Inc., a Delaware corporation (collectively with the Borrower, the "Loan Parties") — contained in Article V of the Mezzanine Credit Agreement and in each of the other Mezzanine Loan Documents are true and correct in all material respects as of the date hereof and as of the Closing Date; provided that, in the case of any representation or warranty that is qualified by materiality or reference to a "Material Adverse Effect," such representation or warranty is true and correct in all respects (without duplication of materiality qualifiers) as of the date hereof and as of the Closing Date; and provided further that, to the extent any such representation or warranty expressly relates to an earlier date, such representation or warranty is true and correct in all material respects (or, as applicable, in all respects) as of such earlier date.

Without limiting the generality of the foregoing, the Borrower specifically confirms the truth and accuracy, in all material respects, of the representations and warranties set forth in Sections 5.01 (Organization; Power and Authority), 5.04 (Financial Statements), 5.05 (Absence of Material Adverse Effect), 5.06 (Litigation), 5.08 (Compliance with Laws), 5.11 (Title to Properties; Liens), 5.14 (Solvency), and 5.18 (Anti-Corruption and Sanctions) of the Mezzanine Credit Agreement.

5(b). No Default

No Default or Event of Default (as each such term is defined in the Mezzanine Credit Agreement) has occurred and is continuing as of the date hereof, and no Default or Event of Default will result from the making of the Mezzanine Term Loan or the application of the proceeds thereof on the Closing Date. The Borrower has complied in all material respects with all covenants, agreements, and conditions contained in the Mezzanine Credit Agreement and the other Mezzanine Loan Documents that are required to be complied with by the Borrower on or prior to the date hereof and on or prior to the Closing Date. No event has occurred or condition exists that, with the giving of notice, the passage of time, or both, would constitute a Default or Event of Default under the Mezzanine Credit Agreement.

5(c). No Material Adverse Effect

Since December 31, 2022 (the date of the most recently delivered audited consolidated financial statements of the Borrower and its subsidiaries), no event, change, condition, circumstance, occurrence, or development has occurred that, individually or in the aggregate, has had or would reasonably be expected to have a Material Adverse Effect on (i) the business, financial condition, operations, assets, or prospects of the Borrower and its subsidiaries, taken as a whole, (ii) the ability of the Borrower or any other Loan Party to perform its obligations under the Mezzanine Credit Agreement or any other Mezzanine Loan Document, or (iii) the rights and remedies of the Mezzanine Lender under the Mezzanine Credit Agreement or any other Mezzanine Loan Document.

5(d). Conditions Precedent

All conditions precedent to the making of the Mezzanine Term Loan set forth in Section 4.01 and Section 4.02 of the Mezzanine Credit Agreement have been satisfied (or will be satisfied on or prior to the Closing Date), and no condition precedent has been waived except as may be agreed in writing by the Mezzanine Lender. Without limiting the foregoing, the Borrower certifies that the following conditions precedent have been satisfied or will be satisfied on or prior to the Closing Date:

(i) Mezzanine Loan Documents. The Mezzanine Credit Agreement, the Mezzanine Guaranty Agreement dated as of September 14, 2023, the Mezzanine Pledge and Security Agreement dated as of September 14, 2023, the Parent Equity Pledge Agreement dated as of September 14, 2023 (by Cascade Ridge SLG Holdings, LLC in favor of the Mezzanine Lender), the Warrant Agreement dated as of September 14, 2023 (pursuant to which warrants to purchase up to 2.5% of the fully diluted equity of the Borrower have been issued to the Mezzanine Lender), the Registration Rights Agreement dated as of September 14, 2023, and all other Mezzanine Loan Documents have been duly executed and delivered by all parties thereto, and each such document is in full force and effect.

(ii) Senior Credit Agreement Amendment. Amendment No. 3 to the Amended and Restated Credit Agreement, dated as of April 7, 2022, among the Borrower, Whitmore National Bank, N.A. as Administrative Agent and Collateral Agent, and the senior lenders party thereto (as so amended, the "Senior Credit Agreement"), has been duly executed and delivered by all parties thereto and is in full force and effect. Amendment No. 3 permits, among other things, the incurrence of the Mezzanine Term Loan, the granting of junior liens in favor of the Mezzanine Lender, and the execution and delivery of the Intercreditor Agreement.

(iii) Intercreditor Agreement. The Intercreditor Agreement, dated as of September 14, 2023, among Whitmore National Bank, N.A., as Senior Agent, Ridgeline Mezzanine Capital Fund III, LP, as Mezzanine Lender, and acknowledged and agreed to by the Borrower and the Guarantors (the "Intercreditor Agreement"), has been duly executed and delivered by all parties thereto and is in full force and effect. The Intercreditor Agreement establishes the relative priority of the liens and security interests securing the Senior Obligations and the Mezzanine Obligations, the exercise of remedies, and related matters.

(iv) Senior Agent Consent. The consent of Whitmore National Bank, N.A., as Administrative Agent under the Senior Credit Agreement (the "Senior Agent"), dated as of September 5, 2023, to the incurrence of the Mezzanine Term Loan and the transactions contemplated by the Mezzanine Loan Documents has been duly executed and delivered, and such consent remains in full force and effect and has not been withdrawn or revoked.

(v) Officer's Certificate. An Officer's Certificate of the Borrower, executed by Janet R. Prescott, Chief Financial Officer, and Marcus D. Halloran, General Counsel and Secretary, certifying as to the satisfaction of closing conditions set forth in the Mezzanine Credit Agreement, has been (or will be, on the Closing Date) duly executed and delivered to the Mezzanine Lender. A draft of such Officer's Certificate is attached hereto as Enclosure 3.

(vi) Secretary's Certificates. A Secretary's Certificate (or equivalent officer's certificate) of the Borrower and each Subsidiary Guarantor (Stonefield Intermodal Services, Inc., Stonefield Fleet Management, LLC, and Stonefield Freight Brokerage, Inc.), in each case attaching true, correct, and complete copies of (A) the certificate of incorporation or certificate of formation, as applicable, and all amendments thereto, (B) the bylaws or limited liability company agreement, as applicable, (C) resolutions of the board of directors or managing member(s), as applicable, authorizing the execution, delivery, and performance of the Mezzanine Loan Documents to which such entity is a party, and (D) an incumbency certificate identifying the officers or authorized persons authorized to execute and deliver the Mezzanine Loan Documents on behalf of such entity, has been (or will be, on the Closing Date) duly executed and delivered to the Mezzanine Lender.

(vii) Solvency Certificate. A Solvency Certificate, in the form attached as Exhibit F to the Mezzanine Credit Agreement, executed by Janet R. Prescott, Chief Financial Officer of the Borrower, certifying that, after giving effect to the making of the Mezzanine Term Loan and the application of the proceeds thereof, the Borrower and its subsidiaries, on a consolidated basis, are Solvent as of the Closing Date, has been (or will be, on the Closing Date) duly executed and delivered to the Mezzanine Lender. A draft of such Solvency Certificate is attached hereto as Enclosure 4.

(viii) Initial Compliance Certificate. An initial Compliance Certificate, in the form attached as Exhibit D to the Mezzanine Credit Agreement, demonstrating compliance with the financial covenants set forth in Section 7.11 of the Mezzanine Credit Agreement as of the most recent fiscal quarter end for which financial statements have been delivered, has been (or will be, on the Closing Date) duly executed and delivered to the Mezzanine Lender. Such Compliance Certificate demonstrates, among other things, (A) a Total Leverage Ratio of 3.75 to 1.00, which is within the maximum permitted Total Leverage Ratio of 4.25 to 1.00 for the applicable test period, (B) a Fixed Charge Coverage Ratio at or above the minimum required level of 1.10 to 1.00, and (C) Liquidity at or above the minimum required level of $15,000,000.

(ix) Legal Opinions. Legal opinions of Calderwood & Harkness LLP, counsel to the Borrower, including (A) a corporate/enforceability opinion with respect to the Borrower and each Guarantor, and (B) a UCC/lien perfection opinion with respect to the security interests granted under the Mezzanine Pledge and Security Agreement, have been (or will be, on the Closing Date) duly executed and delivered to the Mezzanine Lender, in each case in form and substance satisfactory to the Mezzanine Lender and its counsel.

(x) UCC-1 Financing Statements. UCC-1 financing statements have been prepared for filing (and, to the extent not yet filed, will be filed on or prior to the Closing Date) with (A) the Delaware Secretary of State, naming Stonefield Logistics Group Inc. and Stonefield Freight Brokerage, Inc. as debtors and Ridgeline Mezzanine Capital Fund III, LP as secured party, and (B) the Texas Secretary of State, naming Stonefield Intermodal Services, Inc. and Stonefield Fleet Management, LLC as debtors and Ridgeline Mezzanine Capital Fund III, LP as secured party. Filing confirmations will be delivered to the Mezzanine Lender at or promptly following closing. Preliminary filing confirmations are attached hereto as Enclosure 5.

(xi) Good Standing Certificates. Certificates of good standing (or equivalent certificates of existence or status) for the Borrower and each Guarantor from their respective jurisdictions of organization — specifically, certificates from the Delaware Secretary of State with respect to Stonefield Logistics Group Inc., Cascade Ridge SLG Holdings, LLC, and Stonefield Freight Brokerage, Inc., and certificates from the Texas Secretary of State with respect to Stonefield Intermodal Services, Inc. and Stonefield Fleet Management, LLC — have been obtained and delivered (or will be delivered on or prior to the Closing Date) to the Mezzanine Lender, in each case dated no earlier than ten (10) days prior to the Closing Date.

(xii) UCC Lien Search Results. Completed UCC lien search results from the offices of the secretaries of state of the States of Delaware and Texas (and such other jurisdictions as the Mezzanine Lender may have reasonably requested) with respect to the Borrower and each Guarantor have been delivered to the Mezzanine Lender, and such search results confirm the absence of any liens, security interests, or other encumbrances (other than Permitted Liens, as defined in the Mezzanine Credit Agreement) on the Collateral that would be senior to or have priority over the security interests of the Mezzanine Lender.

(xiii) Payment of Fees and Expenses. All fees and expenses required to be paid at or prior to closing pursuant to the Mezzanine Credit Agreement or any other Mezzanine Loan Document have been paid (or will be paid from the proceeds of the Mezzanine Term Loan at closing), including, without limitation, the Commitment Fee of $2,400,000, the Financial Advisory Fee of $900,000, and legal fees and expenses as described in Section 4 of this Borrowing Request.

5(e). Senior Credit Facility Compliance

No default or event of default has occurred and is continuing (or would result from the making of the Mezzanine Term Loan or the application of the proceeds thereof) under the Amended and Restated Credit Agreement, dated as of April 7, 2022, as amended by Amendment No. 1 dated October 18, 2022, Amendment No. 2 dated March 30, 2023, and Amendment No. 3 dated September 14, 2023 (as so amended, the "Senior Credit Agreement"), among the Borrower, Whitmore National Bank, N.A., as Administrative Agent and Collateral Agent, and the senior lenders party thereto.

As of the date hereof, the outstanding balances under the Senior Credit Agreement are as follows:

(i) Senior Term Loan B outstanding principal balance: $275,000,000;

(ii) Senior Revolving Credit Facility: $12,000,000 drawn, with $38,000,000 of remaining undrawn availability under the $50,000,000 revolving commitment; and

(iii) No outstanding letters of credit under the Senior Credit Agreement.

Upon the funding of the Mezzanine Term Loan on the Closing Date, Total Funded Debt (as defined in the Mezzanine Credit Agreement) of the Borrower and its subsidiaries, on a consolidated basis, will be approximately $407,000,000, consisting of (a) $275,000,000 of Senior Term Loan B, (b) $12,000,000 of revolving loans outstanding under the Senior Revolving Credit Facility, and (c) $120,000,000 of Mezzanine Term Loan. The Borrower has confirmed with the Senior Agent that the incurrence of the Mezzanine Term Loan is permitted under the Senior Credit Agreement (as amended by Amendment No. 3) and does not result in a breach of any incurrence-based financial test or debt basket thereunder.

5(f). Solvency. After giving effect to the making of the Mezzanine Term Loan on the Closing Date and the application of the proceeds thereof as described herein, the Borrower and its subsidiaries, on a consolidated basis, are and will be Solvent. For the avoidance of doubt, "Solvent" has the meaning ascribed to such term in Section 1.01 of the Mezzanine Credit Agreement, which requires that (a) the fair value of the assets of the Borrower and its subsidiaries, on a consolidated basis, exceeds the sum of their debts (including contingent liabilities), (b) the present fair saleable value of the assets of the Borrower and its subsidiaries, on a consolidated basis, is greater than the amount that will be required to pay the probable liability on their debts (including contingent liabilities) as such debts become absolute and matured, (c) the Borrower and its subsidiaries, on a consolidated basis, are able to realize upon their assets and pay their debts and other liabilities (including contingent liabilities) as they mature in the normal course of business, and (d) the Borrower and its subsidiaries, on a consolidated basis, do not have unreasonably small capital with which to conduct the businesses in which they are engaged as such businesses are now conducted and are proposed to be conducted. The detailed solvency analysis supporting this certification is set forth in the Solvency Certificate referenced in Section 5(d)(vii) above, a draft of which is attached hereto as Enclosure 4.

5(g). Use of Proceeds

The proceeds of the Mezzanine Term Loan will be applied solely for the purposes permitted under Section 6.10 of the Mezzanine Credit Agreement, as described in Section 3 of this Borrowing Request. No portion of the proceeds will be used, directly or indirectly, to (a) purchase or carry any "margin stock" (as defined in Regulation U of the Board of Governors of the Federal Reserve System), (b) make any payment in violation of the anti-corruption or anti-money laundering laws of any applicable jurisdiction, including the U.S. Foreign Corrupt Practices Act of 1977, as amended, or (c) finance or facilitate any transaction with any person that is the subject of sanctions administered or enforced by the U.S. Department of the Treasury's Office of Foreign Assets Control, the U.S. Department of State, the United Nations Security Council, the European Union, or Her Majesty's Treasury of the United Kingdom.

6. Governing Law

This Borrowing Request shall be governed by, and construed in accordance with, the laws of the State of New York, without regard to the conflicts-of-law principles thereof (other than Sections 5-1401 and 5-1402 of the New York General Obligations Law, which shall apply).

7. Irrevocability

The Borrower hereby reaffirms that this Borrowing Request is irrevocable and may not be withdrawn, rescinded, or revoked by the Borrower after delivery to the Mezzanine Lender. The Mezzanine Lender is authorized and directed to fund the Mezzanine Term Loan on the Closing Date in reliance upon the representations, certifications, and other statements contained herein and in the other documents delivered (or to be delivered) in connection with the closing.

[Signature Page Follows]

IN WITNESS WHEREOF, the undersigned has duly executed and delivered this Irrevocable Borrowing Request as of the date first written above.

STONEFIELD LOGISTICS GROUP INC.

By: ________

Name: Janet R. Prescott

Title: Chief Financial Officer

Date: September 26, 2023

ACKNOWLEDGMENT OF RECEIPT

The undersigned hereby acknowledges receipt of the foregoing Irrevocable Borrowing Request, dated September 26, 2023, delivered by Stonefield Logistics Group Inc. pursuant to Section 2.02(a) of the Mezzanine Credit Agreement. Receipt of this Borrowing Request shall not constitute a commitment or agreement by the Mezzanine Lender to fund the Mezzanine Term Loan except in accordance with, and subject to the satisfaction (or waiver) of all conditions precedent set forth in, the Mezzanine Credit Agreement.

RIDGELINE MEZZANINE CAPITAL FUND III, LP

By: Ridgeline Capital Management III, LLC,

its General Partner

By: ________

Name: Katherine M. Stroud

Title: Managing Director

Date: ________

ENCLOSURES

The following enclosures accompany this Irrevocable Borrowing Request:

Enclosure 1: Draft Closing Funds Flow Memorandum (to be finalized and fully executed on September 29, 2023)

Enclosure 2: Updated wire transfer instructions for all payees identified in Section 4 of this Borrowing Request

Enclosure 3: Draft Officer's Certificate of the Borrower certifying satisfaction of closing conditions pursuant to Section 4.02(a) of the Mezzanine Credit Agreement

Enclosure 4: Draft Solvency Certificate of the Borrower, to be executed by Janet R. Prescott, Chief Financial Officer, pursuant to Section 4.01(j) of the Mezzanine Credit Agreement

Enclosure 5: UCC-1 financing statement filing confirmations (preliminary; final confirmations to be delivered at or promptly following closing)

CONFIDENTIAL — This document and the enclosures referenced herein contain confidential information relating to the mezzanine financing of Stonefield Logistics Group Inc. This document is provided solely for the use of the addressees and their respective counsel and may not be distributed, reproduced, or disclosed to any third party without the prior written consent of the Borrower and the Mezzanine Lender, except as required by law or as otherwise permitted under the Mezzanine Credit Agreement.

Line Item	Amount
Total Mezzanine Term Loan Funded	$120,000,000
Less: Commitment Fee (Section 4(b))	($2,400,000)
Less: Financial Advisory Fee (Section 4(c))	($900,000)
Less: Borrower's Counsel Fees (Section 4(d))	($675,000)
Less: Lender's Counsel Expense Reimbursement (Section 4(e))	($450,000)
Less: Senior Agent Amendment Fee (Section 4(f))	($137,500)
Total Transaction Costs	($4,562,500)
Net Proceeds to Borrower (Section 4(a))	$115,437,500

IRREVOCABLE BORROWING REQUEST
Delivered pursuant to Section 2.02(a) of the Mezzanine Credit Agreement dated as of September 14, 2023
among
STONEFIELD LOGISTICS GROUP INC. (as Borrower)
RIDGELINE MEZZANINE CAPITAL FUND III, LP (as Mezzanine Lender)
and
THE GUARANTORS PARTY THERETO
September 26, 2023
From:
Stonefield Logistics Group Inc. 4800 Commerce Parkway, Suite 1200 Fort Worth, Texas 76107
To:
Ridgeline Mezzanine Capital Fund III, LP 767 Lexington Avenue, 22nd Floor New York, New York 10065
Attention: Katherine M. Stroud, Managing Director
cc:
Archer Blackwell & Moss LLP 1585 Broadway, 34th Floor New York, New York 10036
Attention: Harrison T. Moss / Angela N. Whitford
(Counsel to Mezzanine Lender)
Calderwood & Harkness LLP 601 Lexington Avenue New York, New York 10022
Attention: Stephanie Okafor / Daniel Obi
(Counsel to Borrower)
1. Introductory Provisions; Defined Terms
Reference is made to that certain Mezzanine Credit Agreement, dated as of September 14, 2023 (as the same may be amended, restated, supplemented, or otherwise modified from time to time, the "Mezzanine Credit Agreement"), among Stonefield Logistics Group Inc., a Delaware corporation (the "Borrower"), Ridgeline Mezzanine Capital Fund III, LP, a Delaware limited partnership (the "Mezzanine Lender"), and the guarantors party thereto from time to time (collectively, the "Guarantors", and together with the Borrower, the "Loan Parties").
Capitalized terms used but not otherwise defined in this Borrowing Request shall have the meanings ascribed to such terms in the Mezzanine Credit Agreement. To the extent that any term defined herein is also defined in the Mezzanine Credit Agreement, the definition set forth in the Mezzanine Credit Agreement shall govern for all purposes.
This notice constitutes the "Borrowing Request" delivered by the Borrower to the Mezzanine Lender pursuant to Section 2.02(a) of the Mezzanine Credit Agreement. This Borrowing Request is delivered to the Mezzanine Lender in accordance with the notice provisions set forth in Section 11.01 of the Mezzanine Credit Agreement, and a copy is being contemporaneously delivered to counsel for the Mezzanine Lender and counsel for the Borrower, each as identified above.
This Borrowing Request is irrevocable. The Borrower acknowledges and agrees that, upon delivery of this Borrowing Request to the Mezzanine Lender, this Borrowing Request may not be withdrawn, rescinded, or revoked by the Borrower under any circumstances, and the Mezzanine Lender is entitled to rely upon the representations, certifications, and other statements contained herein in connection with the funding of the Mezzanine Term Loan.
2. Request for Mezzanine Term Loan Advance
The Borrower hereby irrevocably requests that the Mezzanine Lender make a Mezzanine Term Loan to the Borrower on the terms and conditions set forth in the Mezzanine Credit Agreement and on the following specific terms:
(a) Requested Funding Date (Closing Date). The Borrower requests that the Mezzanine Term Loan be funded on September 29, 2023 (the "Closing Date"), which date is not less than three (3) Business Days following the date of delivery of this Borrowing Request, as required by Section 2.02(a) of the Mezzanine Credit Agreement.
(b) Aggregate Principal Amount of Mezzanine Term Loan Requested. The aggregate principal amount of the Mezzanine Term Loan requested hereby is $120,000,000 (One Hundred Twenty Million Dollars), which amount represents the full amount of the Mezzanine Commitment. The Borrower acknowledges that, upon the funding of the Mezzanine Term Loan on the Closing Date, the Mezzanine Commitment shall be permanently and irrevocably reduced to zero in accordance with Section 2.04 of the Mezzanine Credit Agreement.
(c) Type of Loan. The Mezzanine Term Loan requested hereby is a Mezzanine Term Loan, as defined in Section 1.01 of the Mezzanine Credit Agreement. The Mezzanine Term Loan shall be a single advance made in full on the Closing Date and shall not be subject to reborrowing once repaid.
(d) Interest Rate. The Mezzanine Term Loan shall bear interest at a rate of 1,100 basis points (11.00%) per annum, consisting of the following components:
(i) Cash Interest: 850 basis points (8.50%) per annum, payable in cash quarterly in arrears on each Interest Payment Date, as defined below; and
(ii) Payment-in-Kind ("PIK") Interest: 250 basis points (2.50%) per annum, payable in kind by compounding quarterly and being added to the outstanding principal balance of the Mezzanine Term Loan on each Interest Payment Date, in accordance with Section 2.06(b) of the Mezzanine Credit Agreement. PIK Interest so capitalized shall thereafter bear interest at the same rate applicable to the Mezzanine Term Loan (including both the Cash Interest and PIK Interest components).
(e) Day Count Convention. Interest on the Mezzanine Term Loan shall be calculated on the basis of the actual number of days elapsed in each interest period over a 360-day year (Actual/360), in accordance with Section 2.06(d) of the Mezzanine Credit Agreement.
(f) Interest Payment Dates. Interest on the Mezzanine Term Loan shall be due and payable on the last Business Day of each calendar quarter (each, an "Interest Payment Date"), commencing on December 29, 2023, and continuing on each successive Interest Payment Date thereafter until the Maturity Date or such earlier date on which the Mezzanine Term Loan is repaid in full. To the extent any scheduled Interest Payment Date falls on a day that is not a Business Day, such payment shall be made on the next succeeding Business Day, and interest shall continue to accrue through and including the date of actual payment.
(g) Maturity Date. The Mezzanine Term Loan shall mature on September 29, 2029 (the "Maturity Date"), at which time the entire outstanding principal balance of the Mezzanine Term Loan (including all accrued and capitalized PIK Interest), together with all accrued and unpaid cash interest and all other amounts owing thereunder, shall be due and payable in full.
3. Purpose of Borrowing
The proceeds of the Mezzanine Term Loan will be used solely for the purposes specified in Section 6.10 of the Mezzanine Credit Agreement, namely: (a) to fund capital expenditures in connection with the Borrower's fleet expansion program, including the acquisition of additional Class 8 tractors, dry van trailers, and refrigerated trailers; (b) to fund the construction and buildout of terminal facilities located in Dallas-Fort Worth, Texas, Memphis, Tennessee, and Atlanta, Georgia; (c) to fund the Borrower's technology upgrade program, including investments in its proprietary transportation management system, fleet telematics infrastructure, and driver safety and compliance platforms; and (d) to pay fees, costs, and expenses incurred in connection with the negotiation, documentation, and closing of the mezzanine financing transaction, including the transaction costs described in Section 4 below. No portion of the proceeds of the Mezzanine Term Loan will be used, directly or indirectly, for any purpose not permitted under the Mezzanine Credit Agreement, the Senior Credit Agreement, or applicable law.
4. Disbursement and Wire Instructions
The Borrower requests that the Mezzanine Lender disburse the proceeds of the Mezzanine Term Loan on the Closing Date in accordance with the Closing Funds Flow Memorandum dated September 29, 2023 (the "Funds Flow Memorandum"), a substantially final draft of which is attached hereto as Enclosure 1 and a final, fully executed copy of which will be delivered to the Mezzanine Lender, the Senior Agent, and respective counsel on or prior to the Closing Date. The Borrower acknowledges that the Mezzanine Lender shall have no obligation to fund the Mezzanine Term Loan unless and until the final Funds Flow Memorandum has been agreed upon by the parties and all wire transfer instructions have been confirmed. Net proceeds of the Mezzanine Term Loan (after deduction of fees and expenses payable at closing as set forth below) shall be wired to the Borrower's account in accordance with the instructions set forth in this Section 4.
The Borrower hereby directs the Mezzanine Lender to disburse the gross proceeds of the Mezzanine Term Loan as follows:
4(a). Net Proceeds to Borrower
Beneficiary: Stonefield Logistics Group Inc. Bank: Whitmore National Bank, N.A. ABA Routing Number: 111000614 SWIFT Code: WNTBUS33 Account Number: 8872-4410-6639 Account Type: Corporate Operating Account Reference: Mezzanine Term Loan — Closing Proceeds
The net amount to be wired to this account is $115,437,500, representing the gross proceeds of the Mezzanine Term Loan less all transaction costs and closing disbursements described below.
4(b). Commitment Fee to Mezzanine Lender
Payee: Ridgeline Mezzanine Capital Fund III, LP Amount: $2,400,000 (representing 2.00% of the $120,000,000 Mezzanine Commitment, payable at closing in accordance with Section 2.08(a) of the Mezzanine Credit Agreement) Bank: Greaves Bancorp ABA Routing Number: 021000021 Account Number: 7234-0091-8856 Reference: Commitment Fee — Mezzanine Credit Agreement dated September 14, 2023
The Borrower acknowledges that the Commitment Fee has been fully earned by the Mezzanine Lender upon execution of the Mezzanine Credit Agreement and is nonrefundable. The Commitment Fee shall be deducted from the gross proceeds of the Mezzanine Term Loan at closing and paid directly to the Mezzanine Lender's account as set forth above.
4(c). Financial Advisory Fee
Payee: Zynvaro Thornton Advisory Group, LLC Amount: $900,000 (representing 0.75% of the $120,000,000 Mezzanine Commitment, payable at closing pursuant to the Engagement Letter dated July 11, 2023, between the Borrower and Zynvaro Thornton Advisory Group, LLC) Bank: Ridgeway Capital Markets ABA Routing Number: 021000089 Account Number: 5561-3387-2204 Reference: Financial Advisory Fee — Stonefield Mezzanine Financing
4(d). Borrower's Counsel Fees and Disbursements
Payee: Calderwood & Harkness LLP Amount: $675,000 (representing the fee cap amount agreed upon in the engagement letter dated August 2, 2023, between the Borrower and Calderwood & Harkness LLP, plus disbursements as invoiced through the Closing Date; final disbursement amount to be confirmed in the final Funds Flow Memorandum) Bank: Adriatic Savings Bank ABA Routing Number: 026009593 Account Number: 4483-7721-0095 Reference: Legal Fees — Matter No. 1012-00001 (Stonefield Logistics / Mezzanine Financing)
4(e). Mezzanine Lender's Counsel Expense Reimbursement
Payee: Archer Blackwell & Moss LLP Amount: $450,000 (representing the expense reimbursement cap established under Section 11.03(b) of the Mezzanine Credit Agreement, plus disbursements as invoiced through the Closing Date; final disbursement amount to be confirmed in the final Funds Flow Memorandum) Bank: Ostrander Financial ABA Routing Number: 021200025 Account Number: 6690-2218-4437 Reference: Legal Expense Reimbursement — Ridgeline / Stonefield Mezzanine (Archer Blackwell Ref. No. 88214-007)
The Borrower acknowledges that, pursuant to Section 11.03(b) of the Mezzanine Credit Agreement, the Borrower is obligated to reimburse the Mezzanine Lender for the reasonable and documented out-of-pocket fees and expenses of its counsel incurred in connection with the negotiation, preparation, and execution of the Mezzanine Loan Documents.
4(f). Senior Agent Consent / Amendment Fee
Payee: Whitmore National Bank, N.A., as Administrative Agent under the Senior Credit Agreement Amount: $137,500 (representing 0.05% of the $275,000,000 Senior Credit Facility, payable in connection with Amendment No. 3 to the Senior Credit Agreement and the consent of the Senior Agent to the incurrence of the Mezzanine Term Loan) Bank: Whitmore National Bank, N.A. ABA Routing Number: 111000614 Account Number: 2201-5578-3341 Reference: Amendment Fee — Amendment No. 3 to Amended and Restated Credit Agreement dated April 7, 2022 (Stonefield Logistics Group Inc.)
4(g). Summary of Closing Disbursements
The following table summarizes the allocation of gross proceeds of the Mezzanine Term Loan at closing:
The foregoing amounts are preliminary and are subject to final confirmation in the Funds Flow Memorandum to be delivered on or prior to the Closing Date. To the extent that the actual amounts of legal fees and disbursements differ from the estimates set forth above, the net proceeds delivered to the Borrower shall be adjusted accordingly. Any post-closing adjustments required with respect to legal fees and disbursements shall be settled directly between the relevant parties within thirty (30) days following the Closing Date.
5. Certifications by the Borrower
The Borrower hereby certifies and represents to the Mezzanine Lender that, as of the date hereof and as of the Closing Date (September 29, 2023), after giving effect to the making of the Mezzanine Term Loan and the application of the proceeds thereof, the following statements are true and correct:
5(a). Representations and Warranties
All representations and warranties of the Borrower and each Guarantor — including Cascade Ridge SLG Holdings, LLC, a Delaware limited liability company, Stonefield Intermodal Services, Inc., a Texas corporation, Stonefield Fleet Management, LLC, a Texas limited liability company, and Stonefield Freight Brokerage, Inc., a Delaware corporation (collectively with the Borrower, the "Loan Parties") — contained in Article V of the Mezzanine Credit Agreement and in each of the other Mezzanine Loan Documents are true and correct in all material respects as of the date hereof and as of the Closing Date; provided that, in the case of any representation or warranty that is qualified by materiality or reference to a "Material Adverse Effect," such representation or warranty is true and correct in all respects (without duplication of materiality qualifiers) as of the date hereof and as of the Closing Date; and provided further that, to the extent any such representation or warranty expressly relates to an earlier date, such representation or warranty is true and correct in all material respects (or, as applicable, in all respects) as of such earlier date.
Without limiting the generality of the foregoing, the Borrower specifically confirms the truth and accuracy, in all material respects, of the representations and warranties set forth in Sections 5.01 (Organization; Power and Authority), 5.04 (Financial Statements), 5.05 (Absence of Material Adverse Effect), 5.06 (Litigation), 5.08 (Compliance with Laws), 5.11 (Title to Properties; Liens), 5.14 (Solvency), and 5.18 (Anti-Corruption and Sanctions) of the Mezzanine Credit Agreement.
5(b). No Default
No Default or Event of Default (as each such term is defined in the Mezzanine Credit Agreement) has occurred and is continuing as of the date hereof, and no Default or Event of Default will result from the making of the Mezzanine Term Loan or the application of the proceeds thereof on the Closing Date. The Borrower has complied in all material respects with all covenants, agreements, and conditions contained in the Mezzanine Credit Agreement and the other Mezzanine Loan Documents that are required to be complied with by the Borrower on or prior to the date hereof and on or prior to the Closing Date. No event has occurred or condition exists that, with the giving of notice, the passage of time, or both, would constitute a Default or Event of Default under the Mezzanine Credit Agreement.
5(c). No Material Adverse Effect
Since December 31, 2022 (the date of the most recently delivered audited consolidated financial statements of the Borrower and its subsidiaries), no event, change, condition, circumstance, occurrence, or development has occurred that, individually or in the aggregate, has had or would reasonably be expected to have a Material Adverse Effect on (i) the business, financial condition, operations, assets, or prospects of the Borrower and its subsidiaries, taken as a whole, (ii) the ability of the Borrower or any other Loan Party to perform its obligations under the Mezzanine Credit Agreement or any other Mezzanine Loan Document, or (iii) the rights and remedies of the Mezzanine Lender under the Mezzanine Credit Agreement or any other Mezzanine Loan Document.
5(d). Conditions Precedent
All conditions precedent to the making of the Mezzanine Term Loan set forth in Section 4.01 and Section 4.02 of the Mezzanine Credit Agreement have been satisfied (or will be satisfied on or prior to the Closing Date), and no condition precedent has been waived except as may be agreed in writing by the Mezzanine Lender. Without limiting the foregoing, the Borrower certifies that the following conditions precedent have been satisfied or will be satisfied on or prior to the Closing Date:
(i) Mezzanine Loan Documents. The Mezzanine Credit Agreement, the Mezzanine Guaranty Agreement dated as of September 14, 2023, the Mezzanine Pledge and Security Agreement dated as of September 14, 2023, the Parent Equity Pledge Agreement dated as of September 14, 2023 (by Cascade Ridge SLG Holdings, LLC in favor of the Mezzanine Lender), the Warrant Agreement dated as of September 14, 2023 (pursuant to which warrants to purchase up to 2.5% of the fully diluted equity of the Borrower have been issued to the Mezzanine Lender), the Registration Rights Agreement dated as of September 14, 2023, and all other Mezzanine Loan Documents have been duly executed and delivered by all parties thereto, and each such document is in full force and effect.
(ii) Senior Credit Agreement Amendment. Amendment No. 3 to the Amended and Restated Credit Agreement, dated as of April 7, 2022, among the Borrower, Whitmore National Bank, N.A. as Administrative Agent and Collateral Agent, and the senior lenders party thereto (as so amended, the "Senior Credit Agreement"), has been duly executed and delivered by all parties thereto and is in full force and effect. Amendment No. 3 permits, among other things, the incurrence of the Mezzanine Term Loan, the granting of junior liens in favor of the Mezzanine Lender, and the execution and delivery of the Intercreditor Agreement.
(iii) Intercreditor Agreement. The Intercreditor Agreement, dated as of September 14, 2023, among Whitmore National Bank, N.A., as Senior Agent, Ridgeline Mezzanine Capital Fund III, LP, as Mezzanine Lender, and acknowledged and agreed to by the Borrower and the Guarantors (the "Intercreditor Agreement"), has been duly executed and delivered by all parties thereto and is in full force and effect. The Intercreditor Agreement establishes the relative priority of the liens and security interests securing the Senior Obligations and the Mezzanine Obligations, the exercise of remedies, and related matters.
(iv) Senior Agent Consent. The consent of Whitmore National Bank, N.A., as Administrative Agent under the Senior Credit Agreement (the "Senior Agent"), dated as of September 5, 2023, to the incurrence of the Mezzanine Term Loan and the transactions contemplated by the Mezzanine Loan Documents has been duly executed and delivered, and such consent remains in full force and effect and has not been withdrawn or revoked.
(v) Officer's Certificate. An Officer's Certificate of the Borrower, executed by Janet R. Prescott, Chief Financial Officer, and Marcus D. Halloran, General Counsel and Secretary, certifying as to the satisfaction of closing conditions set forth in the Mezzanine Credit Agreement, has been (or will be, on the Closing Date) duly executed and delivered to the Mezzanine Lender. A draft of such Officer's Certificate is attached hereto as Enclosure 3.
(vi) Secretary's Certificates. A Secretary's Certificate (or equivalent officer's certificate) of the Borrower and each Subsidiary Guarantor (Stonefield Intermodal Services, Inc., Stonefield Fleet Management, LLC, and Stonefield Freight Brokerage, Inc.), in each case attaching true, correct, and complete copies of (A) the certificate of incorporation or certificate of formation, as applicable, and all amendments thereto, (B) the bylaws or limited liability company agreement, as applicable, (C) resolutions of the board of directors or managing member(s), as applicable, authorizing the execution, delivery, and performance of the Mezzanine Loan Documents to which such entity is a party, and (D) an incumbency certificate identifying the officers or authorized persons authorized to execute and deliver the Mezzanine Loan Documents on behalf of such entity, has been (or will be, on the Closing Date) duly executed and delivered to the Mezzanine Lender.
(vii) Solvency Certificate. A Solvency Certificate, in the form attached as Exhibit F to the Mezzanine Credit Agreement, executed by Janet R. Prescott, Chief Financial Officer of the Borrower, certifying that, after giving effect to the making of the Mezzanine Term Loan and the application of the proceeds thereof, the Borrower and its subsidiaries, on a consolidated basis, are Solvent as of the Closing Date, has been (or will be, on the Closing Date) duly executed and delivered to the Mezzanine Lender. A draft of such Solvency Certificate is attached hereto as Enclosure 4.
(viii) Initial Compliance Certificate. An initial Compliance Certificate, in the form attached as Exhibit D to the Mezzanine Credit Agreement, demonstrating compliance with the financial covenants set forth in Section 7.11 of the Mezzanine Credit Agreement as of the most recent fiscal quarter end for which financial statements have been delivered, has been (or will be, on the Closing Date) duly executed and delivered to the Mezzanine Lender. Such Compliance Certificate demonstrates, among other things, (A) a Total Leverage Ratio of 3.75 to 1.00, which is within the maximum permitted Total Leverage Ratio of 4.25 to 1.00 for the applicable test period, (B) a Fixed Charge Coverage Ratio at or above the minimum required level of 1.10 to 1.00, and (C) Liquidity at or above the minimum required level of $15,000,000.
(ix) Legal Opinions. Legal opinions of Calderwood & Harkness LLP, counsel to the Borrower, including (A) a corporate/enforceability opinion with respect to the Borrower and each Guarantor, and (B) a UCC/lien perfection opinion with respect to the security interests granted under the Mezzanine Pledge and Security Agreement, have been (or will be, on the Closing Date) duly executed and delivered to the Mezzanine Lender, in each case in form and substance satisfactory to the Mezzanine Lender and its counsel.
(x) UCC-1 Financing Statements. UCC-1 financing statements have been prepared for filing (and, to the extent not yet filed, will be filed on or prior to the Closing Date) with (A) the Delaware Secretary of State, naming Stonefield Logistics Group Inc. and Stonefield Freight Brokerage, Inc. as debtors and Ridgeline Mezzanine Capital Fund III, LP as secured party, and (B) the Texas Secretary of State, naming Stonefield Intermodal Services, Inc. and Stonefield Fleet Management, LLC as debtors and Ridgeline Mezzanine Capital Fund III, LP as secured party. Filing confirmations will be delivered to the Mezzanine Lender at or promptly following closing. Preliminary filing confirmations are attached hereto as Enclosure 5.
(xi) Good Standing Certificates. Certificates of good standing (or equivalent certificates of existence or status) for the Borrower and each Guarantor from their respective jurisdictions of organization — specifically, certificates from the Delaware Secretary of State with respect to Stonefield Logistics Group Inc., Cascade Ridge SLG Holdings, LLC, and Stonefield Freight Brokerage, Inc., and certificates from the Texas Secretary of State with respect to Stonefield Intermodal Services, Inc. and Stonefield Fleet Management, LLC — have been obtained and delivered (or will be delivered on or prior to the Closing Date) to the Mezzanine Lender, in each case dated no earlier than ten (10) days prior to the Closing Date.
(xii) UCC Lien Search Results. Completed UCC lien search results from the offices of the secretaries of state of the States of Delaware and Texas (and such other jurisdictions as the Mezzanine Lender may have reasonably requested) with respect to the Borrower and each Guarantor have been delivered to the Mezzanine Lender, and such search results confirm the absence of any liens, security interests, or other encumbrances (other than Permitted Liens, as defined in the Mezzanine Credit Agreement) on the Collateral that would be senior to or have priority over the security interests of the Mezzanine Lender.
(xiii) Payment of Fees and Expenses. All fees and expenses required to be paid at or prior to closing pursuant to the Mezzanine Credit Agreement or any other Mezzanine Loan Document have been paid (or will be paid from the proceeds of the Mezzanine Term Loan at closing), including, without limitation, the Commitment Fee of $2,400,000, the Financial Advisory Fee of $900,000, and legal fees and expenses as described in Section 4 of this Borrowing Request.
5(e). Senior Credit Facility Compliance
No default or event of default has occurred and is continuing (or would result from the making of the Mezzanine Term Loan or the application of the proceeds thereof) under the Amended and Restated Credit Agreement, dated as of April 7, 2022, as amended by Amendment No. 1 dated October 18, 2022, Amendment No. 2 dated March 30, 2023, and Amendment No. 3 dated September 14, 2023 (as so amended, the "Senior Credit Agreement"), among the Borrower, Whitmore National Bank, N.A., as Administrative Agent and Collateral Agent, and the senior lenders party thereto.
As of the date hereof, the outstanding balances under the Senior Credit Agreement are as follows:
(i) Senior Term Loan B outstanding principal balance: $275,000,000;
(ii) Senior Revolving Credit Facility: $12,000,000 drawn, with $38,000,000 of remaining undrawn availability under the $50,000,000 revolving commitment; and
(iii) No outstanding letters of credit under the Senior Credit Agreement.
Upon the funding of the Mezzanine Term Loan on the Closing Date, Total Funded Debt (as defined in the Mezzanine Credit Agreement) of the Borrower and its subsidiaries, on a consolidated basis, will be approximately $407,000,000, consisting of (a) $275,000,000 of Senior Term Loan B, (b) $12,000,000 of revolving loans outstanding under the Senior Revolving Credit Facility, and (c) $120,000,000 of Mezzanine Term Loan. The Borrower has confirmed with the Senior Agent that the incurrence of the Mezzanine Term Loan is permitted under the Senior Credit Agreement (as amended by Amendment No. 3) and does not result in a breach of any incurrence-based financial test or debt basket thereunder.
5(f). Solvency.  After giving effect to the making of the Mezzanine Term Loan on the Closing Date and the application of the proceeds thereof as described herein, the Borrower and its subsidiaries, on a consolidated basis, are and will be Solvent. For the avoidance of doubt, "Solvent" has the meaning ascribed to such term in Section 1.01 of the Mezzanine Credit Agreement, which requires that (a) the fair value of the assets of the Borrower and its subsidiaries, on a consolidated basis, exceeds the sum of their debts (including contingent liabilities), (b) the present fair saleable value of the assets of the Borrower and its subsidiaries, on a consolidated basis, is greater than the amount that will be required to pay the probable liability on their debts (including contingent liabilities) as such debts become absolute and matured, (c) the Borrower and its subsidiaries, on a consolidated basis, are able to realize upon their assets and pay their debts and other liabilities (including contingent liabilities) as they mature in the normal course of business, and (d) the Borrower and its subsidiaries, on a consolidated basis, do not have unreasonably small capital with which to conduct the businesses in which they are engaged as such businesses are now conducted and are proposed to be conducted. The detailed solvency analysis supporting this certification is set forth in the Solvency Certificate referenced in Section 5(d)(vii) above, a draft of which is attached hereto as Enclosure 4.
5(g). Use of Proceeds
The proceeds of the Mezzanine Term Loan will be applied solely for the purposes permitted under Section 6.10 of the Mezzanine Credit Agreement, as described in Section 3 of this Borrowing Request. No portion of the proceeds will be used, directly or indirectly, to (a) purchase or carry any "margin stock" (as defined in Regulation U of the Board of Governors of the Federal Reserve System), (b) make any payment in violation of the anti-corruption or anti-money laundering laws of any applicable jurisdiction, including the U.S. Foreign Corrupt Practices Act of 1977, as amended, or (c) finance or facilitate any transaction with any person that is the subject of sanctions administered or enforced by the U.S. Department of the Treasury's Office of Foreign Assets Control, the U.S. Department of State, the United Nations Security Council, the European Union, or Her Majesty's Treasury of the United Kingdom.
6. Governing Law
This Borrowing Request shall be governed by, and construed in accordance with, the laws of the State of New York, without regard to the conflicts-of-law principles thereof (other than Sections 5-1401 and 5-1402 of the New York General Obligations Law, which shall apply).
7. Irrevocability
The Borrower hereby reaffirms that this Borrowing Request is irrevocable and may not be withdrawn, rescinded, or revoked by the Borrower after delivery to the Mezzanine Lender. The Mezzanine Lender is authorized and directed to fund the Mezzanine Term Loan on the Closing Date in reliance upon the representations, certifications, and other statements contained herein and in the other documents delivered (or to be delivered) in connection with the closing.
[Signature Page Follows]
IN WITNESS WHEREOF, the undersigned has duly executed and delivered this Irrevocable Borrowing Request as of the date first written above.
STONEFIELD LOGISTICS GROUP INC.
By: ________
Name: Janet R. Prescott
Title: Chief Financial Officer
Date: September 26, 2023
ACKNOWLEDGMENT OF RECEIPT
The undersigned hereby acknowledges receipt of the foregoing Irrevocable Borrowing Request, dated September 26, 2023, delivered by Stonefield Logistics Group Inc. pursuant to Section 2.02(a) of the Mezzanine Credit Agreement. Receipt of this Borrowing Request shall not constitute a commitment or agreement by the Mezzanine Lender to fund the Mezzanine Term Loan except in accordance with, and subject to the satisfaction (or waiver) of all conditions precedent set forth in, the Mezzanine Credit Agreement.
RIDGELINE MEZZANINE CAPITAL FUND III, LP
By: Ridgeline Capital Management III, LLC,
its General Partner
By: ________
Name: Katherine M. Stroud
Title: Managing Director
Date: ________
ENCLOSURES
The following enclosures accompany this Irrevocable Borrowing Request:
Enclosure 1: Draft Closing Funds Flow Memorandum (to be finalized and fully executed on September 29, 2023)
Enclosure 2: Updated wire transfer instructions for all payees identified in Section 4 of this Borrowing Request
Enclosure 3: Draft Officer's Certificate of the Borrower certifying satisfaction of closing conditions pursuant to Section 4.02(a) of the Mezzanine Credit Agreement
Enclosure 4: Draft Solvency Certificate of the Borrower, to be executed by Janet R. Prescott, Chief Financial Officer, pursuant to Section 4.01(j) of the Mezzanine Credit Agreement
Enclosure 5: UCC-1 financing statement filing confirmations (preliminary; final confirmations to be delivered at or promptly following closing)
CONFIDENTIAL — This document and the enclosures referenced herein contain confidential information relating to the mezzanine financing of Stonefield Logistics Group Inc. This document is provided solely for the use of the addressees and their respective counsel and may not be distributed, reproduced, or disclosed to any third party without the prior written consent of the Borrower and the Mezzanine Lender, except as required by law or as otherwise permitted under the Mezzanine Credit Agreement.
Line Item | Amount
Total Mezzanine Term Loan Funded | $120,000,000
Less: Commitment Fee (Section 4(b)) | ($2,400,000)
Less: Financial Advisory Fee (Section 4(c)) | ($900,000)
Less: Borrower's Counsel Fees (Section 4(d)) | ($675,000)
Less: Lender's Counsel Expense Reimbursement (Section 4(e)) | ($450,000)
Less: Senior Agent Amendment Fee (Section 4(f)) | ($137,500)
Total Transaction Costs | ($4,562,500)
Net Proceeds to Borrower (Section 4(a)) | $115,437,500

IRREVOCABLE BORROWING REQUEST

THE GUARANTORS PARTY THERETO

STONEFIELD LOGISTICS GROUP INC.

ACKNOWLEDGMENT OF RECEIPT

RIDGELINE MEZZANINE CAPITAL FUND III, LP

ENCLOSURES

Record

Parties

Dates

Amounts