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COMPLIANCE CERTIFICATE

Delivered Pursuant to Section 7.02(a) of the Mezzanine Credit Agreement

Initial Compliance Certificate (Closing Date)

Reference: Mezzanine Credit Agreement, dated as of September 14, 2023 (as amended, restated, supplemented, or otherwise modified from time to time, the "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.

Date of Certificate: September 29, 2023

Certificate Number: Initial Compliance Certificate (Closing Date)

Capitalized terms used but not otherwise defined herein shall have the respective meanings assigned to such terms in the Credit Agreement.

Section 1: Certifying Officer Identification

The undersigned, Janet R. Prescott, in her capacity as Chief Financial Officer of Stonefield Logistics Group Inc., a Delaware corporation (the "Borrower"), hereby certifies to Ridgeline Mezzanine Capital Fund III, LP (the "Mezzanine Lender"), pursuant to Section 7.02(a) of the Credit Agreement, as follows:

This Compliance Certificate (this "Certificate") is delivered in connection with the initial borrowing under the Credit Agreement on the Closing Date, which is September 29, 2023. The delivery of this Certificate is a condition precedent to the initial extension of credit under the Credit Agreement, as set forth in Section 5.01(d) thereof.

The financial calculations set forth herein are based on the last twelve months ("LTM") ended June 30, 2023 (the "Test Period"), as adjusted to give pro forma effect to the Transactions (as defined in the Credit Agreement) contemplated by the Credit Agreement as of the Closing Date, including, without limitation, the incurrence of $120,000,000 in mezzanine indebtedness under the Mezzanine Term Loan, the payment of all transaction costs and expenses associated therewith, and the application of proceeds as described in Section 2.05 of the Credit Agreement.

The undersigned has reviewed the terms of the Credit Agreement and the other Loan Documents and has made, or caused to be made under her supervision, a review in reasonable detail of the transactions and financial condition of the Borrower and its consolidated subsidiaries during the applicable Test Period. Such review did not disclose, and the undersigned has no knowledge of, the existence of any condition or event which constitutes a Default or Event of Default during or at the end of the applicable Test Period or as of the date of this Certificate, except as set forth herein.

Section 2: Reporting Period

Test Period: Twelve (12) months ended June 30, 2023.

Closing Date: September 29, 2023.

The pro forma adjustments reflected in the financial covenant calculations set forth in Section 3 of this Certificate give effect to the following transactions as though they had occurred on the first day of the Test Period (for income statement items) or as of the Closing Date (for balance sheet items), as applicable:

(a) the incurrence of $120,000,000 in aggregate principal amount of mezzanine indebtedness under the Mezzanine Term Loan facility established pursuant to the Credit Agreement;

(b) the payment of transaction costs and fees in connection with the Transactions in the aggregate amount of $4,562,500, as more fully described in Section 3.3 of this Certificate;

(d) such other pro forma adjustments as are required by the definition of "Pro Forma Basis" set forth in Section 1.01 of the Credit Agreement.

The financial data underlying the calculations set forth herein has been derived from the following sources:

(i) the audited consolidated financial statements of the Borrower and its consolidated subsidiaries for the fiscal year ended December 31, 2022, including the consolidated balance sheet, the consolidated statements of operations, comprehensive income (loss), stockholders' equity, and cash flows for the fiscal year then ended, together with the notes thereto and the report of the independent registered public accounting firm, Braddock & Saylor LLP, thereon (which report expressed an unqualified opinion without any going concern or other qualification); and

(ii) the unaudited interim consolidated financial statements of the Borrower and its consolidated subsidiaries for the six-month period ended June 30, 2023, including the unaudited consolidated balance sheet as of June 30, 2023 and the unaudited consolidated statements of operations and cash flows for the six-month period then ended, which have been prepared in accordance with GAAP (subject to the absence of footnote disclosures and normal year-end audit adjustments, none of which are expected to be material), as delivered to the Mezzanine Lender on or prior to the date hereof.

Section 3: Financial Covenant Calculations

3.1 Maximum Total Leverage Ratio

Covenant Requirement (Section 8.01(a) of the Credit Agreement): The Total Leverage Ratio, calculated as of the last day of the Test Period, shall not exceed 4.25 to 1.00.

Calculation:

(a) Total Funded Debt (as of the Closing Date, after giving pro forma effect to the incurrence of the Mezzanine Term Loan and all other funded indebtedness outstanding):

(b) LTM Adjusted EBITDA (for the Test Period ended June 30, 2023, calculated in accordance with the definition of "Adjusted EBITDA" set forth in Section 1.01 of the Credit Agreement and as reconciled in Section 4 of this Certificate):

$108,600,000

Total Funded Debt ÷ LTM Adjusted EBITDA

= $407,000,000 ÷ $108,600,000

= 3.75 to 1.00

Compliance: Yes. The Total Leverage Ratio of 3.75x is less than the maximum permitted Total Leverage Ratio of 4.25x, resulting in headroom of 0.50x (or approximately $54,300,000 in incremental debt capacity, holding Adjusted EBITDA constant).

Step-Down Schedule for Reference: Pursuant to Section 8.01(a) of the Credit Agreement, the maximum permitted Total Leverage Ratio is subject to the following step-down schedule:

The undersigned notes that the Borrower's current Total Leverage Ratio of 3.75x already satisfies the most restrictive step-down level that will become effective after September 30, 2025.

3.2 Minimum Fixed Charge Coverage Ratio

Covenant Requirement (Section 8.01(b) of the Credit Agreement): The Fixed Charge Coverage Ratio, calculated as of the last day of the Test Period, shall not be less than 1.10 to 1.00.

Calculation:

(a) LTM Adjusted EBITDA (for the Test Period ended June 30, 2023):

$108,600,000

(b) Fixed Charges for the Test Period (as defined in Section 1.01 of the Credit Agreement), calculated on a pro forma basis to give effect to the Transactions as if they had occurred on the first day of the Test Period:

(1) Based on weighted average all-in rate of approximately 8.75% (SOFR at approximately 5.00% plus 375 bps spread) applied to $275,000,000 outstanding principal balance. (2) Based on weighted average drawn balance of approximately $12,000,000 at an all-in rate of approximately 8.50%. (3) Represents only the cash pay component of the Mezzanine Term Loan interest rate; PIK interest of 250 bps is excluded as a non-cash item as described below. (4) Commitment fee calculated on undrawn Revolving Credit Facility commitments. (5) Quarterly amortization of 0.25% of original principal amount per quarter. (6) Maintenance capital expenditures as defined in Section 1.01 of the Credit Agreement, consisting of fleet maintenance, terminal upkeep, and IT system maintenance, excluding growth capital expenditures.

LTM Adjusted EBITDA ÷ Total Fixed Charges

= $108,600,000 ÷ $79,372,500

= 1.37 to 1.00

Compliance: Yes. The Fixed Charge Coverage Ratio of 1.37x exceeds the minimum required Fixed Charge Coverage Ratio of 1.10x, resulting in coverage headroom of 0.27x.

Note Regarding PIK Interest: In accordance with the definition of "Fixed Charges" set forth in Section 1.01 of the Credit Agreement, paid-in-kind ("PIK") interest of 250 basis points per annum on the Mezzanine Term Loan (representing $3,000,000 per annum on $120,000,000 of principal) is excluded from Fixed Charges as a non-cash item. Only the 850 basis point cash pay component of the Mezzanine Term Loan interest rate ($10,200,000 per annum) is included in the calculation of cash interest expense for purposes of determining Fixed Charges.

3.3 Minimum Liquidity

Covenant Requirement (Section 8.01(c) of the Credit Agreement): At all times, the Borrower shall maintain Liquidity of not less than $15,000,000.

Calculation:

(a) Unrestricted cash and cash equivalents of the Borrower and its consolidated subsidiaries as of the Closing Date, after giving effect to the receipt of net mezzanine proceeds and the payment of all transaction costs:

(1) Reflects the initial deployment of mezzanine proceeds for fleet expansion deposits, terminal facility buildout down payments, and technology upgrade commitments as contemplated by the use of proceeds provisions of Section 2.05 of the Credit Agreement, with the balance retained as working capital.

(b) Available commitments under the Senior Secured Revolving Credit Facility:

Unrestricted Cash and Cash Equivalents + Available Revolving Credit Facility Commitments

= $38,287,500 + $38,000,000

= $76,287,500

Compliance: Yes. Total Liquidity of $76,287,500 substantially exceeds the minimum required Liquidity of $15,000,000, providing a liquidity cushion of $61,287,500 in excess of the covenant minimum.

3.4 Maximum Capital Expenditures

Covenant Requirement (Section 8.01(d) of the Credit Agreement): Capital Expenditures shall not exceed $85,000,000 in the aggregate for any fiscal year, with the right to carry forward up to 25% of unused amounts from the immediately preceding fiscal year to the next succeeding fiscal year only.

Calculation:

(a) Fiscal year 2023 capital expenditures (year-to-date through the Closing Date, September 29, 2023):

Capital expenditures incurred from January 1, 2023 through September 29, 2023: $52,800,000

(b) Permitted Capital Expenditures for fiscal year 2023:

(1) FY2022 actual capital expenditures were $60,800,000 against a permitted allowance of $85,000,000, resulting in unused capacity of $24,200,000. The carryforward amount is 25% of $24,200,000 = $6,050,000.

Total permitted CapEx for FY2023 − Year-to-date CapEx

= $91,050,000 − $52,800,000

= $38,250,000

Compliance: Yes. Year-to-date capital expenditures of $52,800,000 are within the total permitted maximum of $91,050,000 for fiscal year 2023, with $38,250,000 of remaining capacity for the fourth quarter.

Note: The mezzanine financing proceeds are designated, in part, for fleet expansion, terminal facility buildout, and technology upgrades as described in the use of proceeds section of the Credit Agreement. Such capital expenditures will be incurred over the course of fiscal years 2023, 2024, and 2025 and will be reflected in future quarterly Compliance Certificates. The Borrower's management projects total growth capital expenditures funded by the mezzanine proceeds to be deployed over approximately 18 to 24 months following the Closing Date.

Summary of Financial Covenant Compliance

Section 4: Adjusted EBITDA Reconciliation

Set forth below is a summary reconciliation of LTM Adjusted EBITDA for the Test Period ended June 30, 2023, prepared in accordance with the definition of "Adjusted EBITDA" set forth in Section 1.01 of the Credit Agreement:

(1) Represents fees and expenses incurred in connection with the negotiation, documentation, and closing of the Mezzanine Term Loan and the related amendment of the Senior Credit Facilities, which are non-recurring in nature and permitted to be added back under the Credit Agreement. (2) Represents the annualized run-rate impact of completed headcount reductions and operational efficiency improvements implemented in Q1 2023, capped at the amount permitted under the "Pro Forma Cost Savings" definition in Section 1.01 of the Credit Agreement. (3) Includes management fees, monitoring fees, and other amounts permitted to be added back under the Credit Agreement.

For reference, the following historical Adjusted EBITDA and revenue data are provided to demonstrate the year-over-year improvement trajectory of the Borrower:

The year-over-year improvement in Adjusted EBITDA is attributable to volume growth in the Borrower's dedicated fleet and intermodal services segments, the realization of cost savings from the facility consolidation initiative completed in the fourth quarter of fiscal year 2022, and improved pricing on contract renewals.

Section 5: Capital Structure Summary (Post-Closing)

Set forth below is a summary of the pro forma capital structure of the Borrower and its consolidated subsidiaries as of the Closing Date, after giving effect to the Transactions:

Leverage Summary:

The Senior Secured Credit Facilities are governed by that certain First Lien Credit Agreement, dated as of November 15, 2021, among the Borrower, Whitmore National Bank, N.A., as Administrative Agent, and the lenders party thereto, as amended by that certain First Amendment to First Lien Credit Agreement, dated as of September 14, 2023 (the "Senior Credit Agreement"), which amendment was entered into in connection with and as a condition to the closing of the Mezzanine Term Loan. The intercreditor arrangements between the First Lien Agent and the Mezzanine Lender are governed by that certain Intercreditor Agreement, dated as of September 29, 2023.

Section 6: Representations and Certifications

The undersigned, in her capacity as Chief Financial Officer of the Borrower and not in her individual capacity, hereby certifies to the Mezzanine Lender as follows:

(a) Accuracy of Financial Information. The financial information and calculations set forth in this Certificate are true, correct, and complete in all material respects as of the date hereof and have been prepared in accordance with the terms of the Credit Agreement and in conformity with GAAP (except as otherwise expressly permitted by the Credit Agreement). All computations of financial ratios and financial covenants have been made in accordance with the definitions and methodologies set forth in the Credit Agreement.

(b) Financial Covenant Compliance. As of the Closing Date and after giving pro forma effect to the borrowing under the Credit Agreement and the application of proceeds therefrom, the Borrower is in compliance with all financial covenants set forth in Section 8.01 of the Credit Agreement, as demonstrated by the calculations set forth in Section 3 of this Certificate.

(c) No Default. No Default or Event of Default (as each such term is defined in Section 9.01 of the Credit Agreement) has occurred and is continuing as of the date hereof or would result from the initial borrowing under the Credit Agreement on the Closing Date. The undersigned has no knowledge of any condition, event, or act which, with the giving of notice or lapse of time, or both, would constitute a Default or Event of Default under the Credit Agreement or any other Loan Document.

(d) Representations and Warranties. The representations and warranties of the Borrower and each Guarantor set forth in the Credit Agreement and the other Loan Documents are true and correct in all material respects as of the date hereof (or, in the case of representations and warranties qualified by materiality or "Material Adverse Effect," in all respects), except to the extent that such representations and warranties expressly relate to an earlier date, in which case such representations and warranties are 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 representations and warranties set forth in Article IV of the Credit Agreement, including those regarding corporate existence, power and authority, enforceability, no conflicts, governmental approvals, financial condition, absence of litigation, ERISA compliance, environmental matters, tax matters, intellectual property, insurance, and the security interests granted in the Collateral, are hereby confirmed and reaffirmed.

(e) No Material Adverse Effect. Since December 31, 2022 (the date of the most recent audited financial statements delivered to the Mezzanine Lender), there has been no event, circumstance, development, change, or effect that, individually or in the aggregate, has had or would reasonably be expected to have a Material Adverse Effect with respect to the Borrower and its subsidiaries, taken as a whole. The business, operations, properties, assets, and financial condition of the Borrower and its consolidated subsidiaries, taken as a whole, are substantially consistent with those reflected in the financial statements and projections previously delivered to the Mezzanine Lender in connection with the negotiation and execution of the Credit Agreement.

Section 7: Schedule of Definitions

The following key defined terms are used in this Certificate. Unless otherwise indicated, each term has the meaning assigned to it in the Credit Agreement:

"Adjusted EBITDA" — has the meaning set forth in Section 1.01 of the Credit Agreement, and generally means, for any Test Period, the consolidated net income of the Borrower and its subsidiaries for such period, plus (without duplication) the sum of (i) interest expense, (ii) income tax expense, (iii) depreciation and amortization expense, (iv) non-cash stock-based compensation, (v) non-recurring restructuring charges, (vi) transaction costs and expenses, (vii) pro forma cost savings from completed initiatives (subject to the caps and limitations set forth in the Credit Agreement), and (viii) certain other non-cash charges and permitted add-backs, minus non-cash gains to the extent included in consolidated net income, in each case as more fully described in the Credit Agreement.

"Capital Expenditures" — has the meaning set forth in Section 1.01 of the Credit Agreement, and generally means, for any period, the aggregate of all expenditures (whether paid in cash or accrued as a liability) by the Borrower and its subsidiaries during such period that, in accordance with GAAP, are or should be included in "additions to property, plant, or equipment" or similar items reflected in the consolidated statement of cash flows of the Borrower and its subsidiaries, excluding any such expenditure constituting a Permitted Acquisition.

"Fixed Charge Coverage Ratio" — means, as of the last day of any Test Period, the ratio of (a) LTM Adjusted EBITDA for such Test Period to (b) Fixed Charges for such Test Period.

"Fixed Charges" — has the meaning set forth in Section 1.01 of the Credit Agreement, and generally means, for any Test Period, without duplication, the sum of (i) cash interest expense on all funded indebtedness of the Borrower and its subsidiaries paid or payable during such period (excluding, for the avoidance of doubt, any paid-in-kind interest or other non-cash interest), (ii) scheduled principal amortization payments on all funded indebtedness during such period (excluding voluntary prepayments and mandatory prepayments from excess cash flow or asset sale proceeds), (iii) maintenance capital expenditures during such period, and (iv) cash taxes paid during such period.

"Liquidity" — means, as of any date of determination, the sum of (a) unrestricted cash and cash equivalents of the Borrower and its subsidiaries held in deposit accounts subject to a Control Agreement in favor of the First Lien Agent or the Mezzanine Lender, as applicable, plus (b) the aggregate amount of unused and available commitments under the Senior Secured Revolving Credit Facility (net of any outstanding letters of credit and swingline loans).

"Material Adverse Effect" — has the meaning set forth in Section 1.01 of the Credit Agreement, and generally means any event, change, circumstance, occurrence, effect, or condition that, individually or in the aggregate, has had or would reasonably be expected to have a material adverse effect on (a) the business, operations, properties, assets, liabilities, or financial condition of the Borrower and its subsidiaries, taken as a whole, (b) the ability of the Borrower or any Guarantor to perform its payment or other material obligations under any Loan Document, or (c) the rights of or remedies available to the Mezzanine Lender under any Loan Document.

"Total Funded Debt" — means, as of any date of determination, the aggregate principal amount of all funded indebtedness for borrowed money of the Borrower and its subsidiaries on a consolidated basis outstanding on such date, including, without limitation, the principal amount outstanding under the Senior Secured Term Loan B, drawn amounts under the Senior Secured Revolving Credit Facility, the principal amount of the Mezzanine Term Loan (including any PIK interest that has been capitalized and added to principal), and any other funded indebtedness for borrowed money, but excluding, for the avoidance of doubt, undrawn letters of credit and operating lease obligations.

"Total Leverage Ratio" — means, as of the last day of any Test Period, the ratio of (a) Total Funded Debt as of such date to (b) LTM Adjusted EBITDA for such Test Period.

Section 8: Supporting Documentation Reference

This Certificate is delivered to the Mezzanine Lender concurrently with or following delivery of the following documents and instruments in satisfaction of the conditions precedent set forth in Article V of the Credit Agreement:

(i) unaudited consolidated financial statements of the Borrower and its consolidated subsidiaries for the six-month period ended June 30, 2023, consisting of the consolidated balance sheet as of such date and the related consolidated statements of operations and cash flows for the six-month period then ended, certified by the Chief Financial Officer of the Borrower as fairly presenting, in all material respects, the financial condition and results of operations of the Borrower and its consolidated subsidiaries as of such date and for such period, in accordance with GAAP (subject to the absence of footnote disclosures and normal year-end audit adjustments);

(ii) the Officer's Certificate of Stonefield Logistics Group Inc., dated September 29, 2023, executed by Janet R. Prescott, Chief Financial Officer, and Marcus D. Callahan, General Counsel and Secretary, certifying as to the incumbency of officers, the good standing of the Borrower, the adoption of authorizing resolutions by the Board of Directors, and such other matters as required under Section 5.01 of the Credit Agreement;

(iii) the Solvency Certificate, dated September 29, 2023, executed by Janet R. Prescott, Chief Financial Officer of the Borrower, certifying that, after giving effect to the Transactions, the Borrower and its consolidated subsidiaries, on a consolidated basis, are Solvent (as defined in the Credit Agreement); and

(iv) the Borrowing Request, dated September 26, 2023, executed by the Borrower and delivered to the Mezzanine Lender in accordance with Section 2.02 of the Credit Agreement, requesting the initial borrowing under the Mezzanine Term Loan in the aggregate principal amount of $120,000,000 on the Closing Date.

The undersigned confirms that, to the best of her knowledge after due inquiry, all conditions precedent to the initial borrowing under the Credit Agreement set forth in Sections 5.01 and 5.02 of the Credit Agreement have been satisfied or waived as of the date hereof.

Signature

IN WITNESS WHEREOF, the undersigned has executed and delivered this Compliance Certificate as of the date first written above.

STONEFIELD LOGISTICS GROUP INC.

By: ________

Name: Janet R. Prescott

Title: Chief Financial Officer

Date: September 29, 2023

Address for notices:

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

Attention: Janet R. Prescott, Chief Financial Officer

Telephone: (817) 555-4200

Email: jprescott@stonefieldlogistics.com

Delivery Information

This Certificate has been delivered to the following parties:

Mezzanine Lender:

Ridgeline Mezzanine Capital Fund III, LP c/o Ridgeline Capital Management, LLC 767 Lexington Avenue, 22nd Floor New York, New York 10065

Attention: Katherine M. Stroud, Managing Director

Telephone: (212) 555-8100

Email: kstroud@ridgelinecapital.com

With a copy to Mezzanine Lender's Counsel:

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

Attention: Harrison T. Moss / Angela N. Whitford

Telephone: (212) 555-6300

Email: hmoss@archerblackwell.com / awhitford@archerblackwell.com

This Compliance Certificate is delivered pursuant to and in accordance with the terms of the Credit Agreement. Nothing contained herein shall be deemed to modify, amend, supplement, or otherwise alter any of the terms, conditions, or provisions of the Credit Agreement or any other Loan Document. In the event of any conflict between the terms of this Certificate and the Credit Agreement, the Credit Agreement shall control. This Certificate may be relied upon by the Mezzanine Lender and its successors and assigns.

Component	Amount
Senior Secured Term Loan B (outstanding principal balance)	$275,000,000
Senior Secured Revolving Credit Facility (drawn amount)	$12,000,000
Mezzanine Term Loan (initial principal amount)	$120,000,000
Capital leases and other funded indebtedness	$0
Total Funded Debt	$407,000,000
Test Period Ending	Maximum Total Leverage Ratio
Closing Date through and including the Test Period ending June 30, 2024	4.25 to 1.00
Test Period ending September 30, 2024 through and including the Test Period ending June 30, 2025	4.00 to 1.00
Test Period ending September 30, 2025 and each Test Period thereafter	3.75 to 1.00
Component	Amount
Cash interest expense on Senior Secured Term Loan B (SOFR + 375 bps)(1)	$24,062,500
Cash interest expense on Senior Secured Revolving Credit Facility (SOFR + 350 bps on drawn amounts)(2)	$1,020,000
Pro forma cash interest expense on Mezzanine Term Loan (850 bps cash pay component on $120,000,000)(3)	$10,200,000
Commitment fee on undrawn Revolving Credit Facility (50 bps on $38,000,000 undrawn)(4)	$190,000
Scheduled principal amortization on Senior Secured Term Loan B (1.00% per annum of original principal)(5)	$2,750,000
Cash taxes paid during the Test Period	$8,750,000
Maintenance capital expenditures during the Test Period(6)	$32,400,000
Total Fixed Charges	$79,372,500
Item	Amount
Gross mezzanine proceeds received on Closing Date	$120,000,000

Less: Transaction costs and fees:

— Commitment fee to Ridgeline Mezzanine Capital Fund III, LP (2.00% of commitment)	($2,400,000)
— Financial advisory fee to Zynvaro Thornton Advisory Group, LLC	($900,000)
— Legal fees to Calderwood & Harkness LLP (Borrower's counsel)	($675,000)
— Legal fees to Archer Blackwell & Moss LLP (Mezzanine Lender's counsel)	($450,000)
— Senior Agent amendment and consent fee to Whitmore National Bank, N.A.	($137,500)
Total transaction costs	($4,562,500)
Net mezzanine proceeds	$115,437,500
Liquidity Component	Amount
Net mezzanine proceeds (as calculated above)	$115,437,500
Pre-existing unrestricted cash and cash equivalents (prior to Closing Date)	$24,850,000
Less: Application of mezzanine proceeds for designated purposes on Closing Date(1)	($102,000,000)
Total unrestricted cash and cash equivalents	$38,287,500
Item	Amount
Total Revolving Credit Facility commitment	$50,000,000
Less: Drawn amount outstanding on the Closing Date	($12,000,000)
Less: Outstanding letters of credit	($0)
Available Revolving Credit Facility	$38,000,000
Item	Amount
Base Capital Expenditure allowance for FY2023	$85,000,000
Plus: Carryforward from FY2022 (25% of unused FY2022 CapEx allowance)(1)	$6,050,000
Total permitted Capital Expenditures for FY2023	$91,050,000
Financial Covenant	Requirement	Actual (Pro Forma)	Compliance
Maximum Total Leverage Ratio	≤ 4.25x	3.75x	Yes
Minimum Fixed Charge Coverage Ratio	≥ 1.10x	1.37x	Yes
Minimum Liquidity	≥ $15,000,000	$76,287,500	Yes

Maximum Capital Expenditures (FY2023)	≤ $91,050,000	$52,800,000 YTD	Yes
Item	Amount
Net income for the LTM period ended June 30, 2023	$28,350,000
Plus: Interest expense (inclusive of all funded indebtedness)	$25,400,000
Plus: Income tax expense (provision)	$11,200,000
Plus: Depreciation expense	$22,800,000
Plus: Amortization of intangible assets	$8,950,000
EBITDA	$96,700,000
Plus: Non-cash stock-based compensation expense	$2,650,000
Plus: Non-recurring restructuring charges (facility consolidation in Q4 2022)	$3,100,000
Plus: Transaction costs and expenses related to the Transactions(1)	$2,800,000
Plus: Pro forma cost savings from completed cost reduction initiatives(2)	$1,950,000
Plus: Non-cash purchase accounting adjustments	$850,000
Plus: Other permitted add-backs under the Credit Agreement(3)	$550,000
LTM Adjusted EBITDA	$108,600,000
Metric	FY2022 (Audited)	LTM Ended June 30, 2023	Change
Revenue	$687,000,000	$724,500,000	+5.5%
Adjusted EBITDA	$98,400,000	$108,600,000	+10.4%
Adjusted EBITDA Margin	14.3%	15.0%	+70 bps
Tranche	Committed / Outstanding Amount	Interest Rate	Maturity Date	Priority / Security
Senior Secured Term Loan B	$275,000,000 outstanding	SOFR + 375 bps	November 15, 2026	First Lien on substantially all assets
Senior Secured Revolving Credit Facility	$50,000,000 committed ($12,000,000 drawn)	SOFR + 350 bps (on drawn amounts); 50 bps commitment fee (on undrawn)	November 15, 2025	First Lien (pari passu with Term Loan B)
Mezzanine Term Loan	$120,000,000 outstanding	1,100 bps total (850 bps cash pay / 250 bps PIK)	September 29, 2029	Second Lien / Subordinated
Total Funded Debt	$407,000,000
Metric	Calculation	Ratio

Total Leverage	$407,000,000 ÷ $108,600,000	3.75x
Senior Secured Leverage	$287,000,000 ÷ $108,600,000	2.64x
Mezzanine Leverage (incremental)	$120,000,000 ÷ $108,600,000	1.10x

COMPLIANCE CERTIFICATE
Delivered Pursuant to Section 7.02(a) of the Mezzanine Credit Agreement
Initial Compliance Certificate (Closing Date)
Reference: Mezzanine Credit Agreement, dated as of September 14, 2023 (as amended, restated, supplemented, or otherwise modified from time to time, the "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.
Date of Certificate: September 29, 2023
Certificate Number: Initial Compliance Certificate (Closing Date)
Capitalized terms used but not otherwise defined herein shall have the respective meanings assigned to such terms in the Credit Agreement.
Section 1: Certifying Officer Identification
The undersigned, Janet R. Prescott, in her capacity as Chief Financial Officer of Stonefield Logistics Group Inc., a Delaware corporation (the "Borrower"), hereby certifies to Ridgeline Mezzanine Capital Fund III, LP (the "Mezzanine Lender"), pursuant to Section 7.02(a) of the Credit Agreement, as follows:
This Compliance Certificate (this "Certificate") is delivered in connection with the initial borrowing under the Credit Agreement on the Closing Date, which is September 29, 2023. The delivery of this Certificate is a condition precedent to the initial extension of credit under the Credit Agreement, as set forth in Section 5.01(d) thereof.
The financial calculations set forth herein are based on the last twelve months ("LTM") ended June 30, 2023 (the "Test Period"), as adjusted to give pro forma effect to the Transactions (as defined in the Credit Agreement) contemplated by the Credit Agreement as of the Closing Date, including, without limitation, the incurrence of $120,000,000 in mezzanine indebtedness under the Mezzanine Term Loan, the payment of all transaction costs and expenses associated therewith, and the application of proceeds as described in Section 2.05 of the Credit Agreement.
The undersigned has reviewed the terms of the Credit Agreement and the other Loan Documents and has made, or caused to be made under her supervision, a review in reasonable detail of the transactions and financial condition of the Borrower and its consolidated subsidiaries during the applicable Test Period. Such review did not disclose, and the undersigned has no knowledge of, the existence of any condition or event which constitutes a Default or Event of Default during or at the end of the applicable Test Period or as of the date of this Certificate, except as set forth herein.
Section 2: Reporting Period
Test Period: Twelve (12) months ended June 30, 2023.
Closing Date: September 29, 2023.
The pro forma adjustments reflected in the financial covenant calculations set forth in Section 3 of this Certificate give effect to the following transactions as though they had occurred on the first day of the Test Period (for income statement items) or as of the Closing Date (for balance sheet items), as applicable:
(a) the incurrence of $120,000,000 in aggregate principal amount of mezzanine indebtedness under the Mezzanine Term Loan facility established pursuant to the Credit Agreement;
(b) the payment of transaction costs and fees in connection with the Transactions in the aggregate amount of $4,562,500, as more fully described in Section 3.3 of this Certificate;
(c) the application of net mezzanine proceeds as contemplated by the Credit Agreement; and
(d) such other pro forma adjustments as are required by the definition of "Pro Forma Basis" set forth in Section 1.01 of the Credit Agreement.
The financial data underlying the calculations set forth herein has been derived from the following sources:
(i) the audited consolidated financial statements of the Borrower and its consolidated subsidiaries for the fiscal year ended December 31, 2022, including the consolidated balance sheet, the consolidated statements of operations, comprehensive income (loss), stockholders' equity, and cash flows for the fiscal year then ended, together with the notes thereto and the report of the independent registered public accounting firm, Braddock & Saylor LLP, thereon (which report expressed an unqualified opinion without any going concern or other qualification); and
(ii) the unaudited interim consolidated financial statements of the Borrower and its consolidated subsidiaries for the six-month period ended June 30, 2023, including the unaudited consolidated balance sheet as of June 30, 2023 and the unaudited consolidated statements of operations and cash flows for the six-month period then ended, which have been prepared in accordance with GAAP (subject to the absence of footnote disclosures and normal year-end audit adjustments, none of which are expected to be material), as delivered to the Mezzanine Lender on or prior to the date hereof.
Section 3: Financial Covenant Calculations
3.1 Maximum Total Leverage Ratio
Covenant Requirement (Section 8.01(a) of the Credit Agreement): The Total Leverage Ratio, calculated as of the last day of the Test Period, shall not exceed 4.25 to 1.00.
Calculation:
(a) Total Funded Debt (as of the Closing Date, after giving pro forma effect to the incurrence of the Mezzanine Term Loan and all other funded indebtedness outstanding):
(b) LTM Adjusted EBITDA (for the Test Period ended June 30, 2023, calculated in accordance with the definition of "Adjusted EBITDA" set forth in Section 1.01 of the Credit Agreement and as reconciled in Section 4 of this Certificate):
$108,600,000
(c) Total Leverage Ratio:
Total Funded Debt ÷ LTM Adjusted EBITDA
= $407,000,000 ÷ $108,600,000
= 3.75 to 1.00
Compliance: Yes. The Total Leverage Ratio of 3.75x is less than the maximum permitted Total Leverage Ratio of 4.25x, resulting in headroom of 0.50x (or approximately $54,300,000 in incremental debt capacity, holding Adjusted EBITDA constant).
Step-Down Schedule for Reference: Pursuant to Section 8.01(a) of the Credit Agreement, the maximum permitted Total Leverage Ratio is subject to the following step-down schedule:
The undersigned notes that the Borrower's current Total Leverage Ratio of 3.75x already satisfies the most restrictive step-down level that will become effective after September 30, 2025.
3.2 Minimum Fixed Charge Coverage Ratio
Covenant Requirement (Section 8.01(b) of the Credit Agreement): The Fixed Charge Coverage Ratio, calculated as of the last day of the Test Period, shall not be less than 1.10 to 1.00.
Calculation:
(a) LTM Adjusted EBITDA (for the Test Period ended June 30, 2023):
$108,600,000
(b) Fixed Charges for the Test Period (as defined in Section 1.01 of the Credit Agreement), calculated on a pro forma basis to give effect to the Transactions as if they had occurred on the first day of the Test Period:
(1) Based on weighted average all-in rate of approximately 8.75% (SOFR at approximately 5.00% plus 375 bps spread) applied to $275,000,000 outstanding principal balance. (2) Based on weighted average drawn balance of approximately $12,000,000 at an all-in rate of approximately 8.50%. (3) Represents only the cash pay component of the Mezzanine Term Loan interest rate; PIK interest of 250 bps is excluded as a non-cash item as described below. (4) Commitment fee calculated on undrawn Revolving Credit Facility commitments. (5) Quarterly amortization of 0.25% of original principal amount per quarter. (6) Maintenance capital expenditures as defined in Section 1.01 of the Credit Agreement, consisting of fleet maintenance, terminal upkeep, and IT system maintenance, excluding growth capital expenditures.
(c) Fixed Charge Coverage Ratio:
LTM Adjusted EBITDA ÷ Total Fixed Charges
= $108,600,000 ÷ $79,372,500
= 1.37 to 1.00
Compliance: Yes. The Fixed Charge Coverage Ratio of 1.37x exceeds the minimum required Fixed Charge Coverage Ratio of 1.10x, resulting in coverage headroom of 0.27x.
Note Regarding PIK Interest: In accordance with the definition of "Fixed Charges" set forth in Section 1.01 of the Credit Agreement, paid-in-kind ("PIK") interest of 250 basis points per annum on the Mezzanine Term Loan (representing $3,000,000 per annum on $120,000,000 of principal) is excluded from Fixed Charges as a non-cash item. Only the 850 basis point cash pay component of the Mezzanine Term Loan interest rate ($10,200,000 per annum) is included in the calculation of cash interest expense for purposes of determining Fixed Charges.
3.3 Minimum Liquidity
Covenant Requirement (Section 8.01(c) of the Credit Agreement): At all times, the Borrower shall maintain Liquidity of not less than $15,000,000.
Calculation:
(a) Unrestricted cash and cash equivalents of the Borrower and its consolidated subsidiaries as of the Closing Date, after giving effect to the receipt of net mezzanine proceeds and the payment of all transaction costs:
(1) Reflects the initial deployment of mezzanine proceeds for fleet expansion deposits, terminal facility buildout down payments, and technology upgrade commitments as contemplated by the use of proceeds provisions of Section 2.05 of the Credit Agreement, with the balance retained as working capital.
(b) Available commitments under the Senior Secured Revolving Credit Facility:
(c) Total Liquidity:
Unrestricted Cash and Cash Equivalents + Available Revolving Credit Facility Commitments
= $38,287,500 + $38,000,000
= $76,287,500
Compliance: Yes. Total Liquidity of $76,287,500 substantially exceeds the minimum required Liquidity of $15,000,000, providing a liquidity cushion of $61,287,500 in excess of the covenant minimum.
3.4 Maximum Capital Expenditures
Covenant Requirement (Section 8.01(d) of the Credit Agreement): Capital Expenditures shall not exceed $85,000,000 in the aggregate for any fiscal year, with the right to carry forward up to 25% of unused amounts from the immediately preceding fiscal year to the next succeeding fiscal year only.
Calculation:
(a) Fiscal year 2023 capital expenditures (year-to-date through the Closing Date, September 29, 2023):
Capital expenditures incurred from January 1, 2023 through September 29, 2023: $52,800,000
(b) Permitted Capital Expenditures for fiscal year 2023:
(1) FY2022 actual capital expenditures were $60,800,000 against a permitted allowance of $85,000,000, resulting in unused capacity of $24,200,000. The carryforward amount is 25% of $24,200,000 = $6,050,000.
(c) Remaining Capital Expenditure capacity for the balance of FY2023:
Total permitted CapEx for FY2023 − Year-to-date CapEx
= $91,050,000 − $52,800,000
= $38,250,000
Compliance: Yes. Year-to-date capital expenditures of $52,800,000 are within the total permitted maximum of $91,050,000 for fiscal year 2023, with $38,250,000 of remaining capacity for the fourth quarter.
Note: The mezzanine financing proceeds are designated, in part, for fleet expansion, terminal facility buildout, and technology upgrades as described in the use of proceeds section of the Credit Agreement. Such capital expenditures will be incurred over the course of fiscal years 2023, 2024, and 2025 and will be reflected in future quarterly Compliance Certificates. The Borrower's management projects total growth capital expenditures funded by the mezzanine proceeds to be deployed over approximately 18 to 24 months following the Closing Date.
Summary of Financial Covenant Compliance
Section 4: Adjusted EBITDA Reconciliation
Set forth below is a summary reconciliation of LTM Adjusted EBITDA for the Test Period ended June 30, 2023, prepared in accordance with the definition of "Adjusted EBITDA" set forth in Section 1.01 of the Credit Agreement:
(1) Represents fees and expenses incurred in connection with the negotiation, documentation, and closing of the Mezzanine Term Loan and the related amendment of the Senior Credit Facilities, which are non-recurring in nature and permitted to be added back under the Credit Agreement. (2) Represents the annualized run-rate impact of completed headcount reductions and operational efficiency improvements implemented in Q1 2023, capped at the amount permitted under the "Pro Forma Cost Savings" definition in Section 1.01 of the Credit Agreement. (3) Includes management fees, monitoring fees, and other amounts permitted to be added back under the Credit Agreement.
For reference, the following historical Adjusted EBITDA and revenue data are provided to demonstrate the year-over-year improvement trajectory of the Borrower:
The year-over-year improvement in Adjusted EBITDA is attributable to volume growth in the Borrower's dedicated fleet and intermodal services segments, the realization of cost savings from the facility consolidation initiative completed in the fourth quarter of fiscal year 2022, and improved pricing on contract renewals.
Section 5: Capital Structure Summary (Post-Closing)
Set forth below is a summary of the pro forma capital structure of the Borrower and its consolidated subsidiaries as of the Closing Date, after giving effect to the Transactions:
Leverage Summary:
The Senior Secured Credit Facilities are governed by that certain First Lien Credit Agreement, dated as of November 15, 2021, among the Borrower, Whitmore National Bank, N.A., as Administrative Agent, and the lenders party thereto, as amended by that certain First Amendment to First Lien Credit Agreement, dated as of September 14, 2023 (the "Senior Credit Agreement"), which amendment was entered into in connection with and as a condition to the closing of the Mezzanine Term Loan. The intercreditor arrangements between the First Lien Agent and the Mezzanine Lender are governed by that certain Intercreditor Agreement, dated as of September 29, 2023.
Section 6: Representations and Certifications
The undersigned, in her capacity as Chief Financial Officer of the Borrower and not in her individual capacity, hereby certifies to the Mezzanine Lender as follows:
(a) Accuracy of Financial Information. The financial information and calculations set forth in this Certificate are true, correct, and complete in all material respects as of the date hereof and have been prepared in accordance with the terms of the Credit Agreement and in conformity with GAAP (except as otherwise expressly permitted by the Credit Agreement). All computations of financial ratios and financial covenants have been made in accordance with the definitions and methodologies set forth in the Credit Agreement.
(b) Financial Covenant Compliance. As of the Closing Date and after giving pro forma effect to the borrowing under the Credit Agreement and the application of proceeds therefrom, the Borrower is in compliance with all financial covenants set forth in Section 8.01 of the Credit Agreement, as demonstrated by the calculations set forth in Section 3 of this Certificate.
(c) No Default. No Default or Event of Default (as each such term is defined in Section 9.01 of the Credit Agreement) has occurred and is continuing as of the date hereof or would result from the initial borrowing under the Credit Agreement on the Closing Date. The undersigned has no knowledge of any condition, event, or act which, with the giving of notice or lapse of time, or both, would constitute a Default or Event of Default under the Credit Agreement or any other Loan Document.
(d) Representations and Warranties. The representations and warranties of the Borrower and each Guarantor set forth in the Credit Agreement and the other Loan Documents are true and correct in all material respects as of the date hereof (or, in the case of representations and warranties qualified by materiality or "Material Adverse Effect," in all respects), except to the extent that such representations and warranties expressly relate to an earlier date, in which case such representations and warranties are 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 representations and warranties set forth in Article IV of the Credit Agreement, including those regarding corporate existence, power and authority, enforceability, no conflicts, governmental approvals, financial condition, absence of litigation, ERISA compliance, environmental matters, tax matters, intellectual property, insurance, and the security interests granted in the Collateral, are hereby confirmed and reaffirmed.
(e) No Material Adverse Effect. Since December 31, 2022 (the date of the most recent audited financial statements delivered to the Mezzanine Lender), there has been no event, circumstance, development, change, or effect that, individually or in the aggregate, has had or would reasonably be expected to have a Material Adverse Effect with respect to the Borrower and its subsidiaries, taken as a whole. The business, operations, properties, assets, and financial condition of the Borrower and its consolidated subsidiaries, taken as a whole, are substantially consistent with those reflected in the financial statements and projections previously delivered to the Mezzanine Lender in connection with the negotiation and execution of the Credit Agreement.
Section 7: Schedule of Definitions
The following key defined terms are used in this Certificate. Unless otherwise indicated, each term has the meaning assigned to it in the Credit Agreement:
"Adjusted EBITDA" — has the meaning set forth in Section 1.01 of the Credit Agreement, and generally means, for any Test Period, the consolidated net income of the Borrower and its subsidiaries for such period, plus (without duplication) the sum of (i) interest expense, (ii) income tax expense, (iii) depreciation and amortization expense, (iv) non-cash stock-based compensation, (v) non-recurring restructuring charges, (vi) transaction costs and expenses, (vii) pro forma cost savings from completed initiatives (subject to the caps and limitations set forth in the Credit Agreement), and (viii) certain other non-cash charges and permitted add-backs, minus non-cash gains to the extent included in consolidated net income, in each case as more fully described in the Credit Agreement.
"Capital Expenditures" — has the meaning set forth in Section 1.01 of the Credit Agreement, and generally means, for any period, the aggregate of all expenditures (whether paid in cash or accrued as a liability) by the Borrower and its subsidiaries during such period that, in accordance with GAAP, are or should be included in "additions to property, plant, or equipment" or similar items reflected in the consolidated statement of cash flows of the Borrower and its subsidiaries, excluding any such expenditure constituting a Permitted Acquisition.
"Fixed Charge Coverage Ratio" — means, as of the last day of any Test Period, the ratio of (a) LTM Adjusted EBITDA for such Test Period to (b) Fixed Charges for such Test Period.
"Fixed Charges" — has the meaning set forth in Section 1.01 of the Credit Agreement, and generally means, for any Test Period, without duplication, the sum of (i) cash interest expense on all funded indebtedness of the Borrower and its subsidiaries paid or payable during such period (excluding, for the avoidance of doubt, any paid-in-kind interest or other non-cash interest), (ii) scheduled principal amortization payments on all funded indebtedness during such period (excluding voluntary prepayments and mandatory prepayments from excess cash flow or asset sale proceeds), (iii) maintenance capital expenditures during such period, and (iv) cash taxes paid during such period.
"Liquidity" — means, as of any date of determination, the sum of (a) unrestricted cash and cash equivalents of the Borrower and its subsidiaries held in deposit accounts subject to a Control Agreement in favor of the First Lien Agent or the Mezzanine Lender, as applicable, plus (b) the aggregate amount of unused and available commitments under the Senior Secured Revolving Credit Facility (net of any outstanding letters of credit and swingline loans).
"Material Adverse Effect" — has the meaning set forth in Section 1.01 of the Credit Agreement, and generally means any event, change, circumstance, occurrence, effect, or condition that, individually or in the aggregate, has had or would reasonably be expected to have a material adverse effect on (a) the business, operations, properties, assets, liabilities, or financial condition of the Borrower and its subsidiaries, taken as a whole, (b) the ability of the Borrower or any Guarantor to perform its payment or other material obligations under any Loan Document, or (c) the rights of or remedies available to the Mezzanine Lender under any Loan Document.
"Total Funded Debt" — means, as of any date of determination, the aggregate principal amount of all funded indebtedness for borrowed money of the Borrower and its subsidiaries on a consolidated basis outstanding on such date, including, without limitation, the principal amount outstanding under the Senior Secured Term Loan B, drawn amounts under the Senior Secured Revolving Credit Facility, the principal amount of the Mezzanine Term Loan (including any PIK interest that has been capitalized and added to principal), and any other funded indebtedness for borrowed money, but excluding, for the avoidance of doubt, undrawn letters of credit and operating lease obligations.
"Total Leverage Ratio" — means, as of the last day of any Test Period, the ratio of (a) Total Funded Debt as of such date to (b) LTM Adjusted EBITDA for such Test Period.
Section 8: Supporting Documentation Reference
This Certificate is delivered to the Mezzanine Lender concurrently with or following delivery of the following documents and instruments in satisfaction of the conditions precedent set forth in Article V of the Credit Agreement:
(i) unaudited consolidated financial statements of the Borrower and its consolidated subsidiaries for the six-month period ended June 30, 2023, consisting of the consolidated balance sheet as of such date and the related consolidated statements of operations and cash flows for the six-month period then ended, certified by the Chief Financial Officer of the Borrower as fairly presenting, in all material respects, the financial condition and results of operations of the Borrower and its consolidated subsidiaries as of such date and for such period, in accordance with GAAP (subject to the absence of footnote disclosures and normal year-end audit adjustments);
(ii) the Officer's Certificate of Stonefield Logistics Group Inc., dated September 29, 2023, executed by Janet R. Prescott, Chief Financial Officer, and Marcus D. Callahan, General Counsel and Secretary, certifying as to the incumbency of officers, the good standing of the Borrower, the adoption of authorizing resolutions by the Board of Directors, and such other matters as required under Section 5.01 of the Credit Agreement;
(iii) the Solvency Certificate, dated September 29, 2023, executed by Janet R. Prescott, Chief Financial Officer of the Borrower, certifying that, after giving effect to the Transactions, the Borrower and its consolidated subsidiaries, on a consolidated basis, are Solvent (as defined in the Credit Agreement); and
(iv) the Borrowing Request, dated September 26, 2023, executed by the Borrower and delivered to the Mezzanine Lender in accordance with Section 2.02 of the Credit Agreement, requesting the initial borrowing under the Mezzanine Term Loan in the aggregate principal amount of $120,000,000 on the Closing Date.
The undersigned confirms that, to the best of her knowledge after due inquiry, all conditions precedent to the initial borrowing under the Credit Agreement set forth in Sections 5.01 and 5.02 of the Credit Agreement have been satisfied or waived as of the date hereof.
Signature
IN WITNESS WHEREOF, the undersigned has executed and delivered this Compliance Certificate as of the date first written above.
STONEFIELD LOGISTICS GROUP INC.
By: ________
Name: Janet R. Prescott
Title: Chief Financial Officer
Date: September 29, 2023
Address for notices:
Stonefield Logistics Group Inc. 4800 Commerce Parkway, Suite 1200 Fort Worth, Texas 76107
Attention: Janet R. Prescott, Chief Financial Officer
Telephone: (817) 555-4200
Email: jprescott@stonefieldlogistics.com
Delivery Information
This Certificate has been delivered to the following parties:
Mezzanine Lender:
Ridgeline Mezzanine Capital Fund III, LP c/o Ridgeline Capital Management, LLC 767 Lexington Avenue, 22nd Floor New York, New York 10065
Attention: Katherine M. Stroud, Managing Director
Telephone: (212) 555-8100
Email: kstroud@ridgelinecapital.com
With a copy to Mezzanine Lender's Counsel:
Archer Blackwell & Moss LLP 1585 Broadway, 34th Floor New York, New York 10036
Attention: Harrison T. Moss / Angela N. Whitford
Telephone: (212) 555-6300
Email: hmoss@archerblackwell.com / awhitford@archerblackwell.com
This Compliance Certificate is delivered pursuant to and in accordance with the terms of the Credit Agreement. Nothing contained herein shall be deemed to modify, amend, supplement, or otherwise alter any of the terms, conditions, or provisions of the Credit Agreement or any other Loan Document. In the event of any conflict between the terms of this Certificate and the Credit Agreement, the Credit Agreement shall control. This Certificate may be relied upon by the Mezzanine Lender and its successors and assigns.
Component | Amount
Senior Secured Term Loan B (outstanding principal balance) | $275,000,000
Senior Secured Revolving Credit Facility (drawn amount) | $12,000,000
Mezzanine Term Loan (initial principal amount) | $120,000,000
Capital leases and other funded indebtedness | $0
Total Funded Debt | $407,000,000
Test Period Ending | Maximum Total Leverage Ratio
Closing Date through and including the Test Period ending June 30, 2024 | 4.25 to 1.00
Test Period ending September 30, 2024 through and including the Test Period ending June 30, 2025 | 4.00 to 1.00
Test Period ending September 30, 2025 and each Test Period thereafter | 3.75 to 1.00
Component | Amount
Cash interest expense on Senior Secured Term Loan B (SOFR + 375 bps)(1) | $24,062,500
Cash interest expense on Senior Secured Revolving Credit Facility (SOFR + 350 bps on drawn amounts)(2) | $1,020,000
Pro forma cash interest expense on Mezzanine Term Loan (850 bps cash pay component on $120,000,000)(3) | $10,200,000
Commitment fee on undrawn Revolving Credit Facility (50 bps on $38,000,000 undrawn)(4) | $190,000
Scheduled principal amortization on Senior Secured Term Loan B (1.00% per annum of original principal)(5) | $2,750,000
Cash taxes paid during the Test Period | $8,750,000
Maintenance capital expenditures during the Test Period(6) | $32,400,000
Total Fixed Charges | $79,372,500
Item | Amount
Gross mezzanine proceeds received on Closing Date | $120,000,000
Less: Transaction costs and fees:
— Commitment fee to Ridgeline Mezzanine Capital Fund III, LP (2.00% of commitment) | ($2,400,000)
— Financial advisory fee to Zynvaro Thornton Advisory Group, LLC | ($900,000)
— Legal fees to Calderwood & Harkness LLP (Borrower's counsel) | ($675,000)
— Legal fees to Archer Blackwell & Moss LLP (Mezzanine Lender's counsel) | ($450,000)
— Senior Agent amendment and consent fee to Whitmore National Bank, N.A. | ($137,500)
Total transaction costs | ($4,562,500)
Net mezzanine proceeds | $115,437,500
Liquidity Component | Amount
Net mezzanine proceeds (as calculated above) | $115,437,500
Pre-existing unrestricted cash and cash equivalents (prior to Closing Date) | $24,850,000
Less: Application of mezzanine proceeds for designated purposes on Closing Date(1) | ($102,000,000)
Total unrestricted cash and cash equivalents | $38,287,500
Item | Amount
Total Revolving Credit Facility commitment | $50,000,000
Less: Drawn amount outstanding on the Closing Date | ($12,000,000)
Less: Outstanding letters of credit | ($0)
Available Revolving Credit Facility | $38,000,000
Item | Amount
Base Capital Expenditure allowance for FY2023 | $85,000,000
Plus: Carryforward from FY2022 (25% of unused FY2022 CapEx allowance)(1) | $6,050,000
Total permitted Capital Expenditures for FY2023 | $91,050,000
Financial Covenant | Requirement | Actual (Pro Forma) | Compliance
Maximum Total Leverage Ratio | ≤ 4.25x | 3.75x | Yes
Minimum Fixed Charge Coverage Ratio | ≥ 1.10x | 1.37x | Yes
Minimum Liquidity | ≥ $15,000,000 | $76,287,500 | Yes
Maximum Capital Expenditures (FY2023) | ≤ $91,050,000 | $52,800,000 YTD | Yes
Item | Amount
Net income for the LTM period ended June 30, 2023 | $28,350,000
Plus: Interest expense (inclusive of all funded indebtedness) | $25,400,000
Plus: Income tax expense (provision) | $11,200,000
Plus: Depreciation expense | $22,800,000
Plus: Amortization of intangible assets | $8,950,000
EBITDA | $96,700,000
Plus: Non-cash stock-based compensation expense | $2,650,000
Plus: Non-recurring restructuring charges (facility consolidation in Q4 2022) | $3,100,000
Plus: Transaction costs and expenses related to the Transactions(1) | $2,800,000
Plus: Pro forma cost savings from completed cost reduction initiatives(2) | $1,950,000
Plus: Non-cash purchase accounting adjustments | $850,000
Plus: Other permitted add-backs under the Credit Agreement(3) | $550,000
LTM Adjusted EBITDA | $108,600,000
Metric | FY2022 (Audited) | LTM Ended June 30, 2023 | Change
Revenue | $687,000,000 | $724,500,000 | +5.5%
Adjusted EBITDA | $98,400,000 | $108,600,000 | +10.4%
Adjusted EBITDA Margin | 14.3% | 15.0% | +70 bps
Tranche | Committed / Outstanding Amount | Interest Rate | Maturity Date | Priority / Security
Senior Secured Term Loan B | $275,000,000 outstanding | SOFR + 375 bps | November 15, 2026 | First Lien on substantially all assets
Senior Secured Revolving Credit Facility | $50,000,000 committed ($12,000,000 drawn) | SOFR + 350 bps (on drawn amounts); 50 bps commitment fee (on undrawn) | November 15, 2025 | First Lien (pari passu with Term Loan B)
Mezzanine Term Loan | $120,000,000 outstanding | 1,100 bps total (850 bps cash pay / 250 bps PIK) | September 29, 2029 | Second Lien / Subordinated
Total Funded Debt | $407,000,000
Metric | Calculation | Ratio
Total Leverage | $407,000,000 ÷ $108,600,000 | 3.75x
Senior Secured Leverage | $287,000,000 ÷ $108,600,000 | 2.64x
Mezzanine Leverage (incremental) | $120,000,000 ÷ $108,600,000 | 1.10x

COMPLIANCE CERTIFICATE

STONEFIELD LOGISTICS GROUP INC.

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