1012-00001 · Client 1012 · Correspondence

pre-closing-letter-ridgeline.docx DOCUMENT Finance & Banking

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PRIVILEGED & CONFIDENTIAL

CALDERWOOD & HARKNESS LLP Attorneys at Law 601 Lexington Avenue New York, New York 10022

Telephone: (212) 455-7000 Facsimile: (212) 455-7100

September 26, 2023

VIA EMAIL AND OVERNIGHT COURIER

Katherine M. Stroud, Managing Director Ridgeline Mezzanine Capital Fund III, LP c/o Ridgeline Capital Management, LLC 767 Lexington Avenue, 22nd Floor New York, New York 10065

Copy to:

Harrison T. Moss, Esq. Archer Blackwell & Moss LLP 1585 Broadway, 34th Floor New York, New York 10036

Re: Satisfaction of Conditions Precedent to Funding — Mezzanine Credit Agreement, dated September 14, 2023 (the "Mezzanine Credit Agreement"), among Stonefield Logistics Group Inc., a Delaware corporation ("Stonefield" or the "Borrower"), Ridgeline Mezzanine Capital Fund III, LP, a Delaware limited partnership (the "Mezzanine Lender"), and the guarantors party thereto

$120,000,000 Mezzanine Term Loan

Calderwood & Harkness Matter No. 1012-00001

Dear Ms. Stroud and Mr. Moss:

1. Introduction and Purpose

Calderwood & Harkness LLP ("Calderwood & Harkness" or "we") represents Stonefield Logistics Group Inc., a Delaware corporation ("Stonefield" or the "Borrower"), as borrower's counsel in connection with the Mezzanine Credit Agreement, dated as of September 14, 2023 (the "Mezzanine Credit Agreement"), among 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").

The purpose of this letter is to confirm that all conditions precedent to the initial borrowing and funding of the $120,000,000 mezzanine term loan (the "Mezzanine Term Loan") under Article V of the Mezzanine Credit Agreement have been satisfied or, as indicated below with respect to certain deliverables to be executed and delivered on the Closing Date, will be satisfied on or prior to the Closing Date of September 29, 2023 (the "Closing Date"). We have prepared this letter to provide you and your counsel at Archer Blackwell & Moss LLP with a comprehensive overview of the status of each condition precedent, together with the relevant supporting documentation, in order to facilitate an efficient and orderly closing of the transaction.

Capitalized terms used but not defined herein shall have the respective meanings ascribed to such terms in the Mezzanine Credit Agreement. All references to "Sections" and "Articles" are references to the Sections and Articles of the Mezzanine Credit Agreement, unless otherwise specified.

Concurrently with the delivery of this letter, the Borrower is submitting its irrevocable Borrowing Request dated September 26, 2023 (the "Borrowing Request"), requesting funding of the full $120,000,000 principal amount of the Mezzanine Term Loan on September 29, 2023, in accordance with Section 2.02 of the Mezzanine Credit Agreement. The Borrowing Request specifies the wire transfer instructions of the Borrower and certifies compliance with the applicable conditions precedent set forth in Article V. A copy of the executed Borrowing Request is enclosed herewith as Enclosure No. 1.

2. Status of Conditions Precedent — Detailed Certification

Set forth below is a detailed description of the status of each condition precedent to the initial funding of the Mezzanine Term Loan under Article V of the Mezzanine Credit Agreement. For ease of reference, we have organized this summary into the categories described below and have indicated for each item whether the applicable condition has been satisfied, or will be satisfied on or prior to the Closing Date.

2.1 Execution and Delivery of Transaction Documents

The following Transaction Documents (as defined in the Mezzanine Credit Agreement) are required to have been executed and delivered on or prior to the Closing Date:

Mezzanine Credit Agreement. The Mezzanine Credit Agreement was duly executed and delivered on September 14, 2023 by Stonefield Logistics Group Inc., as Borrower, Ridgeline Mezzanine Capital Fund III, LP, as Mezzanine Lender, and each of the Guarantors party thereto. Fully executed copies of the Mezzanine Credit Agreement have been distributed to all parties and their respective counsel.

Status: Satisfied.

Intercreditor Agreement. The Intercreditor Agreement (the "Intercreditor Agreement") was duly executed and delivered on September 14, 2023 among Whitmore National Bank, N.A. ("Whitmore"), in its capacity as Senior Administrative Agent and Senior Collateral Agent under the Senior Credit Agreement, Ridgeline Mezzanine Capital Fund III, LP, as Mezzanine Lender, and was acknowledged and agreed to by Stonefield Logistics Group Inc. The Intercreditor Agreement establishes the relative priorities of the security interests of the Senior Agent and the Mezzanine Lender in the shared collateral, sets forth standstill provisions, and addresses the respective enforcement rights of each secured party in accordance with customary intercreditor terms.

Status: Satisfied.

Mezzanine Guaranty Agreement. The Mezzanine Guaranty Agreement (the "Mezzanine Guaranty") was duly executed and delivered on September 14, 2023 by each of the following subsidiary Guarantors in favor of the Mezzanine Lender:

(a) Cascade Ridge SLG Holdings, LLC, a Delaware limited liability company (the direct parent of the Borrower);

(b) Stonefield Intermodal Services, Inc., a Texas corporation;

(d) Stonefield Freight Brokerage, Inc., a Delaware corporation.

The Mezzanine Guaranty provides for a full and unconditional guarantee by each Guarantor of all obligations of the Borrower under the Mezzanine Credit Agreement and the other Transaction Documents.

Status: Satisfied.

Mezzanine Pledge and Security Agreement. The Mezzanine Pledge and Security Agreement (the "Mezzanine Security Agreement") was duly executed and delivered on September 14, 2023 by the Borrower and each subsidiary Guarantor, granting to the Mezzanine Lender a second-priority perfected security interest (subject only to the first-priority security interests in favor of the Senior Agent under the Senior Credit Agreement and the terms of the Intercreditor Agreement) in substantially all assets of the Borrower and the subsidiary Guarantors, including without limitation all equipment, vehicles, rolling stock, accounts receivable, inventory, intellectual property, and equity interests in subsidiaries. The perfection of such security interests is addressed in Section 2.8 below.

Status: Satisfied.

Parent Equity Pledge Agreement. The Parent Equity Pledge Agreement (the "Parent Pledge") was duly executed and delivered on September 14, 2023 by Cascade Ridge SLG Holdings, LLC, as pledgor, in favor of the Mezzanine Lender, pursuant to which Cascade Ridge SLG Holdings, LLC has pledged 100% of its equity interests in Stonefield Logistics Group Inc. to the Mezzanine Lender on a first-priority basis. As contemplated by the Intercreditor Agreement and the Senior Credit Agreement, the equity interests in the Borrower held by Cascade Ridge SLG Holdings, LLC are not included in the collateral package securing the senior facility, and accordingly the Parent Pledge is not subject to the lien priority provisions of the Intercreditor Agreement. The perfection of the first-priority security interest in such equity interests is addressed in Section 2.8 below.

Status: Satisfied.

Amendment No. 3 to Senior Credit Agreement. Amendment No. 3 to the Amended and Restated Credit Agreement, dated as of April 7, 2022 (as amended by Amendment No. 1 thereto dated August 15, 2022, and Amendment No. 2 thereto dated February 28, 2023, the "Senior Credit Agreement"), among Stonefield Logistics Group Inc., as borrower, Whitmore National Bank, N.A., as Administrative Agent and Collateral Agent, and the lenders party thereto (including Whitmore National Bank, N.A., Greystone Commercial Lending Corp., Heritage Pacific Bank, and Clearfield Capital Finance, LLC), was duly executed and delivered on September 14, 2023 ("Amendment No. 3"). Amendment No. 3 amends the Senior Credit Agreement to, among other things: (i) permit the incurrence by the Borrower of up to $120,000,000 of mezzanine indebtedness under the Mezzanine Credit Agreement; (ii) permit the grant of second-priority liens on the shared collateral in favor of the Mezzanine Lender; and (iii) authorize the Borrower's entry into the Intercreditor Agreement and the other Transaction Documents.

Status: Satisfied.

Warrant Agreement. The Warrant Agreement (the "Warrant Agreement"), to be entered into between Stonefield Logistics Group Inc. and Ridgeline Mezzanine Capital Fund III, LP, providing for the issuance of warrants representing 3.0% warrant coverage of the fully-diluted equity of the Borrower on a post-exercise basis, at a nominal exercise price of $0.01 per share, with weighted-average broad-based anti-dilution protections and put rights exercisable upon a change of control or qualified public offering, is in agreed form and will be executed and delivered on the Closing Date, September 29, 2023.

Status: To be satisfied at Closing.

Registration Rights Agreement. The Registration Rights Agreement (the "Registration Rights Agreement"), to be entered into between Stonefield Logistics Group Inc. and Ridgeline Mezzanine Capital Fund III, LP, providing for customary demand and piggyback registration rights with respect to the shares of common stock issuable upon exercise of the warrants, is in agreed form and will be executed and delivered on the Closing Date, September 29, 2023.

Status: To be satisfied at Closing.

2.2 Senior Agent Consent

Consent Letter. On September 5, 2023, Whitmore National Bank, N.A., in its capacity as Senior Administrative Agent under the Senior Credit Agreement, delivered a written consent letter (the "Consent Letter") consenting to the incurrence of the mezzanine indebtedness under the Mezzanine Credit Agreement, the entry into the Intercreditor Agreement by the Senior Agent and the Loan Parties, and the grant of second-priority liens on the shared collateral in favor of the Mezzanine Lender. The Consent Letter was countersigned by each of the senior lenders under the Senior Credit Agreement (Whitmore National Bank, N.A., Greystone Commercial Lending Corp., Heritage Pacific Bank, and Clearfield Capital Finance, LLC), constituting the Required Lenders under the Senior Credit Agreement. A copy of the executed Consent Letter has been previously delivered to Archer Blackwell & Moss LLP.

Status: Satisfied.

Amendment Fee. In connection with the execution and delivery of Amendment No. 3, an amendment fee in the amount of $137,500 (representing 0.05% of the $275,000,000 aggregate commitment under the senior facility) is payable to Whitmore National Bank, N.A. on the Closing Date. Payment of the amendment fee will be made at Closing in accordance with the Funds Flow Memorandum (as described in Section 2.13 below).

Status: To be satisfied at Closing.

2.3 Corporate / Organizational Certificates and Resolutions

Secretary's Certificate of Stonefield Logistics Group Inc. The Secretary's Certificate of the Borrower is to be delivered at Closing, executed by Robert D. Nagamine, in his capacity as General Counsel and Secretary of the Borrower. The Secretary's Certificate will attach the following certified documents: (a) a certified copy of the Certificate of Incorporation of Stonefield Logistics Group Inc. (as amended to date), as filed with the Delaware Secretary of State; (b) a certified copy of the Bylaws of Stonefield Logistics Group Inc. (as amended to date); (c) a certified copy of the resolutions duly adopted by the Board of Directors of Stonefield Logistics Group Inc. authorizing the execution, delivery, and performance of the Mezzanine Credit Agreement and each of the other Transaction Documents to which the Borrower is a party, and the incurrence of the Mezzanine Term Loan and the transactions contemplated thereby; and (d) an incumbency certificate identifying the authorized officers of the Borrower, including Marcus W. Ellison, Chief Executive Officer; Janet R. Prescott, Chief Financial Officer; and Robert D. Nagamine, General Counsel and Secretary. A draft of the Secretary's Certificate is enclosed herewith as Enclosure No. 3 for your review.

Status: To be satisfied at Closing.

Secretary's Certificate of Subsidiary Guarantors (Combined). A combined Secretary's Certificate covering each of the subsidiary Guarantors is to be delivered at Closing. The combined certificate will cover the following entities and will attach the respective organizational documents, authorizing resolutions, and incumbency certificates for each:

(a) Stonefield Intermodal Services, Inc. (a Texas corporation);

(b) Stonefield Fleet Management, LLC (a Texas limited liability company); and

For each subsidiary Guarantor, the combined certificate will attach certified copies of the applicable certificate of incorporation or certificate of formation, bylaws or limited liability company agreement, and resolutions of the board of directors or managing member(s) authorizing the execution, delivery, and performance of the Mezzanine Guaranty, the Mezzanine Security Agreement, and the other Transaction Documents to which such subsidiary Guarantor is a party. A draft of the combined Secretary's Certificate is enclosed herewith as Enclosure No. 4.

Status: To be satisfied at Closing.

Cascade Ridge SLG Holdings, LLC. We note that the organizational documents for Cascade Ridge SLG Holdings, LLC (a Delaware limited liability company), in its capacity as pledgor under the Parent Equity Pledge Agreement and guarantor under the Mezzanine Guaranty Agreement, will also be certified and delivered at Closing. The certificate will include a certified copy of the Certificate of Formation, the Limited Liability Company Agreement, and resolutions or written consents of the managing member(s) authorizing the pledge of 100% of the equity interests in the Borrower and the guarantee of the Mezzanine Lender's obligations.

Status: To be satisfied at Closing.

2.4 Officer's Certificate (Closing Conditions)

An Officer's Certificate (the "Closing Certificate") is to be executed and delivered at Closing by Marcus W. Ellison, in his capacity as Chief Executive Officer of the Borrower, and Janet R. Prescott, in her capacity as Chief Financial Officer of the Borrower, certifying as of the Closing Date that:

(a) all representations and warranties of the Borrower and the other Loan Parties contained in the Mezzanine Credit Agreement and the other Transaction Documents are true and correct in all material respects (or, in the case of representations and warranties qualified by materiality or Material Adverse Change, in all respects) as of the Closing Date, both before and after giving effect to the borrowing under the Mezzanine Term Loan and the application of proceeds therefrom, except to the extent that any such representation or warranty expressly relates to an earlier date, in which case such representation or warranty shall be true and correct in all material respects as of such earlier date;

(b) no Default or Event of Default has occurred and is continuing on the Closing Date, or would result from the borrowing under the Mezzanine Term Loan or the consummation of the transactions contemplated by the Transaction Documents; and

(c) since June 30, 2023 (the date of the most recently delivered financial statements of the Borrower), there has been no event, change, circumstance, occurrence, or development that, individually or in the aggregate, has had or could reasonably be expected to have a Material Adverse Change with respect to the Borrower and its subsidiaries, taken as a whole.

A draft of the Closing Certificate is enclosed herewith as Enclosure No. 2 for your review.

Status: To be satisfied at Closing.

2.5 Solvency Certificate

A Solvency Certificate (the "Solvency Certificate") is to be executed and delivered at Closing by Janet R. Prescott, in her capacity as Chief Financial Officer of the Borrower, certifying that, after giving effect to the incurrence of the $120,000,000 Mezzanine Term Loan and the other transactions contemplated by the Transaction Documents (including the payment of all fees and expenses associated therewith), Stonefield Logistics Group Inc. and its subsidiaries, on a consolidated basis:

(a) are solvent, in that the fair value of the assets of the Borrower and its subsidiaries, on a consolidated basis, exceeds the total amount of their liabilities (including contingent and unliquidated liabilities);

(b) have adequate capital to conduct their businesses as currently conducted and as proposed to be conducted; and

For reference, total funded debt of the Borrower and its subsidiaries at Closing is expected to be approximately $407,000,000, consisting of: (i) $275,000,000 in outstanding borrowings under the Senior Term Loan B facility; (ii) $12,000,000 drawn on the $50,000,000 Senior Revolving Credit Facility; and (iii) $120,000,000 under the Mezzanine Term Loan. As of the last twelve months ("LTM") period ending June 30, 2023, the Borrower's consolidated Adjusted EBITDA was $108,600,000, resulting in a pro forma Total Leverage Ratio of approximately 3.75x. A draft of the Solvency Certificate is enclosed herewith as Enclosure No. 5.

Status: To be satisfied at Closing.

2.6 Compliance Certificate (Initial)

An initial Compliance Certificate (the "Initial Compliance Certificate") is to be executed and delivered at Closing by Janet R. Prescott, in her capacity as Chief Financial Officer of the Borrower, demonstrating initial compliance with each of the financial covenants set forth in Section 7.11 of the Mezzanine Credit Agreement, calculated on a pro forma basis as of the Closing Date based on the LTM period ending June 30, 2023. Set forth below is a preliminary summary of the financial covenant calculations, subject to final confirmation by the CFO:

(a) Maximum Total Leverage Ratio: The Mezzanine Credit Agreement requires that the Total Leverage Ratio (total funded indebtedness to LTM Adjusted EBITDA) shall not exceed 4.25 to 1.00. Based on total funded debt at Closing of approximately $407,000,000 and LTM Adjusted EBITDA of $108,600,000, the actual Total Leverage Ratio is approximately 3.75 to 1.00, which is within the covenant maximum. In compliance.

(b) Minimum Fixed Charge Coverage Ratio: The Mezzanine Credit Agreement requires that the Fixed Charge Coverage Ratio (as defined therein) shall not be less than 1.10 to 1.00. The precise calculation of the Fixed Charge Coverage Ratio is to be confirmed by the CFO and will be set forth in the final executed Initial Compliance Certificate. Based on our preliminary discussions with the Borrower's management, we expect this ratio to be in compliance. To be confirmed by CFO.

(c) Minimum Liquidity: The Mezzanine Credit Agreement requires that Minimum Liquidity (defined as the sum of unrestricted cash and cash equivalents plus availability under the Senior Revolving Credit Facility) shall at all times be not less than $15,000,000. At Closing, the Borrower will have approximately $38,000,000 of availability under the $50,000,000 Senior Revolving Credit Facility (after giving effect to $12,000,000 of outstanding revolving borrowings), plus cash on hand to be confirmed by the CFO. We expect Minimum Liquidity to be well in excess of the $15,000,000 covenant minimum. To be confirmed by CFO.

(d) Capital Expenditures: The Mezzanine Credit Agreement limits Capital Expenditures to $85,000,000 per fiscal year. We expect Capital Expenditures for the current fiscal year to be within the permitted amount, subject to final confirmation by the CFO. To be confirmed by CFO.

A draft of the Initial Compliance Certificate is enclosed herewith as Enclosure No. 6 for your review.

Status: To be satisfied at Closing.

2.7 Legal Opinions

Borrower's Counsel Opinion Letter. Calderwood & Harkness LLP will deliver at Closing a legal opinion letter addressed to Ridgeline Mezzanine Capital Fund III, LP in the form required by Section 5.01(g) of the Mezzanine Credit Agreement (the "Borrower's Counsel Opinion"). The Borrower's Counsel Opinion will cover, among other matters: (i) the due organization, valid existence, and good standing of Stonefield Logistics Group Inc. under the laws of the State of Delaware, and of each Guarantor under the laws of its respective jurisdiction of organization; (ii) the corporate or limited liability company authority and due authorization of each Loan Party to execute, deliver, and perform its obligations under the Mezzanine Credit Agreement and each of the other Transaction Documents to which it is a party; (iii) the due execution and delivery of each Transaction Document by each Loan Party that is a party thereto; (iv) the enforceability of the Mezzanine Credit Agreement and the other Transaction Documents against each Loan Party, subject to customary qualifications as to bankruptcy, insolvency, reorganization, moratorium, and other similar laws affecting creditors' rights generally, and to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law); (v) the absence of conflicts between the Transaction Documents and the organizational documents of any Loan Party or applicable law; and (vi) the absence of any required governmental consents, approvals, or authorizations in connection with the execution, delivery, and performance of the Transaction Documents. The opinion will be governed by and construed in accordance with the laws of the State of New York and the State of Delaware, as applicable.

Status: To be delivered at Closing.

UCC/Lien Perfection Opinion. Calderwood & Harkness LLP will also deliver at Closing a separate legal opinion letter addressed to the Mezzanine Lender with respect to the creation, attachment, and perfection of the security interests granted under the Transaction Documents (the "Lien Perfection Opinion"). The Lien Perfection Opinion will address: (i) the creation and attachment of the second-priority security interests in the collateral described in the Mezzanine Pledge and Security Agreement in favor of the Mezzanine Lender; (ii) the creation and attachment of the first-priority security interests in the equity interests of the Borrower described in the Parent Equity Pledge Agreement in favor of the Mezzanine Lender; and (iii) the perfection of such security interests upon the filing of UCC-1 financing statements in the applicable offices of the Secretary of State of the State of Delaware and the Secretary of State of the State of Texas, as described in Section 2.8 below.

Status: To be delivered at Closing.

2.8 UCC Filings and Lien Perfection

In order to perfect the security interests granted under the Mezzanine Security Agreement and the Parent Equity Pledge Agreement, the following UCC-1 financing statements have been prepared and are ready for filing on the Closing Date:

UCC-1 Financing Statement — Delaware (Stonefield Logistics Group Inc.). A UCC-1 financing statement has been prepared for filing with the Delaware Secretary of State, naming Ridgeline Mezzanine Capital Fund III, LP as secured party and Stonefield Logistics Group Inc. (EIN: 84-3217650) as debtor, covering a second-priority security interest in substantially all assets of the Borrower, as described in the Mezzanine Security Agreement. The filing-ready copy is enclosed herewith as Enclosure No. 7. This filing will be submitted on September 29, 2023, and we will promptly provide filing confirmation upon receipt.

Status: To be satisfied at Closing.

UCC-1 Financing Statement — Texas (Subsidiary Guarantors). A UCC-1 financing statement has been prepared for filing with the Texas Secretary of State, naming Ridgeline Mezzanine Capital Fund III, LP as secured party and each of Stonefield Intermodal Services, Inc. (EIN: 75-6849321) and Stonefield Fleet Management, LLC (EIN: 75-6912488) as debtors, covering a second-priority security interest in substantially all assets of the Texas subsidiary Guarantors, as described in the Mezzanine Security Agreement. The filing-ready copy is enclosed herewith as Enclosure No. 8. This filing will be submitted on September 29, 2023, and we will promptly provide filing confirmation upon receipt.

Status: To be satisfied at Closing.

UCC-1 Financing Statement — Delaware (Stonefield Freight Brokerage, Inc.). A separate UCC-1 financing statement has been prepared for filing with the Delaware Secretary of State, naming Ridgeline Mezzanine Capital Fund III, LP as secured party and Stonefield Freight Brokerage, Inc. (EIN: 84-3306715), a Delaware corporation, as debtor, covering a second-priority security interest in substantially all assets of Stonefield Freight Brokerage, Inc. The filing-ready copy is enclosed herewith as Enclosure No. 9. This filing will be submitted on September 29, 2023.

Status: To be satisfied at Closing.

Pre-Closing Lien Searches. Pre-closing UCC lien searches were completed on September 12, 2023 with respect to all Loan Parties in the States of Delaware and Texas. The search results confirmed the existence of the senior UCC-1 filings by Whitmore National Bank, N.A. as Collateral Agent under the Senior Credit Agreement, and the absence of any competing, intervening, or unexpected liens, security interests, or other encumbrances on the assets of the Loan Parties. A confirmation of the pre-closing UCC lien search results is enclosed herewith as Enclosure No. 10. A more detailed summary memorandum of the lien search results is available upon request.

2.9 Good Standing Certificates

The following certificates of good standing (or equivalent certificates of status) have been obtained or are in the process of being obtained and will be delivered at Closing:

(a) Certificate of good standing for Stonefield Logistics Group Inc. from the Delaware Secretary of State (jurisdiction of incorporation);

(b) Certificate of good standing (or equivalent certificate of authority) for Stonefield Logistics Group Inc. from the Texas Secretary of State (as a foreign corporation qualified to do business in the State of Texas);

(c) Certificate of good standing for Stonefield Intermodal Services, Inc. from the Texas Secretary of State (jurisdiction of incorporation);

(d) Certificate of good standing for Stonefield Fleet Management, LLC from the Texas Secretary of State (jurisdiction of organization);

(e) Certificate of good standing for Stonefield Freight Brokerage, Inc. from the Delaware Secretary of State (jurisdiction of incorporation); and

(f) Certificate of good standing for Cascade Ridge SLG Holdings, LLC from the Delaware Secretary of State (jurisdiction of organization).

We are currently in receipt of the certificates described in clauses (a), (c), and (f) above. The remaining certificates have been requested and are expected to be received prior to the Closing Date. We will deliver all good standing certificates to Archer Blackwell & Moss LLP promptly upon receipt.

Status: Obtained or in process; to be delivered at Closing.

2.10 Financial Statements

Audited Financial Statements (FY2022). The audited consolidated financial statements of Stonefield Logistics Group Inc. and its subsidiaries for the fiscal year ended December 31, 2022, audited by Braddock & Saylor LLP (engagement partner: William F. Saylor), including a consolidated balance sheet, consolidated statements of operations, consolidated statements of changes in stockholders' equity, and consolidated statements of cash flows, together with the notes thereto and the independent auditor's report, were previously delivered to the Mezzanine Lender and its counsel in connection with the negotiation and execution of the Mezzanine Credit Agreement. The FY2022 audited financial statements reflect Revenue of approximately $687,000,000 and Adjusted EBITDA of approximately $98,400,000. The audit opinion was unqualified.

Status: Satisfied.

Unaudited Interim Financial Statements (Six Months Ended June 30, 2023). The unaudited consolidated interim financial statements of Stonefield Logistics Group Inc. and its subsidiaries for the six-month period ended June 30, 2023, including an unaudited consolidated balance sheet and unaudited consolidated statements of operations, were previously delivered to the Mezzanine Lender and its counsel. The interim financial statements reflect LTM Adjusted EBITDA of approximately $108,600,000 as of June 30, 2023, demonstrating improved year-over-year operating performance.

Status: Satisfied.

2.11 Insurance Certificates

Certificates of insurance evidencing all insurance coverage required to be maintained by the Borrower and the other Loan Parties under Section 6.06 of the Mezzanine Credit Agreement, including commercial general liability, property and casualty, business interruption, and auto liability insurance, with Ridgeline Mezzanine Capital Fund III, LP named as additional insured and/or loss payee, as applicable, will be delivered at or prior to the Closing Date. The Borrower's insurance broker has been instructed to prepare and deliver the required certificates and endorsements, and we expect to be in a position to deliver such certificates to Archer Blackwell & Moss LLP in advance of the Closing Date.

Status: To be delivered at or prior to Closing.

2.12 Borrowing Request

The irrevocable Borrowing Request, dated September 26, 2023, has been duly executed by Marcus W. Ellison, as Chief Executive Officer of the Borrower, and is being delivered to the Mezzanine Lender concurrently with this letter. The Borrowing Request requests funding of the full $120,000,000 principal amount of the Mezzanine Term Loan on September 29, 2023, specifies the wire transfer instructions for the disbursement of proceeds to the Borrower, and certifies that the conditions precedent set forth in Article V of the Mezzanine Credit Agreement have been or will be satisfied on or prior to the Closing Date. A copy of the executed Borrowing Request is enclosed herewith as Enclosure No. 1.

Status: Satisfied (delivered herewith).

2.13 Funds Flow Memorandum

A closing funds flow memorandum (the "Funds Flow Memorandum") is being prepared and will be circulated to all parties and their respective counsel prior to the Closing Date. The Funds Flow Memorandum will set forth the detailed disbursement instructions for the $120,000,000 in mezzanine proceeds to be funded on the Closing Date, including the following anticipated disbursements:

We note that the commitment fee payable to the Mezzanine Lender is expected to be netted from the funding amount at Closing in accordance with Section 2.05 of the Mezzanine Credit Agreement. Wire transfer instructions for each recipient will be confirmed in the final Funds Flow Memorandum.

Status: Draft to be finalized prior to Closing.

2.14 Payment of Fees and Expenses

All fees and expenses required to be paid on or prior to the Closing Date under the Mezzanine Credit Agreement and the other Transaction Documents, including the commitment fee, financial advisory fee, legal fees, and Senior Agent amendment fee referenced above, will be paid at Closing in accordance with the Funds Flow Memorandum. We will confirm the final amounts and wire transfer instructions for all fee payments prior to the Closing Date.

Status: To be satisfied at Closing.

3. Representations and Warranties Confirmation

Based on our discussions with the officers of Stonefield Logistics Group Inc., including Marcus W. Ellison (Chief Executive Officer), Janet R. Prescott (Chief Financial Officer), and Robert D. Nagamine (General Counsel and Secretary), and our review of the relevant organizational documents, corporate resolutions, financial statements, material agreements, and other documents and instruments in connection with this transaction, we are not aware of any fact or circumstance that would prevent the Borrower from delivering the Officer's Certificate at Closing certifying that:

(a) all representations and warranties contained in Article IV of the Mezzanine Credit Agreement are true and correct in all material respects as of the Closing Date (or, in the case of representations and warranties qualified by materiality or Material Adverse Change, in all respects), both before and after giving effect to the borrowing and the application of proceeds therefrom; and

For your reference, we provide the following additional information regarding the Borrower:

• Registered Agent in Delaware: Pinnacle Corporate Services, Inc., 1209 Orange Street, Wilmington, Delaware 19801

• Principal Executive Offices: 4800 Commerce Parkway, Suite 1200, Fort Worth, Texas 76107

• USDOT Number: 2847391

4. Post-Closing Matters

To the extent that any deliverables under the Mezzanine Credit Agreement are designated as post-closing obligations, such items will be delivered within the applicable grace periods following the Closing Date as set forth in the Mezzanine Credit Agreement or as otherwise agreed among the parties. We do not anticipate any material post-closing deliverables at this time, but we will promptly notify Archer Blackwell & Moss LLP if any such items are identified.

As a scheduling reminder, the first quarterly interest payment date under the Mezzanine Credit Agreement is December 29, 2023. Pursuant to Section 2.06 of the Mezzanine Credit Agreement, interest on the Mezzanine Term Loan accrues at a blended rate consisting of (a) cash interest at a rate of 850 basis points (8.50%) per annum, payable quarterly in arrears, and (b) payment-in-kind ("PIK") interest at a rate of 250 basis points (2.50%) per annum, compounding quarterly and added to the outstanding principal balance of the Mezzanine Term Loan on each quarterly interest payment date. Accordingly, on December 29, 2023, a cash interest payment will be due and payable in respect of the period from the Closing Date through December 29, 2023, and PIK interest for such period will be capitalized and added to the outstanding principal balance.

5. Enclosures

The following documents are enclosed herewith for your review:

1. Borrowing Request / Funding Notice dated September 26, 2023

2. Draft Officer's Certificate of Stonefield Logistics Group Inc. (Closing Conditions)

3. Draft Secretary's Certificate of Stonefield Logistics Group Inc.

4. Draft Secretary's Certificate of Subsidiary Guarantors (Combined — Stonefield Intermodal Services, Inc., Stonefield Fleet Management, LLC, and Stonefield Freight Brokerage, Inc.)

5. Draft Solvency Certificate

6. Draft Initial Compliance Certificate

7. UCC-1 Financing Statement (Delaware Secretary of State — Stonefield Logistics Group Inc.) — filing-ready copy

8. UCC-1 Financing Statement (Texas Secretary of State — Stonefield Intermodal Services, Inc. and Stonefield Fleet Management, LLC) — filing-ready copy

9. UCC-1 Financing Statement (Delaware Secretary of State — Stonefield Freight Brokerage, Inc.) — filing-ready copy

10. Confirmation of pre-closing UCC lien search results (Delaware and Texas), dated September 12, 2023

6. Closing Logistics

The Closing is expected to take place on September 29, 2023. All Transaction Documents to be executed and delivered at Closing will be executed and delivered, and all funds will be disbursed, in accordance with the final Funds Flow Memorandum. We anticipate that the Closing will be conducted by exchange of signature pages via email or other electronic means, with original signature pages to follow by overnight courier.

We respectfully request that Archer Blackwell & Moss LLP confirm receipt of this letter and the enclosed documents at your earliest convenience and advise us if the Mezzanine Lender has any questions, comments, or concerns regarding the status of the conditions precedent, or if the Mezzanine Lender requires any additional deliverables or documentation in connection with the Closing.

For purposes of closing coordination, the principal contacts at Calderwood & Harkness LLP are as follows:

Stephanie Okafor — Partner (Responsible Attorney) Telephone: (212) 455-7214

Email: sokafor@calderwoodharkness.com

Daniel Obi — Senior Associate (Lead Associate) Telephone: (212) 455-7389

Email: dobi@calderwoodharkness.com

Lisa Morrow — Associate (Working Associate) Telephone: (212) 455-7412

Email: lmorrow@calderwoodharkness.com

Please do not hesitate to contact any of us should you have any questions or wish to discuss any of the foregoing.

7. Disclaimer / No Reliance Qualification

This letter is provided solely for informational purposes to facilitate closing coordination among the parties and their respective counsel in connection with the transactions contemplated by the Mezzanine Credit Agreement. This letter does not constitute, and shall not be construed as, a legal opinion of Calderwood & Harkness LLP on any matter. The legal opinions of Calderwood & Harkness LLP required to be delivered at Closing pursuant to Section 5.01(g) of the Mezzanine Credit Agreement, including the Borrower's Counsel Opinion and the Lien Perfection Opinion, will be delivered separately at Closing in the form required by the Mezzanine Credit Agreement, and are subject to the assumptions, qualifications, exceptions, and limitations set forth therein.

Nothing contained in this letter is intended to waive, modify, or otherwise affect any right, remedy, or obligation of the Borrower or any other Loan Party under the Mezzanine Credit Agreement or any other Transaction Document, all of which are expressly reserved. The Mezzanine Lender should not rely on the statements contained in this letter as a substitute for its own independent review of the Transaction Documents and the conditions precedent set forth therein.

[Remainder of Page Intentionally Left Blank — Signature Page Follows]

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Name: Stephanie Okafor

Title: Partner

Calderwood & Harkness LLP 601 Lexington Avenue New York, New York 10022 Telephone: (212) 455-7214

Email: sokafor@calderwoodharkness.com

cc:

Robert D. Nagamine, General Counsel & Secretary, Stonefield Logistics Group Inc. Janet R. Prescott, Chief Financial Officer, Stonefield Logistics Group Inc. Vincent A. Palumbo, Managing Partner, Cascade Ridge Capital Partners, LLC Angela N. Whitford, Esq., Archer Blackwell & Moss LLP Daniel Obi, Esq., Calderwood & Harkness LLP Lisa Morrow, Esq., Calderwood & Harkness LLP

Enclosures (10)

Recipient	Description	Amount
Ridgeline Mezzanine Capital Fund III, LP	Commitment Fee (2.00% of $120,000,000)	$2,400,000
Zynvaro Thornton Advisory Group, LLC	Financial Advisory Fee	$900,000
Calderwood & Harkness LLP	Borrower's Counsel Fees	$675,000
Archer Blackwell & Moss LLP	Lender's Counsel Expense Reimbursement	$450,000
Whitmore National Bank, N.A.	Senior Agent Amendment Fee	$137,500
Stonefield Logistics Group Inc.	Net Proceeds	Balance
Total Estimated Transaction Costs	$4,562,500

PRIVILEGED & CONFIDENTIAL
CALDERWOOD & HARKNESS LLP Attorneys at Law 601 Lexington Avenue New York, New York 10022
Telephone: (212) 455-7000 Facsimile: (212) 455-7100
September 26, 2023
VIA EMAIL AND OVERNIGHT COURIER
Katherine M. Stroud, Managing Director Ridgeline Mezzanine Capital Fund III, LP c/o Ridgeline Capital Management, LLC 767 Lexington Avenue, 22nd Floor New York, New York 10065
Copy to:
Harrison T. Moss, Esq. Archer Blackwell & Moss LLP 1585 Broadway, 34th Floor New York, New York 10036
Re: Satisfaction of Conditions Precedent to Funding — Mezzanine Credit Agreement, dated September 14, 2023 (the "Mezzanine Credit Agreement"), among Stonefield Logistics Group Inc., a Delaware corporation ("Stonefield" or the "Borrower"), Ridgeline Mezzanine Capital Fund III, LP, a Delaware limited partnership (the "Mezzanine Lender"), and the guarantors party thereto
$120,000,000 Mezzanine Term Loan
Calderwood & Harkness Matter No. 1012-00001
Dear Ms. Stroud and Mr. Moss:
1. Introduction and Purpose
Calderwood & Harkness LLP ("Calderwood & Harkness" or "we") represents Stonefield Logistics Group Inc., a Delaware corporation ("Stonefield" or the "Borrower"), as borrower's counsel in connection with the Mezzanine Credit Agreement, dated as of September 14, 2023 (the "Mezzanine Credit Agreement"), among 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").
The purpose of this letter is to confirm that all conditions precedent to the initial borrowing and funding of the $120,000,000 mezzanine term loan (the "Mezzanine Term Loan") under Article V of the Mezzanine Credit Agreement have been satisfied or, as indicated below with respect to certain deliverables to be executed and delivered on the Closing Date, will be satisfied on or prior to the Closing Date of September 29, 2023 (the "Closing Date"). We have prepared this letter to provide you and your counsel at Archer Blackwell & Moss LLP with a comprehensive overview of the status of each condition precedent, together with the relevant supporting documentation, in order to facilitate an efficient and orderly closing of the transaction.
Capitalized terms used but not defined herein shall have the respective meanings ascribed to such terms in the Mezzanine Credit Agreement. All references to "Sections" and "Articles" are references to the Sections and Articles of the Mezzanine Credit Agreement, unless otherwise specified.
Concurrently with the delivery of this letter, the Borrower is submitting its irrevocable Borrowing Request dated September 26, 2023 (the "Borrowing Request"), requesting funding of the full $120,000,000 principal amount of the Mezzanine Term Loan on September 29, 2023, in accordance with Section 2.02 of the Mezzanine Credit Agreement. The Borrowing Request specifies the wire transfer instructions of the Borrower and certifies compliance with the applicable conditions precedent set forth in Article V. A copy of the executed Borrowing Request is enclosed herewith as Enclosure No. 1.
2. Status of Conditions Precedent — Detailed Certification
Set forth below is a detailed description of the status of each condition precedent to the initial funding of the Mezzanine Term Loan under Article V of the Mezzanine Credit Agreement. For ease of reference, we have organized this summary into the categories described below and have indicated for each item whether the applicable condition has been satisfied, or will be satisfied on or prior to the Closing Date.
2.1 Execution and Delivery of Transaction Documents
The following Transaction Documents (as defined in the Mezzanine Credit Agreement) are required to have been executed and delivered on or prior to the Closing Date:
Mezzanine Credit Agreement. The Mezzanine Credit Agreement was duly executed and delivered on September 14, 2023 by Stonefield Logistics Group Inc., as Borrower, Ridgeline Mezzanine Capital Fund III, LP, as Mezzanine Lender, and each of the Guarantors party thereto. Fully executed copies of the Mezzanine Credit Agreement have been distributed to all parties and their respective counsel.
Status: Satisfied.
Intercreditor Agreement. The Intercreditor Agreement (the "Intercreditor Agreement") was duly executed and delivered on September 14, 2023 among Whitmore National Bank, N.A. ("Whitmore"), in its capacity as Senior Administrative Agent and Senior Collateral Agent under the Senior Credit Agreement, Ridgeline Mezzanine Capital Fund III, LP, as Mezzanine Lender, and was acknowledged and agreed to by Stonefield Logistics Group Inc. The Intercreditor Agreement establishes the relative priorities of the security interests of the Senior Agent and the Mezzanine Lender in the shared collateral, sets forth standstill provisions, and addresses the respective enforcement rights of each secured party in accordance with customary intercreditor terms.
Status: Satisfied.
Mezzanine Guaranty Agreement. The Mezzanine Guaranty Agreement (the "Mezzanine Guaranty") was duly executed and delivered on September 14, 2023 by each of the following subsidiary Guarantors in favor of the Mezzanine Lender:
(a) Cascade Ridge SLG Holdings, LLC, a Delaware limited liability company (the direct parent of the Borrower);
(b) Stonefield Intermodal Services, Inc., a Texas corporation;
(c) Stonefield Fleet Management, LLC, a Texas limited liability company; and
(d) Stonefield Freight Brokerage, Inc., a Delaware corporation.
The Mezzanine Guaranty provides for a full and unconditional guarantee by each Guarantor of all obligations of the Borrower under the Mezzanine Credit Agreement and the other Transaction Documents.
Status: Satisfied.
Mezzanine Pledge and Security Agreement. The Mezzanine Pledge and Security Agreement (the "Mezzanine Security Agreement") was duly executed and delivered on September 14, 2023 by the Borrower and each subsidiary Guarantor, granting to the Mezzanine Lender a second-priority perfected security interest (subject only to the first-priority security interests in favor of the Senior Agent under the Senior Credit Agreement and the terms of the Intercreditor Agreement) in substantially all assets of the Borrower and the subsidiary Guarantors, including without limitation all equipment, vehicles, rolling stock, accounts receivable, inventory, intellectual property, and equity interests in subsidiaries. The perfection of such security interests is addressed in Section 2.8 below.
Status: Satisfied.
Parent Equity Pledge Agreement. The Parent Equity Pledge Agreement (the "Parent Pledge") was duly executed and delivered on September 14, 2023 by Cascade Ridge SLG Holdings, LLC, as pledgor, in favor of the Mezzanine Lender, pursuant to which Cascade Ridge SLG Holdings, LLC has pledged 100% of its equity interests in Stonefield Logistics Group Inc. to the Mezzanine Lender on a first-priority basis. As contemplated by the Intercreditor Agreement and the Senior Credit Agreement, the equity interests in the Borrower held by Cascade Ridge SLG Holdings, LLC are not included in the collateral package securing the senior facility, and accordingly the Parent Pledge is not subject to the lien priority provisions of the Intercreditor Agreement. The perfection of the first-priority security interest in such equity interests is addressed in Section 2.8 below.
Status: Satisfied.
Amendment No. 3 to Senior Credit Agreement. Amendment No. 3 to the Amended and Restated Credit Agreement, dated as of April 7, 2022 (as amended by Amendment No. 1 thereto dated August 15, 2022, and Amendment No. 2 thereto dated February 28, 2023, the "Senior Credit Agreement"), among Stonefield Logistics Group Inc., as borrower, Whitmore National Bank, N.A., as Administrative Agent and Collateral Agent, and the lenders party thereto (including Whitmore National Bank, N.A., Greystone Commercial Lending Corp., Heritage Pacific Bank, and Clearfield Capital Finance, LLC), was duly executed and delivered on September 14, 2023 ("Amendment No. 3"). Amendment No. 3 amends the Senior Credit Agreement to, among other things: (i) permit the incurrence by the Borrower of up to $120,000,000 of mezzanine indebtedness under the Mezzanine Credit Agreement; (ii) permit the grant of second-priority liens on the shared collateral in favor of the Mezzanine Lender; and (iii) authorize the Borrower's entry into the Intercreditor Agreement and the other Transaction Documents.
Status: Satisfied.
Warrant Agreement. The Warrant Agreement (the "Warrant Agreement"), to be entered into between Stonefield Logistics Group Inc. and Ridgeline Mezzanine Capital Fund III, LP, providing for the issuance of warrants representing 3.0% warrant coverage of the fully-diluted equity of the Borrower on a post-exercise basis, at a nominal exercise price of $0.01 per share, with weighted-average broad-based anti-dilution protections and put rights exercisable upon a change of control or qualified public offering, is in agreed form and will be executed and delivered on the Closing Date, September 29, 2023.
Status: To be satisfied at Closing.
Registration Rights Agreement. The Registration Rights Agreement (the "Registration Rights Agreement"), to be entered into between Stonefield Logistics Group Inc. and Ridgeline Mezzanine Capital Fund III, LP, providing for customary demand and piggyback registration rights with respect to the shares of common stock issuable upon exercise of the warrants, is in agreed form and will be executed and delivered on the Closing Date, September 29, 2023.
Status: To be satisfied at Closing.
2.2 Senior Agent Consent
Consent Letter. On September 5, 2023, Whitmore National Bank, N.A., in its capacity as Senior Administrative Agent under the Senior Credit Agreement, delivered a written consent letter (the "Consent Letter") consenting to the incurrence of the mezzanine indebtedness under the Mezzanine Credit Agreement, the entry into the Intercreditor Agreement by the Senior Agent and the Loan Parties, and the grant of second-priority liens on the shared collateral in favor of the Mezzanine Lender. The Consent Letter was countersigned by each of the senior lenders under the Senior Credit Agreement (Whitmore National Bank, N.A., Greystone Commercial Lending Corp., Heritage Pacific Bank, and Clearfield Capital Finance, LLC), constituting the Required Lenders under the Senior Credit Agreement. A copy of the executed Consent Letter has been previously delivered to Archer Blackwell & Moss LLP.
Status: Satisfied.
Amendment Fee. In connection with the execution and delivery of Amendment No. 3, an amendment fee in the amount of $137,500 (representing 0.05% of the $275,000,000 aggregate commitment under the senior facility) is payable to Whitmore National Bank, N.A. on the Closing Date. Payment of the amendment fee will be made at Closing in accordance with the Funds Flow Memorandum (as described in Section 2.13 below).
Status: To be satisfied at Closing.
2.3 Corporate / Organizational Certificates and Resolutions
Secretary's Certificate of Stonefield Logistics Group Inc. The Secretary's Certificate of the Borrower is to be delivered at Closing, executed by Robert D. Nagamine, in his capacity as General Counsel and Secretary of the Borrower. The Secretary's Certificate will attach the following certified documents: (a) a certified copy of the Certificate of Incorporation of Stonefield Logistics Group Inc. (as amended to date), as filed with the Delaware Secretary of State; (b) a certified copy of the Bylaws of Stonefield Logistics Group Inc. (as amended to date); (c) a certified copy of the resolutions duly adopted by the Board of Directors of Stonefield Logistics Group Inc. authorizing the execution, delivery, and performance of the Mezzanine Credit Agreement and each of the other Transaction Documents to which the Borrower is a party, and the incurrence of the Mezzanine Term Loan and the transactions contemplated thereby; and (d) an incumbency certificate identifying the authorized officers of the Borrower, including Marcus W. Ellison, Chief Executive Officer; Janet R. Prescott, Chief Financial Officer; and Robert D. Nagamine, General Counsel and Secretary. A draft of the Secretary's Certificate is enclosed herewith as Enclosure No. 3 for your review.
Status: To be satisfied at Closing.
Secretary's Certificate of Subsidiary Guarantors (Combined). A combined Secretary's Certificate covering each of the subsidiary Guarantors is to be delivered at Closing. The combined certificate will cover the following entities and will attach the respective organizational documents, authorizing resolutions, and incumbency certificates for each:
(a) Stonefield Intermodal Services, Inc. (a Texas corporation);
(b) Stonefield Fleet Management, LLC (a Texas limited liability company); and
(c) Stonefield Freight Brokerage, Inc. (a Delaware corporation).
For each subsidiary Guarantor, the combined certificate will attach certified copies of the applicable certificate of incorporation or certificate of formation, bylaws or limited liability company agreement, and resolutions of the board of directors or managing member(s) authorizing the execution, delivery, and performance of the Mezzanine Guaranty, the Mezzanine Security Agreement, and the other Transaction Documents to which such subsidiary Guarantor is a party. A draft of the combined Secretary's Certificate is enclosed herewith as Enclosure No. 4.
Status: To be satisfied at Closing.
Cascade Ridge SLG Holdings, LLC. We note that the organizational documents for Cascade Ridge SLG Holdings, LLC (a Delaware limited liability company), in its capacity as pledgor under the Parent Equity Pledge Agreement and guarantor under the Mezzanine Guaranty Agreement, will also be certified and delivered at Closing. The certificate will include a certified copy of the Certificate of Formation, the Limited Liability Company Agreement, and resolutions or written consents of the managing member(s) authorizing the pledge of 100% of the equity interests in the Borrower and the guarantee of the Mezzanine Lender's obligations.
Status: To be satisfied at Closing.
2.4 Officer's Certificate (Closing Conditions)
An Officer's Certificate (the "Closing Certificate") is to be executed and delivered at Closing by Marcus W. Ellison, in his capacity as Chief Executive Officer of the Borrower, and Janet R. Prescott, in her capacity as Chief Financial Officer of the Borrower, certifying as of the Closing Date that:
(a) all representations and warranties of the Borrower and the other Loan Parties contained in the Mezzanine Credit Agreement and the other Transaction Documents are true and correct in all material respects (or, in the case of representations and warranties qualified by materiality or Material Adverse Change, in all respects) as of the Closing Date, both before and after giving effect to the borrowing under the Mezzanine Term Loan and the application of proceeds therefrom, except to the extent that any such representation or warranty expressly relates to an earlier date, in which case such representation or warranty shall be true and correct in all material respects as of such earlier date;
(b) no Default or Event of Default has occurred and is continuing on the Closing Date, or would result from the borrowing under the Mezzanine Term Loan or the consummation of the transactions contemplated by the Transaction Documents; and
(c) since June 30, 2023 (the date of the most recently delivered financial statements of the Borrower), there has been no event, change, circumstance, occurrence, or development that, individually or in the aggregate, has had or could reasonably be expected to have a Material Adverse Change with respect to the Borrower and its subsidiaries, taken as a whole.
A draft of the Closing Certificate is enclosed herewith as Enclosure No. 2 for your review.
Status: To be satisfied at Closing.
2.5 Solvency Certificate
A Solvency Certificate (the "Solvency Certificate") is to be executed and delivered at Closing by Janet R. Prescott, in her capacity as Chief Financial Officer of the Borrower, certifying that, after giving effect to the incurrence of the $120,000,000 Mezzanine Term Loan and the other transactions contemplated by the Transaction Documents (including the payment of all fees and expenses associated therewith), Stonefield Logistics Group Inc. and its subsidiaries, on a consolidated basis:
(a) are solvent, in that the fair value of the assets of the Borrower and its subsidiaries, on a consolidated basis, exceeds the total amount of their liabilities (including contingent and unliquidated liabilities);
(b) have adequate capital to conduct their businesses as currently conducted and as proposed to be conducted; and
(c) are able to pay their debts and other liabilities as they become due in the ordinary course of business.
For reference, total funded debt of the Borrower and its subsidiaries at Closing is expected to be approximately $407,000,000, consisting of: (i) $275,000,000 in outstanding borrowings under the Senior Term Loan B facility; (ii) $12,000,000 drawn on the $50,000,000 Senior Revolving Credit Facility; and (iii) $120,000,000 under the Mezzanine Term Loan. As of the last twelve months ("LTM") period ending June 30, 2023, the Borrower's consolidated Adjusted EBITDA was $108,600,000, resulting in a pro forma Total Leverage Ratio of approximately 3.75x. A draft of the Solvency Certificate is enclosed herewith as Enclosure No. 5.
Status: To be satisfied at Closing.
2.6 Compliance Certificate (Initial)
An initial Compliance Certificate (the "Initial Compliance Certificate") is to be executed and delivered at Closing by Janet R. Prescott, in her capacity as Chief Financial Officer of the Borrower, demonstrating initial compliance with each of the financial covenants set forth in Section 7.11 of the Mezzanine Credit Agreement, calculated on a pro forma basis as of the Closing Date based on the LTM period ending June 30, 2023. Set forth below is a preliminary summary of the financial covenant calculations, subject to final confirmation by the CFO:
(a) Maximum Total Leverage Ratio: The Mezzanine Credit Agreement requires that the Total Leverage Ratio (total funded indebtedness to LTM Adjusted EBITDA) shall not exceed 4.25 to 1.00. Based on total funded debt at Closing of approximately $407,000,000 and LTM Adjusted EBITDA of $108,600,000, the actual Total Leverage Ratio is approximately 3.75 to 1.00, which is within the covenant maximum. In compliance.
(b) Minimum Fixed Charge Coverage Ratio: The Mezzanine Credit Agreement requires that the Fixed Charge Coverage Ratio (as defined therein) shall not be less than 1.10 to 1.00. The precise calculation of the Fixed Charge Coverage Ratio is to be confirmed by the CFO and will be set forth in the final executed Initial Compliance Certificate. Based on our preliminary discussions with the Borrower's management, we expect this ratio to be in compliance. To be confirmed by CFO.
(c) Minimum Liquidity: The Mezzanine Credit Agreement requires that Minimum Liquidity (defined as the sum of unrestricted cash and cash equivalents plus availability under the Senior Revolving Credit Facility) shall at all times be not less than $15,000,000. At Closing, the Borrower will have approximately $38,000,000 of availability under the $50,000,000 Senior Revolving Credit Facility (after giving effect to $12,000,000 of outstanding revolving borrowings), plus cash on hand to be confirmed by the CFO. We expect Minimum Liquidity to be well in excess of the $15,000,000 covenant minimum. To be confirmed by CFO.
(d) Capital Expenditures: The Mezzanine Credit Agreement limits Capital Expenditures to $85,000,000 per fiscal year. We expect Capital Expenditures for the current fiscal year to be within the permitted amount, subject to final confirmation by the CFO. To be confirmed by CFO.
A draft of the Initial Compliance Certificate is enclosed herewith as Enclosure No. 6 for your review.
Status: To be satisfied at Closing.
2.7 Legal Opinions
Borrower's Counsel Opinion Letter. Calderwood & Harkness LLP will deliver at Closing a legal opinion letter addressed to Ridgeline Mezzanine Capital Fund III, LP in the form required by Section 5.01(g) of the Mezzanine Credit Agreement (the "Borrower's Counsel Opinion"). The Borrower's Counsel Opinion will cover, among other matters: (i) the due organization, valid existence, and good standing of Stonefield Logistics Group Inc. under the laws of the State of Delaware, and of each Guarantor under the laws of its respective jurisdiction of organization; (ii) the corporate or limited liability company authority and due authorization of each Loan Party to execute, deliver, and perform its obligations under the Mezzanine Credit Agreement and each of the other Transaction Documents to which it is a party; (iii) the due execution and delivery of each Transaction Document by each Loan Party that is a party thereto; (iv) the enforceability of the Mezzanine Credit Agreement and the other Transaction Documents against each Loan Party, subject to customary qualifications as to bankruptcy, insolvency, reorganization, moratorium, and other similar laws affecting creditors' rights generally, and to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law); (v) the absence of conflicts between the Transaction Documents and the organizational documents of any Loan Party or applicable law; and (vi) the absence of any required governmental consents, approvals, or authorizations in connection with the execution, delivery, and performance of the Transaction Documents. The opinion will be governed by and construed in accordance with the laws of the State of New York and the State of Delaware, as applicable.
Status: To be delivered at Closing.
UCC/Lien Perfection Opinion. Calderwood & Harkness LLP will also deliver at Closing a separate legal opinion letter addressed to the Mezzanine Lender with respect to the creation, attachment, and perfection of the security interests granted under the Transaction Documents (the "Lien Perfection Opinion"). The Lien Perfection Opinion will address: (i) the creation and attachment of the second-priority security interests in the collateral described in the Mezzanine Pledge and Security Agreement in favor of the Mezzanine Lender; (ii) the creation and attachment of the first-priority security interests in the equity interests of the Borrower described in the Parent Equity Pledge Agreement in favor of the Mezzanine Lender; and (iii) the perfection of such security interests upon the filing of UCC-1 financing statements in the applicable offices of the Secretary of State of the State of Delaware and the Secretary of State of the State of Texas, as described in Section 2.8 below.
Status: To be delivered at Closing.
2.8 UCC Filings and Lien Perfection
In order to perfect the security interests granted under the Mezzanine Security Agreement and the Parent Equity Pledge Agreement, the following UCC-1 financing statements have been prepared and are ready for filing on the Closing Date:
UCC-1 Financing Statement — Delaware (Stonefield Logistics Group Inc.). A UCC-1 financing statement has been prepared for filing with the Delaware Secretary of State, naming Ridgeline Mezzanine Capital Fund III, LP as secured party and Stonefield Logistics Group Inc. (EIN: 84-3217650) as debtor, covering a second-priority security interest in substantially all assets of the Borrower, as described in the Mezzanine Security Agreement. The filing-ready copy is enclosed herewith as Enclosure No. 7. This filing will be submitted on September 29, 2023, and we will promptly provide filing confirmation upon receipt.
Status: To be satisfied at Closing.
UCC-1 Financing Statement — Texas (Subsidiary Guarantors). A UCC-1 financing statement has been prepared for filing with the Texas Secretary of State, naming Ridgeline Mezzanine Capital Fund III, LP as secured party and each of Stonefield Intermodal Services, Inc. (EIN: 75-6849321) and Stonefield Fleet Management, LLC (EIN: 75-6912488) as debtors, covering a second-priority security interest in substantially all assets of the Texas subsidiary Guarantors, as described in the Mezzanine Security Agreement. The filing-ready copy is enclosed herewith as Enclosure No. 8. This filing will be submitted on September 29, 2023, and we will promptly provide filing confirmation upon receipt.
Status: To be satisfied at Closing.
UCC-1 Financing Statement — Delaware (Stonefield Freight Brokerage, Inc.). A separate UCC-1 financing statement has been prepared for filing with the Delaware Secretary of State, naming Ridgeline Mezzanine Capital Fund III, LP as secured party and Stonefield Freight Brokerage, Inc. (EIN: 84-3306715), a Delaware corporation, as debtor, covering a second-priority security interest in substantially all assets of Stonefield Freight Brokerage, Inc. The filing-ready copy is enclosed herewith as Enclosure No. 9. This filing will be submitted on September 29, 2023.
Status: To be satisfied at Closing.
Pre-Closing Lien Searches. Pre-closing UCC lien searches were completed on September 12, 2023 with respect to all Loan Parties in the States of Delaware and Texas. The search results confirmed the existence of the senior UCC-1 filings by Whitmore National Bank, N.A. as Collateral Agent under the Senior Credit Agreement, and the absence of any competing, intervening, or unexpected liens, security interests, or other encumbrances on the assets of the Loan Parties. A confirmation of the pre-closing UCC lien search results is enclosed herewith as Enclosure No. 10. A more detailed summary memorandum of the lien search results is available upon request.
2.9 Good Standing Certificates
The following certificates of good standing (or equivalent certificates of status) have been obtained or are in the process of being obtained and will be delivered at Closing:
(a) Certificate of good standing for Stonefield Logistics Group Inc. from the Delaware Secretary of State (jurisdiction of incorporation);
(b) Certificate of good standing (or equivalent certificate of authority) for Stonefield Logistics Group Inc. from the Texas Secretary of State (as a foreign corporation qualified to do business in the State of Texas);
(c) Certificate of good standing for Stonefield Intermodal Services, Inc. from the Texas Secretary of State (jurisdiction of incorporation);
(d) Certificate of good standing for Stonefield Fleet Management, LLC from the Texas Secretary of State (jurisdiction of organization);
(e) Certificate of good standing for Stonefield Freight Brokerage, Inc. from the Delaware Secretary of State (jurisdiction of incorporation); and
(f) Certificate of good standing for Cascade Ridge SLG Holdings, LLC from the Delaware Secretary of State (jurisdiction of organization).
We are currently in receipt of the certificates described in clauses (a), (c), and (f) above. The remaining certificates have been requested and are expected to be received prior to the Closing Date. We will deliver all good standing certificates to Archer Blackwell & Moss LLP promptly upon receipt.
Status: Obtained or in process; to be delivered at Closing.
2.10 Financial Statements
Audited Financial Statements (FY2022). The audited consolidated financial statements of Stonefield Logistics Group Inc. and its subsidiaries for the fiscal year ended December 31, 2022, audited by Braddock & Saylor LLP (engagement partner: William F. Saylor), including a consolidated balance sheet, consolidated statements of operations, consolidated statements of changes in stockholders' equity, and consolidated statements of cash flows, together with the notes thereto and the independent auditor's report, were previously delivered to the Mezzanine Lender and its counsel in connection with the negotiation and execution of the Mezzanine Credit Agreement. The FY2022 audited financial statements reflect Revenue of approximately $687,000,000 and Adjusted EBITDA of approximately $98,400,000. The audit opinion was unqualified.
Status: Satisfied.
Unaudited Interim Financial Statements (Six Months Ended June 30, 2023). The unaudited consolidated interim financial statements of Stonefield Logistics Group Inc. and its subsidiaries for the six-month period ended June 30, 2023, including an unaudited consolidated balance sheet and unaudited consolidated statements of operations, were previously delivered to the Mezzanine Lender and its counsel. The interim financial statements reflect LTM Adjusted EBITDA of approximately $108,600,000 as of June 30, 2023, demonstrating improved year-over-year operating performance.
Status: Satisfied.
2.11 Insurance Certificates
Certificates of insurance evidencing all insurance coverage required to be maintained by the Borrower and the other Loan Parties under Section 6.06 of the Mezzanine Credit Agreement, including commercial general liability, property and casualty, business interruption, and auto liability insurance, with Ridgeline Mezzanine Capital Fund III, LP named as additional insured and/or loss payee, as applicable, will be delivered at or prior to the Closing Date. The Borrower's insurance broker has been instructed to prepare and deliver the required certificates and endorsements, and we expect to be in a position to deliver such certificates to Archer Blackwell & Moss LLP in advance of the Closing Date.
Status: To be delivered at or prior to Closing.
2.12 Borrowing Request
The irrevocable Borrowing Request, dated September 26, 2023, has been duly executed by Marcus W. Ellison, as Chief Executive Officer of the Borrower, and is being delivered to the Mezzanine Lender concurrently with this letter. The Borrowing Request requests funding of the full $120,000,000 principal amount of the Mezzanine Term Loan on September 29, 2023, specifies the wire transfer instructions for the disbursement of proceeds to the Borrower, and certifies that the conditions precedent set forth in Article V of the Mezzanine Credit Agreement have been or will be satisfied on or prior to the Closing Date. A copy of the executed Borrowing Request is enclosed herewith as Enclosure No. 1.
Status: Satisfied (delivered herewith).
2.13 Funds Flow Memorandum
A closing funds flow memorandum (the "Funds Flow Memorandum") is being prepared and will be circulated to all parties and their respective counsel prior to the Closing Date. The Funds Flow Memorandum will set forth the detailed disbursement instructions for the $120,000,000 in mezzanine proceeds to be funded on the Closing Date, including the following anticipated disbursements:
We note that the commitment fee payable to the Mezzanine Lender is expected to be netted from the funding amount at Closing in accordance with Section 2.05 of the Mezzanine Credit Agreement. Wire transfer instructions for each recipient will be confirmed in the final Funds Flow Memorandum.
Status: Draft to be finalized prior to Closing.
2.14 Payment of Fees and Expenses
All fees and expenses required to be paid on or prior to the Closing Date under the Mezzanine Credit Agreement and the other Transaction Documents, including the commitment fee, financial advisory fee, legal fees, and Senior Agent amendment fee referenced above, will be paid at Closing in accordance with the Funds Flow Memorandum. We will confirm the final amounts and wire transfer instructions for all fee payments prior to the Closing Date.
Status: To be satisfied at Closing.
3. Representations and Warranties Confirmation
Based on our discussions with the officers of Stonefield Logistics Group Inc., including Marcus W. Ellison (Chief Executive Officer), Janet R. Prescott (Chief Financial Officer), and Robert D. Nagamine (General Counsel and Secretary), and our review of the relevant organizational documents, corporate resolutions, financial statements, material agreements, and other documents and instruments in connection with this transaction, we are not aware of any fact or circumstance that would prevent the Borrower from delivering the Officer's Certificate at Closing certifying that:
(a) all representations and warranties contained in Article IV of the Mezzanine Credit Agreement are true and correct in all material respects as of the Closing Date (or, in the case of representations and warranties qualified by materiality or Material Adverse Change, in all respects), both before and after giving effect to the borrowing and the application of proceeds therefrom; and
(b) no Default or Event of Default has occurred and is continuing on the Closing Date, or would result from the borrowing under the Mezzanine Term Loan or the consummation of the transactions contemplated by the Transaction Documents.
For your reference, we provide the following additional information regarding the Borrower:
• Registered Agent in Delaware: Pinnacle Corporate Services, Inc., 1209 Orange Street, Wilmington, Delaware 19801
• Principal Executive Offices: 4800 Commerce Parkway, Suite 1200, Fort Worth, Texas 76107
• USDOT Number: 2847391
4. Post-Closing Matters
To the extent that any deliverables under the Mezzanine Credit Agreement are designated as post-closing obligations, such items will be delivered within the applicable grace periods following the Closing Date as set forth in the Mezzanine Credit Agreement or as otherwise agreed among the parties. We do not anticipate any material post-closing deliverables at this time, but we will promptly notify Archer Blackwell & Moss LLP if any such items are identified.
As a scheduling reminder, the first quarterly interest payment date under the Mezzanine Credit Agreement is December 29, 2023. Pursuant to Section 2.06 of the Mezzanine Credit Agreement, interest on the Mezzanine Term Loan accrues at a blended rate consisting of (a) cash interest at a rate of 850 basis points (8.50%) per annum, payable quarterly in arrears, and (b) payment-in-kind ("PIK") interest at a rate of 250 basis points (2.50%) per annum, compounding quarterly and added to the outstanding principal balance of the Mezzanine Term Loan on each quarterly interest payment date. Accordingly, on December 29, 2023, a cash interest payment will be due and payable in respect of the period from the Closing Date through December 29, 2023, and PIK interest for such period will be capitalized and added to the outstanding principal balance.
5. Enclosures
The following documents are enclosed herewith for your review:
1. Borrowing Request / Funding Notice dated September 26, 2023
2. Draft Officer's Certificate of Stonefield Logistics Group Inc. (Closing Conditions)
3. Draft Secretary's Certificate of Stonefield Logistics Group Inc.
4. Draft Secretary's Certificate of Subsidiary Guarantors (Combined — Stonefield Intermodal Services, Inc., Stonefield Fleet Management, LLC, and Stonefield Freight Brokerage, Inc.)
5. Draft Solvency Certificate
6. Draft Initial Compliance Certificate
7. UCC-1 Financing Statement (Delaware Secretary of State — Stonefield Logistics Group Inc.) — filing-ready copy
8. UCC-1 Financing Statement (Texas Secretary of State — Stonefield Intermodal Services, Inc. and Stonefield Fleet Management, LLC) — filing-ready copy
9. UCC-1 Financing Statement (Delaware Secretary of State — Stonefield Freight Brokerage, Inc.) — filing-ready copy
10. Confirmation of pre-closing UCC lien search results (Delaware and Texas), dated September 12, 2023
6. Closing Logistics
The Closing is expected to take place on September 29, 2023. All Transaction Documents to be executed and delivered at Closing will be executed and delivered, and all funds will be disbursed, in accordance with the final Funds Flow Memorandum. We anticipate that the Closing will be conducted by exchange of signature pages via email or other electronic means, with original signature pages to follow by overnight courier.
We respectfully request that Archer Blackwell & Moss LLP confirm receipt of this letter and the enclosed documents at your earliest convenience and advise us if the Mezzanine Lender has any questions, comments, or concerns regarding the status of the conditions precedent, or if the Mezzanine Lender requires any additional deliverables or documentation in connection with the Closing.
For purposes of closing coordination, the principal contacts at Calderwood & Harkness LLP are as follows:
Stephanie Okafor — Partner (Responsible Attorney) Telephone: (212) 455-7214
Email: sokafor@calderwoodharkness.com
Daniel Obi — Senior Associate (Lead Associate) Telephone: (212) 455-7389
Email: dobi@calderwoodharkness.com
Lisa Morrow — Associate (Working Associate) Telephone: (212) 455-7412
Email: lmorrow@calderwoodharkness.com
Please do not hesitate to contact any of us should you have any questions or wish to discuss any of the foregoing.
7. Disclaimer / No Reliance Qualification
This letter is provided solely for informational purposes to facilitate closing coordination among the parties and their respective counsel in connection with the transactions contemplated by the Mezzanine Credit Agreement. This letter does not constitute, and shall not be construed as, a legal opinion of Calderwood & Harkness LLP on any matter. The legal opinions of Calderwood & Harkness LLP required to be delivered at Closing pursuant to Section 5.01(g) of the Mezzanine Credit Agreement, including the Borrower's Counsel Opinion and the Lien Perfection Opinion, will be delivered separately at Closing in the form required by the Mezzanine Credit Agreement, and are subject to the assumptions, qualifications, exceptions, and limitations set forth therein.
Nothing contained in this letter is intended to waive, modify, or otherwise affect any right, remedy, or obligation of the Borrower or any other Loan Party under the Mezzanine Credit Agreement or any other Transaction Document, all of which are expressly reserved. The Mezzanine Lender should not rely on the statements contained in this letter as a substitute for its own independent review of the Transaction Documents and the conditions precedent set forth therein.
[Remainder of Page Intentionally Left Blank — Signature Page Follows]
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Name: Stephanie Okafor
Title: Partner
Calderwood & Harkness LLP 601 Lexington Avenue New York, New York 10022 Telephone: (212) 455-7214
Email: sokafor@calderwoodharkness.com
cc:
Robert D. Nagamine, General Counsel & Secretary, Stonefield Logistics Group Inc. Janet R. Prescott, Chief Financial Officer, Stonefield Logistics Group Inc. Vincent A. Palumbo, Managing Partner, Cascade Ridge Capital Partners, LLC Angela N. Whitford, Esq., Archer Blackwell & Moss LLP Daniel Obi, Esq., Calderwood & Harkness LLP Lisa Morrow, Esq., Calderwood & Harkness LLP
Enclosures (10)
Recipient | Description | Amount
Ridgeline Mezzanine Capital Fund III, LP | Commitment Fee (2.00% of $120,000,000) | $2,400,000
Zynvaro Thornton Advisory Group, LLC | Financial Advisory Fee | $900,000
Calderwood & Harkness LLP | Borrower's Counsel Fees | $675,000
Archer Blackwell & Moss LLP | Lender's Counsel Expense Reimbursement | $450,000
Whitmore National Bank, N.A. | Senior Agent Amendment Fee | $137,500
Stonefield Logistics Group Inc. | Net Proceeds | Balance
Total Estimated Transaction Costs | $4,562,500

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