MEZZANINE GUARANTY AGREEMENT
dated as of
September 14, 2023
by
EACH OF THE GUARANTORS LISTED ON SCHEDULE I HERETO
in favor of
RIDGELINE MEZZANINE CAPITAL FUND III, LP, a Delaware limited partnership,
as Mezzanine Lender
Made in connection with that certain Mezzanine Credit Agreement, dated as of September 14, 2023 (as amended, restated, supplemented or otherwise modified from time to time, the "Mezzanine Credit Agreement"), among Stonefield Logistics Group Inc., a Delaware corporation (the "Borrower"), Ridgeline Mezzanine Capital Fund III, LP, as Mezzanine Lender, and the guarantors party thereto.
MEZZANINE GUARANTY AGREEMENT
This MEZZANINE GUARANTY AGREEMENT (as amended, restated, supplemented or otherwise modified from time to time, this "Guaranty"), dated as of September 14, 2023, is made by each of the entities listed on Schedule I hereto (collectively, the "Guarantors" and each individually, a "Guarantor"), in favor of RIDGELINE MEZZANINE CAPITAL FUND III, LP, a Delaware limited partnership (the "Mezzanine Lender").
RECITALS
WHEREAS:
A. Stonefield Logistics Group Inc., a Delaware corporation (the "Borrower"), has entered into that certain Mezzanine Credit Agreement, dated as of September 14, 2023 (as amended, restated, supplemented or otherwise modified from time to time, the "Mezzanine Credit Agreement"), with Ridgeline Mezzanine Capital Fund III, LP, as Mezzanine Lender, pursuant to which the Mezzanine Lender has agreed to make a mezzanine term loan in the aggregate principal amount of One Hundred Twenty Million Dollars ($120,000,000) (the "Mezzanine Loan") to the Borrower, subject to the terms and conditions set forth therein;
B. Each Guarantor is a direct or indirect subsidiary of the Borrower or is the direct parent and holder of equity interests in the Borrower (in the case of Cascade Ridge SLG Holdings, LLC) and will derive substantial direct and indirect benefit from the making of the Mezzanine Loan and the other extensions of credit under the Mezzanine Credit Agreement, and each Guarantor acknowledges that the Mezzanine Loan proceeds will be used, among other things, to fund fleet expansion, terminal facility buildout, and technology platform upgrades that will inure to the benefit of the Borrower and each of its subsidiaries;
C. It is a condition precedent to the obligation of the Mezzanine Lender to make the Mezzanine Loan under the Mezzanine Credit Agreement that each Guarantor execute and deliver this Mezzanine Guaranty Agreement in favor of the Mezzanine Lender;
D. As used herein, "Guaranteed Obligations" encompasses all Obligations (as defined in the Mezzanine Credit Agreement), including, without limitation, all principal, interest (including Cash Interest and PIK Interest, as each is defined in the Mezzanine Credit Agreement), fees, costs, expenses, indemnification obligations, mandatory prepayment premiums, and all other amounts payable by the Borrower under or in connection with the Mezzanine Credit Agreement, the Mezzanine Pledge and Security Agreement, the Parent Equity Pledge Agreement, the Warrant Agreement, the Registration Rights Agreement, and all other agreements, instruments, and documents delivered in connection therewith (collectively, the "Mezzanine Loan Documents"); and
E. This Mezzanine Guaranty Agreement is subject to the terms and conditions of that certain Intercreditor Agreement, dated as of September 14, 2023 (as amended, restated, supplemented or otherwise modified from time to time, the "Intercreditor Agreement"), among Whitmore National Bank, N.A., as administrative agent and collateral agent for the Senior Lenders (in such capacities, the "Senior Agent"), Ridgeline Mezzanine Capital Fund III, LP, as Mezzanine Lender, and acknowledged by the Borrower, which Intercreditor Agreement sets forth, among other things, the relative rights and priorities of the Senior Agent and the Senior Lenders, on the one hand, and the Mezzanine Lender, on the other hand, with respect to the collateral securing the obligations under the Senior Credit Agreement (as defined below) and the Mezzanine Loan Documents.
NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and to induce the Mezzanine Lender to make the Mezzanine Loan and extend the other financial accommodations to the Borrower under the Mezzanine Credit Agreement, each Guarantor hereby agrees with the Mezzanine Lender as follows:
ARTICLE I — DEFINITIONS
Section 1.01 — Defined Terms
As used in this Guaranty, the following terms shall have the meanings set forth below:
"Bankruptcy Code" means Title 11 of the United States Code, 11 U.S.C. §§ 101 et seq., as amended from time to time, and any successor statute thereto.
"Borrower" means Stonefield Logistics Group Inc., a Delaware corporation, with its principal office at 4800 Commerce Parkway, Suite 1200, Fort Worth, Texas 76107, and its successors and permitted assigns under the Mezzanine Credit Agreement.
"Business Day" has the meaning assigned to such term in the Mezzanine Credit Agreement.
"Cash Interest" means interest on the outstanding principal balance of the Mezzanine Loan payable in cash at a rate of eight hundred fifty (850) basis points per annum, as more fully described in the Mezzanine Credit Agreement.
"Change of Control" has the meaning assigned to such term in the Mezzanine Credit Agreement.
"Default" means any event or condition that, with the giving of notice, lapse of time, or both, would constitute an Event of Default.
"Event of Default" has the meaning assigned to such term in Section 5.01 hereof.
"Guaranteed Obligations" means all Obligations of the Borrower under the Mezzanine Credit Agreement and each other Mezzanine Loan Document, whether now existing or hereafter arising, direct or indirect, absolute or contingent, due or to become due, including, without limitation:
(a) the principal amount of the Mezzanine Loan (One Hundred Twenty Million Dollars ($120,000,000) on the date hereof), together with all accrued and unpaid Cash Interest (at a rate of eight hundred fifty (850) basis points per annum) and PIK Interest (at a rate of two hundred fifty (250) basis points per annum, compounding quarterly and added to the outstanding principal balance of the Mezzanine Loan on each Interest Payment Date);
(b) all fees payable under the Mezzanine Credit Agreement and the other Mezzanine Loan Documents, including, without limitation, the Commitment Fee in the amount of Two Million Four Hundred Thousand Dollars ($2,400,000);
(c) all interest accruing at the default rate upon the occurrence and during the continuance of an Event of Default at an additional two hundred (200) basis points per annum above the otherwise applicable rate (resulting in a total rate of one thousand three hundred (1,300) basis points per annum, inclusive of Cash Interest and PIK Interest, during any period in which default interest is applicable);
(d) all costs, expenses, and indemnification obligations payable by the Borrower under or in connection with the Mezzanine Loan Documents, including, without limitation, all reasonable and documented fees and disbursements of counsel to the Mezzanine Lender;
(e) all mandatory prepayment amounts, including, without limitation, amounts payable upon a Change of Control at one hundred three percent (103%) of the outstanding principal amount of the Mezzanine Loan plus all accrued and unpaid interest (including PIK Interest) and all other amounts then due and owing under the Mezzanine Loan Documents; and
(f) all other obligations and liabilities of the Borrower arising under the Mezzanine Loan Documents, whether for principal, interest, fees, premiums, indemnities, costs, expenses, or otherwise, and whether now existing or hereafter arising, direct or indirect, absolute or contingent, due or to become due, and howsoever evidenced.
"Guarantor" means each of the entities listed on Schedule I hereto, and any entity that hereafter becomes a party to this Guaranty by execution and delivery of a Guarantor Joinder Agreement substantially in the form of Exhibit A hereto.
"Guarantor Joinder Agreement" means a Guarantor Joinder Agreement substantially in the form of Exhibit A hereto, pursuant to which an additional entity becomes a Guarantor hereunder.
"Guaranty" means this Mezzanine Guaranty Agreement, as the same may be amended, restated, supplemented or otherwise modified from time to time.
"Intercreditor Agreement" means that certain Intercreditor Agreement, dated as of September 14, 2023, among Whitmore National Bank, N.A., as Senior Agent, Ridgeline Mezzanine Capital Fund III, LP, as Mezzanine Lender, and acknowledged by the Borrower, as the same may be amended, restated, supplemented or otherwise modified from time to time in accordance with its terms.
"Interest Payment Date" has the meaning assigned to such term in the Mezzanine Credit Agreement.
"Material Adverse Effect" has the meaning assigned to such term in the Mezzanine Credit Agreement.
"Maturity Date" means September 29, 2029, as such date may be extended or accelerated in accordance with the terms of the Mezzanine Credit Agreement.
"Mezzanine Credit Agreement" has the meaning assigned to such term in the Recitals hereto.
"Mezzanine Lender" means Ridgeline Mezzanine Capital Fund III, LP, a Delaware limited partnership, with its principal office at 767 Lexington Avenue, 22nd Floor, New York, New York 10065, and its successors and assigns.
"Mezzanine Loan" means the mezzanine term loan in the aggregate principal amount of One Hundred Twenty Million Dollars ($120,000,000) made pursuant to the Mezzanine Credit Agreement, maturing on the Maturity Date.
"Mezzanine Loan Documents" means, collectively, the Mezzanine Credit Agreement, this Guaranty, the Mezzanine Pledge and Security Agreement, the Parent Equity Pledge Agreement, the Warrant Agreement, the Registration Rights Agreement, and all other agreements, instruments, certificates, and documents delivered in connection with or pursuant to any of the foregoing, in each case as the same may be amended, restated, supplemented or otherwise modified from time to time.
"Mezzanine Pledge and Security Agreement" means the Mezzanine Pledge and Security Agreement, dated as of September 14, 2023, by the Borrower and the Subsidiary Guarantors in favor of the Mezzanine Lender, as amended, restated, supplemented or otherwise modified from time to time.
"Parent Equity Pledge Agreement" means the Equity Pledge Agreement, dated as of September 14, 2023, by Cascade Ridge SLG Holdings, LLC in favor of the Mezzanine Lender, pursuant to which Cascade Ridge SLG Holdings, LLC has pledged one hundred percent (100%) of the equity interests in the Borrower to the Mezzanine Lender as security for the Guaranteed Obligations (subject to the Intercreditor Agreement), as amended, restated, supplemented or otherwise modified from time to time.
"Payment in Full" means the indefeasible payment and satisfaction in full in cash of all Guaranteed Obligations (other than contingent indemnification and expense reimbursement obligations for which no claim has been asserted) and the termination of all commitments under the Mezzanine Credit Agreement.
"PIK Interest" means interest on the outstanding principal balance of the Mezzanine Loan at a rate of two hundred fifty (250) basis points per annum, which interest is not paid in cash but instead compounds quarterly and is added to the outstanding principal balance of the Mezzanine Loan on each Interest Payment Date, as more fully described in the Mezzanine Credit Agreement.
"Registration Rights Agreement" means the Registration Rights Agreement, dated as of September 14, 2023, among the Borrower, Cascade Ridge SLG Holdings, LLC, and the Mezzanine Lender, as amended, restated, supplemented or otherwise modified from time to time.
"Senior Agent" means Whitmore National Bank, N.A., in its capacities as administrative agent and collateral agent under the Senior Credit Agreement, together with its successors in such capacities.
"Senior Credit Agreement" means the Amended and Restated Credit Agreement, dated as of April 7, 2022 (originally dated as of November 15, 2019), among the Borrower, Whitmore National Bank, N.A., as Administrative Agent and Collateral Agent, and the lenders party thereto, as amended by Amendment No. 1, dated as of August 12, 2020, Amendment No. 2, dated as of March 18, 2021, and Amendment No. 3, dated as of September 14, 2023, and as the same may be further amended, restated, supplemented or otherwise modified from time to time in accordance with the Intercreditor Agreement.
"Senior Facility" means the Two Hundred Seventy-Five Million Dollar ($275,000,000) Senior Secured Term Loan B facility and the Fifty Million Dollar ($50,000,000) Senior Secured Revolving Credit Facility, in each case under the Senior Credit Agreement.
"Senior Lenders" means the lenders from time to time party to the Senior Credit Agreement.
"Subsidiary" has the meaning assigned to such term in the Mezzanine Credit Agreement.
"Subsidiary Guarantors" means each Guarantor that is a Subsidiary of the Borrower, being, as of the date hereof, Stonefield Intermodal Services, Inc., Stonefield Fleet Management, LLC, and Stonefield Freight Brokerage, Inc.
"UCC" means the Uniform Commercial Code as in effect from time to time in the State of New York or, when the laws of any other jurisdiction govern the perfection or priority of any security interest, the Uniform Commercial Code as in effect from time to time in such other jurisdiction.
"Warrant Agreement" means the Warrant Agreement, dated as of September 14, 2023, between the Borrower and the Mezzanine Lender, as amended, restated, supplemented or otherwise modified from time to time.
Section 1.02 — Interpretation; Rules of Construction
Unless the context otherwise requires:
(a) Terms used but not defined herein shall have the meanings assigned to such terms in the Mezzanine Credit Agreement.
(b) Terms defined in the UCC and not otherwise defined herein or in the Mezzanine Credit Agreement shall have the meanings assigned to them in the UCC to the extent applicable.
(c) References herein to any Article, Section, Schedule, or Exhibit are references to Articles, Sections, Schedules, or Exhibits of or to this Guaranty, unless otherwise specified.
(d) The words "hereof," "herein," "hereunder," "hereto," and similar words refer to this Guaranty as a whole and not to any particular provision of this Guaranty.
(e) The words "include," "includes," and "including" are deemed to be followed by the phrase "without limitation."
(f) References to any agreement, instrument, or document shall mean such agreement, instrument, or document as amended, restated, supplemented, or otherwise modified from time to time to the extent permitted by the terms thereof and of the Mezzanine Loan Documents.
(g) References to any person include the successors and permitted assigns of such person.
(h) References to any law, rule, or regulation shall mean such law, rule, or regulation as amended, modified, supplemented, or replaced from time to time, and shall include all rules, regulations, and orders promulgated thereunder.
(i) The singular includes the plural, and vice versa.
(j) All headings used herein are for convenience of reference only and shall not define, modify, limit, or otherwise affect the substance of any provision of this Guaranty.
(k) This Guaranty shall be construed and interpreted in accordance with the laws of the State of New York, applying New York principles of construction, including the principle that contracts are to be construed against the drafter only to the extent that the meaning of the language is genuinely ambiguous.
Section 1.03 — Mezzanine Credit Agreement Controls
In the event of any conflict or inconsistency between the terms and provisions of this Guaranty and the terms and provisions of the Mezzanine Credit Agreement, the terms and provisions of the Mezzanine Credit Agreement shall control and govern; provided, however, that the foregoing shall not apply with respect to any provision of this Guaranty that is expressly stated herein to control notwithstanding any provision to the contrary in the Mezzanine Credit Agreement. The inclusion in this Guaranty of terms and provisions that supplement or are additional to those contained in the Mezzanine Credit Agreement shall not be deemed a conflict with the Mezzanine Credit Agreement.
ARTICLE II — THE GUARANTY
Section 2.01 — Guaranty of the Guaranteed Obligations
Each Guarantor hereby, jointly and severally, unconditionally and irrevocably guarantees to the Mezzanine Lender the full and punctual payment when due (whether at stated maturity, upon acceleration, upon mandatory prepayment, or otherwise) and performance of all Guaranteed Obligations. This Guaranty constitutes a guaranty of payment and performance and not merely a guaranty of collection, and the Mezzanine Lender shall not be required to exhaust any right or remedy or take any action against the Borrower, any other Guarantor, or any other person or entity, or against any collateral, before enforcing this Guaranty against any Guarantor.
Without limiting the generality of the foregoing, this Guaranty covers, among other things: (a) the full principal amount of the Mezzanine Loan, as increased from time to time by the addition of PIK Interest (which compounds quarterly and is added to the outstanding principal balance of the Mezzanine Loan on each Interest Payment Date); (b) all accrued and unpaid Cash Interest and PIK Interest; (c) all mandatory prepayment premiums, including, without limitation, the prepayment premium of one hundred three percent (103%) of the outstanding principal amount of the Mezzanine Loan (including capitalized PIK Interest) payable upon a Change of Control, together with all accrued and unpaid interest thereon; and (d) all fees, costs, expenses, indemnification obligations, and other amounts payable under the Mezzanine Loan Documents.
Each Guarantor acknowledges and agrees that the amount of the Guaranteed Obligations guaranteed hereunder may increase over time as a result of the compounding and capitalization of PIK Interest and the accrual of other obligations under the Mezzanine Loan Documents, and that such increase shall not diminish, limit, or otherwise affect the obligations of each Guarantor under this Guaranty.
Section 2.02 — Guaranty Absolute and Unconditional
The obligations of each Guarantor under this Guaranty are absolute, unconditional, and irrevocable, irrespective of the value, genuineness, validity, regularity, or enforceability of any of the Guaranteed Obligations or any Mezzanine Loan Document, and irrespective of any other circumstance whatsoever that might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor, it being the intent of each Guarantor that its obligations hereunder shall not be discharged until Payment in Full of the Guaranteed Obligations. Without limiting the generality of the foregoing, the obligations of each Guarantor hereunder shall not be released, discharged, or otherwise affected by any of the following:
(a) any invalidity, irregularity, or unenforceability of all or any part of the Guaranteed Obligations or any Mezzanine Loan Document, or any lack of validity or enforceability of any agreement or instrument relating to any Guaranteed Obligation;
(b) any change in the time, manner, or place of payment of, or in any other term of, all or any part of the Guaranteed Obligations, or any amendment, modification, supplement, renewal, extension, acceleration, or waiver of or any consent to departure from the Mezzanine Credit Agreement or any other Mezzanine Loan Document, including, without limitation, any increase in the principal amount of the Mezzanine Loan (whether by reason of capitalized PIK Interest or otherwise), any increase or decrease in the rate of interest, and any change in the Maturity Date;
(c) any taking, exchange, release, impairment, or non-perfection of any collateral or any taking, release, amendment, waiver of, or consent to departure from any other guaranty, for all or any of the Guaranteed Obligations;
(d) any manner of application of any collateral, or proceeds thereof, to all or any of the Guaranteed Obligations, or any manner of sale or other disposition of any collateral for all or any of the Guaranteed Obligations;
(e) any change, restructuring, or termination of the corporate, limited liability company, partnership, or other organizational structure or existence of the Borrower or any Guarantor, including, without limitation, any merger, consolidation, dissolution, liquidation, or change of control of the Borrower or any Guarantor;
(f) any insolvency, bankruptcy, reorganization, arrangement, adjustment, composition, assignment for the benefit of creditors, receivership, liquidation, winding up, dissolution, or similar proceeding commenced by or against the Borrower, any Guarantor, or any other person or entity, or any resulting release or discharge of all or any part of the Guaranteed Obligations;
(g) any defense, set-off, counterclaim, recoupment, or reduction that the Borrower or any other person or entity may have or assert against the Mezzanine Lender or any other person or entity, whether in connection with the Guaranteed Obligations, the transactions contemplated by the Mezzanine Loan Documents, or any unrelated transaction;
(h) any election of remedies by the Mezzanine Lender that destroys or otherwise impairs the subrogation rights of any Guarantor, the right of any Guarantor to proceed against the Borrower or any other obligor for reimbursement, or any other right of any Guarantor to proceed against any person or entity;
(i) any failure on the part of the Mezzanine Lender to disclose to any Guarantor any information relating to the business, operations, condition (financial or otherwise), prospects, or creditworthiness of the Borrower or any other obligor, whether or not such information would or could have affected the decision of any Guarantor to enter into this Guaranty, it being understood and agreed that each Guarantor has assumed responsibility for being and keeping itself informed of the financial condition of the Borrower and each other Guarantor; or
(j) any other circumstance (including, without limitation, any statute of limitations) or any existence of or reliance on any representation by the Mezzanine Lender that might otherwise constitute a defense available to, or a discharge of, the Borrower, any Guarantor, or any other guarantor or surety.
This Section 2.02 is not intended to limit the rights, benefits, or protections afforded to the Guarantors under Section 2.08 (Limitation on Guarantor Liability) or Section 2.10 (Intercreditor Agreement Subordination).
Section 2.03 — Continuing Guaranty; Reinstatement
This Guaranty is a continuing guaranty and shall apply to all Guaranteed Obligations whenever arising, whether now existing or hereafter incurred. This Guaranty shall remain in full force and effect until Payment in Full of the Guaranteed Obligations. Each Guarantor acknowledges that the Mezzanine Lender may continue to make the Mezzanine Loan and other extensions of credit, and to allow the Borrower to incur Guaranteed Obligations, in reliance upon this Guaranty.
If at any time any payment of any of the Guaranteed Obligations is rescinded or must otherwise be returned, refunded, or restored by the Mezzanine Lender upon the insolvency, bankruptcy, or reorganization of the Borrower, any Guarantor, or any other person or entity, or upon or as a result of the appointment of a receiver, intervenor, conservator, or trustee for the Borrower, any Guarantor, or any other person or entity, or otherwise, including pursuant to any settlement or compromise entered into by the Mezzanine Lender in its reasonable discretion with any person or entity (including the Borrower or any Guarantor), this Guaranty and the obligations of each Guarantor hereunder shall be reinstated with respect to any such payment as though such payment had not been made. Each Guarantor agrees that it shall not be entitled to any benefit of any funds or properties received by the Mezzanine Lender unless and until Payment in Full of the Guaranteed Obligations has occurred. This provision shall survive the termination of this Guaranty and shall constitute a continuing obligation of each Guarantor.
Section 2.04 — Payment by Guarantors
If the Borrower shall fail to pay any Guaranteed Obligation when and as the same shall become due and payable, whether at stated maturity, upon acceleration, upon mandatory prepayment, or otherwise, each Guarantor shall, upon written demand by the Mezzanine Lender (which demand need not be accompanied by any statement of the amount due, the basis for the demand, or any other information), immediately pay or cause to be paid to the Mezzanine Lender an amount equal to the amount of such Guaranteed Obligation that is then due and payable (including any interest that has accrued thereon). The Mezzanine Lender shall not be required to make demand upon all or any particular Guarantor, and may make demand upon any one or more Guarantors in such order and at such times as the Mezzanine Lender may determine in its sole discretion.
All payments to be made by any Guarantor hereunder shall be made in immediately available funds in lawful money of the United States of America, without set-off, counterclaim, deduction, or withholding of any kind, to such account or at such address as the Mezzanine Lender may from time to time designate by written notice to such Guarantor.
Any amounts paid by a Guarantor hereunder in respect of any Guaranteed Obligation shall bear interest from the date of demand therefor at the rate per annum applicable to the underlying Guaranteed Obligation as provided in the Mezzanine Credit Agreement, including, if applicable, the default rate of one thousand three hundred (1,300) basis points per annum (comprised of eight hundred fifty (850) basis points Cash Interest, two hundred fifty (250) basis points PIK Interest, and two hundred (200) basis points default interest), from and after the occurrence and during the continuance of any Event of Default.
Section 2.05 — No Discharge or Diminishment of Guaranty
The obligations of each Guarantor under this Guaranty shall not be discharged, diminished, or otherwise affected by any of the following, and this Guaranty shall continue to be effective, or be reinstated, as the case may be, as to each of the following:
(a) any extension, renewal, settlement, compromise, waiver, or release in respect of any Guaranteed Obligation, by operation of law or otherwise, or any obligation of any other Guarantor under this Guaranty;
(b) any modification or amendment of or supplement to any Mezzanine Loan Document (including any increase in the amount of the Mezzanine Loan, whether resulting from PIK Interest capitalization or otherwise);
(c) any acceptance by the Mezzanine Lender of additional guarantees, endorsements, or other security for any or all of the Guaranteed Obligations;
(d) any release, non-perfection, or invalidity of any direct or indirect security for any Guaranteed Obligation, including, without limitation, any release of liens under the Mezzanine Pledge and Security Agreement or the Parent Equity Pledge Agreement;
(e) any release of any other Guarantor or other obligor with respect to any Guaranteed Obligation;
(f) any impairment in the value of any collateral securing any Guaranteed Obligation, whether arising by reason of market conditions, failure to perfect, or otherwise;
(g) any change in the manner or order in which the Mezzanine Lender applies any payments received by it with respect to any Guaranteed Obligation;
(h) subject to the provisions of the Intercreditor Agreement, any exercise or non-exercise of any right, remedy, or power under or in connection with the Senior Facility, the Senior Credit Agreement, or any other agreement, instrument, or document related thereto; or
(i) any other act or thing or omission or delay to do any other act or thing that may or might in any manner or to any extent vary the risk of any Guarantor or that would otherwise operate as a discharge of any Guarantor as a matter of law or equity (other than Payment in Full of the Guaranteed Obligations).
Section 2.06 — Subordination of Subrogation and Contribution Rights
Until Payment in Full of all Guaranteed Obligations, each Guarantor hereby irrevocably waives and agrees not to exercise any claim, right, or remedy, direct or indirect, that such Guarantor now has or may hereafter acquire against the Borrower or any other Guarantor that arises from the existence, payment, performance, or enforcement of such Guarantor's obligations under or in respect of this Guaranty, including, without limitation:
(a) any right of subrogation, reimbursement, exoneration, contribution, or indemnification;
(b) any right to participate in any claim or remedy of the Mezzanine Lender against the Borrower, any other Guarantor, or any collateral that the Mezzanine Lender now has or may hereafter acquire, whether or not such claim, right, or remedy arises in equity or under contract, statute, or common law, including, without limitation, any right to assert, file, or prove a claim in any proceeding under the Bankruptcy Code or similar law and any right or remedy pursuant to Section 509 of the Bankruptcy Code or any comparable provision of applicable state law; and
(c) any right to receive any payment (whether by set-off or otherwise) on account of any of the foregoing claims, rights, or remedies.
Subject to the Intercreditor Agreement, any subrogation, contribution, reimbursement, or indemnification claims of any Guarantor against the Borrower or any other Guarantor are hereby subordinated in all respects to the prior Payment in Full of the Guaranteed Obligations. If, notwithstanding the foregoing, any Guarantor shall receive any payment on account of any such subordinated claim prior to Payment in Full, such payment shall be held in trust for the benefit of the Mezzanine Lender and shall be promptly paid over to the Mezzanine Lender for application to the Guaranteed Obligations.
Following Payment in Full of all Guaranteed Obligations, the rights of subrogation, reimbursement, exoneration, contribution, and indemnification described in this Section 2.06 shall revive to the extent and in the manner permitted by applicable law.
Section 2.07 — Waivers
Each Guarantor hereby irrevocably waives, to the fullest extent permitted by applicable law:
(a) notice of acceptance of this Guaranty by the Mezzanine Lender;
(b) notice of the creation, renewal, extension, modification, or accrual of any Guaranteed Obligation or of the reliance by the Mezzanine Lender upon this Guaranty;
(c) notice of any adverse change in the financial condition of the Borrower, any other Guarantor, or any other person or entity liable for the payment or performance of any of the Guaranteed Obligations, and notice of any other fact that might increase the risk of any Guarantor hereunder;
(d) presentment, demand for payment or performance, protest, notice of dishonor, and notice of nonpayment or nonperformance;
(e) any right to require the Mezzanine Lender to (i) proceed first against the Borrower or any other person or entity, (ii) proceed first against or exhaust any collateral held by the Mezzanine Lender from the Borrower, any other Guarantor, or any other person or entity, (iii) pursue any other remedy in the Mezzanine Lender's power whatsoever, or (iv) marshal assets or otherwise collect from any particular source;
(f) diligence in collection, protection, or realization upon any collateral securing any of the Guaranteed Obligations, or in bringing suit against the Borrower, any other Guarantor, or any other person or entity liable for any of the Guaranteed Obligations;
(g) any defense based upon any election of remedies by the Mezzanine Lender (including an election to proceed by nonjudicial foreclosure) that may destroy or otherwise impair the subrogation rights of any Guarantor, the right of any Guarantor to proceed against the Borrower or any other person or entity for reimbursement, contribution, or indemnity, or any other right of any Guarantor;
(h) any defense based upon the doctrine of marshaling or any similar doctrine or principle;
(i) any suretyship defense under the laws of any jurisdiction, including, without limitation, any defense arising under Sections 3-605 and 3-419 of the UCC (or any successor provisions thereof);
(j) the benefit of any statute of limitations affecting the enforcement of this Guaranty or any of the Guaranteed Obligations; and
(k) any defense, right, or claim arising by reason of the incapacity, lack of authority, death, or disability of any other person or entity, or the failure of the Mezzanine Lender to file or enforce a claim against the estate (either in administration, bankruptcy, or otherwise) of any other person or entity.
Section 2.08 — Limitation on Guarantor Liability (Savings Clause)
Notwithstanding any provision of this Guaranty to the contrary, the obligations of each Guarantor under this Guaranty shall be limited to the maximum amount that would not render such Guarantor's obligations hereunder voidable or avoidable under applicable law, including, without limitation, Sections 544, 548, and 550 of the Bankruptcy Code and the comparable provisions of any applicable state fraudulent conveyance or fraudulent transfer law, including the Uniform Voidable Transactions Act (as adopted in any applicable jurisdiction) and the Uniform Fraudulent Transfer Act (as adopted in any applicable jurisdiction).
In furtherance of the foregoing, each Guarantor's maximum guaranteed amount under this Guaranty shall be reduced to the largest amount that, after giving effect to all other liabilities of such Guarantor (whether contingent or otherwise) and after giving effect to any collections from, rights to receive contribution from, or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under this Guaranty, would not result in the obligations of such Guarantor hereunder constituting a "fraudulent conveyance" or "fraudulent transfer" under the Bankruptcy Code or any comparable provision of applicable state law. For purposes of this Section 2.08, in determining the net worth or financial condition of each Guarantor, due consideration shall be given to the value of the rights of contribution, reimbursement, and subrogation of such Guarantor against the Borrower and each other Guarantor pursuant to applicable law, including any right of contribution among the Guarantors.
Each Guarantor that makes a payment under this Guaranty shall be entitled to contribution from each other Guarantor in an amount equal to such other Guarantor's pro rata share of such payment, based upon the respective net worths of the Guarantors at the time of such payment or as may be otherwise equitable. Such contribution rights shall, however, be subordinated to the Payment in Full of all Guaranteed Obligations in accordance with Section 2.06 hereof.
Section 2.09 — Acceleration
If any Guaranteed Obligation is accelerated pursuant to the terms of the Mezzanine Credit Agreement (subject in all respects to the standstill, payment blockage, and other provisions of the Intercreditor Agreement), each Guarantor shall immediately, without further notice or demand, pay or cause to be paid to the Mezzanine Lender the full amount of the accelerated Guaranteed Obligations, including, without limitation, the outstanding principal amount of the Mezzanine Loan (including capitalized PIK Interest), all accrued and unpaid interest, all prepayment premiums (if any), all fees, and all other amounts then due and payable under the Mezzanine Loan Documents.
Section 2.10 — Intercreditor Agreement Subordination
Notwithstanding any provision of this Guaranty to the contrary, the rights and remedies of the Mezzanine Lender under this Guaranty are, and shall at all times be, subject to the terms and conditions of the Intercreditor Agreement. Without limiting the generality of the foregoing:
(a) Enforcement Standstill. The Mezzanine Lender shall not exercise any right or remedy under this Guaranty (including any demand for payment under Section 2.04 or enforcement of any other provision hereof) during any enforcement standstill period under the Intercreditor Agreement, which standstill period shall be one hundred eighty (180) days following the delivery by the Mezzanine Lender of written notice to the Senior Agent of the occurrence of an Event of Default under the Mezzanine Credit Agreement (subject to any exceptions set forth in the Intercreditor Agreement, including the ability to exercise remedies following the acceleration of the Senior Facility or the commencement of enforcement actions by the Senior Agent).
(b) Payment blockage. The Mezzanine Lender's right to receive payment under this Guaranty is subject to the payment blockage mechanics set forth in the Intercreditor Agreement, pursuant to which the Senior Agent may deliver a payment blockage notice blocking the payment of Guaranteed Obligations (other than scheduled Cash Interest payments to the extent permitted under the Intercreditor Agreement) for a period of up to one hundred eighty (180) consecutive days, with no more than one (1) such blockage period in any three hundred sixty (360)-day period.
(c) Lien Subordination. To the extent that any liens securing the Guaranteed Obligations encumber shared collateral (as such term is defined or described in the Intercreditor Agreement), such liens are subordinate and junior in right to the liens securing the Senior Facility in accordance with the terms of the Intercreditor Agreement.
In the event of any conflict or inconsistency between the provisions of this Guaranty and the provisions of the Intercreditor Agreement, the provisions of the Intercreditor Agreement shall govern and control. Each Guarantor acknowledges and agrees that it has received a copy of the Intercreditor Agreement and is familiar with its terms. The Mezzanine Lender shall not be required to exercise any rights or remedies under this Guaranty at any time when such exercise would violate or be inconsistent with the terms of the Intercreditor Agreement.
ARTICLE III — REPRESENTATIONS AND WARRANTIES
Each Guarantor hereby represents and warrants to the Mezzanine Lender as of the date hereof and as of the date of funding of the Mezzanine Loan as follows:
Section 3.01 — Organization and Good Standing
Each Guarantor is duly organized, validly existing, and in good standing under the laws of its jurisdiction of organization, as set forth below:
(a) Cascade Ridge SLG Holdings, LLC is a limited liability company duly organized, validly existing, and in good standing under the laws of the State of Delaware;
(b) Stonefield Intermodal Services, Inc. is a corporation duly organized, validly existing, and in good standing under the laws of the State of Texas;
(c) Stonefield Fleet Management, LLC is a limited liability company duly organized, validly existing, and in good standing under the laws of the State of Texas; and
(d) Stonefield Freight Brokerage, Inc. is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware.
Each Guarantor is duly qualified, licensed, and authorized to do business and is in good standing in each jurisdiction where the ownership, leasing, or operation of its properties or the conduct of its business requires such qualification, licensing, or authorization, except where the failure to be so qualified, licensed, or authorized or in good standing could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
Section 3.02 — Power and Authority
Each Guarantor has the corporate, limited liability company, or other organizational power and authority to execute, deliver, and perform this Guaranty and to consummate the transactions contemplated hereby. Each Guarantor has the corporate, limited liability company, or other organizational power and authority to own, lease, and operate its properties and to carry on its business as now conducted and as proposed to be conducted.
Section 3.03 — Due Authorization; Execution; Enforceability
The execution, delivery, and performance of this Guaranty by each Guarantor have been duly authorized by all necessary corporate, member, manager, or other organizational action on the part of such Guarantor. No further approval, consent, authorization, or other action by, or notice to or filing with, any person (including any equityholder, board of directors, board of managers, or similar governing body of such Guarantor) is required in connection with the execution, delivery, and performance of this Guaranty by such Guarantor.
This Guaranty has been duly executed and delivered by each Guarantor. This Guaranty constitutes the legal, valid, and binding obligation of each Guarantor, enforceable against each Guarantor in accordance with its terms, except as such enforceability may be limited by (a) applicable bankruptcy, insolvency, reorganization, moratorium, receivership, conservatorship, or other similar laws now or hereafter in effect affecting the enforcement of creditors' rights generally and (b) general principles of equity (whether enforcement is sought by a proceeding in equity or at law).
Section 3.04 — No Conflicts
The execution, delivery, and performance of this Guaranty by each Guarantor do not and will not:
(a) conflict with, result in a breach of, or constitute a default under, the certificate of incorporation, certificate of formation, bylaws, limited liability company agreement, operating agreement, or other organizational documents of such Guarantor;
(b) conflict with, or result in a breach or violation of, any applicable law, statute, rule, regulation, order, writ, judgment, injunction, or decree of any governmental authority applicable to such Guarantor or any of its properties or assets;
(c) result in any breach of, or constitute a default (or an event that, with notice or lapse of time, or both, would become a default) under, or give to any other person any right of termination, amendment, acceleration, or cancellation of, or result in the creation of a lien (other than liens permitted under the Mezzanine Credit Agreement) upon any of the properties or assets of such Guarantor under, any material agreement, mortgage, deed of trust, indenture, note, bond, license, lease agreement, instrument, or obligation to which such Guarantor is a party or by which any of its properties or assets is bound, including, without limitation, the Senior Credit Agreement, as amended by Amendment No. 1, Amendment No. 2, and Amendment No. 3; or
(d) result in the creation or imposition of any lien upon any of the properties or assets of such Guarantor, other than liens permitted under the Mezzanine Credit Agreement and the Intercreditor Agreement.
Section 3.05 — Governmental Consents and Approvals
No governmental authorization, consent, approval, license, permit, exemption, or filing or registration with any governmental authority is required in connection with the execution, delivery, or performance of this Guaranty by any Guarantor, or the consummation of the transactions contemplated hereby, except for:
(a) UCC-1 financing statement filings with the Secretary of State of the State of Delaware (with respect to Cascade Ridge SLG Holdings, LLC and Stonefield Freight Brokerage, Inc.) and the Secretary of State of the State of Texas (with respect to Stonefield Intermodal Services, Inc. and Stonefield Fleet Management, LLC);
(b) any filings, recordings, or registrations that have been made or will be made at or prior to the closing of the Mezzanine Loan; and
(c) any filings, consents, or approvals the failure to obtain or make which could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
Section 3.06 — Litigation
There is no pending or, to the knowledge of each Guarantor, threatened action, suit, investigation, arbitration, or proceeding before or by any governmental authority or arbitral body that (a) could reasonably be expected to have a Material Adverse Effect, or (b) challenges the validity or enforceability of this Guaranty or any other Mezzanine Loan Document, or questions the right or authority of any Guarantor to enter into or perform its obligations under this Guaranty.
Section 3.07 — Solvency
After giving effect to the consummation of the transactions contemplated by the Mezzanine Credit Agreement, including the making of the Mezzanine Loan, the incurrence of the obligations under this Guaranty, and the application of the proceeds of the Mezzanine Loan:
(a) each Guarantor is Solvent, meaning that (i) the fair saleable value of the assets of such Guarantor exceeds the amount of its liabilities (including contingent liabilities) as they become absolute and matured, (ii) each Guarantor is able to pay its debts and other liabilities, contingent obligations, and commitments as they mature in the ordinary course of business, and (iii) each Guarantor does not have unreasonably small capital for the conduct of its business;
(b) each Guarantor does not intend to, and does not believe that it will, incur debts beyond its ability to pay as such debts mature (taking into account the timing of and amounts of cash to be received by such Guarantor and the timing of and amounts of cash to be payable on or in respect of the obligations of such Guarantor); and
(c) as of the date hereof, there are no judgments, writs, warrants of attachment, or executions unsatisfied against any Guarantor, and each Guarantor is not in default in the performance of any material obligation.
The foregoing representations are made in reliance upon and subject to the Solvency Certificate of the Chief Financial Officer of the Borrower dated September 29, 2023 (delivered in connection with the closing of the Mezzanine Loan), which Solvency Certificate addresses the solvency of the Borrower and its Subsidiaries on a consolidated basis and each Guarantor individually.
Section 3.08 — Benefit
Each Guarantor acknowledges and represents that it will derive substantial direct and indirect benefit from the making of the Mezzanine Loan and the other extensions of credit under the Mezzanine Credit Agreement, and that this Guaranty is given in consideration of such benefit. Without limiting the generality of the foregoing:
(a) Cascade Ridge SLG Holdings, LLC, as the direct parent and holder of one hundred percent (100%) of the issued and outstanding equity interests in the Borrower (holding approximately 78.4% of the economic interests in Stonefield Logistics Group Inc. through its intermediate holdings on behalf of Cascade Ridge Capital Fund V, LP), will benefit from the preservation and enhancement of the value of its equity investment in the Borrower resulting from the Mezzanine Loan and the use of proceeds thereof.
(b) Stonefield Intermodal Services, Inc., as a wholly-owned subsidiary of the Borrower, will benefit directly from the fleet expansion and terminal facility buildout that will be funded, in part, with the proceeds of the Mezzanine Loan, including the acquisition of approximately 800 additional intermodal chassis and the expansion of intermodal terminal capacity at the Borrower's Dallas-Fort Worth, Houston, and Atlanta facilities.
(c) Stonefield Fleet Management, LLC, as a wholly-owned subsidiary of the Borrower, will benefit directly from the technology platform upgrades and fleet management system modernization that will be funded, in part, with the proceeds of the Mezzanine Loan, including the implementation of a new enterprise fleet management software platform and GPS/telematics integration across the Borrower's fleet of approximately 3,200 tractors and 8,500 trailers.
(d) Stonefield Freight Brokerage, Inc., as a wholly-owned subsidiary of the Borrower, will benefit directly from the working capital and operational funding provided by the Mezzanine Loan, enabling the expansion of its freight brokerage operations, including the development of a digital freight matching platform and the expansion of its carrier network.
Section 3.09 — Information
All written information (including financial statements, projections, and other data) provided by or on behalf of each Guarantor to the Mezzanine Lender in connection with this Guaranty, the Mezzanine Credit Agreement, and the other Mezzanine Loan Documents was, at the time so provided and as of the date hereof, true, correct, and complete in all material respects, and did not and does not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements contained therein, taken as a whole, in the light of the circumstances in which they were made, not misleading. As of the date hereof, each Guarantor is not aware of any facts or circumstances not previously disclosed to the Mezzanine Lender that could, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
ARTICLE IV — COVENANTS
Section 4.01 — Affirmative Covenants
Each Guarantor hereby covenants and agrees that, for so long as any Guaranteed Obligations remain outstanding (or any commitment of the Mezzanine Lender under the Mezzanine Credit Agreement remains in effect), each Guarantor shall:
(a) Existence. Preserve, renew, and maintain in full force and effect its legal existence and its good standing under the laws of its jurisdiction of organization, and take all reasonable action to maintain all rights, privileges, permits, licenses, and franchises necessary or desirable in the normal conduct of its business, except where the failure to do so could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; provided that nothing in this clause (a) shall prohibit any merger, consolidation, or dissolution permitted under Section 4.02(a) hereof and the Mezzanine Credit Agreement.
(b) Compliance with Laws. Comply in all material respects with all applicable laws, statutes, rules, regulations, and orders of any governmental authority applicable to such Guarantor and its properties and business, including, without limitation, all applicable environmental laws, tax laws, labor and employment laws, and anti-corruption laws, except where the failure to comply could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(c) Payment of Obligations. Pay and discharge, or cause to be paid and discharged, all material obligations and liabilities as they become due and payable, including, without limitation, (i) all tax liabilities, assessments, and governmental charges upon it and its properties, income, or profits, unless and to the extent that such obligations, liabilities, taxes, assessments, or charges are being contested in good faith by appropriate proceedings and adequate reserves in conformity with GAAP have been provided on the books of such Guarantor, and (ii) all lawful claims that, if unpaid, might by law become a lien upon the property of such Guarantor.
(d) Books and Records. Maintain proper books of record and account, in which full, true, and correct entries in conformity with GAAP and all requirements of applicable law shall be made of all financial transactions and matters involving the assets and business of such Guarantor.
(e) Inspection Rights. Permit representatives of the Mezzanine Lender, upon reasonable advance notice (which shall be no less than three (3) Business Days, except in the case of an Event of Default, in which case no prior notice shall be required), and during normal business hours, to visit and inspect any of the properties of such Guarantor, to examine and make copies of and abstracts from the books, records, and financial and other data of such Guarantor, and to discuss the affairs, finances, and condition of such Guarantor with the officers and independent certified public accountants of such Guarantor. The Mezzanine Lender shall endeavor to coordinate any such inspections with the Senior Agent to minimize disruption to the Guarantors' business operations.
(f) Notice of Events. Promptly (and in any event within five (5) Business Days of obtaining knowledge thereof) notify the Mezzanine Lender in writing of:
(i) the occurrence of any Event of Default or Default under this Guaranty, the Mezzanine Credit Agreement, or any other Mezzanine Loan Document, specifying the nature thereof and the action that such Guarantor has taken, is taking, or proposes to take with respect thereto;
(ii) the commencement of, or any material development in, any material litigation, investigation, or proceeding affecting any Guarantor or the Borrower, including, without limitation, any litigation, investigation, or proceeding brought by or before any governmental authority;
(iii) any event or condition that has had or could reasonably be expected to have a Material Adverse Effect; and
(iv) any change in the information provided in Schedule I hereto, including any change in the legal name, jurisdiction of organization, organizational identification number, or address of any Guarantor.
(g) Additional Guarantors. Cause any Subsidiary of the Borrower that is required to become a Guarantor pursuant to the terms of the Mezzanine Credit Agreement (including any Subsidiary formed or acquired after the date hereof) to promptly (and in any event within thirty (30) days after the formation or acquisition of such Subsidiary, unless a longer period is permitted under the Mezzanine Credit Agreement) execute and deliver a Guarantor Joinder Agreement substantially in the form of Exhibit A hereto, together with all organizational documents, resolutions, incumbency certificates, legal opinions, and other documents and information as the Mezzanine Lender may reasonably request.
(h) Maintenance of Property. Maintain, preserve, and protect all of its properties and assets (including all properties and assets that constitute collateral under the Mezzanine Loan Documents) in good working order and condition, ordinary wear and tear and casualty and condemnation excepted, and make all necessary repairs, renewals, replacements, betterments, and improvements thereto, in each case as in the judgment of such Guarantor may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times, except where the failure to do so could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
Section 4.02 — Negative Covenants