UNANIMOUS WRITTEN CONSENT
OF THE BOARD OF DIRECTORS
OF
STONEFIELD LOGISTICS GROUP INC.
IN LIEU OF A SPECIAL MEETING
December 11, 2023
EIN: 83-2457109
The undersigned, being all of the members of the Board of Directors (the "Board") of Stonefield Logistics Group Inc., a Delaware corporation (the "Company" or "SLG"), acting pursuant to Section 141(f) of the General Corporation Law of the State of Delaware, as amended (the "DGCL"), and the Amended and Restated Bylaws of the Company (the "Bylaws"), do hereby consent to and adopt the following recitals and resolutions, effective as of the date first written above, with the same force and effect as if adopted at a duly called and held special meeting of the Board at which a quorum was present and acting throughout:
RECITALS
WHEREAS:
A. Background of the Company
The Company is a corporation duly organized and existing under the laws of the State of Delaware, engaged in the business of freight brokerage, last-mile delivery, and warehousing services. The Company currently operates approximately twenty-six (26) terminals across fourteen (14) states and employs approximately 3,800 full-time employees. The Company's principal executive offices are located at 4200 Commerce Street, Suite 1500, Dallas, Texas 75201.
The Company is a portfolio company of Ridgeline Capital Partners Fund III, L.P. ("Ridgeline" or "RCP III"), a Delaware limited partnership, whose general partner is Ridgeline Capital Management III LLC ("RCM III"), a Delaware limited liability company, with principal offices at 300 Park Avenue, 28th Floor, New York, New York 10022. Ridgeline acquired the Company in December 2017 through a leveraged buyout transaction, investing approximately $210 million in equity capital at the time of acquisition. Since the acquisition, Ridgeline has served as the Company's controlling stockholder and has been actively involved in the strategic oversight and governance of the Company.
B. Board Composition
The Board currently consists of the following duly elected and qualified directors, each of whom is entitled to vote on the matters set forth herein:
(i) Julian Voight, Managing Director of Ridgeline Capital Management III LLC (Ridgeline designee);
(ii) Serena Chu, Principal of Ridgeline Capital Management III LLC (Ridgeline designee);
(iii) Marcus Delano, Chief Executive Officer of the Company; and
(iv) such additional directors as are constituted under the Company's current governance documents.
All directors entitled to vote on the matters set forth herein are executing this Written Consent. No director has recused himself or herself from the deliberations or actions contemplated by this Written Consent.
C. Financial Distress and Need for Restructuring
The Board is aware of, and has been closely monitoring, the deterioration of the Company's financial condition and operating performance. In particular, the Board notes the following:
(i) Declining Revenue and EBITDA. The Company's revenue for fiscal year 2022 ("FY 2022") was approximately $612.3 million. Revenue is projected to decline to approximately $545.0 million for fiscal year 2023 ("FY 2023E"), representing a year-over-year decline of approximately 11.0%. The Company's Adjusted EBITDA (as defined in the First Lien Credit Agreement) declined from approximately $58.7 million in FY 2022 to approximately $41.2 million for the last twelve months ended March 31, 2023 ("LTM Q1 2023"), and is projected to decline further to approximately $38.5 million for FY 2023E. Such declines are attributable to, among other factors, softening freight demand, increased competition in the brokerage segment, and inflationary cost pressures across the Company's terminal network.
(ii) Unsustainable Capital Structure. As of March 31, 2023, the Company had total funded debt of approximately $475.1 million, comprising: (a) $42.0 million drawn under the Revolving Credit Facility (with $35.0 million committed and $42.0 million outstanding inclusive of $7.0 million in temporary over-advance consented to by the revolving lenders); (b) $285.0 million outstanding under the First Lien Term Loan B (the "TLB"); (c) $140.0 million in aggregate principal amount of 11.50% Senior Secured Second Lien Notes due June 15, 2025 (the "Mezzanine Notes"); and (d) approximately $8.1 million of accrued payment-in-kind ("PIK") interest on the Mezzanine Notes. Based on LTM Q1 2023 Adjusted EBITDA of approximately $41.2 million, the Company's total leverage ratio was approximately 11.5x and its first lien leverage ratio was approximately 7.9x.
(iii) Near-Term Maturity Wall. Approximately $327.0 million in aggregate first lien debt (comprising the $285.0 million TLB and the $42.0 million drawn revolving facility) is scheduled to mature on December 15, 2024. The Company does not have the ability to repay such debt from available liquidity or operating cash flow and is unable to refinance such indebtedness in the current capital markets environment at sustainable terms absent a comprehensive restructuring.
(iv) Liquidity Crisis. As of March 31, 2023, the Company's total liquidity was approximately $15.8 million, consisting of $11.3 million in unrestricted cash and cash equivalents and $4.5 million of remaining availability under the Revolving Credit Facility. The Company's average monthly net cash burn was approximately $2.5 million. Without a restructuring, the Company's management and financial advisor project that the Company's liquidity will be exhausted by the third quarter of 2024, at which point the Company would be unable to meet its obligations as they become due in the ordinary course of business.
D. Prior Board Actions
The Board has previously taken action in connection with the Company's restructuring efforts. Specifically, by unanimous written consent of the Board dated June 29, 2023 (the "Prior Board Resolutions"), the Board approved the Company's entry into a Restructuring Support Agreement dated June 30, 2023 (the "RSA" or the "Restructuring Support Agreement"), among the Company, Ridgeline, consenting first lien term loan lenders holding approximately $228.5 million in aggregate principal amount (representing approximately 80.2% of the $285.0 million outstanding TLB), all three revolving credit facility lenders (Pinnacle National Bank, N.A., Great Basin Commercial Bank, and Tidewater Lending Corporation), and members of the ad hoc group of mezzanine note holders (the "Ad Hoc Mezzanine Group"), consisting of Graystone Mezzanine Capital Fund II LP, Ashland Structured Credit LLC, and Dunmore Special Situations Fund LP, collectively holding approximately $122.0 million in aggregate principal amount of Mezzanine Notes at the time of execution of the RSA.
During the joinder period specified in Section 3.2 of the RSA (July 3 through July 21, 2023), additional mezzanine note holders holding approximately $12.5 million in aggregate principal amount of Mezzanine Notes executed joinder agreements and became parties to the RSA, bringing total consenting mezzanine holdings to approximately $134.5 million (representing approximately 96.1% of the $140.0 million aggregate principal amount outstanding).
The RSA establishes a long-stop date of December 31, 2023, by which the closing of the restructuring transactions contemplated therein must occur, failing which the RSA terminates in accordance with its terms.
E. Engagement of Advisors
In connection with the evaluation and implementation of the restructuring transactions, the Company has engaged the following professional advisors:
(i) Restructuring Counsel. Calderwood & Harkness LLP ("C&H"), located at 599 Lexington Avenue, New York, New York 10022, was engaged as restructuring counsel to the Company pursuant to an engagement letter dated April 3, 2023 (Matter No. 1012-00002). The engagement is supervised by Nathaniel Bower as the responsible partner, with Colette Whitman serving as the billing partner. The working team includes Nathan Ikeda as lead associate, Gabrielle Moss as working associate, and Sylvia Hartwell as tax specialist partner. C&H has advised the Company on all legal aspects of the restructuring, including the negotiation and drafting of the definitive documentation described herein.
(ii) Financial Advisor. Hargrove Advisory Group LLC ("Hargrove"), located at 1345 Avenue of the Americas, 38th Floor, New York, New York 10105, was retained as financial advisor to the Company effective March 15, 2023. The engagement is led by Elena Voss, Managing Director. Hargrove has advised the Company on the financial terms of the restructuring, prepared financial projections, conducted liquidity analyses, and assisted in negotiations with creditor constituencies.
(iii) Independent Auditor. Whitfield & Pryce LLP, located at 2100 Ross Avenue, Suite 2800, Dallas, Texas 75201, serves as the Company's independent auditor. The engagement partner is Todd Ashburn, CPA. Whitfield & Pryce has provided audited and reviewed financial statements relied upon by the parties in connection with the restructuring.
F. Negotiation and Definitive Documentation
Following execution of the RSA, the Company and its advisors engaged in extensive negotiations with each of the principal creditor constituencies and their respective advisors regarding the terms and conditions of the definitive documentation necessary to implement the restructuring transactions contemplated by the RSA. The relevant creditor advisors are as follows:
(i) Westlake Harden & Cole LLP (lead partner: Ramona Quelibo), serving as counsel to the consenting first lien lenders and the administrative agent under the First Lien Credit Agreement;
(ii) Thornbury McCaffrey LLP (lead partner: Alan Driscoll), serving as counsel to the Ad Hoc Mezzanine Group;
(iii) Meridian Veltrian Partners LLC, serving as financial advisor to the Ad Hoc Mezzanine Group; and
(iv) Belvedere Credit Opportunities Fund LP (Managing Partner: Christopher Hartigan), as proposed new money lender under the Super-Priority Credit Agreement, represented by Thornbury McCaffrey LLP (with an appropriate ethical wall established in accordance with applicable rules of professional conduct to address the concurrent representation of the Ad Hoc Mezzanine Group).
These negotiations were conducted over the course of approximately five months, involved multiple rounds of document drafts and mark-ups, and resulted in the series of definitive documents that have been negotiated and, in certain cases, already executed prior to the date of these resolutions.
G. Enumeration of Definitive Documents
The Board has reviewed and considered the following definitive documents, each substantially in the form attached hereto as the applicable Exhibit and incorporated herein by reference (collectively, the "Restructuring Documents"):
1. Amended and Restated Intercreditor Agreement dated November 10, 2023 (the "A&R Intercreditor Agreement"), among Belvedere Credit Opportunities Fund LP, in its capacity as Super-Priority Agent, Pinnacle National Bank, N.A., in its capacity as First Lien Agent, and the Company, establishing the super-priority first-out / first lien second-out priority and payment waterfall governing the relative rights and priorities of the super-priority lenders and the first lien lenders with respect to the shared collateral. A copy of the A&R Intercreditor Agreement is attached hereto as Exhibit F.
2. Super-Priority Credit Agreement dated November 17, 2023 (the "Super-Priority Credit Agreement"), among the Company, as Borrower, the Guarantors party thereto (being Stonefield Logistics Holdings LLC, a Delaware limited liability company, Stonefield Freight Services LLC, a Delaware limited liability company, Stonefield Last Mile Inc., a Delaware corporation, and Stonefield Warehousing LLC, a Delaware limited liability company, collectively the "Guarantors"), and Belvedere Credit Opportunities Fund LP, as Administrative Agent, Collateral Agent, and Initial Lender, providing for a $55.0 million credit facility, consisting of (a) a $45.0 million term loan funded at closing and (b) a $10.0 million delayed-draw term loan (the "DDTL"), bearing interest at a rate equal to the Secured Overnight Financing Rate ("SOFR") plus 700 basis points (with a SOFR floor of 100 basis points), with an original issue discount ("OID") of 2.00% ($1.1 million on the funded portion), a maturity date of December 19, 2027, mandatory prepayment from 75% of excess cash flow above a $20.0 million minimum liquidity threshold, call protection at 103% during the first year, 102% during the second year, 101% during the third year, and par thereafter, and a commitment fee of 1.00% per annum on the undrawn DDTL. A copy of the Super-Priority Credit Agreement is attached hereto as Exhibit C.
3. Super-Priority Guaranty Agreement dated November 17, 2023 (the "Super-Priority Guaranty"), by each of the Guarantors in favor of Belvedere Credit Opportunities Fund LP, as Collateral Agent, pursuant to which each Guarantor unconditionally and irrevocably guarantees the full and timely payment and performance of all obligations under the Super-Priority Credit Agreement. A copy of the Super-Priority Guaranty is attached hereto as Exhibit D.
4. Super-Priority Pledge and Security Agreement dated November 17, 2023 (the "Super-Priority Security Agreement"), by the Company and the Guarantors in favor of Belvedere Credit Opportunities Fund LP, as Collateral Agent, granting a first-priority super-priority security interest and lien on substantially all assets of the Company and the Guarantors, including but not limited to all accounts, chattel paper, commercial tort claims, deposit accounts, equipment, general intangibles, goods, instruments, intellectual property, inventory, investment property, and proceeds thereof. A copy of the Super-Priority Security Agreement is attached hereto as Exhibit E.
5. Amended and Restated First Lien Credit Agreement dated December 1, 2023 (the "A&R First Lien Credit Agreement"), among the Company, as Borrower, the Guarantors, Pinnacle National Bank, N.A., as Administrative Agent and Collateral Agent, and the Lenders party thereto, providing for: (a) a first lien Term Loan B in the aggregate principal amount of $285.0 million, bearing interest at a rate equal to SOFR plus 500 basis points (with a SOFR floor of 100 basis points), with a maturity date of December 19, 2028, and 1.00% annual amortization (payable in equal quarterly installments); and (b) a Revolving Credit Facility with aggregate commitments reduced to $35.0 million, bearing interest at a rate equal to SOFR plus 450 basis points, with a maturity date of December 19, 2027 (subject to a springing maturity date that is 91 days prior to the TLB maturity date in the event the TLB has not been refinanced or repaid in full by such date). The A&R First Lien Credit Agreement adds the following financial maintenance covenants: (x) a Total Net Leverage covenant requiring Total Net Leverage not to exceed 6.50x as of the last day of the fiscal quarter ending December 31, 2025, stepping down to 6.25x by fiscal year-end 2026 and 5.75x by fiscal year-end 2027; (y) a Minimum Liquidity covenant requiring unrestricted cash and available revolving commitments of not less than $20.0 million at all times, tested monthly; and (z) a change of control trigger requiring mandatory prepayment of all outstanding loans at 101% of par upon the occurrence of a change of control event. A copy of the A&R First Lien Credit Agreement is attached hereto as Exhibit A.
6. Amendment No. 1 to First Lien Credit Agreement (Cover Agreement) dated December 1, 2023 (the "Cover Agreement"), effectuating the amendment and restatement of the original First Lien Credit Agreement dated December 15, 2017. The Cover Agreement provides for consent fees of: (a) 50 basis points on the outstanding TLB ($1,425,000) and (b) 25 basis points on the revolving commitments ($87,500), payable to consenting lenders on the closing date. A copy of the Cover Agreement is attached hereto as Exhibit B.
7. Exchange Agreement dated December 8, 2023 (the "Exchange Agreement"), among the Company and the exchanging mezzanine holders (holding approximately $134.5 million of the $140.0 million outstanding Mezzanine Notes, representing approximately 96.1% of the aggregate principal amount), pursuant to which the exchanging mezzanine holders will exchange their 11.50% Senior Secured Second Lien Notes due June 15, 2025 (CUSIP 861537 AA 2) for: (a) shares of Series A Preferred Stock of the Company with an aggregate liquidation preference of $35.0 million; and (b) shares of common stock of the Company representing 47.5% of the pro forma common equity of the Company. In connection with the exchange, the exchanging mezzanine holders have agreed to waive approximately $8.1 million of accrued PIK interest on the exchanged Mezzanine Notes. A copy of the Exchange Agreement is attached hereto as Exhibit G.
8. First Supplemental Indenture (Exit Consent Amendments) dated December 8, 2023 (the "First Supplemental Indenture"), among the Company and Continental Fiduciary Trust Company, as Trustee, effectuating exit consent amendments with respect to the remaining $5.5 million in aggregate principal amount of non-exchanged Mezzanine Notes, stripping substantially all restrictive covenants, events of default, and reporting obligations from the Indenture governing such Mezzanine Notes. A copy of the First Supplemental Indenture is attached hereto as Exhibit H.
9. Amended and Restated Certificate of Incorporation (the "A&R Charter"), to be filed with the Secretary of State of the State of Delaware, authorizing the Company's new capital structure, including the authorization of shares of common stock and shares of Series A Preferred Stock, and reflecting the pro forma equity ownership of the Company consisting of 47.5% held by Ridgeline, 47.5% held by the mezzanine equitization recipients, and 5.0% reserved for the management incentive plan. A copy of the A&R Charter is attached hereto as Exhibit I.
10. Certificate of Designations of Series A Preferred Stock (the "Certificate of Designations"), to be filed with the Secretary of State of the State of Delaware, establishing the terms and conditions of the Series A Preferred Stock, including an aggregate liquidation preference of $35.0 million, a PIK dividend rate of 10.00% per annum (compounding quarterly), seniority to common stock in respect of liquidation preferences and dividend rights, and such other terms as are set forth therein. A copy of the Certificate of Designations is attached hereto as Exhibit J.
11. Amended and Restated Stockholders' Agreement dated December 12, 2023 (the "A&R Stockholders' Agreement"), among the Company, Ridgeline Capital Partners Fund III, L.P., and the mezzanine equitization recipients, providing for, among other things: (a) board composition consisting of seven (7) directors — three (3) Ridgeline designees, three (3) mezzanine holder designees, and one (1) independent director; (b) transfer restrictions on all equity holders; (c) tag-along and drag-along rights; (d) preemptive rights in connection with future issuances; and (e) information rights. A copy of the A&R Stockholders' Agreement is attached hereto as Exhibit K.
12. Registration Rights Agreement dated December 12, 2023 (the "Registration Rights Agreement"), among the Company and the holders of common stock and Series A Preferred Stock, providing for demand and piggyback registration rights with respect to the equity securities of the Company, subject to customary conditions and limitations. A copy of the Registration Rights Agreement is attached hereto as Exhibit L.
13. All related ancillary documents, instruments, agreements, certificates, UCC financing statements, and governmental and regulatory filings contemplated by or required in connection with any of the foregoing documents (collectively with the documents identified in clauses 1 through 12 above, the "Restructuring Documents").
H. Review of Financial Impacts
The Board has reviewed, with the assistance of Hargrove and C&H, the expected financial impacts of the restructuring transactions on the Company's capital structure and financial position. In summary:
(i) Debt Reduction. Post-restructuring total funded debt is expected to be reduced to approximately $375.0 million, consisting of (a) $55.0 million under the Super-Priority Credit Agreement (of which $45.0 million is funded at closing and $10.0 million is available under the DDTL), (b) up to $35.0 million under the reduced Revolving Credit Facility, and (c) $285.0 million under the TLB. This represents a reduction of approximately $100.1 million in funded debt obligations resulting from the equitization of the Mezzanine Notes and the waiver of accrued PIK interest.
(ii) Projected Leverage. Based on the Company's management projections for fiscal year 2024 ("FY 2024E"), which assume the realization of certain identified cost savings and operational efficiencies and project Adjusted EBITDA of approximately $52.0 million, post-restructuring total leverage is projected at approximately 7.2x. Such projections have been reviewed and validated by Hargrove in connection with its financial advisory engagement.
(iii) Ridgeline Equity Contribution. Ridgeline Capital Partners Fund III, L.P. has committed to contribute $12.5 million in new cash equity to the Company, to be funded on or about December 15, 2023, to fund a portion of the transaction costs associated with the restructuring and to provide an additional liquidity cushion for the Company's post-closing operations.
I. Transaction Costs
The Board has reviewed and approved the total estimated transaction costs in connection with the Restructuring Transactions, which are expected to be approximately $12,762,500, comprising the following:
The Company's obligations to reimburse the fees and expenses of Westlake Harden & Cole LLP, Thornbury McCaffrey LLP, and Meridian Veltrian Partners LLC arise from the fee reimbursement provisions of the RSA and the respective fee letters entered into in connection therewith.
J. Recommendations and Fiduciary Consideration
The Board has received detailed presentations from C&H regarding the legal aspects of the Restructuring Documents and the transactions contemplated thereby, including the terms and conditions of each of the Restructuring Documents, the mechanics of the exchange, the exit consent amendments, the filing requirements associated with the A&R Charter and the Certificate of Designations, and the governance arrangements under the A&R Stockholders' Agreement. The Board has also received detailed presentations from Hargrove regarding the financial aspects of the Restructuring Transactions, including the impact on the Company's capital structure, liquidity position, projected financial performance, and debt service capacity.
The Board has considered, with the assistance of C&H and Hargrove, the alternatives to the proposed restructuring, including without limitation: (a) a filing for relief under Chapter 11 of Title 11 of the United States Code (the "Bankruptcy Code"), which would involve significant administrative costs (estimated at $15.0 million to $25.0 million), potential disruption to customer and vendor relationships, risk of employee attrition, and potential erosion of franchise value; (b) alternative liability management transactions, including uptier exchange transactions and drop-down transactions, which were determined to carry significant execution risk and potential litigation exposure; and (c) maintaining the status quo, which, as noted in Recital C above, would result in liquidity exhaustion by Q3 2024 and likely trigger an involuntary restructuring on less favorable terms.
After careful deliberation, and having considered its fiduciary duties under applicable Delaware law, including the duties of care, loyalty, and good faith, and having taken into account the interests of the Company, its stockholders, and its broader stakeholder constituencies in light of the Company's financial condition and proximity to the zone of insolvency, the Board has determined that the Restructuring Transactions contemplated by the Restructuring Documents, on the terms and conditions set forth therein, are fair, reasonable, and in the best interests of the Company and its stakeholders.
NOW, THEREFORE, BE IT RESOLVED AS FOLLOWS:
OPERATIVE RESOLUTIONS
Resolution 1 — Approval of the Restructuring Transactions
RESOLVED, that the restructuring transactions (collectively, the "Restructuring Transactions") contemplated by the Restructuring Support Agreement dated June 30, 2023, as amended, supplemented, or otherwise modified from time to time, including without limitation (a) the amendment and restatement of the first lien credit facilities, (b) the entry into the new super-priority credit facility, (c) the equitization of the Mezzanine Notes in exchange for Series A Preferred Stock and common equity of the Company, (d) the issuance of new equity securities of the Company, (e) the filing of the A&R Charter and the Certificate of Designations with the Secretary of State of the State of Delaware, (f) the reconstitution of the Board, and (g) all related and ancillary transactions, are hereby approved, ratified, and confirmed in all respects.
Resolution 2 — Approval of Amended and Restated First Lien Credit Agreement and Cover Agreement
RESOLVED, that the Amended and Restated First Lien Credit Agreement dated December 1, 2023, among the Company, as Borrower, the Guarantors, Pinnacle National Bank, N.A., as Administrative Agent and Collateral Agent, and the Lenders party thereto, substantially in the form attached hereto as Exhibit A and presented to the Board, is hereby approved in all respects; and further
RESOLVED, that Amendment No. 1 to the First Lien Credit Agreement (Cover Agreement) dated December 1, 2023, substantially in the form attached hereto as Exhibit B and presented to the Board, is hereby approved in all respects; and further
RESOLVED, that the Authorized Officers (as defined in Resolution 16 below) are hereby authorized and directed, acting singly or together, to execute and deliver the A&R First Lien Credit Agreement and the Cover Agreement on behalf of the Company, with such changes thereto as any Authorized Officer executing the same shall approve, such approval to be conclusively evidenced by such Authorized Officer's execution and delivery thereof.
Resolution 3 — Approval of Super-Priority Credit Agreement and Related Security Documents
RESOLVED, that the Super-Priority Credit Agreement dated November 17, 2023, among the Company, as Borrower, the Guarantors party thereto, and Belvedere Credit Opportunities Fund LP, as Administrative Agent, Collateral Agent, and Initial Lender, substantially in the form attached hereto as Exhibit C and presented to the Board, is hereby approved in all respects; and further
RESOLVED, that the Super-Priority Guaranty Agreement dated November 17, 2023, by each of the Guarantors in favor of Belvedere Credit Opportunities Fund LP, as Collateral Agent, substantially in the form attached hereto as Exhibit D and presented to the Board, is hereby approved in all respects; and further
RESOLVED, that the Super-Priority Pledge and Security Agreement dated November 17, 2023, by the Company and the Guarantors in favor of Belvedere Credit Opportunities Fund LP, as Collateral Agent, substantially in the form attached hereto as Exhibit E and presented to the Board, is hereby approved in all respects; and further
RESOLVED, that the Authorized Officers are hereby authorized and directed, acting singly or together, to execute and deliver each of the Super-Priority Credit Agreement, the Super-Priority Guaranty Agreement, and the Super-Priority Pledge and Security Agreement on behalf of the Company, and to cause each of the Guarantors (being Stonefield Logistics Holdings LLC, Stonefield Freight Services LLC, Stonefield Last Mile Inc., and Stonefield Warehousing LLC) to execute and deliver such documents through the duly authorized officers or managers of each such Guarantor, with such changes thereto as any Authorized Officer executing the same shall approve, such approval to be conclusively evidenced by such Authorized Officer's execution and delivery thereof.
Resolution 4 — Approval of Amended and Restated Intercreditor Agreement
RESOLVED, that the Amended and Restated Intercreditor Agreement dated November 10, 2023, among Belvedere Credit Opportunities Fund LP, in its capacity as Super-Priority Agent, Pinnacle National Bank, N.A., in its capacity as First Lien Agent, and the Company, substantially in the form attached hereto as Exhibit F and presented to the Board, is hereby approved in all respects; and further
RESOLVED, that the Authorized Officers are hereby authorized and directed, acting singly or together, to execute and deliver the A&R Intercreditor Agreement on behalf of the Company, with such changes thereto as any Authorized Officer executing the same shall approve, such approval to be conclusively evidenced by such Authorized Officer's execution and delivery thereof.
Resolution 5 — Approval of Exchange Agreement and Supplemental Indenture
RESOLVED, that the Exchange Agreement dated December 8, 2023, among the Company and the exchanging mezzanine holders, substantially in the form attached hereto as Exhibit G and presented to the Board, is hereby approved in all respects; and further
RESOLVED, that the First Supplemental Indenture (Exit Consent Amendments) dated December 8, 2023, among the Company and Continental Fiduciary Trust Company, as Trustee, substantially in the form attached hereto as Exhibit H and presented to the Board, is hereby approved in all respects; and further
RESOLVED, that the Authorized Officers are hereby authorized and directed, acting singly or together, to execute and deliver the Exchange Agreement and the First Supplemental Indenture on behalf of the Company, with such changes thereto as any Authorized Officer executing the same shall approve, such approval to be conclusively evidenced by such Authorized Officer's execution and delivery thereof.
Resolution 6 — Approval and Filing of Amended and Restated Certificate of Incorporation
RESOLVED, that the Amended and Restated Certificate of Incorporation of the Company, substantially in the form attached hereto as Exhibit I and presented to the Board, providing for the authorization of the Company's new capital structure including shares of common stock and shares of Series A Preferred Stock and reflecting the pro forma equity ownership contemplated by the Restructuring Transactions, is hereby approved and adopted in all respects; and further
RESOLVED, that the Authorized Officers are hereby authorized and directed, acting singly or together, to execute the A&R Charter and to cause it to be filed with the Secretary of State of the State of Delaware, with such changes thereto as may be required by the Secretary of State or as any Authorized Officer executing the same shall approve, such approval to be conclusively evidenced by such Authorized Officer's execution thereof; and further
RESOLVED, that the stockholders of the Company shall be requested to adopt and approve the A&R Charter by written consent to the extent required by the DGCL and the Company's existing organizational documents.
Resolution 7 — Approval and Filing of Certificate of Designations of Series A Preferred Stock
RESOLVED, that the Certificate of Designations of Series A Preferred Stock of the Company, substantially in the form attached hereto as Exhibit J and presented to the Board, establishing the Series A Preferred Stock with an aggregate liquidation preference of $35.0 million, a PIK dividend rate of 10.00% per annum, seniority to common stock in respect of liquidation preferences and dividend rights, and such other terms and conditions as are set forth therein, is hereby approved and adopted in all respects; and further
RESOLVED, that the Authorized Officers are hereby authorized and directed, acting singly or together, to execute the Certificate of Designations and to cause it to be filed with the Secretary of State of the State of Delaware, with such changes thereto as may be required by the Secretary of State or as any Authorized Officer executing the same shall approve, such approval to be conclusively evidenced by such Authorized Officer's execution thereof.
Resolution 8 — Approval of Stockholders' Agreement
RESOLVED, that the Amended and Restated Stockholders' Agreement dated December 12, 2023, among the Company, Ridgeline Capital Partners Fund III, L.P., and the mezzanine equitization recipients, substantially in the form attached hereto as Exhibit K and presented to the Board, is hereby approved in all respects; and further
RESOLVED, that the Authorized Officers are hereby authorized and directed, acting singly or together, to execute and deliver the A&R Stockholders' Agreement on behalf of the Company, with such changes thereto as any Authorized Officer executing the same shall approve, such approval to be conclusively evidenced by such Authorized Officer's execution and delivery thereof.
Resolution 9 — Approval of Registration Rights Agreement
RESOLVED, that the Registration Rights Agreement dated December 12, 2023, among the Company and the holders of common stock and Series A Preferred Stock, substantially in the form attached hereto as Exhibit L and presented to the Board, is hereby approved in all respects; and further
RESOLVED, that the Authorized Officers are hereby authorized and directed, acting singly or together, to execute and deliver the Registration Rights Agreement on behalf of the Company, with such changes thereto as any Authorized Officer executing the same shall approve, such approval to be conclusively evidenced by such Authorized Officer's execution and delivery thereof.
Resolution 10 — Issuance of Equity Securities
RESOLVED, that the following issuances of equity securities of the Company are hereby authorized and approved:
(a) the issuance of shares of Series A Preferred Stock to the exchanging mezzanine holders in accordance with the Exchange Agreement, with an aggregate liquidation preference of $35.0 million;
(b) the issuance of shares of common stock to the exchanging mezzanine holders in accordance with the Exchange Agreement, representing 47.5% of the pro forma common equity of the Company on a fully diluted basis (subject to dilution from the management incentive plan); and
(c) the reservation of shares of common stock for issuance under the management incentive plan of the Company, representing 5.0% of the pro forma common equity of the Company on a fully diluted basis;
and further
RESOLVED, that following the consummation of such issuances, the pro forma common equity ownership of the Company shall be as follows: Ridgeline Capital Partners Fund III, L.P. shall hold 47.5%, the mezzanine equitization recipients shall hold 47.5%, and 5.0% shall be reserved for the management incentive plan; and further
RESOLVED, that all shares of Series A Preferred Stock and common stock issued pursuant to the foregoing resolutions shall be duly authorized, validly issued, fully paid, and non-assessable, and shall be issued in compliance with applicable federal and state securities laws, including any available exemptions from registration under Section 4(a)(2) of the Securities Act of 1933, as amended, and Regulation D promulgated thereunder.
Resolution 11 — Cancellation of Mezzanine Notes
RESOLVED, that upon the consummation of the exchange contemplated by the Exchange Agreement, the exchanged Mezzanine Notes (CUSIP 861537 AA 2) tendered by the exchanging mezzanine holders shall be cancelled in accordance with the terms of the Exchange Agreement and the Indenture governing the Mezzanine Notes; and further
RESOLVED, that the Authorized Officers are hereby authorized and directed to provide written notice to Continental Fiduciary Trust Company, in its capacity as Trustee and second lien collateral agent under the Indenture, to effectuate such cancellation and to take all actions necessary or appropriate to cause the cancellation of such exchanged Mezzanine Notes to be reflected on the books and records of the Trustee and the Company.
Resolution 12 — Acceptance of Ridgeline Equity Contribution
RESOLVED, that the Company is hereby authorized and directed to accept the cash equity contribution in the aggregate amount of $12.5 million from Ridgeline Capital Partners Fund III, L.P., to be funded on or about December 15, 2023, in accordance with the terms and conditions of the RSA and such contribution documentation as may be agreed upon between the Company and Ridgeline; and further
RESOLVED, that the Authorized Officers are hereby authorized and directed to execute and deliver any and all documents, instruments, and certificates as may be necessary or appropriate to effect such equity contribution and to apply the proceeds thereof to the payment of transaction costs and the enhancement of the Company's liquidity in accordance with the funds flow memorandum to be agreed upon among the parties.
Resolution 13 — Payment of Transaction Costs and Consent Fees
RESOLVED, that the Authorized Officers are hereby authorized and directed to pay or cause to be paid, out of available funds of the Company (including proceeds of the Ridgeline equity contribution and the super-priority facility), all transaction costs, consent fees, and related expenses in connection with the Restructuring Transactions, including without limitation:
(a) the TLB consent fee in the amount of $1,425,000 (representing 50 basis points on the $285.0 million outstanding TLB);
(b) the revolving credit facility consent fee in the amount of $87,500 (representing 25 basis points on the $35.0 million revolving commitment);
(c) professional fees payable to Calderwood & Harkness LLP, Hargrove Advisory Group LLC, Westlake Harden & Cole LLP, Thornbury McCaffrey LLP, and Meridian Veltrian Partners LLC, in each case in accordance with the applicable engagement letter or fee letter;
(d) the D&O tail insurance premium in the amount of $475,000 payable to Northgate Specialty Insurance Company; and
(e) all filing fees, administrative costs, and trustee fees incurred in connection with the Restructuring Transactions;
in each case, in such amounts and at such times as any Authorized Officer shall deem necessary or appropriate, in accordance with the funds flow memorandum to be prepared in connection with the closing of the Restructuring Transactions.
Resolution 14 — Authorization of D&O Tail Policy
RESOLVED, that the procurement of the directors' and officers' liability insurance tail policy from Northgate Specialty Insurance Company (Policy No. NSI-DOL-2023-07721), providing $15.0 million in aggregate coverage for claims arising from acts or omissions occurring prior to the closing of the Restructuring Transactions, with a six (6)-year tail period, is hereby approved and ratified in all respects; and further
RESOLVED, that the Authorized Officers are hereby authorized and directed to pay or cause to be paid the tail premium in the amount of $475,000 and to execute and deliver all applications, certificates, and documents necessary to bind and maintain such coverage.
Resolution 15 — Reconstitution of Board
RESOLVED, that effective upon the closing of the Restructuring Transactions and the execution and delivery of the A&R Stockholders' Agreement, the Board shall be reconstituted in accordance with the governance provisions set forth in the A&R Stockholders' Agreement, such that the Board shall consist of seven (7) directors, as follows:
(a) three (3) directors designated by Ridgeline Capital Partners Fund III, L.P. (or its designated affiliate);
(b) three (3) directors designated by the mezzanine equitization recipients (acting by majority in interest); and
(c) one (1) independent director, mutually acceptable to Ridgeline and the mezzanine equitization recipients;
and further
RESOLVED, that the Authorized Officers are hereby authorized and directed to take all actions necessary or appropriate to effect the reconstitution of the Board as contemplated hereby, including the solicitation of resignations from incumbent directors to the extent necessary and the acceptance of nominations from the designating parties in accordance with the A&R Stockholders' Agreement.
Resolution 16 — Designation of Authorized Officers
RESOLVED, that each of the following officers of the Company (each, an "Authorized Officer") is hereby authorized and directed, acting singly or together, to execute, deliver, and perform on behalf of the Company all Restructuring Documents and all ancillary agreements, instruments, certificates, filings, and documents contemplated hereby or thereby:
(a) Marcus Delano, Chief Executive Officer;
(b) Priya Sundaram, Chief Financial Officer; and
(c) Howard Kessler, General Counsel and Secretary.
Each Authorized Officer is authorized to act singly, and any action taken by any one Authorized Officer in connection with any Restructuring Document or ancillary matter shall be deemed to be the authorized act of the Company without the need for any additional approval from any other Authorized Officer or from the Board, except to the extent that the express terms of any Restructuring Document require the execution by a specific officer.
Resolution 17 — Authorization of Closing Certificates
RESOLVED, that the Authorized Officers are hereby authorized and directed to execute and deliver, on behalf of the Company, each of the following closing certificates as may be required by the Restructuring Documents or by the agents, lenders, or other parties thereto as conditions to the closing of the Restructuring Transactions:
(a) a Secretary's Certificate, to be executed by Howard Kessler in his capacity as Secretary of the Company, certifying as to (i) the incumbency and specimen signatures of the Authorized Officers, (ii) the Company's certificate of incorporation and bylaws (each as amended and restated), and (iii) the board resolutions set forth in this Written Consent authorizing the Restructuring Transactions;
(b) an Officer's Certificate, to be executed by Marcus Delano or Priya Sundaram in their respective capacities, certifying as to (i) the truth and accuracy of the representations and warranties of the Company contained in the Restructuring Documents as of the closing date, (ii) the compliance by the Company with all covenants and agreements required to be performed by it prior to or on the closing date, and (iii) the satisfaction of all conditions precedent to the closing of the Restructuring Transactions set forth in the applicable Restructuring Documents; and
(c) any other certificates, affidavits, or instruments required by the Restructuring Documents or by any agent, lender, trustee, or other party thereto as conditions to closing.
Resolution 18 — Authorization of UCC and Other Filings
RESOLVED, that the Authorized Officers are hereby authorized and directed to prepare, execute, and file (or to authorize C&H or other counsel to prepare and file on behalf of the Company and the Guarantors) all UCC-1 financing statements, UCC-3 amendments and continuation statements, intellectual property security filings (including filings with the United States Patent and Trademark Office and the United States Copyright Office), and all other perfection documents and instruments required in connection with the security interests granted under the Super-Priority Pledge and Security Agreement and the A&R First Lien Credit Agreement, in each case in such form and in such filing offices as may be necessary to properly perfect the security interests contemplated by such documents, and to pay all associated filing fees.
Resolution 19 — Authorization of Legal Opinion
RESOLVED, that Calderwood & Harkness LLP is hereby authorized and directed to deliver a legal opinion letter (the "Closing Opinion"), addressed to (a) Pinnacle National Bank, N.A., in its capacity as Administrative Agent under the A&R First Lien Credit Agreement, and (b) Belvedere Credit Opportunities Fund LP, in its capacity as Administrative Agent under the Super-Priority Credit Agreement, and to such other addressees as may be required by the Restructuring Documents, opining as to, among other things, (i) the due organization and good standing of the Company and the Guarantors, (ii) the corporate power and authority of the Company and the Guarantors to enter into the Restructuring Documents, (iii) the due authorization, execution, and delivery of the Restructuring Documents by the Company and the Guarantors, (iv) the enforceability of the Restructuring Documents against the Company and the Guarantors, (v) the absence of conflicts with the organizational documents of the Company and the Guarantors, applicable law, and existing material agreements, and (vi) the absence of any required governmental approvals in connection with the execution, delivery, and performance of the Restructuring Documents (subject, in each case, to customary qualifications, assumptions, and exceptions); and further
RESOLVED, that the Authorized Officers are hereby authorized and directed to provide to C&H all factual certificates, representations, and information reasonably requested by C&H in connection with the preparation and delivery of the Closing Opinion.
Resolution 20 — Ratification of Prior Actions
RESOLVED, that all actions heretofore taken by any officer, director, or authorized representative of the Company, or by any officer, manager, or authorized representative of any Guarantor, in connection with the negotiation, preparation, execution, and delivery of any of the Restructuring Documents, the RSA, or any ancillary agreement, instrument, or document related thereto, including without limitation all actions taken pursuant to and in reliance upon the Prior Board Resolutions dated June 29, 2023, are hereby ratified, confirmed, and approved in all respects as the valid and authorized acts of the Company and the applicable Guarantors.
Resolution 21 — Omnibus Authorization
RESOLVED, that each Authorized Officer is hereby authorized and empowered, acting singly, to take or cause to be taken any and all further actions, to execute, deliver, file, and record any and all further documents, instruments, agreements, notices, certificates, and filings, in the name and on behalf of the Company and each of its subsidiaries (including each Guarantor), as such Authorized Officer may in his or her sole discretion deem necessary, advisable, or appropriate to carry out the intent and purposes of the foregoing resolutions and to consummate the Restructuring Transactions, the execution and delivery of any such documents or the taking of any such actions to be conclusive evidence of such Authorized Officer's approval thereof and of the authorization of the Company with respect thereto; and further
RESOLVED, that the authority granted by these resolutions shall be deemed to include, without limitation, the authority to: (a) agree to modifications, amendments, or waivers to any of the Restructuring Documents that are not materially adverse to the Company, in the judgment of the Authorized Officer executing or consenting to the same; (b) execute and deliver funds flow memoranda, payoff letters, and disbursement instructions; (c) open, close, or modify bank accounts as necessary in connection with the closing of the Restructuring Transactions; (d) provide notices, instructions, and directions to Continental Fiduciary Trust Company, Pinnacle National Bank, N.A., Belvedere Credit Opportunities Fund LP, and any other agent, trustee, or depository; and (e) take all such other actions as may be required or advisable to effectuate the transactions contemplated by these resolutions.
Resolution 22 — Governing Law
RESOLVED, that the Restructuring Documents shall be governed by and construed in accordance with the laws of the State of New York (without regard to conflict of laws principles that would result in the application of the laws of any other jurisdiction), except that (a) the Amended and Restated Certificate of Incorporation, (b) the Certificate of Designations of Series A Preferred Stock, and (c) corporate governance matters arising under the Amended and Restated Stockholders' Agreement (to the extent relating to the internal affairs of the Company as a Delaware corporation) shall be governed by and construed in accordance with the laws of the State of Delaware.
GENERAL PROVISIONS
This Unanimous Written Consent may be executed in any number of counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. Delivery of an executed counterpart of this Written Consent by electronic mail in portable document format (.pdf) or by any other electronic means shall be as effective as delivery of a manually executed counterpart.
This Written Consent shall be filed with the minutes of the proceedings of the Board of Directors of the Company and shall be maintained by the Secretary of the Company as part of the corporate records, in accordance with Section 141(f) of the DGCL.
This Written Consent shall be effective as of the date first written above.
IN WITNESS WHEREOF, the undersigned directors of Stonefield Logistics Group Inc. have executed this Unanimous Written Consent as of December 11, 2023.
________________________________________
Julian Voight Director (Ridgeline Designee)
Date: ________
________________________________________
Serena Chu Director (Ridgeline Designee)
Date: ________
________________________________________
Marcus Delano Director (Chief Executive Officer)
Date: ________
________________________________________
Patricia Langford Director
Date: ________
EXHIBIT LIST
The following Exhibits are attached to and form a part of this Unanimous Written Consent:
[Exhibits omitted from this counterpart; copies on file with the Secretary of the Company and available for inspection at the Company's principal executive offices at 4200 Commerce Street, Suite 1500, Dallas, TX 75201.]
| Cost Category | Amount | |
| Calderwood & Harkness LLP fees (including $750,000 success fee) | $2,850,000 | |
| Hargrove Advisory Group LLC fees | $3,200,000 | |
| Westlake Harden & Cole LLP fees (first lien counsel; reimbursed by Company) | $1,400,000 | |
| Thornbury McCaffrey LLP fees (mezzanine ad hoc group counsel; reimbursed by Company) | $1,100,000 | |
| Meridian Veltrian Partners LLC fees (mezzanine financial advisor; reimbursed by Company) | $900,000 | |
| TLB consent fee (50 bps on $285.0 million) | $1,425,000 | |
| Revolver consent fee (25 bps on $35.0 million) | $87,500 | |
| Super-Priority OID (2.00% on $55.0 million) | $1,100,000 | |
| D&O tail premium (Northgate Specialty Insurance Company, Policy No. NSI-DOL-2023-07721; $15.0 million coverage; 6-year tail) | $475,000 | |
| Filing, administrative, and trustee fees | $225,000 | |
| Total Estimated Transaction Costs | $12,762,500 | |
| Exhibit | Document | Date |
| Exhibit A | Amended and Restated First Lien Credit Agreement | December 1, 2023 |
| Exhibit B | Amendment No. 1 Cover Agreement | December 1, 2023 |
| Exhibit C | Super-Priority Credit Agreement | November 17, 2023 |
| Exhibit D | Super-Priority Guaranty Agreement | November 17, 2023 |
| Exhibit E | Super-Priority Pledge and Security Agreement | November 17, 2023 |
| Exhibit F | Amended and Restated Intercreditor Agreement | November 10, 2023 |
| Exhibit G | Exchange Agreement | December 8, 2023 |
| Exhibit H | First Supplemental Indenture (Exit Consent Amendments) | December 8, 2023 |
| Exhibit I | Amended and Restated Certificate of Incorporation | To be filed |
| Exhibit J | Certificate of Designations — Series A Preferred Stock | To be filed |
| Exhibit K | Amended and Restated Stockholders' Agreement | December 12, 2023 |
| Exhibit L | Registration Rights Agreement | December 12, 2023 |
Exhibit M