1012-00002 · Stonefield Logistics Group · Corporate Governance

board-resolutions-rsa-approval.docx DOCUMENT Finance & Banking

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UNANIMOUS WRITTEN CONSENT OF THE BOARD OF DIRECTORS OF STONEFIELD LOGISTICS GROUP INC.

IN LIEU OF A SPECIAL MEETING

Effective as of June 29, 2023

The undersigned, constituting all of the members of the Board of Directors (the "Board") of Stonefield Logistics Group Inc., a Delaware corporation (the "Company"), acting pursuant to Section 141(f) of the General Corporation Law of the State of Delaware (the "DGCL") and Article III, Section 3.11 of the Company's Amended and Restated Bylaws, as currently in effect, hereby adopt the following resolutions by unanimous written consent in lieu of a special meeting of the Board, effective as of June 29, 2023.

No prior notice of this action was required. No meeting of the Board was required for the adoption of these resolutions. The actions taken by this Unanimous Written Consent shall have the same force and effect as if such actions had been duly adopted at a meeting of the Board at which all directors were present in person or by means of remote communication and at which a quorum was present and acting throughout, in accordance with Section 141(f) of the DGCL and the Company's Bylaws.

Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Restructuring Support Agreement (as defined below) or in the Revised Restructuring Term Sheet dated June 9, 2023, attached hereto as Exhibit A.

RECITALS

WHEREAS:

A. Background of the Company

The Company is a corporation duly organized and existing under the laws of the State of Delaware, bearing Employer Identification Number 83-2457109 and Delaware Division of Corporations File Number 6341872, with its principal executive offices located at 4200 Commerce Street, Suite 1500, Dallas, Texas 75201. The Company is engaged in the business of freight brokerage, last-mile delivery, and warehousing services, which operations are conducted through its three wholly owned operating subsidiaries: (i) Stonefield Freight Services LLC, a Texas limited liability company; (ii) Stonefield Last Mile Inc., a Delaware corporation; and (iii) Stonefield Warehousing LLC, a Texas limited liability company (collectively, the "Operating Subsidiaries"). Stonefield Logistics Holdings LLC, a Delaware limited liability company ("Holdings"), is the Company's direct parent entity and sole stockholder prior to the consummation of the Restructuring Transactions (as defined below).

The Company is a portfolio company of Ridgeline Capital Partners Fund III, L.P. ("Ridgeline"), a Delaware limited partnership, whose general partner is Ridgeline Capital Management III LLC, a Delaware limited liability company. Ridgeline acquired the Company in a leveraged buyout transaction that closed on December 15, 2017 (the "LBO Closing Date"), pursuant to which Ridgeline, directly and through Holdings, acquired one hundred percent (100%) of the issued and outstanding equity interests of the Company.

As of the date hereof, the Company operates a network of approximately twenty-six (26) terminals across fourteen (14) states and employs approximately three thousand eight hundred (3,800) persons, including full-time employees, part-time employees, and independent contractors classified as owner-operators.

B. Existing Capital Structure and Financial Condition

The Board has reviewed and is familiar with the Company's existing capital structure, which consists of the following funded indebtedness:

(i) A senior secured revolving credit facility (the "Revolving Credit Facility") with aggregate commitments of Fifty Million Dollars ($50,000,000), of which Forty-Two Million Dollars ($42,000,000) was drawn as of March 31, 2023, with an additional Three Million Five Hundred Thousand Dollars ($3,500,000) in outstanding letters of credit, leaving approximately Four Million Five Hundred Thousand Dollars ($4,500,000) in availability, under that certain First Lien Credit Agreement, dated as of December 15, 2017 (as amended, restated, supplemented, or otherwise modified from time to time, the "First Lien Credit Agreement"), among the Company, the lenders from time to time party thereto, and Pinnacle National Bank, N.A., as administrative agent (in such capacity, the "First Lien Administrative Agent") and collateral agent (in such capacity, the "First Lien Collateral Agent");

(ii) A first lien term loan B facility (the "Term Loan B" or "TLB") with Two Hundred Eighty-Five Million Dollars ($285,000,000) in outstanding principal (original principal amount of Three Hundred Ten Million Dollars ($310,000,000), with Twenty-Five Million Dollars ($25,000,000) having been amortized since the LBO Closing Date), bearing interest at the Secured Overnight Financing Rate ("SOFR") plus four hundred and twenty-five basis points (425 bps) per annum, with a SOFR floor of seventy-five basis points (75 bps), maturing on December 15, 2024, also issued under the First Lien Credit Agreement;

(iii) One Hundred Forty Million Dollars ($140,000,000) in aggregate principal amount of 11.50% Senior Secured Second Lien Notes due June 15, 2025 (the "Mezzanine Notes"), issued under that certain Indenture, dated as of December 15, 2017 (as amended, restated, supplemented, or otherwise modified from time to time, the "Mezzanine Indenture"), among the Company, the guarantors party thereto, and Continental Fiduciary Trust Company, as trustee (in such capacity, the "Mezzanine Trustee") and second lien collateral agent (in such capacity, the "Second Lien Collateral Agent"), bearing CUSIP No. 861537 AA 2, with approximately Eight Million One Hundred Thousand Dollars ($8,100,000) in accrued and unpaid payment-in-kind ("PIK") interest as of the date hereof; and

(iv) Total funded debt of the Company and its subsidiaries as of March 31, 2023 is approximately Four Hundred Seventy-Five Million One Hundred Thousand Dollars ($475,100,000).

The Company's audited fiscal year 2022 revenue was Six Hundred Twelve Million Three Hundred Thousand Dollars ($612,300,000), as reported in the Company's audited consolidated financial statements prepared by Whitfield & Pryce LLP, the Company's independent registered public accounting firm. Fiscal year 2022 Adjusted EBITDA (as defined in the First Lien Credit Agreement) was Fifty-Eight Million Seven Hundred Thousand Dollars ($58,700,000). For the last twelve months ended March 31, 2023 ("LTM Q1 2023"), Adjusted EBITDA has declined to Forty-One Million Two Hundred Thousand Dollars ($41,200,000), resulting in total leverage of approximately 11.5x LTM Q1 2023 Adjusted EBITDA and first lien leverage of approximately 7.9x LTM Q1 2023 Adjusted EBITDA.

The Board has been advised that the decline in revenue and Adjusted EBITDA is attributable to a confluence of adverse macroeconomic and industry-specific factors, including (a) the ongoing freight recession affecting domestic truckload and less-than-truckload volumes, (b) excess carrier capacity in the U.S. freight market following the post-pandemic supply chain normalization, and (c) the loss of certain customer contracts, including the Company's previously announced loss of its contract with a major national retailer in the third quarter of fiscal year 2022. The Company's management projects fiscal year 2023 revenue of approximately Five Hundred Forty-Five Million Dollars ($545,000,000) and fiscal year 2023 Adjusted EBITDA of approximately Thirty-Eight Million Five Hundred Thousand Dollars ($38,500,000) (the "FY 2023E Projections").

As of March 31, 2023, total liquidity available to the Company is approximately Fifteen Million Eight Hundred Thousand Dollars ($15,800,000), comprised of Eleven Million Three Hundred Thousand Dollars ($11,300,000) in unrestricted cash and cash equivalents and approximately Four Million Five Hundred Thousand Dollars ($4,500,000) of undrawn availability under the Revolving Credit Facility. The Company is experiencing monthly cash burn of approximately Two Million Five Hundred Thousand Dollars ($2,500,000), driven primarily by contractual interest expense on its funded indebtedness and necessary capital expenditures required to maintain operations and comply with regulatory requirements.

Without a restructuring of the Company's balance sheet, the Company faces a near-term maturity wall of approximately Three Hundred Twenty-Seven Million Dollars ($327,000,000) in first lien debt (consisting of the Term Loan B and drawn Revolving Credit Facility balances) maturing on December 15, 2024, and projects that total liquidity will be exhausted by the third quarter of fiscal year 2024. In such scenario, the Company would be unable to refinance or repay its first lien debt at maturity and would likely be compelled to commence proceedings under Chapter 11 of Title 11 of the United States Code (the "Bankruptcy Code").

C. Restructuring Efforts and Negotiations

In light of the foregoing financial condition and the Board's recognition that the Company's current capital structure is unsustainable, the Board determined that it was in the best interests of the Company, its stockholders, and its broader stakeholders — including employees, customers, suppliers, and creditors — to explore a consensual out-of-court restructuring of the Company's balance sheet and capital structure.

On March 15, 2023, after conducting a competitive process involving interviews of three prospective financial advisory firms, the Board authorized the Company to retain Hargrove Advisory Group LLC ("Hargrove"), led by Elena Voss, Managing Director, as financial advisor to the Company to provide liability management and capital structure advisory services in connection with the potential restructuring.

On April 3, 2023, the Board authorized the Company to retain Calderwood & Harkness LLP ("Calderwood & Harkness") as restructuring counsel to the Company, with Nathaniel Bower serving as Responsible Partner, Colette Whitman serving as Billing Partner, Nathan Ikeda serving as Lead Associate, Gabrielle Moss serving as Working Associate, and Sylvia Hartwell serving as Specialist Tax Partner, pursuant to an engagement letter of the same date (Matter No. 1012-00002).

On April 14, 2023, the Company, together with its financial and legal advisors, held an initial meeting with the first lien lender group and Pinnacle National Bank, N.A. (Daniel Wexford, Managing Director), in its capacity as First Lien Administrative Agent, together with counsel to the first lien lenders, Westlake Harden & Cole LLP (Ramona Quelibo, Lead Partner), at which meeting the Company provided a presentation regarding the Company's current financial condition, recent operating performance, management's business plan, and the potential framework for a balance sheet restructuring.

On April 28, 2023, the Company, together with its financial and legal advisors, held an initial meeting with the ad hoc group of holders of the Mezzanine Notes (the "Ad Hoc Group"), which Ad Hoc Group comprises Graystone Mezzanine Capital Fund II LP, Ashland Structured Credit LLC, and Dunmore Special Situations Fund LP, collectively holding approximately One Hundred Twenty-Two Million Dollars ($122,000,000) in aggregate principal amount of the Mezzanine Notes, representing approximately 87.1% of the total outstanding principal amount thereof. The Ad Hoc Group is represented by Thornbury McCaffrey LLP (Alan Driscoll, Lead Partner) as legal counsel and advised by Meridian Veltrian Partners LLC as financial advisor.

Following the initial meetings described above, the Company, Ridgeline, and their respective advisors engaged in extensive arm's-length negotiations with the first lien lender group, the Revolving Credit Facility lenders, and the Ad Hoc Group regarding the terms of a potential restructuring. An initial restructuring term sheet was circulated to the lender groups on May 19, 2023. Following multiple rounds of negotiation, feedback sessions, and diligence requests, a revised restructuring term sheet incorporating lender feedback and reflecting the agreed-upon economic terms of the Restructuring Transactions was circulated on June 9, 2023 (the "Revised Term Sheet"), a copy of which is attached hereto as Exhibit A.

D. The Proposed Restructuring Transactions

The Board has reviewed and carefully considered the proposed Restructuring Support Agreement (the "RSA"), attached hereto in substantially final form as Exhibit B, and the restructuring transactions contemplated thereby (collectively, the "Restructuring Transactions"), which include the following principal elements:

(i) Amend-and-Extend of the First Lien Term Loan B. An amendment to the First Lien Credit Agreement to extend the maturity date of the Term Loan B from December 15, 2024 to December 19, 2028; an increase in the applicable interest rate from SOFR plus 425 basis points to SOFR plus 500 basis points per annum, with the SOFR floor increased from 75 basis points to 100 basis points; maintenance of the existing 1.00% per annum amortization schedule; the addition of financial maintenance covenants, including a Total Net Leverage Ratio not to exceed 6.50x by the fourth quarter of 2025, stepping down to 5.75x by the fourth quarter of 2027, and a Minimum Liquidity covenant of not less than Twenty Million Dollars ($20,000,000) at all times; and payment of a consent fee of 50 basis points (equal to approximately One Million Four Hundred Twenty-Five Thousand Dollars ($1,425,000)) to each Term Loan B lender that consents to the amendment;

(ii) Amend-and-Extend of the Revolving Credit Facility. An amendment to the First Lien Credit Agreement to reduce the aggregate commitments under the Revolving Credit Facility from Fifty Million Dollars ($50,000,000) to Thirty-Five Million Dollars ($35,000,000); an extension of the maturity date to December 19, 2027, subject to a springing maturity date ninety-one (91) days prior to the maturity date of the Term Loan B if the Term Loan B has not been refinanced or otherwise extended by such date; an increase in the applicable interest rate from SOFR plus 375 basis points to SOFR plus 450 basis points per annum; and payment of a consent fee of 25 basis points (equal to approximately Eighty-Seven Thousand Five Hundred Dollars ($87,500)) to each Revolving Credit Facility lender that consents to the amendment;

(iii) New Super-Priority First-Out Term Loan Facility. A new super-priority first-out secured term loan facility (the "Super-Priority Facility") in an aggregate principal amount of Fifty-Five Million Dollars ($55,000,000), to be provided by Belvedere Credit Opportunities Fund LP ("Belvedere"), with Christopher Hartigan, Managing Partner, acting as lead arranger and initial lender, consisting of (a) a funded tranche of Forty-Five Million Dollars ($45,000,000) to be funded at closing and (b) a delayed-draw tranche of Ten Million Dollars ($10,000,000) (the "DDTL"), to be documented pursuant to a separate Super-Priority Credit Agreement; bearing interest at SOFR plus 700 basis points per annum, with a SOFR floor of 100 basis points; with an original issue discount ("OID") of 2.00% (equal to One Million One Hundred Thousand Dollars ($1,100,000)); maturing on December 19, 2027; with a mandatory prepayment sweep of 75% of excess cash flow above a Twenty Million Dollar ($20,000,000) minimum liquidity threshold; call protection at premiums of 103% in year one, 102% in year two, 101% in year three, and par thereafter; and a commitment fee of 1.00% per annum on the undrawn DDTL;

(iv) Equitization of the Mezzanine Notes. An exchange of One Hundred Forty Million Dollars ($140,000,000) in aggregate principal amount of the Mezzanine Notes (together with the waiver and cancellation of approximately Eight Million One Hundred Thousand Dollars ($8,100,000) in accrued and unpaid PIK interest thereon) for (a) newly issued Series A Preferred Stock of the Company with an aggregate liquidation preference of Thirty-Five Million Dollars ($35,000,000) and a 10.00% per annum PIK dividend rate, and (b) newly issued shares of common stock of the Company representing 47.5% of the pro forma fully diluted common equity of the Company (after giving effect to the Restructuring Transactions and the MIP (as defined below) but before giving effect to the exercise or conversion of any warrants, options, or other convertible securities issued under the MIP);

(v) Dilution of Ridgeline Equity. As a result of the equitization described in clause (iv) above, the pro forma equity interest of Ridgeline Capital Partners Fund III, L.P. in the Company will be diluted from 100% to 47.5% of the pro forma fully diluted common equity of the Company;

(vi) Management Incentive Plan. Establishment of a management incentive plan (the "MIP") providing for the issuance of equity-based awards representing 5.0% of the pro forma fully diluted common equity of the Company, the terms of which shall be agreed upon among Ridgeline, the Ad Hoc Group, and the Company's management prior to closing;

(vii) Ridgeline Cash Equity Contribution. A cash equity contribution of Twelve Million Five Hundred Thousand Dollars ($12,500,000) by Ridgeline to the Company, to be used to fund transaction costs incurred in connection with the Restructuring Transactions and to provide a liquidity cushion for the Company's post-closing operations;

(viii) Board Reconstitution. Upon consummation of the Restructuring Transactions, the Board shall be reconstituted to consist of seven (7) directors: three (3) designees of Ridgeline Capital Partners Fund III, L.P., three (3) designees of the mezzanine equitization recipients (as a group), and one (1) independent director mutually acceptable to Ridgeline and the mezzanine equitization recipients; and

(ix) Amended and Restated Intercreditor Agreement. Entry into an Amended and Restated Intercreditor Agreement among Belvedere (as Super-Priority Agent), Pinnacle National Bank, N.A. (as First Lien Agent), and the Company and its subsidiaries, establishing a super-priority first-out / first lien second-out payment and lien priority waterfall governing the relative rights and priorities of the secured parties under the Super-Priority Facility and the amended First Lien Credit Agreement.

The Board has been advised by Hargrove that the Restructuring Transactions, if consummated, are expected to reduce total funded debt from approximately Four Hundred Seventy-Five Million One Hundred Thousand Dollars ($475,100,000) to approximately Three Hundred Seventy-Five Million Dollars ($375,000,000), representing a reduction of approximately One Hundred Million One Hundred Thousand Dollars ($100,100,000). Total leverage is expected to decrease from approximately 11.5x (based on LTM Q1 2023 Adjusted EBITDA of $41,200,000) to approximately 7.2x (based on projected fiscal year 2024 Adjusted EBITDA of Fifty-Two Million Dollars ($52,000,000)), thereby providing the Company with a more sustainable capital structure and adequate runway to execute its business plan.

E. RSA Terms

The RSA is to be entered into among the Company, Ridgeline Capital Partners Fund III, L.P., consenting first lien term loan lenders (holding approximately Two Hundred Twenty-Eight Million Five Hundred Thousand Dollars ($228,500,000) in aggregate principal amount of the Term Loan B, representing approximately 80.2% of the Two Hundred Eighty-Five Million Dollars ($285,000,000) in outstanding Term Loan B principal), all three Revolving Credit Facility lenders (Pinnacle National Bank, N.A., Great Basin Commercial Bank, and Tidewater Lending Corporation — representing unanimous consent of the Revolving Credit Facility lender group), and the members of the Ad Hoc Group (holding approximately One Hundred Twenty-Two Million Dollars ($122,000,000) in aggregate principal amount of the Mezzanine Notes).

The RSA includes, among other provisions: (a) a long-stop date of December 31, 2023, by which the Restructuring Transactions must be consummated; (b) milestones for the negotiation, execution, and delivery of all definitive documentation; (c) customary termination events, including the right of any party to terminate the RSA upon the occurrence of certain specified events; and (d) a fiduciary out expressly permitting the Board to consider, respond to, and accept a superior proposal for an alternative transaction if, in the exercise of its fiduciary duties under applicable law, the Board determines that failure to do so would be inconsistent with the directors' obligations to the Company and its stakeholders.

The RSA will be governed by and construed in accordance with the laws of the State of New York, without regard to the conflict of laws principles thereof that would require the application of the laws of any other jurisdiction.

F. Advisors and Presentations

The Board has received detailed presentations from Hargrove Advisory Group LLC and Calderwood & Harkness LLP regarding: (a) the terms and conditions of the proposed Restructuring Transactions and the RSA; (b) the fiduciary duties of directors of Delaware corporations operating in the zone of insolvency, including the duty to consider the interests of creditors as well as stockholders; (c) the alternatives available to the Company, including the option of filing a voluntary petition under Chapter 11 of the Bankruptcy Code, and the relative advantages, disadvantages, risks, and costs associated with each alternative; and (d) the financial analysis supporting the proposed restructuring, including the projected post-restructuring capital structure, debt service requirements, liquidity projections, and enterprise value analysis.

The Board has reviewed the memorandum prepared by Calderwood & Harkness LLP, dated June 28, 2023, summarizing the key terms of the RSA and the principal definitive documentation to be negotiated and executed in connection with the Restructuring Transactions (the "C&H Memorandum").

Based upon its review of the foregoing materials, and taking into account the advice of its financial and legal advisors, the Board is satisfied that the Restructuring Transactions, on the terms described herein and in the Revised Term Sheet, are fair, reasonable, and in the best interests of the Company and its stakeholders, including its creditors, stockholders, employees, customers, and suppliers.

G. Estimated Transaction Costs

The Board has reviewed the estimated transaction costs associated with the Restructuring Transactions, which are expected to total approximately Twelve Million Seven Hundred Sixty-Two Thousand Five Hundred Dollars ($12,762,500), inclusive of the following components:

(a) Legal fees:

(1) Calderwood & Harkness LLP (Company counsel) — approximately Two Million Eight Hundred Fifty Thousand Dollars ($2,850,000);

(2) Westlake Harden & Cole LLP (first lien lender counsel) — approximately One Million Four Hundred Thousand Dollars ($1,400,000);

(3) Thornbury McCaffrey LLP (Ad Hoc Group counsel) — approximately One Million One Hundred Thousand Dollars ($1,100,000);

(b) Financial advisory fees:

(1) Hargrove Advisory Group LLC (Company financial advisor) — approximately Three Million Two Hundred Thousand Dollars ($3,200,000);

(2) Meridian Veltrian Partners LLC (Ad Hoc Group financial advisor) — approximately Nine Hundred Thousand Dollars ($900,000);

(1) Term Loan B consent fee (50 bps) — One Million Four Hundred Twenty-Five Thousand Dollars ($1,425,000);

(2) Revolving Credit Facility consent fee (25 bps) — Eighty-Seven Thousand Five Hundred Dollars ($87,500);

(d) Super-Priority Facility original issue discount (2.00%) — One Million One Hundred Thousand Dollars ($1,100,000);

(e) D&O tail insurance premium — Four Hundred Seventy-Five Thousand Dollars ($475,000), payable to Northgate Specialty Insurance Company (Policy No. NSI-DOL-2023-07721), for a directors' and officers' liability insurance tail policy providing Fifteen Million Dollars ($15,000,000) in coverage with a six-year tail period; and

(f) Filing fees, administrative costs, and trustee fees — approximately Two Hundred Twenty-Five Thousand Dollars ($225,000).

The Board acknowledges that such estimated transaction costs are subject to adjustment based on actual amounts incurred through the closing of the Restructuring Transactions.

NOW, THEREFORE, BE IT:

RESOLUTIONS

Resolution 1 — Approval of the Restructuring Transactions

RESOLVED, that the Board hereby approves, in all respects, the Restructuring Transactions as described in the recitals above and in the Revised Restructuring Term Sheet dated June 9, 2023 (attached hereto as Exhibit A), including but not limited to: (a) the amend-and-extend of the First Lien Term Loan B, (b) the amend-and-extend of the Revolving Credit Facility, (c) the new Super-Priority Facility to be provided by Belvedere Credit Opportunities Fund LP, (d) the equitization of the Mezzanine Notes into Series A Preferred Stock and common equity of the Company, (e) the new post-restructuring equity structure of the Company (including the dilution of Ridgeline Capital Partners Fund III, L.P. from 100% to 47.5% of pro forma common equity), (f) the cash equity contribution of Twelve Million Five Hundred Thousand Dollars ($12,500,000) by Ridgeline, (g) the establishment of the Management Incentive Plan providing for 5.0% of pro forma common equity, and (h) all related transactions, agreements, instruments, and documents, in each case on terms and conditions substantially consistent with those described in these resolutions and in the Revised Term Sheet; and it is further

Resolution 2 — Approval and Authorization of the Restructuring Support Agreement

RESOLVED, that the Board hereby approves the form and substance of the Restructuring Support Agreement, attached hereto in substantially final form as Exhibit B, and hereby authorizes, empowers, and directs the Company to enter into, execute, and deliver the RSA, to be dated as of June 30, 2023, among the Company, Ridgeline Capital Partners Fund III, L.P., the consenting first lien term loan lenders, the consenting Revolving Credit Facility lenders (Pinnacle National Bank, N.A., Great Basin Commercial Bank, and Tidewater Lending Corporation), and the members of the Ad Hoc Group (Graystone Mezzanine Capital Fund II LP, Ashland Structured Credit LLC, and Dunmore Special Situations Fund LP), together with any and all exhibits, schedules, annexes, and ancillary documents thereto; and it is further

Resolution 3 — Engagement and Retention of Advisors

RESOLVED, that the Board hereby ratifies, confirms, and approves the engagement and retention of the following advisors by the Company:

(a) Calderwood & Harkness LLP (Nathaniel Bower, Responsible Partner; Colette Whitman, Billing Partner; Nathan Ikeda, Lead Associate; Gabrielle Moss, Working Associate; Sylvia Hartwell, Specialist Tax Partner) as restructuring counsel to the Company, pursuant to the engagement letter dated April 3, 2023 (Matter No. 1012-00002), with a fee arrangement consisting of standard hourly rates for attorneys and professional staff, a retainer of One Hundred Thousand Dollars ($100,000) (which has been applied), and a success fee of Seven Hundred Fifty Thousand Dollars ($750,000) payable upon the closing of the Restructuring Transactions; and

(b) Hargrove Advisory Group LLC (Elena Voss, Managing Director) as financial advisor to the Company for liability management and capital structure advisory services, pursuant to the engagement letter entered into on March 15, 2023, on the terms and conditions set forth therein;

and it is further

Resolution 4 — Authorization of Officers to Negotiate and Execute Definitive Documentation

RESOLVED, that each of the following officers of the Company is hereby authorized, empowered, and directed, acting individually or together with any one or more of the other officers named herein, to negotiate, execute, deliver, and perform, on behalf of the Company:

• Marcus Delano, Chief Executive Officer;

• Priya Sundaram, Chief Financial Officer; and

• Howard Kessler, General Counsel and Secretary;

such agreements, instruments, certificates, documents, consents, notices, amendments, and filings as any such officer shall deem necessary, advisable, or appropriate in his or her sole discretion to consummate the Restructuring Transactions, including without limitation each of the following:

(i) The Amended and Restated First Lien Credit Agreement (and the related amendment cover agreement and any lender joinders or consents) with Pinnacle National Bank, N.A. as Administrative Agent and Collateral Agent, and the lenders party thereto;

(ii) The Super-Priority Credit Agreement, the Super-Priority Guaranty Agreement, and the Super-Priority Pledge and Security Agreement, in each case with Belvedere Credit Opportunities Fund LP as Administrative Agent and Collateral Agent, together with any related fee letters, notes, and ancillary security documents;

(iii) The Amended and Restated Intercreditor Agreement among Belvedere Credit Opportunities Fund LP (as Super-Priority Agent), Pinnacle National Bank, N.A. (as First Lien Agent), and the Company and its subsidiaries as grantors;

(iv) The Exchange Agreement among the Company and the exchanging holders of the Mezzanine Notes providing for the exchange of the Mezzanine Notes for Series A Preferred Stock and common equity of the Company;

(v) The consent solicitation statement, the form of letter of transmittal, and any related offering or disclosure documents in connection with the mezzanine note exchange;

(vi) A Supplemental Indenture to the Mezzanine Indenture effectuating exit consent amendments to the Mezzanine Indenture as contemplated by the RSA, to be entered into with Continental Fiduciary Trust Company, as Mezzanine Trustee;

(vii) The Amended and Restated Stockholders' Agreement among the Company, Ridgeline Capital Partners Fund III, L.P. (and/or its affiliates), and the mezzanine equitization recipients, governing the rights and obligations of the Company's stockholders following the consummation of the Restructuring Transactions, including board designation rights, transfer restrictions, tag-along and drag-along rights, preemptive rights, and information rights;

(viii) The Amended and Restated Certificate of Incorporation of the Company and the Certificate of Designations of the Series A Preferred Stock of the Company, each to be filed with the Secretary of State of the State of Delaware;

(ix) The Registration Rights Agreement among the Company and the holders of registrable securities issued in connection with the Restructuring Transactions;

(x) Officer's certificates, secretary's certificates, good standing certificates, incumbency certificates, solvency certificates, and all other customary closing deliverables required by the definitive documentation or reasonably requested by any party thereto;

(xi) Any and all other agreements, instruments, certificates, documents, filings, consents, and notices contemplated by the RSA, the Restructuring Transactions, or the definitive documentation related thereto, or as may otherwise be necessary or desirable to effectuate the intent and purposes of these resolutions;

with such changes, amendments, modifications, supplements, and waivers to any of the foregoing as any such officer may approve in his or her sole discretion (such approval to be conclusively evidenced by the execution and delivery thereof by any such officer), provided that such changes, amendments, modifications, supplements, or waivers are not materially inconsistent with the terms of the Restructuring Transactions as approved by the Board; and it is further

Resolution 5 — Approval of Reimbursement of Professional Fees and Transaction Costs

RESOLVED, that the Board hereby authorizes and directs the Company to reimburse or pay, as applicable, the professional fees and out-of-pocket expenses of (a) Westlake Harden & Cole LLP, as counsel to the first lien lenders, (b) Thornbury McCaffrey LLP, as counsel to the Ad Hoc Group, and (c) Meridian Veltrian Partners LLC, as financial advisor to the Ad Hoc Group, and to pay the consent fees payable to consenting Term Loan B lenders and consenting Revolving Credit Facility lenders, the original issue discount on the Super-Priority Facility, the D&O tail insurance premium, and all other transaction costs and expenses described in the recitals above, in each case in accordance with the terms of the RSA, the definitive documentation, and any applicable fee letters or engagement letters, and in such amounts as are set forth in the recitals hereto or as otherwise approved by the Chief Financial Officer of the Company; and it is further

Resolution 6 — D&O Insurance Tail

RESOLVED, that the Board hereby authorizes and directs the Company to procure a six-year directors' and officers' liability insurance tail policy (the "D&O Tail Policy") from Northgate Specialty Insurance Company (Policy No. NSI-DOL-2023-07721), providing aggregate coverage of Fifteen Million Dollars ($15,000,000) under a Side A difference-in-conditions ("DIC") and ABC (Side A, Side B, and Side C) policy structure, at a one-time premium of Four Hundred Seventy-Five Thousand Dollars ($475,000), for the benefit of the current and former directors and officers of the Company and its subsidiaries, with such coverage to extend for a period of six (6) years following the consummation of the Restructuring Transactions or, if earlier, the reconstitution of the Board; and it is further

Resolution 7 — Board Composition and Governance Changes

RESOLVED, that the Board hereby acknowledges and approves that, upon consummation of the Restructuring Transactions and as set forth in the Amended and Restated Stockholders' Agreement to be entered into in connection therewith, the Board shall be reconstituted to consist of seven (7) directors, as follows:

(a) Three (3) directors designated by Ridgeline Capital Partners Fund III, L.P. (the "Ridgeline Designees"), which Ridgeline Designees shall initially include Julian Voight and Serena Chu, with the third Ridgeline Designee to be identified by Ridgeline prior to the closing of the Restructuring Transactions;

(b) Three (3) directors designated by the mezzanine equitization recipients (as a group) (the "Mezzanine Designees"), which Mezzanine Designees shall be identified by the Ad Hoc Group prior to the closing of the Restructuring Transactions; and

(c) One (1) independent director (the "Independent Director") mutually acceptable to Ridgeline and the mezzanine equitization recipients, to be identified and agreed upon prior to the closing of the Restructuring Transactions;

and the Board further acknowledges that, following such reconstitution, the composition and governance of the Board shall be subject to the terms and conditions of the Amended and Restated Stockholders' Agreement; and it is further

Resolution 8 — Ratification of Prior Actions

RESOLVED, that all acts and things previously done, and all agreements, instruments, documents, and certificates previously executed, delivered, or filed, by any officer, director, or authorized representative of the Company in connection with or in furtherance of the Restructuring Transactions, the engagement of the Company's financial and legal advisors, the negotiation of the RSA and the Revised Term Sheet, and the discussions with the Company's creditor constituencies, are hereby ratified, confirmed, and approved in all respects as the authorized acts of the Company; and it is further

Resolution 9 — General Authorization

RESOLVED, that each of Marcus Delano, Chief Executive Officer, Priya Sundaram, Chief Financial Officer, and Howard Kessler, General Counsel and Secretary, acting individually, is hereby authorized, empowered, and directed to take or cause to be taken any and all such further actions, to execute and deliver or cause to be executed and delivered any and all such further agreements, instruments, documents, certificates, notices, and filings, and to pay or cause to be paid all such fees, costs, and expenses, in the name of and on behalf of the Company, as any such officer may deem necessary, advisable, or appropriate to carry out the intent and purposes of the foregoing resolutions, with the execution and delivery of any such agreement, instrument, document, or certificate by any such officer being conclusive evidence of the Board's approval and authorization hereunder, and no further action of the Board shall be required in connection therewith; and it is further

Resolution 10 — Governing Law

RESOLVED, that, unless otherwise specified in the definitive documentation, the restructuring documentation to be negotiated, executed, and delivered in connection with the Restructuring Transactions shall be governed by and construed in accordance with the laws of the State of New York, without regard to the conflict of laws principles thereof that would require the application of the laws of any other jurisdiction; provided, however, that the corporate governance documents of the Company, including the Amended and Restated Certificate of Incorporation of the Company, the Certificate of Designations of the Series A Preferred Stock, and the Company's Amended and Restated Bylaws, shall be governed by and construed in accordance with the laws of the State of Delaware, as applicable.

[Remainder of this page intentionally left blank. Signature page follows.]

SIGNATURE PAGE TO UNANIMOUS WRITTEN CONSENT OF THE BOARD OF DIRECTORS OF STONEFIELD LOGISTICS GROUP INC.

IN WITNESS WHEREOF, the undersigned directors, constituting all members of the Board of Directors of Stonefield Logistics Group Inc., have executed this Unanimous Written Consent effective as of June 29, 2023, and each hereby confirms that this consent may be executed in counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument.

________________________________________

Name: Julian Voight

Title: Director (Ridgeline Designee)

Date: ________

________________________________________

Name: Serena Chu

Title: Director (Ridgeline Designee)

Date: ________

________________________________________

Name: Marcus Delano

Title: Director and Chief Executive Officer

Date: ________

________________________________________

Name: Richard Calloway

Title: Director (Ridgeline Designee)

Date: ________

EXHIBIT A

REVISED RESTRUCTURING TERM SHEET Dated June 9, 2023

(As presented to the Board of Directors of Stonefield Logistics Group Inc.)

[The Revised Restructuring Term Sheet dated June 9, 2023, setting forth the principal economic and structural terms of the proposed Restructuring Transactions, is attached hereto and incorporated herein by this reference. The Revised Term Sheet is a summary of the principal terms and is subject in all respects to the definitive documentation to be negotiated and executed by the parties thereto.]

EXHIBIT B

FORM OF RESTRUCTURING SUPPORT AGREEMENT

(Substantially Final Form — To Be Executed on June 30, 2023)

[The substantially final form of the Restructuring Support Agreement, to be entered into as of June 30, 2023, among Stonefield Logistics Group Inc., Ridgeline Capital Partners Fund III, L.P., the consenting first lien term loan lenders, the consenting Revolving Credit Facility lenders (Pinnacle National Bank, N.A., Great Basin Commercial Bank, and Tidewater Lending Corporation), and the members of the Ad Hoc Group of Mezzanine Note holders (Graystone Mezzanine Capital Fund II LP, Ashland Structured Credit LLC, and Dunmore Special Situations Fund LP), together with all exhibits, schedules, and annexes thereto, is attached hereto and incorporated herein by this reference.]

CONFIDENTIAL — SUBJECT TO ATTORNEY-CLIENT PRIVILEGE AND WORK PRODUCT DOCTRINE

UNANIMOUS WRITTEN CONSENT OF THE BOARD OF DIRECTORS OF STONEFIELD LOGISTICS GROUP INC.
IN LIEU OF A SPECIAL MEETING
Effective as of June 29, 2023
The undersigned, constituting all of the members of the Board of Directors (the "Board") of Stonefield Logistics Group Inc., a Delaware corporation (the "Company"), acting pursuant to Section 141(f) of the General Corporation Law of the State of Delaware (the "DGCL") and Article III, Section 3.11 of the Company's Amended and Restated Bylaws, as currently in effect, hereby adopt the following resolutions by unanimous written consent in lieu of a special meeting of the Board, effective as of June 29, 2023.
No prior notice of this action was required. No meeting of the Board was required for the adoption of these resolutions. The actions taken by this Unanimous Written Consent shall have the same force and effect as if such actions had been duly adopted at a meeting of the Board at which all directors were present in person or by means of remote communication and at which a quorum was present and acting throughout, in accordance with Section 141(f) of the DGCL and the Company's Bylaws.
Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Restructuring Support Agreement (as defined below) or in the Revised Restructuring Term Sheet dated June 9, 2023, attached hereto as Exhibit A.
RECITALS
WHEREAS:
A. Background of the Company
The Company is a corporation duly organized and existing under the laws of the State of Delaware, bearing Employer Identification Number 83-2457109 and Delaware Division of Corporations File Number 6341872, with its principal executive offices located at 4200 Commerce Street, Suite 1500, Dallas, Texas 75201. The Company is engaged in the business of freight brokerage, last-mile delivery, and warehousing services, which operations are conducted through its three wholly owned operating subsidiaries: (i) Stonefield Freight Services LLC, a Texas limited liability company; (ii) Stonefield Last Mile Inc., a Delaware corporation; and (iii) Stonefield Warehousing LLC, a Texas limited liability company (collectively, the "Operating Subsidiaries"). Stonefield Logistics Holdings LLC, a Delaware limited liability company ("Holdings"), is the Company's direct parent entity and sole stockholder prior to the consummation of the Restructuring Transactions (as defined below).
The Company is a portfolio company of Ridgeline Capital Partners Fund III, L.P. ("Ridgeline"), a Delaware limited partnership, whose general partner is Ridgeline Capital Management III LLC, a Delaware limited liability company. Ridgeline acquired the Company in a leveraged buyout transaction that closed on December 15, 2017 (the "LBO Closing Date"), pursuant to which Ridgeline, directly and through Holdings, acquired one hundred percent (100%) of the issued and outstanding equity interests of the Company.
As of the date hereof, the Company operates a network of approximately twenty-six (26) terminals across fourteen (14) states and employs approximately three thousand eight hundred (3,800) persons, including full-time employees, part-time employees, and independent contractors classified as owner-operators.
B. Existing Capital Structure and Financial Condition
The Board has reviewed and is familiar with the Company's existing capital structure, which consists of the following funded indebtedness:
(i) A senior secured revolving credit facility (the "Revolving Credit Facility") with aggregate commitments of Fifty Million Dollars ($50,000,000), of which Forty-Two Million Dollars ($42,000,000) was drawn as of March 31, 2023, with an additional Three Million Five Hundred Thousand Dollars ($3,500,000) in outstanding letters of credit, leaving approximately Four Million Five Hundred Thousand Dollars ($4,500,000) in availability, under that certain First Lien Credit Agreement, dated as of December 15, 2017 (as amended, restated, supplemented, or otherwise modified from time to time, the "First Lien Credit Agreement"), among the Company, the lenders from time to time party thereto, and Pinnacle National Bank, N.A., as administrative agent (in such capacity, the "First Lien Administrative Agent") and collateral agent (in such capacity, the "First Lien Collateral Agent");
(ii) A first lien term loan B facility (the "Term Loan B" or "TLB") with Two Hundred Eighty-Five Million Dollars ($285,000,000) in outstanding principal (original principal amount of Three Hundred Ten Million Dollars ($310,000,000), with Twenty-Five Million Dollars ($25,000,000) having been amortized since the LBO Closing Date), bearing interest at the Secured Overnight Financing Rate ("SOFR") plus four hundred and twenty-five basis points (425 bps) per annum, with a SOFR floor of seventy-five basis points (75 bps), maturing on December 15, 2024, also issued under the First Lien Credit Agreement;
(iii) One Hundred Forty Million Dollars ($140,000,000) in aggregate principal amount of 11.50% Senior Secured Second Lien Notes due June 15, 2025 (the "Mezzanine Notes"), issued under that certain Indenture, dated as of December 15, 2017 (as amended, restated, supplemented, or otherwise modified from time to time, the "Mezzanine Indenture"), among the Company, the guarantors party thereto, and Continental Fiduciary Trust Company, as trustee (in such capacity, the "Mezzanine Trustee") and second lien collateral agent (in such capacity, the "Second Lien Collateral Agent"), bearing CUSIP No. 861537 AA 2, with approximately Eight Million One Hundred Thousand Dollars ($8,100,000) in accrued and unpaid payment-in-kind ("PIK") interest as of the date hereof; and
(iv) Total funded debt of the Company and its subsidiaries as of March 31, 2023 is approximately Four Hundred Seventy-Five Million One Hundred Thousand Dollars ($475,100,000).
The Company's audited fiscal year 2022 revenue was Six Hundred Twelve Million Three Hundred Thousand Dollars ($612,300,000), as reported in the Company's audited consolidated financial statements prepared by Whitfield & Pryce LLP, the Company's independent registered public accounting firm. Fiscal year 2022 Adjusted EBITDA (as defined in the First Lien Credit Agreement) was Fifty-Eight Million Seven Hundred Thousand Dollars ($58,700,000). For the last twelve months ended March 31, 2023 ("LTM Q1 2023"), Adjusted EBITDA has declined to Forty-One Million Two Hundred Thousand Dollars ($41,200,000), resulting in total leverage of approximately 11.5x LTM Q1 2023 Adjusted EBITDA and first lien leverage of approximately 7.9x LTM Q1 2023 Adjusted EBITDA.
The Board has been advised that the decline in revenue and Adjusted EBITDA is attributable to a confluence of adverse macroeconomic and industry-specific factors, including (a) the ongoing freight recession affecting domestic truckload and less-than-truckload volumes, (b) excess carrier capacity in the U.S. freight market following the post-pandemic supply chain normalization, and (c) the loss of certain customer contracts, including the Company's previously announced loss of its contract with a major national retailer in the third quarter of fiscal year 2022. The Company's management projects fiscal year 2023 revenue of approximately Five Hundred Forty-Five Million Dollars ($545,000,000) and fiscal year 2023 Adjusted EBITDA of approximately Thirty-Eight Million Five Hundred Thousand Dollars ($38,500,000) (the "FY 2023E Projections").
As of March 31, 2023, total liquidity available to the Company is approximately Fifteen Million Eight Hundred Thousand Dollars ($15,800,000), comprised of Eleven Million Three Hundred Thousand Dollars ($11,300,000) in unrestricted cash and cash equivalents and approximately Four Million Five Hundred Thousand Dollars ($4,500,000) of undrawn availability under the Revolving Credit Facility. The Company is experiencing monthly cash burn of approximately Two Million Five Hundred Thousand Dollars ($2,500,000), driven primarily by contractual interest expense on its funded indebtedness and necessary capital expenditures required to maintain operations and comply with regulatory requirements.
Without a restructuring of the Company's balance sheet, the Company faces a near-term maturity wall of approximately Three Hundred Twenty-Seven Million Dollars ($327,000,000) in first lien debt (consisting of the Term Loan B and drawn Revolving Credit Facility balances) maturing on December 15, 2024, and projects that total liquidity will be exhausted by the third quarter of fiscal year 2024. In such scenario, the Company would be unable to refinance or repay its first lien debt at maturity and would likely be compelled to commence proceedings under Chapter 11 of Title 11 of the United States Code (the "Bankruptcy Code").
C. Restructuring Efforts and Negotiations
In light of the foregoing financial condition and the Board's recognition that the Company's current capital structure is unsustainable, the Board determined that it was in the best interests of the Company, its stockholders, and its broader stakeholders — including employees, customers, suppliers, and creditors — to explore a consensual out-of-court restructuring of the Company's balance sheet and capital structure.
On March 15, 2023, after conducting a competitive process involving interviews of three prospective financial advisory firms, the Board authorized the Company to retain Hargrove Advisory Group LLC ("Hargrove"), led by Elena Voss, Managing Director, as financial advisor to the Company to provide liability management and capital structure advisory services in connection with the potential restructuring.
On April 3, 2023, the Board authorized the Company to retain Calderwood & Harkness LLP ("Calderwood & Harkness") as restructuring counsel to the Company, with Nathaniel Bower serving as Responsible Partner, Colette Whitman serving as Billing Partner, Nathan Ikeda serving as Lead Associate, Gabrielle Moss serving as Working Associate, and Sylvia Hartwell serving as Specialist Tax Partner, pursuant to an engagement letter of the same date (Matter No. 1012-00002).
On April 14, 2023, the Company, together with its financial and legal advisors, held an initial meeting with the first lien lender group and Pinnacle National Bank, N.A. (Daniel Wexford, Managing Director), in its capacity as First Lien Administrative Agent, together with counsel to the first lien lenders, Westlake Harden & Cole LLP (Ramona Quelibo, Lead Partner), at which meeting the Company provided a presentation regarding the Company's current financial condition, recent operating performance, management's business plan, and the potential framework for a balance sheet restructuring.
On April 28, 2023, the Company, together with its financial and legal advisors, held an initial meeting with the ad hoc group of holders of the Mezzanine Notes (the "Ad Hoc Group"), which Ad Hoc Group comprises Graystone Mezzanine Capital Fund II LP, Ashland Structured Credit LLC, and Dunmore Special Situations Fund LP, collectively holding approximately One Hundred Twenty-Two Million Dollars ($122,000,000) in aggregate principal amount of the Mezzanine Notes, representing approximately 87.1% of the total outstanding principal amount thereof. The Ad Hoc Group is represented by Thornbury McCaffrey LLP (Alan Driscoll, Lead Partner) as legal counsel and advised by Meridian Veltrian Partners LLC as financial advisor.
Following the initial meetings described above, the Company, Ridgeline, and their respective advisors engaged in extensive arm's-length negotiations with the first lien lender group, the Revolving Credit Facility lenders, and the Ad Hoc Group regarding the terms of a potential restructuring. An initial restructuring term sheet was circulated to the lender groups on May 19, 2023. Following multiple rounds of negotiation, feedback sessions, and diligence requests, a revised restructuring term sheet incorporating lender feedback and reflecting the agreed-upon economic terms of the Restructuring Transactions was circulated on June 9, 2023 (the "Revised Term Sheet"), a copy of which is attached hereto as Exhibit A.
D. The Proposed Restructuring Transactions
The Board has reviewed and carefully considered the proposed Restructuring Support Agreement (the "RSA"), attached hereto in substantially final form as Exhibit B, and the restructuring transactions contemplated thereby (collectively, the "Restructuring Transactions"), which include the following principal elements:
(i) Amend-and-Extend of the First Lien Term Loan B. An amendment to the First Lien Credit Agreement to extend the maturity date of the Term Loan B from December 15, 2024 to December 19, 2028; an increase in the applicable interest rate from SOFR plus 425 basis points to SOFR plus 500 basis points per annum, with the SOFR floor increased from 75 basis points to 100 basis points; maintenance of the existing 1.00% per annum amortization schedule; the addition of financial maintenance covenants, including a Total Net Leverage Ratio not to exceed 6.50x by the fourth quarter of 2025, stepping down to 5.75x by the fourth quarter of 2027, and a Minimum Liquidity covenant of not less than Twenty Million Dollars ($20,000,000) at all times; and payment of a consent fee of 50 basis points (equal to approximately One Million Four Hundred Twenty-Five Thousand Dollars ($1,425,000)) to each Term Loan B lender that consents to the amendment;
(ii) Amend-and-Extend of the Revolving Credit Facility. An amendment to the First Lien Credit Agreement to reduce the aggregate commitments under the Revolving Credit Facility from Fifty Million Dollars ($50,000,000) to Thirty-Five Million Dollars ($35,000,000); an extension of the maturity date to December 19, 2027, subject to a springing maturity date ninety-one (91) days prior to the maturity date of the Term Loan B if the Term Loan B has not been refinanced or otherwise extended by such date; an increase in the applicable interest rate from SOFR plus 375 basis points to SOFR plus 450 basis points per annum; and payment of a consent fee of 25 basis points (equal to approximately Eighty-Seven Thousand Five Hundred Dollars ($87,500)) to each Revolving Credit Facility lender that consents to the amendment;
(iii) New Super-Priority First-Out Term Loan Facility. A new super-priority first-out secured term loan facility (the "Super-Priority Facility") in an aggregate principal amount of Fifty-Five Million Dollars ($55,000,000), to be provided by Belvedere Credit Opportunities Fund LP ("Belvedere"), with Christopher Hartigan, Managing Partner, acting as lead arranger and initial lender, consisting of (a) a funded tranche of Forty-Five Million Dollars ($45,000,000) to be funded at closing and (b) a delayed-draw tranche of Ten Million Dollars ($10,000,000) (the "DDTL"), to be documented pursuant to a separate Super-Priority Credit Agreement; bearing interest at SOFR plus 700 basis points per annum, with a SOFR floor of 100 basis points; with an original issue discount ("OID") of 2.00% (equal to One Million One Hundred Thousand Dollars ($1,100,000)); maturing on December 19, 2027; with a mandatory prepayment sweep of 75% of excess cash flow above a Twenty Million Dollar ($20,000,000) minimum liquidity threshold; call protection at premiums of 103% in year one, 102% in year two, 101% in year three, and par thereafter; and a commitment fee of 1.00% per annum on the undrawn DDTL;
(iv) Equitization of the Mezzanine Notes. An exchange of One Hundred Forty Million Dollars ($140,000,000) in aggregate principal amount of the Mezzanine Notes (together with the waiver and cancellation of approximately Eight Million One Hundred Thousand Dollars ($8,100,000) in accrued and unpaid PIK interest thereon) for (a) newly issued Series A Preferred Stock of the Company with an aggregate liquidation preference of Thirty-Five Million Dollars ($35,000,000) and a 10.00% per annum PIK dividend rate, and (b) newly issued shares of common stock of the Company representing 47.5% of the pro forma fully diluted common equity of the Company (after giving effect to the Restructuring Transactions and the MIP (as defined below) but before giving effect to the exercise or conversion of any warrants, options, or other convertible securities issued under the MIP);
(v) Dilution of Ridgeline Equity. As a result of the equitization described in clause (iv) above, the pro forma equity interest of Ridgeline Capital Partners Fund III, L.P. in the Company will be diluted from 100% to 47.5% of the pro forma fully diluted common equity of the Company;
(vi) Management Incentive Plan. Establishment of a management incentive plan (the "MIP") providing for the issuance of equity-based awards representing 5.0% of the pro forma fully diluted common equity of the Company, the terms of which shall be agreed upon among Ridgeline, the Ad Hoc Group, and the Company's management prior to closing;
(vii) Ridgeline Cash Equity Contribution. A cash equity contribution of Twelve Million Five Hundred Thousand Dollars ($12,500,000) by Ridgeline to the Company, to be used to fund transaction costs incurred in connection with the Restructuring Transactions and to provide a liquidity cushion for the Company's post-closing operations;
(viii) Board Reconstitution. Upon consummation of the Restructuring Transactions, the Board shall be reconstituted to consist of seven (7) directors: three (3) designees of Ridgeline Capital Partners Fund III, L.P., three (3) designees of the mezzanine equitization recipients (as a group), and one (1) independent director mutually acceptable to Ridgeline and the mezzanine equitization recipients; and
(ix) Amended and Restated Intercreditor Agreement. Entry into an Amended and Restated Intercreditor Agreement among Belvedere (as Super-Priority Agent), Pinnacle National Bank, N.A. (as First Lien Agent), and the Company and its subsidiaries, establishing a super-priority first-out / first lien second-out payment and lien priority waterfall governing the relative rights and priorities of the secured parties under the Super-Priority Facility and the amended First Lien Credit Agreement.
The Board has been advised by Hargrove that the Restructuring Transactions, if consummated, are expected to reduce total funded debt from approximately Four Hundred Seventy-Five Million One Hundred Thousand Dollars ($475,100,000) to approximately Three Hundred Seventy-Five Million Dollars ($375,000,000), representing a reduction of approximately One Hundred Million One Hundred Thousand Dollars ($100,100,000). Total leverage is expected to decrease from approximately 11.5x (based on LTM Q1 2023 Adjusted EBITDA of $41,200,000) to approximately 7.2x (based on projected fiscal year 2024 Adjusted EBITDA of Fifty-Two Million Dollars ($52,000,000)), thereby providing the Company with a more sustainable capital structure and adequate runway to execute its business plan.
E. RSA Terms
The RSA is to be entered into among the Company, Ridgeline Capital Partners Fund III, L.P., consenting first lien term loan lenders (holding approximately Two Hundred Twenty-Eight Million Five Hundred Thousand Dollars ($228,500,000) in aggregate principal amount of the Term Loan B, representing approximately 80.2% of the Two Hundred Eighty-Five Million Dollars ($285,000,000) in outstanding Term Loan B principal), all three Revolving Credit Facility lenders (Pinnacle National Bank, N.A., Great Basin Commercial Bank, and Tidewater Lending Corporation — representing unanimous consent of the Revolving Credit Facility lender group), and the members of the Ad Hoc Group (holding approximately One Hundred Twenty-Two Million Dollars ($122,000,000) in aggregate principal amount of the Mezzanine Notes).
The RSA includes, among other provisions: (a) a long-stop date of December 31, 2023, by which the Restructuring Transactions must be consummated; (b) milestones for the negotiation, execution, and delivery of all definitive documentation; (c) customary termination events, including the right of any party to terminate the RSA upon the occurrence of certain specified events; and (d) a fiduciary out expressly permitting the Board to consider, respond to, and accept a superior proposal for an alternative transaction if, in the exercise of its fiduciary duties under applicable law, the Board determines that failure to do so would be inconsistent with the directors' obligations to the Company and its stakeholders.
The RSA will be governed by and construed in accordance with the laws of the State of New York, without regard to the conflict of laws principles thereof that would require the application of the laws of any other jurisdiction.
F. Advisors and Presentations
The Board has received detailed presentations from Hargrove Advisory Group LLC and Calderwood & Harkness LLP regarding: (a) the terms and conditions of the proposed Restructuring Transactions and the RSA; (b) the fiduciary duties of directors of Delaware corporations operating in the zone of insolvency, including the duty to consider the interests of creditors as well as stockholders; (c) the alternatives available to the Company, including the option of filing a voluntary petition under Chapter 11 of the Bankruptcy Code, and the relative advantages, disadvantages, risks, and costs associated with each alternative; and (d) the financial analysis supporting the proposed restructuring, including the projected post-restructuring capital structure, debt service requirements, liquidity projections, and enterprise value analysis.
The Board has reviewed the memorandum prepared by Calderwood & Harkness LLP, dated June 28, 2023, summarizing the key terms of the RSA and the principal definitive documentation to be negotiated and executed in connection with the Restructuring Transactions (the "C&H Memorandum").
Based upon its review of the foregoing materials, and taking into account the advice of its financial and legal advisors, the Board is satisfied that the Restructuring Transactions, on the terms described herein and in the Revised Term Sheet, are fair, reasonable, and in the best interests of the Company and its stakeholders, including its creditors, stockholders, employees, customers, and suppliers.
G. Estimated Transaction Costs
The Board has reviewed the estimated transaction costs associated with the Restructuring Transactions, which are expected to total approximately Twelve Million Seven Hundred Sixty-Two Thousand Five Hundred Dollars ($12,762,500), inclusive of the following components:
(a) Legal fees:
(1) Calderwood & Harkness LLP (Company counsel) — approximately Two Million Eight Hundred Fifty Thousand Dollars ($2,850,000);
(2) Westlake Harden & Cole LLP (first lien lender counsel) — approximately One Million Four Hundred Thousand Dollars ($1,400,000);
(3) Thornbury McCaffrey LLP (Ad Hoc Group counsel) — approximately One Million One Hundred Thousand Dollars ($1,100,000);
(b) Financial advisory fees:
(1) Hargrove Advisory Group LLC (Company financial advisor) — approximately Three Million Two Hundred Thousand Dollars ($3,200,000);
(2) Meridian Veltrian Partners LLC (Ad Hoc Group financial advisor) — approximately Nine Hundred Thousand Dollars ($900,000);
(c) Consent fees:
(1) Term Loan B consent fee (50 bps) — One Million Four Hundred Twenty-Five Thousand Dollars ($1,425,000);
(2) Revolving Credit Facility consent fee (25 bps) — Eighty-Seven Thousand Five Hundred Dollars ($87,500);
(d) Super-Priority Facility original issue discount (2.00%) — One Million One Hundred Thousand Dollars ($1,100,000);
(e) D&O tail insurance premium — Four Hundred Seventy-Five Thousand Dollars ($475,000), payable to Northgate Specialty Insurance Company (Policy No. NSI-DOL-2023-07721), for a directors' and officers' liability insurance tail policy providing Fifteen Million Dollars ($15,000,000) in coverage with a six-year tail period; and
(f) Filing fees, administrative costs, and trustee fees — approximately Two Hundred Twenty-Five Thousand Dollars ($225,000).
The Board acknowledges that such estimated transaction costs are subject to adjustment based on actual amounts incurred through the closing of the Restructuring Transactions.
NOW, THEREFORE, BE IT:
RESOLUTIONS
Resolution 1 — Approval of the Restructuring Transactions
RESOLVED, that the Board hereby approves, in all respects, the Restructuring Transactions as described in the recitals above and in the Revised Restructuring Term Sheet dated June 9, 2023 (attached hereto as Exhibit A), including but not limited to: (a) the amend-and-extend of the First Lien Term Loan B, (b) the amend-and-extend of the Revolving Credit Facility, (c) the new Super-Priority Facility to be provided by Belvedere Credit Opportunities Fund LP, (d) the equitization of the Mezzanine Notes into Series A Preferred Stock and common equity of the Company, (e) the new post-restructuring equity structure of the Company (including the dilution of Ridgeline Capital Partners Fund III, L.P. from 100% to 47.5% of pro forma common equity), (f) the cash equity contribution of Twelve Million Five Hundred Thousand Dollars ($12,500,000) by Ridgeline, (g) the establishment of the Management Incentive Plan providing for 5.0% of pro forma common equity, and (h) all related transactions, agreements, instruments, and documents, in each case on terms and conditions substantially consistent with those described in these resolutions and in the Revised Term Sheet; and it is further
Resolution 2 — Approval and Authorization of the Restructuring Support Agreement
RESOLVED, that the Board hereby approves the form and substance of the Restructuring Support Agreement, attached hereto in substantially final form as Exhibit B, and hereby authorizes, empowers, and directs the Company to enter into, execute, and deliver the RSA, to be dated as of June 30, 2023, among the Company, Ridgeline Capital Partners Fund III, L.P., the consenting first lien term loan lenders, the consenting Revolving Credit Facility lenders (Pinnacle National Bank, N.A., Great Basin Commercial Bank, and Tidewater Lending Corporation), and the members of the Ad Hoc Group (Graystone Mezzanine Capital Fund II LP, Ashland Structured Credit LLC, and Dunmore Special Situations Fund LP), together with any and all exhibits, schedules, annexes, and ancillary documents thereto; and it is further
Resolution 3 — Engagement and Retention of Advisors
RESOLVED, that the Board hereby ratifies, confirms, and approves the engagement and retention of the following advisors by the Company:
(a) Calderwood & Harkness LLP (Nathaniel Bower, Responsible Partner; Colette Whitman, Billing Partner; Nathan Ikeda, Lead Associate; Gabrielle Moss, Working Associate; Sylvia Hartwell, Specialist Tax Partner) as restructuring counsel to the Company, pursuant to the engagement letter dated April 3, 2023 (Matter No. 1012-00002), with a fee arrangement consisting of standard hourly rates for attorneys and professional staff, a retainer of One Hundred Thousand Dollars ($100,000) (which has been applied), and a success fee of Seven Hundred Fifty Thousand Dollars ($750,000) payable upon the closing of the Restructuring Transactions; and
(b) Hargrove Advisory Group LLC (Elena Voss, Managing Director) as financial advisor to the Company for liability management and capital structure advisory services, pursuant to the engagement letter entered into on March 15, 2023, on the terms and conditions set forth therein;
and it is further
Resolution 4 — Authorization of Officers to Negotiate and Execute Definitive Documentation
RESOLVED, that each of the following officers of the Company is hereby authorized, empowered, and directed, acting individually or together with any one or more of the other officers named herein, to negotiate, execute, deliver, and perform, on behalf of the Company:
•  Marcus Delano, Chief Executive Officer;
•  Priya Sundaram, Chief Financial Officer; and
•  Howard Kessler, General Counsel and Secretary;
such agreements, instruments, certificates, documents, consents, notices, amendments, and filings as any such officer shall deem necessary, advisable, or appropriate in his or her sole discretion to consummate the Restructuring Transactions, including without limitation each of the following:
(i) The Amended and Restated First Lien Credit Agreement (and the related amendment cover agreement and any lender joinders or consents) with Pinnacle National Bank, N.A. as Administrative Agent and Collateral Agent, and the lenders party thereto;
(ii) The Super-Priority Credit Agreement, the Super-Priority Guaranty Agreement, and the Super-Priority Pledge and Security Agreement, in each case with Belvedere Credit Opportunities Fund LP as Administrative Agent and Collateral Agent, together with any related fee letters, notes, and ancillary security documents;
(iii) The Amended and Restated Intercreditor Agreement among Belvedere Credit Opportunities Fund LP (as Super-Priority Agent), Pinnacle National Bank, N.A. (as First Lien Agent), and the Company and its subsidiaries as grantors;
(iv) The Exchange Agreement among the Company and the exchanging holders of the Mezzanine Notes providing for the exchange of the Mezzanine Notes for Series A Preferred Stock and common equity of the Company;
(v) The consent solicitation statement, the form of letter of transmittal, and any related offering or disclosure documents in connection with the mezzanine note exchange;
(vi) A Supplemental Indenture to the Mezzanine Indenture effectuating exit consent amendments to the Mezzanine Indenture as contemplated by the RSA, to be entered into with Continental Fiduciary Trust Company, as Mezzanine Trustee;
(vii) The Amended and Restated Stockholders' Agreement among the Company, Ridgeline Capital Partners Fund III, L.P. (and/or its affiliates), and the mezzanine equitization recipients, governing the rights and obligations of the Company's stockholders following the consummation of the Restructuring Transactions, including board designation rights, transfer restrictions, tag-along and drag-along rights, preemptive rights, and information rights;
(viii) The Amended and Restated Certificate of Incorporation of the Company and the Certificate of Designations of the Series A Preferred Stock of the Company, each to be filed with the Secretary of State of the State of Delaware;
(ix) The Registration Rights Agreement among the Company and the holders of registrable securities issued in connection with the Restructuring Transactions;
(x) Officer's certificates, secretary's certificates, good standing certificates, incumbency certificates, solvency certificates, and all other customary closing deliverables required by the definitive documentation or reasonably requested by any party thereto;
(xi) Any and all other agreements, instruments, certificates, documents, filings, consents, and notices contemplated by the RSA, the Restructuring Transactions, or the definitive documentation related thereto, or as may otherwise be necessary or desirable to effectuate the intent and purposes of these resolutions;
with such changes, amendments, modifications, supplements, and waivers to any of the foregoing as any such officer may approve in his or her sole discretion (such approval to be conclusively evidenced by the execution and delivery thereof by any such officer), provided that such changes, amendments, modifications, supplements, or waivers are not materially inconsistent with the terms of the Restructuring Transactions as approved by the Board; and it is further
Resolution 5 — Approval of Reimbursement of Professional Fees and Transaction Costs
RESOLVED, that the Board hereby authorizes and directs the Company to reimburse or pay, as applicable, the professional fees and out-of-pocket expenses of (a) Westlake Harden & Cole LLP, as counsel to the first lien lenders, (b) Thornbury McCaffrey LLP, as counsel to the Ad Hoc Group, and (c) Meridian Veltrian Partners LLC, as financial advisor to the Ad Hoc Group, and to pay the consent fees payable to consenting Term Loan B lenders and consenting Revolving Credit Facility lenders, the original issue discount on the Super-Priority Facility, the D&O tail insurance premium, and all other transaction costs and expenses described in the recitals above, in each case in accordance with the terms of the RSA, the definitive documentation, and any applicable fee letters or engagement letters, and in such amounts as are set forth in the recitals hereto or as otherwise approved by the Chief Financial Officer of the Company; and it is further
Resolution 6 — D&O Insurance Tail
RESOLVED, that the Board hereby authorizes and directs the Company to procure a six-year directors' and officers' liability insurance tail policy (the "D&O Tail Policy") from Northgate Specialty Insurance Company (Policy No. NSI-DOL-2023-07721), providing aggregate coverage of Fifteen Million Dollars ($15,000,000) under a Side A difference-in-conditions ("DIC") and ABC (Side A, Side B, and Side C) policy structure, at a one-time premium of Four Hundred Seventy-Five Thousand Dollars ($475,000), for the benefit of the current and former directors and officers of the Company and its subsidiaries, with such coverage to extend for a period of six (6) years following the consummation of the Restructuring Transactions or, if earlier, the reconstitution of the Board; and it is further
Resolution 7 — Board Composition and Governance Changes
RESOLVED, that the Board hereby acknowledges and approves that, upon consummation of the Restructuring Transactions and as set forth in the Amended and Restated Stockholders' Agreement to be entered into in connection therewith, the Board shall be reconstituted to consist of seven (7) directors, as follows:
(a) Three (3) directors designated by Ridgeline Capital Partners Fund III, L.P. (the "Ridgeline Designees"), which Ridgeline Designees shall initially include Julian Voight and Serena Chu, with the third Ridgeline Designee to be identified by Ridgeline prior to the closing of the Restructuring Transactions;
(b) Three (3) directors designated by the mezzanine equitization recipients (as a group) (the "Mezzanine Designees"), which Mezzanine Designees shall be identified by the Ad Hoc Group prior to the closing of the Restructuring Transactions; and
(c) One (1) independent director (the "Independent Director") mutually acceptable to Ridgeline and the mezzanine equitization recipients, to be identified and agreed upon prior to the closing of the Restructuring Transactions;
and the Board further acknowledges that, following such reconstitution, the composition and governance of the Board shall be subject to the terms and conditions of the Amended and Restated Stockholders' Agreement; and it is further
Resolution 8 — Ratification of Prior Actions
RESOLVED, that all acts and things previously done, and all agreements, instruments, documents, and certificates previously executed, delivered, or filed, by any officer, director, or authorized representative of the Company in connection with or in furtherance of the Restructuring Transactions, the engagement of the Company's financial and legal advisors, the negotiation of the RSA and the Revised Term Sheet, and the discussions with the Company's creditor constituencies, are hereby ratified, confirmed, and approved in all respects as the authorized acts of the Company; and it is further
Resolution 9 — General Authorization
RESOLVED, that each of Marcus Delano, Chief Executive Officer, Priya Sundaram, Chief Financial Officer, and Howard Kessler, General Counsel and Secretary, acting individually, is hereby authorized, empowered, and directed to take or cause to be taken any and all such further actions, to execute and deliver or cause to be executed and delivered any and all such further agreements, instruments, documents, certificates, notices, and filings, and to pay or cause to be paid all such fees, costs, and expenses, in the name of and on behalf of the Company, as any such officer may deem necessary, advisable, or appropriate to carry out the intent and purposes of the foregoing resolutions, with the execution and delivery of any such agreement, instrument, document, or certificate by any such officer being conclusive evidence of the Board's approval and authorization hereunder, and no further action of the Board shall be required in connection therewith; and it is further
Resolution 10 — Governing Law
RESOLVED, that, unless otherwise specified in the definitive documentation, the restructuring documentation to be negotiated, executed, and delivered in connection with the Restructuring Transactions shall be governed by and construed in accordance with the laws of the State of New York, without regard to the conflict of laws principles thereof that would require the application of the laws of any other jurisdiction; provided, however, that the corporate governance documents of the Company, including the Amended and Restated Certificate of Incorporation of the Company, the Certificate of Designations of the Series A Preferred Stock, and the Company's Amended and Restated Bylaws, shall be governed by and construed in accordance with the laws of the State of Delaware, as applicable.
[Remainder of this page intentionally left blank. Signature page follows.]
SIGNATURE PAGE TO UNANIMOUS WRITTEN CONSENT OF THE BOARD OF DIRECTORS OF STONEFIELD LOGISTICS GROUP INC.
IN WITNESS WHEREOF, the undersigned directors, constituting all members of the Board of Directors of Stonefield Logistics Group Inc., have executed this Unanimous Written Consent effective as of June 29, 2023, and each hereby confirms that this consent may be executed in counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument.
________________________________________
Name: Julian Voight
Title: Director (Ridgeline Designee)
Date: ________
________________________________________
Name: Serena Chu
Title: Director (Ridgeline Designee)
Date: ________
________________________________________
Name: Marcus Delano
Title: Director and Chief Executive Officer
Date: ________
________________________________________
Name: Richard Calloway
Title: Director (Ridgeline Designee)
Date: ________
EXHIBIT A
REVISED RESTRUCTURING TERM SHEET Dated June 9, 2023
(As presented to the Board of Directors of Stonefield Logistics Group Inc.)
[The Revised Restructuring Term Sheet dated June 9, 2023, setting forth the principal economic and structural terms of the proposed Restructuring Transactions, is attached hereto and incorporated herein by this reference. The Revised Term Sheet is a summary of the principal terms and is subject in all respects to the definitive documentation to be negotiated and executed by the parties thereto.]
EXHIBIT B
FORM OF RESTRUCTURING SUPPORT AGREEMENT
(Substantially Final Form — To Be Executed on June 30, 2023)
[The substantially final form of the Restructuring Support Agreement, to be entered into as of June 30, 2023, among Stonefield Logistics Group Inc., Ridgeline Capital Partners Fund III, L.P., the consenting first lien term loan lenders, the consenting Revolving Credit Facility lenders (Pinnacle National Bank, N.A., Great Basin Commercial Bank, and Tidewater Lending Corporation), and the members of the Ad Hoc Group of Mezzanine Note holders (Graystone Mezzanine Capital Fund II LP, Ashland Structured Credit LLC, and Dunmore Special Situations Fund LP), together with all exhibits, schedules, and annexes thereto, is attached hereto and incorporated herein by this reference.]
CONFIDENTIAL — SUBJECT TO ATTORNEY-CLIENT PRIVILEGE AND WORK PRODUCT DOCTRINE

UNANIMOUS WRITTEN CONSENT OF THE BOARD OF DIRECTORS OF STONEFIELD LOGISTICS GROUP INC.

IN LIEU OF A SPECIAL MEETING

RECITALS

WHEREAS:

NOW, THEREFORE, BE IT:

RESOLUTIONS

EXHIBIT A

EXHIBIT B

FORM OF RESTRUCTURING SUPPORT AGREEMENT

Record

Parties

Dates

Amounts