1012-00002 · Stonefield Logistics Group · Correspondence

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CONFIDENTIAL

CALDERWOOD & HARKNESS LLP Counselors at Law

599 Lexington Avenue New York, New York 10022

Telephone: (212) 455-7000 Facsimile: (212) 455-7001 www.calderwoodharkness.com

December 19, 2023

Matter No.: 1012-00002

VIA HAND DELIVERY AND ELECTRONIC MAIL

Mr. Marcus Delano Chief Executive Officer Stonefield Logistics Group Inc. 4200 Commerce Street, Suite 1500 Dallas, Texas 75201

Mr. Howard Kessler General Counsel and Secretary Stonefield Logistics Group Inc. 4200 Commerce Street, Suite 1500 Dallas, Texas 75201

Re: Closing of Consensual Out-of-Court Restructuring of Stonefield Logistics Group Inc. — Confirmation of Closing on December 19, 2023

Dear Messrs. Delano and Kessler:

I. CONFIRMATION OF SUCCESSFUL CLOSING

Calderwood & Harkness LLP is pleased to confirm the successful closing of the consensual out-of-court restructuring (the "Restructuring") of Stonefield Logistics Group Inc. ("Stonefield" or the "Company"), a corporation organized and existing under the laws of the State of Delaware (EIN: 83-2457109; Delaware Secretary of State File No.: 6341872), effective as of December 19, 2023 (the "Closing Date").

As you know, Calderwood & Harkness LLP was retained as restructuring counsel to the Company pursuant to that certain engagement letter dated April 3, 2023 (the "Engagement Letter"), by and between Calderwood & Harkness LLP and Stonefield Logistics Group Inc. Over the course of the past eight and a half months, our firm has worked closely with the Company's management team, board of directors, financial advisor, and the various stakeholder groups and their respective advisors to negotiate, document, and consummate the series of integrated transactions comprising the Restructuring.

We are pleased to confirm that, as of the Closing Date, all conditions precedent to closing set forth in the definitive transaction documents have been duly satisfied or, where applicable, waived by the relevant parties in accordance with the terms thereof, and all restructuring transactions contemplated thereby have been consummated. This letter serves to memorialize the closing, summarize the completed transactions and key deliverables, outline certain post-closing matters requiring the Company's attention, and confirm the delivery of the closing binder and ancillary materials.

Capitalized terms used but not otherwise defined in this letter shall have the meanings ascribed to such terms in the respective definitive transaction documents, as applicable.

II. SUMMARY OF COMPLETED RESTRUCTURING TRANSACTIONS

The Restructuring was effectuated through a series of interrelated transactions, each of which is summarized in detail below. The transactions were carefully sequenced and, in certain cases, executed on different dates in the weeks preceding the Closing Date, with all remaining conditions satisfied and final deliverables exchanged on December 19, 2023.

A. Amended and Restated First Lien Credit Agreement

The Amended and Restated First Lien Credit Agreement (the "A&R First Lien Credit Agreement") was executed on December 1, 2023, among Stonefield Logistics Group Inc. as Borrower, the Guarantors party thereto, Pinnacle National Bank, N.A. as Administrative Agent and Collateral Agent, and the Lenders party thereto. The A&R First Lien Credit Agreement was effectuated pursuant to Amendment No. 1 to that certain First Lien Credit Agreement dated as of December 15, 2017 (the "Original First Lien Credit Agreement"), among the same parties and their predecessors in interest.

Lender Consents. The amendment required the consent of the "Required Lenders" as defined under the Original First Lien Credit Agreement. Lenders holding $228.5 million of the $285.0 million in outstanding Term Loan B principal (representing approximately 80.2% of the aggregate outstanding principal amount) provided their written consent. In addition, all three revolving credit facility lenders — Pinnacle National Bank, N.A., Great Basin Commercial Bank, and Tidewater Lending Corporation — consented unanimously to the amendments affecting the revolving credit facility.

Key Amended Terms. The A&R First Lien Credit Agreement incorporates the following material modifications to the terms of the existing first lien credit facilities:

Term Loan B:

• Outstanding principal amount: $285.0 million (no forgiveness or reduction of principal);

• Maturity date extended from December 15, 2024 to December 19, 2028;

• Interest rate increased from SOFR + 425 basis points to SOFR + 500 basis points;

• SOFR floor increased from 75 basis points to 100 basis points;

• Scheduled annual amortization of 1.00% of original principal amount maintained at current levels.

Revolving Credit Facility:

• Total revolving credit commitment reduced from $50.0 million to $35.0 million;

• Maturity date extended to December 19, 2027, subject to a springing maturity date that is 91 days prior to the maturity date of the Term Loan B if the Term Loan B has not been refinanced or repaid in full by such date;

• Interest rate increased from SOFR + 375 basis points to SOFR + 450 basis points.

New Financial Covenants:

• Total Net Leverage Ratio not to exceed 6.50x, tested quarterly beginning with the fiscal quarter ending December 31, 2025, stepping down to 6.25x by the fourth fiscal quarter of 2026 and to 5.75x by the fourth fiscal quarter of 2027;

• Minimum Liquidity (defined as unrestricted cash plus available revolving credit commitments) of not less than $20.0 million at all times.

Consent Fees. In consideration of the consenting lenders' agreement to the foregoing amendments, the Company paid the following consent fees on the Closing Date: (i) 50 basis points on the outstanding Term Loan B principal amount ($285.0 million × 0.50% = $1,425,000), payable pro rata to each consenting Term Loan B lender, and (ii) 25 basis points on the aggregate revolving credit commitment ($35.0 million × 0.25% = $87,500), payable pro rata to each consenting revolving credit facility lender. All consent fees were funded from proceeds of the super-priority credit facility and the sponsor equity contribution, as reflected in the funds flow memorandum described in Section VII below.

First Lien Lenders' Counsel. The first lien lender group was represented by Westlake Harden & Cole LLP, with Ramona Quelibo serving as lead partner on the engagement. The Company has reimbursed the reasonable fees and expenses of Westlake Harden & Cole LLP in accordance with the terms of the Original First Lien Credit Agreement, as detailed in Section VII of this letter.

B. Super-Priority Credit Agreement

The Super-Priority Credit Agreement (the "Super-Priority Credit Agreement") was executed on November 17, 2023, among Stonefield Logistics Group Inc. as Borrower, the Guarantors party thereto, and Belvedere Credit Opportunities Fund LP as Administrative Agent, Collateral Agent, and Initial Lender.

Facility Terms. The Super-Priority Credit Agreement provides for a $55.0 million super-priority first-out term loan facility, consisting of (i) a $45.0 million initial term loan, which was funded in full at closing, and (ii) a $10.0 million delayed-draw term loan ("DDTL"), available to be drawn in a single drawing at any time during the 12-month period following the Closing Date upon satisfaction of specified conditions precedent. Interest accrues at a rate of SOFR + 700 basis points, with a 100 basis point SOFR floor.

Original Issue discount. The super-priority term loan was issued with a 2.00% original issue discount ($55.0 million × 2.00% = $1,100,000). Accordingly, the net funded proceeds received by the Company at closing in respect of the initial $45.0 million term loan were $43,900,000 ($45,000,000 minus $1,100,000 of OID).

Maturity and Prepayment. The super-priority term loan matures on December 19, 2027, providing a four-year tenor from the Closing Date. Mandatory prepayment is required from 75% of excess cash flow in any fiscal year, subject to a minimum liquidity threshold of $20.0 million after giving effect to such prepayment. The facility includes the following call protection schedule: 103% of par during the first year, 102% during the second year, 101% during the third year, and par thereafter. A commitment fee of 1.00% per annum accrues on the undrawn DDTL commitment, payable quarterly in arrears.

Super-Priority Guaranty Agreement. In connection with the Super-Priority Credit Agreement, the Super-Priority Guaranty Agreement was executed on November 17, 2023, by each of the following subsidiaries of the Company as Guarantors: Stonefield Logistics Holdings LLC, Stonefield Freight Services LLC, Stonefield Last Mile Inc., and Stonefield Warehousing LLC. Each Guarantor unconditionally guarantees all obligations of the Borrower under the Super-Priority Credit Agreement.

Super-Priority Pledge and Security Agreement. The Super-Priority Pledge and Security Agreement was also executed on November 17, 2023, by the Borrower and each Guarantor in favor of Belvedere Credit Opportunities Fund LP as Collateral Agent. This agreement grants a first-priority super-priority lien on substantially all assets of the Borrower and the Guarantors, including accounts, inventory, equipment, intellectual property, equity interests in subsidiaries, and proceeds thereof, in each case subject to the priority provisions established in the Amended and Restated Intercreditor Agreement described in Section II.C below.

Belvedere's Counsel. Belvedere Credit Opportunities Fund LP was represented by Thornbury McCaffrey LLP. We note that Thornbury McCaffrey LLP also served as counsel to the mezzanine ad hoc group (as described in Section II.D below), and the firm maintained an ethical wall between the two engagement teams in accordance with applicable professional responsibility requirements.

C. Amended and Restated Intercreditor Agreement

The Amended and Restated Intercreditor Agreement (the "A&R ICA") was executed on 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 Stonefield Logistics Group Inc. (as acknowledged by the Company). The A&R ICA amends and restates the original Intercreditor Agreement dated December 15, 2017 in its entirety.

The A&R ICA establishes the relative lien and payment priority as between the super-priority first-out obligations and the first lien second-out obligations, providing for, among other things: (i) a super-priority first-out / first lien second-out payment and lien priority waterfall governing the distribution of proceeds of collateral and the application of payments in respect of the secured obligations; (ii) customary standstill periods limiting enforcement actions by the junior priority secured party during specified periods; (iii) purchase options permitting the first lien lenders to acquire the super-priority obligations under specified circumstances, including upon the occurrence of certain insolvency events; and (iv) provisions governing debtor-in-possession financing and the use of cash collateral in the event of a subsequent bankruptcy filing.

The A&R ICA is governed by, and shall be 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.

D. Mezzanine Equitization — Exchange Agreement and Supplemental Indenture

Exchange Agreement. The Exchange Agreement (the "Exchange Agreement") was executed on December 8, 2023, among Stonefield Logistics Group Inc. and the exchanging holders (the "Exchanging Holders") of the Company's 11.50% Senior Secured Second Lien Notes due June 15, 2025 (CUSIP: 861537 AA 2) (the "Mezzanine Notes"). The Exchanging Holders hold, in the aggregate, $134.5 million in principal amount of the $140.0 million total outstanding principal amount of the Mezzanine Notes, representing approximately 96.1% of the outstanding principal amount.

The Exchanging Holders include the members of the ad hoc group of mezzanine holders (the "Ad Hoc Group"), whose holdings are set forth below, together with additional holders who joined the Restructuring Support Agreement during the joinder period from July 3, 2023 through July 21, 2023:

Exchange Consideration. Pursuant to the Exchange Agreement, the Exchanging Holders exchanged their Mezzanine Notes for the following consideration: (i) Series A Preferred Equity of the Company, with an aggregate liquidation preference of $35.0 million and a 10.00% annual dividend rate payable in kind ("PIK"), issued pursuant to the Certificate of Designations described in Section II.E below; and (ii) 47.5% of the pro forma common equity of the Company, allocated pro rata among the Exchanging Holders based on their respective holdings of Mezzanine Notes.

Waiver of Accrued Interest. As part of the settlement consideration embodied in the Exchange Agreement, the Exchanging Holders waived all accrued and unpaid PIK interest on their Mezzanine Notes in the amount of $8.1 million.

Recovery Analysis. Based on the analysis performed by Hargrove Advisory Group LLC, the Company's financial advisor, the total implied recovery to the Exchanging Holders under the Exchange Agreement is estimated at approximately 40 to 55 cents on the dollar, taking into account the value of the Series A Preferred Equity, the pro forma common equity, and the waived accrued interest, in each case measured against the $134.5 million in aggregate outstanding principal amount and $8.1 million in accrued PIK interest of the exchanged Mezzanine Notes.

First Supplemental Indenture — Exit Consent Amendments

The First Supplemental Indenture (the "First Supplemental Indenture") was executed on December 8, 2023, between Stonefield Logistics Group Inc. as Issuer and Continental Fiduciary Trust Company as Trustee under the original Indenture dated June 15, 2020 governing the Mezzanine Notes. The First Supplemental Indenture was executed pursuant to the exit consents delivered by the Exchanging Holders (representing 96.1% of the outstanding principal amount of the Mezzanine Notes, which exceeded the threshold required under the original Indenture to effectuate the amendments contemplated thereby).

The First Supplemental Indenture amends the original Indenture to strip substantially all restrictive covenants, events of default, and reporting obligations applicable to the remaining $5.5 million in principal amount of Mezzanine Notes held by non-consenting holders who did not participate in the exchange (the "Non-Consenting Mezzanine Holders"). These exit consent amendments are consistent with customary restructuring practice and are intended to protect the Company from any future covenant default or acceleration claims under the Mezzanine Notes while the residual $5.5 million in Non-Consenting Mezzanine Notes remains outstanding.

Consent Solicitation Timeline

The consent solicitation in connection with the Exchange Agreement and the exit consent amendments was conducted on the following timeline:

• Consent solicitation launched: October 6, 2023;

• Early consent deadline: October 20, 2023;

• Final consent deadline: November 3, 2023.

All requisite consents were received by the final consent deadline, and the Exchange Agreement and First Supplemental Indenture were thereafter finalized and executed on December 8, 2023.

Mezzanine Ad Hoc Group Advisors

The mezzanine Ad Hoc Group was represented by Thornbury McCaffrey LLP as legal counsel, with Alan Driscoll serving as lead partner. Meridian Veltrian Partners LLC served as financial advisor to the Ad Hoc Group. As noted in Section VII below, the Company has reimbursed the reasonable fees and expenses of both Thornbury McCaffrey LLP and Meridian Veltrian Partners LLC in accordance with the terms of the Restructuring Support Agreement.

E. Equity Restructuring

The equity restructuring component of the Restructuring involved the following corporate actions and agreements:

Amended and Restated Certificate of Incorporation. The Amended and Restated Certificate of Incorporation of Stonefield Logistics Group Inc. was filed with the Delaware Secretary of State on December 12, 2023. The Amended and Restated Certificate of Incorporation reflects, among other things, the authorization of the new Series A Preferred Stock, the reclassification of the Company's existing common equity, and such other amendments as were necessary to effectuate the equity restructuring.

Certificate of Designations. The Certificate of Designations of the Company's Series A Preferred Stock was filed with the Delaware Secretary of State on December 12, 2023. The Certificate of Designations establishes the terms, rights, preferences, and limitations of the Series A Preferred Stock, including the $35.0 million aggregate liquidation preference, the 10.00% PIK dividend rate, and customary protective provisions for the holders thereof.

Amended and Restated Stockholders' Agreement. The Amended and Restated Stockholders' Agreement (the "A&R SHA") was executed on December 12, 2023, among the Company, Ridgeline Capital Partners Fund III, L.P. (the "Sponsor" or "Ridgeline"), and the mezzanine equitization recipients. The A&R SHA governs the rights and obligations of the stockholders with respect to, among other things, transfer restrictions, tag-along and drag-along rights, preemptive rights, information rights, and board composition and governance.

Pro Forma Equity Ownership. The pro forma equity ownership of the Company following consummation of the Restructuring is as follows:

Board Composition. The board of directors of the Company following the Restructuring consists of seven (7) members: three (3) designees of Ridgeline (including Julian Voight and Serena Chu), three (3) designees of the mezzanine equitization recipients, and one (1) independent director. Board composition rights are governed by the terms of the A&R SHA.

Registration Rights Agreement. The Registration Rights Agreement was executed on December 12, 2023, among the Company and the parties entitled to registration rights thereunder, including Ridgeline and the mezzanine equitization recipients. The Registration Rights Agreement provides for customary demand and piggyback registration rights with respect to the registrable securities held by such parties.

F. Sponsor Equity Contribution

Ridgeline Capital Partners Fund III, L.P. funded a new cash equity contribution of $12.5 million on December 15, 2023 (the "Sponsor Equity Contribution"). The proceeds of the Sponsor Equity Contribution were used to fund a portion of the transaction costs incurred in connection with the Restructuring and to provide the Company with an incremental liquidity cushion. As a consequence of the mezzanine equitization and the terms of the A&R SHA, Ridgeline's pro forma common equity ownership in the Company was diluted from 100% to 47.5%.

III. SUMMARY OF CLOSING FINANCIAL IMPACT

The following table summarizes the financial impact of the Restructuring on the Company's capital structure as of the Closing Date:

*Note: $5.5 million in Non-Consenting Mezzanine Notes remain outstanding following the exit consent amendments but are excluded from the pro forma capital structure for purposes of this summary, as substantially all covenants, events of default, and reporting obligations have been stripped from the governing indenture.

Total Debt Reduction. The Restructuring resulted in a total reduction in funded debt obligations of approximately $100.1 million, principally through the equitization of $134.5 million in Mezzanine Notes and the waiver of $8.1 million in accrued PIK interest, partially offset by the incurrence of the $55.0 million super-priority facility.

Leverage Reduction. Based on the Company's last twelve months ("LTM") Adjusted EBITDA for the period ending with the first fiscal quarter of 2023 of $41.2 million, the Company's pre-restructuring total leverage was approximately 11.5x. On a pro forma basis, based on the Company's projected Adjusted EBITDA for fiscal year 2024 of $52.0 million (as set forth in the Company's business plan shared with the restructuring parties), the Company's post-restructuring total leverage is approximately 7.2x.

Maturity Profile. The Restructuring eliminates the Company's near-term maturity wall. Prior to the Restructuring, the Company faced a Term Loan B maturity of December 15, 2024 and a Mezzanine Notes maturity of June 15, 2025. Following the Restructuring, the Company's earliest debt maturity is December 19, 2027 (applicable to both the revolving credit facility and the super-priority term loan), with the Term Loan B maturing on December 19, 2028. This extended maturity runway provides the Company with substantial operational flexibility to execute on its business plan and deleveraging strategy.

IV. CORPORATE DELIVERABLES COMPLETED AT CLOSING

The following corporate deliverables were executed and delivered in connection with the closing of the Restructuring:

(a) Board Resolutions. Resolutions of the Board of Directors of Stonefield Logistics Group Inc. authorizing the closing and execution of all definitive transaction documents, adopted unanimously on December 11, 2023.

(b) Secretary's Certificate. Secretary's Certificate executed by Howard Kessler, General Counsel and Secretary, dated December 19, 2023, certifying: (i) the incumbency and specimen signatures of the officers authorized to execute documents on behalf of the Company; (ii) that attached thereto are true and complete copies of the Amended and Restated Certificate of Incorporation (as filed with the Delaware Secretary of State on December 12, 2023); (iii) that attached thereto are true and complete copies of the Company's current bylaws; and (iv) that attached thereto are true and complete copies of the board resolutions adopted on December 11, 2023 authorizing the Restructuring transactions.

(c) Officer's Certificate. Officer's Certificate executed by Priya Sundaram, Chief Financial Officer, dated December 19, 2023, certifying: (i) that all representations and warranties of the Company contained in the definitive transaction documents are true and correct in all material respects as of the Closing Date; (ii) that the Company is in compliance with all covenants and agreements contained in the definitive transaction documents; and (iii) that no Default or Event of Default has occurred and is continuing, or would result from the consummation of the Restructuring transactions.

(d) Legal Opinion Letter. Legal opinion letter delivered by Calderwood & Harkness LLP, signed by Nathaniel Bower, Partner, dated December 19, 2023, addressed to Pinnacle National Bank, N.A. (as First Lien Administrative Agent and Collateral Agent) and Belvedere Credit Opportunities Fund LP (as Super-Priority Administrative Agent and Collateral Agent), opining as to, among other things, due organization, valid existence, and good standing of the Company, corporate power and authority, due authorization, execution, and delivery of the definitive transaction documents, enforceability (subject to customary qualifications), no conflict with organizational documents, and such other matters as were required under the respective credit agreements.

V. TRANSACTION COSTS SUMMARY

Reference is made to the funds flow memorandum dated December 18, 2023 (the "Funds Flow Memorandum"), prepared by Gabrielle Moss of Calderwood & Harkness LLP and approved by Priya Sundaram, Chief Financial Officer of the Company, which sets forth in detail all closing-day fund movements among the relevant parties and accounts in connection with the consummation of the Restructuring transactions. A copy of the Funds Flow Memorandum is enclosed with this letter and included in the closing binder.

The estimated total transaction costs incurred by the Company in connection with the Restructuring are approximately $12,762,500, comprised of the following components:

The foregoing costs were funded from a combination of the net proceeds of the super-priority term loan, the Sponsor Equity Contribution from Ridgeline Capital Partners Fund III, L.P., and the Company's cash on hand, in each case as reflected in the Funds Flow Memorandum.

VI. ENCLOSED CLOSING BINDER

The closing binder (the "Closing Binder") containing fully executed copies of all definitive transaction documents and ancillary materials is enclosed with this letter or, to the extent physical volumes are being separately delivered, will be delivered to the Company's offices at 4200 Commerce Street, Suite 1500, Dallas, Texas 75201 by courier within five (5) business days of the date hereof. The Closing Binder includes the closing checklist and comprehensive document index prepared by Gabrielle Moss of Calderwood & Harkness LLP, dated December 19, 2023.

The Closing Binder is organized into the following categories:

(a) Credit Facility Documents — including the A&R First Lien Credit Agreement, the Super-Priority Credit Agreement, the Super-Priority Guaranty Agreement, the Super-Priority Pledge and Security Agreement, the A&R Intercreditor Agreement, and all schedules, exhibits, and ancillary documents related thereto;

(b) Equitization Documents — including the Exchange Agreement, the First Supplemental Indenture, the consent solicitation materials, and related correspondence with Continental Fiduciary Trust Company as Trustee;

(c) Equity Documents — including the Amended and Restated Certificate of Incorporation, the Certificate of Designations for Series A Preferred Stock, the A&R Stockholders' Agreement, and the Registration Rights Agreement;

(d) Corporate Deliverables — including the Board Resolutions, Secretary's Certificate, Officer's Certificate, and good standing certificates;

(e) Legal Opinions — including the Calderwood & Harkness LLP opinion letter and any opinions delivered by local counsel; and

(f) Funds Flow Materials — including the Funds Flow Memorandum and wire transfer confirmations.

We recommend that the Company retain the Closing Binder and its contents in a secure location in accordance with the Company's document retention policies.

VII. POST-CLOSING MATTERS REQUIRING ATTENTION

The following post-closing matters require the Company's prompt attention. We are available to assist with any of the items described below as needed.

A. Filing of Amended and Restated Certificate of Incorporation and Certificate of Designations

As noted in Section II.E above, the Amended and Restated Certificate of Incorporation and the Certificate of Designations for the Company's Series A Preferred Stock were filed with the Delaware Secretary of State on December 12, 2023. Please confirm receipt of the filed and stamped copies from the Delaware Secretary of State and retain such copies in the Company's corporate records. The Company's registered agent in Delaware is Capitol Registered Agents, Inc., located at 1209 Orange Street, Wilmington, Delaware 19801. Any future filings or service of process matters in Delaware should be coordinated through Capitol Registered Agents, Inc.

B. Notice to Non-Consenting Mezzanine Holders

Non-Consenting Mezzanine Holders holding $5.5 million in aggregate principal amount of the Mezzanine Notes were not parties to the Exchange Agreement and did not participate in the equitization. Formal notice must be delivered to such holders informing them of: (i) the execution of the First Supplemental Indenture; (ii) the exit consent amendments effectuated thereby, which strip substantially all restrictive covenants, events of default, and reporting obligations from the remaining Mezzanine Notes; and (iii) the consummation of the exchange and equitization transactions.

We recommend that the Company coordinate with Continental Fiduciary Trust Company, in its capacity as Trustee under the Indenture, to distribute such notice to the Non-Consenting Mezzanine Holders through the customary channels of the Depository Trust Company. Continental Fiduciary Trust Company's offices are located at 100 Wall Street, 15th Floor, New York, New York 10005, and we would be pleased to provide you with the appropriate contact information and a draft form of notice upon request.

C. UCC Filings

In order to perfect the security interests granted under the Super-Priority Pledge and Security Agreement, UCC-1 financing statements are to be filed (or confirmed to have been filed) in the following jurisdictions:

(i) Delaware — as the jurisdiction of organization of Stonefield Logistics Group Inc., Stonefield Logistics Holdings LLC, and Stonefield Last Mile Inc.; and

(ii) Texas — as the jurisdiction of organization of Stonefield Freight Services LLC and Stonefield Warehousing LLC.

In addition, UCC-3 amendments are to be filed as necessary in the applicable jurisdictions to reflect the amended and restated first lien security interests under the A&R First Lien Credit Agreement and to ensure that the priority of the existing first lien security interests is properly maintained and reflected on the public record. We anticipate that Belvedere Credit Opportunities Fund LP's counsel, Thornbury McCaffrey LLP, will coordinate the preparation and filing of the UCC-1 financing statements in respect of the super-priority security interests, and that Westlake Harden & Cole LLP will coordinate any UCC-3 amendments in respect of the first lien security interests. The Company should confirm with both firms that all filings have been completed and obtain copies of the filed financing statements for its records.

D. D&O Tail Insurance

The Company should confirm that the six-year directors' and officers' liability insurance tail policy with Northgate Specialty Insurance Company has been bound, effective as of the Closing Date, with aggregate coverage of $15.0 million (Policy No. NSI-DOL-2023-07721). The premium of $475,000 for the tail policy was paid on the Closing Date from the funds flow, as reflected in the Funds Flow Memorandum. A copy of the bound policy should be obtained and retained in the Company's corporate records, and the Company's risk management function should be advised of the policy terms and coverage period.

E. Other Administrative Matters

The following additional administrative matters should be attended to promptly following closing:

(i) Closing Notices. Distribution of closing notices to all parties under the A&R First Lien Credit Agreement, the Super-Priority Credit Agreement, and the A&R Intercreditor Agreement, confirming the consummation of the Restructuring transactions and the satisfaction of all conditions precedent to closing. We recommend that such notices be distributed within five (5) business days of the Closing Date.

(ii) Books and Records. Update of the Company's stock ledger, minute books, and other corporate books and records to reflect the new equity ownership structure (including the issuance of the Series A Preferred Stock and the reallocation of common equity), the revised board composition, and the execution and delivery of the A&R SHA and the Registration Rights Agreement.

(iii) Accounting Treatment and Disclosure. Coordination with Whitfield & Pryce LLP (Todd Ashburn, engagement partner), the Company's independent accounting advisors, regarding the appropriate accounting treatment of the Restructuring transactions under applicable generally accepted accounting principles, including but not limited to the treatment of the debt extinguishment and modification, the equitization of the Mezzanine Notes, the issuance of the Series A Preferred Stock, and any related gain or loss recognition. The Company should also consult with Whitfield & Pryce LLP regarding any disclosure requirements that may be applicable in connection with the Company's financial reporting obligations.

VIII. CLOSING REMARKS

On behalf of Calderwood & Harkness LLP, we wish to congratulate Stonefield Logistics Group Inc. on the successful completion of this complex consensual out-of-court restructuring. The achievement of a comprehensive restructuring of the Company's capital structure — including the extension of the first lien maturities, the introduction of a super-priority liquidity facility, the equitization of $134.5 million in mezzanine debt, and the establishment of a new governance framework — without the need for a bankruptcy filing is a testament to the commitment and collaborative efforts of all parties involved.

We wish to specifically acknowledge the tireless efforts of the Company's management team throughout this process, including Marcus Delano as Chief Executive Officer, Priya Sundaram as Chief Financial Officer, and Howard Kessler as General Counsel and Secretary, each of whom contributed significantly to the successful negotiation and consummation of the Restructuring. We also wish to recognize the invaluable contributions of the Company's financial advisor, Hargrove Advisory Group LLC, and in particular Elena Voss, Managing Director, whose strategic guidance and analytical support were instrumental in bringing the restructuring negotiations to a successful conclusion.

As noted above, the engagement was opened on April 3, 2023, pursuant to the Engagement Letter, and the matter is now considered closed as of the Closing Date, December 19, 2023. Notwithstanding the foregoing, Calderwood & Harkness LLP remains available to assist with any post-closing questions, follow-up matters, or issues arising from the Restructuring, and we would welcome the opportunity to continue serving the Company in the future.

We note that all definitive transaction documents executed in connection with the Restructuring are governed by, and shall be construed in accordance with, the laws of the State of New York, without regard to conflict-of-laws principles, except that the corporate governance provisions set forth in the Amended and Restated Stockholders' Agreement are governed by, and shall be construed in accordance with, the laws of the State of Delaware.

We trust that this letter, together with the enclosed Closing Binder and Funds Flow Memorandum, provides a complete record of the closing. Please do not hesitate to contact the undersigned or any member of the Calderwood & Harkness team with any questions.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Nathaniel Bower Partner

Calderwood & Harkness LLP 599 Lexington Avenue New York, New York 10022 Telephone: (212) 455-7000

Email: nbower@calderwoodharkness.com

cc: (via electronic mail)

Colette Whitman, Partner, Calderwood & Harkness LLP (billing partner) Nathan Ikeda, Senior Associate, Calderwood & Harkness LLP (lead associate) Gabrielle Moss, Associate, Calderwood & Harkness LLP (working associate) Sylvia Hartwell, Partner, Calderwood & Harkness LLP (tax specialist) Priya Sundaram, Chief Financial Officer, Stonefield Logistics Group Inc. Julian Voight, Managing Director, Ridgeline Capital Management III LLC Serena Chu, Principal, Ridgeline Capital Management III LLC Elena Voss, Managing Director, Hargrove Advisory Group LLC

Enclosures:

1. Closing Binder (including Closing Checklist and Document Index dated December 19, 2023)

2. Funds Flow Memorandum dated December 18, 2023

Holder	Principal Amount Held
Graystone Mezzanine Capital Fund II LP	$52.0 million
Ashland Structured Credit LLC	$40.0 million
Dunmore Special Situations Fund LP	$30.0 million
Additional Joining Holders (various)	$12.5 million
Total Exchanging Holders	$134.5 million
Stockholder	Common Equity Ownership
Ridgeline Capital Partners Fund III, L.P.	47.5%
Mezzanine Equitization Recipients (pro rata)	47.5%
Management Incentive Plan (MIP) Reserve	5.0%
Total	100.0%
Debt Instrument	Pre-Restructuring	Post-Restructuring
Super-Priority Term Loan	—	$55.0M
Revolving Credit Facility (commitment / drawn)	$50.0M / $42.0M drawn	$35.0M commitment
Term Loan B	$285.0M	$285.0M
11.50% Senior Secured Second Lien Notes (Mezzanine)	$140.0M	— (equitized)*
Accrued PIK Interest on Mezzanine Notes	$8.1M	— (waived)
Total Funded Debt	$475.1M	$375.0M
Cost Item	Amount
Calderwood & Harkness LLP — legal fees and expenses (including $750,000 success fee per Engagement Letter)	$2,850,000
Hargrove Advisory Group LLC — financial advisory fees	$3,200,000
Westlake Harden & Cole LLP — legal fees and expenses (reimbursed by the Company pursuant to the First Lien Credit Agreement)	$1,400,000
Thornbury McCaffrey LLP — legal fees and expenses (reimbursed by the Company pursuant to the Restructuring Support Agreement)	$1,100,000
Meridian Veltrian Partners LLC — financial advisory fees (reimbursed by the Company pursuant to the Restructuring Support Agreement)	$900,000
Term Loan B consent fee (50 bps on $285.0M)	$1,425,000

Revolving credit facility consent fee (25 bps on $35.0M)	$87,500
Super-Priority OID (2.00% on $55.0M)	$1,100,000
D&O tail insurance premium — Northgate Specialty Insurance Company (Policy No. NSI-DOL-2023-07721)	$475,000
Filing fees, administrative fees, and trustee fees	$225,000
Total Estimated Transaction Costs	$12,762,500

CONFIDENTIAL
CALDERWOOD & HARKNESS LLP Counselors at Law
599 Lexington Avenue New York, New York 10022
Telephone: (212) 455-7000 Facsimile: (212) 455-7001 www.calderwoodharkness.com
December 19, 2023
Matter No.: 1012-00002
VIA HAND DELIVERY AND ELECTRONIC MAIL
Mr. Marcus Delano Chief Executive Officer Stonefield Logistics Group Inc. 4200 Commerce Street, Suite 1500 Dallas, Texas 75201
Mr. Howard Kessler General Counsel and Secretary Stonefield Logistics Group Inc. 4200 Commerce Street, Suite 1500 Dallas, Texas 75201
Re: Closing of Consensual Out-of-Court Restructuring of Stonefield Logistics Group Inc. — Confirmation of Closing on December 19, 2023
Dear Messrs. Delano and Kessler:
I. CONFIRMATION OF SUCCESSFUL CLOSING
Calderwood & Harkness LLP is pleased to confirm the successful closing of the consensual out-of-court restructuring (the "Restructuring") of Stonefield Logistics Group Inc. ("Stonefield" or the "Company"), a corporation organized and existing under the laws of the State of Delaware (EIN: 83-2457109; Delaware Secretary of State File No.: 6341872), effective as of December 19, 2023 (the "Closing Date").
As you know, Calderwood & Harkness LLP was retained as restructuring counsel to the Company pursuant to that certain engagement letter dated April 3, 2023 (the "Engagement Letter"), by and between Calderwood & Harkness LLP and Stonefield Logistics Group Inc. Over the course of the past eight and a half months, our firm has worked closely with the Company's management team, board of directors, financial advisor, and the various stakeholder groups and their respective advisors to negotiate, document, and consummate the series of integrated transactions comprising the Restructuring.
We are pleased to confirm that, as of the Closing Date, all conditions precedent to closing set forth in the definitive transaction documents have been duly satisfied or, where applicable, waived by the relevant parties in accordance with the terms thereof, and all restructuring transactions contemplated thereby have been consummated. This letter serves to memorialize the closing, summarize the completed transactions and key deliverables, outline certain post-closing matters requiring the Company's attention, and confirm the delivery of the closing binder and ancillary materials.
Capitalized terms used but not otherwise defined in this letter shall have the meanings ascribed to such terms in the respective definitive transaction documents, as applicable.
II. SUMMARY OF COMPLETED RESTRUCTURING TRANSACTIONS
The Restructuring was effectuated through a series of interrelated transactions, each of which is summarized in detail below. The transactions were carefully sequenced and, in certain cases, executed on different dates in the weeks preceding the Closing Date, with all remaining conditions satisfied and final deliverables exchanged on December 19, 2023.
A. Amended and Restated First Lien Credit Agreement
The Amended and Restated First Lien Credit Agreement (the "A&R First Lien Credit Agreement") was executed on December 1, 2023, among Stonefield Logistics Group Inc. as Borrower, the Guarantors party thereto, Pinnacle National Bank, N.A. as Administrative Agent and Collateral Agent, and the Lenders party thereto. The A&R First Lien Credit Agreement was effectuated pursuant to Amendment No. 1 to that certain First Lien Credit Agreement dated as of December 15, 2017 (the "Original First Lien Credit Agreement"), among the same parties and their predecessors in interest.
Lender Consents. The amendment required the consent of the "Required Lenders" as defined under the Original First Lien Credit Agreement. Lenders holding $228.5 million of the $285.0 million in outstanding Term Loan B principal (representing approximately 80.2% of the aggregate outstanding principal amount) provided their written consent. In addition, all three revolving credit facility lenders — Pinnacle National Bank, N.A., Great Basin Commercial Bank, and Tidewater Lending Corporation — consented unanimously to the amendments affecting the revolving credit facility.
Key Amended Terms. The A&R First Lien Credit Agreement incorporates the following material modifications to the terms of the existing first lien credit facilities:
Term Loan B:
• Outstanding principal amount: $285.0 million (no forgiveness or reduction of principal);
• Maturity date extended from December 15, 2024 to December 19, 2028;
• Interest rate increased from SOFR + 425 basis points to SOFR + 500 basis points;
• SOFR floor increased from 75 basis points to 100 basis points;
• Scheduled annual amortization of 1.00% of original principal amount maintained at current levels.
Revolving Credit Facility:
• Total revolving credit commitment reduced from $50.0 million to $35.0 million;
• Maturity date extended to December 19, 2027, subject to a springing maturity date that is 91 days prior to the maturity date of the Term Loan B if the Term Loan B has not been refinanced or repaid in full by such date;
• Interest rate increased from SOFR + 375 basis points to SOFR + 450 basis points.
New Financial Covenants:
• Total Net Leverage Ratio not to exceed 6.50x, tested quarterly beginning with the fiscal quarter ending December 31, 2025, stepping down to 6.25x by the fourth fiscal quarter of 2026 and to 5.75x by the fourth fiscal quarter of 2027;
• Minimum Liquidity (defined as unrestricted cash plus available revolving credit commitments) of not less than $20.0 million at all times.
Consent Fees. In consideration of the consenting lenders' agreement to the foregoing amendments, the Company paid the following consent fees on the Closing Date: (i) 50 basis points on the outstanding Term Loan B principal amount ($285.0 million × 0.50% = $1,425,000), payable pro rata to each consenting Term Loan B lender, and (ii) 25 basis points on the aggregate revolving credit commitment ($35.0 million × 0.25% = $87,500), payable pro rata to each consenting revolving credit facility lender. All consent fees were funded from proceeds of the super-priority credit facility and the sponsor equity contribution, as reflected in the funds flow memorandum described in Section VII below.
First Lien Lenders' Counsel. The first lien lender group was represented by Westlake Harden & Cole LLP, with Ramona Quelibo serving as lead partner on the engagement. The Company has reimbursed the reasonable fees and expenses of Westlake Harden & Cole LLP in accordance with the terms of the Original First Lien Credit Agreement, as detailed in Section VII of this letter.
B. Super-Priority Credit Agreement
The Super-Priority Credit Agreement (the "Super-Priority Credit Agreement") was executed on November 17, 2023, among Stonefield Logistics Group Inc. as Borrower, the Guarantors party thereto, and Belvedere Credit Opportunities Fund LP as Administrative Agent, Collateral Agent, and Initial Lender.
Facility Terms. The Super-Priority Credit Agreement provides for a $55.0 million super-priority first-out term loan facility, consisting of (i) a $45.0 million initial term loan, which was funded in full at closing, and (ii) a $10.0 million delayed-draw term loan ("DDTL"), available to be drawn in a single drawing at any time during the 12-month period following the Closing Date upon satisfaction of specified conditions precedent. Interest accrues at a rate of SOFR + 700 basis points, with a 100 basis point SOFR floor.
Original Issue discount. The super-priority term loan was issued with a 2.00% original issue discount ($55.0 million × 2.00% = $1,100,000). Accordingly, the net funded proceeds received by the Company at closing in respect of the initial $45.0 million term loan were $43,900,000 ($45,000,000 minus $1,100,000 of OID).
Maturity and Prepayment. The super-priority term loan matures on December 19, 2027, providing a four-year tenor from the Closing Date. Mandatory prepayment is required from 75% of excess cash flow in any fiscal year, subject to a minimum liquidity threshold of $20.0 million after giving effect to such prepayment. The facility includes the following call protection schedule: 103% of par during the first year, 102% during the second year, 101% during the third year, and par thereafter. A commitment fee of 1.00% per annum accrues on the undrawn DDTL commitment, payable quarterly in arrears.
Super-Priority Guaranty Agreement. In connection with the Super-Priority Credit Agreement, the Super-Priority Guaranty Agreement was executed on November 17, 2023, by each of the following subsidiaries of the Company as Guarantors: Stonefield Logistics Holdings LLC, Stonefield Freight Services LLC, Stonefield Last Mile Inc., and Stonefield Warehousing LLC. Each Guarantor unconditionally guarantees all obligations of the Borrower under the Super-Priority Credit Agreement.
Super-Priority Pledge and Security Agreement. The Super-Priority Pledge and Security Agreement was also executed on November 17, 2023, by the Borrower and each Guarantor in favor of Belvedere Credit Opportunities Fund LP as Collateral Agent. This agreement grants a first-priority super-priority lien on substantially all assets of the Borrower and the Guarantors, including accounts, inventory, equipment, intellectual property, equity interests in subsidiaries, and proceeds thereof, in each case subject to the priority provisions established in the Amended and Restated Intercreditor Agreement described in Section II.C below.
Belvedere's Counsel. Belvedere Credit Opportunities Fund LP was represented by Thornbury McCaffrey LLP. We note that Thornbury McCaffrey LLP also served as counsel to the mezzanine ad hoc group (as described in Section II.D below), and the firm maintained an ethical wall between the two engagement teams in accordance with applicable professional responsibility requirements.
C. Amended and Restated Intercreditor Agreement
The Amended and Restated Intercreditor Agreement (the "A&R ICA") was executed on 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 Stonefield Logistics Group Inc. (as acknowledged by the Company). The A&R ICA amends and restates the original Intercreditor Agreement dated December 15, 2017 in its entirety.
The A&R ICA establishes the relative lien and payment priority as between the super-priority first-out obligations and the first lien second-out obligations, providing for, among other things: (i) a super-priority first-out / first lien second-out payment and lien priority waterfall governing the distribution of proceeds of collateral and the application of payments in respect of the secured obligations; (ii) customary standstill periods limiting enforcement actions by the junior priority secured party during specified periods; (iii) purchase options permitting the first lien lenders to acquire the super-priority obligations under specified circumstances, including upon the occurrence of certain insolvency events; and (iv) provisions governing debtor-in-possession financing and the use of cash collateral in the event of a subsequent bankruptcy filing.
The A&R ICA is governed by, and shall be 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.
D. Mezzanine Equitization — Exchange Agreement and Supplemental Indenture
Exchange Agreement. The Exchange Agreement (the "Exchange Agreement") was executed on December 8, 2023, among Stonefield Logistics Group Inc. and the exchanging holders (the "Exchanging Holders") of the Company's 11.50% Senior Secured Second Lien Notes due June 15, 2025 (CUSIP: 861537 AA 2) (the "Mezzanine Notes"). The Exchanging Holders hold, in the aggregate, $134.5 million in principal amount of the $140.0 million total outstanding principal amount of the Mezzanine Notes, representing approximately 96.1% of the outstanding principal amount.
The Exchanging Holders include the members of the ad hoc group of mezzanine holders (the "Ad Hoc Group"), whose holdings are set forth below, together with additional holders who joined the Restructuring Support Agreement during the joinder period from July 3, 2023 through July 21, 2023:
Exchange Consideration. Pursuant to the Exchange Agreement, the Exchanging Holders exchanged their Mezzanine Notes for the following consideration: (i) Series A Preferred Equity of the Company, with an aggregate liquidation preference of $35.0 million and a 10.00% annual dividend rate payable in kind ("PIK"), issued pursuant to the Certificate of Designations described in Section II.E below; and (ii) 47.5% of the pro forma common equity of the Company, allocated pro rata among the Exchanging Holders based on their respective holdings of Mezzanine Notes.
Waiver of Accrued Interest. As part of the settlement consideration embodied in the Exchange Agreement, the Exchanging Holders waived all accrued and unpaid PIK interest on their Mezzanine Notes in the amount of $8.1 million.
Recovery Analysis. Based on the analysis performed by Hargrove Advisory Group LLC, the Company's financial advisor, the total implied recovery to the Exchanging Holders under the Exchange Agreement is estimated at approximately 40 to 55 cents on the dollar, taking into account the value of the Series A Preferred Equity, the pro forma common equity, and the waived accrued interest, in each case measured against the $134.5 million in aggregate outstanding principal amount and $8.1 million in accrued PIK interest of the exchanged Mezzanine Notes.
First Supplemental Indenture — Exit Consent Amendments
The First Supplemental Indenture (the "First Supplemental Indenture") was executed on December 8, 2023, between Stonefield Logistics Group Inc. as Issuer and Continental Fiduciary Trust Company as Trustee under the original Indenture dated June 15, 2020 governing the Mezzanine Notes. The First Supplemental Indenture was executed pursuant to the exit consents delivered by the Exchanging Holders (representing 96.1% of the outstanding principal amount of the Mezzanine Notes, which exceeded the threshold required under the original Indenture to effectuate the amendments contemplated thereby).
The First Supplemental Indenture amends the original Indenture to strip substantially all restrictive covenants, events of default, and reporting obligations applicable to the remaining $5.5 million in principal amount of Mezzanine Notes held by non-consenting holders who did not participate in the exchange (the "Non-Consenting Mezzanine Holders"). These exit consent amendments are consistent with customary restructuring practice and are intended to protect the Company from any future covenant default or acceleration claims under the Mezzanine Notes while the residual $5.5 million in Non-Consenting Mezzanine Notes remains outstanding.
Consent Solicitation Timeline
The consent solicitation in connection with the Exchange Agreement and the exit consent amendments was conducted on the following timeline:
• Consent solicitation launched: October 6, 2023;
• Early consent deadline: October 20, 2023;
• Final consent deadline: November 3, 2023.
All requisite consents were received by the final consent deadline, and the Exchange Agreement and First Supplemental Indenture were thereafter finalized and executed on December 8, 2023.
Mezzanine Ad Hoc Group Advisors
The mezzanine Ad Hoc Group was represented by Thornbury McCaffrey LLP as legal counsel, with Alan Driscoll serving as lead partner. Meridian Veltrian Partners LLC served as financial advisor to the Ad Hoc Group. As noted in Section VII below, the Company has reimbursed the reasonable fees and expenses of both Thornbury McCaffrey LLP and Meridian Veltrian Partners LLC in accordance with the terms of the Restructuring Support Agreement.
E. Equity Restructuring
The equity restructuring component of the Restructuring involved the following corporate actions and agreements:
Amended and Restated Certificate of Incorporation. The Amended and Restated Certificate of Incorporation of Stonefield Logistics Group Inc. was filed with the Delaware Secretary of State on December 12, 2023. The Amended and Restated Certificate of Incorporation reflects, among other things, the authorization of the new Series A Preferred Stock, the reclassification of the Company's existing common equity, and such other amendments as were necessary to effectuate the equity restructuring.
Certificate of Designations. The Certificate of Designations of the Company's Series A Preferred Stock was filed with the Delaware Secretary of State on December 12, 2023. The Certificate of Designations establishes the terms, rights, preferences, and limitations of the Series A Preferred Stock, including the $35.0 million aggregate liquidation preference, the 10.00% PIK dividend rate, and customary protective provisions for the holders thereof.
Amended and Restated Stockholders' Agreement. The Amended and Restated Stockholders' Agreement (the "A&R SHA") was executed on December 12, 2023, among the Company, Ridgeline Capital Partners Fund III, L.P. (the "Sponsor" or "Ridgeline"), and the mezzanine equitization recipients. The A&R SHA governs the rights and obligations of the stockholders with respect to, among other things, transfer restrictions, tag-along and drag-along rights, preemptive rights, information rights, and board composition and governance.
Pro Forma Equity Ownership. The pro forma equity ownership of the Company following consummation of the Restructuring is as follows:
Board Composition. The board of directors of the Company following the Restructuring consists of seven (7) members: three (3) designees of Ridgeline (including Julian Voight and Serena Chu), three (3) designees of the mezzanine equitization recipients, and one (1) independent director. Board composition rights are governed by the terms of the A&R SHA.
Registration Rights Agreement. The Registration Rights Agreement was executed on December 12, 2023, among the Company and the parties entitled to registration rights thereunder, including Ridgeline and the mezzanine equitization recipients. The Registration Rights Agreement provides for customary demand and piggyback registration rights with respect to the registrable securities held by such parties.
F. Sponsor Equity Contribution
Ridgeline Capital Partners Fund III, L.P. funded a new cash equity contribution of $12.5 million on December 15, 2023 (the "Sponsor Equity Contribution"). The proceeds of the Sponsor Equity Contribution were used to fund a portion of the transaction costs incurred in connection with the Restructuring and to provide the Company with an incremental liquidity cushion. As a consequence of the mezzanine equitization and the terms of the A&R SHA, Ridgeline's pro forma common equity ownership in the Company was diluted from 100% to 47.5%.
III. SUMMARY OF CLOSING FINANCIAL IMPACT
The following table summarizes the financial impact of the Restructuring on the Company's capital structure as of the Closing Date:
*Note: $5.5 million in Non-Consenting Mezzanine Notes remain outstanding following the exit consent amendments but are excluded from the pro forma capital structure for purposes of this summary, as substantially all covenants, events of default, and reporting obligations have been stripped from the governing indenture.
Total Debt Reduction. The Restructuring resulted in a total reduction in funded debt obligations of approximately $100.1 million, principally through the equitization of $134.5 million in Mezzanine Notes and the waiver of $8.1 million in accrued PIK interest, partially offset by the incurrence of the $55.0 million super-priority facility.
Leverage Reduction. Based on the Company's last twelve months ("LTM") Adjusted EBITDA for the period ending with the first fiscal quarter of 2023 of $41.2 million, the Company's pre-restructuring total leverage was approximately 11.5x. On a pro forma basis, based on the Company's projected Adjusted EBITDA for fiscal year 2024 of $52.0 million (as set forth in the Company's business plan shared with the restructuring parties), the Company's post-restructuring total leverage is approximately 7.2x.
Maturity Profile. The Restructuring eliminates the Company's near-term maturity wall. Prior to the Restructuring, the Company faced a Term Loan B maturity of December 15, 2024 and a Mezzanine Notes maturity of June 15, 2025. Following the Restructuring, the Company's earliest debt maturity is December 19, 2027 (applicable to both the revolving credit facility and the super-priority term loan), with the Term Loan B maturing on December 19, 2028. This extended maturity runway provides the Company with substantial operational flexibility to execute on its business plan and deleveraging strategy.
IV. CORPORATE DELIVERABLES COMPLETED AT CLOSING
The following corporate deliverables were executed and delivered in connection with the closing of the Restructuring:
(a) Board Resolutions. Resolutions of the Board of Directors of Stonefield Logistics Group Inc. authorizing the closing and execution of all definitive transaction documents, adopted unanimously on December 11, 2023.
(b) Secretary's Certificate. Secretary's Certificate executed by Howard Kessler, General Counsel and Secretary, dated December 19, 2023, certifying: (i) the incumbency and specimen signatures of the officers authorized to execute documents on behalf of the Company; (ii) that attached thereto are true and complete copies of the Amended and Restated Certificate of Incorporation (as filed with the Delaware Secretary of State on December 12, 2023); (iii) that attached thereto are true and complete copies of the Company's current bylaws; and (iv) that attached thereto are true and complete copies of the board resolutions adopted on December 11, 2023 authorizing the Restructuring transactions.
(c) Officer's Certificate. Officer's Certificate executed by Priya Sundaram, Chief Financial Officer, dated December 19, 2023, certifying: (i) that all representations and warranties of the Company contained in the definitive transaction documents are true and correct in all material respects as of the Closing Date; (ii) that the Company is in compliance with all covenants and agreements contained in the definitive transaction documents; and (iii) that no Default or Event of Default has occurred and is continuing, or would result from the consummation of the Restructuring transactions.
(d) Legal Opinion Letter. Legal opinion letter delivered by Calderwood & Harkness LLP, signed by Nathaniel Bower, Partner, dated December 19, 2023, addressed to Pinnacle National Bank, N.A. (as First Lien Administrative Agent and Collateral Agent) and Belvedere Credit Opportunities Fund LP (as Super-Priority Administrative Agent and Collateral Agent), opining as to, among other things, due organization, valid existence, and good standing of the Company, corporate power and authority, due authorization, execution, and delivery of the definitive transaction documents, enforceability (subject to customary qualifications), no conflict with organizational documents, and such other matters as were required under the respective credit agreements.
V. TRANSACTION COSTS SUMMARY
Reference is made to the funds flow memorandum dated December 18, 2023 (the "Funds Flow Memorandum"), prepared by Gabrielle Moss of Calderwood & Harkness LLP and approved by Priya Sundaram, Chief Financial Officer of the Company, which sets forth in detail all closing-day fund movements among the relevant parties and accounts in connection with the consummation of the Restructuring transactions. A copy of the Funds Flow Memorandum is enclosed with this letter and included in the closing binder.
The estimated total transaction costs incurred by the Company in connection with the Restructuring are approximately $12,762,500, comprised of the following components:
The foregoing costs were funded from a combination of the net proceeds of the super-priority term loan, the Sponsor Equity Contribution from Ridgeline Capital Partners Fund III, L.P., and the Company's cash on hand, in each case as reflected in the Funds Flow Memorandum.
VI. ENCLOSED CLOSING BINDER
The closing binder (the "Closing Binder") containing fully executed copies of all definitive transaction documents and ancillary materials is enclosed with this letter or, to the extent physical volumes are being separately delivered, will be delivered to the Company's offices at 4200 Commerce Street, Suite 1500, Dallas, Texas 75201 by courier within five (5) business days of the date hereof. The Closing Binder includes the closing checklist and comprehensive document index prepared by Gabrielle Moss of Calderwood & Harkness LLP, dated December 19, 2023.
The Closing Binder is organized into the following categories:
(a) Credit Facility Documents — including the A&R First Lien Credit Agreement, the Super-Priority Credit Agreement, the Super-Priority Guaranty Agreement, the Super-Priority Pledge and Security Agreement, the A&R Intercreditor Agreement, and all schedules, exhibits, and ancillary documents related thereto;
(b) Equitization Documents — including the Exchange Agreement, the First Supplemental Indenture, the consent solicitation materials, and related correspondence with Continental Fiduciary Trust Company as Trustee;
(c) Equity Documents — including the Amended and Restated Certificate of Incorporation, the Certificate of Designations for Series A Preferred Stock, the A&R Stockholders' Agreement, and the Registration Rights Agreement;
(d) Corporate Deliverables — including the Board Resolutions, Secretary's Certificate, Officer's Certificate, and good standing certificates;
(e) Legal Opinions — including the Calderwood & Harkness LLP opinion letter and any opinions delivered by local counsel; and
(f) Funds Flow Materials — including the Funds Flow Memorandum and wire transfer confirmations.
We recommend that the Company retain the Closing Binder and its contents in a secure location in accordance with the Company's document retention policies.
VII. POST-CLOSING MATTERS REQUIRING ATTENTION
The following post-closing matters require the Company's prompt attention. We are available to assist with any of the items described below as needed.
A. Filing of Amended and Restated Certificate of Incorporation and Certificate of Designations
As noted in Section II.E above, the Amended and Restated Certificate of Incorporation and the Certificate of Designations for the Company's Series A Preferred Stock were filed with the Delaware Secretary of State on December 12, 2023. Please confirm receipt of the filed and stamped copies from the Delaware Secretary of State and retain such copies in the Company's corporate records. The Company's registered agent in Delaware is Capitol Registered Agents, Inc., located at 1209 Orange Street, Wilmington, Delaware 19801. Any future filings or service of process matters in Delaware should be coordinated through Capitol Registered Agents, Inc.
B. Notice to Non-Consenting Mezzanine Holders
Non-Consenting Mezzanine Holders holding $5.5 million in aggregate principal amount of the Mezzanine Notes were not parties to the Exchange Agreement and did not participate in the equitization. Formal notice must be delivered to such holders informing them of: (i) the execution of the First Supplemental Indenture; (ii) the exit consent amendments effectuated thereby, which strip substantially all restrictive covenants, events of default, and reporting obligations from the remaining Mezzanine Notes; and (iii) the consummation of the exchange and equitization transactions.
We recommend that the Company coordinate with Continental Fiduciary Trust Company, in its capacity as Trustee under the Indenture, to distribute such notice to the Non-Consenting Mezzanine Holders through the customary channels of the Depository Trust Company. Continental Fiduciary Trust Company's offices are located at 100 Wall Street, 15th Floor, New York, New York 10005, and we would be pleased to provide you with the appropriate contact information and a draft form of notice upon request.
C. UCC Filings
In order to perfect the security interests granted under the Super-Priority Pledge and Security Agreement, UCC-1 financing statements are to be filed (or confirmed to have been filed) in the following jurisdictions:
(i) Delaware — as the jurisdiction of organization of Stonefield Logistics Group Inc., Stonefield Logistics Holdings LLC, and Stonefield Last Mile Inc.; and
(ii) Texas — as the jurisdiction of organization of Stonefield Freight Services LLC and Stonefield Warehousing LLC.
In addition, UCC-3 amendments are to be filed as necessary in the applicable jurisdictions to reflect the amended and restated first lien security interests under the A&R First Lien Credit Agreement and to ensure that the priority of the existing first lien security interests is properly maintained and reflected on the public record. We anticipate that Belvedere Credit Opportunities Fund LP's counsel, Thornbury McCaffrey LLP, will coordinate the preparation and filing of the UCC-1 financing statements in respect of the super-priority security interests, and that Westlake Harden & Cole LLP will coordinate any UCC-3 amendments in respect of the first lien security interests. The Company should confirm with both firms that all filings have been completed and obtain copies of the filed financing statements for its records.
D. D&O Tail Insurance
The Company should confirm that the six-year directors' and officers' liability insurance tail policy with Northgate Specialty Insurance Company has been bound, effective as of the Closing Date, with aggregate coverage of $15.0 million (Policy No. NSI-DOL-2023-07721). The premium of $475,000 for the tail policy was paid on the Closing Date from the funds flow, as reflected in the Funds Flow Memorandum. A copy of the bound policy should be obtained and retained in the Company's corporate records, and the Company's risk management function should be advised of the policy terms and coverage period.
E. Other Administrative Matters
The following additional administrative matters should be attended to promptly following closing:
(i) Closing Notices. Distribution of closing notices to all parties under the A&R First Lien Credit Agreement, the Super-Priority Credit Agreement, and the A&R Intercreditor Agreement, confirming the consummation of the Restructuring transactions and the satisfaction of all conditions precedent to closing. We recommend that such notices be distributed within five (5) business days of the Closing Date.
(ii) Books and Records. Update of the Company's stock ledger, minute books, and other corporate books and records to reflect the new equity ownership structure (including the issuance of the Series A Preferred Stock and the reallocation of common equity), the revised board composition, and the execution and delivery of the A&R SHA and the Registration Rights Agreement.
(iii) Accounting Treatment and Disclosure. Coordination with Whitfield & Pryce LLP (Todd Ashburn, engagement partner), the Company's independent accounting advisors, regarding the appropriate accounting treatment of the Restructuring transactions under applicable generally accepted accounting principles, including but not limited to the treatment of the debt extinguishment and modification, the equitization of the Mezzanine Notes, the issuance of the Series A Preferred Stock, and any related gain or loss recognition. The Company should also consult with Whitfield & Pryce LLP regarding any disclosure requirements that may be applicable in connection with the Company's financial reporting obligations.
VIII. CLOSING REMARKS
On behalf of Calderwood & Harkness LLP, we wish to congratulate Stonefield Logistics Group Inc. on the successful completion of this complex consensual out-of-court restructuring. The achievement of a comprehensive restructuring of the Company's capital structure — including the extension of the first lien maturities, the introduction of a super-priority liquidity facility, the equitization of $134.5 million in mezzanine debt, and the establishment of a new governance framework — without the need for a bankruptcy filing is a testament to the commitment and collaborative efforts of all parties involved.
We wish to specifically acknowledge the tireless efforts of the Company's management team throughout this process, including Marcus Delano as Chief Executive Officer, Priya Sundaram as Chief Financial Officer, and Howard Kessler as General Counsel and Secretary, each of whom contributed significantly to the successful negotiation and consummation of the Restructuring. We also wish to recognize the invaluable contributions of the Company's financial advisor, Hargrove Advisory Group LLC, and in particular Elena Voss, Managing Director, whose strategic guidance and analytical support were instrumental in bringing the restructuring negotiations to a successful conclusion.
As noted above, the engagement was opened on April 3, 2023, pursuant to the Engagement Letter, and the matter is now considered closed as of the Closing Date, December 19, 2023. Notwithstanding the foregoing, Calderwood & Harkness LLP remains available to assist with any post-closing questions, follow-up matters, or issues arising from the Restructuring, and we would welcome the opportunity to continue serving the Company in the future.
We note that all definitive transaction documents executed in connection with the Restructuring are governed by, and shall be construed in accordance with, the laws of the State of New York, without regard to conflict-of-laws principles, except that the corporate governance provisions set forth in the Amended and Restated Stockholders' Agreement are governed by, and shall be construed in accordance with, the laws of the State of Delaware.
We trust that this letter, together with the enclosed Closing Binder and Funds Flow Memorandum, provides a complete record of the closing. Please do not hesitate to contact the undersigned or any member of the Calderwood & Harkness team with any questions.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Nathaniel Bower Partner
Calderwood & Harkness LLP 599 Lexington Avenue New York, New York 10022 Telephone: (212) 455-7000
Email: nbower@calderwoodharkness.com
cc: (via electronic mail)
Colette Whitman, Partner, Calderwood & Harkness LLP (billing partner) Nathan Ikeda, Senior Associate, Calderwood & Harkness LLP (lead associate) Gabrielle Moss, Associate, Calderwood & Harkness LLP (working associate) Sylvia Hartwell, Partner, Calderwood & Harkness LLP (tax specialist) Priya Sundaram, Chief Financial Officer, Stonefield Logistics Group Inc. Julian Voight, Managing Director, Ridgeline Capital Management III LLC Serena Chu, Principal, Ridgeline Capital Management III LLC Elena Voss, Managing Director, Hargrove Advisory Group LLC
Enclosures:
1. Closing Binder (including Closing Checklist and Document Index dated December 19, 2023)
2. Funds Flow Memorandum dated December 18, 2023
Holder | Principal Amount Held
Graystone Mezzanine Capital Fund II LP | $52.0 million
Ashland Structured Credit LLC | $40.0 million
Dunmore Special Situations Fund LP | $30.0 million
Additional Joining Holders (various) | $12.5 million
Total Exchanging Holders | $134.5 million
Stockholder | Common Equity Ownership
Ridgeline Capital Partners Fund III, L.P. | 47.5%
Mezzanine Equitization Recipients (pro rata) | 47.5%
Management Incentive Plan (MIP) Reserve | 5.0%
Total | 100.0%
Debt Instrument | Pre-Restructuring | Post-Restructuring
Super-Priority Term Loan | — | $55.0M
Revolving Credit Facility (commitment / drawn) | $50.0M / $42.0M drawn | $35.0M commitment
Term Loan B | $285.0M | $285.0M
11.50% Senior Secured Second Lien Notes (Mezzanine) | $140.0M | — (equitized)*
Accrued PIK Interest on Mezzanine Notes | $8.1M | — (waived)
Total Funded Debt | $475.1M | $375.0M
Cost Item | Amount
Calderwood & Harkness LLP — legal fees and expenses (including $750,000 success fee per Engagement Letter) | $2,850,000
Hargrove Advisory Group LLC — financial advisory fees | $3,200,000
Westlake Harden & Cole LLP — legal fees and expenses (reimbursed by the Company pursuant to the First Lien Credit Agreement) | $1,400,000
Thornbury McCaffrey LLP — legal fees and expenses (reimbursed by the Company pursuant to the Restructuring Support Agreement) | $1,100,000
Meridian Veltrian Partners LLC — financial advisory fees (reimbursed by the Company pursuant to the Restructuring Support Agreement) | $900,000
Term Loan B consent fee (50 bps on $285.0M) | $1,425,000
Revolving credit facility consent fee (25 bps on $35.0M) | $87,500
Super-Priority OID (2.00% on $55.0M) | $1,100,000
D&O tail insurance premium — Northgate Specialty Insurance Company (Policy No. NSI-DOL-2023-07721) | $475,000
Filing fees, administrative fees, and trustee fees | $225,000
Total Estimated Transaction Costs | $12,762,500