1012-00002 · Stonefield Logistics Group · Term Sheets

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CONFIDENTIAL — SUBJECT TO FRE 408 AND ALL APPLICABLE PRIVILEGES

REVISED RESTRUCTURING TERM SHEET

June 9, 2023

Stonefield Logistics Group Inc.

Consensual Out-of-Court Restructuring

This Revised Term Sheet (this "Revised Term Sheet") supersedes in its entirety the Initial Restructuring Term Sheet dated May 19, 2023, previously circulated to the parties and their respective advisors.

This Revised Term Sheet has been revised to incorporate feedback received from Westlake Harden & Cole LLP, counsel to the First Lien Lender Group, and Thornbury McCaffrey LLP, counsel to the Ad Hoc Group of Mezzanine Holders (each as defined herein), in each case based on comments exchanged during working group calls held on May 25, May 31, June 2, and June 6, 2023, as well as written markup sessions and bilateral discussions among the parties' respective financial and legal advisors.

This Revised Term Sheet has been prepared by Calderwood & Harkness LLP, as restructuring counsel to Stonefield Logistics Group Inc. (the "Company"), in connection with Calderwood & Harkness LLP Matter No. 1012-00002.

This Revised Term Sheet is not a binding agreement or commitment by any party hereto to consummate the transactions described herein, except with respect to the exclusivity, confidentiality, and expense reimbursement provisions set forth in Sections XIV and XVIII hereof, which shall be binding upon circulation and acknowledgment by the parties. This Revised Term Sheet is intended to serve as the basis for the negotiation and preparation of definitive documentation reflecting the terms and conditions of the proposed restructuring transactions described herein. All terms and conditions are subject to the negotiation, execution, and delivery of such definitive documentation, the completion of satisfactory due diligence, and the receipt of all required consents and approvals as described herein.

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I. PARTIES

A. The Company

Stonefield Logistics Group Inc., a corporation duly organized and existing under the laws of the State of Delaware ("Stonefield" or the "Company").

Headquarters: 4200 Commerce Street, Suite 1500, Dallas, Texas 75201

Employer Identification Number (EIN): 83-2457109

Delaware Secretary of State File Number: 6341872

The Company's operating subsidiaries, each of which is a direct or indirect wholly owned subsidiary of the Company and each of which shall serve as a Guarantor under the restructured credit facilities described herein, are as follows:

(a) Stonefield Logistics Holdings LLC, a limited liability company organized under the laws of the State of Delaware, which serves as the intermediate holding company for the Company's operating businesses;

(b) Stonefield Freight Services LLC, a limited liability company organized under the laws of the State of Texas, which operates the Company's full truckload and less-than-truckload freight transportation business;

(c) Stonefield Last Mile Inc., a corporation organized under the laws of the State of Delaware, which operates the Company's last-mile delivery and parcel logistics operations; and

(d) Stonefield Warehousing LLC, a limited liability company organized under the laws of the State of Texas, which operates the Company's warehousing and third-party logistics facilities across the southwestern United States.

Each of the foregoing subsidiaries (collectively, the "Subsidiary Guarantors") shall guarantee, on a joint and several basis, all obligations of the Company arising under the Amended and Restated First Lien Credit Agreement, the Super-Priority Credit Agreement, and the Amended Revolving Credit Facility, and shall grant first-priority perfected security interests in substantially all of their respective assets in connection therewith, in each case as more fully described herein.

B. Private Equity Sponsor

Ridgeline Capital Partners Fund III, L.P., a limited partnership organized under the laws of the State of Delaware ("Ridgeline" or the "Sponsor").

General Partner: Ridgeline Capital Management III LLC, a limited liability company organized under the laws of the State of Delaware

Principal Office: 300 Park Avenue, 28th Floor, New York, New York 10022

Ridgeline acquired the Company in December 2017 through a leveraged buyout transaction. In connection with such acquisition, Ridgeline invested approximately $210 million in equity capital in the Company. As of the date hereof, Ridgeline holds 100% of the outstanding common equity of the Company. As described in Section V.F below, Ridgeline's common equity ownership will be diluted to 47.5% on a pro forma, fully diluted basis as part of the proposed restructuring transactions.

C. First Lien Lenders

Administrative Agent and Collateral Agent: Pinnacle National Bank, N.A. ("Pinnacle" or the "First Lien Agent").

Contact: Daniel Wexford, Managing Director, Loan Restructuring Group, Pinnacle National Bank, N.A., 787 Seventh Avenue, New York, New York 10019

First Lien Term Loan B Lenders. The following lenders (collectively, the "TLB Lenders") hold commitments and outstanding principal under the First Lien Term Loan B Credit Facility (the "TLB") as of the date hereof:

The TLB was originally funded in an aggregate principal amount of $310,000,000, of which $25,000,000 has been amortized through scheduled quarterly payments since the closing of the leveraged buyout in December 2017.

Revolving Credit Facility Lenders. The following lenders (collectively, the "Revolver Lenders" and, together with the TLB Lenders, the "First Lien Lenders") hold commitments under the Revolving Credit Facility (the "Revolver") as of the date hereof:

As of the date hereof, $42,000,000 is drawn under the Revolver and $3,500,000 in letters of credit are outstanding (the "Outstanding LCs"), leaving $4,500,000 in available unused capacity under the Revolver.

Counsel to the First Lien Lenders: Westlake Harden & Cole LLP (Ramona Quelibo, lead partner), 1 Liberty Plaza, New York, New York 10006.

D. Mezzanine Holders / Ad Hoc Group

Mezzanine Notes. 11.50% Senior Secured Second Lien Notes due June 15, 2025 (CUSIP: 861537 AA 2) (the "Mezzanine Notes"), issued pursuant to that certain Indenture, dated as of December 15, 2017 (as supplemented and amended from time to time, the "Indenture"), between Stonefield Logistics Group Inc., as issuer, the Subsidiary Guarantors, as guarantors, and Continental Fiduciary Trust Company, as indenture trustee (in such capacity, the "Indenture Trustee").

Total Outstanding Mezzanine Principal: $140,000,000

Accrued and Unpaid PIK Interest (as of March 31, 2023): $8,100,000

Total Mezzanine Claims: $148,100,000

Ad Hoc Group of Mezzanine Holders. The following holders (collectively, the "Ad Hoc Group") have organized as an ad hoc group for purposes of negotiating the restructuring transactions described herein:

The Ad Hoc Group collectively holds $122,000,000 in aggregate principal amount of Mezzanine Notes, representing approximately 87.1% of the total outstanding principal amount of Mezzanine Notes. The remaining $18,000,000 in principal amount of Mezzanine Notes is held by holders who are not currently members of the Ad Hoc Group.

Counsel to the Ad Hoc Group: Thornbury McCaffrey LLP (Alan Driscoll, lead partner), 51 West 52nd Street, New York, New York 10019

Financial Advisor to the Ad Hoc Group: Meridian Veltrian Partners LLC, 245 Park Avenue, New York, New York 10167

E. New-Money Provider

Belvedere Credit Opportunities Fund LP ("Belvedere"), a limited partnership organized under the laws of the State of Delaware, as lead arranger and initial lender under the Super-Priority Term Loan described in Section V.C below.

Principal Office: 450 Lexington Avenue, 30th Floor, New York, New York 10017

Managing Partner: Christopher Hartigan

Counsel to Belvedere: Thornbury McCaffrey LLP (with an ethical wall separating the attorneys and staff advising Belvedere from those representing the Ad Hoc Group of Mezzanine Holders, such ethical wall having been established in accordance with applicable rules of professional conduct and confirmed by written notice to all parties)

It is noted that Belvedere is also a TLB Lender, holding $32,000,000 in outstanding TLB principal. Belvedere's participation in the Super-Priority Term Loan is in its separate capacity as a new-money lender and does not alter, impair, or subordinate its existing rights as a First Lien Lender under the existing First Lien Credit Agreement.

F. Company Advisors

Restructuring Counsel: Calderwood & Harkness LLP (Nathaniel Bower, responsible partner; Colette Whitman, billing partner), 599 Lexington Avenue, New York, New York 10022

Financial Advisor: Hargrove Advisory Group LLC (Elena Voss, Managing Director), 1114 Avenue of the Americas, New York, New York 10036

II. OVERVIEW OF PROPOSED RESTRUCTURING

The proposed restructuring (the "Restructuring") contemplates a consensual, out-of-court restructuring of approximately $485 million in funded debt obligations of the Company and its subsidiaries, including approximately $8.1 million in accrued and unpaid PIK interest on the Mezzanine Notes. The Restructuring is designed to be implemented without a filing by the Company or any of its subsidiaries under Title 11 of the United States Code (the "Bankruptcy Code"), and is predicated upon the voluntary participation and consent of the requisite majorities of each affected creditor constituency.

The Restructuring is organized around three principal pillars:

Pillar 1 — Amend-and-Extend of First Lien Facilities. The existing First Lien Term Loan B and Revolving Credit Facility will be amended and extended on the terms described herein, including increased pricing, extended maturities, the introduction of financial maintenance covenants (Total Net Leverage Ratio and Minimum Liquidity), and payment of consent fees to consenting lenders, in each case as more fully set forth in Sections V.A and V.B below.

Pillar 2 — New-Money Super-Priority Term Loan. Belvedere will provide a new $55,000,000 super-priority first-out term loan facility ($45,000,000 funded at closing and $10,000,000 available on a delayed-draw basis), the proceeds of which will be used to fund transaction costs, repay a portion of outstanding Revolver borrowings, and provide a post-closing liquidity cushion. The Super-Priority Term Loan will be secured by a first-priority, super-priority lien on substantially all assets of the Company and its subsidiaries, senior in right of payment and lien priority to all other funded debt obligations. The terms of the Super-Priority Term Loan are more fully set forth in Section V.C below.

Pillar 3 — Equitization of Mezzanine Debt. The $140,000,000 in outstanding principal amount of Mezzanine Notes (plus $8,100,000 in accrued PIK interest, which will be waived in full) will be exchanged for (a) Series A Preferred Stock of the Company with an aggregate liquidation preference of $35,000,000 and (b) 47.5% of the pro forma fully diluted common equity of the Company. The exchange will be implemented through a registered or exempt exchange offer and consent solicitation, as more fully set forth in Section V.D below.

The Restructuring is expected to achieve a total debt reduction of approximately $100,100,000, reducing the Company's total funded debt from $475,100,000 (as of March 31, 2023) to $375,000,000 on a post-restructuring basis. On a pro forma basis, the Company's total leverage is projected to decline from 11.5x LTM Q1 2023 Adjusted EBITDA of $41,200,000 to approximately 7.2x projected FY 2024E Adjusted EBITDA of $52,000,000. The Company's first lien leverage is expected to remain at manageable levels, and the introduction of new financial maintenance covenants will provide lenders with early-warning mechanisms and enhanced credit protections going forward.

The Restructuring is intended to place the Company on a sustainable financial footing, preserve employment for the Company's approximately 2,800 employees, maintain customer and vendor relationships, and position the Company for long-term value creation under a de-levered capital structure.

III. EXISTING CAPITAL STRUCTURE (PRE-RESTRUCTURING)

The following table sets forth the existing capital structure of the Company as of March 31, 2023 (the most recent date for which audited or reviewed financial information is available):

Key Financial Metrics (Pre-Restructuring):

LTM Q1 2023 Adjusted EBITDA: $41,200,000

Total Leverage: 11.5x ($475,100,000 ÷ $41,200,000)

First Lien Leverage: 7.9x ($327,000,000 ÷ $41,200,000), where First Lien Debt is calculated as $285,000,000 TLB + $42,000,000 drawn Revolver = $327,000,000

Total Liquidity: $15,800,000, consisting of $11,300,000 in unrestricted cash and cash equivalents and $4,500,000 in available unused Revolver capacity (after giving effect to the $42,000,000 in drawn amounts and $3,500,000 in Outstanding LCs)

Monthly Cash Burn (Average, Last Six Months): Approximately $2,500,000 per month

Projected Liquidity Exhaustion: The Company's financial advisor, Hargrove Advisory Group LLC, has projected that, absent a restructuring or other capital infusion, the Company's liquidity will be exhausted during the third quarter of 2024, at which point the Company would be unable to meet its operating obligations and debt service requirements in the ordinary course.

The Company's current capital structure is unsustainable. The combination of a highly leveraged balance sheet, near-term debt maturities (December 2024 for both First Lien facilities, June 2025 for the Mezzanine Notes), declining operating performance relative to pre-acquisition projections, and limited liquidity necessitates a comprehensive restructuring of the Company's capital structure. The Restructuring described herein is designed to address each of these challenges through the amend-and-extend of the First Lien facilities, the injection of new-money capital through the Super-Priority Term Loan, and the significant de-leveraging achieved through the equitization of the Mezzanine Notes.

IV. PROPOSED POST-RESTRUCTURING CAPITAL STRUCTURE

The following table sets forth the proposed post-restructuring capital structure of the Company, giving effect to the completion of all transactions contemplated by this Revised Term Sheet:

Key Financial Metrics (Post-Restructuring):

Projected FY 2024E Adjusted EBITDA: $52,000,000

Post-Restructuring Total Leverage: 7.2x ($375,000,000 ÷ $52,000,000)

Total Debt Reduction: $100,100,000 ($475,100,000 pre-restructuring total funded debt, including accrued PIK, less $375,000,000 post-restructuring total funded debt)

Post-Restructuring Estimated Total Liquidity (at Closing): Estimated to exceed $35,000,000, consisting of closing cash on hand (including net proceeds of the Super-Priority Term Loan and the Ridgeline equity contribution, after payment of transaction costs and partial Revolver paydown) plus available unused Revolver capacity under the reduced $35,000,000 commitment

The post-restructuring capital structure is designed to provide the Company with (a) a sustainable debt load that is serviceable under the Company's projected cash flows, (b) enhanced liquidity through the infusion of new-money capital and the reduction of total debt service obligations, (c) an extended maturity profile that eliminates near-term refinancing risk, and (d) a governance framework that reflects the economic contributions of all key stakeholders.

V. DETAILED TERMS OF THE RESTRUCTURING TRANSACTIONS

A. Amended and Restated First Lien Term Loan B

The existing First Lien Term Loan B will be amended and restated on the terms set forth below. All TLB Lenders who consent to the amendment (each, a "Consenting TLB Lender") will receive the consent fee described below in consideration for their approval of the amendment.

Borrower: Stonefield Logistics Group Inc.

Guarantors: Stonefield Logistics Holdings LLC, Stonefield Freight Services LLC, Stonefield Last Mile Inc., and Stonefield Warehousing LLC (each a Subsidiary Guarantor, and collectively the "Guarantors"), providing joint and several guarantees of all obligations under the Amended TLB on a full and unconditional basis.

Administrative Agent: Pinnacle National Bank, N.A.

Collateral Agent: Pinnacle National Bank, N.A.

Outstanding Principal Amount: $285,000,000 (unchanged from the existing TLB; no principal reduction or increase).

Interest Rate: SOFR + 500 basis points (increased from SOFR + 425 basis points under the existing TLB, reflecting a 75-basis-point increase in the applicable margin). The SOFR floor shall be increased from 75 basis points to 100 basis points. Interest shall be payable quarterly in arrears. For the avoidance of doubt, SOFR shall be determined using Term SOFR (as published by CME Group) for the applicable interest period, with customary SOFR adjustment provisions (including a credit spread adjustment if applicable) to be set forth in the definitive documentation.

Maturity Date: December 19, 2028 (extended from December 15, 2024, representing an approximately four-year extension of the existing maturity date). The extension is conditioned upon the consummation of all transactions contemplated by this Revised Term Sheet, including the funding of the Super-Priority Term Loan and the completion of the mezzanine equitization.

Amortization: 1.00% per annum of the outstanding principal amount of the Amended TLB, payable in equal quarterly installments (i.e., 0.25% per quarter, or $712,500 per quarter based on the $285,000,000 outstanding balance). This amortization schedule is maintained from the existing TLB terms. The remaining principal balance shall be due and payable in full at maturity.

Consent Fee: 50 basis points of the outstanding TLB principal amount shall be payable to each Consenting TLB Lender, calculated as $285,000,000 × 0.50% = $1,425,000 in the aggregate. The consent fee shall be payable in cash on the closing date of the Restructuring and shall be allocated pro rata among all Consenting TLB Lenders based on their respective TLB holdings.

Financial Covenants (Newly Added): The Amended TLB shall include the following financial maintenance covenants, which represent newly imposed requirements not contained in the existing First Lien Credit Agreement:

(i) Total Net Leverage Ratio: The Company shall not permit the Total Net Leverage Ratio (as defined in Section IX below) to exceed (a) 6.50x as of the last day of each fiscal quarter ending on or after Q4 2025, (b) 6.25x as of the last day of each fiscal quarter ending on or after Q4 2026, and (c) 5.75x as of the last day of each fiscal quarter ending on or after Q4 2027 and each fiscal quarter thereafter.

(ii) Minimum Liquidity: The Company shall maintain Minimum Liquidity (as defined in Section IX below) of not less than $20,000,000 at all times, tested as of the last day of each fiscal quarter and at any time upon the occurrence of a trigger event (as defined in the definitive documentation).

Negative Covenants: The Amended TLB shall contain negative covenants customary for transactions of this type and consistent with the terms of the existing First Lien Credit Agreement (as modified to reflect the post-restructuring capital structure), including, without limitation, limitations on:

(a) the incurrence of additional indebtedness and the issuance of disqualified stock;

(b) the creation or existence of liens on property or assets of the Company or any Guarantor;

(d) investments, loans, and advances;

(e) sales, transfers, and other dispositions of assets;

(f) fundamental changes, including mergers, consolidations, and dissolutions;

(g) transactions with affiliates; and

(h) modifications of subordinated or junior indebtedness.

The specific terms, baskets, thresholds, exceptions, and qualifications applicable to each negative covenant shall be set forth in the definitive documentation, and the parties acknowledge that such terms remain subject to ongoing negotiation.

Events of Default: The Amended TLB shall contain events of default customary for transactions of this type, including, without limitation:

(a) failure to make any payment of principal, interest, or fees when due;

(b) breach of any financial covenant or negative covenant;

(d) cross-default to other material indebtedness (with a threshold to be agreed in definitive documentation);

(e) bankruptcy, insolvency, or similar proceedings;

(f) one or more judgments in excess of an aggregate amount to be agreed;

(g) ERISA events;

(h) invalidity of any material guaranty or security interest; and

(i) a change of control (as defined in Section VII below).

Required Lenders: Holders of more than 50% of the outstanding TLB loans (the "TLB Required Lenders").

Amendment Consent Required: Consent of TLB Required Lenders under the existing First Lien Credit Agreement, dated as of December 15, 2017, by and among Stonefield Logistics Group Inc., the Guarantors party thereto, the Lenders from time to time party thereto, and Pinnacle National Bank, N.A., as administrative agent and collateral agent (as amended, restated, supplemented, or otherwise modified from time to time, the "Existing First Lien Credit Agreement").

Governing Law: The laws of the State of New York, without regard to conflicts of law principles (other than Section 5-1401 and Section 5-1402 of the New York General Obligations Law).

B. Amended Revolving Credit Facility

The existing Revolving Credit Facility will be amended on the terms set forth below. All Revolver Lenders who consent to the amendment (each, a "Consenting Revolver Lender") will receive the consent fee described below.

Borrower: Stonefield Logistics Group Inc.

Guarantors: Same as the Amended TLB (i.e., each Subsidiary Guarantor, on a joint and several basis).

Administrative Agent: Pinnacle National Bank, N.A.

Lenders: Pinnacle National Bank, N.A., Great Basin Commercial Bank, and Tidewater Lending Corporation.

Total Commitment: Reduced from $50,000,000 to $35,000,000. The commitment reduction shall be allocated among the Revolver Lenders on a pro rata basis or as otherwise agreed among the Revolver Lenders. As of the closing date, outstanding borrowings under the Revolver shall be reduced to a level consistent with the $35,000,000 commitment (after giving effect to the application of a portion of the Super-Priority Term Loan proceeds and/or the Ridgeline equity contribution to repay excess drawn amounts).

Interest Rate: SOFR + 450 basis points (increased from SOFR + 375 basis points under the existing Revolver, reflecting a 75-basis-point increase in the applicable margin). Interest shall be payable quarterly in arrears, with customary SOFR adjustment provisions.

Maturity Date: December 19, 2027; provided, however, that the Revolver shall be subject to a springing maturity that will cause the Revolver to mature 91 days prior to the maturity date of the Amended TLB (i.e., September 19, 2028) if the Amended TLB has not been refinanced, repaid in full, or extended to a date that is at least 91 days after the then-current Revolver maturity date, in each case on or prior to such springing maturity date. The springing maturity provision is intended to ensure that the Revolver Lenders are not exposed to the risk of a TLB maturity default occurring while Revolver commitments remain outstanding.

Letter of Credit Sub-Facility: The letter of credit sub-facility under the Revolver shall be maintained. The existing $3,500,000 in Outstanding LCs shall remain outstanding and shall continue to be treated as utilization of the Revolver commitment for purposes of calculating available capacity. The maximum amount available under the letter of credit sub-facility shall be set forth in the definitive documentation.

Consent Fee: 25 basis points of the post-closing Revolver commitment amount shall be payable to each Consenting Revolver Lender, calculated as $35,000,000 × 0.25% = $87,500 in the aggregate. The consent fee shall be payable in cash on the closing date of the Restructuring and shall be allocated pro rata among all Consenting Revolver Lenders based on their respective post-closing commitment amounts.

Financial Covenants: The Amended Revolver shall be subject to the same financial maintenance covenants as the Amended TLB, specifically the Total Net Leverage Ratio and Minimum Liquidity covenants described in Section IX below, tested on a unified basis with the Amended TLB.

Lien Priority: First lien, second-out. The Amended Revolver shall be secured by a first-priority perfected security interest in substantially all assets of the Borrower and the Guarantors, provided that the liens securing the Amended Revolver (together with the liens securing the Amended TLB) shall be subordinated on a payment waterfall basis to the liens securing the Super-Priority Term Loan, as set forth in the Amended and Restated Intercreditor Agreement described in Section VI below. The Amended Revolver and the Amended TLB shall be pari passu with each other in right of payment and lien priority.

Governing Law: The laws of the State of New York, without regard to conflicts of law principles (other than Section 5-1401 and Section 5-1402 of the New York General Obligations Law).

C. Super-Priority Term Loan (New Money Facility)

Belvedere will provide a new super-priority term loan facility (the "Super-Priority Term Loan") on the terms set forth below. The Super-Priority Term Loan represents the new-money component of the Restructuring and is essential to providing the Company with the liquidity necessary to fund transaction costs, service ongoing operations, and maintain adequate financial flexibility during and after the Restructuring.

Borrower: Stonefield Logistics Group Inc.

Guarantors: Same as the Amended TLB (i.e., each Subsidiary Guarantor, on a joint and several basis).

Administrative Agent: Belvedere Credit Opportunities Fund LP.

Collateral Agent: Belvedere Credit Opportunities Fund LP.

Lead Arranger: Belvedere Credit Opportunities Fund LP.

Initial Lender: Belvedere Credit Opportunities Fund LP. Additional lenders may participate in the Super-Priority Term Loan with the consent of the Borrower, the Administrative Agent, and the Lead Arranger.

Total Facility Amount: $55,000,000, consisting of:

(a) Closing Draw: $45,000,000, to be funded in full on the closing date of the Restructuring; and

(b) Delayed-Draw Term Loan ("DDTL"): $10,000,000, available for drawing by the Borrower at any time during the 12-month period following the closing date, subject to the satisfaction of customary borrowing conditions, including: (i) no default or event of default existing or resulting from such borrowing; (ii) the representations and warranties of the Borrower being true and correct in all material respects as of the date of such borrowing; and (iii) the delivery of a customary borrowing request. The DDTL may be drawn in a single drawing or in multiple drawings, in minimum amounts of $2,500,000 per drawing.

Interest Rate: SOFR + 700 basis points, with a 100-basis-point SOFR floor. Interest shall be payable quarterly in arrears. For the avoidance of doubt, if Term SOFR is less than 1.00%, the SOFR floor of 1.00% shall apply, resulting in a minimum all-in interest rate of 8.00% per annum. SOFR shall be determined using Term SOFR (as published by CME Group) for the applicable interest period, with customary SOFR adjustment provisions to be set forth in the definitive documentation.

Original Issue discount ("OID"): 2.00% of the total commitment amount. OID shall be calculated as $55,000,000 × 2.00% = $1,100,000. The OID shall be netted against the initial funding of the Closing Draw, resulting in net funded proceeds at closing of $43,900,000 ($45,000,000 − $1,100,000). The OID on the DDTL (to the extent drawn) shall be netted against the DDTL funding in the same manner.

Commitment Fee on Undrawn DDTL: 1.00% per annum on the undrawn and uncancelled portion of the $10,000,000 DDTL commitment, payable quarterly in arrears, commencing on the first quarter-end following the closing date. The commitment fee shall cease to accrue upon the earlier of (x) the date on which the DDTL is fully drawn and (y) the expiration of the 12-month DDTL availability period.

Maturity Date: December 19, 2027 (approximately four years from the anticipated closing date).

Mandatory Prepayment:

(a) Excess Cash Flow Sweep: 75% of annual Excess Cash Flow (as defined in the definitive documentation) shall be applied to prepay the Super-Priority Term Loan on an annual basis, commencing with the fiscal year ending December 31, 2024, provided that the Company shall not be required to make any Excess Cash Flow prepayment to the extent that, after giving effect to such prepayment, the Company's Minimum Liquidity would be less than $20,000,000. Excess Cash Flow shall be defined in a manner customary for leveraged credit facilities and shall be calculated based on audited financial statements delivered by the Company.

(b) Asset Sale Proceeds: 100% of net cash proceeds from any asset sale, disposition, or casualty event (including insurance and condemnation proceeds) exceeding $2,500,000 in any single transaction or series of related transactions shall be applied to prepay the Super-Priority Term Loan, provided that the Borrower shall have a customary reinvestment right permitting the application of such proceeds to the acquisition of replacement assets or capital expenditures within 365 days of receipt (or, if committed within such 365-day period, within 180 days after the end of such 365-day period).

(c) Change of Control: Upon the occurrence of a "change of control" (as defined in Section VII below), the Borrower shall be required to prepay the Super-Priority Term Loan in full at a price equal to 101% of the outstanding principal amount, together with all accrued and unpaid interest and all other amounts owing under the Super-Priority Credit Agreement.

Call Protection: Voluntary prepayment of the Super-Priority Term Loan shall be permitted at any time, subject to the following prepayment premium schedule:

• Year 1 (closing through 12th month): 103% of principal prepaid

• Year 2 (13th through 24th month): 102% of principal prepaid

• Year 3 (25th through 36th month): 101% of principal prepaid

• Year 4 and thereafter: Par (100%) — no prepayment premium

Lien Priority: The Super-Priority Term Loan shall be secured by a super-priority first-out lien on all collateral of the Borrower and the Guarantors, senior in lien priority and right of payment to all other funded debt of the Company, including the Amended TLB and the Amended Revolver. The super-priority status of the liens securing the Super-Priority Term Loan shall be established and governed by the Amended and Restated Intercreditor Agreement described in Section VI below.

Security: First-priority perfected security interest in substantially all assets of the Borrower and each Guarantor, including, without limitation, all accounts receivable, inventory, equipment, general intangibles (including intellectual property), real property (to the extent owned), deposit accounts, securities accounts, investment property, instruments, chattel paper, letter-of-credit rights, commercial tort claims, and proceeds of the foregoing, in each case subject to customary permitted liens and exclusions. The security interest shall be perfected through the filing of UCC financing statements, the delivery of control agreements with respect to deposit accounts and securities accounts, the recordation of intellectual property security agreements, and such other perfection actions as may be required under applicable law.

Governing Law: The laws of the State of New York, without regard to conflicts of law principles (other than Section 5-1401 and Section 5-1402 of the New York General Obligations Law).

D. Equitization of Mezzanine Notes

The Mezzanine Notes will be equitized through an exchange offer and consent solicitation on the terms described below. The equitization of the Mezzanine Notes is a central component of the Restructuring and is the primary mechanism by which the Company's total leverage will be reduced to sustainable levels.

Exchange Consideration: Each participating mezzanine holder (each, an "Exchanging Holder") shall exchange its pro rata share of the $140,000,000 outstanding principal amount of Mezzanine Notes (CUSIP: 861537 AA 2) for:

(i) Its pro rata share of Series A Preferred Stock of the Company (as described in Section V.E below) with an aggregate liquidation preference of $35,000,000. Based on the total mezzanine claims of $148,100,000 (including $8,100,000 in accrued PIK interest), the preferred stock component represents an approximate cash-equivalent recovery of 23.6% ($35,000,000 ÷ $148,100,000) on the preferred stock alone, before taking into account the value of the common equity component; and

(ii) Its pro rata share of 47.5% of the pro forma fully diluted common equity of the Company. Based on the preliminary equity valuation analysis prepared by Hargrove Advisory Group LLC, the total implied recovery to mezzanine holders (combining the liquidation preference of the Series A Preferred Stock and the implied value of the 47.5% common equity stake) is estimated at approximately 40–55 cents on the dollar, depending on the equity valuation methodology and assumptions employed.

Accrued PIK Interest: The $8,100,000 in accrued and unpaid PIK interest on the Mezzanine Notes as of the closing date shall be waived in full by each Exchanging Holder as part of the settlement consideration. No separate consideration shall be provided in respect of accrued PIK interest.

Consent Threshold: Holders of more than 66⅔% in aggregate principal amount of outstanding Mezzanine Notes are required to approve the exchange and consent solicitation under Section 9.02 of the Indenture, which requires the consent of holders of at least two-thirds in principal amount of the outstanding notes for amendments affecting certain fundamental terms. The Ad Hoc Group currently holds $122,000,000 in principal amount (87.1%), which exceeds the minimum consent threshold of approximately $93,400,000 (66⅔% of $140,000,000). The Ad Hoc Group has indicated its support in principle for the Restructuring on the terms described herein, subject to execution of definitive documentation.

Exchange Mechanic: The equitization will be implemented through an exchange offer and consent solicitation, to be conducted in accordance with applicable securities laws and the terms of the Indenture. Participating holders shall tender their Mezzanine Notes via a Letter of Transmittal to be delivered to Continental Fiduciary Trust Company, acting as exchange agent. The exchange offer will be subject to customary terms and conditions, including a minimum tender condition (at the 66⅔% threshold), proration mechanics (if applicable), and withdrawal rights, in each case as set forth in the offering memorandum or exchange offer circular to be prepared and distributed in connection with the exchange.

Exit Consent Amendments: As a condition to receiving the exchange consideration, each Exchanging Holder shall deliver exit consents to effectuate a Supplemental Indenture (the "Supplemental Indenture") that will amend the Indenture to strip substantially all restrictive covenants, events of default, and reporting obligations from the Mezzanine Notes that remain outstanding following the completion of the exchange (the "Remaining Notes"). The purpose of the exit consent amendments is to incentivize non-consenting holders to participate in the exchange by rendering the Remaining Notes a substantially less attractive investment. Specifically, the Supplemental Indenture is expected to eliminate or modify, among other things:

(a) all financial and operating covenants;

(b) all events of default other than payment default;

(d) the change of control put right;

(e) the limitation on liens covenant; and

(f) the limitation on additional indebtedness covenant.

Treatment of Non-Consenting Holders: Non-consenting holders (estimated to hold up to $18,000,000 in principal amount of Mezzanine Notes, although the actual amount is expected to be substantially smaller given the Ad Hoc Group's support of $122,000,000) shall receive substantially identical exchange consideration if they elect to participate in the exchange at any time prior to the final expiration of the exchange offer. Mezzanine Notes held by non-exchanging holders shall remain outstanding following the closing, but shall be subject to the stripped covenants and modified terms effectuated by the Supplemental Indenture. The Company reserves the right to include customary "drag-along" or "cramdown" provisions in the exchange documentation to the extent permitted under the Indenture and applicable law.

Cancellation: Upon the completion of the exchange, all tendered Mezzanine Notes shall be delivered to the Indenture Trustee for cancellation under the Supplemental Indenture. Following cancellation, such notes shall cease to be outstanding for all purposes under the Indenture.

E. Series A Preferred Stock

The Company will issue a new series of preferred stock designated as "Series A Preferred Stock" in connection with the equitization of the Mezzanine Notes, on the following terms:

Issuer: Stonefield Logistics Group Inc.

Aggregate Liquidation Preference: $35,000,000, allocated pro rata among the Exchanging Holders based on the principal amount of Mezzanine Notes tendered by each such holder.

Dividend Rate: 10.00% per annum, payable in kind ("PIK"). PIK dividends shall accrue on the outstanding liquidation preference and shall compound annually on each anniversary of the issuance date. No cash dividends shall be required to be paid on the Series A Preferred Stock.

Seniority: Senior in right of payment and liquidation preference to all common stock of the Company. Junior in right of payment and priority to all funded debt of the Company, including the Super-Priority Term Loan, the Amended TLB, and the Amended Revolver. For the avoidance of doubt, the Series A Preferred Stock is equity, not debt, and shall not constitute indebtedness for purposes of any financial covenant calculation.

Conversion: The Series A Preferred Stock shall be convertible into common stock of the Company at the option of the holder, at any time following issuance, at a conversion price to be determined in the definitive documentation based on the agreed equity valuation of the Company at the time of closing. Conversion mechanics, anti-dilution adjustments, and other customary terms shall be set forth in the Certificate of Designations.

Redemption:

(a) Optional Redemption: The Company may, at its option, redeem all or any portion of the outstanding Series A Preferred Stock at any time after the third anniversary of the issuance date, at a redemption price equal to the aggregate liquidation preference plus all accrued and unpaid PIK dividends.

(b) Mandatory Redemption: The Company shall be required to redeem all outstanding Series A Preferred Stock on the seventh anniversary of the issuance date, at a redemption price equal to the aggregate liquidation preference plus all accrued and unpaid PIK dividends. Failure to redeem on the mandatory redemption date shall constitute an event of default under the Certificate of Designations.

Voting Rights: The holders of Series A Preferred Stock shall be entitled to vote on all matters submitted to a vote of the Company's stockholders, voting together with the common stockholders as a single class, on an as-converted basis. In addition, the holders of Series A Preferred Stock shall have consent rights with respect to the following fundamental matters, each of which shall require the affirmative vote or written consent of holders of a majority of the outstanding Series A Preferred Stock (voting as a separate class):

(a) any amendment, modification, or waiver of any provision of the Company's certificate of incorporation or bylaws that would adversely affect the rights, preferences, or privileges of the Series A Preferred Stock;

(b) the authorization or issuance of any class or series of capital stock that is senior to or pari passu with the Series A Preferred Stock in right of payment, liquidation preference, or dividend priority;

(d) any voluntary liquidation, dissolution, or winding up of the Company.

Establishment: The Series A Preferred Stock shall be established by a Certificate of Designations of Series A Preferred Stock (the "Certificate of Designations"), to be filed with the Secretary of State of the State of Delaware prior to or contemporaneously with the closing of the Restructuring.

F. Pro Forma Common Equity Allocation

Upon the consummation of the Restructuring, the pro forma fully diluted common equity of the Company shall be allocated as follows:

Ridgeline's ownership shall be diluted from 100% to 47.5% as a result of the issuance of new common equity to the mezzanine equitization recipients and the reservation of the MIP pool. Ridgeline's maintenance of a 47.5% equity stake is conditioned upon the funding of the $12,500,000 equity contribution described in Section V.G below.

Board Composition. The post-restructuring Board of Directors of the Company (the "Board") shall consist of seven (7) directors, allocated as follows:

(a) Three (3) directors designated by Ridgeline Capital Partners Fund III, L.P. (or its designee);

(b) Three (3) directors designated by the mezzanine equitization recipients (initially to be designated by the Ad Hoc Group or its designee); and

The allocation of board seats and the procedures for designation, removal, and replacement of directors shall be set forth in the Amended and Restated Stockholders' Agreement described in Section XV below. The independent director shall not be an employee, officer, or affiliate of any party or its affiliates, and shall satisfy applicable independence standards.

G. Sponsor Contribution

CONFIDENTIAL — SUBJECT TO FRE 408 AND ALL APPLICABLE PRIVILEGES
REVISED RESTRUCTURING TERM SHEET
June 9, 2023
Stonefield Logistics Group Inc.
Consensual Out-of-Court Restructuring
This Revised Term Sheet (this "Revised Term Sheet") supersedes in its entirety the Initial Restructuring Term Sheet dated May 19, 2023, previously circulated to the parties and their respective advisors.
This Revised Term Sheet has been revised to incorporate feedback received from Westlake Harden & Cole LLP, counsel to the First Lien Lender Group, and Thornbury McCaffrey LLP, counsel to the Ad Hoc Group of Mezzanine Holders (each as defined herein), in each case based on comments exchanged during working group calls held on May 25, May 31, June 2, and June 6, 2023, as well as written markup sessions and bilateral discussions among the parties' respective financial and legal advisors.
This Revised Term Sheet has been prepared by Calderwood & Harkness LLP, as restructuring counsel to Stonefield Logistics Group Inc. (the "Company"), in connection with Calderwood & Harkness LLP Matter No. 1012-00002.
This Revised Term Sheet is not a binding agreement or commitment by any party hereto to consummate the transactions described herein, except with respect to the exclusivity, confidentiality, and expense reimbursement provisions set forth in Sections XIV and XVIII hereof, which shall be binding upon circulation and acknowledgment by the parties. This Revised Term Sheet is intended to serve as the basis for the negotiation and preparation of definitive documentation reflecting the terms and conditions of the proposed restructuring transactions described herein. All terms and conditions are subject to the negotiation, execution, and delivery of such definitive documentation, the completion of satisfactory due diligence, and the receipt of all required consents and approvals as described herein.
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I. PARTIES
A. The Company
Stonefield Logistics Group Inc., a corporation duly organized and existing under the laws of the State of Delaware ("Stonefield" or the "Company").
Headquarters: 4200 Commerce Street, Suite 1500, Dallas, Texas 75201
Employer Identification Number (EIN): 83-2457109
Delaware Secretary of State File Number: 6341872
The Company's operating subsidiaries, each of which is a direct or indirect wholly owned subsidiary of the Company and each of which shall serve as a Guarantor under the restructured credit facilities described herein, are as follows:
(a) Stonefield Logistics Holdings LLC, a limited liability company organized under the laws of the State of Delaware, which serves as the intermediate holding company for the Company's operating businesses;
(b) Stonefield Freight Services LLC, a limited liability company organized under the laws of the State of Texas, which operates the Company's full truckload and less-than-truckload freight transportation business;
(c) Stonefield Last Mile Inc., a corporation organized under the laws of the State of Delaware, which operates the Company's last-mile delivery and parcel logistics operations; and
(d) Stonefield Warehousing LLC, a limited liability company organized under the laws of the State of Texas, which operates the Company's warehousing and third-party logistics facilities across the southwestern United States.
Each of the foregoing subsidiaries (collectively, the "Subsidiary Guarantors") shall guarantee, on a joint and several basis, all obligations of the Company arising under the Amended and Restated First Lien Credit Agreement, the Super-Priority Credit Agreement, and the Amended Revolving Credit Facility, and shall grant first-priority perfected security interests in substantially all of their respective assets in connection therewith, in each case as more fully described herein.
B. Private Equity Sponsor
Ridgeline Capital Partners Fund III, L.P., a limited partnership organized under the laws of the State of Delaware ("Ridgeline" or the "Sponsor").
General Partner: Ridgeline Capital Management III LLC, a limited liability company organized under the laws of the State of Delaware
Principal Office: 300 Park Avenue, 28th Floor, New York, New York 10022
Ridgeline acquired the Company in December 2017 through a leveraged buyout transaction. In connection with such acquisition, Ridgeline invested approximately $210 million in equity capital in the Company. As of the date hereof, Ridgeline holds 100% of the outstanding common equity of the Company. As described in Section V.F below, Ridgeline's common equity ownership will be diluted to 47.5% on a pro forma, fully diluted basis as part of the proposed restructuring transactions.
C. First Lien Lenders
Administrative Agent and Collateral Agent: Pinnacle National Bank, N.A. ("Pinnacle" or the "First Lien Agent").
Contact: Daniel Wexford, Managing Director, Loan Restructuring Group, Pinnacle National Bank, N.A., 787 Seventh Avenue, New York, New York 10019
First Lien Term Loan B Lenders. The following lenders (collectively, the "TLB Lenders") hold commitments and outstanding principal under the First Lien Term Loan B Credit Facility (the "TLB") as of the date hereof:
The TLB was originally funded in an aggregate principal amount of $310,000,000, of which $25,000,000 has been amortized through scheduled quarterly payments since the closing of the leveraged buyout in December 2017.
Revolving Credit Facility Lenders. The following lenders (collectively, the "Revolver Lenders" and, together with the TLB Lenders, the "First Lien Lenders") hold commitments under the Revolving Credit Facility (the "Revolver") as of the date hereof:
As of the date hereof, $42,000,000 is drawn under the Revolver and $3,500,000 in letters of credit are outstanding (the "Outstanding LCs"), leaving $4,500,000 in available unused capacity under the Revolver.
Counsel to the First Lien Lenders: Westlake Harden & Cole LLP (Ramona Quelibo, lead partner), 1 Liberty Plaza, New York, New York 10006.
D. Mezzanine Holders / Ad Hoc Group
Mezzanine Notes. 11.50% Senior Secured Second Lien Notes due June 15, 2025 (CUSIP: 861537 AA 2) (the "Mezzanine Notes"), issued pursuant to that certain Indenture, dated as of December 15, 2017 (as supplemented and amended from time to time, the "Indenture"), between Stonefield Logistics Group Inc., as issuer, the Subsidiary Guarantors, as guarantors, and Continental Fiduciary Trust Company, as indenture trustee (in such capacity, the "Indenture Trustee").
Total Outstanding Mezzanine Principal: $140,000,000
Accrued and Unpaid PIK Interest (as of March 31, 2023): $8,100,000
Total Mezzanine Claims: $148,100,000
Ad Hoc Group of Mezzanine Holders. The following holders (collectively, the "Ad Hoc Group") have organized as an ad hoc group for purposes of negotiating the restructuring transactions described herein:
The Ad Hoc Group collectively holds $122,000,000 in aggregate principal amount of Mezzanine Notes, representing approximately 87.1% of the total outstanding principal amount of Mezzanine Notes. The remaining $18,000,000 in principal amount of Mezzanine Notes is held by holders who are not currently members of the Ad Hoc Group.
Counsel to the Ad Hoc Group: Thornbury McCaffrey LLP (Alan Driscoll, lead partner), 51 West 52nd Street, New York, New York 10019
Financial Advisor to the Ad Hoc Group: Meridian Veltrian Partners LLC, 245 Park Avenue, New York, New York 10167
E. New-Money Provider
Belvedere Credit Opportunities Fund LP ("Belvedere"), a limited partnership organized under the laws of the State of Delaware, as lead arranger and initial lender under the Super-Priority Term Loan described in Section V.C below.
Principal Office: 450 Lexington Avenue, 30th Floor, New York, New York 10017
Managing Partner: Christopher Hartigan
Counsel to Belvedere: Thornbury McCaffrey LLP (with an ethical wall separating the attorneys and staff advising Belvedere from those representing the Ad Hoc Group of Mezzanine Holders, such ethical wall having been established in accordance with applicable rules of professional conduct and confirmed by written notice to all parties)
It is noted that Belvedere is also a TLB Lender, holding $32,000,000 in outstanding TLB principal. Belvedere's participation in the Super-Priority Term Loan is in its separate capacity as a new-money lender and does not alter, impair, or subordinate its existing rights as a First Lien Lender under the existing First Lien Credit Agreement.
F. Company Advisors
Restructuring Counsel: Calderwood & Harkness LLP (Nathaniel Bower, responsible partner; Colette Whitman, billing partner), 599 Lexington Avenue, New York, New York 10022
Financial Advisor: Hargrove Advisory Group LLC (Elena Voss, Managing Director), 1114 Avenue of the Americas, New York, New York 10036
II. OVERVIEW OF PROPOSED RESTRUCTURING
The proposed restructuring (the "Restructuring") contemplates a consensual, out-of-court restructuring of approximately $485 million in funded debt obligations of the Company and its subsidiaries, including approximately $8.1 million in accrued and unpaid PIK interest on the Mezzanine Notes. The Restructuring is designed to be implemented without a filing by the Company or any of its subsidiaries under Title 11 of the United States Code (the "Bankruptcy Code"), and is predicated upon the voluntary participation and consent of the requisite majorities of each affected creditor constituency.
The Restructuring is organized around three principal pillars:
Pillar 1 — Amend-and-Extend of First Lien Facilities. The existing First Lien Term Loan B and Revolving Credit Facility will be amended and extended on the terms described herein, including increased pricing, extended maturities, the introduction of financial maintenance covenants (Total Net Leverage Ratio and Minimum Liquidity), and payment of consent fees to consenting lenders, in each case as more fully set forth in Sections V.A and V.B below.
Pillar 2 — New-Money Super-Priority Term Loan. Belvedere will provide a new $55,000,000 super-priority first-out term loan facility ($45,000,000 funded at closing and $10,000,000 available on a delayed-draw basis), the proceeds of which will be used to fund transaction costs, repay a portion of outstanding Revolver borrowings, and provide a post-closing liquidity cushion. The Super-Priority Term Loan will be secured by a first-priority, super-priority lien on substantially all assets of the Company and its subsidiaries, senior in right of payment and lien priority to all other funded debt obligations. The terms of the Super-Priority Term Loan are more fully set forth in Section V.C below.
Pillar 3 — Equitization of Mezzanine Debt. The $140,000,000 in outstanding principal amount of Mezzanine Notes (plus $8,100,000 in accrued PIK interest, which will be waived in full) will be exchanged for (a) Series A Preferred Stock of the Company with an aggregate liquidation preference of $35,000,000 and (b) 47.5% of the pro forma fully diluted common equity of the Company. The exchange will be implemented through a registered or exempt exchange offer and consent solicitation, as more fully set forth in Section V.D below.
The Restructuring is expected to achieve a total debt reduction of approximately $100,100,000, reducing the Company's total funded debt from $475,100,000 (as of March 31, 2023) to $375,000,000 on a post-restructuring basis. On a pro forma basis, the Company's total leverage is projected to decline from 11.5x LTM Q1 2023 Adjusted EBITDA of $41,200,000 to approximately 7.2x projected FY 2024E Adjusted EBITDA of $52,000,000. The Company's first lien leverage is expected to remain at manageable levels, and the introduction of new financial maintenance covenants will provide lenders with early-warning mechanisms and enhanced credit protections going forward.
The Restructuring is intended to place the Company on a sustainable financial footing, preserve employment for the Company's approximately 2,800 employees, maintain customer and vendor relationships, and position the Company for long-term value creation under a de-levered capital structure.
III. EXISTING CAPITAL STRUCTURE (PRE-RESTRUCTURING)
The following table sets forth the existing capital structure of the Company as of March 31, 2023 (the most recent date for which audited or reviewed financial information is available):
Key Financial Metrics (Pre-Restructuring):
LTM Q1 2023 Adjusted EBITDA: $41,200,000
Total Leverage: 11.5x ($475,100,000 ÷ $41,200,000)
First Lien Leverage: 7.9x ($327,000,000 ÷ $41,200,000), where First Lien Debt is calculated as $285,000,000 TLB + $42,000,000 drawn Revolver = $327,000,000
Total Liquidity: $15,800,000, consisting of $11,300,000 in unrestricted cash and cash equivalents and $4,500,000 in available unused Revolver capacity (after giving effect to the $42,000,000 in drawn amounts and $3,500,000 in Outstanding LCs)
Monthly Cash Burn (Average, Last Six Months): Approximately $2,500,000 per month
Projected Liquidity Exhaustion: The Company's financial advisor, Hargrove Advisory Group LLC, has projected that, absent a restructuring or other capital infusion, the Company's liquidity will be exhausted during the third quarter of 2024, at which point the Company would be unable to meet its operating obligations and debt service requirements in the ordinary course.
The Company's current capital structure is unsustainable. The combination of a highly leveraged balance sheet, near-term debt maturities (December 2024 for both First Lien facilities, June 2025 for the Mezzanine Notes), declining operating performance relative to pre-acquisition projections, and limited liquidity necessitates a comprehensive restructuring of the Company's capital structure. The Restructuring described herein is designed to address each of these challenges through the amend-and-extend of the First Lien facilities, the injection of new-money capital through the Super-Priority Term Loan, and the significant de-leveraging achieved through the equitization of the Mezzanine Notes.
IV. PROPOSED POST-RESTRUCTURING CAPITAL STRUCTURE
The following table sets forth the proposed post-restructuring capital structure of the Company, giving effect to the completion of all transactions contemplated by this Revised Term Sheet:
Key Financial Metrics (Post-Restructuring):
Projected FY 2024E Adjusted EBITDA: $52,000,000
Post-Restructuring Total Leverage: 7.2x ($375,000,000 ÷ $52,000,000)
Total Debt Reduction: $100,100,000 ($475,100,000 pre-restructuring total funded debt, including accrued PIK, less $375,000,000 post-restructuring total funded debt)
Post-Restructuring Estimated Total Liquidity (at Closing): Estimated to exceed $35,000,000, consisting of closing cash on hand (including net proceeds of the Super-Priority Term Loan and the Ridgeline equity contribution, after payment of transaction costs and partial Revolver paydown) plus available unused Revolver capacity under the reduced $35,000,000 commitment
The post-restructuring capital structure is designed to provide the Company with (a) a sustainable debt load that is serviceable under the Company's projected cash flows, (b) enhanced liquidity through the infusion of new-money capital and the reduction of total debt service obligations, (c) an extended maturity profile that eliminates near-term refinancing risk, and (d) a governance framework that reflects the economic contributions of all key stakeholders.
V. DETAILED TERMS OF THE RESTRUCTURING TRANSACTIONS
A. Amended and Restated First Lien Term Loan B
The existing First Lien Term Loan B will be amended and restated on the terms set forth below. All TLB Lenders who consent to the amendment (each, a "Consenting TLB Lender") will receive the consent fee described below in consideration for their approval of the amendment.
Borrower: Stonefield Logistics Group Inc.
Guarantors: Stonefield Logistics Holdings LLC, Stonefield Freight Services LLC, Stonefield Last Mile Inc., and Stonefield Warehousing LLC (each a Subsidiary Guarantor, and collectively the "Guarantors"), providing joint and several guarantees of all obligations under the Amended TLB on a full and unconditional basis.
Administrative Agent: Pinnacle National Bank, N.A.
Collateral Agent: Pinnacle National Bank, N.A.
Outstanding Principal Amount: $285,000,000 (unchanged from the existing TLB; no principal reduction or increase).
Interest Rate: SOFR + 500 basis points (increased from SOFR + 425 basis points under the existing TLB, reflecting a 75-basis-point increase in the applicable margin). The SOFR floor shall be increased from 75 basis points to 100 basis points. Interest shall be payable quarterly in arrears. For the avoidance of doubt, SOFR shall be determined using Term SOFR (as published by CME Group) for the applicable interest period, with customary SOFR adjustment provisions (including a credit spread adjustment if applicable) to be set forth in the definitive documentation.
Maturity Date: December 19, 2028 (extended from December 15, 2024, representing an approximately four-year extension of the existing maturity date). The extension is conditioned upon the consummation of all transactions contemplated by this Revised Term Sheet, including the funding of the Super-Priority Term Loan and the completion of the mezzanine equitization.
Amortization: 1.00% per annum of the outstanding principal amount of the Amended TLB, payable in equal quarterly installments (i.e., 0.25% per quarter, or $712,500 per quarter based on the $285,000,000 outstanding balance). This amortization schedule is maintained from the existing TLB terms. The remaining principal balance shall be due and payable in full at maturity.
Consent Fee: 50 basis points of the outstanding TLB principal amount shall be payable to each Consenting TLB Lender, calculated as $285,000,000 × 0.50% = $1,425,000 in the aggregate. The consent fee shall be payable in cash on the closing date of the Restructuring and shall be allocated pro rata among all Consenting TLB Lenders based on their respective TLB holdings.
Financial Covenants (Newly Added): The Amended TLB shall include the following financial maintenance covenants, which represent newly imposed requirements not contained in the existing First Lien Credit Agreement:
(i) Total Net Leverage Ratio: The Company shall not permit the Total Net Leverage Ratio (as defined in Section IX below) to exceed (a) 6.50x as of the last day of each fiscal quarter ending on or after Q4 2025, (b) 6.25x as of the last day of each fiscal quarter ending on or after Q4 2026, and (c) 5.75x as of the last day of each fiscal quarter ending on or after Q4 2027 and each fiscal quarter thereafter.
(ii) Minimum Liquidity: The Company shall maintain Minimum Liquidity (as defined in Section IX below) of not less than $20,000,000 at all times, tested as of the last day of each fiscal quarter and at any time upon the occurrence of a trigger event (as defined in the definitive documentation).
Negative Covenants: The Amended TLB shall contain negative covenants customary for transactions of this type and consistent with the terms of the existing First Lien Credit Agreement (as modified to reflect the post-restructuring capital structure), including, without limitation, limitations on:
(a) the incurrence of additional indebtedness and the issuance of disqualified stock;
(b) the creation or existence of liens on property or assets of the Company or any Guarantor;
(c) restricted payments, including dividends, distributions, and equity repurchases;
(d) investments, loans, and advances;
(e) sales, transfers, and other dispositions of assets;
(f) fundamental changes, including mergers, consolidations, and dissolutions;
(g) transactions with affiliates; and
(h) modifications of subordinated or junior indebtedness.
The specific terms, baskets, thresholds, exceptions, and qualifications applicable to each negative covenant shall be set forth in the definitive documentation, and the parties acknowledge that such terms remain subject to ongoing negotiation.
Events of Default: The Amended TLB shall contain events of default customary for transactions of this type, including, without limitation:
(a) failure to make any payment of principal, interest, or fees when due;
(b) breach of any financial covenant or negative covenant;
(c) any representation or warranty proving to have been incorrect in any material respect when made;
(d) cross-default to other material indebtedness (with a threshold to be agreed in definitive documentation);
(e) bankruptcy, insolvency, or similar proceedings;
(f) one or more judgments in excess of an aggregate amount to be agreed;
(g) ERISA events;
(h) invalidity of any material guaranty or security interest; and
(i) a change of control (as defined in Section VII below).
Required Lenders: Holders of more than 50% of the outstanding TLB loans (the "TLB Required Lenders").
Amendment Consent Required: Consent of TLB Required Lenders under the existing First Lien Credit Agreement, dated as of December 15, 2017, by and among Stonefield Logistics Group Inc., the Guarantors party thereto, the Lenders from time to time party thereto, and Pinnacle National Bank, N.A., as administrative agent and collateral agent (as amended, restated, supplemented, or otherwise modified from time to time, the "Existing First Lien Credit Agreement").
Governing Law: The laws of the State of New York, without regard to conflicts of law principles (other than Section 5-1401 and Section 5-1402 of the New York General Obligations Law).
B. Amended Revolving Credit Facility
The existing Revolving Credit Facility will be amended on the terms set forth below. All Revolver Lenders who consent to the amendment (each, a "Consenting Revolver Lender") will receive the consent fee described below.
Borrower: Stonefield Logistics Group Inc.
Guarantors: Same as the Amended TLB (i.e., each Subsidiary Guarantor, on a joint and several basis).
Administrative Agent: Pinnacle National Bank, N.A.
Lenders: Pinnacle National Bank, N.A., Great Basin Commercial Bank, and Tidewater Lending Corporation.
Total Commitment: Reduced from $50,000,000 to $35,000,000. The commitment reduction shall be allocated among the Revolver Lenders on a pro rata basis or as otherwise agreed among the Revolver Lenders. As of the closing date, outstanding borrowings under the Revolver shall be reduced to a level consistent with the $35,000,000 commitment (after giving effect to the application of a portion of the Super-Priority Term Loan proceeds and/or the Ridgeline equity contribution to repay excess drawn amounts).
Interest Rate: SOFR + 450 basis points (increased from SOFR + 375 basis points under the existing Revolver, reflecting a 75-basis-point increase in the applicable margin). Interest shall be payable quarterly in arrears, with customary SOFR adjustment provisions.
Maturity Date: December 19, 2027; provided, however, that the Revolver shall be subject to a springing maturity that will cause the Revolver to mature 91 days prior to the maturity date of the Amended TLB (i.e., September 19, 2028) if the Amended TLB has not been refinanced, repaid in full, or extended to a date that is at least 91 days after the then-current Revolver maturity date, in each case on or prior to such springing maturity date. The springing maturity provision is intended to ensure that the Revolver Lenders are not exposed to the risk of a TLB maturity default occurring while Revolver commitments remain outstanding.
Letter of Credit Sub-Facility: The letter of credit sub-facility under the Revolver shall be maintained. The existing $3,500,000 in Outstanding LCs shall remain outstanding and shall continue to be treated as utilization of the Revolver commitment for purposes of calculating available capacity. The maximum amount available under the letter of credit sub-facility shall be set forth in the definitive documentation.
Consent Fee: 25 basis points of the post-closing Revolver commitment amount shall be payable to each Consenting Revolver Lender, calculated as $35,000,000 × 0.25% = $87,500 in the aggregate. The consent fee shall be payable in cash on the closing date of the Restructuring and shall be allocated pro rata among all Consenting Revolver Lenders based on their respective post-closing commitment amounts.
Financial Covenants: The Amended Revolver shall be subject to the same financial maintenance covenants as the Amended TLB, specifically the Total Net Leverage Ratio and Minimum Liquidity covenants described in Section IX below, tested on a unified basis with the Amended TLB.
Lien Priority: First lien, second-out. The Amended Revolver shall be secured by a first-priority perfected security interest in substantially all assets of the Borrower and the Guarantors, provided that the liens securing the Amended Revolver (together with the liens securing the Amended TLB) shall be subordinated on a payment waterfall basis to the liens securing the Super-Priority Term Loan, as set forth in the Amended and Restated Intercreditor Agreement described in Section VI below. The Amended Revolver and the Amended TLB shall be pari passu with each other in right of payment and lien priority.
Governing Law: The laws of the State of New York, without regard to conflicts of law principles (other than Section 5-1401 and Section 5-1402 of the New York General Obligations Law).
C. Super-Priority Term Loan (New Money Facility)
Belvedere will provide a new super-priority term loan facility (the "Super-Priority Term Loan") on the terms set forth below. The Super-Priority Term Loan represents the new-money component of the Restructuring and is essential to providing the Company with the liquidity necessary to fund transaction costs, service ongoing operations, and maintain adequate financial flexibility during and after the Restructuring.
Borrower: Stonefield Logistics Group Inc.
Guarantors: Same as the Amended TLB (i.e., each Subsidiary Guarantor, on a joint and several basis).
Administrative Agent: Belvedere Credit Opportunities Fund LP.
Collateral Agent: Belvedere Credit Opportunities Fund LP.
Lead Arranger: Belvedere Credit Opportunities Fund LP.
Initial Lender: Belvedere Credit Opportunities Fund LP. Additional lenders may participate in the Super-Priority Term Loan with the consent of the Borrower, the Administrative Agent, and the Lead Arranger.
Total Facility Amount: $55,000,000, consisting of:
(a) Closing Draw: $45,000,000, to be funded in full on the closing date of the Restructuring; and
(b) Delayed-Draw Term Loan ("DDTL"): $10,000,000, available for drawing by the Borrower at any time during the 12-month period following the closing date, subject to the satisfaction of customary borrowing conditions, including: (i) no default or event of default existing or resulting from such borrowing; (ii) the representations and warranties of the Borrower being true and correct in all material respects as of the date of such borrowing; and (iii) the delivery of a customary borrowing request. The DDTL may be drawn in a single drawing or in multiple drawings, in minimum amounts of $2,500,000 per drawing.
Interest Rate: SOFR + 700 basis points, with a 100-basis-point SOFR floor. Interest shall be payable quarterly in arrears. For the avoidance of doubt, if Term SOFR is less than 1.00%, the SOFR floor of 1.00% shall apply, resulting in a minimum all-in interest rate of 8.00% per annum. SOFR shall be determined using Term SOFR (as published by CME Group) for the applicable interest period, with customary SOFR adjustment provisions to be set forth in the definitive documentation.
Original Issue discount ("OID"): 2.00% of the total commitment amount. OID shall be calculated as $55,000,000 × 2.00% = $1,100,000. The OID shall be netted against the initial funding of the Closing Draw, resulting in net funded proceeds at closing of $43,900,000 ($45,000,000 − $1,100,000). The OID on the DDTL (to the extent drawn) shall be netted against the DDTL funding in the same manner.
Commitment Fee on Undrawn DDTL: 1.00% per annum on the undrawn and uncancelled portion of the $10,000,000 DDTL commitment, payable quarterly in arrears, commencing on the first quarter-end following the closing date. The commitment fee shall cease to accrue upon the earlier of (x) the date on which the DDTL is fully drawn and (y) the expiration of the 12-month DDTL availability period.
Maturity Date: December 19, 2027 (approximately four years from the anticipated closing date).
Mandatory Prepayment:
(a) Excess Cash Flow Sweep: 75% of annual Excess Cash Flow (as defined in the definitive documentation) shall be applied to prepay the Super-Priority Term Loan on an annual basis, commencing with the fiscal year ending December 31, 2024, provided that the Company shall not be required to make any Excess Cash Flow prepayment to the extent that, after giving effect to such prepayment, the Company's Minimum Liquidity would be less than $20,000,000. Excess Cash Flow shall be defined in a manner customary for leveraged credit facilities and shall be calculated based on audited financial statements delivered by the Company.
(b) Asset Sale Proceeds: 100% of net cash proceeds from any asset sale, disposition, or casualty event (including insurance and condemnation proceeds) exceeding $2,500,000 in any single transaction or series of related transactions shall be applied to prepay the Super-Priority Term Loan, provided that the Borrower shall have a customary reinvestment right permitting the application of such proceeds to the acquisition of replacement assets or capital expenditures within 365 days of receipt (or, if committed within such 365-day period, within 180 days after the end of such 365-day period).
(c) Change of Control: Upon the occurrence of a "change of control" (as defined in Section VII below), the Borrower shall be required to prepay the Super-Priority Term Loan in full at a price equal to 101% of the outstanding principal amount, together with all accrued and unpaid interest and all other amounts owing under the Super-Priority Credit Agreement.
Call Protection: Voluntary prepayment of the Super-Priority Term Loan shall be permitted at any time, subject to the following prepayment premium schedule:
•  Year 1 (closing through 12th month): 103% of principal prepaid
•  Year 2 (13th through 24th month): 102% of principal prepaid
•  Year 3 (25th through 36th month): 101% of principal prepaid
•  Year 4 and thereafter: Par (100%) — no prepayment premium
Lien Priority: The Super-Priority Term Loan shall be secured by a super-priority first-out lien on all collateral of the Borrower and the Guarantors, senior in lien priority and right of payment to all other funded debt of the Company, including the Amended TLB and the Amended Revolver. The super-priority status of the liens securing the Super-Priority Term Loan shall be established and governed by the Amended and Restated Intercreditor Agreement described in Section VI below.
Security: First-priority perfected security interest in substantially all assets of the Borrower and each Guarantor, including, without limitation, all accounts receivable, inventory, equipment, general intangibles (including intellectual property), real property (to the extent owned), deposit accounts, securities accounts, investment property, instruments, chattel paper, letter-of-credit rights, commercial tort claims, and proceeds of the foregoing, in each case subject to customary permitted liens and exclusions. The security interest shall be perfected through the filing of UCC financing statements, the delivery of control agreements with respect to deposit accounts and securities accounts, the recordation of intellectual property security agreements, and such other perfection actions as may be required under applicable law.
Governing Law: The laws of the State of New York, without regard to conflicts of law principles (other than Section 5-1401 and Section 5-1402 of the New York General Obligations Law).
D. Equitization of Mezzanine Notes
The Mezzanine Notes will be equitized through an exchange offer and consent solicitation on the terms described below. The equitization of the Mezzanine Notes is a central component of the Restructuring and is the primary mechanism by which the Company's total leverage will be reduced to sustainable levels.
Exchange Consideration: Each participating mezzanine holder (each, an "Exchanging Holder") shall exchange its pro rata share of the $140,000,000 outstanding principal amount of Mezzanine Notes (CUSIP: 861537 AA 2) for:
(i) Its pro rata share of Series A Preferred Stock of the Company (as described in Section V.E below) with an aggregate liquidation preference of $35,000,000. Based on the total mezzanine claims of $148,100,000 (including $8,100,000 in accrued PIK interest), the preferred stock component represents an approximate cash-equivalent recovery of 23.6% ($35,000,000 ÷ $148,100,000) on the preferred stock alone, before taking into account the value of the common equity component; and
(ii) Its pro rata share of 47.5% of the pro forma fully diluted common equity of the Company. Based on the preliminary equity valuation analysis prepared by Hargrove Advisory Group LLC, the total implied recovery to mezzanine holders (combining the liquidation preference of the Series A Preferred Stock and the implied value of the 47.5% common equity stake) is estimated at approximately 40–55 cents on the dollar, depending on the equity valuation methodology and assumptions employed.
Accrued PIK Interest: The $8,100,000 in accrued and unpaid PIK interest on the Mezzanine Notes as of the closing date shall be waived in full by each Exchanging Holder as part of the settlement consideration. No separate consideration shall be provided in respect of accrued PIK interest.
Consent Threshold: Holders of more than 66⅔% in aggregate principal amount of outstanding Mezzanine Notes are required to approve the exchange and consent solicitation under Section 9.02 of the Indenture, which requires the consent of holders of at least two-thirds in principal amount of the outstanding notes for amendments affecting certain fundamental terms. The Ad Hoc Group currently holds $122,000,000 in principal amount (87.1%), which exceeds the minimum consent threshold of approximately $93,400,000 (66⅔% of $140,000,000). The Ad Hoc Group has indicated its support in principle for the Restructuring on the terms described herein, subject to execution of definitive documentation.
Exchange Mechanic: The equitization will be implemented through an exchange offer and consent solicitation, to be conducted in accordance with applicable securities laws and the terms of the Indenture. Participating holders shall tender their Mezzanine Notes via a Letter of Transmittal to be delivered to Continental Fiduciary Trust Company, acting as exchange agent. The exchange offer will be subject to customary terms and conditions, including a minimum tender condition (at the 66⅔% threshold), proration mechanics (if applicable), and withdrawal rights, in each case as set forth in the offering memorandum or exchange offer circular to be prepared and distributed in connection with the exchange.
Exit Consent Amendments: As a condition to receiving the exchange consideration, each Exchanging Holder shall deliver exit consents to effectuate a Supplemental Indenture (the "Supplemental Indenture") that will amend the Indenture to strip substantially all restrictive covenants, events of default, and reporting obligations from the Mezzanine Notes that remain outstanding following the completion of the exchange (the "Remaining Notes"). The purpose of the exit consent amendments is to incentivize non-consenting holders to participate in the exchange by rendering the Remaining Notes a substantially less attractive investment. Specifically, the Supplemental Indenture is expected to eliminate or modify, among other things:
(a) all financial and operating covenants;
(b) all events of default other than payment default;
(c) all reporting and information covenants;
(d) the change of control put right;
(e) the limitation on liens covenant; and
(f) the limitation on additional indebtedness covenant.
Treatment of Non-Consenting Holders: Non-consenting holders (estimated to hold up to $18,000,000 in principal amount of Mezzanine Notes, although the actual amount is expected to be substantially smaller given the Ad Hoc Group's support of $122,000,000) shall receive substantially identical exchange consideration if they elect to participate in the exchange at any time prior to the final expiration of the exchange offer. Mezzanine Notes held by non-exchanging holders shall remain outstanding following the closing, but shall be subject to the stripped covenants and modified terms effectuated by the Supplemental Indenture. The Company reserves the right to include customary "drag-along" or "cramdown" provisions in the exchange documentation to the extent permitted under the Indenture and applicable law.
Cancellation: Upon the completion of the exchange, all tendered Mezzanine Notes shall be delivered to the Indenture Trustee for cancellation under the Supplemental Indenture. Following cancellation, such notes shall cease to be outstanding for all purposes under the Indenture.
E. Series A Preferred Stock
The Company will issue a new series of preferred stock designated as "Series A Preferred Stock" in connection with the equitization of the Mezzanine Notes, on the following terms:
Issuer: Stonefield Logistics Group Inc.
Aggregate Liquidation Preference: $35,000,000, allocated pro rata among the Exchanging Holders based on the principal amount of Mezzanine Notes tendered by each such holder.
Dividend Rate: 10.00% per annum, payable in kind ("PIK"). PIK dividends shall accrue on the outstanding liquidation preference and shall compound annually on each anniversary of the issuance date. No cash dividends shall be required to be paid on the Series A Preferred Stock.
Seniority: Senior in right of payment and liquidation preference to all common stock of the Company. Junior in right of payment and priority to all funded debt of the Company, including the Super-Priority Term Loan, the Amended TLB, and the Amended Revolver. For the avoidance of doubt, the Series A Preferred Stock is equity, not debt, and shall not constitute indebtedness for purposes of any financial covenant calculation.
Conversion: The Series A Preferred Stock shall be convertible into common stock of the Company at the option of the holder, at any time following issuance, at a conversion price to be determined in the definitive documentation based on the agreed equity valuation of the Company at the time of closing. Conversion mechanics, anti-dilution adjustments, and other customary terms shall be set forth in the Certificate of Designations.
Redemption:
(a) Optional Redemption: The Company may, at its option, redeem all or any portion of the outstanding Series A Preferred Stock at any time after the third anniversary of the issuance date, at a redemption price equal to the aggregate liquidation preference plus all accrued and unpaid PIK dividends.
(b) Mandatory Redemption: The Company shall be required to redeem all outstanding Series A Preferred Stock on the seventh anniversary of the issuance date, at a redemption price equal to the aggregate liquidation preference plus all accrued and unpaid PIK dividends. Failure to redeem on the mandatory redemption date shall constitute an event of default under the Certificate of Designations.
Voting Rights: The holders of Series A Preferred Stock shall be entitled to vote on all matters submitted to a vote of the Company's stockholders, voting together with the common stockholders as a single class, on an as-converted basis. In addition, the holders of Series A Preferred Stock shall have consent rights with respect to the following fundamental matters, each of which shall require the affirmative vote or written consent of holders of a majority of the outstanding Series A Preferred Stock (voting as a separate class):
(a) any amendment, modification, or waiver of any provision of the Company's certificate of incorporation or bylaws that would adversely affect the rights, preferences, or privileges of the Series A Preferred Stock;
(b) the authorization or issuance of any class or series of capital stock that is senior to or pari passu with the Series A Preferred Stock in right of payment, liquidation preference, or dividend priority;
(c) any merger, consolidation, sale of all or substantially all assets, or other extraordinary transaction; and
(d) any voluntary liquidation, dissolution, or winding up of the Company.
Establishment: The Series A Preferred Stock shall be established by a Certificate of Designations of Series A Preferred Stock (the "Certificate of Designations"), to be filed with the Secretary of State of the State of Delaware prior to or contemporaneously with the closing of the Restructuring.
F. Pro Forma Common Equity Allocation
Upon the consummation of the Restructuring, the pro forma fully diluted common equity of the Company shall be allocated as follows:
Ridgeline's ownership shall be diluted from 100% to 47.5% as a result of the issuance of new common equity to the mezzanine equitization recipients and the reservation of the MIP pool. Ridgeline's maintenance of a 47.5% equity stake is conditioned upon the funding of the $12,500,000 equity contribution described in Section V.G below.
Board Composition. The post-restructuring Board of Directors of the Company (the "Board") shall consist of seven (7) directors, allocated as follows:
(a) Three (3) directors designated by Ridgeline Capital Partners Fund III, L.P. (or its designee);
(b) Three (3) directors designated by the mezzanine equitization recipients (initially to be designated by the Ad Hoc Group or its designee); and
(c) One (1) independent director mutually agreed upon by Ridgeline and the mezzanine equitization recipients.
The allocation of board seats and the procedures for designation, removal, and replacement of directors shall be set forth in the Amended and Restated Stockholders' Agreement described in Section XV below. The independent director shall not be an employee, officer, or affiliate of any party or its affiliates, and shall satisfy applicable independence standards.
G. Sponsor Contribution
As a material condition to the Restructuring and as consideration for Ridgeline's retention of a 47.5% pro forma common equity ownership stake and the designation of three (3) directors to the post-restructuring Board, Ridgeline Capital Partners Fund III, L.P. shall contribute $12,500,000 in new cash equity to the Company at or prior to the closing of the Restructuring (the "Ridgeline Equity Contribution").
Amount: $12,500,000, payable in immediately available funds.
Timing: The Ridgeline Equity Contribution shall be funded on or prior to the closing date of the Restructuring. Funding of the Ridgeline Equity Contribution is a condition precedent to closing.
Use of Proceeds: The proceeds of the Ridgeline Equity Contribution shall be used by the Company to (a) fund a portion of the transaction costs described in Section XIII below and (b) provide an additional post-closing liquidity cushion to support the Company's operations and working capital needs during the period following the Restructuring.
Consideration: In exchange for the Ridgeline Equity Contribution, Ridgeline shall retain its 47.5% pro forma common equity ownership stake and its right to designate three (3) directors to the post-restructuring Board, in each case as described above.
The parties acknowledge that Ridgeline's existing equity investment of approximately $210,000,000 has been significantly impaired, and that the Ridgeline Equity Contribution represents a meaningful additional commitment of capital by the Sponsor in support of the Restructuring.
VI. INTERCREDITOR ARRANGEMENTS
The existing Intercreditor Agreement among the First Lien Agent, the second lien agent (under the Indenture), and the Company shall be terminated upon the closing of the Restructuring (contemporaneously with the cancellation of the Mezzanine Notes) and replaced with an Amended and Restated Intercreditor Agreement (the "Intercreditor Agreement") among the following parties:
Parties:
(a) Belvedere Credit Opportunities Fund LP, in its capacity as administrative agent and collateral agent under the Super-Priority Credit Agreement (the "Super-Priority Agent");
(b) Pinnacle National Bank, N.A., in its capacity as administrative agent and collateral agent under the Amended First Lien Credit Agreement (the "First Lien Agent"); and
(c) Stonefield Logistics Group Inc., as the Company.
The Intercreditor Agreement shall establish the relative lien priorities, payment rights, and enforcement rights among the Super-Priority Agent and the First Lien Agent with respect to the shared collateral, on the following terms:
Structure: The Intercreditor Agreement shall establish a super-priority / first lien "first-out / second-out" arrangement, under which (a) the Super-Priority Obligations shall have the benefit of a super-priority, first-out lien on all shared collateral, and (b) the First Lien Obligations (comprising all obligations under the Amended TLB and the Amended Revolver, on a pari passu basis) shall have the benefit of a first lien, second-out lien on all shared collateral.
Payment Waterfall: All proceeds of collateral and all payments received in respect of the secured obligations shall be applied in the following order of priority:
First, to the payment in full of all Super-Priority Obligations (including principal, interest, fees, premiums, expenses, indemnification obligations, and all other amounts owing to the Super-Priority Agent and the Super-Priority Lenders under the Super-Priority Credit Agreement);
Second, to the payment in full of all First Lien Obligations (including principal, interest, fees, premiums, expenses, indemnification obligations, and all other amounts owing to the First Lien Agent and the First Lien Lenders under the Amended First Lien Credit Agreement, with the Amended TLB and the Amended Revolver sharing on a pari passu basis); and
Third, to the Company or as otherwise required by law.
Lien Subordination: The First Lien Agent, on behalf of itself and the First Lien Lenders, shall acknowledge and agree that the liens securing the First Lien Obligations are subordinated in priority to the liens securing the Super-Priority Obligations. The First Lien Agent shall not contest, challenge, or seek to avoid or subordinate the liens securing the Super-Priority Obligations, and shall not take any action that would impair the priority of such liens.
Standstill: The First Lien Lenders shall be subject to a standstill on the exercise of remedies and enforcement actions with respect to the shared collateral for a period to be agreed in the definitive documentation (customary for transactions of this type, typically 90–180 days following the occurrence of an event of default under the Amended First Lien Credit Agreement), during which period the Super-Priority Agent shall have the exclusive right to direct enforcement actions with respect to the shared collateral.
Purchase Option: The Super-Priority Agent (or, at the direction of the Super-Priority Lenders, any designee thereof) shall have the option, exercisable at any time following an acceleration of the First Lien Obligations or the occurrence of an insolvency event with respect to the Company, to purchase all (but not less than all) of the First Lien Obligations at a purchase price equal to par plus all accrued and unpaid interest and fees, without premium. The purchase option shall be exercisable by written notice to the First Lien Agent within a period to be agreed in the definitive documentation.
DIP Financing: The Intercreditor Agreement shall contain customary provisions addressing the rights of the parties in the event of a bankruptcy filing by the Company or any Guarantor under the Bankruptcy Code, including:
(a) the respective adequate protection rights of the Super-Priority Agent and the First Lien Agent;
(b) the right of the Super-Priority Agent to provide or consent to debtor-in-possession financing, and the agreement of the First Lien Agent not to object to such financing (subject to customary conditions);
(c) the relative lien priorities and claim priorities in any bankruptcy proceeding; and
(d) the agreement of the First Lien Agent not to seek relief from the automatic stay with respect to the shared collateral during the standstill period (subject to adequate protection).
Governing Law: The laws of the State of New York, without regard to conflicts of law principles (other than Section 5-1401 and Section 5-1402 of the New York General Obligations Law).
VII. CHANGE OF CONTROL PROVISION
For purposes of the Super-Priority Credit Agreement and the Amended First Lien Credit Agreement, a "change of control" shall be deemed to have occurred if any person or "group" (within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended), other than Ridgeline Capital Partners Fund III, L.P. and the mezzanine equitization recipients and their respective permitted transferees (as defined in the applicable credit agreement), acquires, directly or indirectly, beneficial ownership of more than 50% of the total outstanding voting equity interests of the Company.
Consequence under the Super-Priority Credit Agreement: Upon the occurrence of a change of control, the Borrower shall be required to prepay the Super-Priority Term Loan in full at a price equal to 101% of the outstanding principal amount, together with all accrued and unpaid interest and all other amounts owing under the Super-Priority Credit Agreement.
Consequence under the Amended First Lien Credit Agreement: Upon the occurrence of a change of control, the Borrower shall be required to offer to prepay the Amended TLB in full at a price equal to 101% of the outstanding principal amount, together with all accrued and unpaid interest and all other amounts owing under the Amended First Lien Credit Agreement; provided, however, that if the TLB Required Lenders waive the mandatory prepayment requirement in respect of such change of control, no prepayment shall be required.
The parties shall negotiate the specific terms of the change of control definition, including the treatment of permitted transferees, indirect ownership changes, and management equity, in the definitive documentation.
VIII. MANDATORY PREPAYMENT PROVISIONS (SUMMARY)
The following is a summary of the mandatory prepayment provisions applicable to the Super-Priority Term Loan and the Amended TLB. All mandatory prepayment provisions are subject to the detailed terms to be set forth in the definitive documentation.
Excess Cash Flow: 75% of annual Excess Cash Flow shall be applied to prepay outstanding funded debt, subject to the requirement that the Company maintain Minimum Liquidity of not less than $20,000,000 after giving effect to such prepayment. Excess Cash Flow shall be calculated annually based on audited financial statements and shall be due within a customary period (to be specified in definitive documentation) following the delivery of such financial statements.
Asset Sales: 100% of net cash proceeds from any asset sale, disposition, or casualty event exceeding $2,500,000 in any single transaction or series of related transactions shall be applied to prepay outstanding funded debt, subject to a 365-day reinvestment right permitting the Borrower to reinvest such proceeds in replacement assets or capital expenditures (or, if committed within such 365-day period, within 180 days after the end of such period).
Change of Control: Mandatory prepayment at 101% of outstanding principal upon the occurrence of a "change of control" (as defined in Section VII above).
Insurance and Condemnation Proceeds: The treatment of insurance and condemnation proceeds shall be addressed in the definitive documentation in a manner customary for transactions of this type.
Application of Mandatory Prepayments: All mandatory prepayments shall be applied in the following order of priority: first, to reduce outstanding Super-Priority Obligations until paid in full; then, to reduce outstanding TLB obligations (applied on a pro rata basis among TLB Lenders). In addition, upon any mandatory prepayment resulting from an asset sale, the Revolver commitments shall be permanently reduced by an amount to be specified in the definitive documentation.
IX. FINANCIAL COVENANTS (NEWLY ADDED)
The Amended First Lien Credit Agreement and the Super-Priority Credit Agreement shall each contain the following financial maintenance covenants, which represent newly imposed requirements that are not contained in the Existing First Lien Credit Agreement. The financial covenants shall be tested on a unified basis across both credit facilities.
Total Net Leverage Ratio
The Company shall not permit the Total Net Leverage Ratio, as of the last day of any fiscal quarter, to exceed the following levels:
For purposes of this covenant, the "Total Net Leverage Ratio" shall be defined as the ratio of (a) Total Funded Debt (i.e., all outstanding funded indebtedness of the Company and its subsidiaries, including the Super-Priority Term Loan, the Amended TLB, and drawn amounts under the Amended Revolver, but excluding letters of credit to the extent undrawn) minus Unrestricted Cash (up to a maximum of $15,000,000 in netting credit) to (b) LTM Adjusted EBITDA (as defined in the definitive documentation, which definition shall be consistent with customary practice for leveraged credit facilities and shall include add-backs for non-recurring charges, restructuring costs, and other customary adjustments).
Minimum Liquidity.  The Company shall maintain Minimum Liquidity of not less than $20,000,000 at all times. The Minimum Liquidity covenant shall be tested as of the last day of each fiscal quarter and, in addition, at any time upon the occurrence of a trigger event (to be defined in the definitive documentation, which definition is expected to include, among other things, any event of default, any borrowing under the Revolver that would cause utilization to exceed a specified threshold, and any material adverse change in the Company's business or financial condition).
For purposes of this covenant, "Minimum Liquidity" shall be defined as the sum of (a) unrestricted cash and cash equivalents of the Company and its subsidiaries plus (b) available unused commitments under the Amended Revolving Credit Facility (after giving effect to all outstanding borrowings and Outstanding LCs).
Testing and Cure Rights
Both financial covenants shall be applicable to the Super-Priority Credit Agreement and the Amended First Lien Credit Agreement on a unified basis, meaning that a breach of either covenant shall constitute an event of default under both credit facilities simultaneously.
The definitive documentation shall include a customary equity cure right, subject to the following limitations:
(a) The equity cure right may be exercised no more than two (2) times in any period of four (4) consecutive fiscal quarters;
(b) The equity cure right may be exercised no more than five (5) times in the aggregate over the life of the credit facilities;
(c) Any equity contribution made pursuant to the equity cure right shall be applied to increase Adjusted EBITDA for the applicable testing period (for purposes of the Total Net Leverage Ratio) or to increase Minimum Liquidity (for purposes of the Minimum Liquidity covenant), as applicable; and
(d) The equity cure contribution must be received by the Company within a customary cure period (to be specified in the definitive documentation) following the delivery of the applicable compliance certificate.
X. CONSENT THRESHOLDS AND APPROVALS REQUIRED
The following consents and approvals are required to consummate the Restructuring:
TLB Amendment: The consent of the TLB Required Lenders (i.e., holders of more than 50% of outstanding TLB loans) is required to approve the amendment and restatement of the Existing First Lien Credit Agreement on the terms described herein. The Company must seek consent from lenders holding at least $142,600,000 of the $285,000,000 outstanding TLB principal (representing more than 50% of outstanding loans). The Company's target is to obtain consent from TLB Lenders holding 80% or more of the outstanding TLB, in order to achieve broad-based support and minimize potential holdout risks.
Revolver Amendment: The consent of the Required Lenders under the Revolver (i.e., holders of more than 50% of Revolver commitments) is required to approve the amendment of the Revolver on the terms described herein. Given that the Revolver is held by only three lenders (Pinnacle, Great Basin, and Tidewater), the Company's target is to obtain unanimous consent from all three Revolver Lenders.
Mezzanine Equitization: The consent of holders of more than 66⅔% in aggregate principal amount of outstanding Mezzanine Notes is required under the Indenture to approve the exchange and consent solicitation and to authorize the Supplemental Indenture. The Ad Hoc Group already holds $122,000,000 in principal amount of Mezzanine Notes, representing 87.1% of the outstanding principal, which exceeds the minimum consent threshold of approximately $93,400,000 (66⅔% of $140,000,000). Accordingly, the required consent is expected to be obtainable with the Ad Hoc Group's support alone, without the need for additional consents from non-Ad Hoc Group holders.
Corporate Approvals: Approval of the Board of Directors of Stonefield Logistics Group Inc. No stockholder approval is required under the Delaware General Corporation Law (the "DGCL") for the transactions contemplated hereby, as the Company is a private corporation and no provision of the DGCL or the Company's certificate of incorporation or bylaws requires stockholder approval for the issuance of additional equity, the incurrence of indebtedness, or the entry into the other transactions described herein.
XI. IMPLEMENTATION MILESTONES AND KEY DATES
The following table sets forth the indicative timeline and key milestones for the implementation of the Restructuring. All dates are target dates and are subject to adjustment by mutual agreement of the parties. The failure to achieve any milestone by its target date shall constitute a termination event under the Restructuring Support Agreement only if such milestone is designated as a "hard" milestone therein.
The parties acknowledge that the timeline set forth above is aggressive but achievable, and that timely execution will require good-faith cooperation among all parties and their respective advisors. The Company and its advisors will serve as the primary drafters of the definitive documentation, with review and comment rights provided to counsel for each party.
XII. CONDITIONS PRECEDENT TO CLOSING
The obligations of the parties to consummate the Restructuring and the funding of the Super-Priority Term Loan shall be subject to the satisfaction (or waiver by the relevant party) of the following conditions precedent:
(a) Definitive Documentation. The execution and delivery of all definitive documentation in form and substance satisfactory to each party, including:
(i) the Amended and Restated First Lien Credit Agreement;
(ii) the Super-Priority Credit Agreement;
(iii) the Amended and Restated Intercreditor Agreement;
(iv) the Exchange Agreement;
(v) the Supplemental Indenture;
(vi) the Amended and Restated Certificate of Incorporation;
(vii) the Certificate of Designations of Series A Preferred Stock;
(viii) the Amended and Restated Stockholders' Agreement;
(ix) the Registration Rights Agreement;
(x) all ancillary security documents

CONFIDENTIAL — SUBJECT TO FRE 408 AND ALL APPLICABLE PRIVILEGES

REVISED RESTRUCTURING TERM SHEET

I. PARTIES

II. OVERVIEW OF PROPOSED RESTRUCTURING

III. EXISTING CAPITAL STRUCTURE (PRE-RESTRUCTURING)

IV. PROPOSED POST-RESTRUCTURING CAPITAL STRUCTURE

V. DETAILED TERMS OF THE RESTRUCTURING TRANSACTIONS

Record

Parties

Dates

Amounts