1012-00005 · Stonefield Logistics Group · Experts

expert-retention-letter-kensington.docx DOCUMENT Litigation

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PRIVILEGED & CONFIDENTIAL ATTORNEY WORK PRODUCT

CALDERWOOD & HARKNESS LLP Attorneys at Law

200 Park Avenue, 38th Floor New York, New York 10166 Telephone: (212) 455-7800 Facsimile: (212) 455-7801 www.calderwoodharkness.com

October 28, 2022

Dr. Evelyn Rosser Managing Director Kensington Analytics Group LLC 1700 Market Street, Suite 2800 Philadelphia, Pennsylvania 19103

Re: Retention of Kensington Analytics Group LLC as Expert Consultant and Potential Testifying Expert

Matter: Vantor Holdings Corp. v. Stonefield Logistics Group Inc., Case No. 22-cv-07841 (S.D.N.Y.)

Calderwood & Harkness LLP Matter No.: 1012-00005

Dear Dr. Rosser:

1. Purpose and Engagement Overview

Calderwood & Harkness LLP ("C&H" or the "Firm") serves as lead defense counsel for Stonefield Logistics Group Inc. ("Stonefield" or "SLG"), a Delaware corporation headquartered at 4200 Commerce Parkway, Suite 800, Fort Worth, Texas 76102, in the above-referenced litigation currently pending in the United States District Court for the Southern District of New York. This letter sets forth the terms and conditions upon which C&H, acting on behalf of and at the direction of its client Stonefield, hereby retains Kensington Analytics Group LLC ("KAG" or "Kensington") to serve as an expert consultant and, if necessary, a testifying expert in connection with the defense of claims brought by Vantor Holdings Corp. ("Vantor") and its wholly owned operating subsidiary, Vantor Transport Services LLC ("VTS"), in the above-captioned action.

KAG is being retained to provide economic and damages analysis in support of Stonefield's defense, including, but not limited to, the preparation of a comprehensive rebuttal of the plaintiff's damages claims. The specific scope of KAG's engagement is described in greater detail in Section 3 of this letter. C&H selected KAG based on the firm's well-recognized expertise in transportation economics, commercial damages quantification, and contract disputes analysis, as well as Dr. Rosser's extensive credentials and experience testifying in complex commercial litigation matters.

This engagement shall be effective as of the date of this letter upon countersignature by Dr. Rosser in the space provided at the conclusion of this letter. Upon execution, this letter shall constitute a binding agreement between C&H (on behalf of Stonefield) and KAG with respect to the terms of the engagement described herein.

2. Background of the Litigation

To provide KAG with sufficient context for the work contemplated by this engagement, C&H sets forth the following summary of the parties, the contractual relationship at issue, the events giving rise to the litigation, and the current procedural posture of the case. This summary is based on information known to C&H as of the date of this letter and is subject to supplementation as discovery proceeds.

2.1 The Parties

Stonefield Logistics Group Inc. Stonefield is a mid-market freight brokerage, managed transportation, and supply chain solutions company. Stonefield manages a carrier network of approximately 12,000 approved carriers and handles roughly 850,000 shipments annually across a diversified suite of transportation modes, including full truckload ("TL"), less-than-truckload ("LTL"), intermodal, and last-mile delivery services. Stonefield reported fiscal year 2021 revenue of approximately $1.42 billion, fiscal year 2022 revenue of approximately $1.28 billion, and fiscal year 2022 EBITDA of approximately $118 million. The company employs approximately 2,800 personnel across its corporate headquarters in Fort Worth, Texas, and regional offices in Chicago, Illinois; Charlotte, North Carolina; and Edison, New Jersey.

Stonefield's majority owner is Ridgeline Capital Partners, LP ("Ridgeline"), a middle-market private equity firm focused on logistics, distribution, and business services. Ridgeline acquired a controlling equity stake in Stonefield — approximately 72% of the outstanding equity, held through Ridgeline Fund III, LP — in October 2017 for an enterprise value of approximately $680 million. The remaining equity is held by Stonefield management and certain minority investors.

Vantor Holdings Corp. Vantor Holdings Corp. ("Vantor") is a New York corporation that serves as the holding company for its transportation and logistics operations. Through its wholly owned operating subsidiary, Vantor Transport Services LLC, Vantor provides asset-based and asset-light trucking, warehousing, and regional distribution services primarily in the Northeast and Mid-Atlantic corridors. Vantor reported fiscal year 2021 revenue of approximately $385 million and fiscal year 2022 revenue of approximately $310 million. Vantor employs approximately 1,900 individuals. The company's founder and chief executive officer is Nikolai Vantorovich, who holds an approximately 58% ownership interest in Vantor.

Vantor Transport Services LLC. VTS is a New York limited liability company whose sole member is Vantor Holdings Corp. VTS is the operating entity that performed the transportation services at issue in this litigation under the Transportation Services Agreement described below. VTS operates a fleet of approximately 650 owned tractors and 2,100 trailers, the majority of which are deployed in regional and long-haul truckload operations across the Northeast, Mid-Atlantic, and Southeast corridors.

2.2 The Transportation Services Agreement

On March 15, 2019, Stonefield (as "Shipper-Broker") and VTS (as "Carrier-Provider") entered into a Transportation Services Agreement bearing Contract Reference No. SLG-VTS-2019-0315 (the "TSA" or the "Agreement"). The TSA was drafted by Ashford Meridian LLP on behalf of Stonefield. The Agreement is governed by the laws of the State of New York. The following summarizes the material terms of the TSA:

Term. The TSA has a five-year term commencing April 1, 2019 and expiring March 31, 2024.

Scope of Services. Under the TSA, VTS committed to providing dedicated and on-demand truckload transportation services across specified lanes in the Northeast, Mid-Atlantic, and Southeast corridors. VTS further committed to maintaining a minimum fleet capacity of 400 tractors and 1,200 trailers available for Stonefield freight at all times during the term of the Agreement.

Annual Committed Volume (ACV). The TSA established an Annual Committed Volume of $43.2 million per year, resulting in a total five-year minimum commitment of $216 million over the full term of the Agreement.

Rate Structure. Per-mile rates by lane are set forth in Schedule B to the TSA. Rates are subject to annual adjustment pursuant to the Rate Adjustment Mechanism in Section 5.3 of the TSA, which provides for an annual rate adjustment each April 1 based on a blended index comprising 70% diesel fuel index and 30% CPI-U.

Service Level Obligations (SLOs). The TSA established the following minimum service level obligations applicable to VTS's performance:

• On-time pickup rate: ≥ 95%

• On-time delivery rate: ≥ 93%

• Cargo claims ratio: ≤ 0.5% of gross revenue

• Tender acceptance rate: ≥ 90%

• Equipment availability: ≥ 85% of committed fleet

Liquidated Damages (Section 14.2). The TSA provides that if Stonefield terminates the Agreement other than "for Cause" (as defined in Section 13.1), Stonefield shall pay to VTS an amount equal to 75% of the Annual Committed Volume multiplied by the number of full and partial contract years remaining in the term. Section 14.2 further states that the liquidated damages amount represents "a reasonable estimate of the damages that [VTS] would sustain as a result of early termination" and that such damages are "not a penalty."

Termination for Cause (Section 13.1). The TSA permits either party to terminate the Agreement for "Cause," which is defined to include: (a) material breach of any provision of the Agreement that remains uncured for thirty (30) calendar days after written notice specifying the breach; (b) insolvency or commencement of bankruptcy proceedings; (c) failure to maintain required insurance coverage; and (d) material violation of applicable law or FMCSA regulations.

Cure Notice Requirement (Section 13.2). Before a termination for Cause may become effective under Section 13.1(a), the terminating party must deliver a written Cure Notice specifying the breach with reasonable particularity and affording the breaching party the applicable cure period set forth in the Agreement.

Consequential Damages Waiver (Section 15.1). The TSA contains a mutual waiver of consequential damages, pursuant to which each party waives any claim against the other for indirect, incidental, consequential, special, or punitive damages arising out of or relating to the Agreement.

Force Majeure (Section 12.1). The TSA includes a force majeure clause excusing either party's performance during qualifying force majeure events, subject to applicable notice requirements.

2.3 Termination and Pre-Litigation Events

The following timeline describes the key events leading to the termination of the TSA and the commencement of this litigation:

January 18, 2022 — Cure Notice. Stonefield's Director of Contract Compliance, Raymond Hess, sent a written Cure Notice to Sandra Milescu, Chief Operating Officer of Vantor and VTS, identifying multiple material breaches of VTS's obligations under the TSA. The Cure Notice specified the following deficiencies in VTS's performance:

• On-time pickup rate of 78.2% (vs. the 95% SLO);

• On-time delivery rate of 81.6% (vs. the 93% SLO);

• Tender acceptance rate of 71.4% (vs. the 90% SLO);

• Equipment availability of 62% of committed fleet, equating to approximately 248 tractors available versus the 400 tractors required under the TSA;

• Sixteen (16) cargo claims filed during November and December 2021 totaling $387,400 in claimed losses, yielding a cargo claims ratio of approximately 1.07% of gross revenue (vs. the ≤ 0.5% SLO); and

• Chronic failure to provide substitute equipment as required under Section 7.4 of the TSA.

The Cure Notice stated that VTS had thirty (30) calendar days from receipt to cure the identified breaches in accordance with Section 13.2 of the TSA.

February 14, 2022 — VTS Response. Derek Pruitt, Vice President of Business Development at Vantor, responded to the Cure Notice on behalf of VTS. Mr. Pruitt's letter acknowledged certain "operational challenges" but attributed those challenges to a nationwide driver shortage affecting the entire industry, Stonefield's alleged failure to tender minimum committed volumes under the ACV provision, and Stonefield's alleged diversion of volume to spot market carriers in preference to VTS. Mr. Pruitt's letter further disputed the accuracy of Stonefield's cargo claims data and asserted that VTS had achieved "substantial cure" of the identified performance deficiencies.

February 17, 2022 — Cure Period Expiration. The thirty-day cure period specified in the January 18, 2022 Cure Notice expired. In C&H's assessment, VTS had not achieved cure of the identified material breaches as of this date.

March 4, 2022 — Termination. Tobias Wren, General Counsel of Stonefield, sent a formal termination letter to Vantor and VTS, stating that VTS had "failed to cure the material breaches identified in the January 18, 2022 Cure Notice within the applicable cure period" and terminating the TSA effective immediately pursuant to Section 13.1(a) of the Agreement. As of the date of termination, the remaining term of the TSA was approximately two (2) years and twenty-seven (27) days (March 4, 2022 through March 31, 2024).

April 8, 2022 — Demand Letter. Vantor's outside counsel transmitted a demand letter to Stonefield asserting that Stonefield's termination of the TSA was wrongful and claiming approximately $95.4 million in damages.

April 29, 2022 — Rejection of Demand. Stonefield, through C&H, rejected the demand and invoked the executive negotiation period required under Section 16 of the TSA prior to the commencement of litigation.

May 16, 2022 and June 3, 2022 — Executive Negotiations. Two executive negotiation sessions were held in accordance with Section 16 of the TSA. The parties were unable to reach a resolution, and the negotiation period concluded without agreement.

2.4 Litigation Status

On August 12, 2022, Vantor filed its original Complaint in the United States District Court for the Southern District of New York (Case No. 22-cv-07841). The case has been assigned to the Honorable Margaret T. Calloway, United States District Judge. Vantor is represented by Caldwell Royce & Shapiro LLP, with Harrison Caldwell serving as lead partner.

C&H was engaged as lead defense counsel for Stonefield on September 1, 2022, and the matter was opened under Firm Matter No. 1012-00005. C&H filed its Notice of Appearance on September 8, 2022.

On October 14, 2022, Stonefield filed a Motion to Dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), arguing, inter alia, that: (i) the liquidated damages clause in Section 14.2 of the TSA is unenforceable as a penalty under New York law; and (ii) Vantor's lost profits claim is inadequately pled. The motion remains pending before Judge Calloway as of the date of this letter.

No Case Management Order has yet been entered; C&H anticipates that an initial scheduling conference will be held and a Case Management Order issued in early 2023. Expert discovery deadlines have not yet been set.

3. Scope of Engagement

3.1 Primary Scope — Rebuttal of Plaintiff's Damages Claims

The primary purpose of KAG's engagement is to analyze and prepare to rebut Vantor's claimed damages, which currently total approximately $95.4 million. Based on Vantor's April 8, 2022 demand letter and the allegations in the Complaint, the plaintiff's damages claim is broken down as follows:

(a) Liquidated Damages (Section 14.2 of the TSA): $64,800,000 (calculated as 75% × $43.2 million ACV × 2 full remaining contract years) plus $2,430,000 for the partial contract year (27 days), totaling $67,230,000;

(b) Lost Profits (Above-Contract Margin): $18,700,000, based on Vantor's claimed average 12% operating margin on Stonefield freight multiplied by the remaining committed volume over the balance of the contract term;

(c) Stranded Assets and Costs: $5,200,000, consisting of accelerated depreciation on tractors and trailers acquired specifically for the Stonefield contract and lease termination costs for associated equipment;

(d) Workforce Reduction Costs: $2,870,000, representing severance payments and unemployment insurance costs for approximately 180 drivers and support staff allegedly displaced as a result of the termination; and

(e) Mitigation Costs: $1,400,000, representing costs incurred by VTS in seeking replacement freight volume following termination of the TSA.

C&H notes that Vantor has not yet served a formal expert damages report. C&H anticipates that Vantor will retain its own damages expert and serve an expert report during the expert discovery period once a Case Management Order is entered. KAG's rebuttal work should be developed with the understanding that KAG will need to respond to and rebut that expert report once it is served.

KAG's analysis under this primary scope of engagement should specifically address, at a minimum, the following issues:

(i) Enforceability of the Liquidated Damages Clause. Whether the liquidated damages formula set forth in Section 14.2 of the TSA produces results that are grossly disproportionate to any actual harm that VTS could reasonably have been expected to suffer as a result of early termination, thereby supporting Stonefield's argument that the clause constitutes an unenforceable penalty under New York law. KAG's analysis should examine the relationship between the liquidated damages amount ($67.23 million) and VTS's probable actual damages under various reasonable scenarios, taking into account VTS's actual margins, market conditions, and mitigation opportunities.

(ii) Alternative Damages Calculations — Lost Profits. Assuming arguendo that the termination was wrongful, KAG should prepare an alternative damages calculation under a lost-profits theory that properly accounts for: (a) Vantor's and VTS's actual operating margins as reflected in available financial data, as distinguished from the 12% operating margin claimed by Vantor; (b) prevailing market conditions and freight rate trends during the remaining contract term, including the post-pandemic freight market cycle; (c) VTS's own breaches of the TSA that reduced committed volume and service capacity, and the appropriate offset or reduction of damages attributable thereto; and (d) proper discounting and present-value adjustments to any future lost profits stream.

(iii) Consequential Damages and the Section 15.1 Waiver. Whether Vantor's claimed consequential damages — specifically, the stranded assets and costs ($5.2 million), workforce reduction costs ($2.87 million), and mitigation costs ($1.4 million) — are properly categorized as consequential damages, and whether those categories of damages are barred by the mutual consequential damages waiver contained in Section 15.1 of the TSA. KAG should analyze the economic substance of each category to determine whether any of the claimed amounts represent direct damages rather than consequential damages.

(iv) Failure to Mitigate. Whether Vantor and VTS failed to mitigate their damages by not seeking replacement freight volume following the termination of the TSA, particularly given the robust freight market conditions prevailing in the first and second quarters of 2022. KAG's analysis should assess the availability of alternative freight volume and the rates at which VTS could have redeployed its fleet and driver workforce in the relevant corridors during the period following termination.

(v) Vantor/VTS Financial Condition. An examination of Vantor's and VTS's financial condition during the relevant period, including an assessment of whether the claimed damages overstate the actual economic loss sustained by the Vantor enterprise, taking into account VTS's pre-termination financial performance and the trajectory of the business.

(vi) Duplicative Damages. Whether Vantor's damages claims for liquidated damages (under Section 14.2) and lost profits are duplicative — that is, whether both categories of claimed damages compensate for the same underlying economic harm, namely the lost value of the contract, and whether awarding both would result in an impermissible double recovery.

3.2 Additional Scope — Supporting Analyses

In addition to the primary rebuttal analyses described above, KAG is engaged to perform the following supporting analyses:

(a) Freight Market Conditions Analysis. KAG shall analyze freight market conditions, including the spot rate environment, carrier demand dynamics, and capacity utilization metrics, during the relevant period (2019 through 2022). This analysis will serve two purposes: first, to support Stonefield's force majeure defense with respect to the impact of COVID-19 on freight demand during the period from approximately April 2020 through September 2020; and second, to assess the availability and quality of Vantor's mitigation opportunities following the March 2022 termination.

(b) Volume Tender Analysis. KAG shall analyze Stonefield's actual volume tenders under the TSA relative to the Annual Committed Volume, including the force majeure adjustment applicable during Contract Year 2, which reduced the adjusted ACV to $21.6 million compared to actual tenders of $31.8 million, and the Contract Year 3 partial-year tenders of $36.5 million against the $43.2 million ACV. KAG's analysis should evaluate the merits and economic basis of Vantor's claim that Stonefield failed to meet aggregate volume commitments under the TSA.

(c) Fleet Redeployment Analysis. KAG shall analyze VTS's fleet redeployment decisions during the relevant period and assess their economic impact on VTS's ability to perform its obligations under the TSA. C&H has information suggesting that VTS may have redirected a significant portion of its fleet capacity to higher-margin spot market loads and dedicated contracts with other shippers, contributing to the performance deficiencies identified in the Cure Notice.

(d) Rate Adjustment Mechanism Analysis. KAG shall review the April 2022 Rate Adjustment Mechanism and the projected 14.3% rate increase that would have taken effect on April 1, 2022 (from a weighted average per-mile rate of $2.87 to $3.28), including the projected $6.2 million annual cost increase to Stonefield resulting from the rate adjustment. This analysis should be contextualized within the broader damages analysis, including the question of whether the projected rate increase would have altered the economic incentives and behavior of both parties had the TSA remained in effect.

3.3 Expert Report and Testimony

If requested by C&H, KAG, through Dr. Rosser as the designated testifying expert, will prepare a written expert report that complies in all respects with the requirements of Federal Rule of Civil Procedure 26(a)(2)(B). The expert report shall include, without limitation: a complete statement of all opinions Dr. Rosser will express and the basis and reasons therefor; the facts or data considered by Dr. Rosser in forming the opinions; any exhibits that will be used to summarize or support the opinions; a statement of Dr. Rosser's qualifications, including a list of all publications authored in the previous ten years; a list of all other cases in which Dr. Rosser has testified as an expert at trial or by deposition within the preceding four years; and a statement of the compensation to be paid for the study and testimony in the case.

In addition, Dr. Rosser may be asked to testify at deposition and at trial. KAG should anticipate the need for Dr. Rosser to be available for deposition preparation sessions with C&H in advance of any such testimony.

All expert report drafts and communications between KAG and C&H counsel are intended to be subject to applicable work-product and privilege protections to the fullest extent permitted by law. However, KAG is advised that under Federal Rule of Civil Procedure 26(b)(4)(B) and (C), draft expert reports and certain categories of attorney-expert communications may be discoverable, subject to the limited exceptions set forth in those rules. KAG should consult with C&H counsel regarding best practices for document handling and communications to preserve all applicable protections.

4. Key Personnel

Dr. Evelyn Rosser, Managing Director of KAG, will serve as the lead expert and, if designated by C&H, the testifying expert in this engagement. Dr. Rosser's qualifications in transportation economics and contract damages analysis are understood to be extensive based on the curriculum vitae that Dr. Rosser previously provided to C&H, which has been reviewed and approved by the engagement team. C&H's decision to retain KAG is based in significant part on Dr. Rosser's qualifications, experience, and reputation.

Michael Chung, Senior Analyst at KAG, will support Dr. Rosser in connection with data analysis, financial modeling, and preparation of the expert report and supporting exhibits. Mr. Chung will work under Dr. Rosser's supervision and direction at all times.

KAG shall not substitute, remove, or add personnel to the engagement without the prior written consent of C&H. Any request to modify the engagement team shall be submitted in writing with sufficient advance notice to allow C&H to evaluate the proposed change.

C&H's primary contacts for the engagement are as follows:

Samuel Eklund, Partner — Responsible Partner for the engagement. Mr. Eklund has overall supervisory authority over all aspects of the Stonefield defense and KAG's engagement.

Patrick Gallagher, Associate — Lead Associate and day-to-day contact for KAG. Mr. Gallagher should be KAG's primary point of contact for scheduling, document requests, substantive questions, and coordination of work product. Mr. Gallagher may be reached at (212) 455-7843 or pgallagher@calderwoodharkness.com.

5. Compensation and Budget

5.1 Hourly Rates

KAG shall be compensated for services rendered in connection with this engagement at the following hourly rates:

Any additional personnel engaged to support this matter must be pre-approved by C&H in writing, and the applicable hourly rates for any such additional personnel shall be agreed in writing in advance of any work being performed.

5.2 Expenses. KAG will be reimbursed for reasonable out-of-pocket expenses actually incurred in connection with the engagement, including, without limitation, travel expenses, document copying and reproduction costs, data acquisition costs, specialized software costs, and other direct expenses. Travel expenses shall be incurred at coach class for air travel and at reasonable prevailing rates for ground transportation and lodging. Any single expense item exceeding $2,500 requires prior written approval from C&H before being incurred.

5.3 Budget Estimate

Based on the anticipated scope of the engagement as described in Section 3 of this letter, C&H estimates that total fees and expenses for KAG's engagement will range from $180,000 to $250,000 through completion of expert reports and depositions. This estimate is based on the following assumptions:

• Review and analysis of plaintiff's damages claims and supporting documents, including financial data, contractual materials, and market data;

• Preparation of one (1) rebuttal expert report addressing the issues identified in Section 3.1;

• Preparation for and attendance at one (1) expert deposition of Dr. Rosser, estimated at one (1) day in duration; and

• Ongoing consultation with C&H throughout the engagement, including attendance at strategy conferences and review of developing materials.

If the matter proceeds to trial, the budget for KAG's engagement will be supplemented by mutual written agreement of the parties to account for trial preparation and testimony. KAG shall notify C&H promptly if actual or projected costs are likely to exceed the budget range set forth above, and shall not incur fees in excess of $250,000 without prior written authorization from C&H.

5.4 Invoicing and Payment

KAG shall submit monthly invoices to C&H with reasonable detail regarding the time expended and expenses incurred during the applicable billing period. Invoices should identify the personnel performing each task, a brief narrative description of the work performed, the hours expended, and the applicable rate. Expenses should be itemized and supported by receipts where applicable.

Invoices are payable within thirty (30) days of receipt by C&H. C&H will arrange for payment from Stonefield. KAG acknowledges and agrees that C&H is acting solely as agent for its client, Stonefield, in connection with this engagement, and that C&H is not personally liable for KAG's fees and expenses unless separately agreed in a written instrument signed by an authorized representative of C&H.

6. Confidentiality and Privilege

6.1 Confidential Information

All documents, data, communications, analyses, memoranda, correspondence, and other information provided by C&H or Stonefield to KAG in connection with this engagement, or generated by KAG in the course of performing services under this engagement, constitute confidential information (collectively, "Confidential Information"). KAG shall not disclose any Confidential Information to any third party without the prior written consent of C&H, except as may be required by applicable law, regulation, or court order. In the event KAG receives a subpoena or other compulsory process seeking disclosure of Confidential Information, KAG shall promptly notify C&H before making any disclosure so that Stonefield may seek protective relief if appropriate.

KAG shall implement and maintain reasonable administrative, technical, and physical security measures to protect Confidential Information from unauthorized access, use, or disclosure, including with respect to electronic data and communications. Such measures shall include, at a minimum, encryption of electronic transmissions of Confidential Information, secure storage of physical documents, and access controls limiting access to Confidential Information to authorized KAG personnel working on the engagement.

6.2 Work Product and Privilege

KAG's work in this engagement is being directed by C&H counsel in anticipation of and in connection with pending litigation and is intended to be protected by the attorney work-product doctrine and, to the extent applicable, the attorney-client privilege. KAG should treat all communications with C&H as privileged and confidential, and should mark all internal work product and draft analyses as "PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT."

KAG should maintain all draft analyses, internal memoranda, communications with C&H, and internal working papers separately from any final expert report or materials that may be produced in discovery. KAG should be aware that if Dr. Rosser is designated as a testifying expert under Federal Rule of Civil Procedure 26(a)(2)(B), certain categories of materials may become discoverable under Federal Rule of Civil Procedure 26(a)(2) and 26(b)(4), including, without limitation, the final expert report, all data and information considered by the expert in forming opinions, and the expert's compensation. Draft reports and certain attorney-expert communications enjoy limited protection under Rule 26(b)(4)(B) and (C), but KAG should consult with C&H counsel regarding the scope of these protections and best practices for preserving them.

6.3 Document Retention

KAG shall retain all materials related to this engagement, including but not limited to documents received from C&H, internal work product, draft and final analyses, correspondence, electronic data, and billing records, until instructed otherwise by C&H in writing. KAG shall not destroy, delete, or discard any materials related to the engagement without the prior written authorization of C&H. Upon conclusion of the engagement, KAG shall, at C&H's direction, either return all Confidential Information and related materials to C&H or destroy such materials and provide written certification of destruction, as C&H may direct.

7. Conflicts of Interest

KAG represents and warrants that it has conducted a reasonable conflicts check in connection with this proposed retention and has determined that KAG has no current or prior engagement that would create a conflict of interest with respect to the services to be performed under this engagement. Specifically, KAG confirms that it has not been retained by, and has no current engagement with, Vantor Holdings Corp., Vantor Transport Services LLC, Caldwell Royce & Shapiro LLP, or any other party, counsel, or affiliate involved in the above-captioned litigation or any related proceeding.

KAG shall promptly notify C&H in writing if, at any time during the course of this engagement, KAG becomes aware of any actual or potential conflict of interest that could affect KAG's ability to perform its obligations under this letter or Dr. Rosser's ability to serve as an independent expert in this matter.

8. Independence and Professional Standards

KAG and Dr. Rosser shall maintain full professional independence in forming all opinions and conclusions rendered in connection with this engagement. KAG's analyses and opinions shall be based solely on the facts, data, and information reviewed by KAG, and shall reflect KAG's independent professional judgment. KAG shall not advocate for a particular outcome or tailor its opinions to achieve a result desired by C&H or Stonefield. The credibility and persuasive value of KAG's work depend upon its objectivity and analytical rigor.

Notwithstanding the foregoing, C&H and Stonefield retain the exclusive right to determine: (a) whether to designate Dr. Rosser as a testifying expert under Federal Rule of Civil Procedure 26(a)(2); (b) the scope and content of any expert report to be served in discovery; and (c) whether to call Dr. Rosser as a witness at deposition or at trial. Nothing in this engagement obligates C&H or Stonefield to designate Dr. Rosser as a testifying expert or to use any work product generated by KAG in the litigation.

9. Term and Termination

This engagement shall continue until the earliest of the following: (a) the matter is resolved, whether by settlement, judgment, or other final disposition; (b) C&H provides written notice to KAG of termination of the engagement; or (c) KAG provides thirty (30) days' prior written notice to C&H of its withdrawal from the engagement, subject to any applicable court orders, scheduling deadlines, or other constraints that may require KAG's continued participation for a reasonable period following delivery of such notice.

Upon termination of the engagement for any reason, KAG shall be entitled to payment for all services rendered and expenses incurred through the effective date of termination, in accordance with the compensation terms set forth in Section 5 of this letter. KAG's obligations with respect to confidentiality (Section 6), conflicts of interest (Section 7), and document retention (Section 6.3) shall survive termination of the engagement and shall remain in full force and effect.

10. Materials to Be Provided

C&H will provide KAG with the following initial materials for review in connection with the commencement of the engagement. Additional materials will be provided as discovery progresses and as further documents, data, and information become available:

1. Transportation Services Agreement dated March 15, 2019 (Contract Reference No. SLG-VTS-2019-0315), including all schedules, exhibits, and amendments thereto;

2. Stonefield's Cure Notice dated January 18, 2022, from Raymond Hess to Sandra Milescu;

3. Vantor's response to the Cure Notice dated February 14, 2022, from Derek Pruitt;

4. Stonefield's Termination Letter dated March 4, 2022, from Tobias Wren;

5. Vantor's demand letter dated April 8, 2022;

6. Original Complaint filed August 12, 2022, Vantor Holdings Corp. v. Stonefield Logistics Group Inc., Case No. 22-cv-07841 (S.D.N.Y.);

7. Stonefield's Motion to Dismiss and supporting memorandum of law, filed October 14, 2022;

8. Stonefield financial data for fiscal years 2019 through 2022, including revenue, operating metrics, and volume data;

9. Available Vantor/VTS financial data, including publicly available filings and any data obtained through pre-litigation exchanges;

10. VTS Q4 2021 Performance Report (internal VTS document);

11. Ashford Meridian LLP rate adjustment analysis memorandum dated February 2022;

12. Relevant internal Stonefield communications (subject to completion of privilege review by C&H);

13. Freight market data and indices for relevant periods, including Granite Harbor Technologies data, Dunmore Systems data, and FMCSA carrier data as available.

As discovery proceeds, C&H will supplement these materials with relevant document productions received from Vantor and third parties, deposition transcripts, interrogatory responses, and any expert report served by the plaintiff. C&H will coordinate with KAG regarding the format and delivery of materials to ensure efficient review and analysis.

11. Governing Law and Dispute Resolution

This engagement letter shall be governed by and construed in accordance with the laws of the State of New York, without regard to principles of conflicts of law. Any dispute arising out of or relating to this engagement letter or the services performed hereunder shall be resolved by binding arbitration conducted in New York, New York, in accordance with the Commercial Arbitration Rules of the American Arbitration Association then in effect. The arbitrator's decision shall be final and binding, and judgment upon the award may be entered in any court having jurisdiction thereof.

12. Miscellaneous

This letter constitutes the entire agreement between C&H (acting on behalf of Stonefield) and KAG with respect to the engagement described herein, and supersedes all prior negotiations, representations, and understandings, whether oral or written, relating to the subject matter of this letter. No amendment or modification of this letter shall be effective unless made in writing and signed by both C&H and KAG.

KAG shall not assign, delegate, or transfer any of its rights or obligations under this engagement letter without the prior written consent of C&H. Any attempted assignment without such consent shall be void and of no effect.

All notices, requests, and communications required or permitted under this letter shall be in writing and shall be deemed duly given when delivered by hand, sent by overnight courier service, or sent by electronic mail (with confirmation of receipt) to the addresses set forth herein or to such other address as either party may designate in writing.

This letter may be executed in counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument. Signatures transmitted by electronic means (including .pdf) shall be deemed original signatures for all purposes.

We look forward to working with you and your team on this important matter. KAG's expertise in transportation economics and commercial damages analysis will be invaluable to Stonefield's defense. Please do not hesitate to contact me or Patrick Gallagher at your earliest convenience to arrange an initial conference call to discuss the scope of work, timeline, and delivery of initial materials.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Samuel Eklund, Partner 200 Park Avenue, 38th Floor New York, New York 10166 Telephone: (212) 455-7818

Email: seklund@calderwoodharkness.com

AGREED AND ACCEPTED:

By executing this engagement letter below, Kensington Analytics Group LLC, through its Managing Director, Dr. Evelyn Rosser, agrees to the terms and conditions set forth herein and confirms the representations and warranties made by KAG in Sections 7 and 8 of this letter.

KENSINGTON ANALYTICS GROUP LLC

By: ________

Dr. Evelyn Rosser, Managing Director 1700 Market Street, Suite 2800 Philadelphia, Pennsylvania 19103

Date: ________

cc:

Tobias Wren, General Counsel, Stonefield Logistics Group Inc. Patrick Gallagher, Calderwood & Harkness LLP Linda Osei, Calderwood & Harkness LLP

Encl.: As referenced in Section 10 (initial materials to follow under separate cover)

Personnel	Title	Hourly Rate
Dr. Evelyn Rosser	Managing Director	$625.00
Michael Chung	Senior Analyst	$375.00

PRIVILEGED & CONFIDENTIAL ATTORNEY WORK PRODUCT
CALDERWOOD & HARKNESS LLP Attorneys at Law
200 Park Avenue, 38th Floor New York, New York 10166 Telephone: (212) 455-7800 Facsimile: (212) 455-7801 www.calderwoodharkness.com
October 28, 2022
Dr. Evelyn Rosser Managing Director Kensington Analytics Group LLC 1700 Market Street, Suite 2800 Philadelphia, Pennsylvania 19103
Re: Retention of Kensington Analytics Group LLC as Expert Consultant and Potential Testifying Expert
Matter: Vantor Holdings Corp. v. Stonefield Logistics Group Inc., Case No. 22-cv-07841 (S.D.N.Y.)
Calderwood & Harkness LLP Matter No.: 1012-00005
Dear Dr. Rosser:
1. Purpose and Engagement Overview
Calderwood & Harkness LLP ("C&H" or the "Firm") serves as lead defense counsel for Stonefield Logistics Group Inc. ("Stonefield" or "SLG"), a Delaware corporation headquartered at 4200 Commerce Parkway, Suite 800, Fort Worth, Texas 76102, in the above-referenced litigation currently pending in the United States District Court for the Southern District of New York. This letter sets forth the terms and conditions upon which C&H, acting on behalf of and at the direction of its client Stonefield, hereby retains Kensington Analytics Group LLC ("KAG" or "Kensington") to serve as an expert consultant and, if necessary, a testifying expert in connection with the defense of claims brought by Vantor Holdings Corp. ("Vantor") and its wholly owned operating subsidiary, Vantor Transport Services LLC ("VTS"), in the above-captioned action.
KAG is being retained to provide economic and damages analysis in support of Stonefield's defense, including, but not limited to, the preparation of a comprehensive rebuttal of the plaintiff's damages claims. The specific scope of KAG's engagement is described in greater detail in Section 3 of this letter. C&H selected KAG based on the firm's well-recognized expertise in transportation economics, commercial damages quantification, and contract disputes analysis, as well as Dr. Rosser's extensive credentials and experience testifying in complex commercial litigation matters.
This engagement shall be effective as of the date of this letter upon countersignature by Dr. Rosser in the space provided at the conclusion of this letter. Upon execution, this letter shall constitute a binding agreement between C&H (on behalf of Stonefield) and KAG with respect to the terms of the engagement described herein.
2. Background of the Litigation
To provide KAG with sufficient context for the work contemplated by this engagement, C&H sets forth the following summary of the parties, the contractual relationship at issue, the events giving rise to the litigation, and the current procedural posture of the case. This summary is based on information known to C&H as of the date of this letter and is subject to supplementation as discovery proceeds.
2.1 The Parties
Stonefield Logistics Group Inc. Stonefield is a mid-market freight brokerage, managed transportation, and supply chain solutions company. Stonefield manages a carrier network of approximately 12,000 approved carriers and handles roughly 850,000 shipments annually across a diversified suite of transportation modes, including full truckload ("TL"), less-than-truckload ("LTL"), intermodal, and last-mile delivery services. Stonefield reported fiscal year 2021 revenue of approximately $1.42 billion, fiscal year 2022 revenue of approximately $1.28 billion, and fiscal year 2022 EBITDA of approximately $118 million. The company employs approximately 2,800 personnel across its corporate headquarters in Fort Worth, Texas, and regional offices in Chicago, Illinois; Charlotte, North Carolina; and Edison, New Jersey.
Stonefield's majority owner is Ridgeline Capital Partners, LP ("Ridgeline"), a middle-market private equity firm focused on logistics, distribution, and business services. Ridgeline acquired a controlling equity stake in Stonefield — approximately 72% of the outstanding equity, held through Ridgeline Fund III, LP — in October 2017 for an enterprise value of approximately $680 million. The remaining equity is held by Stonefield management and certain minority investors.
Vantor Holdings Corp. Vantor Holdings Corp. ("Vantor") is a New York corporation that serves as the holding company for its transportation and logistics operations. Through its wholly owned operating subsidiary, Vantor Transport Services LLC, Vantor provides asset-based and asset-light trucking, warehousing, and regional distribution services primarily in the Northeast and Mid-Atlantic corridors. Vantor reported fiscal year 2021 revenue of approximately $385 million and fiscal year 2022 revenue of approximately $310 million. Vantor employs approximately 1,900 individuals. The company's founder and chief executive officer is Nikolai Vantorovich, who holds an approximately 58% ownership interest in Vantor.
Vantor Transport Services LLC. VTS is a New York limited liability company whose sole member is Vantor Holdings Corp. VTS is the operating entity that performed the transportation services at issue in this litigation under the Transportation Services Agreement described below. VTS operates a fleet of approximately 650 owned tractors and 2,100 trailers, the majority of which are deployed in regional and long-haul truckload operations across the Northeast, Mid-Atlantic, and Southeast corridors.
2.2 The Transportation Services Agreement
On March 15, 2019, Stonefield (as "Shipper-Broker") and VTS (as "Carrier-Provider") entered into a Transportation Services Agreement bearing Contract Reference No. SLG-VTS-2019-0315 (the "TSA" or the "Agreement"). The TSA was drafted by Ashford Meridian LLP on behalf of Stonefield. The Agreement is governed by the laws of the State of New York. The following summarizes the material terms of the TSA:
Term. The TSA has a five-year term commencing April 1, 2019 and expiring March 31, 2024.
Scope of Services. Under the TSA, VTS committed to providing dedicated and on-demand truckload transportation services across specified lanes in the Northeast, Mid-Atlantic, and Southeast corridors. VTS further committed to maintaining a minimum fleet capacity of 400 tractors and 1,200 trailers available for Stonefield freight at all times during the term of the Agreement.
Annual Committed Volume (ACV). The TSA established an Annual Committed Volume of $43.2 million per year, resulting in a total five-year minimum commitment of $216 million over the full term of the Agreement.
Rate Structure. Per-mile rates by lane are set forth in Schedule B to the TSA. Rates are subject to annual adjustment pursuant to the Rate Adjustment Mechanism in Section 5.3 of the TSA, which provides for an annual rate adjustment each April 1 based on a blended index comprising 70% diesel fuel index and 30% CPI-U.
Service Level Obligations (SLOs). The TSA established the following minimum service level obligations applicable to VTS's performance:
•  On-time pickup rate: ≥ 95%
•  On-time delivery rate: ≥ 93%
•  Cargo claims ratio: ≤ 0.5% of gross revenue
•  Tender acceptance rate: ≥ 90%
•  Equipment availability: ≥ 85% of committed fleet
Liquidated Damages (Section 14.2). The TSA provides that if Stonefield terminates the Agreement other than "for Cause" (as defined in Section 13.1), Stonefield shall pay to VTS an amount equal to 75% of the Annual Committed Volume multiplied by the number of full and partial contract years remaining in the term. Section 14.2 further states that the liquidated damages amount represents "a reasonable estimate of the damages that [VTS] would sustain as a result of early termination" and that such damages are "not a penalty."
Termination for Cause (Section 13.1). The TSA permits either party to terminate the Agreement for "Cause," which is defined to include: (a) material breach of any provision of the Agreement that remains uncured for thirty (30) calendar days after written notice specifying the breach; (b) insolvency or commencement of bankruptcy proceedings; (c) failure to maintain required insurance coverage; and (d) material violation of applicable law or FMCSA regulations.
Cure Notice Requirement (Section 13.2). Before a termination for Cause may become effective under Section 13.1(a), the terminating party must deliver a written Cure Notice specifying the breach with reasonable particularity and affording the breaching party the applicable cure period set forth in the Agreement.
Consequential Damages Waiver (Section 15.1). The TSA contains a mutual waiver of consequential damages, pursuant to which each party waives any claim against the other for indirect, incidental, consequential, special, or punitive damages arising out of or relating to the Agreement.
Force Majeure (Section 12.1). The TSA includes a force majeure clause excusing either party's performance during qualifying force majeure events, subject to applicable notice requirements.
2.3 Termination and Pre-Litigation Events
The following timeline describes the key events leading to the termination of the TSA and the commencement of this litigation:
January 18, 2022 — Cure Notice. Stonefield's Director of Contract Compliance, Raymond Hess, sent a written Cure Notice to Sandra Milescu, Chief Operating Officer of Vantor and VTS, identifying multiple material breaches of VTS's obligations under the TSA. The Cure Notice specified the following deficiencies in VTS's performance:
•  On-time pickup rate of 78.2% (vs. the 95% SLO);
•  On-time delivery rate of 81.6% (vs. the 93% SLO);
•  Tender acceptance rate of 71.4% (vs. the 90% SLO);
•  Equipment availability of 62% of committed fleet, equating to approximately 248 tractors available versus the 400 tractors required under the TSA;
•  Sixteen (16) cargo claims filed during November and December 2021 totaling $387,400 in claimed losses, yielding a cargo claims ratio of approximately 1.07% of gross revenue (vs. the ≤ 0.5% SLO); and
•  Chronic failure to provide substitute equipment as required under Section 7.4 of the TSA.
The Cure Notice stated that VTS had thirty (30) calendar days from receipt to cure the identified breaches in accordance with Section 13.2 of the TSA.
February 14, 2022 — VTS Response. Derek Pruitt, Vice President of Business Development at Vantor, responded to the Cure Notice on behalf of VTS. Mr. Pruitt's letter acknowledged certain "operational challenges" but attributed those challenges to a nationwide driver shortage affecting the entire industry, Stonefield's alleged failure to tender minimum committed volumes under the ACV provision, and Stonefield's alleged diversion of volume to spot market carriers in preference to VTS. Mr. Pruitt's letter further disputed the accuracy of Stonefield's cargo claims data and asserted that VTS had achieved "substantial cure" of the identified performance deficiencies.
February 17, 2022 — Cure Period Expiration. The thirty-day cure period specified in the January 18, 2022 Cure Notice expired. In C&H's assessment, VTS had not achieved cure of the identified material breaches as of this date.
March 4, 2022 — Termination. Tobias Wren, General Counsel of Stonefield, sent a formal termination letter to Vantor and VTS, stating that VTS had "failed to cure the material breaches identified in the January 18, 2022 Cure Notice within the applicable cure period" and terminating the TSA effective immediately pursuant to Section 13.1(a) of the Agreement. As of the date of termination, the remaining term of the TSA was approximately two (2) years and twenty-seven (27) days (March 4, 2022 through March 31, 2024).
April 8, 2022 — Demand Letter. Vantor's outside counsel transmitted a demand letter to Stonefield asserting that Stonefield's termination of the TSA was wrongful and claiming approximately $95.4 million in damages.
April 29, 2022 — Rejection of Demand. Stonefield, through C&H, rejected the demand and invoked the executive negotiation period required under Section 16 of the TSA prior to the commencement of litigation.
May 16, 2022 and June 3, 2022 — Executive Negotiations. Two executive negotiation sessions were held in accordance with Section 16 of the TSA. The parties were unable to reach a resolution, and the negotiation period concluded without agreement.
2.4 Litigation Status
On August 12, 2022, Vantor filed its original Complaint in the United States District Court for the Southern District of New York (Case No. 22-cv-07841). The case has been assigned to the Honorable Margaret T. Calloway, United States District Judge. Vantor is represented by Caldwell Royce & Shapiro LLP, with Harrison Caldwell serving as lead partner.
C&H was engaged as lead defense counsel for Stonefield on September 1, 2022, and the matter was opened under Firm Matter No. 1012-00005. C&H filed its Notice of Appearance on September 8, 2022.
On October 14, 2022, Stonefield filed a Motion to Dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), arguing, inter alia, that: (i) the liquidated damages clause in Section 14.2 of the TSA is unenforceable as a penalty under New York law; and (ii) Vantor's lost profits claim is inadequately pled. The motion remains pending before Judge Calloway as of the date of this letter.
No Case Management Order has yet been entered; C&H anticipates that an initial scheduling conference will be held and a Case Management Order issued in early 2023. Expert discovery deadlines have not yet been set.
3. Scope of Engagement
3.1 Primary Scope — Rebuttal of Plaintiff's Damages Claims
The primary purpose of KAG's engagement is to analyze and prepare to rebut Vantor's claimed damages, which currently total approximately $95.4 million. Based on Vantor's April 8, 2022 demand letter and the allegations in the Complaint, the plaintiff's damages claim is broken down as follows:
(a) Liquidated Damages (Section 14.2 of the TSA): $64,800,000 (calculated as 75% × $43.2 million ACV × 2 full remaining contract years) plus $2,430,000 for the partial contract year (27 days), totaling $67,230,000;
(b) Lost Profits (Above-Contract Margin): $18,700,000, based on Vantor's claimed average 12% operating margin on Stonefield freight multiplied by the remaining committed volume over the balance of the contract term;
(c) Stranded Assets and Costs: $5,200,000, consisting of accelerated depreciation on tractors and trailers acquired specifically for the Stonefield contract and lease termination costs for associated equipment;
(d) Workforce Reduction Costs: $2,870,000, representing severance payments and unemployment insurance costs for approximately 180 drivers and support staff allegedly displaced as a result of the termination; and
(e) Mitigation Costs: $1,400,000, representing costs incurred by VTS in seeking replacement freight volume following termination of the TSA.
C&H notes that Vantor has not yet served a formal expert damages report. C&H anticipates that Vantor will retain its own damages expert and serve an expert report during the expert discovery period once a Case Management Order is entered. KAG's rebuttal work should be developed with the understanding that KAG will need to respond to and rebut that expert report once it is served.
KAG's analysis under this primary scope of engagement should specifically address, at a minimum, the following issues:
(i) Enforceability of the Liquidated Damages Clause. Whether the liquidated damages formula set forth in Section 14.2 of the TSA produces results that are grossly disproportionate to any actual harm that VTS could reasonably have been expected to suffer as a result of early termination, thereby supporting Stonefield's argument that the clause constitutes an unenforceable penalty under New York law. KAG's analysis should examine the relationship between the liquidated damages amount ($67.23 million) and VTS's probable actual damages under various reasonable scenarios, taking into account VTS's actual margins, market conditions, and mitigation opportunities.
(ii) Alternative Damages Calculations — Lost Profits. Assuming arguendo that the termination was wrongful, KAG should prepare an alternative damages calculation under a lost-profits theory that properly accounts for: (a) Vantor's and VTS's actual operating margins as reflected in available financial data, as distinguished from the 12% operating margin claimed by Vantor; (b) prevailing market conditions and freight rate trends during the remaining contract term, including the post-pandemic freight market cycle; (c) VTS's own breaches of the TSA that reduced committed volume and service capacity, and the appropriate offset or reduction of damages attributable thereto; and (d) proper discounting and present-value adjustments to any future lost profits stream.
(iii) Consequential Damages and the Section 15.1 Waiver. Whether Vantor's claimed consequential damages — specifically, the stranded assets and costs ($5.2 million), workforce reduction costs ($2.87 million), and mitigation costs ($1.4 million) — are properly categorized as consequential damages, and whether those categories of damages are barred by the mutual consequential damages waiver contained in Section 15.1 of the TSA. KAG should analyze the economic substance of each category to determine whether any of the claimed amounts represent direct damages rather than consequential damages.
(iv) Failure to Mitigate. Whether Vantor and VTS failed to mitigate their damages by not seeking replacement freight volume following the termination of the TSA, particularly given the robust freight market conditions prevailing in the first and second quarters of 2022. KAG's analysis should assess the availability of alternative freight volume and the rates at which VTS could have redeployed its fleet and driver workforce in the relevant corridors during the period following termination.
(v) Vantor/VTS Financial Condition. An examination of Vantor's and VTS's financial condition during the relevant period, including an assessment of whether the claimed damages overstate the actual economic loss sustained by the Vantor enterprise, taking into account VTS's pre-termination financial performance and the trajectory of the business.
(vi) Duplicative Damages. Whether Vantor's damages claims for liquidated damages (under Section 14.2) and lost profits are duplicative — that is, whether both categories of claimed damages compensate for the same underlying economic harm, namely the lost value of the contract, and whether awarding both would result in an impermissible double recovery.
3.2 Additional Scope — Supporting Analyses
In addition to the primary rebuttal analyses described above, KAG is engaged to perform the following supporting analyses:
(a) Freight Market Conditions Analysis. KAG shall analyze freight market conditions, including the spot rate environment, carrier demand dynamics, and capacity utilization metrics, during the relevant period (2019 through 2022). This analysis will serve two purposes: first, to support Stonefield's force majeure defense with respect to the impact of COVID-19 on freight demand during the period from approximately April 2020 through September 2020; and second, to assess the availability and quality of Vantor's mitigation opportunities following the March 2022 termination.
(b) Volume Tender Analysis. KAG shall analyze Stonefield's actual volume tenders under the TSA relative to the Annual Committed Volume, including the force majeure adjustment applicable during Contract Year 2, which reduced the adjusted ACV to $21.6 million compared to actual tenders of $31.8 million, and the Contract Year 3 partial-year tenders of $36.5 million against the $43.2 million ACV. KAG's analysis should evaluate the merits and economic basis of Vantor's claim that Stonefield failed to meet aggregate volume commitments under the TSA.
(c) Fleet Redeployment Analysis. KAG shall analyze VTS's fleet redeployment decisions during the relevant period and assess their economic impact on VTS's ability to perform its obligations under the TSA. C&H has information suggesting that VTS may have redirected a significant portion of its fleet capacity to higher-margin spot market loads and dedicated contracts with other shippers, contributing to the performance deficiencies identified in the Cure Notice.
(d) Rate Adjustment Mechanism Analysis. KAG shall review the April 2022 Rate Adjustment Mechanism and the projected 14.3% rate increase that would have taken effect on April 1, 2022 (from a weighted average per-mile rate of $2.87 to $3.28), including the projected $6.2 million annual cost increase to Stonefield resulting from the rate adjustment. This analysis should be contextualized within the broader damages analysis, including the question of whether the projected rate increase would have altered the economic incentives and behavior of both parties had the TSA remained in effect.
3.3 Expert Report and Testimony
If requested by C&H, KAG, through Dr. Rosser as the designated testifying expert, will prepare a written expert report that complies in all respects with the requirements of Federal Rule of Civil Procedure 26(a)(2)(B). The expert report shall include, without limitation: a complete statement of all opinions Dr. Rosser will express and the basis and reasons therefor; the facts or data considered by Dr. Rosser in forming the opinions; any exhibits that will be used to summarize or support the opinions; a statement of Dr. Rosser's qualifications, including a list of all publications authored in the previous ten years; a list of all other cases in which Dr. Rosser has testified as an expert at trial or by deposition within the preceding four years; and a statement of the compensation to be paid for the study and testimony in the case.
In addition, Dr. Rosser may be asked to testify at deposition and at trial. KAG should anticipate the need for Dr. Rosser to be available for deposition preparation sessions with C&H in advance of any such testimony.
All expert report drafts and communications between KAG and C&H counsel are intended to be subject to applicable work-product and privilege protections to the fullest extent permitted by law. However, KAG is advised that under Federal Rule of Civil Procedure 26(b)(4)(B) and (C), draft expert reports and certain categories of attorney-expert communications may be discoverable, subject to the limited exceptions set forth in those rules. KAG should consult with C&H counsel regarding best practices for document handling and communications to preserve all applicable protections.
4. Key Personnel
Dr. Evelyn Rosser, Managing Director of KAG, will serve as the lead expert and, if designated by C&H, the testifying expert in this engagement. Dr. Rosser's qualifications in transportation economics and contract damages analysis are understood to be extensive based on the curriculum vitae that Dr. Rosser previously provided to C&H, which has been reviewed and approved by the engagement team. C&H's decision to retain KAG is based in significant part on Dr. Rosser's qualifications, experience, and reputation.
Michael Chung, Senior Analyst at KAG, will support Dr. Rosser in connection with data analysis, financial modeling, and preparation of the expert report and supporting exhibits. Mr. Chung will work under Dr. Rosser's supervision and direction at all times.
KAG shall not substitute, remove, or add personnel to the engagement without the prior written consent of C&H. Any request to modify the engagement team shall be submitted in writing with sufficient advance notice to allow C&H to evaluate the proposed change.
C&H's primary contacts for the engagement are as follows:
Samuel Eklund, Partner — Responsible Partner for the engagement. Mr. Eklund has overall supervisory authority over all aspects of the Stonefield defense and KAG's engagement.
Patrick Gallagher, Associate — Lead Associate and day-to-day contact for KAG. Mr. Gallagher should be KAG's primary point of contact for scheduling, document requests, substantive questions, and coordination of work product. Mr. Gallagher may be reached at (212) 455-7843 or pgallagher@calderwoodharkness.com.
5. Compensation and Budget
5.1 Hourly Rates
KAG shall be compensated for services rendered in connection with this engagement at the following hourly rates:
Any additional personnel engaged to support this matter must be pre-approved by C&H in writing, and the applicable hourly rates for any such additional personnel shall be agreed in writing in advance of any work being performed.
5.2 Expenses.  KAG will be reimbursed for reasonable out-of-pocket expenses actually incurred in connection with the engagement, including, without limitation, travel expenses, document copying and reproduction costs, data acquisition costs, specialized software costs, and other direct expenses. Travel expenses shall be incurred at coach class for air travel and at reasonable prevailing rates for ground transportation and lodging. Any single expense item exceeding $2,500 requires prior written approval from C&H before being incurred.
5.3 Budget Estimate
Based on the anticipated scope of the engagement as described in Section 3 of this letter, C&H estimates that total fees and expenses for KAG's engagement will range from $180,000 to $250,000 through completion of expert reports and depositions. This estimate is based on the following assumptions:
•  Review and analysis of plaintiff's damages claims and supporting documents, including financial data, contractual materials, and market data;
•  Preparation of one (1) rebuttal expert report addressing the issues identified in Section 3.1;
•  Preparation for and attendance at one (1) expert deposition of Dr. Rosser, estimated at one (1) day in duration; and
•  Ongoing consultation with C&H throughout the engagement, including attendance at strategy conferences and review of developing materials.
If the matter proceeds to trial, the budget for KAG's engagement will be supplemented by mutual written agreement of the parties to account for trial preparation and testimony. KAG shall notify C&H promptly if actual or projected costs are likely to exceed the budget range set forth above, and shall not incur fees in excess of $250,000 without prior written authorization from C&H.
5.4 Invoicing and Payment
KAG shall submit monthly invoices to C&H with reasonable detail regarding the time expended and expenses incurred during the applicable billing period. Invoices should identify the personnel performing each task, a brief narrative description of the work performed, the hours expended, and the applicable rate. Expenses should be itemized and supported by receipts where applicable.
Invoices are payable within thirty (30) days of receipt by C&H. C&H will arrange for payment from Stonefield. KAG acknowledges and agrees that C&H is acting solely as agent for its client, Stonefield, in connection with this engagement, and that C&H is not personally liable for KAG's fees and expenses unless separately agreed in a written instrument signed by an authorized representative of C&H.
6. Confidentiality and Privilege
6.1 Confidential Information
All documents, data, communications, analyses, memoranda, correspondence, and other information provided by C&H or Stonefield to KAG in connection with this engagement, or generated by KAG in the course of performing services under this engagement, constitute confidential information (collectively, "Confidential Information"). KAG shall not disclose any Confidential Information to any third party without the prior written consent of C&H, except as may be required by applicable law, regulation, or court order. In the event KAG receives a subpoena or other compulsory process seeking disclosure of Confidential Information, KAG shall promptly notify C&H before making any disclosure so that Stonefield may seek protective relief if appropriate.
KAG shall implement and maintain reasonable administrative, technical, and physical security measures to protect Confidential Information from unauthorized access, use, or disclosure, including with respect to electronic data and communications. Such measures shall include, at a minimum, encryption of electronic transmissions of Confidential Information, secure storage of physical documents, and access controls limiting access to Confidential Information to authorized KAG personnel working on the engagement.
6.2 Work Product and Privilege
KAG's work in this engagement is being directed by C&H counsel in anticipation of and in connection with pending litigation and is intended to be protected by the attorney work-product doctrine and, to the extent applicable, the attorney-client privilege. KAG should treat all communications with C&H as privileged and confidential, and should mark all internal work product and draft analyses as "PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT."
KAG should maintain all draft analyses, internal memoranda, communications with C&H, and internal working papers separately from any final expert report or materials that may be produced in discovery. KAG should be aware that if Dr. Rosser is designated as a testifying expert under Federal Rule of Civil Procedure 26(a)(2)(B), certain categories of materials may become discoverable under Federal Rule of Civil Procedure 26(a)(2) and 26(b)(4), including, without limitation, the final expert report, all data and information considered by the expert in forming opinions, and the expert's compensation. Draft reports and certain attorney-expert communications enjoy limited protection under Rule 26(b)(4)(B) and (C), but KAG should consult with C&H counsel regarding the scope of these protections and best practices for preserving them.
6.3 Document Retention
KAG shall retain all materials related to this engagement, including but not limited to documents received from C&H, internal work product, draft and final analyses, correspondence, electronic data, and billing records, until instructed otherwise by C&H in writing. KAG shall not destroy, delete, or discard any materials related to the engagement without the prior written authorization of C&H. Upon conclusion of the engagement, KAG shall, at C&H's direction, either return all Confidential Information and related materials to C&H or destroy such materials and provide written certification of destruction, as C&H may direct.
7. Conflicts of Interest
KAG represents and warrants that it has conducted a reasonable conflicts check in connection with this proposed retention and has determined that KAG has no current or prior engagement that would create a conflict of interest with respect to the services to be performed under this engagement. Specifically, KAG confirms that it has not been retained by, and has no current engagement with, Vantor Holdings Corp., Vantor Transport Services LLC, Caldwell Royce & Shapiro LLP, or any other party, counsel, or affiliate involved in the above-captioned litigation or any related proceeding.
KAG shall promptly notify C&H in writing if, at any time during the course of this engagement, KAG becomes aware of any actual or potential conflict of interest that could affect KAG's ability to perform its obligations under this letter or Dr. Rosser's ability to serve as an independent expert in this matter.
8. Independence and Professional Standards
KAG and Dr. Rosser shall maintain full professional independence in forming all opinions and conclusions rendered in connection with this engagement. KAG's analyses and opinions shall be based solely on the facts, data, and information reviewed by KAG, and shall reflect KAG's independent professional judgment. KAG shall not advocate for a particular outcome or tailor its opinions to achieve a result desired by C&H or Stonefield. The credibility and persuasive value of KAG's work depend upon its objectivity and analytical rigor.
Notwithstanding the foregoing, C&H and Stonefield retain the exclusive right to determine: (a) whether to designate Dr. Rosser as a testifying expert under Federal Rule of Civil Procedure 26(a)(2); (b) the scope and content of any expert report to be served in discovery; and (c) whether to call Dr. Rosser as a witness at deposition or at trial. Nothing in this engagement obligates C&H or Stonefield to designate Dr. Rosser as a testifying expert or to use any work product generated by KAG in the litigation.
9. Term and Termination
This engagement shall continue until the earliest of the following: (a) the matter is resolved, whether by settlement, judgment, or other final disposition; (b) C&H provides written notice to KAG of termination of the engagement; or (c) KAG provides thirty (30) days' prior written notice to C&H of its withdrawal from the engagement, subject to any applicable court orders, scheduling deadlines, or other constraints that may require KAG's continued participation for a reasonable period following delivery of such notice.
Upon termination of the engagement for any reason, KAG shall be entitled to payment for all services rendered and expenses incurred through the effective date of termination, in accordance with the compensation terms set forth in Section 5 of this letter. KAG's obligations with respect to confidentiality (Section 6), conflicts of interest (Section 7), and document retention (Section 6.3) shall survive termination of the engagement and shall remain in full force and effect.
10. Materials to Be Provided
C&H will provide KAG with the following initial materials for review in connection with the commencement of the engagement. Additional materials will be provided as discovery progresses and as further documents, data, and information become available:
1.  Transportation Services Agreement dated March 15, 2019 (Contract Reference No. SLG-VTS-2019-0315), including all schedules, exhibits, and amendments thereto;
2.  Stonefield's Cure Notice dated January 18, 2022, from Raymond Hess to Sandra Milescu;
3.  Vantor's response to the Cure Notice dated February 14, 2022, from Derek Pruitt;
4.  Stonefield's Termination Letter dated March 4, 2022, from Tobias Wren;
5.  Vantor's demand letter dated April 8, 2022;
6.  Original Complaint filed August 12, 2022, Vantor Holdings Corp. v. Stonefield Logistics Group Inc., Case No. 22-cv-07841 (S.D.N.Y.);
7.  Stonefield's Motion to Dismiss and supporting memorandum of law, filed October 14, 2022;
8.  Stonefield financial data for fiscal years 2019 through 2022, including revenue, operating metrics, and volume data;
9.  Available Vantor/VTS financial data, including publicly available filings and any data obtained through pre-litigation exchanges;
10.  VTS Q4 2021 Performance Report (internal VTS document);
11.  Ashford Meridian LLP rate adjustment analysis memorandum dated February 2022;
12.  Relevant internal Stonefield communications (subject to completion of privilege review by C&H);
13.  Freight market data and indices for relevant periods, including Granite Harbor Technologies data, Dunmore Systems data, and FMCSA carrier data as available.
As discovery proceeds, C&H will supplement these materials with relevant document productions received from Vantor and third parties, deposition transcripts, interrogatory responses, and any expert report served by the plaintiff. C&H will coordinate with KAG regarding the format and delivery of materials to ensure efficient review and analysis.
11. Governing Law and Dispute Resolution
This engagement letter shall be governed by and construed in accordance with the laws of the State of New York, without regard to principles of conflicts of law. Any dispute arising out of or relating to this engagement letter or the services performed hereunder shall be resolved by binding arbitration conducted in New York, New York, in accordance with the Commercial Arbitration Rules of the American Arbitration Association then in effect. The arbitrator's decision shall be final and binding, and judgment upon the award may be entered in any court having jurisdiction thereof.
12. Miscellaneous
This letter constitutes the entire agreement between C&H (acting on behalf of Stonefield) and KAG with respect to the engagement described herein, and supersedes all prior negotiations, representations, and understandings, whether oral or written, relating to the subject matter of this letter. No amendment or modification of this letter shall be effective unless made in writing and signed by both C&H and KAG.
KAG shall not assign, delegate, or transfer any of its rights or obligations under this engagement letter without the prior written consent of C&H. Any attempted assignment without such consent shall be void and of no effect.
All notices, requests, and communications required or permitted under this letter shall be in writing and shall be deemed duly given when delivered by hand, sent by overnight courier service, or sent by electronic mail (with confirmation of receipt) to the addresses set forth herein or to such other address as either party may designate in writing.
This letter may be executed in counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument. Signatures transmitted by electronic means (including .pdf) shall be deemed original signatures for all purposes.
We look forward to working with you and your team on this important matter. KAG's expertise in transportation economics and commercial damages analysis will be invaluable to Stonefield's defense. Please do not hesitate to contact me or Patrick Gallagher at your earliest convenience to arrange an initial conference call to discuss the scope of work, timeline, and delivery of initial materials.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Samuel Eklund, Partner 200 Park Avenue, 38th Floor New York, New York 10166 Telephone: (212) 455-7818
Email: seklund@calderwoodharkness.com
AGREED AND ACCEPTED:
By executing this engagement letter below, Kensington Analytics Group LLC, through its Managing Director, Dr. Evelyn Rosser, agrees to the terms and conditions set forth herein and confirms the representations and warranties made by KAG in Sections 7 and 8 of this letter.
KENSINGTON ANALYTICS GROUP LLC
By: ________
Dr. Evelyn Rosser, Managing Director 1700 Market Street, Suite 2800 Philadelphia, Pennsylvania 19103
Date: ________
cc:
Tobias Wren, General Counsel, Stonefield Logistics Group Inc. Patrick Gallagher, Calderwood & Harkness LLP Linda Osei, Calderwood & Harkness LLP
Encl.: As referenced in Section 10 (initial materials to follow under separate cover)
Personnel | Title | Hourly Rate
Dr. Evelyn Rosser | Managing Director | $625.00
Michael Chung | Senior Analyst | $375.00

PRIVILEGED & CONFIDENTIAL ATTORNEY WORK PRODUCT

CALDERWOOD & HARKNESS LLP

AGREED AND ACCEPTED:

KENSINGTON ANALYTICS GROUP LLC

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