1012-00005 · Stonefield Logistics Group · Insurance & Lender Notifications

draft-lender-notification-sc-review.docx DOCUMENT Litigation

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PRIVILEGED & CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGED / ATTORNEY WORK PRODUCT

PRIVILEGED & CONFIDENTIAL — This document, including all attachments and markup comments, is protected by the attorney-client privilege and constitutes attorney work product. It is intended solely for the use of the addressee. Any dissemination, distribution, or copying of this communication by any person other than the intended recipient is strictly prohibited.

CALDERWOOD & HARKNESS LLP 200 Park Avenue, 38th Floor New York, New York 10166

Matter No. 1012-00005

August 22, 2022

DRAFT LENDER NOTIFICATION LETTER — LAKESHORE NATIONAL BANK

Calderwood & Harkness LLP Marked-Up Draft

I. TRANSMITTAL MEMORANDUM

August 22, 2022

FROM: Patrick Gallagher, Lead Associate, Calderwood & Harkness LLP

TO: Tobias Wren, General Counsel, Stonefield Logistics Group Inc.

RE: Marked-Up Draft — Lender Notification Letter to Lakeshore National Bank (Administrative Agent) — Vantor Holdings Corp. v. Stonefield Logistics Group Inc., Case No. 22-cv-07841 (S.D.N.Y.)

CC: Samuel Eklund, Responsible Partner, Calderwood & Harkness LLP

Dear Tobias,

Attached please find our marked-up draft of the lender notification letter to Lakeshore National Bank in its capacity as Administrative Agent under the Senior Secured Credit Facility. As discussed, this letter addresses Stonefield's obligation to notify the Administrative Agent of the litigation commenced by Vantor Holdings Corp. against Stonefield Logistics Group Inc.

As you are aware, the Complaint in Vantor Holdings Corp. v. Stonefield Logistics Group Inc., Case No. 22-cv-07841, was filed in the United States District Court for the Southern District of New York on August 12, 2022. Service of process was effected on or about August 12, 2022, with actual receipt by Stonefield's registered agent occurring on August 14, 2022 (a Sunday). For purposes of calculating the notification deadline, we begin counting business days from the next business day, August 15, 2022.

Timing is critical. Section 6.03(b) of the Amended and Restated Credit Agreement dated October 12, 2017 (as amended and restated June 30, 2021) (the "Credit Agreement") requires the Borrower to provide written notice to the Administrative Agent of any litigation, arbitration, or governmental investigation involving claims for potential liability in excess of $25 million within ten (10) business days following the occurrence of the triggering event. Counting forward ten (10) business days from August 15, 2022, the notification deadline falls on approximately August 24, 2022. We strongly urge you to finalize and transmit the letter by no later than that date to ensure full compliance with this covenant.

In preparing this markup, we reviewed the draft for three principal considerations: (i) tone and characterization of the litigation; (ii) legal accuracy of the factual descriptions; and (iii) compliance with the specific notification requirements set forth in Section 6.03(b) of the Credit Agreement. Samuel Eklund, the Responsible Partner on this matter, has also reviewed and approved the markup in its current form.

A few key principles have guided our revisions:

(i) Factual accuracy without concession of merit. The letter should describe the claims asserted by Vantor with sufficient specificity to satisfy the notification obligation, but it should do so factually and without conceding that any of Vantor's allegations have merit. We have carefully revised several passages in your original draft where the language, though well-intentioned, could be read as implicitly acknowledging the validity of certain factual assertions made by the plaintiff.

(ii) Characterization of Stonefield's assessment. The letter should clearly convey management's belief that the claims lack merit and Stonefield's intention to vigorously defend. We have suggested specific formulations that are standard in lender notification practice and that appropriately convey confidence without creating potential exposure.

(iii) Avoidance of admissions or minimizations. We have been attentive to language that could be construed either as an admission of liability or, at the other extreme, as an attempt to minimize the disclosure in a manner that could later be characterized as misleading. The goal is a balanced, professional notification that meets the contractual standard.

(iv) Satisfaction of the threshold trigger. The letter must clearly establish that the notification is being made because the claimed damages exceed the $25 million threshold under Section 6.03(b). We have included appropriate qualifying language to make clear that the threshold is met based on the plaintiff's claimed damages, not based on Stonefield's assessment of probable liability.

Please note that the final letter should be printed and sent on Stonefield Logistics Group Inc. letterhead, signed by you in your capacity as General Counsel. Alternatively, if Stonefield prefers, the letter may be signed by Priya Ramachandran in her capacity as Chief Financial Officer. Either signatory is appropriate for a notification of this nature; however, we recommend General Counsel as the more natural signatory for a litigation-related notification.

We are available to discuss the markup at your convenience. Given the August 24 deadline, we suggest scheduling a brief call tomorrow, August 23, to address any questions and finalize the letter for transmission.

Best regards,

Patrick Gallagher Lead Associate Calderwood & Harkness LLP 200 Park Avenue, 38th Floor New York, New York 10166 Tel: (212) 555-4200

Email: pgallagher@calderwoodharkness.com

II. MARKED-UP DRAFT — LENDER NOTIFICATION LETTER

NOTE: Tracked changes and C&H attorney comments are shown inline using the conventions and . Marginal comments from C&H attorneys are presented in bold italic brackets. All changes are suggestions for Stonefield's consideration and should be reviewed and approved prior to finalizing the letter.

[STONEFIELD LOGISTICS GROUP INC. LETTERHEAD]

Stonefield Logistics Group Inc. 4200 Commerce Parkway, Suite 800 Fort Worth, Texas 76102

*[C&H COMMENT: Insert date of actual sending. We recommend no later than August 24, 2022, to comply with the ten (10) business day notification window under Section 6.03(b) of the Credit Agreement.]*

Via Email and Overnight Courier

Catherine Devereaux Senior Vice President, Loan Administration Lakeshore National Bank 135 South LaSalle Street Chicago, Illinois 60603

Re: Notice of Material Litigation Pursuant to Section 6.03(b) of the Amended and Restated Credit Agreement dated October 12, 2017 (as amended and restated June 30, 2021) (Reference No. LNB-SLG-2017-CA-4402)

Dear Ms. Devereaux:

A. Purpose of Notice

Stonefield Logistics Group Inc. (the "Borrower") hereby provides written notice to Lakeshore National Bank, in its capacity as Administrative Agent (the "Administrative Agent"), pursuant to Section 6.03(b) of that certain Amended and Restated Credit Agreement dated as of October 12, 2017, by and among the Borrower, the lenders party thereto from time to time (collectively, the "Lenders"), and the Administrative Agent, as amended and restated as of June 30, 2021 (the "Credit Agreement"), Reference No. LNB-SLG-2017-CA-4402. Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Credit Agreement.

As the Administrative Agent is aware, the Credit Agreement provides for a $425 million Senior Secured Credit Facility consisting of a $175 million revolving credit facility and a $250 million term loan B. Section 6.03(b) of the Credit Agreement requires the Borrower to promptly notify the Administrative Agent in writing of any litigation, investigation, or proceeding pending against or, to the knowledge of the Borrower, threatened against the Borrower or any of its subsidiaries that involves claims for damages or other relief the $25 million notification threshold specified in Section 6.03(b) of the Credit Agreement.

*[C&H COMMENT: We have added the qualifying language "if the plaintiff's allegations were accepted in their entirety (which the Borrower disputes)" to the threshold description. This qualifier is important because it makes clear that the notification is being triggered by the amount of the plaintiff's claim — not by Stonefield's own assessment that exposure at or above $25 million is probable. Without this qualifier, the letter could be read as implicitly conceding that the actual exposure exceeds the threshold, which is not Stonefield's position. This formulation is standard in notifications of this nature.]*

The Borrower is providing this notice because it has been served as a defendant in litigation involving claims for damages that, if valued as asserted by the plaintiff, exceed the $25 million notification threshold. The details of the litigation are set forth below.

B. Description of the Litigation

1. Case Caption and Court

On August 12, 2022, Vantor Holdings Corp. ("Vantor"), a New York corporation with its principal place of business at 580 Eighth Avenue, 14th Floor, New York, New York 10018, filed a civil complaint (the "Complaint") against the Borrower in the United States District Court for the Southern District of New York, captioned Vantor Holdings Corp. v. Stonefield Logistics Group Inc., Case No. 22-cv-07841. The case has been assigned to the Honorable Margaret T. Calloway, United States District Judge.

*[C&H COMMENT: We have confirmed the case number (22-cv-07841) and filing date (August 12, 2022) through our independent docket check on the PACER system as of August 19, 2022. The information as stated is accurate.]*

Service of the Complaint was effected on the Borrower on or about August 12, 2022, with actual receipt by the Borrower's registered agent occurring on August 14, 2022.

2. Plaintiff's Counsel

Vantor is represented in this matter by Caldwell Royce & Shapiro LLP, located at 1 Liberty Plaza, 22nd Floor, New York, New York 10006. Lead counsel for Vantor is Harrison Caldwell, Named Partner of that firm.

3. Nature of the Claims

*[C&H COMMENT: We have significantly revised this paragraph. The original draft described Vantor's allegations in considerably more detail than is necessary or advisable, including characterizations of Vantor's theory regarding Stonefield's purported motivations. The notification obligation under Section 6.03(b) requires a description of the nature of the claims, but it does not require — and prudence does not counsel — a recitation of the plaintiff's narrative theory of the case. A summary-level description sufficient to inform the Administrative Agent of the general nature of the dispute is appropriate. Excessive detail could be construed as lending credibility to claims that Stonefield intends to contest vigorously.]*

4. Damages Claimed

*[C&H COMMENT: We recommend presenting the damages figure at the aggregate level — approximately $95.4 million — rather than providing the detailed component breakdown. The purpose of the notification is to establish that the claimed amount exceeds the $25 million threshold, and the aggregate figure clearly accomplishes this. A detailed breakdown, while factually accurate (the amounts are drawn directly from Vantor's pre-suit demand letter dated April 8, 2022, and are consistent with the allegations in the Complaint), is not required under Section 6.03(b) and provides more granularity than is necessary at this stage.]*

*[C&H COMMENT (continued): That said, if Tobias prefers to include the detailed breakdown for purposes of transparency with the lender group, we have no objection — the amounts are matters of public record as stated in the filed Complaint, and there is no prejudice to Stonefield in disclosing them. We leave this to Stonefield's judgment regarding its relationship with Lakeshore. If you elect to include the breakdown, we suggest using the following formulation:]*

*[C&H ALTERNATIVE LANGUAGE (optional, if detailed breakdown preferred):]*

"Vantor claims total damages of approximately $95.4 million, consisting of the following categories: (i) liquidated damages under Section 14.2 of the TSA: approximately $67.23 million (calculated by Vantor as 75% of the Annual Committed Volume of $43.2 million multiplied by the remaining contract term of approximately 2.07 years); (ii) lost profits: approximately $18.7 million; (iii) stranded asset and lease termination costs: approximately $5.2 million; (iv) workforce reduction costs: approximately $2.87 million; and (v) mitigation costs: approximately $1.4 million. Detailed backup for Vantor's damages calculations is available upon request."

C. Borrower's Position and Assessment

*[C&H COMMENT: This is the most important paragraph in the letter, and we have made extensive revisions. The original language — "Stonefield does not believe any liability will result from this litigation" — is problematic for three reasons:]*

*[(i) This absolute characterization could be viewed by the lender as a warranty or assurance regarding the litigation outcome. If the case ultimately results in any adverse outcome, even a nuisance settlement, this language could undermine Stonefield's credibility with the lender group and potentially give rise to a claim that the notification was misleading.]*

*[(ii) The language does not adequately account for the inherent uncertainty of litigation. No responsible litigant can state with certainty that "no liability will result" from any pending case, particularly one involving a $95.4 million claim in federal court.]*

*[(iii) The more measured formulation "management believes the claims lack merit" is standard practice for lender notifications of this nature. It conveys appropriate confidence while preserving the necessary hedging that all litigation communications should contain.]*

*[We have replaced the original paragraph with the following language, which we strongly recommend:]*

*[C&H COMMENT: The three paragraphs above accomplish several objectives simultaneously. The first sentence — "Management believes that the claims lack merit and intends to vigorously defend" — is the key characterization. The second paragraph provides a brief, factual summary of the defense posture without excessive detail. The third paragraph addresses the damages exposure directly, signaling that even in a worst-case scenario, the actual exposure is likely materially lower than the headline number. Together, these paragraphs should provide the Administrative Agent with comfort that the matter is being taken seriously and managed responsibly.]*

*[C&H COMMENT: We recommend including this "no material adverse effect" statement, which is customary in lender notifications and will be important to the lender group. However, we flag that this language should be coordinated with Priya Ramachandran (CFO) before the letter is finalized to ensure she is comfortable with the characterization from a financial perspective. Additionally, this language should be reviewed for consistency with any financial statement disclosures or footnotes that may be required in connection with Stonefield's fiscal year-end audit. We recommend that Tobias or Priya consult with Robert Farraday, the Engagement Partner at Clarendon Partners LLP (Stonefield's independent auditor, located at 500 West 5th Street, Suite 1200, Austin, Texas 78701), to confirm that the characterization in this letter is consistent with the accounting treatment that Clarendon will apply under ASC 450 (Contingencies). Any material inconsistency between the lender notification and the audited financial statement disclosures could create complications.]*

D. Defense Counsel

*[C&H COMMENT: We suggest including this information in the letter. Notifying the Administrative Agent that qualified outside counsel has been retained signals that the matter is being handled with appropriate diligence and seriousness. It also provides the lender with a point of reference if they wish to understand the caliber of the defense effort. We note that our formal notice of appearance in the action will be filed in the coming days; the notice was subsequently filed on September 8, 2022.]*

E. Insurance Coverage

*[C&H COMMENT: We recommend including this brief, generic reference to insurance coverage. Lenders routinely inquire about insurance availability in connection with significant litigation, and a proactive reference here may forestall a follow-up request.]*

*[C&H MARGINAL NOTE — FOR INTERNAL DISCUSSION ONLY, NOT FOR INCLUSION IN LETTER: As a practical matter, the insurance coverage outlook is not favorable for this claim. Stonefield has tendered — or will shortly tender — the claim under its Directors & Officers liability insurance policy with Graymark Insurance Company (Policy No. GLG-DO-1025-00008). The tender letter is being prepared and is expected to be submitted on or about September 6, 2022. However, coverage under the D&O policy is unlikely given that this is a commercial contract dispute rather than a claim alleging wrongful acts by directors or officers in their capacity as such. Similarly, the commercial general liability policy with Brindoval Mutual Insurance Co. (Policy No. CGL-SLG-2022-11902) contains standard exclusions for breach of contract claims and is therefore also unlikely to provide coverage.]*

*[We recommend NOT detailing the expected coverage declination in the lender notification letter at this stage. It is better to report factually on coverage status once actual coverage determinations have been received from the carriers. If and when coverage is formally declined, Stonefield can decide at that time whether to notify the Administrative Agent of the declination or simply note in a subsequent update that coverage is not available for this type of claim.]*

F. Additional Information and Ongoing Reporting

The Borrower will keep the Administrative Agent informed of material developments in the litigation as they occur.

*[C&H COMMENT: We suggest adding the proactive offer of quarterly updates. This language establishes a cooperative and transparent tone with the lender group and may forestall more intrusive or ad hoc requests for information. Setting the expectation of quarterly reporting — with the flexibility for more frequent updates in the event of material developments — strikes an appropriate balance between keeping the lender informed and preserving Stonefield's ability to manage the flow of litigation-related information.]*

Upon request, the Borrower will provide copies of key pleadings filed in connection with the litigation. For follow-up inquiries regarding this matter, please contact:

Tobias Wren General Counsel Stonefield Logistics Group Inc. 4200 Commerce Parkway, Suite 800 Fort Worth, Texas 76102 Tel: (817) 555-3100

Email: twren@stonefieldlogistics.com

G. Reservation of Rights

*[C&H COMMENT: This reservation of rights / no waiver language was not included in Stonefield's original draft. We strongly recommend its inclusion as a protective measure. This type of protective language is standard in lender notifications involving pending litigation and serves to ensure that the act of notification itself cannot be used against Stonefield in any context — whether by the lender group in a future dispute under the Credit Agreement or by the plaintiff if the letter were to be produced in discovery (which is unlikely, but possible). The language is deliberately comprehensive and covers the most common risks associated with litigation-related lender notifications.]*

H. Enclosure

A copy of the Complaint filed in Vantor Holdings Corp. v. Stonefield Logistics Group Inc., Case No. 22-cv-07841 (S.D.N.Y.), is enclosed herewith for the Administrative Agent's reference.

*[C&H COMMENT: We recommend enclosing a copy of the Complaint with the notification letter. Providing the Complaint demonstrates full transparency and may satisfy any immediate follow-up requests from Lakeshore before they are made. Since the Complaint is a public filing, there is no privilege concern with its production. Enclosing it also allows the Administrative Agent and its counsel to review the plaintiff's allegations directly, which is more efficient than relying solely on the summary provided in the letter.]*

I. Signature block

*[C&H COMMENT: We recommend that the letter be signed by Tobias Wren as General Counsel. As noted in the transmittal memo, the letter could alternatively be signed by Priya Ramachandran as CFO if Stonefield prefers a financial officer to make the notification. Either is appropriate under the Credit Agreement, which requires notification by an authorized officer of the Borrower. However, for a notification relating to pending litigation, General Counsel is the more natural and customary signatory.]*

Very truly yours,

STONEFIELD LOGISTICS GROUP INC.

By: ________

Name: Tobias Wren

Title: General Counsel

Date: ________

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

III. SUMMARY OF C&H MARKUP NOTES — CONSOLIDATED REFERENCE

For the convenience of Tobias Wren and Stonefield's internal team, the following is a consolidated summary of all attorney comments and markup notes embedded in the draft letter above. These notes are intended to facilitate Stonefield's review and finalization of the letter prior to transmission.

Additional Procedural Notes

Filing of Notice of Appearance. Calderwood & Harkness LLP's notice of appearance in Vantor Holdings Corp. v. Stonefield Logistics Group Inc. is being prepared and will be filed with the Court in the near term. The notice was subsequently filed on September 8, 2022. In the interim, the litigation is being actively monitored and all relevant deadlines are being tracked.

Complaint Enclosure. We recommend enclosing a copy of the Complaint with the notification letter. The Complaint is a public filing and its production to the Administrative Agent raises no privilege concerns. Proactive disclosure of the Complaint demonstrates transparency and may satisfy follow-up requests before they arise, thereby reducing administrative burden on both Stonefield and the lender.

Credit Agreement Review. We have reviewed the relevant provisions of the Credit Agreement in connection with this notification, including Section 6.03(b) (Litigation Notices), Section 5.04 (Material Adverse Effect), and Section 8.01 (Events of Default), to confirm that the notification as drafted satisfies the applicable requirements. We are satisfied that the letter, as revised in this markup, complies with the Credit Agreement's notification obligations.

END OF MARKUP

PRIVILEGED & CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGED / ATTORNEY WORK PRODUCT Calderwood & Harkness LLP — Matter No. 1012-00005 This document is a draft for discussion purposes only and does not constitute a final legal opinion or advice. © 2022 Calderwood & Harkness LLP. All rights reserved.

No.	Topic	C&H Recommendation
1	Timing	The letter must be sent by no later than August 24, 2022 (ten business days from service of the Complaint on August 14, 2022) to comply with the notification obligation under Section 6.03(b) of the Credit Agreement. We strongly urge that the letter be finalized and transmitted on or before that date. Any delay beyond August 24 would constitute a technical breach of the reporting covenant, which could trigger a notice-and-cure provision or, in a worst case, an Event of Default under the Credit Agreement.
2	Tone	Replace the absolute language in the original draft ("Stonefield does not believe any liability will result from this litigation") with the more measured and standard characterization: "Management believes that the claims lack merit and intends to vigorously defend." This formulation conveys appropriate confidence while avoiding the risks associated with an absolute statement regarding litigation outcomes.
3	Damages Description	The aggregate amount of claimed damages ($95.4 million) is sufficient for purposes of the notification. A detailed breakdown of damages components is optional but acceptable if Stonefield prefers to include it for transparency. We have provided alternative language for both the summary and detailed approaches.
4	Defense Summary	Include a brief description of the for-cause termination basis and the cure notice process (Cure Notice dated January 18, 2022; thirty-day cure period; failure to cure; termination effective March 4, 2022). This demonstrates the merits of the defense without providing excessive detail. The level of specificity in the revised draft strikes the right balance.
5	No Material Adverse Effect	Include the forward-looking statement that management does not believe the litigation will have a material adverse effect on the Borrower's financial condition, results of operations, or ability to perform its obligations under the Credit Agreement. This language must be coordinated with Priya Ramachandran (CFO) and Robert Farraday, Engagement Partner at Clarendon Partners LLP (independent auditor), to ensure consistency with any financial statement disclosures or contingency footnotes under ASC 450.
6	Insurance Coverage	Reference the Borrower's evaluation of insurance coverage generically. Do not detail the expected coverage declination at this stage — report factually once actual carrier determinations are received. The D&O policy (Graymark Insurance Company, Policy No. GLG-DO-1025-00008) and CGL policy (Brindoval Mutual Insurance Co., Policy No. CGL-SLG-2022-11902) are both unlikely to cover this commercial contract dispute, but formal tender and determination should precede any disclosure to the lender.
7	Quarterly Updates	Proactively offer periodic reporting to the Administrative Agent — quarterly updates, or more frequently in the event of material developments. This cooperative posture may forestall more intrusive or ad hoc lender requests and establishes a constructive tone for the relationship.
8	Reservation of Rights	Add comprehensive protective language confirming that the notification does not constitute an admission of liability, a waiver of any defense, or a determination as to materiality for any purpose other than the Section 6.03(b) notification obligation. This language was absent from the original draft and should be included.
9	Signatory	General Counsel (Tobias Wren) is recommended as the signatory for a litigation-related notification. CFO (Priya Ramachandran) is an acceptable alternative if preferred.
10	PE Sponsor Coordination	We suggest that the final letter, once approved and sent, be shared with Ridgeline Capital Partners for awareness. Specifically, we recommend providing a copy to Alison Trang (Partner and Stonefield Board Member) and Douglas Whitmore (Managing Partner) at Ridgeline. As the private equity sponsor of Stonefield, Ridgeline may have its own reporting obligations or internal policies regarding lender communications, and early coordination will avoid any downstream complications. Additionally, Ridgeline may have views regarding the tone or content of lender communications that Stonefield should consider, given the sponsor's relationship with the broader lender syndicate.

PRIVILEGED & CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGED / ATTORNEY WORK PRODUCT
PRIVILEGED & CONFIDENTIAL — This document, including all attachments and markup comments, is protected by the attorney-client privilege and constitutes attorney work product. It is intended solely for the use of the addressee. Any dissemination, distribution, or copying of this communication by any person other than the intended recipient is strictly prohibited.
CALDERWOOD & HARKNESS LLP 200 Park Avenue, 38th Floor New York, New York 10166
Matter No. 1012-00005
August 22, 2022
DRAFT LENDER NOTIFICATION LETTER — LAKESHORE NATIONAL BANK
Calderwood & Harkness LLP Marked-Up Draft
I. TRANSMITTAL MEMORANDUM
August 22, 2022
FROM: Patrick Gallagher, Lead Associate, Calderwood & Harkness LLP
TO: Tobias Wren, General Counsel, Stonefield Logistics Group Inc.
RE: Marked-Up Draft — Lender Notification Letter to Lakeshore National Bank (Administrative Agent) — Vantor Holdings Corp. v. Stonefield Logistics Group Inc., Case No. 22-cv-07841 (S.D.N.Y.)
CC: Samuel Eklund, Responsible Partner, Calderwood & Harkness LLP
Dear Tobias,
Attached please find our marked-up draft of the lender notification letter to Lakeshore National Bank in its capacity as Administrative Agent under the Senior Secured Credit Facility. As discussed, this letter addresses Stonefield's obligation to notify the Administrative Agent of the litigation commenced by Vantor Holdings Corp. against Stonefield Logistics Group Inc.
As you are aware, the Complaint in Vantor Holdings Corp. v. Stonefield Logistics Group Inc., Case No. 22-cv-07841, was filed in the United States District Court for the Southern District of New York on August 12, 2022. Service of process was effected on or about August 12, 2022, with actual receipt by Stonefield's registered agent occurring on August 14, 2022 (a Sunday). For purposes of calculating the notification deadline, we begin counting business days from the next business day, August 15, 2022.
Timing is critical. Section 6.03(b) of the Amended and Restated Credit Agreement dated October 12, 2017 (as amended and restated June 30, 2021) (the "Credit Agreement") requires the Borrower to provide written notice to the Administrative Agent of any litigation, arbitration, or governmental investigation involving claims for potential liability in excess of $25 million within ten (10) business days following the occurrence of the triggering event. Counting forward ten (10) business days from August 15, 2022, the notification deadline falls on approximately August 24, 2022. We strongly urge you to finalize and transmit the letter by no later than that date to ensure full compliance with this covenant.
In preparing this markup, we reviewed the draft for three principal considerations: (i) tone and characterization of the litigation; (ii) legal accuracy of the factual descriptions; and (iii) compliance with the specific notification requirements set forth in Section 6.03(b) of the Credit Agreement. Samuel Eklund, the Responsible Partner on this matter, has also reviewed and approved the markup in its current form.
A few key principles have guided our revisions:
(i) Factual accuracy without concession of merit. The letter should describe the claims asserted by Vantor with sufficient specificity to satisfy the notification obligation, but it should do so factually and without conceding that any of Vantor's allegations have merit. We have carefully revised several passages in your original draft where the language, though well-intentioned, could be read as implicitly acknowledging the validity of certain factual assertions made by the plaintiff.
(ii) Characterization of Stonefield's assessment. The letter should clearly convey management's belief that the claims lack merit and Stonefield's intention to vigorously defend. We have suggested specific formulations that are standard in lender notification practice and that appropriately convey confidence without creating potential exposure.
(iii) Avoidance of admissions or minimizations. We have been attentive to language that could be construed either as an admission of liability or, at the other extreme, as an attempt to minimize the disclosure in a manner that could later be characterized as misleading. The goal is a balanced, professional notification that meets the contractual standard.
(iv) Satisfaction of the threshold trigger. The letter must clearly establish that the notification is being made because the claimed damages exceed the $25 million threshold under Section 6.03(b). We have included appropriate qualifying language to make clear that the threshold is met based on the plaintiff's claimed damages, not based on Stonefield's assessment of probable liability.
Please note that the final letter should be printed and sent on Stonefield Logistics Group Inc. letterhead, signed by you in your capacity as General Counsel. Alternatively, if Stonefield prefers, the letter may be signed by Priya Ramachandran in her capacity as Chief Financial Officer. Either signatory is appropriate for a notification of this nature; however, we recommend General Counsel as the more natural signatory for a litigation-related notification.
We are available to discuss the markup at your convenience. Given the August 24 deadline, we suggest scheduling a brief call tomorrow, August 23, to address any questions and finalize the letter for transmission.
Best regards,
Patrick Gallagher Lead Associate Calderwood & Harkness LLP 200 Park Avenue, 38th Floor New York, New York 10166 Tel: (212) 555-4200
Email: pgallagher@calderwoodharkness.com
II. MARKED-UP DRAFT — LENDER NOTIFICATION LETTER
NOTE: Tracked changes and C&H attorney comments are shown inline using the conventions  and . Marginal comments from C&H attorneys are presented in bold italic brackets. All changes are suggestions for Stonefield's consideration and should be reviewed and approved prior to finalizing the letter.
[STONEFIELD LOGISTICS GROUP INC. LETTERHEAD]
Stonefield Logistics Group Inc. 4200 Commerce Parkway, Suite 800 Fort Worth, Texas 76102
*[C&H COMMENT: Insert date of actual sending. We recommend no later than August 24, 2022, to comply with the ten (10) business day notification window under Section 6.03(b) of the Credit Agreement.]*
Via Email and Overnight Courier
Catherine Devereaux Senior Vice President, Loan Administration Lakeshore National Bank 135 South LaSalle Street Chicago, Illinois 60603
Re: Notice of Material Litigation Pursuant to Section 6.03(b) of the Amended and Restated Credit Agreement dated October 12, 2017 (as amended and restated June 30, 2021) (Reference No. LNB-SLG-2017-CA-4402)
Dear Ms. Devereaux:
A. Purpose of Notice
Stonefield Logistics Group Inc. (the "Borrower") hereby provides written notice to Lakeshore National Bank, in its capacity as Administrative Agent (the "Administrative Agent"), pursuant to Section 6.03(b) of that certain Amended and Restated Credit Agreement dated as of October 12, 2017, by and among the Borrower, the lenders party thereto from time to time (collectively, the "Lenders"), and the Administrative Agent, as amended and restated as of June 30, 2021 (the "Credit Agreement"), Reference No. LNB-SLG-2017-CA-4402. Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Credit Agreement.
As the Administrative Agent is aware, the Credit Agreement provides for a $425 million Senior Secured Credit Facility consisting of a $175 million revolving credit facility and a $250 million term loan B. Section 6.03(b) of the Credit Agreement requires the Borrower to promptly notify the Administrative Agent in writing of any litigation, investigation, or proceeding pending against or, to the knowledge of the Borrower, threatened against the Borrower or any of its subsidiaries that involves claims for damages or other relief   the $25 million notification threshold specified in Section 6.03(b) of the Credit Agreement.
*[C&H COMMENT: We have added the qualifying language "if the plaintiff's allegations were accepted in their entirety (which the Borrower disputes)" to the threshold description. This qualifier is important because it makes clear that the notification is being triggered by the amount of the plaintiff's claim — not by Stonefield's own assessment that exposure at or above $25 million is probable. Without this qualifier, the letter could be read as implicitly conceding that the actual exposure exceeds the threshold, which is not Stonefield's position. This formulation is standard in notifications of this nature.]*
The Borrower is providing this notice because it has been served as a defendant in litigation involving claims for damages that, if valued as asserted by the plaintiff, exceed the $25 million notification threshold. The details of the litigation are set forth below.
B. Description of the Litigation
1. Case Caption and Court
On August 12, 2022, Vantor Holdings Corp. ("Vantor"), a New York corporation with its principal place of business at 580 Eighth Avenue, 14th Floor, New York, New York 10018, filed a civil complaint (the "Complaint") against the Borrower in the United States District Court for the Southern District of New York, captioned Vantor Holdings Corp. v. Stonefield Logistics Group Inc., Case No. 22-cv-07841. The case has been assigned to the Honorable Margaret T. Calloway, United States District Judge.
*[C&H COMMENT: We have confirmed the case number (22-cv-07841) and filing date (August 12, 2022) through our independent docket check on the PACER system as of August 19, 2022. The information as stated is accurate.]*
Service of the Complaint was effected on the Borrower on or about August 12, 2022, with actual receipt by the Borrower's registered agent occurring on August 14, 2022.
2. Plaintiff's Counsel
Vantor is represented in this matter by Caldwell Royce & Shapiro LLP, located at 1 Liberty Plaza, 22nd Floor, New York, New York 10006. Lead counsel for Vantor is Harrison Caldwell, Named Partner of that firm.
3. Nature of the Claims
*[C&H COMMENT: We have significantly revised this paragraph. The original draft described Vantor's allegations in considerably more detail than is necessary or advisable, including characterizations of Vantor's theory regarding Stonefield's purported motivations. The notification obligation under Section 6.03(b) requires a description of the nature of the claims, but it does not require — and prudence does not counsel — a recitation of the plaintiff's narrative theory of the case. A summary-level description sufficient to inform the Administrative Agent of the general nature of the dispute is appropriate. Excessive detail could be construed as lending credibility to claims that Stonefield intends to contest vigorously.]*
4. Damages Claimed
*[C&H COMMENT: We recommend presenting the damages figure at the aggregate level — approximately $95.4 million — rather than providing the detailed component breakdown. The purpose of the notification is to establish that the claimed amount exceeds the $25 million threshold, and the aggregate figure clearly accomplishes this. A detailed breakdown, while factually accurate (the amounts are drawn directly from Vantor's pre-suit demand letter dated April 8, 2022, and are consistent with the allegations in the Complaint), is not required under Section 6.03(b) and provides more granularity than is necessary at this stage.]*
*[C&H COMMENT (continued): That said, if Tobias prefers to include the detailed breakdown for purposes of transparency with the lender group, we have no objection — the amounts are matters of public record as stated in the filed Complaint, and there is no prejudice to Stonefield in disclosing them. We leave this to Stonefield's judgment regarding its relationship with Lakeshore. If you elect to include the breakdown, we suggest using the following formulation:]*
*[C&H ALTERNATIVE LANGUAGE (optional, if detailed breakdown preferred):]*
"Vantor claims total damages of approximately $95.4 million, consisting of the following categories: (i) liquidated damages under Section 14.2 of the TSA: approximately $67.23 million (calculated by Vantor as 75% of the Annual Committed Volume of $43.2 million multiplied by the remaining contract term of approximately 2.07 years); (ii) lost profits: approximately $18.7 million; (iii) stranded asset and lease termination costs: approximately $5.2 million; (iv) workforce reduction costs: approximately $2.87 million; and (v) mitigation costs: approximately $1.4 million. Detailed backup for Vantor's damages calculations is available upon request."
C. Borrower's Position and Assessment
*[C&H COMMENT: This is the most important paragraph in the letter, and we have made extensive revisions. The original language — "Stonefield does not believe any liability will result from this litigation" — is problematic for three reasons:]*
*[(i) This absolute characterization could be viewed by the lender as a warranty or assurance regarding the litigation outcome. If the case ultimately results in any adverse outcome, even a nuisance settlement, this language could undermine Stonefield's credibility with the lender group and potentially give rise to a claim that the notification was misleading.]*
*[(ii) The language does not adequately account for the inherent uncertainty of litigation. No responsible litigant can state with certainty that "no liability will result" from any pending case, particularly one involving a $95.4 million claim in federal court.]*
*[(iii) The more measured formulation "management believes the claims lack merit" is standard practice for lender notifications of this nature. It conveys appropriate confidence while preserving the necessary hedging that all litigation communications should contain.]*
*[We have replaced the original paragraph with the following language, which we strongly recommend:]*
*[C&H COMMENT: The three paragraphs above accomplish several objectives simultaneously. The first sentence — "Management believes that the claims lack merit and intends to vigorously defend" — is the key characterization. The second paragraph provides a brief, factual summary of the defense posture without excessive detail. The third paragraph addresses the damages exposure directly, signaling that even in a worst-case scenario, the actual exposure is likely materially lower than the headline number. Together, these paragraphs should provide the Administrative Agent with comfort that the matter is being taken seriously and managed responsibly.]*
*[C&H COMMENT: We recommend including this "no material adverse effect" statement, which is customary in lender notifications and will be important to the lender group. However, we flag that this language should be coordinated with Priya Ramachandran (CFO) before the letter is finalized to ensure she is comfortable with the characterization from a financial perspective. Additionally, this language should be reviewed for consistency with any financial statement disclosures or footnotes that may be required in connection with Stonefield's fiscal year-end audit. We recommend that Tobias or Priya consult with Robert Farraday, the Engagement Partner at Clarendon Partners LLP (Stonefield's independent auditor, located at 500 West 5th Street, Suite 1200, Austin, Texas 78701), to confirm that the characterization in this letter is consistent with the accounting treatment that Clarendon will apply under ASC 450 (Contingencies). Any material inconsistency between the lender notification and the audited financial statement disclosures could create complications.]*
D. Defense Counsel
*[C&H COMMENT: We suggest including this information in the letter. Notifying the Administrative Agent that qualified outside counsel has been retained signals that the matter is being handled with appropriate diligence and seriousness. It also provides the lender with a point of reference if they wish to understand the caliber of the defense effort. We note that our formal notice of appearance in the action will be filed in the coming days; the notice was subsequently filed on September 8, 2022.]*
E. Insurance Coverage
*[C&H COMMENT: We recommend including this brief, generic reference to insurance coverage. Lenders routinely inquire about insurance availability in connection with significant litigation, and a proactive reference here may forestall a follow-up request.]*
*[C&H MARGINAL NOTE — FOR INTERNAL DISCUSSION ONLY, NOT FOR INCLUSION IN LETTER: As a practical matter, the insurance coverage outlook is not favorable for this claim. Stonefield has tendered — or will shortly tender — the claim under its Directors & Officers liability insurance policy with Graymark Insurance Company (Policy No. GLG-DO-1025-00008). The tender letter is being prepared and is expected to be submitted on or about September 6, 2022. However, coverage under the D&O policy is unlikely given that this is a commercial contract dispute rather than a claim alleging wrongful acts by directors or officers in their capacity as such. Similarly, the commercial general liability policy with Brindoval Mutual Insurance Co. (Policy No. CGL-SLG-2022-11902) contains standard exclusions for breach of contract claims and is therefore also unlikely to provide coverage.]*
*[We recommend NOT detailing the expected coverage declination in the lender notification letter at this stage. It is better to report factually on coverage status once actual coverage determinations have been received from the carriers. If and when coverage is formally declined, Stonefield can decide at that time whether to notify the Administrative Agent of the declination or simply note in a subsequent update that coverage is not available for this type of claim.]*
F. Additional Information and Ongoing Reporting
The Borrower will keep the Administrative Agent informed of material developments in the litigation as they occur. 
*[C&H COMMENT: We suggest adding the proactive offer of quarterly updates. This language establishes a cooperative and transparent tone with the lender group and may forestall more intrusive or ad hoc requests for information. Setting the expectation of quarterly reporting — with the flexibility for more frequent updates in the event of material developments — strikes an appropriate balance between keeping the lender informed and preserving Stonefield's ability to manage the flow of litigation-related information.]*
Upon request, the Borrower will provide copies of key pleadings filed in connection with the litigation. For follow-up inquiries regarding this matter, please contact:
Tobias Wren General Counsel Stonefield Logistics Group Inc. 4200 Commerce Parkway, Suite 800 Fort Worth, Texas 76102 Tel: (817) 555-3100
Email: twren@stonefieldlogistics.com
G. Reservation of Rights
*[C&H COMMENT: This reservation of rights / no waiver language was not included in Stonefield's original draft. We strongly recommend its inclusion as a protective measure. This type of protective language is standard in lender notifications involving pending litigation and serves to ensure that the act of notification itself cannot be used against Stonefield in any context — whether by the lender group in a future dispute under the Credit Agreement or by the plaintiff if the letter were to be produced in discovery (which is unlikely, but possible). The language is deliberately comprehensive and covers the most common risks associated with litigation-related lender notifications.]*
H. Enclosure
A copy of the Complaint filed in Vantor Holdings Corp. v. Stonefield Logistics Group Inc., Case No. 22-cv-07841 (S.D.N.Y.), is enclosed herewith for the Administrative Agent's reference.
*[C&H COMMENT: We recommend enclosing a copy of the Complaint with the notification letter. Providing the Complaint demonstrates full transparency and may satisfy any immediate follow-up requests from Lakeshore before they are made. Since the Complaint is a public filing, there is no privilege concern with its production. Enclosing it also allows the Administrative Agent and its counsel to review the plaintiff's allegations directly, which is more efficient than relying solely on the summary provided in the letter.]*
I. Signature block
*[C&H COMMENT: We recommend that the letter be signed by Tobias Wren as General Counsel. As noted in the transmittal memo, the letter could alternatively be signed by Priya Ramachandran as CFO if Stonefield prefers a financial officer to make the notification. Either is appropriate under the Credit Agreement, which requires notification by an authorized officer of the Borrower. However, for a notification relating to pending litigation, General Counsel is the more natural and customary signatory.]*
Very truly yours,
STONEFIELD LOGISTICS GROUP INC.
By: ________
Name: Tobias Wren
Title: General Counsel
Date: ________
Enclosure: Complaint, Vantor Holdings Corp. v. Stonefield Logistics Group Inc., Case No. 22-cv-07841 (S.D.N.Y., filed August 12, 2022)
III. SUMMARY OF C&H MARKUP NOTES — CONSOLIDATED REFERENCE
For the convenience of Tobias Wren and Stonefield's internal team, the following is a consolidated summary of all attorney comments and markup notes embedded in the draft letter above. These notes are intended to facilitate Stonefield's review and finalization of the letter prior to transmission.
Additional Procedural Notes
Filing of Notice of Appearance. Calderwood & Harkness LLP's notice of appearance in Vantor Holdings Corp. v. Stonefield Logistics Group Inc. is being prepared and will be filed with the Court in the near term. The notice was subsequently filed on September 8, 2022. In the interim, the litigation is being actively monitored and all relevant deadlines are being tracked.
Complaint Enclosure. We recommend enclosing a copy of the Complaint with the notification letter. The Complaint is a public filing and its production to the Administrative Agent raises no privilege concerns. Proactive disclosure of the Complaint demonstrates transparency and may satisfy follow-up requests before they arise, thereby reducing administrative burden on both Stonefield and the lender.
Credit Agreement Review. We have reviewed the relevant provisions of the Credit Agreement in connection with this notification, including Section 6.03(b) (Litigation Notices), Section 5.04 (Material Adverse Effect), and Section 8.01 (Events of Default), to confirm that the notification as drafted satisfies the applicable requirements. We are satisfied that the letter, as revised in this markup, complies with the Credit Agreement's notification obligations.
END OF MARKUP
PRIVILEGED & CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGED / ATTORNEY WORK PRODUCT Calderwood & Harkness LLP — Matter No. 1012-00005 This document is a draft for discussion purposes only and does not constitute a final legal opinion or advice. © 2022 Calderwood & Harkness LLP. All rights reserved.
No. | Topic | C&H Recommendation
1 | Timing | The letter must be sent by no later than August 24, 2022 (ten business days from service of the Complaint on August 14, 2022) to comply with the notification obligation under Section 6.03(b) of the Credit Agreement. We strongly urge that the letter be finalized and transmitted on or before that date. Any delay beyond August 24 would constitute a technical breach of the reporting covenant, which could trigger a notice-and-cure provision or, in a worst case, an Event of Default under the Credit Agreement.
2 | Tone | Replace the absolute language in the original draft ("Stonefield does not believe any liability will result from this litigation") with the more measured and standard characterization: "Management believes that the claims lack merit and intends to vigorously defend." This formulation conveys appropriate confidence while avoiding the risks associated with an absolute statement regarding litigation outcomes.
3 | Damages Description | The aggregate amount of claimed damages ($95.4 million) is sufficient for purposes of the notification. A detailed breakdown of damages components is optional but acceptable if Stonefield prefers to include it for transparency. We have provided alternative language for both the summary and detailed approaches.
4 | Defense Summary | Include a brief description of the for-cause termination basis and the cure notice process (Cure Notice dated January 18, 2022; thirty-day cure period; failure to cure; termination effective March 4, 2022). This demonstrates the merits of the defense without providing excessive detail. The level of specificity in the revised draft strikes the right balance.
5 | No Material Adverse Effect | Include the forward-looking statement that management does not believe the litigation will have a material adverse effect on the Borrower's financial condition, results of operations, or ability to perform its obligations under the Credit Agreement. This language must be coordinated with Priya Ramachandran (CFO) and Robert Farraday, Engagement Partner at Clarendon Partners LLP (independent auditor), to ensure consistency with any financial statement disclosures or contingency footnotes under ASC 450.
6 | Insurance Coverage | Reference the Borrower's evaluation of insurance coverage generically. Do not detail the expected coverage declination at this stage — report factually once actual carrier determinations are received. The D&O policy (Graymark Insurance Company, Policy No. GLG-DO-1025-00008) and CGL policy (Brindoval Mutual Insurance Co., Policy No. CGL-SLG-2022-11902) are both unlikely to cover this commercial contract dispute, but formal tender and determination should precede any disclosure to the lender.
7 | Quarterly Updates | Proactively offer periodic reporting to the Administrative Agent — quarterly updates, or more frequently in the event of material developments. This cooperative posture may forestall more intrusive or ad hoc lender requests and establishes a constructive tone for the relationship.
8 | Reservation of Rights | Add comprehensive protective language confirming that the notification does not constitute an admission of liability, a waiver of any defense, or a determination as to materiality for any purpose other than the Section 6.03(b) notification obligation. This language was absent from the original draft and should be included.
9 | Signatory | General Counsel (Tobias Wren) is recommended as the signatory for a litigation-related notification. CFO (Priya Ramachandran) is an acceptable alternative if preferred.
10 | PE Sponsor Coordination | We suggest that the final letter, once approved and sent, be shared with Ridgeline Capital Partners for awareness. Specifically, we recommend providing a copy to Alison Trang (Partner and Stonefield Board Member) and Douglas Whitmore (Managing Partner) at Ridgeline. As the private equity sponsor of Stonefield, Ridgeline may have its own reporting obligations or internal policies regarding lender communications, and early coordination will avoid any downstream complications. Additionally, Ridgeline may have views regarding the tone or content of lender communications that Stonefield should consider, given the sponsor's relationship with the broader lender syndicate.

PRIVILEGED & CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGED / ATTORNEY WORK PRODUCT

I. TRANSMITTAL MEMORANDUM

STONEFIELD LOGISTICS GROUP INC.

END OF MARKUP

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