Contract analysis

I. Executive Summary and Purpose The purpose of this memorandum is to advise Harrowgate Capital Management LLC ("HCM"), in its capacity as the general partner of Harrowgate Private Equity Fund IV, L.P. ("HPE Fund IV"), on the legal mechanics, procedural requirements, and recommended timeline necessary to effectuate the orderly abandonment of the proposed acquisition of one hundred percent (100%) of the outstanding me

II. Termination of the Membership Interest Purchase Agreement A. Overview of the MIPA The operative transaction document is the Membership Interest Purchase Agreement, dated as of June 4, 2024 (the "MIPA"), entered into among the following parties: • Harrowgate Private Equity Fund IV, L.P., a Delaware limited partnership, as Buyer; • Ridgemark Capital Advisors, LLC, a Delaware limited liability company, as the Compan

1. Amount. The Reverse Termination Fee payable by the Buyer in connection with a voluntary termination under Section 10.1(d) of the MIPA is $7,400,000 (Seven Million Four Hundred Thousand Dollars), calculated as 2.0% of the total enterprise value of the transaction ($370,000,000 × 2.0% = $7,400,000). This amount was negotiated at the time of signing as a mutually agreed measure of liquidated damages to compensate the

2. Payment Obligation The Reverse Termination Fee is payable by HPE Fund IV to Ridgemark Capital Advisors, LLC. The payment obligation is triggered upon the effective termination of the MIPA by the Buyer without cause under Section 10.1(d). Pursuant to Section 10.3(b) of the MIPA, the Reverse Termination Fee must be paid no later than ten (10) business days following the date on which the termination becomes effectiv

3. Payment Mechanism Payment of the Reverse Termination Fee shall be made by wire transfer of immediately available funds to the bank account designated by Ridgemark in Schedule 2.3 of the MIPA, or to such other account as Ridgemark or its counsel may designate in writing. We recommend that Calderwood & Harkness confirm the wire instructions with Catherine Oakes at Blackwell, Oakes & Hardin LLP (Ridgemark's lead M&A

Section 10.3(b) of the MIPA expressly provides that the Reverse Termination Fee constitutes the sole and exclusive remedy of Ridgemark, the Sellers, and their respective affiliates against HPE Fund IV, HCM, and their respective affiliates, equityholders, partners, officers, directors, employees, agents, and representatives in connection with a voluntary termination of the MIPA by the Buyer. Upon timely payment of the

5. Tax Treatment Considerations The characterization and deductibility of the $7.4 million Reverse Termination Fee payment for U.S. federal, state, and local income tax purposes should be analyzed by HCM's tax advisors. We recommend that HCM consult with Pallister & Greaves Bramwell CPAs LLP, Harrowgate's outside auditor, regarding whether the Reverse Termination Fee is deductible as an ordinary and necessary busines

Section 12.1 of the MIPA specifies the procedures for the delivery of notices under the agreement. A notice of termination must be in writing and must be delivered to the Company, the Sellers' Representative, and each of the parties entitled to receive notice under the MIPA. The notice must reference the specific section of the MIPA under which termination is being effected (i.e., Section 10.1(d)), must state that th

2. Required Recipients and Addresses The termination notice must be delivered to the following parties at the addresses specified in Section 12.1 of the MIPA: (a) Ridgemark Capital Advisors, LLC 600 Boylston Street, Suite 3200 Boston, MA 02116 Attention: Jonathan Kessler, Chief Executive Officer (b) Thornfield Growth Partners, LLC 399 Park Avenue, 28th Floor New York, NY 10022 Attention: Sandra Wellman, Partner (c) B

3. Delivery Methods Pursuant to Section 12.1 of the MIPA, notices are deemed received upon (i) personal delivery, (ii) the next business day following deposit with a nationally recognized overnight courier service (with proof of delivery), or (iii) the date of transmission by email if sent prior to 5:00 p.m. Eastern Time on a business day and confirmed by a non-automated reply or by delivery of an original via overni

4. Drafting and Delivery Timeline Calderwood & Harkness will prepare and circulate a draft termination notice for HCM's review by August 28, 2024. We request that HCM review the draft and provide any comments or approval by August 29, 2024, with a target delivery date of August 30, 2024. If HCM approves the draft on the expected timeline, Calderwood & Harkness will arrange for the overnight courier deliveries and ema

5. Effective Date of Termination Subject to the specific language of Section 12.1 of the MIPA, the termination will become effective upon delivery of the notice to the Company and the Sellers' Representative (i.e., upon the earliest of personal delivery, overnight courier delivery, or confirmed email delivery). Assuming delivery on August 30, 2024, the effective date of termination will be August 30, 2024, and all po

III. Withdrawal of the HSR Notification A. Procedural Basis for Withdrawal

1. Statutory and Regulatory Framework The proposed acquisition is subject to the premerger notification requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, 15 U.S.C. § 18a (the "HSR Act"), and the implementing regulations promulgated thereunder by the Federal Trade Commission at 16 C.F.R. Parts 801–803. The HSR Act requires that the parties to certain mergers and acquisitions exceedi

2. Withdrawal Authority The specific regulatory authority for the withdrawal of an HSR notification is set forth in 16 C.F.R. § 803.7, which provides that a filing person may withdraw its notification at any time prior to the expiration or termination of the waiting period, or, in the case of a transaction that is subject to a Request for Additional Information and Documentary Material (commonly known as a "Second Re

3. Current Procedural Posture The parties filed their respective HSR Notification and Report Forms with the FTC and DOJ on June 18, 2024. The FTC acknowledged receipt of both filings on June 21, 2024, and clearance to review the transaction was assigned to the FTC (rather than DOJ). The initial thirty (30)-day waiting period under the HSR Act commenced upon the FTC's acknowledgment of receipt and would have expired o

4. Effect of Withdrawal Upon the FTC's receipt of the Acquiring Person's withdrawal letter, the HSR investigation will effectively be closed. The FTC will have no further basis to compel compliance with the Second Request, as the Second Request is ancillary to the pending notification and becomes moot upon withdrawal. No further obligation to comply with the Second Request will exist once the filing is withdrawn and

IV. Post-Termination Obligations A. Confidentiality and Non-Disclosure Obligations The MIPA contains comprehensive confidentiality and non-disclosure provisions in Section 8.3, which by their terms survive the termination of the agreement. These provisions impose ongoing obligations on HPE Fund IV, HCM, and their respective officers, directors, employees, agents, and representatives (including outside advisors) to ma

Section 8.3(d) of the MIPA requires that, upon termination of the agreement, the Buyer and its representatives promptly return or destroy all confidential information received from the Company and the Sellers, and provide a written certification of destruction or return to the Company. This obligation extends to all copies of confidential information in any format, including electronic copies, printed documents, summ

V. Notifications to Other Parties and Advisors A. Notification to Financial Advisors Greycastle Partners LLC served as the financial advisor to HPE Fund IV and HCM in connection with the proposed acquisition. HCM should notify Mitchell Avery, Managing Director, at Greycastle Partners LLC, 300 Atlantic Street, Stamford, CT 06901, of the termination of the transaction promptly following the delivery of the MIPA termina

VI. Financial Summary and Fee Implications The following is a summary of the principal financial obligations and fee matters arising in connection with the termination of the transaction: Calderwood & Harkness Legal Fees. As of the date of this memorandum, Calderwood & Harkness has billed approximately $487,000 in legal fees for all work performed on the matter from the engagement through the present date. This amoun

VII. Recommended Action Items and Timeline The following table summarizes the recommended steps, responsible parties, and target dates for the orderly execution of the transaction abandonment: The foregoing timeline is aggressive but achievable, and we recommend adhering to it to ensure the prompt and orderly completion of all termination-related steps. We note that the Labor Day holiday falls on September 2, 2024, w

VIII. Conclusion Calderwood & Harkness stands ready to execute each of the steps described in this memorandum promptly upon HCM's instruction. We believe the recommended timeline is achievable and will result in a clean and orderly termination of the proposed acquisition, withdrawal of the HSR notification, and satisfaction of all post-termination obligations. We respectfully request authorization from Gavin Trask or