Contract analysis

I. EXECUTIVE SUMMARY A. Purpose of This Memorandum The purpose of this memorandum is to identify, analyze, and catalog all provisions in the agreements of Pennfield Holdings, Inc. ("Pennfield," the "Company," or the "Target," Nasdaq: PNFD) that constitute or reference a "change of control" (or analogous concept, including "change in control," "fundamental change," or "transfer of control") and that would be triggered

II. METHODOLOGY AND SOURCES A. Data Room Review All documents referenced in this memorandum were reviewed from the Thackeray Solutions virtual data room established for Project Summit. The data room was opened on February 10, 2025, and our review encompasses all documents uploaded through March 25, 2025. Documents were organized in the data room by category (e.g., "3.0 — Material Contracts," "4.0 — Real Property / Le

III. EXISTING CREDIT AGREEMENTS A. Senior Secured Credit Agreement (Revolving Credit Facility)

1. Overview of the Facility Pennfield is party to that certain Senior Secured Credit Agreement (the "Credit Agreement"), originally dated as of June 15, 2021, by and among Pennfield Holdings, Inc., as borrower, the lenders party thereto from time to time, and Falconer National Bank, N.A. ("Falconer"), as administrative agent and collateral agent (the "Administrative Agent"). The Credit Agreement was amended and resta

2. Change of Control Provision

Section 8.01(g) of the Amended and Restated Credit Agreement defines "Change of Control" as: "(a) any 'person' or 'group' (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act, but excluding any employee benefit plan of the Company or any of its subsidiaries, and any person or entity acting in its capacity as trustee, agent, or other fiduciary or administrator of any such plan) shall become the 'ben

3. Consequences of Triggering Under Section 8.01 of the Amended and Restated Credit Agreement, the occurrence of a Change of Control constitutes an immediate "Event of Default." Upon the occurrence and during the continuance of an Event of Default, the Administrative Agent may (and at the written direction of the Required Lenders — defined as lenders holding more than 50% of the aggregate commitments — shall): (i) de

4. Required Action and Coordination with Acquisition Financing The acquisition financing structure for the Merger, as set forth in the Debt Commitment Letter from Falconer National Bank and Dunmore Capital Markets LLC, contemplates the full repayment and termination of the existing Revolving Facility at the closing of the Merger. Specifically, the Sources and Uses summary included in the commitment letter provides fo

1. Overview. In addition to the Revolving Facility, Pennfield is party to an equipment financing arrangement consisting of multiple promissory notes secured by specified equipment assets used in the Company's distribution and warehouse operations. Based on the documents available in the data room, the aggregate outstanding principal balance under these equipment financing notes is approximately $15,000,000 as of the

2. Change of Control Provision The equipment financing notes contain an acceleration clause that is triggered upon a "change of control" of the borrower, defined in substantially similar terms to the definition in the Amended and Restated Credit Agreement (i.e., acquisition of more than 50% of voting securities or consummation of a merger in which existing stockholders lose majority control). The proposed Merger clea

3. Consequences of Triggering Upon a change of control, the lender may, at its option, declare all amounts outstanding under the equipment financing notes immediately due and payable. Unlike the Credit Agreement (where the change of control constitutes an automatic Event of Default), the equipment financing notes appear to grant the lender a permissive acceleration right — i.e., the lender may, but is not required to

4. Required Action The required action is to either (a) repay all outstanding amounts under the equipment financing notes at or prior to closing (using proceeds from the acquisition financing or available cash), or (b) negotiate a waiver or consent from the equipment lender permitting the Merger to occur without triggering acceleration. Given the relatively modest outstanding balance ($15,000,000) and the fact that t

IV. EXECUTIVE EMPLOYMENT AGREEMENTS A. Overview Pennfield is party to four executive employment agreements, each of which contains change of control provisions. The executives covered by these agreements are:

1. Catherine Langford, Chief Executive Officer;

2. Derek Simmons, Chief Financial Officer;

3. Maxwell Dunn, Chief Operating Officer; and

4. Patricia Okafor, General Counsel & Corporate Secretary. Each of the four employment agreements defines "Change of Control" (or, in the case of the Langford agreement, "Change in Control") in substantially similar terms: the acquisition by any person or group of beneficial ownership of more than 50% of Pennfield's outstanding voting securities, or the consummation of a merger, consolidation, or similar transaction

1. Agreement Terms Ms. Langford's employment with Pennfield is governed by an Amended and Restated Employment Agreement dated as of April 1, 2022, as further amended by Amendment No. 1, effective January 15, 2024 (collectively, the "Langford Employment Agreement"). The Langford Employment Agreement provides for an initial employment term through March 31, 2026, with automatic one-year renewal periods thereafter unles

2. Change of Control Window The Langford Employment Agreement provides for a Change of Control Window of 24 months following a Change in Control. This is the longest window among the four executive agreements and reflects Ms. Langford's seniority and negotiating leverage at the time the agreement was entered into.

3. Double-Trigger Severance Provisions If, within the 24-month Change of Control Window, Ms. Langford's employment is terminated by the Company without Cause, or if Ms. Langford resigns for Good Reason (each as defined in the Langford Employment Agreement), she will be entitled to the following severance benefits: (i) Cash Severance Payment: A lump-sum cash payment equal to 2.5 times the sum of (a) her annual base sa

4. Definitions of "Cause" and "Good Reason" The Langford Employment Agreement defines "Cause" to include (a) willful misconduct or gross negligence in the performance of duties, (b) conviction of, or plea of guilty or nolo contendere to, a felony, (c) fraud, embezzlement, or material dishonesty, (d) material breach of the employment agreement or Company policies, subject to a 30-day cure period, and (e) willful refus

5. Interaction with Rollover Equity Ms. Langford is one of three executives who have agreed (or are expected to agree) to roll over a portion of their equity in Pennfield into equity of the surviving entity or a parent holding company. Ms. Langford's expected rollover amount is approximately $12,500,000. She is expected to continue serving as Chief Executive Officer of Pennfield following the closing of the Merger. I

6. Section 280G Analysis The change of control payments and benefits under the Langford Employment Agreement, together with the value of accelerated equity awards, may constitute "excess parachute payments" within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"). If the aggregate present value of all "parachute payments" to Ms. Langford equals or exceeds three times her "base

7. Restrictive Covenants The Langford Employment Agreement contains a 12-month post-termination non-competition covenant and an 18-month post-termination non-solicitation covenant (covering both employees and customers/clients). These restrictive covenants apply following any termination of employment, including a termination following a change of control. The enforceability of the non-competition covenant should be

1. Agreement Terms Mr. Simmons's employment is governed by an Employment Agreement dated as of September 1, 2021, as amended by Amendment No. 1, effective March 1, 2023 (the "Simmons Employment Agreement"). Mr. Simmons's current base salary is $625,000 per annum, with a target annual bonus opportunity of 100% of base salary ($625,000).

2. Change of Control Window The Simmons Employment Agreement provides for a Change of Control Window of 18 months following a Change of Control.

3. Double-Trigger Severance Provisions If, within the 18-month Change of Control Window, Mr. Simmons's employment is terminated by the Company without Cause or Mr. Simmons resigns for Good Reason, he will be entitled to: (i) Cash Severance Payment: A lump-sum cash payment equal to 2.0 times the sum of his annual base salary and his target annual bonus. Based on current compensation levels: 2.0 × ($625,000 + $625,000)

4. Interaction with Rollover Equity Mr. Simmons is expected to roll over approximately $5,000,000 of equity and continue as Chief Financial Officer post-closing. The same double-trigger analysis and Rollover Agreement coordination issues described with respect to Ms. Langford apply equally to Mr. Simmons.

5. Section 280G Analysis The Simmons Employment Agreement contains the same "best net" cutback provision as the Langford Employment Agreement. We recommend that 280G calculations be prepared simultaneously for Mr. Simmons and the other covered executives.

6. Restrictive Covenants The Simmons Employment Agreement contains a 12-month non-competition covenant and a 12-month non-solicitation covenant, both running from the date of termination. D. Maxwell Dunn — Chief Operating Officer

1. Agreement Terms Mr. Dunn's employment is governed by an Employment Agreement dated as of January 15, 2022 (the "Dunn Employment Agreement"). Mr. Dunn's current base salary is $575,000 per annum, with a target annual bonus opportunity of 100% of base salary ($575,000).

2. Change of Control Window The Dunn Employment Agreement provides for a Change of Control Window of 18 months following a Change of Control.

3. Double-Trigger Severance Provisions If, within the 18-month Change of Control Window, Mr. Dunn's employment is terminated by the Company without Cause or Mr. Dunn resigns for Good Reason, he will be entitled to: (i) Cash Severance Payment: 2.0 × ($575,000 + $575,000) = $2,300,000. (ii) Equity Award Acceleration: Full acceleration of all unvested equity awards. (iii) Continued Health and Welfare Benefits: 18 months

4. Interaction with Rollover Equity Mr. Dunn is expected to roll over approximately $4,000,000 of equity and continue as Chief Operating Officer post-closing. The same coordination issues apply.

5. Section 280G Analysis The Dunn Employment Agreement contains the same "best net" cutback provision. We recommend concurrent 280G analysis.

6. Restrictive Covenants The Dunn Employment Agreement contains a 12-month non-competition covenant and a 12-month non-solicitation covenant. E. Patricia Okafor — General Counsel & Corporate Secretary

1. Agreement Terms Ms. Okafor's employment is governed by an Employment Agreement dated as of July 1, 2020, as amended by Amendment No. 1, effective June 1, 2023 (the "Okafor Employment Agreement"). Ms. Okafor's current base salary is $525,000 per annum, with a target annual bonus opportunity of 75% of base salary ($393,750).

2. Change of Control Window The Okafor Employment Agreement provides for a Change of Control Window of 12 months following a Change of Control. This is the shortest window among the four executive agreements.

3. Double-Trigger Severance Provisions If, within the 12-month Change of Control Window, Ms. Okafor's employment is terminated by the Company without Cause or Ms. Okafor resigns for Good Reason, she will be entitled to: (i) Cash Severance Payment: 1.5 × ($525,000 + $393,750) = $1,378,125. (ii) Equity Award Acceleration: Partial acceleration — 50% of unvested equity awards (as distinguished from the full acceleration

4. Rollover and Post-Closing Status Importantly, Ms. Okafor is not a rollover participant. She has not been included in the group of executives who will roll over equity into the post-closing entity. This raises the question of whether Ms. Okafor will continue in her role as General Counsel & Corporate Secretary of Pennfield following the closing, or whether Harrowgate intends to install its own legal counsel or rest

5. Section 280G Analysis The Okafor Employment Agreement contains the same "best net" cutback provision. We recommend that 280G calculations be prepared for Ms. Okafor as well, noting that the lower severance multiplier (1.5x) and shorter benefits continuation period (12 months) reduce the likelihood that the 280G safe harbor will be exceeded, but this cannot be confirmed without a detailed analysis of Ms. Okafor's b

6. Restrictive Covenants The Okafor Employment Agreement contains a 12-month non-competition covenant and a 12-month non-solicitation covenant. F. Summary Table — Executive Employment Agreements Note: Estimated cash severance amounts reflect base salary plus target bonus multiplied by the applicable multiplier. Amounts do not include the value of accelerated equity awards, continued health and welfare benefits, or pr

V. COMMERCIAL LEASE AGREEMENTS A. Overview of Lease Portfolio Pennfield operates an extensive real estate portfolio in connection with its retail, distribution, and corporate operations. Based on the information available in the data room and in Pennfield's public filings, the Company's lease portfolio consists of: • 187 company-owned store locations across 34 states; • 22 outlet locations (for a total of 209 retail

1. Consent-Required Provisions (Approximately 24 Leases) Approximately 24 leases require the tenant to obtain the prior written consent of the landlord before any direct or indirect "change of control" of the tenant may occur. The specific formulation varies from lease to lease, but the typical provision states that any transfer, sale, or other disposition of 50% or more of the voting interests in the tenant (whether

2. Notice-Only Provisions (Approximately 9 Leases) Approximately 9 leases require the tenant to provide written notice to the landlord within a specified period (typically 30 days, and in some cases 15 or 60 days) following a change of control, but do not require the landlord's consent. While the notice obligation is less onerous than a consent requirement, failure to provide timely notice may itself constitute a def

3. Recapture Rights (Approximately 5 Leases) Approximately 5 leases grant the landlord the right to terminate the lease and "recapture" the premises upon a change of control of the tenant. In these leases, upon receiving notice of the change of control (or upon the occurrence of the change of control, if no prior notice is required), the landlord has a specified period — typically 30 to 60 days — within which to exer

1. Lease Terms Pennfield's corporate headquarters is located at 4500 Commerce Boulevard, Suite 800, Charlotte, North Carolina 28202. The premises comprise approximately 62,000 rentable square feet. The landlord is identified in the data room (name omitted from this circulation copy for confidentiality). The current lease term runs through June 30, 2031, with two successive five-year renewal options exercisable by the

2. Change of Control Provision

Section 14.3 of the headquarters lease provides that any "Transfer" (defined to include any direct or indirect change of control of the tenant, meaning any transfer, issuance, or other disposition of 50% or more of the voting interests in the tenant entity, whether by sale, merger, consolidation, or otherwise) requires the prior written consent of the landlord. The lease provides that the landlord's consent "shall no

3. Required Action A landlord consent request letter should be prepared and delivered to the headquarters landlord promptly following the execution of the Merger Agreement (or, if the landlord can be approached confidentially prior to signing, as early as practicable). Based on our experience with similar consent solicitations, we estimate that the landlord response process will take approximately 30 to 45 days from

1. Consent-Required Leases (24 leases): Prepare and deliver landlord consent request letters for all 24 consent-required leases. A form of consent request letter is attached as Appendix C. We recommend that the letters be sent promptly following the execution of the Merger Agreement, with a target response deadline of 30 to 45 days. For leases where the landlord's consent is at the landlord's sole discretion (as oppo

2. Notice-Only Leases (9 leases): Prepare and deliver form notice letters for all 9 notice-only leases. These can be sent either promptly after signing or at the closing, depending on the specific notice period required by each lease. We recommend a standardized form of notice letter with lease-specific details to be inserted.

3. Recapture-Right Leases (5 leases): Initiate direct outreach to the landlords of the 5 recapture-right locations through Pennfield's real estate team. The goal of this outreach is to (a) inform the landlords of the anticipated transaction, (b) gauge their likelihood of exercising recapture rights, and (c) negotiate waivers or amendments. Given the revenue significance of several of these locations, we recommend tha

4. Lease Consent Tracker: Build and maintain a comprehensive lease consent tracker, to be integrated into the master Closing Checklist & Conditions Tracker maintained by Kowalski and Chu. The tracker should include, for each affected lease: the landlord's name and contact information, the type of provision (consent, notice, or recapture), the date the consent request or notice was sent, the deadline for response, the

VI. EQUITY INCENTIVE PLANS AND AWARD AGREEMENTS A. Pennfield Holdings, Inc. 2019 Omnibus Equity Incentive Plan

1. Plan History and Authorization The Pennfield Holdings, Inc. 2019 Omnibus Equity Incentive Plan (the "Plan") was adopted by the Pennfield Board of Directors in June 2019 and approved by Pennfield's stockholders at the 2019 Annual Meeting of Stockholders. The Plan authorized the issuance of up to 6,500,000 shares of Pennfield common stock pursuant to awards granted under the Plan. As of the most recent proxy stateme

2. Change of Control Definition

Section 2.6 of the Plan defines "Change of Control" to mean the occurrence of any of the following events: (a) The acquisition by any person or group (as defined in the Exchange Act) of beneficial ownership of more than 50% of the combined voting power of Pennfield's then-outstanding voting securities; (b) The consummation of a merger, consolidation, or similar business combination involving Pennfield after which the

3. Plan Provisions Regarding Treatment of Awards Upon Change of Control The Plan contains detailed provisions governing the treatment of outstanding awards upon a Change of Control, set forth primarily in Section 12 of the Plan. The key provisions are summarized below and discussed in further detail in the subsections that follow. B. Treatment of Outstanding Stock Options

1. Outstanding Options As of the most recent available information, approximately 1,800,000 shares of Pennfield common stock are subject to outstanding stock options granted under the Plan. These options include a mix of options that are currently vested and exercisable and options that remain subject to time-based vesting conditions. The outstanding options were granted at various exercise prices over the period fro