Contract analysis

I. Executive Summary This memorandum summarizes the findings of the environmental compliance review conducted by Calderwood & Harkness LLP as part of the legal due diligence in connection with the proposed take-private acquisition of Pennfield Holdings, Inc. ("Pennfield" or the "Company") (Nasdaq: PNFD) by Harrowgate Private Equity Fund IV LP ("Harrowgate" or the "Buyer"), through a reverse triangular merger with Pin

II. Scope and Methodology A. Documents Reviewed Calderwood & Harkness conducted a comprehensive review of the environmental compliance documentation produced by Pennfield and its advisors to the Project Summit virtual data room on the Thackeray Solutions platform. The principal categories of documents reviewed include the following:

1. Phase I Environmental Site Assessments. Phase I ESAs prepared in accordance with ASTM E1527-21 (Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process) for each of Pennfield's three warehouse and distribution center facilities. These assessments were prepared by qualified environmental consulting firms and included historical research, database reviews, site reconnaissa

2. Environmental Permits. Copies of all environmental permits held by Pennfield, including stormwater general permits, hazardous waste generator registrations, and related documentation such as Stormwater Pollution Prevention Plans ("SWPPPs") and monitoring reports.

3. Regulatory Correspondence. All correspondence between Pennfield and federal, state, and local environmental regulatory agencies, including any notices of violation, inspection reports, compliance orders, and responses thereto.

4. Compliance Audit Reports. Internal environmental compliance audit reports and assessments prepared by Pennfield's environmental, health, and safety ("EHS") team and third-party consultants.

5. Remediation Documentation. Any documentation relating to environmental investigation, remediation, or corrective action at current or former Pennfield facilities, to the extent such documentation exists (none was identified, as discussed in Section VIII).

6. Environmental Diligence Questionnaire Responses. Pennfield's responses to the environmental section of the buyer's due diligence questionnaire, submitted on February 28, 2025, with supplemental responses provided on March 14, 2025, and March 21, 2025.

7. Lease Agreements. Lease agreements for retail store locations and warehouse and distribution facilities, reviewed in coordination with the real estate diligence workstream. This review cross-references the Real Estate & Lease Portfolio Summary memorandum prepared by the Calderwood & Harkness real estate team, dated March 25, 2025, with particular attention to environmental provisions, indemnification obligations,

8. Environmental Insurance Policies and Claims Records. Historical environmental insurance policies maintained by Pennfield and records of any environmental claims submitted thereunder.

9. Waste Management Contracts. Material contracts with waste haulers, recycling vendors, and environmental service providers, including agreements governing the transportation, treatment, and disposal of hazardous and non-hazardous waste generated at Pennfield's distribution center facilities.

10. Safety Data Sheets and Hazardous Communication Materials. Representative Safety Data Sheets and Hazard Communication program documentation maintained at distribution center facilities. A complete itemized list of the data room documents reviewed, organized by facility and cross-referenced to Project Summit data room index numbers on Thackeray Solutions, is set forth in Appendix A to this memorandum. B. Limitation

1. No Phase II Environmental Site Assessments. No Phase II ESAs (i.e., subsurface sampling, soil borings, groundwater monitoring well installation, or other intrusive investigation activities) were conducted or commissioned by Calderwood & Harkness or Harrowgate in connection with this diligence review. Reliance is placed on the existing Phase I ESAs produced by Pennfield to the data room, which were prepared by thir

2. Data Room Cut-Off Date. This review is limited to documents produced to the Project Summit data room as of March 25, 2025, the date on which the final batch of responsive documents was uploaded by Pennfield's outside counsel. Any documents produced after this date have not been reviewed for purposes of this memorandum, though we will continue to monitor data room uploads through the anticipated closing date.

3. No Independent Site Inspections. No independent site inspections or physical environmental assessments of any Pennfield facility were performed by Calderwood & Harkness attorneys or agents in connection with this review. Our assessment is based entirely on the documentary record produced to the data room and information provided by Pennfield's management and counsel.

4. Auditor Contact. Pennfield's independent auditor, Pemberton & Associates LLP (lead audit partner: Kevin Tarrant Corporation), was not separately contacted by Calderwood & Harkness regarding environmental accruals, contingent liabilities, or other environmental matters reflected or potentially required to be reflected in Pennfield's audited financial statements. Reliance is placed on the data room disclosures, incl

5. Tax Advisor Exclusion. Environmental matters, if any, relating to Pennfield's tax advisor, Crestline Tax Advisors LLC (Alan Fitzgerald), were not within the scope of this review.

6. General Limitations. This memorandum addresses environmental compliance matters based on currently available information and applicable law as of the date hereof. It does not constitute a guarantee that no environmental liabilities exist or will arise in the future. Environmental conditions that are unknown, undisclosed, or not reasonably discoverable through the diligence procedures described herein may exist at

III. Facility Overview Pennfield's real estate portfolio, for purposes of this environmental review, consists of three principal categories of facilities: (a) the corporate headquarters in Charlotte, North Carolina; (b) 209 retail and outlet store locations across 34 states; and (c) three warehouse and distribution center facilities. Each category is discussed below. A. Corporate Headquarters Pennfield's corporate he

1. Charlotte Distribution Center. Pennfield's primary national distribution hub is located at 1280 Logistics Parkway, Charlotte, North Carolina 28214. The facility comprises approximately 350,000 square feet of warehouse and distribution space in a modern, single-story industrial building constructed in 2015. The lease commenced on March 1, 2018, with a current term running through February 28, 2028, and two five-yea

2. Reno Distribution Center. Pennfield's western distribution center is located at 7400 Industrial Way, Reno, Nevada 89506. The facility comprises approximately 180,000 square feet of warehouse and distribution space in a single-story industrial building. The lease commenced on January 1, 2020, with a current term running through December 31, 2029, and one five-year renewal option. This facility serves Pennfield's re

3. Columbus Distribution Center. Pennfield's midwestern and northeastern distribution center is located at 3200 Commerce Center Drive, Columbus, Ohio 43228. The facility comprises approximately 150,000 square feet of warehouse and distribution space. The lease was originally executed in 2016 and was renewed in early 2024 for an additional seven-year term running through January 31, 2031. This facility serves retail l

IV. Hazardous Materials Handling and Storage A. Retail Locations As noted in Section III.B above, hazardous materials present at Pennfield's 209 retail and outlet locations are limited to de minimis quantities of cleaning supplies and certain consumer products offered for sale that may contain regulated substances. The quantities involved at any individual retail location are well below reportable thresholds under th

V. Underground Storage Tanks (USTs) Pennfield has affirmatively represented, through its responses to the environmental diligence questionnaire and through supplemental certifications provided by its General Counsel, Patricia Okafor, that the Company does not own or operate any underground storage tanks at any of its currently owned or leased facilities. This representation encompasses all 209 retail and outlet locat

VI. Phase I Environmental Site Assessments A. Distribution Centers Phase I Environmental Site Assessments were conducted for each of Pennfield's three distribution center facilities within the past three years. Each Phase I ESA was prepared in general conformance with the ASTM E1527-21 standard and included, among other components, a review of historical sources (including historical aerial photographs, Trelwick fire

1. Charlotte Distribution Center. A Phase I ESA for the Charlotte Distribution Center at 1280 Logistics Parkway, Charlotte, North Carolina 28214, was prepared in June 2023 by EcoTech Environmental Consulting, Inc. ("EcoTech"), an environmental consulting firm retained by the property landlord, Logistics Capital Partners LLC, in connection with a refinancing of the property. The report was uploaded to the data room at

2. Reno Distribution Center. A Phase I ESA for the Reno Distribution Center at 7400 Industrial Way, Reno, Nevada 89506, was prepared in September 2022 by Western Environmental Associates, LLC, at the time of Pennfield's execution of the lease for the facility. The report was uploaded to the data room at folder 4.3.2 (Data Room Index No. 4.3.2.01). The Reno Phase I ESA identified no Recognized Environmental Conditions

3. Columbus Distribution Center. A Phase I ESA for the Columbus Distribution Center at 3200 Commerce Center Drive, Columbus, Ohio 43228, was prepared in February 2024 by Midland Environmental Group, Inc., at the time of Pennfield's lease renewal for the facility. The report was uploaded to the data room at folder 4.3.3 (Data Room Index No. 4.3.3.01). The Columbus Phase I ESA identified no Recognized Environmental Con

VII. Environmental Permits and Regulatory Compliance A. Air Quality Permits No air emission permits are required or held by Pennfield at any of its facilities. The Company's operations do not involve emissions sources subject to permitting under the Clean Air Act, 42 U.S.C. §§ 7401-7671q, or analogous state air quality statutes. Specifically, Pennfield does not operate manufacturing facilities, paint spray booths, so

VIII. Remediation and Environmental Liabilities Based on our review of the data room documents and Pennfield's responses to the environmental diligence questionnaire, no active remediation obligations have been identified for any property currently owned, leased, or operated by Pennfield. The Company has not been required to conduct, and is not currently conducting, any environmental investigation, remediation, corre

IX. Environmental Insurance Pennfield does not currently maintain a standalone environmental liability insurance policy, such as a Pollution Legal Liability ("PLL") policy, Site Pollution Liability policy, or similar environmental-specific coverage. This is consistent with the Company's low-risk environmental profile as a specialty retailer and logistics operator with no manufacturing or heavy industrial operations.

X. Change of Control Considerations — Environmental Permits The reverse triangular merger structure contemplated by the Transaction will result in Pennfield surviving as a wholly-owned subsidiary of Harrowgate (with Merger Sub merging into Pennfield), and accordingly the Transaction constitutes a change of control of Pennfield for purposes of certain of the Company's agreements, permits, and plans. With respect to en

XI. Recommendations and Open Items Based on the findings of this environmental diligence review, the following items are recommended for attention prior to and following the closing of the Transaction. A. Pre-Closing Items

1. Columbus Stormwater Permit Status. Confirm the stormwater permit status at the Columbus Distribution Center. Specifically, determine whether the facility qualifies for a "No Exposure" exclusion under Ohio EPA's industrial stormwater permitting program, and if so, arrange for Pennfield to file a No Exposure Certification with Ohio EPA prior to closing or promptly following closing. If the facility does not qualify

2. Updated SDS and HazCom Records. Request that Pennfield provide updated Safety Data Sheet files and Hazard Communication training records for distribution center employees as part of the closing deliverables or as a condition to the bring-down of environmental representations. This will ensure that Harrowgate has a complete baseline of EHS compliance documentation for the distribution center operations at the time

1. Stormwater Permit Transfer Notifications. Following the closing of the Transaction, submit transfer notifications and/or updated Notices of Intent for the stormwater general permits at the Charlotte Distribution Center (NC DEQ) and the Reno Distribution Center (NDEP) to reflect the change in ultimate corporate ownership of Pennfield. These filings should be prepared by Harrowgate's environmental counsel or a quali

2. RCRA Notification Updates. Submit updated RCRA notification forms (EPA Form 8700-12) for the Charlotte, Reno, and Columbus distribution centers to the applicable EPA Region or authorized state agency (the North Carolina Department of Environmental Quality, the Nevada Division of Environmental Protection, and the Ohio Environmental Protection Agency, respectively) to reflect the post-merger ownership structure. The

3. SPCC Plan Updates. Update the Spill Prevention, Control, and Countermeasure plans at the Charlotte and Reno distribution centers (and the voluntary SPCC plan at the Columbus distribution center) to reflect the new corporate ownership. Updated SPCC plans should be prepared and certified by a licensed Professional Engineer. We recommend that SPCC plan updates be completed within 90 days following the closing date.

4. Pollution Legal Liability Insurance Evaluation. Evaluate whether standalone Pollution Legal Liability ("PLL") insurance should be procured for the distribution center operations post-closing. While the overall environmental risk profile is low, the CREC on the parcel adjacent to the Charlotte Distribution Center (relating to the historical dry cleaner and ongoing groundwater monitoring) warrants consideration of P