Contract analysis

I. Executive Summary The purpose of this memorandum is to summarize the findings of our review of the real estate and lease portfolio of Pennfield Holdings, Inc. ("Pennfield" or the "Company") in connection with the proposed acquisition of Pennfield by Harrowgate Private Equity Fund IV LP ("HPE Fund IV" or the "Sponsor") for an aggregate equity purchase price of approximately $980,000,000 (the "Transaction"). The Tra

II. Portfolio Overview A. Summary of Real Estate Holdings by Category The table below provides a high-level summary of Pennfield's real estate portfolio as reflected in the Data Room materials reviewed through March 25, 2025: As the table above illustrates, Pennfield's real estate portfolio is overwhelmingly leased. Virtually all retail locations and outlet stores are operated under lease agreements with third-party

III. Corporate Headquarters Pennfield's corporate headquarters is located at 4500 Commerce Boulevard, Suite 800, Charlotte, North Carolina 28202 (the "HQ Facility"). The following summarizes the key terms of the corporate headquarters lease based on the materials reviewed in the Data Room: Landlord. The landlord under the headquarters lease is Commerce Boulevard Partners LLC, a Delaware limited liability company, whi

IV. Retail Store Leases — Detailed Analysis A. Lease Terms and Expiration Profile Typical Lease Terms. The retail store leases across the Pennfield portfolio generally follow a standard structure for specialty retail tenants. Initial lease terms typically range from 10 to 15 years, with the most common initial term being 10 years. Certain newer leases executed since 2020 reflect somewhat shorter initial terms of 7 to

V. Outlet Store Leases Pennfield operates 22 outlet store locations across the United States, all of which are leased. The outlet locations represent an important component of the Company's multi-channel retail strategy, providing a channel for clearance and excess inventory disposition as well as outlet-exclusive product lines. Outlet Mall Operators/Landlords. The 22 outlet locations are situated in outlet malls ope

VI. Distribution and Warehouse Facilities Pennfield operates four regional distribution and warehouse facilities that support its retail store network and e-commerce fulfillment operations. The following summarizes the key information for each facility based on the Data Room materials: Facility 1 — Gastonia, North Carolina (Owned) The Company's primary distribution center is located at 2200 Industrial Park Drive, Gas

VII. Change of Control Provisions This section addresses the change of control provisions found in the Pennfield lease portfolio. This is a critical issue for the Transaction, as the Merger will constitute a change of control under numerous lease agreements, and the failure to obtain required consents could give rise to landlord remedies, including in certain cases lease termination or recapture rights. Transaction S

1. Consent Required. Leases that explicitly require the landlord's prior written consent before a change of control of the tenant may be effectuated. The reverse triangular merger resulting in Pennfield becoming a wholly owned subsidiary of HPE Fund IV triggers the consent requirement under these leases. The failure to obtain consent prior to the change of control typically constitutes an event of default under the l

2. Notice Only. Leases that require the tenant to provide written notice to the landlord of a change of control but do not require the landlord's consent. Under these leases, Pennfield must notify the landlord of the Merger either prior to or within a specified period following the closing, but the landlord has no approval right and cannot block the transaction.

3. No Restriction. Leases that are silent on the issue of change of control or that contain express carve-outs exempting mergers, consolidations, or acquisitions from the change of control provisions. Certain leases also contain carve-outs for transfers to affiliates or in connection with a sale of all or substantially all of the assets of the tenant, which may or may not apply to the Merger depending on the specific

4. Termination Right. Leases that grant the landlord an affirmative right to terminate the lease upon the occurrence of a change of control. These provisions are the most adverse to the Transaction, as they give the landlord the unilateral ability to reclaim the premises. In some cases, the landlord's termination right is conditioned on the failure of the new controlling party to meet specified financial or creditwor

5. Recapture Right. Leases that grant the landlord a right to recapture the premises (i.e., to terminate the lease and retake possession of the leased space) upon the occurrence of a change of control. Recapture rights are functionally similar to termination rights but are typically framed as the landlord's election to step into the shoes of the tenant or to re-let the premises to a third party. Certain recapture pro

1. Pre-Closing Outreach. The Company should commence landlord outreach at least 60 to 90 days prior to the Anticipated Closing Date (i.e., by early to mid-April 2025) for all leases requiring consent or for which a termination or recapture right exists. The outreach should be coordinated through Pennfield's real estate team under the direction of Patricia Okafor (General Counsel) with the assistance of outside counse

2. Form of Consent Letter. Calderwood & Harkness LLP should prepare a standardized form of landlord consent letter that can be customized for each lease. The consent letter should include a brief description of the Merger, confirmation that the surviving entity (Pennfield) will continue as the tenant, and an acknowledgment that the Merger does not constitute an assignment of the lease. The consent letter should also

3. Prioritization. The consent solicitation should be prioritized as follows: (a) leases with termination or recapture rights, (b) high-revenue consent-required locations, (c) headquarters and distribution facility leases, and (d) all remaining consent-required leases.

4. Fallback Provisions. For leases where consent is not obtained prior to closing, the Agreement and Plan of Merger should include appropriate provisions allocating the risk between HPE Fund IV and the Pennfield shareholders. We discuss this further below. Interaction with the Agreement and Plan of Merger. The closing conditions in the Agreement and Plan of Merger (the "Merger Agreement") should address the lease con

VIII. Co-Tenancy Clauses Overview Co-tenancy provisions are a significant feature of the Pennfield lease portfolio, particularly with respect to inline mall and outlet mall locations. Co-tenancy clauses grant Pennfield certain protective rights — including rent reduction and, in some cases, lease termination rights — in the event that specified anchor tenants or a minimum percentage of co-tenants at a shopping center