Contract analysis

I. Executive Summary This memorandum summarizes the terms of the buyer-side representations and warranty insurance ("R&W Insurance") policy issued by Meridian Specialty Insurance Company, a Connecticut-domiciled insurer with its principal place of business at One Constitution Plaza, 18th Floor, Hartford, CT 06103 (the "Carrier" or "Meridian"). The policy was bound on March 28, 2025, in connection with the proposed ta

II. Transaction Overview A. Parties The following is a summary of the principal parties to the Transaction: Buyer. Harrowgate Private Equity Fund IV LP ("HPE Fund IV"), a Delaware limited partnership, with its principal office located at 1200 Market Street, Suite 3100, Wilmington, DE 19801 (EIN: 87-2263148). HPE Fund IV is the fourth institutional buyout fund managed by the Harrowgate Capital Partners platform. Gener

III. Policy Placement Process A. Broker Engagement In late February 2025, Harrowgate engaged Lockwood Risk Advisors LLC ("Lockwood"), an insurance brokerage firm specializing in transactional risk insurance, to manage a competitive placement process for buyer-side R&W Insurance in connection with the Transaction. Lockwood maintains its principal office at 125 High Street, Suite 900, Boston, MA 02110. James Fielding,

IV. Summary of Bound Policy Terms Set forth below is a detailed summary of the principal terms and conditions of the bound R&W Insurance policy. This summary is qualified in its entirety by reference to the full text of the bound policy form, a copy of which is retained in the deal files as Appendix A and is not reproduced in this memorandum. A. Named Insured The Named Insureds under the policy are:

1. Harrowgate Private Equity Fund IV LP (Buyer)

2. Pinnacle Merger Sub, Inc. (Merger Sub)

3. Pennfield Holdings, Inc. (as the surviving corporation in the Merger, effective as of the Closing Date) and its subsidiaries The following entities and individuals are designated as Additional Insureds under the policy: • Harrowgate Capital Partners IV GP LLC (General Partner of HPE Fund IV) • Harrowgate Capital Partners LLC (Investment Manager) • Ashford Growth Partners LP (Co-Investor) • The respective directors

1. Organization, Good Standing, and Qualification. Representations that Pennfield and each of its subsidiaries is duly organized, validly existing, and in good standing under the laws of its jurisdiction of organization, and is duly qualified or licensed to do business in each jurisdiction where the nature of its business or the ownership of its properties requires such qualification.

2. Authorization and Enforceability. Representations that Pennfield has the requisite corporate power and authority to execute, deliver, and perform its obligations under the Merger Agreement and to consummate the Merger, and that the Merger Agreement constitutes a valid and binding obligation of Pennfield enforceable in accordance with its terms.

3. Capitalization. Representations regarding Pennfield's authorized and outstanding capital stock, including 58,200,000 basic shares of common stock outstanding, 3,250,000 shares issuable upon exercise or settlement of outstanding stock options and RSUs, and 61,450,000 fully diluted shares. The capitalization representation also addresses the absence of other outstanding equity securities, warrants, convertible instr

4. Financial Statements. Representations that Pennfield's audited consolidated financial statements for the fiscal year ended January 31, 2025 (FY 2024), and the unaudited interim financial statements for the most recently completed fiscal quarter, have been prepared in accordance with GAAP consistently applied and fairly present in all material respects the financial position, results of operations, and cash flows o

5. Absence of Undisclosed Liabilities. Representations that neither Pennfield nor any of its subsidiaries has any liabilities of a nature required to be reflected or reserved against in a balance sheet prepared in accordance with GAAP, other than liabilities (a) reflected or reserved against in the most recent balance sheet included in the financial statements, (b) incurred in the ordinary course of business since th

6. Absence of Certain Changes (Material Adverse Effect). Representations that, since the date of the most recent balance sheet, there has been no event, development, or circumstance that, individually or in the aggregate, has had or would reasonably be expected to have a Material Adverse Effect on Pennfield and its subsidiaries, taken as a whole.

7. Compliance with Laws. Representations that Pennfield and its subsidiaries are, and have been since the applicable look-back date, in material compliance with all applicable federal, state, local, and foreign laws, statutes, regulations, ordinances, and orders.

8. Tax Matters. Representations regarding the timely filing of all required tax returns, the timely payment of all taxes due, the absence of pending or threatened tax audits or disputes, and compliance with tax withholding and reporting obligations.

9. Employee Benefits / ERISA. Representations regarding the establishment, maintenance, and administration of Pennfield's employee benefit plans in compliance with ERISA, the Internal Revenue Code, and applicable law, including representations regarding the funded status of pension plans and the absence of withdrawal liability with respect to multiemployer plans.

10. Environmental Matters. Representations regarding Pennfield's compliance with applicable environmental laws and regulations, the absence of material environmental liabilities, the absence of releases or threatened releases of hazardous substances at or from properties owned, operated, or leased by Pennfield, and the possession of all required environmental permits.

11. Material Contracts. Representations regarding the material contracts to which Pennfield and its subsidiaries are a party, including the accuracy of the schedule of material contracts, the absence of defaults, and the validity and enforceability of such contracts.

12. Real Property. Representations regarding the real property owned or leased by Pennfield, encompassing all 187 company-owned store locations, 22 outlet locations, the corporate headquarters in Charlotte, NC, and distribution and warehouse facilities. 13. intellectual Property. Representations regarding Pennfield's ownership of or right to use its material intellectual property, the absence of infringement claims,

14. Litigation and Proceedings. Representations regarding the absence of pending or, to the knowledge of Pennfield, threatened litigation, arbitration, or governmental proceedings that would reasonably be expected to be material.

15. Insurance. Representations regarding the maintenance of insurance policies customary for businesses of the type and size operated by Pennfield.

16. Brokers and Finders. Representations that no broker, finder, or investment banker (other than Whitmore Zanthor & Co.) is entitled to any brokerage fee, finder's fee, or other commission in connection with the Merger.

17. Anti-Corruption / FCPA. Representations regarding compliance with the U.S. Foreign Corrupt Practices Act and other applicable anti-corruption laws and regulations.

18. Data Privacy and Cybersecurity. Representations regarding Pennfield's compliance with applicable data privacy and data protection laws and regulations, the adequacy of its cybersecurity policies and practices, and the absence of material data breaches or unauthorized access to personal information.

V. Exclusions and Limitations A. Standard Exclusions The bound policy contains the following standard exclusions from coverage, which are customary in buyer-side R&W Insurance policies for transactions of this type and size:

1. Known Breaches / Actual Knowledge Exclusion. The policy does not provide coverage for any breach of a representation or warranty of which any member of the "Deal Team Knowledge Group" had actual knowledge as of the date the policy was bound (March 28, 2025). The Deal Team Knowledge Group is a specifically defined and negotiated list of individuals whose knowledge is attributed to the Named Insureds for purposes of

2. Forward-Looking Statements and Projections. The policy does not provide coverage for losses arising from breaches of any forward-looking statements, financial projections, forecasts, budgets, or estimates of Pennfield, whether included in the Merger Agreement, the Seller's disclosure schedules, or any other document provided in connection with the Transaction. This exclusion is standard and reflects the principle

3. Purchase Price Adjustments. The policy does not provide coverage for losses to the extent they constitute adjustments to the merger consideration that are subject to the purchase price adjustment mechanism (if any) in the Merger Agreement. It is noted that the Merger Agreement provides for a fixed-price deal with no post-closing purchase price adjustment. Accordingly, this exclusion is not expected to have practic

4. Consequential, Punitive, and Multiplied Damages. Coverage for consequential damages is available only to the extent such damages are awarded to a third party in a Third-Party Claim (i.e., a claim brought by a person or entity other than the Named Insured or an Additional Insured). The policy does not cover consequential damages suffered directly by the Named Insureds in a first-party claim context. The policy does

5. Covenant Breaches. The policy covers only breaches of representations and warranties as defined in the Merger Agreement. It does not cover breaches of covenants, agreements, or obligations of the parties under the Merger Agreement. This distinction is fundamental to the structure of R&W Insurance: representations and warranties are statements of fact made at a point in time, whereas covenants are forward-looking p

6. Pension / Multiemployer Plan Underfunding. The policy does not provide coverage for losses arising from underfunding of defined benefit pension plans or withdrawal liability with respect to multiemployer plans under Title IV of ERISA. This exclusion reflects the significant and often unpredictable magnitude of pension underfunding liabilities, which R&W Insurance carriers generally view as uninsurable on standard

7. Transfer Taxes and Fees. The policy does not provide coverage for transfer taxes, stamp duties, or similar transaction-related taxes or fees incurred in connection with the consummation of the Merger. These costs are transaction expenses borne by the parties pursuant to the tax allocation provisions of the Merger Agreement and are not losses arising from breaches of representations and warranties.

8. Asbestos, Lead Paint, and PFAS Contamination. The policy excludes coverage for losses arising from asbestos, lead-based paint, or per- and polyfluoroalkyl substances ("PFAS") contamination, except to the extent such matters are specifically addressed in the environmental representations in the Merger Agreement and are not otherwise excluded by the negotiated environmental carve-out described in Section VI.D below.

1. Change of Control Consent Costs. The policy does not cover costs associated with obtaining consents required as a result of the Merger constituting a change of control under Pennfield's contracts, leases, or other agreements. Pennfield's existing agreements contain numerous change of control provisions that are triggered by the Merger, including provisions in its existing credit agreements, executive employment ag

2. Intercompany Transactions. The policy does not cover losses arising from intercompany transactions between Pennfield and its subsidiaries to the extent such transactions are eliminated in consolidation. This exclusion addresses the concern that intercompany accounting entries that wash out in the consolidated financial statements should not form the basis for a claim under the policy, as they do not represent a tr

3. Certain Disclosed Matters. Matters specifically disclosed on the Seller's disclosure schedules delivered with the Merger Agreement are excluded from coverage to the extent of such disclosure. This exclusion is coextensive with the customary principle that a buyer cannot claim a breach of a representation that is qualified by a disclosure schedule item that accurately describes the relevant matter. C&H notes that t

4. Undisclosed Tax Liabilities Arising from Pre-Closing Restructuring. The policy does not cover tax liabilities directly attributable to any pre-closing restructuring undertaken by Pennfield at the direction of, or in coordination with, Harrowgate. This exclusion is designed to prevent the Named Insureds from obtaining R&W Insurance coverage for tax consequences of restructuring steps that are within the Buyer's con

VI. Calderwood & Harkness Negotiation Notes The following sections describe the key issues raised during C&H's negotiation of the R&W Insurance policy with Meridian and its underwriting counsel, Winslow & Crane LLP, and the manner in which those issues were resolved. These notes are intended to memorialize the negotiation process for the benefit of the Harrowgate deal team and to provide context for the final policy