1003-00004 · Harrowgate Private Equity Fund IV LP · Diligence

ip-diligence-memo.docx DOCUMENT M&A / Corporate

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PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT WORK PRODUCT

This memorandum has been prepared by Calderwood & Harkness LLP at the direction of counsel and contains the mental impressions, conclusions, opinions, and legal theories of attorneys. It is protected from disclosure by the attorney-client privilege and the work product doctrine. This memorandum should not be disclosed to any person or entity outside the attorney-client relationship without the prior written consent of Calderwood & Harkness LLP.

MEMORANDUM

TO: Oliver Mackenzie, Responsible Partner, M&A — Calderwood & Harkness LLP Ryan Kowalski, Lead Associate, M&A — Calderwood & Harkness LLP

FROM: Megan Chu, Working Associate, M&A — Calderwood & Harkness LLP

DATE: March 24, 2025

RE: intellectual Property Due Diligence Summary — Pennfield Holdings, Inc. (Project Summit)

MATTER NO.: 1003-00004

CLIENT: Harrowgate Private Equity Fund IV LP

I. Executive Summary

This memorandum summarizes the findings from an intellectual property due diligence review of Pennfield Holdings, Inc. ("Pennfield," the "Company," or the "Target," Nasdaq: PNFD) conducted in connection with the proposed take-private acquisition of Pennfield by Harrowgate Private Equity Fund IV LP ("Harrowgate," "HPE Fund IV," or the "Buyer") for an aggregate merger consideration of approximately $980,000,000 (the "Transaction"). The Transaction is structured as a reverse triangular merger in which Pinnacle Merger Sub, Inc. ("Merger Sub"), a newly formed, wholly owned subsidiary of Harrowgate, will merge with and into Pennfield, with Pennfield surviving as the wholly owned subsidiary of Harrowgate following the closing.

The due diligence review was conducted through the virtual data room hosted on Thackeray Solutions under the project code name "Project Summit." The data room was opened on February 10, 2025, and IP-related documents were indexed and made available in folders 4.0 through 4.7. Our review encompassed documents uploaded through March 18, 2025, including supplemental materials provided by Pennfield's General Counsel, Patricia Okafor, and Pennfield's outside intellectual property counsel at Whitaker & Daines LLP. We also conducted independent searches of the United States Patent and Trademark Office ("USPTO") Trademark Status and Document Retrieval ("TSDR") database, the USPTO assignment database, the U.S. Copyright Office records, and publicly available WHOIS domain registration records to verify and supplement the data room materials.

Overall Assessment. Pennfield maintains a material portfolio of registered and unregistered intellectual property assets that support its specialty retail business. The Company operates in the outdoor lifestyle, sporting goods, and adventure apparel segments, with a retail footprint of approximately 187 company-owned store locations, 22 outlet locations, and a growing direct-to-consumer e-commerce operation. The Company's intellectual property portfolio is generally well-maintained and adequate to support current business operations. However, our review has identified certain registration gaps, pending opposition matters, license dependency risks, and other open items that warrant attention in the negotiation and drafting of the Merger Agreement, including in particular the representations and warranties and the buyer disclosure schedules. These items are described in detail throughout this memorandum, with key risk items consolidated in Section VIII below.

Scope of Review. This memorandum covers the following categories of intellectual property: (i) trademarks and service marks (registered and unregistered); (ii) trade names and "doing business as" ("DBA") registrations; (iii) domain names; (iv) proprietary technology and software, including the Company's e-commerce platform; (v) copyrights; (vi) patents (if any); (vii) trade secrets; and (viii) inbound and outbound license agreements relating to intellectual property. Issues relating to software license agreements that do not implicate intellectual property ownership or licensing of the Company's own IP are cross-referenced in the Material Contracts Review Memorandum prepared separately by the deal team. Similarly, change of control provisions in material contracts are addressed comprehensively in the Change of Control Analysis prepared under separate cover.

Recommendation. Several items identified in this review warrant specific attention in the Merger Agreement. In particular, we recommend that: (1) consent outreach be initiated promptly with respect to certain inbound brand license agreements containing change of control provisions; (2) the SUMMIT TRAIL opposition proceeding before the Trademark Trial and Appeal Board ("TTAB") be monitored and managed through the closing process and beyond; (3) a pending USPTO office action on the PENNFIELD EXPEDITION trademark application be timely responded to before its May 2025 deadline; and (4) certain post-closing actions be considered, including a comprehensive open-source software audit, copyright registrations for key assets, and the development of a foreign trademark filing strategy aligned with Harrowgate's investment thesis for the Company. These and additional recommendations are set forth in detail in Sections VIII and XI below.

II. Trademarks and Service Marks

A. Overview of Registered Marks

Based on our review of the Company's trademark schedules maintained in data room folder 4.1, as well as our independent verification through the USPTO TSDR database and assignment records, Pennfield owns approximately forty-two (42) active United States trademark registrations with the USPTO. These registrations cover the PENNFIELD house mark in both word mark and stylized logo formats, as well as various sub-brands, product line names, taglines, and design marks used in connection with the Company's outdoor lifestyle and sporting goods retail operations.

The key registered marks in the Company's portfolio are summarized below:

The remaining thirty-five (35) active registrations cover additional sub-brands, product names, tagline marks (e.g., "Gear Up. Get Out."), seasonal campaign marks, and design marks associated with specific product lines and marketing campaigns. A complete schedule of all forty-two (42) active registrations was provided in data room document 4.1.03 (Pennfield Trademark Registration Schedule, dated January 2025) and has been independently verified against USPTO records.

Registrations span across several International Classes relevant to the Company's business, including International Class 18 (leather goods, bags, and travel accessories), International Class 25 (clothing, footwear, and headgear), International Class 28 (games, toys, and sporting goods), and International Class 35 (retail store services, advertising, and business management). This coverage is generally comprehensive for a specialty retailer operating in the outdoor lifestyle and sporting goods segments.

Importantly, all key registrations appear to be owned directly by Pennfield Holdings, Inc. as the registrant of record. We did not identify any subsidiary ownership fragmentation — that is, we found no instances in which material trademark registrations were held by subsidiaries of Pennfield rather than by Pennfield itself. This is a favorable finding for purposes of the Transaction, as it eliminates the need for intra-group assignment actions prior to or following the closing and simplifies the chain of title analysis for the Company's core brand assets.

B. Maintenance and Renewal Status

We reviewed the maintenance and renewal status of all forty-two (42) active trademark registrations. Of these, thirty-eight (38) registrations are fully current on all required maintenance filings, including Section 8 affidavits of continued use (or excusable non-use), Section 9 renewal applications, and, where applicable, Section 15 affidavits of incontestability. The Company's outside intellectual property counsel at Whitaker & Daines LLP maintains a docketing system for these deadlines, and the Company's General Counsel confirmed in her IP representation letter dated February 2025 that the Company has procedures in place to track and timely file all required maintenance documents.

Four (4) registrations have upcoming renewal deadlines falling within the next twelve (12) months — specifically, between April 2025 and March 2026. These registrations are identified on the schedule attached to data room document 4.1.07. While none of these deadlines is imminent (the earliest is in April 2025), they will fall within the anticipated pre-closing or post-closing period for the Transaction. We recommend that these deadlines be calendared by the deal team and that responsibility for preparing and filing the required maintenance documents be clearly assigned. If the closing occurs before any of these deadlines, post-closing responsibility should be addressed in the transition services or administrative closing checklist. If any of these deadlines fall before the closing, Pennfield should be required under the interim operating covenants of the Merger Agreement to timely file all required maintenance documents in the ordinary course of business consistent with past practice.

No registrations were identified as having lapsed, been cancelled, or become abandoned due to missed maintenance filings. This is a positive indicator of the Company's historical diligence in managing its trademark portfolio.

C. Pending Applications

Three (3) trademark applications are currently pending before the USPTO, reflecting the Company's ongoing efforts to expand its brand portfolio in alignment with its product development and digital commerce strategies:

1. PENNFIELD ALPINE (Serial No. 98/214,356; International Class 25). This application was filed in September 2024 in connection with a new premium outerwear line planned for the fall/winter 2025 retail season. The application has been examined, approved by the examining attorney, and published for opposition in the Official Gazette. As of the date of this memorandum, no Notice of Opposition has been filed, and the thirty-day opposition period has expired without extension. The application is expected to proceed to registration in the ordinary course, and we anticipate that a registration certificate will issue within the next sixty to ninety days.

2. PENNFIELD EXPEDITION (Serial No. 98/301,478; International Class 28). This application was filed in November 2024 for a line of outdoor sporting equipment and accessories. The application is currently at the examination stage. An office action was issued by the USPTO examining attorney requesting amendments to the identification of goods to conform to the USPTO's Acceptable Identification of Goods and Services Manual. The required response is due by May 15, 2025. The office action does not raise substantive refusal grounds (e.g., likelihood of confusion or descriptiveness); rather, it is a routine request for clarification of the goods description. Pennfield's outside IP counsel has confirmed that a response is being prepared and expects the matter to proceed to publication following the amended filing. Nonetheless, the May 2025 deadline must be monitored and the response timely filed to avoid statutory abandonment of the application. This item is flagged as a key open item in Section VIII.G below.

3. BASECAMP DIGITAL (Serial No. 98/412,205; International Classes 35 and 42). This application was filed in January 2025 and relates to the Company's expanded e-commerce services and digital retail platform. The application was recently filed and is currently at the initial processing stage within the USPTO. No examining attorney has been assigned, and no office action has been issued. Given the typical USPTO examination timeline of approximately three to six months from filing, we would not expect substantive action on this application until mid-2025 at the earliest. The application is notable in that it covers International Class 42 (design and development of computer software) in addition to International Class 35 (retail store services), reflecting the Company's positioning of its "Pennfield Digital" e-commerce platform as a branded offering.

D. Opposition and Cancellation Proceedings

Our review identified one (1) active inter partes proceeding before the TTAB involving Pennfield's trademark portfolio:

SUMMIT TRAIL Opposition — TTAB Proceeding No. 91283741. In October 2024, a third party filed a Notice of Opposition against Pennfield's application to register the SUMMIT TRAIL mark in International Class 25 (apparel). The opposer, whose identity has been redacted in the data room materials per the Company's confidentiality protocols, alleges a likelihood of confusion between Pennfield's SUMMIT TRAIL mark and the opposer's prior trademark registration for a mark the opposer contends is confusingly similar. The opposition proceeding is currently in the discovery phase, with written discovery served and responses pending. Trial dates have not yet been set by the Board.

Pennfield's outside IP counsel at Whitaker & Daines LLP has provided a preliminary assessment (data room document 4.1.12) indicating that the opposition has limited merit based on differences in the overall commercial impression of the marks, the channels of trade, and the sophistication of the relevant consumers. However, counsel acknowledged that TTAB proceedings are inherently uncertain and that the outcome cannot be predicted with confidence at this early stage.

The SUMMIT TRAIL apparel line represents a meaningful product sub-brand within Pennfield's business, contributing to the Company's brand identity in the outdoor athletic apparel category. If the opposition were to succeed, Pennfield would lose the ability to obtain a federal registration for the SUMMIT TRAIL mark, although the Company's common-law trademark rights based on its prior and continued use of the mark in commerce would persist. Common-law rights, however, are geographically limited to the areas in which the mark has been used and do not provide the same presumption of nationwide validity and enforcement advantages afforded by federal registration. This matter is discussed further as a key risk item in Section VIII.A below.

No active cancellation proceedings against any of Pennfield's existing registered trademarks were identified in our review of TTAB records, and the Company's General Counsel has confirmed in her IP representation letter that no such proceedings are pending or, to her knowledge, threatened.

E. Foreign Trademark Registrations

Pennfield has not filed any trademark registrations outside the United States, and the Company does not maintain any foreign trademark portfolio. The Company has no foreign retail operations; its physical retail footprint is limited to 187 company-owned stores and 22 outlet locations across thirty-four (34) states within the United States. The Company's e-commerce operations are also currently limited to domestic sales within the United States.

The absence of foreign trademark registrations is consistent with the Company's current operations and does not present an immediate risk to the conduct of the business as presently operated. However, this gap may become significant if Harrowgate's post-acquisition strategy for Pennfield includes international e-commerce expansion, cross-border fulfillment, or the development of retail partnerships in foreign markets. Trademark rights in most foreign jurisdictions are acquired through registration rather than use, and delay in filing could expose the Company to the risk of third-party squatter filings in key international markets. This potential gap is flagged in Section VIII.E below, and we recommend that a foreign trademark filing strategy be developed in coordination with Harrowgate's investment thesis for the Company.

III. Trade Names and DBA Registrations

Pennfield operates under its corporate name, "Pennfield Holdings, Inc.," and under the following trade names and DBA designations in connection with its retail and e-commerce operations:

• Pennfield — the primary consumer-facing brand name used on store signage, marketing materials, and product labeling.

• Pennfield Outfitters — the trade name used in connection with certain full-line retail store locations carrying the complete product assortment.

• Pennfield Outlet — the trade name used in connection with the Company's twenty-two (22) outlet store locations offering discounted merchandise.

We reviewed the Company's DBA and fictitious business name registrations in connection with its key states of operation. The Company's headquarters are located in Charlotte, North Carolina, and the relevant DBA registrations in the State of North Carolina were confirmed as current and in good standing based on filings with the Mecklenburg County Register of Deeds. Additionally, DBA registrations were reviewed in certain major market states where the Company operates multiple retail locations, including California, Texas, Florida, New York, Colorado, and Virginia. Based on the records made available in the data room (folder 4.2), these registrations appear current and consistent with the Company's use of its trade names in those jurisdictions.

We note, however, that we did not conduct a comprehensive state-by-state audit of DBA registrations in all thirty-four (34) states in which Pennfield operates retail locations. It is possible that certain jurisdictions may require updated or new DBA filings following the closing of the Transaction, particularly if the surviving entity's name, organizational structure, or state of formation is modified as part of Harrowgate's post-closing restructuring. We recommend that this item be included on the post-closing administrative checklist to ensure compliance with applicable state filing requirements.

IV. Domain Names

A. Owned Domain Portfolio

Based on our review of domain registrar account records provided in data room folder 4.3 and our independent verification through publicly available WHOIS records, Pennfield owns approximately twenty-eight (28) domain name registrations. The core commercial domains in the portfolio include the following:

In addition to these core commercial domains, the portfolio includes various defensive registrations comprising .net and .org variants of the primary domain names, as well as several registrations intended to capture common misspellings of "pennfield" (e.g., "penfield.com" and "pennfeild.com"). These defensive registrations serve to prevent cybersquatting and to redirect inadvertent consumer traffic to the Company's primary website.

All twenty-eight (28) domain names are registered through a single domain registrar, Marlowe Software, and are configured for automatic renewal. The registrant of record for all domains is Pennfield Holdings, Inc., with Patricia Okafor, the Company's General Counsel, listed as the administrative and technical contact. The centralization of domain management through a single registrar and a single administrative contact is a positive finding from a portfolio management perspective, as it reduces the risk of domains being inadvertently lost due to fragmented management.

B. Domain Expiration and Renewal

We reviewed the expiration dates for all twenty-eight (28) domain name registrations. All domains are current through at least December 2025, and no domains are at immediate risk of expiration or lapse.

Three (3) domains — summittrail.com, ridgebackgear.com, and basecampseries.com — have renewal dates falling in Q3 2025 (September 2025), which will coincide with the anticipated pre-closing or post-closing period for the Transaction. While these domains are set to auto-renew, it is important that the payment method associated with the registrar account (currently a corporate credit card on file) remains active and valid through the renewal dates. We recommend that the deal team confirm renewal responsibility for these domains and ensure that the registrar account credentials and payment information are included in any pre-closing or post-closing transition of administrative functions.

C. Domain Disputes

No active Uniform Domain-Name Dispute-Resolution Policy ("UDRP") proceedings or other formal domain name disputes were identified involving any of Pennfield's domain name registrations.

The Company did address one informal domain dispute in 2024. In approximately June 2024, the Company's outside IP counsel sent a cease-and-desist letter to a third party operating the domain pennfield-outdoors.com, which was being used as a parked domain page with pay-per-click advertising that generated revenue through consumer confusion with the Pennfield brand. The matter was resolved amicably, with the third party agreeing to transfer the domain to Pennfield. The transfer was completed in August 2024, and the domain now redirects to pennfield.com. No litigation was filed, and no payment was made by Pennfield to the third party in connection with the transfer. This resolution is documented in data room document 4.3.09 (correspondence file).

V. Proprietary Technology and Software

A. E-Commerce Platform

Pennfield operates a proprietary e-commerce platform branded as "Pennfield Digital," accessible through the Company's primary commercial website at pennfield.com. The platform was developed in-house by the Company's technology team, which is based at the Company's corporate headquarters in Charlotte, North Carolina, and consists of approximately thirty-five (35) software engineers, product managers, and quality assurance personnel.

The Pennfield Digital platform provides the following core functionality:

• Product Catalog Management: A comprehensive product information management system that supports the display, categorization, search, and filtering of the Company's full product assortment across all product lines (apparel, footwear, gear, and accessories).

• Inventory Integration: Real-time integration with the Company's in-store point-of-sale ("POS") systems and warehouse management systems, enabling unified inventory visibility across the Company's 187 company-owned stores, 22 outlet locations, and centralized distribution centers.

• Customer Account Management: User registration, account management, order history, wish list functionality, and personalized product recommendations based on purchase history and browsing behavior.

• Payment Processing Interfaces: Integration with third-party payment processors, including support for major credit cards, digital wallets (Tidewater Industries Pay, Severin Industries Pay), and the Company's proprietary store credit and gift card systems.

• TRAILHEAD Loyalty Program Engine: The backend system powering the Company's TRAILHEAD customer loyalty and rewards program, including points accrual, tier management, rewards redemption, and promotional campaign management.

The source code for the Pennfield Digital platform is maintained internally on the Company's own development servers and version control repositories. The Company uses Git-based version control and maintains regular backups of the source code repository. Notably, no source code escrow agreements were identified in the data room. While source code escrow is more commonly associated with situations where a licensor provides software to third-party licensees (and Pennfield does not license its platform software to third parties), the absence of escrow may warrant consideration if Harrowgate determines that business continuity protections for the platform code base are advisable.

The platform is built on a combination of proprietary code developed by the Company's technology team and open-source software components. The proprietary code constitutes the core business logic, user interface, and integration layers of the platform, while the open-source components provide supporting infrastructure functionality (e.g., web server frameworks, database libraries, and utility functions). The open-source components and their associated licenses are discussed in Section V.C below.

B. Other Proprietary Software

In addition to the Pennfield Digital e-commerce platform, the Company has developed several proprietary internal software tools to support its retail operations:

• Supply Chain and Distribution Management Tools: Proprietary software used to manage the Company's supply chain operations, including purchase order management, vendor communications, shipment tracking, and distribution center workflow optimization across the Company's warehouse and distribution network.

• In-Store Analytics and Customer Behavior Tracking: Proprietary analytics tools that aggregate data from in-store POS systems, foot traffic sensors, and customer interaction touchpoints to generate insights on store performance, product placement effectiveness, and customer shopping patterns.

• Employee Scheduling and Workforce Management: A proprietary scheduling and workforce management application used across the Company's retail locations to manage employee scheduling, shift swaps, time-off requests, and labor cost forecasting.

These internal tools are used exclusively within the Company's own operations and are not licensed, sold, or otherwise distributed to third parties. They were developed by the Company's technology team and are maintained internally. No third-party claims of ownership or co-development rights in these tools were identified in the data room.

C. Open-Source Software Compliance

As noted above, the Pennfield Digital e-commerce platform incorporates certain open-source software components. The Company's technology team prepared an open-source software inventory and compliance memorandum (data room document 4.4.06), which was reviewed as part of this due diligence process.

Based on our review, the open-source components used in the platform are subject to the following categories of licenses:

• Permissive Licenses (MIT License, Apache License 2.0, BSD Licenses): The majority of open-source components used in the platform are subject to permissive open-source licenses. These licenses generally allow unrestricted use, modification, and distribution of the software, subject to attribution requirements and the inclusion of the original license text. Use of components under permissive licenses does not present material IP risk, provided that the attribution and notice requirements are observed.

• Copyleft License (GNU Lesser General Public License, Version 2.1 — "LGPL v2.1"): At least one open-source component incorporated into the platform is subject to the LGPL v2.1, a "weak copyleft" license. The LGPL v2.1 permits the use of the licensed component in proprietary software without requiring the proprietary code to be released under the same license, provided that the LGPL component is used in a manner consistent with the license terms — specifically, through dynamic linking rather than static incorporation into the proprietary code base. The Company's technology team has represented in its compliance memorandum that the LGPL-licensed component is used as a dynamically linked library and is not statically compiled into or otherwise incorporated into the proprietary source code of the Pennfield Digital platform. If this representation is accurate, the Company's use of the LGPL component should be consistent with the terms of the license and should not trigger the copyleft obligation to release the proprietary platform source code.

We note, however, that we have not conducted an independent technical audit of the platform source code to verify the accuracy of the Company's representations regarding the manner in which the LGPL component is linked. The distinction between dynamic linking and static linking is a technical one that requires code-level analysis by qualified software engineers or technical auditors. Based on the information available in the data room, the Company's representations appear reasonable and internally consistent, but a definitive compliance conclusion cannot be reached without a more detailed technical review.

Recommendation: We recommend that a comprehensive open-source software audit be conducted post-closing, particularly if Harrowgate's investment thesis contemplates licensing, sublicensing, or distributing any components of the Pennfield Digital platform to third parties as part of the Company's digital-first omnichannel strategy. Such an audit would provide a definitive assessment of open-source license compliance and identify any remediation actions that may be required. This recommendation is reflected in the key risk items in Section VIII.D below.

D. Patents

Pennfield does not hold any issued United States patents, and no pending patent applications were identified in the data room or through our independent search of the USPTO patent database. The Company has not historically pursued patent protection for its technology or business methods.

The absence of patents is consistent with the Company's profile as a specialty retailer rather than a technology company. While the Company has developed proprietary e-commerce platform technology and internal software tools, the Company has not sought patent protection for these technologies. This is not unusual for retail companies of similar size and profile, where trade secret protection and contractual restrictions on employee disclosure are often the preferred means of protecting proprietary technology.

No patent infringement claims, assertions, or demands by any third party against Pennfield were identified in the data room materials or in the Company's General Counsel's IP representation letter. Similarly, no indemnification demands related to patent infringement from any of the Company's technology vendors or licensors were identified.

VI. Copyrights

Pennfield claims common-law copyright protection over a range of original works of authorship created in the ordinary course of its business, including:

• Marketing materials, including print advertisements, digital marketing content, social media creative assets, and seasonal campaign materials.

• Product catalogs, both in print and digital formats.

• Website content, including text, layout, and graphical elements displayed on pennfield.com and related properties.

• Photography, including original product photography, lifestyle campaign photography, and in-store imagery.

• E-commerce platform source code, including the proprietary code developed by the Company's technology team for the Pennfield Digital platform and related internal tools.

Despite the breadth of the Company's copyrightable content, no formal copyright registrations with the United States Copyright Office were identified in the data room, and none were located through our independent search of the Copyright Office's registration records. The Company's General Counsel confirmed in her IP representation letter that the Company has not historically pursued copyright registration for its content assets.

While formal registration with the Copyright Office is not a prerequisite for copyright protection under the Copyright Act of 1976, as amended, copyright ownership arises automatically upon the creation of an original work of authorship fixed in a tangible medium of expression, the absence of formal registration has significant practical implications for the Company's ability to enforce its copyrights. Under 17 U.S.C. § 411(a), copyright registration is a prerequisite to commencing a civil action for infringement of a work of U.S. origin. Moreover, under 17 U.S.C. § 412, a copyright owner who has not registered the work prior to the commencement of infringement (or within three months of first publication) is not eligible to recover statutory damages or attorneys' fees, which are often the most powerful remedies available in copyright infringement litigation.

The absence of copyright registrations is a registration gap that, while not uncommon among companies in the retail sector, limits the Company's enforcement posture. We recommend that Pennfield pursue post-closing registration of its highest-value content assets, including in particular the Pennfield Digital platform source code, key original marketing campaign materials, and original photography. Registration of these assets would strengthen the Company's ability to pursue infringement claims and recover meaningful damages in the event of unauthorized copying. This recommendation is discussed further in Section VIII.C below.

No copyright infringement claims asserted by or against Pennfield were identified in our review.

VII. License Agreements

A. Inbound Licenses

1. Software Licenses

Pennfield is a licensee under multiple enterprise software agreements with third-party vendors providing core business systems and technology infrastructure. The key categories of software licenses include:

• Enterprise Resource Planning (ERP): The Company licenses an ERP system from a major enterprise software provider, which serves as the backbone for the Company's financial reporting, procurement, and supply chain management functions.

• Customer Relationship Management (CRM): The Company licenses a CRM platform used to manage customer data, marketing campaigns, and customer service interactions across retail and e-commerce channels.

• Point-of-Sale (POS) Systems: The Company licenses POS software and related technology deployed across its 209 retail and outlet locations.

• Cybersecurity and IT Infrastructure: The Company maintains license agreements for cybersecurity tools, network management software, endpoint protection, and other IT infrastructure components.

These software license agreements were reviewed primarily for the presence of anti-assignment clauses, change of control provisions, and consent-to-assignment requirements that may be implicated by the Transaction. Several of the enterprise software agreements contain provisions that restrict the Company's ability to assign its rights under the agreement without the prior written consent of the licensor, or that grant the licensor certain rights (including, in some cases, termination rights) upon a change of control of the licensee. In a reverse triangular merger structure, the surviving entity (Pennfield) remains the same legal entity and the contractual counterparty, which may mitigate the application of certain anti-assignment provisions. However, the change of control provisions are separately triggered by a change in the ultimate ownership or control of the licensee, which will occur as a result of the Transaction.

A detailed analysis of the assignment and change of control provisions in the Company's material software license agreements is set forth in the Change of Control Analysis prepared separately by the deal team. The software license agreements are also cross-referenced in the Material Contracts Review Memorandum.

2. Brand / Product Licenses

Pennfield is a licensee under three (3) brand license agreements with third-party manufacturers and designers for co-branded product lines carried in Pennfield's retail stores and on its e-commerce platform. These co-branded product arrangements are a component of the Company's merchandising strategy and contribute to the product assortment offered in specific categories, including performance outerwear, technical accessories, and specialty footwear.

The three brand license agreements were reviewed in the data room (folder 4.5, with counterparty names redacted per the Company's data room confidentiality protocols). Our review of these agreements identified the following key provisions relevant to the Transaction:

• Anti-Assignment or Change of Control Consent Provisions: Two of the three brand license agreements contain provisions requiring the prior written consent of the licensor before the licensee may assign its rights under the agreement or undergo a change of control. In a reverse triangular merger, while the licensee entity (Pennfield) survives, the change of ownership of the licensee is likely to trigger the change of control provisions, and the licensors' consent may be required.

• Termination Rights Upon Change of Control: One of the three brand license agreements contains an explicit termination right exercisable by the licensor upon a change of control of the licensee. Under this provision, the licensor may terminate the agreement upon written notice within a specified period following the occurrence of a change of control event, regardless of whether consent was sought. This agreement is the largest of the three by revenue contribution and relates to a high-profile co-branded product line that is prominently featured in the Company's retail and marketing materials.

• Ambiguous Change of Control Clause: One of the remaining two agreements contains a change of control clause that is drafted in ambiguous terms and could be interpreted either as requiring consent or as providing an informational notice obligation only. Further analysis and potentially direct communication with the licensor's counsel may be required to determine the scope of this provision.

The reverse triangular merger will constitute a "change of control" of Pennfield under these agreements, as Harrowgate will acquire 100% of the equity interests of the surviving entity. Accordingly, consent or notice will need to be provided to the relevant licensors in connection with the closing. The brand license agreement containing the explicit termination-on-change-of-control right presents the most significant risk among the three, as the licensor could exercise its termination right regardless of whether consent is sought, and the loss of the associated co-branded product line could have a material impact on the Company's merchandising and revenue. We recommend that consent outreach for this agreement be prioritized and initiated promptly following the signing of the Merger Agreement. This item is discussed further as a key risk item in Section VIII.B below.

3. Content Licenses

Pennfield licenses certain third-party photography and graphic design content for use in its marketing materials, product catalogs, and website content under standard stock photography licenses (e.g., licenses from Kestrel Industries and Greaves Partners LLC) and creative agency agreements with third-party marketing firms. These agreements were reviewed at a high level. The stock photography licenses are generally perpetual or long-term licenses that do not contain assignment or change of control restrictions. The creative agency agreements are standard services agreements that typically assign all intellectual property rights in the work product to the Company. No material assignment or change of control concerns were identified in connection with these content licenses.

B. Outbound Licenses

Pennfield does not grant material outbound licenses of its intellectual property to third parties, with two limited exceptions:

1. Co-Branded Product Partners: In connection with the brand license agreements discussed in Section VII.A.2 above, Pennfield grants limited licenses to its co-branded product partners allowing those partners to use the PENNFIELD trademark and associated branding elements on co-branded products and in co-branded marketing materials. These outbound licenses are the reciprocal complement to the inbound brand licenses and are generally co-terminus with the corresponding inbound license agreements.

2. Authorized E-Commerce Marketplace Partners: Pennfield grants a non-exclusive, limited license to its trademark, product images, and product descriptions to authorized e-commerce marketplace partners for the purpose of listing and promoting Pennfield products on third-party marketplace platforms. These licenses are governed by the Company's standard marketplace partner agreements and are generally narrow in scope, non-exclusive, and revocable at the Company's discretion.

No other material outbound licenses of the Company's intellectual property were identified in the data room.

VIII. Key Risks and Open Items

Based on our review, we have identified the following key risks and open items that warrant attention in connection with the Transaction:

A. SUMMIT TRAIL Opposition Proceeding

The pending TTAB opposition against Pennfield's application to register the SUMMIT TRAIL mark in International Class 25 (TTAB Proceeding No. 91283741) presents a moderate risk to the Company's trademark portfolio. As discussed in Section II.D above, the proceeding was initiated in October 2024, is currently in the discovery phase, and its outcome is uncertain.

If the opposition succeeds, Pennfield would lose the ability to obtain a federal registration for the SUMMIT TRAIL mark. While the Company's common-law trademark rights based on prior and continued use in commerce would persist, the loss of the federal registration would deprive the Company of the presumption of nationwide validity, the constructive notice benefits, and the enhanced statutory remedies associated with a federal registration. Common-law rights would be geographically limited to the areas in which the Company has actually used the mark, which may not encompass all markets relevant to the Company's future expansion plans.

The SUMMIT TRAIL apparel line represents a meaningful product sub-brand within Pennfield's business. The line has been featured prominently in the Company's marketing campaigns and has developed consumer recognition among the Company's target demographic.

Recommendation: We recommend that the deal team continue to monitor this proceeding through the closing process. Additionally, Pennfield's outside IP counsel should evaluate the feasibility of seeking a negotiated settlement or co-existence agreement with the opposer that would allow both parties to maintain their respective marks in defined channels of trade or product categories. A settlement of this nature could resolve the opposition without the risk and expense of a contested TTAB trial. The status of this proceeding should be disclosed on the buyer's disclosure schedules in the Merger Agreement.

B. Change of Control Provisions in IP-Related Licenses

As discussed in Section VII.A.2, the Transaction will constitute a change of control under at least two (2) of Pennfield's three (3) material inbound brand license agreements. The brand license agreement that contains an explicit licensor termination right upon change of control of the licensee presents the most significant risk, as the licensor could elect to terminate the agreement regardless of whether consent was sought, and the loss of the associated co-branded product line would have a material impact on the Company's product assortment and revenue.

Recommendation: Consent outreach to the relevant licensors should be initiated promptly following the signing of the Merger Agreement. The deal team should evaluate whether obtaining consents from these licensors should be included as a closing condition in the Merger Agreement, or whether the risk of non-consent or termination should instead be addressed through the material adverse effect ("MAE") definition, the indemnification provisions, or as a post-closing commercial matter. The brand license agreement with the explicit termination right should be prioritized for early engagement, and the deal team should be prepared to negotiate commercially reasonable accommodations (such as modifications to the license terms or accelerated royalty payments) to secure the licensor's consent.

C. Absence of Copyright Registrations

As discussed in Section VI, Pennfield has no formal copyright registrations with the U.S. Copyright Office, which limits the Company's ability to pursue infringement claims with the full range of statutory remedies available under the Copyright Act.

Recommendation: We recommend that the Company pursue post-closing copyright registration for its highest-value content assets, including in particular: (i) the Pennfield Digital platform source code; (ii) original marketing campaign content and creative assets; and (iii) original product and lifestyle photography. Registration of these assets would strengthen the Company's enforcement posture and position the Company to seek statutory damages and attorneys' fees in the event of infringement. The cost of copyright registration is modest, and the process is relatively straightforward.

D. Open-Source Software Compliance

As discussed in Section V.C, the Pennfield Digital e-commerce platform incorporates at least one open-source component subject to the LGPL v2.1 copyleft license. While the Company's technology team has represented that the component is used in a manner consistent with the LGPL license terms (dynamic linking rather than static incorporation), this representation has not been independently verified through a code-level technical audit.

Recommendation: We recommend that a comprehensive open-source software audit be conducted post-closing. This is particularly important if Harrowgate's investment thesis for the Company contemplates licensing, sublicensing, or distributing any components of the Pennfield Digital platform to third parties, or if the platform technology is expected to be a material driver of enterprise value. A finding of non-compliance with the LGPL or other open-source license terms could expose the Company to claims for injunctive relief or to obligations to release proprietary source code, either of which could have a significant adverse impact on the value of the platform technology.

E. Foreign Trademark Gap

As discussed in Section II.E, Pennfield has not filed trademark registrations in any foreign jurisdiction. The Company's current operations are entirely domestic, and this gap does not present an immediate risk. However, if Harrowgate's post-acquisition strategy includes international e-commerce expansion, cross-border fulfillment to customers in foreign markets, or the development of retail partnerships outside the United States, the absence of foreign trademark registrations could expose the Company to the risk of third-party squatter filings and enforcement difficulties in key international markets.

Recommendation: A foreign trademark filing strategy should be developed promptly post-closing, in coordination with Harrowgate's investment committee and the Company's management team, to secure priority rights in key jurisdictions aligned with the Company's anticipated international expansion plans. Priority markets for consideration may include Canada, the United Kingdom, the European Union (via EUIPO), Australia, Japan, and other jurisdictions identified in the investment thesis.

F. Domain Name Hygiene

While the Company's core domain portfolio of twenty-eight (28) registrations is well-maintained and covers the Company's primary brands and product lines, our review noted that several potentially valuable defensive registrations are absent from the portfolio. Specifically, the Company does not appear to hold country-code top-level domains ("ccTLDs") for key international markets (e.g., .co.uk, .ca, .com.au, .de), nor does the portfolio include registrations under certain newer generic top-level domains (e.g., .shop, .store, .outdoor) that could be relevant to the Company's retail brand. Additionally, while several common misspelling variants are registered, additional misspelling and typosquatting variants may warrant registration as defensive measures.

Recommendation: We recommend that the domain portfolio be expanded post-closing to include additional defensive registrations, particularly ccTLDs for jurisdictions aligned with any international expansion plans and new gTLDs relevant to the Company's retail brand. The cost of domain registration is minimal relative to the brand protection benefits.

G. Pending USPTO Office Action

As discussed in Section II.C, the PENNFIELD EXPEDITION trademark application (Serial No. 98/301,478) has a pending office action requiring a response by May 15, 2025. The office action is non-substantive in nature (requesting amendments to the identification of goods) and is expected to be resolved through a routine amendment filing. However, failure to timely respond would result in the statutory abandonment of the application.

Recommendation: The May 15, 2025 response deadline must be calendared by the deal team and assigned to responsible counsel (either Pennfield's outside IP counsel at Whitaker & Daines LLP or, if the closing occurs before the deadline, successor counsel designated by Harrowgate). Under the interim operating covenants of the Merger Agreement, Pennfield should be required to prosecute and maintain its pending trademark applications in the ordinary course of business consistent with past practice.

IX. Impact on Merger Agreement and Disclosure Schedules

The findings of this IP due diligence review have several implications for the Merger Agreement and related disclosure schedules, which are summarized below for the deal team's consideration in connection with the negotiation and drafting of the definitive transaction documentation.

Representations and Warranties. The intellectual property representations in the Merger Agreement should include, at a minimum, representations covering the following matters:

• Ownership and validity of all registered intellectual property and all material unregistered intellectual property used in the conduct of the Company's business.

• Absence of pending or threatened infringement claims, opposition or cancellation proceedings, and other intellectual property disputes, subject to disclosure of the SUMMIT TRAIL TTAB opposition and other identified matters.

• Compliance with the terms of all material intellectual property license agreements (both inbound and outbound).

• Sufficiency of the Company's intellectual property portfolio to operate the business as currently conducted, without infringement or misappropriation of the intellectual property rights of any third party.

• Compliance with open-source software license terms applicable to the Company's proprietary software.

• Proper ownership assignment of all intellectual property developed by employees and contractors in the course of their engagement with the Company.

Disclosure Schedules. The buyer disclosure schedules should cross-reference and describe the following items:

• The SUMMIT TRAIL TTAB opposition proceeding (Proceeding No. 91283741), including its current status and the Company's outside counsel's preliminary assessment.

• The pending USPTO office action on the PENNFIELD EXPEDITION application (Serial No. 98/301,478), including the May 15, 2025 response deadline.

• The open-source software compliance status, including identification of the LGPL v2.1 component and the Company's technology team's representations regarding dynamic linking.

• The brand license agreements containing change of control provisions and the associated consent requirements.

Indemnification and Insurance. The indemnification provisions in the Merger Agreement, which we understand are currently structured with a cap of $117,600,000 (representing approximately 12% of the $980,000,000 aggregate merger consideration), should be reviewed to confirm that breaches of the intellectual property representations fall within the scope of indemnifiable losses. Similarly, the buyer-side representations and warranties insurance ("R&W Insurance") policy being arranged through Meridian Specialty Insurance Company (with a policy limit of $100,000,000 and a retention of $9,800,000) should be reviewed to confirm that intellectual property representations are included within the scope of insured representations and that no IP-specific exclusions apply that would limit coverage for the risk items identified in this memorandum. We recommend that the R&W insurance broker and underwriting counsel be provided with a copy of this memorandum (subject to appropriate privilege protections) so that the underwriting process can take into account the specific IP risk items identified herein.

X. Documents Reviewed

The following is a summary of the key data room documents and other materials reviewed in connection with this IP due diligence memorandum. Document references correspond to the data room folder and document numbering conventions used in the Thackeray Solutions virtual data room for Project Summit.

1. Pennfield Trademark Registration Schedule (Data Room Doc. 4.1.03) — Schedule of all active and pending U.S. trademark registrations and applications, dated January 2025.

2. USPTO TSDR Database Printouts — Independent printouts of current status information for all forty-two (42) active registrations and three (3) pending applications, obtained from the USPTO TSDR system on March 10–12, 2025.

3. USPTO Assignment Records — Chain of title records for key registered marks, confirming ownership by Pennfield Holdings, Inc.

4. TTAB Opposition File — SUMMIT TRAIL (Data Room Docs. 4.1.10 through 4.1.14) — Notice of Opposition, Pennfield's Answer, and related filings in TTAB Proceeding No. 91283741, including outside counsel's preliminary merit assessment memorandum dated November 2024.

5. Open-Source Software Inventory and Compliance Memorandum (Data Room Doc. 4.4.06) — Internal memorandum prepared by Pennfield's technology team, dated January 2025, describing open-source components used in the Pennfield Digital platform and the Company's assessment of license compliance.

6. Inbound Brand License Agreements (Data Room Docs. 4.5.01 through 4.5.03) — Three brand license agreements with third-party manufacturers/designers (counterparty names redacted per data room confidentiality protocols), reviewed for assignment, change of control, and termination provisions.

7. Enterprise Software License Agreements (Data Room Docs. 4.5.04 through 4.5.11) — Key enterprise software agreements (ERP, CRM, POS, cybersecurity), reviewed for assignment and change of control provisions; cross-referenced in Material Contracts Review Memorandum and Change of Control Analysis.

8. Domain Registrar Account Records (Data Room Doc. 4.3.01) — Summary of all twenty-eight (28) domain name registrations, including registrant information, registration and expiration dates, registrar details, and auto-renewal status.

9. Internal Pennfield Memoranda — E-Commerce Platform Architecture (Data Room Docs. 4.4.01 through 4.4.05) — Internal technical memoranda describing the architecture, technology stack, and development history of the Pennfield Digital e-commerce platform.

10. Pennfield General Counsel IP Representation Letter (Data Room Doc. 4.0.01) — Letter from Patricia Okafor, General Counsel of Pennfield Holdings, Inc., dated February 14, 2025, providing representations regarding the Company's intellectual property ownership, registrations, disputes, and material agreements.

11. DBA/Fictitious Business Name Registration Records (Data Room Docs. 4.2.01 through 4.2.06) — Selected state-level DBA registrations for "Pennfield," "Pennfield Outfitters," and "Pennfield Outlet" in North Carolina and other major market states.

12. Domain Dispute Correspondence (Data Room Doc. 4.3.09) — Correspondence file relating to the pennfield-outdoors.com cease-and-desist and voluntary domain transfer (2024).

XI. Conclusion and Recommendations

Based on our review of the data room materials and independent verification of public records, Pennfield's intellectual property portfolio is adequate to support its current specialty retail operations across 209 retail and outlet locations (187 company-owned stores and 22 outlet locations in 34 states) and its direct-to-consumer e-commerce operations through the Pennfield Digital platform. The Company's trademark portfolio is the most significant component of its IP assets, and the portfolio is generally well-maintained with comprehensive coverage of the Company's house mark and key sub-brands.

The IP portfolio does, however, present certain risks and gaps that warrant attention by the deal team in connection with the Merger Agreement and that may require post-closing remediation. The key action items arising from this review are summarized below:

1. Prioritize Consent Outreach for Brand License Agreements. Consent outreach should be initiated promptly following the signing of the Merger Agreement for the inbound brand license agreement that contains an explicit licensor termination right upon change of control. This agreement is the largest of the three brand license agreements by revenue contribution, and the loss of the associated co-branded product line could have a material impact on the Company's business. The remaining two brand license agreements with change of control consent provisions should also be addressed, with the ambiguous provision in one agreement analyzed further in coordination with the licensor's counsel.

2. Monitor and Manage the SUMMIT TRAIL TTAB Opposition. The pending opposition proceeding (Proceeding No. 91283741) should be monitored through the closing process and beyond. The deal team should evaluate the feasibility of a negotiated settlement or co-existence agreement with the opposer, and should ensure that the proceeding is disclosed on the Merger Agreement disclosure schedules.

3. Ensure Timely Response to PENNFIELD EXPEDITION Office Action. The pending office action on the PENNFIELD EXPEDITION trademark application (Serial No. 98/301,478) requires a response by May 15, 2025. This deadline must be calendared and responsibility assigned to ensure that the response is timely filed and the application is not abandoned. This obligation should be addressed in the interim operating covenants of the Merger Agreement.

4. Post-Closing Workstreams. The following post-closing actions should be considered in coordination with Harrowgate's investment thesis for the Company:

(a) Open-Source Software Audit. A comprehensive code-level audit of the Pennfield Digital platform should be conducted to verify compliance with open-source license terms, particularly the LGPL v2.1 component.

(b) Copyright Registrations. Formal copyright registrations should be pursued for high-value content assets, including the Pennfield Digital platform source code, original marketing campaign content, and original photography.

(c) Foreign Trademark Filings. A foreign trademark filing strategy should be developed to secure priority rights in key international jurisdictions, aligned with Harrowgate's plans for the Company's post-acquisition digital-first omnichannel strategy and potential international e-commerce expansion.

(d) Domain Portfolio Expansion. The domain name portfolio should be expanded to include additional defensive registrations, including ccTLDs for key international markets and relevant new gTLDs.

5. Calendar Renewal Deadlines. Four (4) trademark renewal deadlines and three (3) domain name renewal dates fall within the next twelve (12) months. These deadlines should be calendared by the deal team and assigned post-closing responsibility to ensure continuity.

The findings in this memorandum should be read in conjunction with the Material Contracts Review Memorandum and the Change of Control Analysis, both of which have been prepared separately as part of the Project Summit due diligence workstream and contain additional analysis of assignment and change of control provisions in the Company's material contracts, including IP-related license agreements.

We are available to discuss the contents of this memorandum at your convenience and to assist with the drafting of the Merger Agreement representations, disclosure schedules, and related transaction documentation.

Respectfully submitted,

CALDERWOOD & HARKNESS LLP

By: ________

Megan Chu Working Associate, Mergers & Acquisitions

Distribution: This memorandum is being provided solely to the a

PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT WORK PRODUCT
This memorandum has been prepared by Calderwood & Harkness LLP at the direction of counsel and contains the mental impressions, conclusions, opinions, and legal theories of attorneys. It is protected from disclosure by the attorney-client privilege and the work product doctrine. This memorandum should not be disclosed to any person or entity outside the attorney-client relationship without the prior written consent of Calderwood & Harkness LLP.
MEMORANDUM
TO: Oliver Mackenzie, Responsible Partner, M&A — Calderwood & Harkness LLP Ryan Kowalski, Lead Associate, M&A — Calderwood & Harkness LLP
FROM: Megan Chu, Working Associate, M&A — Calderwood & Harkness LLP
DATE: March 24, 2025
RE: intellectual Property Due Diligence Summary — Pennfield Holdings, Inc. (Project Summit)
MATTER NO.: 1003-00004
CLIENT: Harrowgate Private Equity Fund IV LP
I. Executive Summary
This memorandum summarizes the findings from an intellectual property due diligence review of Pennfield Holdings, Inc. ("Pennfield," the "Company," or the "Target," Nasdaq: PNFD) conducted in connection with the proposed take-private acquisition of Pennfield by Harrowgate Private Equity Fund IV LP ("Harrowgate," "HPE Fund IV," or the "Buyer") for an aggregate merger consideration of approximately $980,000,000 (the "Transaction"). The Transaction is structured as a reverse triangular merger in which Pinnacle Merger Sub, Inc. ("Merger Sub"), a newly formed, wholly owned subsidiary of Harrowgate, will merge with and into Pennfield, with Pennfield surviving as the wholly owned subsidiary of Harrowgate following the closing.
The due diligence review was conducted through the virtual data room hosted on Thackeray Solutions under the project code name "Project Summit." The data room was opened on February 10, 2025, and IP-related documents were indexed and made available in folders 4.0 through 4.7. Our review encompassed documents uploaded through March 18, 2025, including supplemental materials provided by Pennfield's General Counsel, Patricia Okafor, and Pennfield's outside intellectual property counsel at Whitaker & Daines LLP. We also conducted independent searches of the United States Patent and Trademark Office ("USPTO") Trademark Status and Document Retrieval ("TSDR") database, the USPTO assignment database, the U.S. Copyright Office records, and publicly available WHOIS domain registration records to verify and supplement the data room materials.
Overall Assessment. Pennfield maintains a material portfolio of registered and unregistered intellectual property assets that support its specialty retail business. The Company operates in the outdoor lifestyle, sporting goods, and adventure apparel segments, with a retail footprint of approximately 187 company-owned store locations, 22 outlet locations, and a growing direct-to-consumer e-commerce operation. The Company's intellectual property portfolio is generally well-maintained and adequate to support current business operations. However, our review has identified certain registration gaps, pending opposition matters, license dependency risks, and other open items that warrant attention in the negotiation and drafting of the Merger Agreement, including in particular the representations and warranties and the buyer disclosure schedules. These items are described in detail throughout this memorandum, with key risk items consolidated in Section VIII below.
Scope of Review. This memorandum covers the following categories of intellectual property: (i) trademarks and service marks (registered and unregistered); (ii) trade names and "doing business as" ("DBA") registrations; (iii) domain names; (iv) proprietary technology and software, including the Company's e-commerce platform; (v) copyrights; (vi) patents (if any); (vii) trade secrets; and (viii) inbound and outbound license agreements relating to intellectual property. Issues relating to software license agreements that do not implicate intellectual property ownership or licensing of the Company's own IP are cross-referenced in the Material Contracts Review Memorandum prepared separately by the deal team. Similarly, change of control provisions in material contracts are addressed comprehensively in the Change of Control Analysis prepared under separate cover.
Recommendation. Several items identified in this review warrant specific attention in the Merger Agreement. In particular, we recommend that: (1) consent outreach be initiated promptly with respect to certain inbound brand license agreements containing change of control provisions; (2) the SUMMIT TRAIL opposition proceeding before the Trademark Trial and Appeal Board ("TTAB") be monitored and managed through the closing process and beyond; (3) a pending USPTO office action on the PENNFIELD EXPEDITION trademark application be timely responded to before its May 2025 deadline; and (4) certain post-closing actions be considered, including a comprehensive open-source software audit, copyright registrations for key assets, and the development of a foreign trademark filing strategy aligned with Harrowgate's investment thesis for the Company. These and additional recommendations are set forth in detail in Sections VIII and XI below.
II. Trademarks and Service Marks
A. Overview of Registered Marks
Based on our review of the Company's trademark schedules maintained in data room folder 4.1, as well as our independent verification through the USPTO TSDR database and assignment records, Pennfield owns approximately forty-two (42) active United States trademark registrations with the USPTO. These registrations cover the PENNFIELD house mark in both word mark and stylized logo formats, as well as various sub-brands, product line names, taglines, and design marks used in connection with the Company's outdoor lifestyle and sporting goods retail operations.
The key registered marks in the Company's portfolio are summarized below:
The remaining thirty-five (35) active registrations cover additional sub-brands, product names, tagline marks (e.g., "Gear Up. Get Out."), seasonal campaign marks, and design marks associated with specific product lines and marketing campaigns. A complete schedule of all forty-two (42) active registrations was provided in data room document 4.1.03 (Pennfield Trademark Registration Schedule, dated January 2025) and has been independently verified against USPTO records.
Registrations span across several International Classes relevant to the Company's business, including International Class 18 (leather goods, bags, and travel accessories), International Class 25 (clothing, footwear, and headgear), International Class 28 (games, toys, and sporting goods), and International Class 35 (retail store services, advertising, and business management). This coverage is generally comprehensive for a specialty retailer operating in the outdoor lifestyle and sporting goods segments.
Importantly, all key registrations appear to be owned directly by Pennfield Holdings, Inc. as the registrant of record. We did not identify any subsidiary ownership fragmentation — that is, we found no instances in which material trademark registrations were held by subsidiaries of Pennfield rather than by Pennfield itself. This is a favorable finding for purposes of the Transaction, as it eliminates the need for intra-group assignment actions prior to or following the closing and simplifies the chain of title analysis for the Company's core brand assets.
B. Maintenance and Renewal Status
We reviewed the maintenance and renewal status of all forty-two (42) active trademark registrations. Of these, thirty-eight (38) registrations are fully current on all required maintenance filings, including Section 8 affidavits of continued use (or excusable non-use), Section 9 renewal applications, and, where applicable, Section 15 affidavits of incontestability. The Company's outside intellectual property counsel at Whitaker & Daines LLP maintains a docketing system for these deadlines, and the Company's General Counsel confirmed in her IP representation letter dated February 2025 that the Company has procedures in place to track and timely file all required maintenance documents.
Four (4) registrations have upcoming renewal deadlines falling within the next twelve (12) months — specifically, between April 2025 and March 2026. These registrations are identified on the schedule attached to data room document 4.1.07. While none of these deadlines is imminent (the earliest is in April 2025), they will fall within the anticipated pre-closing or post-closing period for the Transaction. We recommend that these deadlines be calendared by the deal team and that responsibility for preparing and filing the required maintenance documents be clearly assigned. If the closing occurs before any of these deadlines, post-closing responsibility should be addressed in the transition services or administrative closing checklist. If any of these deadlines fall before the closing, Pennfield should be required under the interim operating covenants of the Merger Agreement to timely file all required maintenance documents in the ordinary course of business consistent with past practice.
No registrations were identified as having lapsed, been cancelled, or become abandoned due to missed maintenance filings. This is a positive indicator of the Company's historical diligence in managing its trademark portfolio.
C. Pending Applications
Three (3) trademark applications are currently pending before the USPTO, reflecting the Company's ongoing efforts to expand its brand portfolio in alignment with its product development and digital commerce strategies:
1. PENNFIELD ALPINE (Serial No. 98/214,356; International Class 25). This application was filed in September 2024 in connection with a new premium outerwear line planned for the fall/winter 2025 retail season. The application has been examined, approved by the examining attorney, and published for opposition in the Official Gazette. As of the date of this memorandum, no Notice of Opposition has been filed, and the thirty-day opposition period has expired without extension. The application is expected to proceed to registration in the ordinary course, and we anticipate that a registration certificate will issue within the next sixty to ninety days.
2. PENNFIELD EXPEDITION (Serial No. 98/301,478; International Class 28). This application was filed in November 2024 for a line of outdoor sporting equipment and accessories. The application is currently at the examination stage. An office action was issued by the USPTO examining attorney requesting amendments to the identification of goods to conform to the USPTO's Acceptable Identification of Goods and Services Manual. The required response is due by May 15, 2025. The office action does not raise substantive refusal grounds (e.g., likelihood of confusion or descriptiveness); rather, it is a routine request for clarification of the goods description. Pennfield's outside IP counsel has confirmed that a response is being prepared and expects the matter to proceed to publication following the amended filing. Nonetheless, the May 2025 deadline must be monitored and the response timely filed to avoid statutory abandonment of the application. This item is flagged as a key open item in Section VIII.G below.
3. BASECAMP DIGITAL (Serial No. 98/412,205; International Classes 35 and 42). This application was filed in January 2025 and relates to the Company's expanded e-commerce services and digital retail platform. The application was recently filed and is currently at the initial processing stage within the USPTO. No examining attorney has been assigned, and no office action has been issued. Given the typical USPTO examination timeline of approximately three to six months from filing, we would not expect substantive action on this application until mid-2025 at the earliest. The application is notable in that it covers International Class 42 (design and development of computer software) in addition to International Class 35 (retail store services), reflecting the Company's positioning of its "Pennfield Digital" e-commerce platform as a branded offering.
D. Opposition and Cancellation Proceedings
Our review identified one (1) active inter partes proceeding before the TTAB involving Pennfield's trademark portfolio:
SUMMIT TRAIL Opposition — TTAB Proceeding No. 91283741. In October 2024, a third party filed a Notice of Opposition against Pennfield's application to register the SUMMIT TRAIL mark in International Class 25 (apparel). The opposer, whose identity has been redacted in the data room materials per the Company's confidentiality protocols, alleges a likelihood of confusion between Pennfield's SUMMIT TRAIL mark and the opposer's prior trademark registration for a mark the opposer contends is confusingly similar. The opposition proceeding is currently in the discovery phase, with written discovery served and responses pending. Trial dates have not yet been set by the Board.
Pennfield's outside IP counsel at Whitaker & Daines LLP has provided a preliminary assessment (data room document 4.1.12) indicating that the opposition has limited merit based on differences in the overall commercial impression of the marks, the channels of trade, and the sophistication of the relevant consumers. However, counsel acknowledged that TTAB proceedings are inherently uncertain and that the outcome cannot be predicted with confidence at this early stage.
The SUMMIT TRAIL apparel line represents a meaningful product sub-brand within Pennfield's business, contributing to the Company's brand identity in the outdoor athletic apparel category. If the opposition were to succeed, Pennfield would lose the ability to obtain a federal registration for the SUMMIT TRAIL mark, although the Company's common-law trademark rights based on its prior and continued use of the mark in commerce would persist. Common-law rights, however, are geographically limited to the areas in which the mark has been used and do not provide the same presumption of nationwide validity and enforcement advantages afforded by federal registration. This matter is discussed further as a key risk item in Section VIII.A below.
No active cancellation proceedings against any of Pennfield's existing registered trademarks were identified in our review of TTAB records, and the Company's General Counsel has confirmed in her IP representation letter that no such proceedings are pending or, to her knowledge, threatened.
E. Foreign Trademark Registrations
Pennfield has not filed any trademark registrations outside the United States, and the Company does not maintain any foreign trademark portfolio. The Company has no foreign retail operations; its physical retail footprint is limited to 187 company-owned stores and 22 outlet locations across thirty-four (34) states within the United States. The Company's e-commerce operations are also currently limited to domestic sales within the United States.
The absence of foreign trademark registrations is consistent with the Company's current operations and does not present an immediate risk to the conduct of the business as presently operated. However, this gap may become significant if Harrowgate's post-acquisition strategy for Pennfield includes international e-commerce expansion, cross-border fulfillment, or the development of retail partnerships in foreign markets. Trademark rights in most foreign jurisdictions are acquired through registration rather than use, and delay in filing could expose the Company to the risk of third-party squatter filings in key international markets. This potential gap is flagged in Section VIII.E below, and we recommend that a foreign trademark filing strategy be developed in coordination with Harrowgate's investment thesis for the Company.
III. Trade Names and DBA Registrations
Pennfield operates under its corporate name, "Pennfield Holdings, Inc.," and under the following trade names and DBA designations in connection with its retail and e-commerce operations:
• Pennfield — the primary consumer-facing brand name used on store signage, marketing materials, and product labeling.
• Pennfield Outfitters — the trade name used in connection with certain full-line retail store locations carrying the complete product assortment.
• Pennfield Outlet — the trade name used in connection with the Company's twenty-two (22) outlet store locations offering discounted merchandise.
We reviewed the Company's DBA and fictitious business name registrations in connection with its key states of operation. The Company's headquarters are located in Charlotte, North Carolina, and the relevant DBA registrations in the State of North Carolina were confirmed as current and in good standing based on filings with the Mecklenburg County Register of Deeds. Additionally, DBA registrations were reviewed in certain major market states where the Company operates multiple retail locations, including California, Texas, Florida, New York, Colorado, and Virginia. Based on the records made available in the data room (folder 4.2), these registrations appear current and consistent with the Company's use of its trade names in those jurisdictions.
We note, however, that we did not conduct a comprehensive state-by-state audit of DBA registrations in all thirty-four (34) states in which Pennfield operates retail locations. It is possible that certain jurisdictions may require updated or new DBA filings following the closing of the Transaction, particularly if the surviving entity's name, organizational structure, or state of formation is modified as part of Harrowgate's post-closing restructuring. We recommend that this item be included on the post-closing administrative checklist to ensure compliance with applicable state filing requirements.
IV. Domain Names
A. Owned Domain Portfolio
Based on our review of domain registrar account records provided in data room folder 4.3 and our independent verification through publicly available WHOIS records, Pennfield owns approximately twenty-eight (28) domain name registrations. The core commercial domains in the portfolio include the following:
In addition to these core commercial domains, the portfolio includes various defensive registrations comprising .net and .org variants of the primary domain names, as well as several registrations intended to capture common misspellings of "pennfield" (e.g., "penfield.com" and "pennfeild.com"). These defensive registrations serve to prevent cybersquatting and to redirect inadvertent consumer traffic to the Company's primary website.
All twenty-eight (28) domain names are registered through a single domain registrar, Marlowe Software, and are configured for automatic renewal. The registrant of record for all domains is Pennfield Holdings, Inc., with Patricia Okafor, the Company's General Counsel, listed as the administrative and technical contact. The centralization of domain management through a single registrar and a single administrative contact is a positive finding from a portfolio management perspective, as it reduces the risk of domains being inadvertently lost due to fragmented management.
B. Domain Expiration and Renewal
We reviewed the expiration dates for all twenty-eight (28) domain name registrations. All domains are current through at least December 2025, and no domains are at immediate risk of expiration or lapse.
Three (3) domains — summittrail.com, ridgebackgear.com, and basecampseries.com — have renewal dates falling in Q3 2025 (September 2025), which will coincide with the anticipated pre-closing or post-closing period for the Transaction. While these domains are set to auto-renew, it is important that the payment method associated with the registrar account (currently a corporate credit card on file) remains active and valid through the renewal dates. We recommend that the deal team confirm renewal responsibility for these domains and ensure that the registrar account credentials and payment information are included in any pre-closing or post-closing transition of administrative functions.
C. Domain Disputes
No active Uniform Domain-Name Dispute-Resolution Policy ("UDRP") proceedings or other formal domain name disputes were identified involving any of Pennfield's domain name registrations.
The Company did address one informal domain dispute in 2024. In approximately June 2024, the Company's outside IP counsel sent a cease-and-desist letter to a third party operating the domain pennfield-outdoors.com, which was being used as a parked domain page with pay-per-click advertising that generated revenue through consumer confusion with the Pennfield brand. The matter was resolved amicably, with the third party agreeing to transfer the domain to Pennfield. The transfer was completed in August 2024, and the domain now redirects to pennfield.com. No litigation was filed, and no payment was made by Pennfield to the third party in connection with the transfer. This resolution is documented in data room document 4.3.09 (correspondence file).
V. Proprietary Technology and Software
A. E-Commerce Platform
Pennfield operates a proprietary e-commerce platform branded as "Pennfield Digital," accessible through the Company's primary commercial website at pennfield.com. The platform was developed in-house by the Company's technology team, which is based at the Company's corporate headquarters in Charlotte, North Carolina, and consists of approximately thirty-five (35) software engineers, product managers, and quality assurance personnel.
The Pennfield Digital platform provides the following core functionality:
• Product Catalog Management: A comprehensive product information management system that supports the display, categorization, search, and filtering of the Company's full product assortment across all product lines (apparel, footwear, gear, and accessories).
• Inventory Integration: Real-time integration with the Company's in-store point-of-sale ("POS") systems and warehouse management systems, enabling unified inventory visibility across the Company's 187 company-owned stores, 22 outlet locations, and centralized distribution centers.
• Customer Account Management: User registration, account management, order history, wish list functionality, and personalized product recommendations based on purchase history and browsing behavior.
• Payment Processing Interfaces: Integration with third-party payment processors, including support for major credit cards, digital wallets (Tidewater Industries Pay, Severin Industries Pay), and the Company's proprietary store credit and gift card systems.
• TRAILHEAD Loyalty Program Engine: The backend system powering the Company's TRAILHEAD customer loyalty and rewards program, including points accrual, tier management, rewards redemption, and promotional campaign management.
The source code for the Pennfield Digital platform is maintained internally on the Company's own development servers and version control repositories. The Company uses Git-based version control and maintains regular backups of the source code repository. Notably, no source code escrow agreements were identified in the data room. While source code escrow is more commonly associated with situations where a licensor provides software to third-party licensees (and Pennfield does not license its platform software to third parties), the absence of escrow may warrant consideration if Harrowgate determines that business continuity protections for the platform code base are advisable.
The platform is built on a combination of proprietary code developed by the Company's technology team and open-source software components. The proprietary code constitutes the core business logic, user interface, and integration layers of the platform, while the open-source components provide supporting infrastructure functionality (e.g., web server frameworks, database libraries, and utility functions). The open-source components and their associated licenses are discussed in Section V.C below.
B. Other Proprietary Software
In addition to the Pennfield Digital e-commerce platform, the Company has developed several proprietary internal software tools to support its retail operations:
• Supply Chain and Distribution Management Tools: Proprietary software used to manage the Company's supply chain operations, including purchase order management, vendor communications, shipment tracking, and distribution center workflow optimization across the Company's warehouse and distribution network.
• In-Store Analytics and Customer Behavior Tracking: Proprietary analytics tools that aggregate data from in-store POS systems, foot traffic sensors, and customer interaction touchpoints to generate insights on store performance, product placement effectiveness, and customer shopping patterns.
• Employee Scheduling and Workforce Management: A proprietary scheduling and workforce management application used across the Company's retail locations to manage employee scheduling, shift swaps, time-off requests, and labor cost forecasting.
These internal tools are used exclusively within the Company's own operations and are not licensed, sold, or otherwise distributed to third parties. They were developed by the Company's technology team and are maintained internally. No third-party claims of ownership or co-development rights in these tools were identified in the data room.
C. Open-Source Software Compliance
As noted above, the Pennfield Digital e-commerce platform incorporates certain open-source software components. The Company's technology team prepared an open-source software inventory and compliance memorandum (data room document 4.4.06), which was reviewed as part of this due diligence process.
Based on our review, the open-source components used in the platform are subject to the following categories of licenses:
• Permissive Licenses (MIT License, Apache License 2.0, BSD Licenses): The majority of open-source components used in the platform are subject to permissive open-source licenses. These licenses generally allow unrestricted use, modification, and distribution of the software, subject to attribution requirements and the inclusion of the original license text. Use of components under permissive licenses does not present material IP risk, provided that the attribution and notice requirements are observed.
• Copyleft License (GNU Lesser General Public License, Version 2.1 — "LGPL v2.1"): At least one open-source component incorporated into the platform is subject to the LGPL v2.1, a "weak copyleft" license. The LGPL v2.1 permits the use of the licensed component in proprietary software without requiring the proprietary code to be released under the same license, provided that the LGPL component is used in a manner consistent with the license terms — specifically, through dynamic linking rather than static incorporation into the proprietary code base. The Company's technology team has represented in its compliance memorandum that the LGPL-licensed component is used as a dynamically linked library and is not statically compiled into or otherwise incorporated into the proprietary source code of the Pennfield Digital platform. If this representation is accurate, the Company's use of the LGPL component should be consistent with the terms of the license and should not trigger the copyleft obligation to release the proprietary platform source code.
We note, however, that we have not conducted an independent technical audit of the platform source code to verify the accuracy of the Company's representations regarding the manner in which the LGPL component is linked. The distinction between dynamic linking and static linking is a technical one that requires code-level analysis by qualified software engineers or technical auditors. Based on the information available in the data room, the Company's representations appear reasonable and internally consistent, but a definitive compliance conclusion cannot be reached without a more detailed technical review.
Recommendation: We recommend that a comprehensive open-source software audit be conducted post-closing, particularly if Harrowgate's investment thesis contemplates licensing, sublicensing, or distributing any components of the Pennfield Digital platform to third parties as part of the Company's digital-first omnichannel strategy. Such an audit would provide a definitive assessment of open-source license compliance and identify any remediation actions that may be required. This recommendation is reflected in the key risk items in Section VIII.D below.
D. Patents
Pennfield does not hold any issued United States patents, and no pending patent applications were identified in the data room or through our independent search of the USPTO patent database. The Company has not historically pursued patent protection for its technology or business methods.
The absence of patents is consistent with the Company's profile as a specialty retailer rather than a technology company. While the Company has developed proprietary e-commerce platform technology and internal software tools, the Company has not sought patent protection for these technologies. This is not unusual for retail companies of similar size and profile, where trade secret protection and contractual restrictions on employee disclosure are often the preferred means of protecting proprietary technology.
No patent infringement claims, assertions, or demands by any third party against Pennfield were identified in the data room materials or in the Company's General Counsel's IP representation letter. Similarly, no indemnification demands related to patent infringement from any of the Company's technology vendors or licensors were identified.
VI. Copyrights
Pennfield claims common-law copyright protection over a range of original works of authorship created in the ordinary course of its business, including:
• Marketing materials, including print advertisements, digital marketing content, social media creative assets, and seasonal campaign materials.
• Product catalogs, both in print and digital formats.
• Website content, including text, layout, and graphical elements displayed on pennfield.com and related properties.
• Photography, including original product photography, lifestyle campaign photography, and in-store imagery.
• E-commerce platform source code, including the proprietary code developed by the Company's technology team for the Pennfield Digital platform and related internal tools.
Despite the breadth of the Company's copyrightable content, no formal copyright registrations with the United States Copyright Office were identified in the data room, and none were located through our independent search of the Copyright Office's registration records. The Company's General Counsel confirmed in her IP representation letter that the Company has not historically pursued copyright registration for its content assets.
While formal registration with the Copyright Office is not a prerequisite for copyright protection under the Copyright Act of 1976, as amended, copyright ownership arises automatically upon the creation of an original work of authorship fixed in a tangible medium of expression, the absence of formal registration has significant practical implications for the Company's ability to enforce its copyrights. Under 17 U.S.C. § 411(a), copyright registration is a prerequisite to commencing a civil action for infringement of a work of U.S. origin. Moreover, under 17 U.S.C. § 412, a copyright owner who has not registered the work prior to the commencement of infringement (or within three months of first publication) is not eligible to recover statutory damages or attorneys' fees, which are often the most powerful remedies available in copyright infringement litigation.
The absence of copyright registrations is a registration gap that, while not uncommon among companies in the retail sector, limits the Company's enforcement posture. We recommend that Pennfield pursue post-closing registration of its highest-value content assets, including in particular the Pennfield Digital platform source code, key original marketing campaign materials, and original photography. Registration of these assets would strengthen the Company's ability to pursue infringement claims and recover meaningful damages in the event of unauthorized copying. This recommendation is discussed further in Section VIII.C below.
No copyright infringement claims asserted by or against Pennfield were identified in our review.
VII. License Agreements
A. Inbound Licenses
1. Software Licenses
Pennfield is a licensee under multiple enterprise software agreements with third-party vendors providing core business systems and technology infrastructure. The key categories of software licenses include:
• Enterprise Resource Planning (ERP): The Company licenses an ERP system from a major enterprise software provider, which serves as the backbone for the Company's financial reporting, procurement, and supply chain management functions.
• Customer Relationship Management (CRM): The Company licenses a CRM platform used to manage customer data, marketing campaigns, and customer service interactions across retail and e-commerce channels.
• Point-of-Sale (POS) Systems: The Company licenses POS software and related technology deployed across its 209 retail and outlet locations.
• Cybersecurity and IT Infrastructure: The Company maintains license agreements for cybersecurity tools, network management software, endpoint protection, and other IT infrastructure components.
These software license agreements were reviewed primarily for the presence of anti-assignment clauses, change of control provisions, and consent-to-assignment requirements that may be implicated by the Transaction. Several of the enterprise software agreements contain provisions that restrict the Company's ability to assign its rights under the agreement without the prior written consent of the licensor, or that grant the licensor certain rights (including, in some cases, termination rights) upon a change of control of the licensee. In a reverse triangular merger structure, the surviving entity (Pennfield) remains the same legal entity and the contractual counterparty, which may mitigate the application of certain anti-assignment provisions. However, the change of control provisions are separately triggered by a change in the ultimate ownership or control of the licensee, which will occur as a result of the Transaction.
A detailed analysis of the assignment and change of control provisions in the Company's material software license agreements is set forth in the Change of Control Analysis prepared separately by the deal team. The software license agreements are also cross-referenced in the Material Contracts Review Memorandum.
2. Brand / Product Licenses
Pennfield is a licensee under three (3) brand license agreements with third-party manufacturers and designers for co-branded product lines carried in Pennfield's retail stores and on its e-commerce platform. These co-branded product arrangements are a component of the Company's merchandising strategy and contribute to the product assortment offered in specific categories, including performance outerwear, technical accessories, and specialty footwear.
The three brand license agreements were reviewed in the data room (folder 4.5, with counterparty names redacted per the Company's data room confidentiality protocols). Our review of these agreements identified the following key provisions relevant to the Transaction:
• Anti-Assignment or Change of Control Consent Provisions: Two of the three brand license agreements contain provisions requiring the prior written consent of the licensor before the licensee may assign its rights under the agreement or undergo a change of control. In a reverse triangular merger, while the licensee entity (Pennfield) survives, the change of ownership of the licensee is likely to trigger the change of control provisions, and the licensors' consent may be required.
• Termination Rights Upon Change of Control: One of the three brand license agreements contains an explicit termination right exercisable by the licensor upon a change of control of the licensee. Under this provision, the licensor may terminate the agreement upon written notice within a specified period following the occurrence of a change of control event, regardless of whether consent was sought. This agreement is the largest of the three by revenue contribution and relates to a high-profile co-branded product line that is prominently featured in the Company's retail and marketing materials.
• Ambiguous Change of Control Clause: One of the remaining two agreements contains a change of control clause that is drafted in ambiguous terms and could be interpreted either as requiring consent or as providing an informational notice obligation only. Further analysis and potentially direct communication with the licensor's counsel may be required to determine the scope of this provision.
The reverse triangular merger will constitute a "change of control" of Pennfield under these agreements, as Harrowgate will acquire 100% of the equity interests of the surviving entity. Accordingly, consent or notice will need to be provided to the relevant licensors in connection with the closing. The brand license agreement containing the explicit termination-on-change-of-control right presents the most significant risk among the three, as the licensor could exercise its termination right regardless of whether consent is sought, and the loss of the associated co-branded product line could have a material impact on the Company's merchandising and revenue. We recommend that consent outreach for this agreement be prioritized and initiated promptly following the signing of the Merger Agreement. This item is discussed further as a key risk item in Section VIII.B below.
3. Content Licenses
Pennfield licenses certain third-party photography and graphic design content for use in its marketing materials, product catalogs, and website content under standard stock photography licenses (e.g., licenses from Kestrel Industries and Greaves Partners LLC) and creative agency agreements with third-party marketing firms. These agreements were reviewed at a high level. The stock photography licenses are generally perpetual or long-term licenses that do not contain assignment or change of control restrictions. The creative agency agreements are standard services agreements that typically assign all intellectual property rights in the work product to the Company. No material assignment or change of control concerns were identified in connection with these content licenses.
B. Outbound Licenses
Pennfield does not grant material outbound licenses of its intellectual property to third parties, with two limited exceptions:
1. Co-Branded Product Partners: In connection with the brand license agreements discussed in Section VII.A.2 above, Pennfield grants limited licenses to its co-branded product partners allowing those partners to use the PENNFIELD trademark and associated branding elements on co-branded products and in co-branded marketing materials. These outbound licenses are the reciprocal complement to the inbound brand licenses and are generally co-terminus with the corresponding inbound license agreements.
2. Authorized E-Commerce Marketplace Partners: Pennfield grants a non-exclusive, limited license to its trademark, product images, and product descriptions to authorized e-commerce marketplace partners for the purpose of listing and promoting Pennfield products on third-party marketplace platforms. These licenses are governed by the Company's standard marketplace partner agreements and are generally narrow in scope, non-exclusive, and revocable at the Company's discretion.
No other material outbound licenses of the Company's intellectual property were identified in the data room.
VIII. Key Risks and Open Items
Based on our review, we have identified the following key risks and open items that warrant attention in connection with the Transaction:
A. SUMMIT TRAIL Opposition Proceeding
The pending TTAB opposition against Pennfield's application to register the SUMMIT TRAIL mark in International Class 25 (TTAB Proceeding No. 91283741) presents a moderate risk to the Company's trademark portfolio. As discussed in Section II.D above, the proceeding was initiated in October 2024, is currently in the discovery phase, and its outcome is uncertain.
If the opposition succeeds, Pennfield would lose the ability to obtain a federal registration for the SUMMIT TRAIL mark. While the Company's common-law trademark rights based on prior and continued use in commerce would persist, the loss of the federal registration would deprive the Company of the presumption of nationwide validity, the constructive notice benefits, and the enhanced statutory remedies associated with a federal registration. Common-law rights would be geographically limited to the areas in which the Company has actually used the mark, which may not encompass all markets relevant to the Company's future expansion plans.
The SUMMIT TRAIL apparel line represents a meaningful product sub-brand within Pennfield's business. The line has been featured prominently in the Company's marketing campaigns and has developed consumer recognition among the Company's target demographic.
Recommendation: We recommend that the deal team continue to monitor this proceeding through the closing process. Additionally, Pennfield's outside IP counsel should evaluate the feasibility of seeking a negotiated settlement or co-existence agreement with the opposer that would allow both parties to maintain their respective marks in defined channels of trade or product categories. A settlement of this nature could resolve the opposition without the risk and expense of a contested TTAB trial. The status of this proceeding should be disclosed on the buyer's disclosure schedules in the Merger Agreement.
B. Change of Control Provisions in IP-Related Licenses
As discussed in Section VII.A.2, the Transaction will constitute a change of control under at least two (2) of Pennfield's three (3) material inbound brand license agreements. The brand license agreement that contains an explicit licensor termination right upon change of control of the licensee presents the most significant risk, as the licensor could elect to terminate the agreement regardless of whether consent was sought, and the loss of the associated co-branded product line would have a material impact on the Company's product assortment and revenue.
Recommendation: Consent outreach to the relevant licensors should be initiated promptly following the signing of the Merger Agreement. The deal team should evaluate whether obtaining consents from these licensors should be included as a closing condition in the Merger Agreement, or whether the risk of non-consent or termination should instead be addressed through the material adverse effect ("MAE") definition, the indemnification provisions, or as a post-closing commercial matter. The brand license agreement with the explicit termination right should be prioritized for early engagement, and the deal team should be prepared to negotiate commercially reasonable accommodations (such as modifications to the license terms or accelerated royalty payments) to secure the licensor's consent.
C. Absence of Copyright Registrations
As discussed in Section VI, Pennfield has no formal copyright registrations with the U.S. Copyright Office, which limits the Company's ability to pursue infringement claims with the full range of statutory remedies available under the Copyright Act.
Recommendation: We recommend that the Company pursue post-closing copyright registration for its highest-value content assets, including in particular: (i) the Pennfield Digital platform source code; (ii) original marketing campaign content and creative assets; and (iii) original product and lifestyle photography. Registration of these assets would strengthen the Company's enforcement posture and position the Company to seek statutory damages and attorneys' fees in the event of infringement. The cost of copyright registration is modest, and the process is relatively straightforward.
D. Open-Source Software Compliance
As discussed in Section V.C, the Pennfield Digital e-commerce platform incorporates at least one open-source component subject to the LGPL v2.1 copyleft license. While the Company's technology team has represented that the component is used in a manner consistent with the LGPL license terms (dynamic linking rather than static incorporation), this representation has not been independently verified through a code-level technical audit.
Recommendation: We recommend that a comprehensive open-source software audit be conducted post-closing. This is particularly important if Harrowgate's investment thesis for the Company contemplates licensing, sublicensing, or distributing any components of the Pennfield Digital platform to third parties, or if the platform technology is expected to be a material driver of enterprise value. A finding of non-compliance with the LGPL or other open-source license terms could expose the Company to claims for injunctive relief or to obligations to release proprietary source code, either of which could have a significant adverse impact on the value of the platform technology.
E. Foreign Trademark Gap
As discussed in Section II.E, Pennfield has not filed trademark registrations in any foreign jurisdiction. The Company's current operations are entirely domestic, and this gap does not present an immediate risk. However, if Harrowgate's post-acquisition strategy includes international e-commerce expansion, cross-border fulfillment to customers in foreign markets, or the development of retail partnerships outside the United States, the absence of foreign trademark registrations could expose the Company to the risk of third-party squatter filings and enforcement difficulties in key international markets.
Recommendation: A foreign trademark filing strategy should be developed promptly post-closing, in coordination with Harrowgate's investment committee and the Company's management team, to secure priority rights in key jurisdictions aligned with the Company's anticipated international expansion plans. Priority markets for consideration may include Canada, the United Kingdom, the European Union (via EUIPO), Australia, Japan, and other jurisdictions identified in the investment thesis.
F. Domain Name Hygiene
While the Company's core domain portfolio of twenty-eight (28) registrations is well-maintained and covers the Company's primary brands and product lines, our review noted that several potentially valuable defensive registrations are absent from the portfolio. Specifically, the Company does not appear to hold country-code top-level domains ("ccTLDs") for key international markets (e.g., .co.uk, .ca, .com.au, .de), nor does the portfolio include registrations under certain newer generic top-level domains (e.g., .shop, .store, .outdoor) that could be relevant to the Company's retail brand. Additionally, while several common misspelling variants are registered, additional misspelling and typosquatting variants may warrant registration as defensive measures.
Recommendation: We recommend that the domain portfolio be expanded post-closing to include additional defensive registrations, particularly ccTLDs for jurisdictions aligned with any international expansion plans and new gTLDs relevant to the Company's retail brand. The cost of domain registration is minimal relative to the brand protection benefits.
G. Pending USPTO Office Action
As discussed in Section II.C, the PENNFIELD EXPEDITION trademark application (Serial No. 98/301,478) has a pending office action requiring a response by May 15, 2025. The office action is non-substantive in nature (requesting amendments to the identification of goods) and is expected to be resolved through a routine amendment filing. However, failure to timely respond would result in the statutory abandonment of the application.
Recommendation: The May 15, 2025 response deadline must be calendared by the deal team and assigned to responsible counsel (either Pennfield's outside IP counsel at Whitaker & Daines LLP or, if the closing occurs before the deadline, successor counsel designated by Harrowgate). Under the interim operating covenants of the Merger Agreement, Pennfield should be required to prosecute and maintain its pending trademark applications in the ordinary course of business consistent with past practice.
IX. Impact on Merger Agreement and Disclosure Schedules
The findings of this IP due diligence review have several implications for the Merger Agreement and related disclosure schedules, which are summarized below for the deal team's consideration in connection with the negotiation and drafting of the definitive transaction documentation.
Representations and Warranties. The intellectual property representations in the Merger Agreement should include, at a minimum, representations covering the following matters:
• Ownership and validity of all registered intellectual property and all material unregistered intellectual property used in the conduct of the Company's business.
• Absence of pending or threatened infringement claims, opposition or cancellation proceedings, and other intellectual property disputes, subject to disclosure of the SUMMIT TRAIL TTAB opposition and other identified matters.
• Compliance with the terms of all material intellectual property license agreements (both inbound and outbound).
• Sufficiency of the Company's intellectual property portfolio to operate the business as currently conducted, without infringement or misappropriation of the intellectual property rights of any third party.
• Compliance with open-source software license terms applicable to the Company's proprietary software.
• Proper ownership assignment of all intellectual property developed by employees and contractors in the course of their engagement with the Company.
Disclosure Schedules. The buyer disclosure schedules should cross-reference and describe the following items:
• The SUMMIT TRAIL TTAB opposition proceeding (Proceeding No. 91283741), including its current status and the Company's outside counsel's preliminary assessment.
• The pending USPTO office action on the PENNFIELD EXPEDITION application (Serial No. 98/301,478), including the May 15, 2025 response deadline.
• The open-source software compliance status, including identification of the LGPL v2.1 component and the Company's technology team's representations regarding dynamic linking.
• The brand license agreements containing change of control provisions and the associated consent requirements.
Indemnification and Insurance. The indemnification provisions in the Merger Agreement, which we understand are currently structured with a cap of $117,600,000 (representing approximately 12% of the $980,000,000 aggregate merger consideration), should be reviewed to confirm that breaches of the intellectual property representations fall within the scope of indemnifiable losses. Similarly, the buyer-side representations and warranties insurance ("R&W Insurance") policy being arranged through Meridian Specialty Insurance Company (with a policy limit of $100,000,000 and a retention of $9,800,000) should be reviewed to confirm that intellectual property representations are included within the scope of insured representations and that no IP-specific exclusions apply that would limit coverage for the risk items identified in this memorandum. We recommend that the R&W insurance broker and underwriting counsel be provided with a copy of this memorandum (subject to appropriate privilege protections) so that the underwriting process can take into account the specific IP risk items identified herein.
X. Documents Reviewed
The following is a summary of the key data room documents and other materials reviewed in connection with this IP due diligence memorandum. Document references correspond to the data room folder and document numbering conventions used in the Thackeray Solutions virtual data room for Project Summit.
1. Pennfield Trademark Registration Schedule (Data Room Doc. 4.1.03) — Schedule of all active and pending U.S. trademark registrations and applications, dated January 2025.
2. USPTO TSDR Database Printouts — Independent printouts of current status information for all forty-two (42) active registrations and three (3) pending applications, obtained from the USPTO TSDR system on March 10–12, 2025.
3. USPTO Assignment Records — Chain of title records for key registered marks, confirming ownership by Pennfield Holdings, Inc.
4. TTAB Opposition File — SUMMIT TRAIL (Data Room Docs. 4.1.10 through 4.1.14) — Notice of Opposition, Pennfield's Answer, and related filings in TTAB Proceeding No. 91283741, including outside counsel's preliminary merit assessment memorandum dated November 2024.
5. Open-Source Software Inventory and Compliance Memorandum (Data Room Doc. 4.4.06) — Internal memorandum prepared by Pennfield's technology team, dated January 2025, describing open-source components used in the Pennfield Digital platform and the Company's assessment of license compliance.
6. Inbound Brand License Agreements (Data Room Docs. 4.5.01 through 4.5.03) — Three brand license agreements with third-party manufacturers/designers (counterparty names redacted per data room confidentiality protocols), reviewed for assignment, change of control, and termination provisions.
7. Enterprise Software License Agreements (Data Room Docs. 4.5.04 through 4.5.11) — Key enterprise software agreements (ERP, CRM, POS, cybersecurity), reviewed for assignment and change of control provisions; cross-referenced in Material Contracts Review Memorandum and Change of Control Analysis.
8. Domain Registrar Account Records (Data Room Doc. 4.3.01) — Summary of all twenty-eight (28) domain name registrations, including registrant information, registration and expiration dates, registrar details, and auto-renewal status.
9. Internal Pennfield Memoranda — E-Commerce Platform Architecture (Data Room Docs. 4.4.01 through 4.4.05) — Internal technical memoranda describing the architecture, technology stack, and development history of the Pennfield Digital e-commerce platform.
10. Pennfield General Counsel IP Representation Letter (Data Room Doc. 4.0.01) — Letter from Patricia Okafor, General Counsel of Pennfield Holdings, Inc., dated February 14, 2025, providing representations regarding the Company's intellectual property ownership, registrations, disputes, and material agreements.
11. DBA/Fictitious Business Name Registration Records (Data Room Docs. 4.2.01 through 4.2.06) — Selected state-level DBA registrations for "Pennfield," "Pennfield Outfitters," and "Pennfield Outlet" in North Carolina and other major market states.
12. Domain Dispute Correspondence (Data Room Doc. 4.3.09) — Correspondence file relating to the pennfield-outdoors.com cease-and-desist and voluntary domain transfer (2024).
XI. Conclusion and Recommendations
Based on our review of the data room materials and independent verification of public records, Pennfield's intellectual property portfolio is adequate to support its current specialty retail operations across 209 retail and outlet locations (187 company-owned stores and 22 outlet locations in 34 states) and its direct-to-consumer e-commerce operations through the Pennfield Digital platform. The Company's trademark portfolio is the most significant component of its IP assets, and the portfolio is generally well-maintained with comprehensive coverage of the Company's house mark and key sub-brands.
The IP portfolio does, however, present certain risks and gaps that warrant attention by the deal team in connection with the Merger Agreement and that may require post-closing remediation. The key action items arising from this review are summarized below:
1. Prioritize Consent Outreach for Brand License Agreements. Consent outreach should be initiated promptly following the signing of the Merger Agreement for the inbound brand license agreement that contains an explicit licensor termination right upon change of control. This agreement is the largest of the three brand license agreements by revenue contribution, and the loss of the associated co-branded product line could have a material impact on the Company's business. The remaining two brand license agreements with change of control consent provisions should also be addressed, with the ambiguous provision in one agreement analyzed further in coordination with the licensor's counsel.
2. Monitor and Manage the SUMMIT TRAIL TTAB Opposition. The pending opposition proceeding (Proceeding No. 91283741) should be monitored through the closing process and beyond. The deal team should evaluate the feasibility of a negotiated settlement or co-existence agreement with the opposer, and should ensure that the proceeding is disclosed on the Merger Agreement disclosure schedules.
3. Ensure Timely Response to PENNFIELD EXPEDITION Office Action. The pending office action on the PENNFIELD EXPEDITION trademark application (Serial No. 98/301,478) requires a response by May 15, 2025. This deadline must be calendared and responsibility assigned to ensure that the response is timely filed and the application is not abandoned. This obligation should be addressed in the interim operating covenants of the Merger Agreement.
4. Post-Closing Workstreams. The following post-closing actions should be considered in coordination with Harrowgate's investment thesis for the Company:
(a) Open-Source Software Audit. A comprehensive code-level audit of the Pennfield Digital platform should be conducted to verify compliance with open-source license terms, particularly the LGPL v2.1 component.
(b) Copyright Registrations. Formal copyright registrations should be pursued for high-value content assets, including the Pennfield Digital platform source code, original marketing campaign content, and original photography.
(c) Foreign Trademark Filings. A foreign trademark filing strategy should be developed to secure priority rights in key international jurisdictions, aligned with Harrowgate's plans for the Company's post-acquisition digital-first omnichannel strategy and potential international e-commerce expansion.
(d) Domain Portfolio Expansion. The domain name portfolio should be expanded to include additional defensive registrations, including ccTLDs for key international markets and relevant new gTLDs.
5. Calendar Renewal Deadlines. Four (4) trademark renewal deadlines and three (3) domain name renewal dates fall within the next twelve (12) months. These deadlines should be calendared by the deal team and assigned post-closing responsibility to ensure continuity.
The findings in this memorandum should be read in conjunction with the Material Contracts Review Memorandum and the Change of Control Analysis, both of which have been prepared separately as part of the Project Summit due diligence workstream and contain additional analysis of assignment and change of control provisions in the Company's material contracts, including IP-related license agreements.
We are available to discuss the contents of this memorandum at your convenience and to assist with the drafting of the Merger Agreement representations, disclosure schedules, and related transaction documentation.
Respectfully submitted,
CALDERWOOD & HARKNESS LLP
By: ________
Megan Chu Working Associate, Mergers & Acquisitions
Distribution: This memorandum is being provided solely to the a

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