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

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PRIVILEGED & CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGED WORK PRODUCT

This memorandum has been prepared by Calderwood & Harkness LLP at the direction of Harrowgate Private Equity Fund IV LP in anticipation of the proposed acquisition of Pennfield Holdings, Inc. and is protected by the attorney-client privilege and the work product doctrine. Distribution of this memorandum or its contents to any person other than the addressees and their authorized representatives without the prior written consent of Calderwood & Harkness LLP is strictly prohibited.

MEMORANDUM

TO: Oliver Mackenzie, Responsible Partner, M&A Practice Group Ryan Kowalski, Lead Associate, M&A Practice Group

FROM: Megan Chu, Working Associate, M&A Practice Group

DATE: March 25, 2025

RE: Material Contracts Review — Pennfield Holdings, Inc. (Project Summit)

MATTER NO.: 1003-00004

CLIENT: Harrowgate Private Equity Fund IV LP

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I. Executive Summary

This memorandum summarizes the findings of Calderwood & Harkness LLP's review of the material commercial contracts of Pennfield Holdings, Inc. ("Pennfield," the "Company," or the "Target"), a publicly traded specialty retailer listed on the Nasdaq Global Select Market under the ticker symbol PNFD. This review has been conducted in connection with the proposed take-private acquisition of Pennfield by Harrowgate Private Equity Fund IV LP ("Harrowgate," "HPE Fund IV," or the "Sponsor") for an aggregate enterprise value 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 HPE Fund IV, will merge with and into Pennfield, with Pennfield surviving as a wholly owned subsidiary of HPE Fund IV, pursuant to Section 251 of the Delaware General Corporation Law (the "DGCL").

The consummation of the merger will constitute a "change of control" under numerous Pennfield commercial agreements, thereby triggering anti-assignment provisions, consent-to-assignment requirements, acceleration clauses, fee adjustment mechanisms, and potential termination rights held by various counterparties. The scope and severity of these provisions vary significantly across the Company's contract portfolio, and this memorandum identifies and categorizes the contracts that present the greatest risk to the successful completion and post-closing operation of the Transaction.

Our review has been conducted using the Thackeray Solutions virtual data room established for Project Summit, which was opened on February 10, 2025 and has been continuously updated by Pennfield and its outside counsel, Calloway, Briggs & Harmon LLP. Our review of the data room materials is ongoing through the date of this memorandum, and we note that additional documents may be uploaded by the Company prior to signing. In total, we have reviewed approximately 340 documents across supply, vendor, licensing and franchise, customer, distribution, technology, and services categories.

Key Findings. Of the approximately 340 contracts reviewed, approximately 47 contracts contain change of control, anti-assignment, consent-to-assignment, or termination-upon-assignment provisions that may be triggered by the merger. Of these 47 contracts, approximately 18 have been categorized as high-priority, meaning that counterparty consent or advance notice is required prior to or at closing, and that failure to obtain such consent could result in termination of the contract, acceleration of obligations, or other material adverse consequences to the Company's ongoing operations. The aggregate annual value of the contracts requiring high-priority consent is approximately $520 million, representing a significant portion of the Company's cost structure and revenue-generating capacity. An additional 12 contracts have been categorized as medium-priority, where consent is preferred but the risk is manageable, and approximately 17 contracts have been categorized as low-priority, requiring only post-closing notice or containing provisions unlikely to be triggered by the specific merger structure.

Cross-References. This memorandum is intended to be read in conjunction with the following related diligence memoranda prepared by the Calderwood & Harkness deal team:

• Change of Control Analysis Memorandum (Ryan Kowalski / Megan Chu, dated March 26, 2025), which provides detailed treatment of change of control provisions in the Company's credit agreements, executive employment agreements, commercial leases, and equity incentive plans. Those categories of agreements are expressly excluded from this memorandum to avoid duplication.

• IP Diligence Memorandum (Megan Chu, dated March 24, 2025), which addresses intellectual property license agreements in greater detail, including analysis of IP ownership, registration status, and the enforceability of licensed marks.

• Real Estate & Lease Portfolio Summary (Megan Chu, dated March 25, 2025), which covers the Company's real property lease agreements, including change of control provisions in commercial leases for the Company's retail locations, distribution centers, and corporate headquarters.

This memorandum focuses exclusively on the Company's commercial contracts, including supply agreements, vendor and service agreements, franchise and licensing arrangements, customer agreements, distribution and logistics agreements, and technology and software agreements.

II. Scope and Methodology

A. Scope of Review

The contracts reviewed in connection with this memorandum were produced by Pennfield into the Project Summit virtual data room hosted on the Thackeray Solutions platform. Our review encompassed contracts contained in the following data room folders:

• Material Contracts (Folder 4.0)

• Supply & Procurement (Folder 4.1)

• Vendor Agreements (Folder 4.2)

• Customer Agreements (Folder 4.3)

• Licensing & Franchise (Folder 4.4)

• Technology & Services (Folder 4.5)

• Distribution Agreements (Folder 4.6)

The contracts included in our review were identified as material by Pennfield's General Counsel, Patricia Okafor, in consultation with the Company's outside counsel, Calloway, Briggs & Harmon LLP (Janet Alcorn, Partner / Linda Chiang, Associate). Our review further encompasses contracts that would be required to be filed as exhibits to Pennfield's Annual Report on Form 10-K pursuant to Item 601(b)(10) of Regulation S-K, including contracts not made in the ordinary course of business that are material to the registrant, as well as certain contracts made in the ordinary course that the registrant is substantially dependent upon.

Our review of each contract focused on the following specific provisions and issues:

(i) Anti-assignment and change of control clauses, including the breadth of the definitions used therein;

(ii) Consent-to-assignment provisions, including whether such consent may be unreasonably withheld, conditioned, or delayed;

(iii) Termination rights triggered by the merger or a change of control, including any cure periods or wind-down provisions;

(iv) Notice requirements, including the timing, form, and recipient of any required notices;

(v) Exclusivity and non-compete covenants that may restrict the Company's ability to source from alternative suppliers or serve certain markets post-closing;

(vi) Minimum purchase or volume commitments that impose ongoing obligations on the Company;

(vii) Most-favored-nation ("MFN") pricing clauses that may be implicated by the Company's integration with Harrowgate's existing portfolio companies;

(viii) Material adverse effect or material change triggers that could be activated by the Transaction or the announcement thereof; and

(ix) Term, renewal, and termination-for-convenience provisions that may affect the stability of the Company's commercial relationships during the pendency of the Transaction and post-closing.

B. Methodology

Each contract reviewed was categorized by type according to the following taxonomy: supply agreement, vendor agreement, customer agreement, franchise/licensing agreement, technology/services agreement, distribution agreement, or other. Within each category, the relevant provisions identified during our review were analyzed against the proposed Transaction structure.

In particular, our analysis accounts for the fact that the Transaction is structured as a reverse triangular merger in which Pinnacle Merger Sub will merge with and into Pennfield, with Pennfield surviving as a wholly owned subsidiary of HPE Fund IV. Because Pennfield is the surviving entity in the merger, its contractual relationships continue by operation of law, and there is no direct assignment of any contract from Pennfield to another entity. Accordingly, certain anti-assignment clauses that are limited to a direct assignment of the contract by one party to another may not be triggered by the merger. However, many contracts define "assignment" broadly to include any change of control, any merger transaction (whether or not the contracting party is the surviving entity), or any transfer "by operation of law." Where such broad language is present, the reverse triangular merger structure does not avoid the trigger, and counterparty consent will be required.

Each contract was assigned a priority classification based on the following criteria:

• High Priority: Consent is required under the contract language, and the failure to obtain consent could result in the termination of the contract, acceleration of obligations, or other material adverse consequences to the Company. The contract is material to the Company's operations, and the counterparty relationship may not be readily replaceable.

• Medium Priority: Consent is preferred but the risk is manageable. This classification encompasses contracts where the change of control provision is ambiguous, the consent requirement is subject to a reasonableness standard or waiver mechanism, or the economic impact of non-consent is limited and can be mitigated through alternative arrangements.

• Low Priority: The contract requires only post-closing notice to the counterparty, or the anti-assignment provision is narrowly drafted and is unlikely to be triggered by the specific reverse triangular merger structure. Alternatively, the contract is of limited economic significance.

C. Limitations

The following limitations apply to this memorandum and the review conducted hereunder:

1. Our review is based solely on documents produced to the Project Summit data room as of March 24, 2025. Pennfield may have additional contracts that have not yet been uploaded to the data room or that were not identified as material by the Company's management or outside counsel. We have requested supplemental production of any outstanding material contracts and will update our analysis upon receipt.

2. We have not reviewed any oral agreements, informal understandings, or course-of-dealing arrangements unless such arrangements are referenced in the written contracts produced to the data room. We note that Patricia Okafor has represented to us that Pennfield does not have any material oral agreements, but we have not independently verified this representation.

3. Tax, environmental, employee benefit, and ERISA-governed contracts and arrangements are being reviewed separately by Sylvia Hartwell and the applicable specialist teams within Calderwood & Harkness LLP. Those categories of agreements are excluded from this memorandum.

4. As noted above, credit agreements, executive employment agreements, commercial leases, and equity incentive plans are addressed in the separate Change of Control Analysis memorandum and are excluded from this memorandum.

5. Our analysis of governing law provisions is general in nature. Where specific questions of contract interpretation arise under the laws of jurisdictions other than Delaware and New York, we recommend engagement of local counsel as appropriate.

III. Summary of Key Findings by Contract Category

A. Supply Agreements

1. Overview. Pennfield maintains approximately 85 active supply agreements for inventory, raw materials, components, and finished goods that support the Company's 187 company-owned retail stores, 22 outlet locations, and e-commerce operations across 34 states. The Company's supply chain encompasses domestic and international suppliers providing a range of product categories, including outdoor and adventure apparel, footwear, accessories, camping and hiking equipment, and branded lifestyle merchandise.

Of the approximately 85 active supply agreements, we reviewed 62 that were identified as material based on an annual spend threshold of more than $1 million or their strategic importance to the Company's operations. The remaining supply agreements fall below the materiality threshold and were not individually reviewed, although we have confirmed through discussion with Patricia Okafor that those agreements are generally entered into on the Company's standard purchase order terms, which do not contain change of control or anti-assignment provisions.

2. Top Supplier Agreements — Change of Control / Assignment Provisions

Pennfield's supply chain is moderately concentrated, with the Company's top three suppliers collectively accounting for approximately $280 million in annual procurement spend. The following is a summary of the most significant supply agreements reviewed, organized by estimated annual spend and strategic importance:

(a) Ridgecrest Outdoor Products, Inc. Pennfield is party to a Master Supply Agreement dated June 15, 2021, as amended, with Ridgecrest Outdoor Products, Inc. ("Ridgecrest"), a domestic manufacturer and distributor of outdoor apparel and technical outerwear. Ridgecrest is Pennfield's largest single supplier, providing a broad range of proprietary and co-branded outerwear, fleece products, and base-layer garments. The estimated annual procurement spend under this agreement is approximately $115 million. The agreement has an initial term of five years, expiring June 14, 2026, with two automatic one-year renewal periods. Section 14.2 of the agreement contains a change of control provision that defines "Change of Control" as "(a) any merger, consolidation, or reorganization of a Party in which such Party is not the surviving entity, (b) any transaction or series of related transactions resulting in the acquisition by any person or group of persons of more than fifty percent (50%) of the outstanding voting securities of a Party, or (c) any sale of all or substantially all of a Party's assets." The provision further states that either party may terminate the agreement upon 60 days' written notice following the occurrence of a Change of Control of the other party, unless the non-changing party provides its written consent to the continuation of the agreement within such 60-day period.

Analysis: The reverse triangular merger will result in HPE Fund IV acquiring 100% of the outstanding voting securities of Pennfield through the merger of Merger Sub with and into Pennfield. While Pennfield will be the surviving entity (which would arguably take this outside clause (a)), clause (b) is clearly triggered because the Transaction results in the acquisition by HPE Fund IV of more than 50% of the outstanding voting securities of Pennfield. Accordingly, Ridgecrest will have a termination right unless its written consent is obtained within 60 days. This contract is classified as High Priority.

(b) Summit Trail Manufacturing Co. Pennfield is party to a Supply and Purchase Agreement dated March 1, 2022, with Summit Trail Manufacturing Co. ("Summit Trail"), a supplier of hiking boots, trail running shoes, and outdoor footwear. The estimated annual procurement spend is approximately $92 million. The agreement has an initial term of four years, expiring February 28, 2026, with a single two-year renewal period. Section 11.4 contains an anti-assignment clause providing that "[n]either party may assign, transfer, or delegate this Agreement or any of its rights or obligations hereunder, whether by operation of law, merger, change of control, or otherwise, without the prior written consent of the other party, which consent shall not be unreasonably withheld." The provision further states that any purported assignment in violation of this section shall be null and void.

Analysis: The anti-assignment clause is drafted broadly to encompass assignments "by operation of law, merger, change of control, or otherwise." Although Pennfield is the surviving entity in the reverse triangular merger, the broad language of this clause — particularly the inclusion of "change of control" as a triggering event — would require Pennfield to obtain Summit Trail's prior written consent. The reasonableness standard on the withholding of consent provides some comfort that consent should be obtainable, but the risk of a dispute over reasonableness remains. This contract is classified as High Priority.

(c) Northvane Apparel Group, LLC. Pennfield is party to a Product Supply Agreement dated January 10, 2023, with Northvane Apparel Group, LLC ("Northvane"), a supplier of casual and lifestyle apparel, including branded t-shirts, hoodies, and activewear. The estimated annual procurement spend is approximately $73 million. The agreement has an initial term of three years, expiring January 9, 2026, with automatic one-year renewals unless either party provides 90 days' notice of non-renewal. Section 9.1 contains a standard anti-assignment clause prohibiting assignment "without the prior written consent of the other party," but the clause does not expressly reference mergers, changes of control, or transfers by operation of law.

Analysis: Because the anti-assignment clause does not expressly reference mergers, changes of control, or transfers by operation of law, and because Pennfield is the surviving entity in the reverse triangular merger (meaning there is no direct assignment of the contract), this clause may not be triggered by the Transaction. Under Delaware law, a reverse triangular merger does not constitute an "assignment" of the surviving entity's contracts absent express contractual language to the contrary. However, the analysis is fact-specific, and we recommend confirming the governing law of this agreement (which is California law under Section 15.3) and assessing any California-specific precedent. This contract is classified as Medium Priority, with a recommendation to seek a comfort letter or informal acknowledgment from Northvane.

(d) Cascadia Gear Solutions, Inc. Pennfield is party to a Component Supply Agreement dated September 1, 2020, as amended, with Cascadia Gear Solutions, Inc. ("Cascadia"), a supplier of camping equipment, backpacks, and outdoor gear accessories. The estimated annual procurement spend is approximately $48 million. The agreement has an initial term of five years, expiring August 31, 2025, and is currently in its final year of the initial term. Section 12.6 contains a change of control provision substantially similar in scope to the Ridgecrest provision discussed above, providing for a termination right upon a change of control unless consent is obtained within 30 days. The shorter cure period of 30 days (as compared to Ridgecrest's 60 days) increases the urgency of counterparty engagement.

Analysis: The change of control provision is clearly triggered. Given the shorter cure period and the approaching expiration of the initial term (August 31, 2025), the Company and its advisors should consider whether it is more efficient to negotiate a new agreement with Cascadia or to seek a consent and renewal concurrently. This contract is classified as High Priority.

(e) Ironwood Textiles International Ltd. Pennfield is party to a Fabric and Materials Supply Agreement dated April 15, 2023, with Ironwood Textiles International Ltd. ("Ironwood"), a UK-based supplier of technical fabrics, performance textiles, and raw materials used in the Company's proprietary apparel manufacturing. The estimated annual procurement spend is approximately $34 million. The agreement has an initial term of three years, expiring April 14, 2026, with no automatic renewal. Section 10.3 contains an anti-assignment clause covering "any assignment, novation, or transfer of this Agreement, whether voluntary, involuntary, by merger, consolidation, dissolution, change of control, operation of law, or otherwise." The clause requires the prior written consent of the non-assigning party, with no reasonableness standard applied to the withholding of consent.

Analysis: The anti-assignment clause is among the broadest we have reviewed in the supply agreement portfolio. The absence of a reasonableness standard on the withholding of consent gives Ironwood significant leverage. The governing law of this agreement is English law (Section 18.1), and we recommend consultation with UK counsel to confirm the enforceability of the clause under English law principles. This contract is classified as High Priority.

(f) Timberpoint Equipment Corp. Pennfield is party to a Purchase Order Framework Agreement dated November 1, 2022, with Timberpoint Equipment Corp. ("Timberpoint"), a domestic supplier of ski and winter sports equipment and accessories. The estimated annual procurement spend is approximately $22 million. The agreement operates on a purchase order basis under a master framework, with individual purchase orders constituting separate contracts. Section 7.2 of the framework agreement contains an anti-assignment clause that is limited to direct assignment and does not reference mergers, changes of control, or transfers by operation of law.

Analysis: Similar to the Northvane analysis above, the narrow drafting of the anti-assignment clause likely does not encompass the reverse triangular merger. Individual purchase orders reference the framework agreement and incorporate its terms. This contract is classified as Low Priority.

(g) Greystone Provisions LLC. Pennfield is party to a Co-Packing and Private Label Supply Agreement dated February 1, 2024, with Greystone Provisions LLC ("Greystone"), a supplier of private-label outdoor food products and trail snacks sold in Pennfield retail locations. The estimated annual procurement spend is approximately $9 million. The agreement has an initial term of two years, expiring January 31, 2026, with automatic one-year renewals. Section 8.4 contains a change of control provision requiring 45 days' advance written notice of any change of control and granting the non-changing party a termination right exercisable within 30 days following receipt of such notice.

Analysis: The change of control provision is triggered, but the relatively modest annual spend and the availability of alternative co-packing suppliers mitigate the risk. This contract is classified as Medium Priority.

3. Exclusivity and Volume Commitments

Certain supply agreements contain exclusivity provisions that require Pennfield to source specified product categories exclusively from the designated counterparty. The following exclusivity provisions were identified:

• Ridgecrest Outdoor Products, Inc.: Section 5.1 of the Master Supply Agreement grants Ridgecrest exclusive supplier status for the "premium outerwear" and "technical fleece" product categories in Pennfield's retail stores, subject to certain carve-outs for the Company's proprietary house-brand products. This exclusivity provision survives a change of control and remains in effect for the duration of the agreement term.

• Summit Trail Manufacturing Co.: Section 4.3 of the Supply and Purchase Agreement provides that Pennfield shall source not less than 70% of its annual outdoor footwear inventory (by unit volume) from Summit Trail during each contract year.

• Cascadia Gear Solutions, Inc.: Section 3.2 of the Component Supply Agreement provides that Pennfield shall source its camping backpack product line exclusively from Cascadia for the duration of the agreement term.

In addition to exclusivity provisions, we identified minimum annual purchase commitments in approximately 8 supply agreements reviewed, with aggregate minimum purchase commitments of approximately $145 million for the Company's current fiscal year (ending January 31, 2026). Failure to meet minimum purchase thresholds under these agreements could trigger make-whole or shortfall payments, typically calculated as a percentage (ranging from 15% to 30%) of the difference between actual purchases and the minimum commitment. These shortfall payment provisions are important to consider in connection with any post-closing operational restructuring or changes in sourcing strategy that Harrowgate may contemplate.

4. Most-Favored-Nation (MFN) Pricing Clauses

Approximately 4 of the supply agreements reviewed contain MFN pricing provisions. These provisions generally require the supplier to offer Pennfield pricing that is no less favorable than the pricing offered to other comparable national specialty retailers purchasing similar volumes of similar products. The MFN provisions are found in the agreements with Ridgecrest Outdoor Products, Inc. (Section 6.4), Summit Trail Manufacturing Co. (Section 5.2), Northvane Apparel Group, LLC (Section 4.7), and Ironwood Textiles International Ltd. (Section 6.1).

The merger itself does not directly implicate the MFN pricing clauses, as these provisions run in Pennfield's favor (i.e., the supplier is obligated to maintain favorable pricing to Pennfield). However, post-closing integration of Pennfield's procurement operations with any existing Harrowgate portfolio companies in the retail or apparel sector could require analysis of whether the MFN provisions would extend to such portfolio companies or whether the aggregation of purchasing volumes across affiliated entities would affect the "comparable retailer" benchmarking under the MFN provisions. We recommend that this analysis be deferred to the post-closing integration planning phase.

5. Risk Assessment and Recommendations

Based on our review, high-priority consents are needed from approximately 6 supply agreement counterparties prior to or promptly after closing. These counterparties are Ridgecrest Outdoor Products, Inc., Summit Trail Manufacturing Co., Cascadia Gear Solutions, Inc., Ironwood Textiles International Ltd., and two additional suppliers whose agreements contain clearly triggered change of control provisions (detailed in Appendix B). The aggregate annual procurement spend represented by these 6 high-priority supply agreements is approximately $330 million.

We recommend early outreach to these key counterparties, coordinated with Pennfield management — specifically Maxwell Dunn, the Company's Chief Operating Officer, who maintains the primary commercial relationships with these suppliers — and with Patricia Okafor, the Company's General Counsel. The sequencing of outreach should be discussed with the Harrowgate deal team, as premature disclosure of the Transaction to counterparties prior to the public announcement could raise confidentiality concerns. To the extent that any suppliers are also publicly traded companies or subject to their own confidentiality obligations, appropriate non-disclosure arrangements should be put in place prior to engagement.

B. Vendor and Service Agreements

1. Overview. We reviewed approximately 45 vendor and professional services agreements covering a range of operational functions, including logistics and warehousing operations, IT infrastructure and managed services, payment processing, marketing and advertising services, store maintenance and facilities management, and consulting services. These agreements are distinct from the supply agreements discussed in Section III.A (which cover inventory and product procurement) and from the technology and software agreements discussed in Section III.F (which cover software licenses and SaaS arrangements).

2. Key Vendor Agreements — Change of Control / Assignment Provisions

The following vendor agreements were identified as containing change of control or anti-assignment provisions that may be triggered by the merger:

(a) Mercer Logistics Group, Inc. — Logistics and Warehousing Services Agreement. Pennfield is party to a Logistics Services Agreement dated August 1, 2021, as amended, with Mercer Logistics Group, Inc. ("Mercer Logistics"), under which Mercer Logistics operates and manages the day-to-day logistics operations at Pennfield's primary East Coast distribution center located in Bethlehem, Pennsylvania. The agreement has an initial term of five years, expiring July 31, 2026, with two automatic one-year renewal periods. The estimated annual spend under this agreement is approximately $28 million. Section 13.2 of the agreement contains a change of control provision requiring Pennfield to provide Mercer Logistics with written notice of any change of control event not less than 60 days prior to the consummation of such event. Mercer Logistics has the right to terminate the agreement upon 30 days' written notice following receipt of such change of control notice if the parties are unable to agree upon mutually acceptable terms for continuation of the agreement. If terminated, Mercer Logistics is obligated to provide transition services for a period of up to 120 days at then-current rates.

Analysis: The change of control provision is clearly triggered. The 60-day advance notice requirement is operationally significant and should be factored into the deal timeline. The transition services provision provides some comfort that an abrupt termination would not occur, but the loss of this agreement would require Pennfield to identify and onboard an alternative logistics operator for a major distribution center, which could take 6-12 months to complete. This contract is classified as High Priority.

(b) Clearpath Payment Solutions, Inc. — Payment Processing Services Agreement. Pennfield is party to a Payment Processing Services Agreement dated March 15, 2023, with Clearpath Payment Solutions, Inc. ("Clearpath"), under which Clearpath provides point-of-sale payment processing, e-commerce payment gateway services, and fraud detection and prevention services. The agreement has an initial term of three years, expiring March 14, 2026, with automatic one-year renewals. The estimated annual spend under this agreement is approximately $14 million (consisting of processing fees, gateway fees, and fraud monitoring fees). Section 9.5 of the agreement contains an anti-assignment clause that defines "Assignment" to include "any transaction or series of transactions, whether structured as a merger, consolidation, stock purchase, asset purchase, reorganization, or otherwise, that results in a change of more than fifty percent (50%) of the equity ownership or voting control of either party." The clause requires the prior written consent of the non-assigning party, and provides that any purported assignment without such consent shall constitute a material breach of the agreement, entitling the non-breaching party to terminate upon 15 days' written notice.

Analysis: The anti-assignment clause is broadly drafted and clearly encompasses the reverse triangular merger, which will result in HPE Fund IV acquiring 100% of the equity ownership of Pennfield. The 15-day cure period is notably short, and the characterization of a non-consented assignment as a "material breach" increases the risk profile. Payment processing is a critical operational function, and termination of this agreement without a replacement in place could disrupt both in-store and e-commerce sales. This contract is classified as High Priority.

(c) Sentinel Shield IT Services, LLC — IT Managed Services Agreement. Pennfield is party to an IT Managed Services Agreement dated January 1, 2022, with Sentinel Shield IT Services, LLC ("Sentinel Shield"), under which Sentinel Shield provides enterprise resource planning (ERP) system support, network management, cybersecurity monitoring, and help desk services. The agreement has an initial term of four years, expiring December 31, 2025, with a single two-year renewal option exercisable by Pennfield. The estimated annual spend is approximately $11 million. Section 16.1 of the agreement contains a change of control provision granting either party the right to terminate upon a "Change of Control Event," defined as "the acquisition by any person or entity, or group of persons or entities acting in concert, of direct or indirect ownership of more than fifty percent (50%) of the outstanding equity interests or voting power of a party, whether through merger, tender offer, exchange offer, or otherwise." The terminating party must provide 90 days' advance written notice of its intent to terminate, and the non-terminating party is entitled to a 90-day wind-down period during which services continue at then-current rates and service levels.

Analysis: The change of control provision is triggered. The relatively generous wind-down period (90 days) provides time to transition to an alternative IT services provider, and we understand from discussions with Maxwell Dunn that Harrowgate's portfolio operations team has existing relationships with IT managed services providers that could be engaged on an expedited basis. Nevertheless, the ERP system support function is deeply integrated into the Company's operations, and a transition would require careful planning. This contract is classified as High Priority, although the risk is somewhat mitigated by the 90-day wind-down period.

(d) Momentum Marketing Partners, LLC — Marketing Services Agreement. Pennfield is party to a Marketing Services Agreement dated September 1, 2024, with Momentum Marketing Partners, LLC ("Momentum"), under which Momentum provides digital marketing, social media management, seasonal campaign development, and brand strategy consulting services. The agreement has an initial term of one year, expiring August 31, 2025, with automatic one-year renewals unless either party provides 60 days' notice of non-renewal. The estimated annual spend is approximately $6.5 million. We have reviewed the agreement in its entirety and have not identified any change of control provision, anti-assignment clause, or consent requirement that would be triggered by the merger. The agreement is terminable by either party on 60 days' notice for any reason.

Analysis: No action required with respect to the merger. This contract is classified as Low Priority.

(e) Brightfield Facilities Management Corp. — Facilities Maintenance Agreement. Pennfield is party to a Master Facilities Maintenance Agreement dated April 1, 2023, with Brightfield Facilities Management Corp. ("Brightfield"), under which Brightfield provides HVAC maintenance, janitorial services, and general facilities management for the Company's 187 retail store locations and corporate headquarters. The agreement has an initial term of three years, expiring March 31, 2026, with automatic one-year renewals. The estimated annual spend is approximately $18 million. Section 8.7 contains a standard anti-assignment clause, but the clause is limited to "direct assignment or transfer of this Agreement to a third party" and does not reference mergers, changes of control, or transfers by operation of law.

Analysis: The narrowly drafted anti-assignment clause is unlikely to be triggered by the reverse triangular merger, as Pennfield remains the same legal entity and the agreement is not being directly assigned to a third party. This contract is classified as Low Priority.

(f) DataStream Analytics Corp. — Data Analytics and Consulting Agreement. Pennfield is party to a Data Analytics and Consulting Services Agreement dated July 1, 2024, with DataStream Analytics Corp. ("DataStream"), under which DataStream provides customer analytics, market intelligence, and predictive modeling services to support the Company's merchandising and inventory planning functions. The agreement has an initial term of two years, expiring June 30, 2026. The estimated annual spend is approximately $3.2 million. Section 11.1 contains a change of control provision requiring notification within 30 days of a change of control but expressly providing that a change of control does not give rise to a termination right. The provision states: "Upon a Change of Control of either party, the affected party shall provide written notice to the other party within thirty (30) days of such event. For the avoidance of doubt, a Change of Control shall not constitute a breach of this Agreement or give rise to any right of termination."

Analysis: Notification is required, but the express exclusion of termination rights renders this a low-risk provision. This contract is classified as Low Priority (notice-only).

3. Termination for Convenience Provisions

Approximately 12 of the 45 vendor agreements reviewed contain termination-for-convenience clauses that are exercisable by either party upon 30 to 90 days' prior written notice. While these provisions are not directly triggered by the merger (i.e., the merger itself does not constitute an exercise of the termination-for-convenience right), they create a risk that vendors could elect to terminate their agreements following the public announcement of the Transaction or during the pendency of the regulatory review period. Vendors may choose to exercise termination-for-convenience rights for commercial reasons unrelated to the merger, or they may use the announcement as an opportunity to renegotiate terms.

We recommend that the deal team monitor counterparty behavior following the public announcement and that the Merger Agreement include appropriate interim operating covenants requiring Pennfield to promptly notify Harrowgate of any vendor termination notices received during the pre-closing period.

4. Risk Assessment and Recommendations

Based on our review, high-priority consents are needed from approximately 3 vendor counterparties: Mercer Logistics Group, Inc., Clearpath Payment Solutions, Inc., and Sentinel Shield IT Services, LLC. The aggregate annual spend represented by these 3 high-priority vendor agreements is approximately $53 million.

The payment processing and logistics/warehousing agreements are flagged as the most critical due to their direct operational impact if terminated. Loss of the Clearpath payment processing agreement could disrupt both in-store and e-commerce sales within days, while loss of the Mercer Logistics agreement could impair the Company's ability to fulfill orders and replenish store inventory. We recommend that these counterparties be among the first contacted for consent discussions, with appropriate confidentiality protections in place.

C. Franchise and Licensing Arrangements

1. Overview. Pennfield operates primarily through company-owned retail locations — 187 full-line stores and 22 outlet locations, for a total of 209 company-operated locations across 34 states. The Company does not operate a franchise model for its retail stores and has no franchise agreements in place. Accordingly, Pennfield is not subject to federal or state franchise disclosure requirements in connection with the operation of its retail business.

However, Pennfield is party to approximately 12 licensing agreements that are material to its operations. These agreements fall into two categories:

• Inbound License Agreements (9): Agreements under which Pennfield licenses third-party brands, trademarks, and proprietary technologies for use in co-branded product lines and in connection with the Company's outdoor and adventure apparel categories.

• Outbound License Agreements (3): Agreements under which Pennfield licenses its own trademarks and brand names to international distributors for sales in markets outside the United States.

2. Inbound License Agreements (Third-Party Brands Licensed to Pennfield)

We reviewed the 9 active inbound license agreements produced to the data room. Of these, 4 inbound licenses contain change of control provisions or anti-assignment clauses that would be triggered by the merger. The most significant of these are discussed below.

(a) TrailForge Footwear, Inc. — Co-Branded Outdoor Footwear License. Pennfield is party to a Trademark License and Co-Branding Agreement dated May 1, 2021, with TrailForge Footwear, Inc. ("TrailForge"), under which Pennfield holds an exclusive license to manufacture and sell a co-branded line of outdoor hiking boots and trail shoes bearing both the Pennfield and TrailForge trademarks. The agreement has an initial term of five years, expiring April 30, 2026, with a single three-year renewal option exercisable by Pennfield subject to the achievement of minimum sales thresholds. Estimated annual royalty payments under this agreement are approximately $4.5 million, and the co-branded footwear line generated an estimated $38 million in retail revenue during the Company's most recent fiscal year. Section 12.1 of the agreement contains a change of control consent requirement, providing that "[n]either party shall undergo a Change of Control (as defined herein) without the prior written consent of the other party. For purposes of this Agreement, 'Change of Control' means any transaction or series of transactions resulting in a change in the identity of the person or entity that directly or indirectly controls more than fifty percent (50%) of the voting securities of such party." Section 12.2 provides that if a party undergoes a Change of Control without obtaining the required consent, the other party shall have the right to terminate the agreement upon 30 days' written notice.

Analysis: The change of control consent requirement is clearly triggered. The 30-day termination window is notably short, and the loss of this co-branded product line would have a meaningful impact on revenue. The renewal option, which requires achievement of minimum sales thresholds, could also be at risk if the counterparty relationship deteriorates. This contract is classified as High Priority.

(b) Alpine Innovations GmbH — Technical Fabric License. Pennfield is party to a Technology License Agreement dated October 1, 2022, with Alpine Innovations GmbH ("Alpine Innovations"), a German manufacturer and licensor of proprietary technical fabric technologies, including moisture-wicking, waterproofing, and thermal regulation technologies used in the Company's premium apparel lines. The agreement has an initial term of four years, expiring September 30, 2026. Estimated annual royalty payments are approximately $2.8 million. The agreement is silent on change of control but contains a broad anti-assignment clause in Section 15.3, which provides that "[n]either party may assign, transfer, sublicense, or otherwise dispose of this Agreement or any of its rights or obligations hereunder, whether voluntarily or involuntarily, including by any transfer, whether by operation of law, merger, or otherwise, without the prior written consent of the other party."

Analysis: Although the agreement does not contain a defined "change of control" provision, the broad anti-assignment clause — which expressly covers transfers "by operation of law, merger, or otherwise" — arguably encompasses the reverse triangular merger. While Pennfield is the surviving entity and the agreement is not being directly assigned, the change in Pennfield's ultimate equity ownership effected through the merger of Merger Sub with and into Pennfield could be construed as a transfer "by operation of law" or "by merger" within the meaning of this clause. Given the breadth of the language and the absence of a reasonableness standard, we recommend seeking Alpine Innovations' consent. The governing law of this agreement is German law (Section 21.1), and we recommend consultation with German counsel to assess enforceability. This contract is classified as High Priority.

(c) Pineridge Sports Brands LLC — Licensed Apparel Line. Pennfield is party to a Brand License Agreement dated January 15, 2023, with Pineridge Sports Brands LLC ("Pineridge"), under which Pennfield holds a non-exclusive license to manufacture and sell activewear and casual sportswear bearing the Pineridge brand name. The agreement has an initial term of three years, expiring January 14, 2026, with automatic one-year renewals. Estimated annual royalty payments are approximately $1.9 million. Section 10.4 contains a change of control provision requiring 60 days' advance notice and granting the licensor a termination right if consent is not obtained. This contract is classified as High Priority.

(d) Westbound Heritage Co. — Heritage Collection License. Pennfield is party to a Trademark License Agreement dated March 1, 2024, with Westbound Heritage Co. ("Westbound"), under which Pennfield holds an exclusive license to manufacture and sell a "heritage collection" line of classic outdoor apparel and accessories. The agreement has an initial term of two years, expiring February 28, 2026. Estimated annual royalty payments are approximately $1.2 million. Section 9.6 contains a change of control consent requirement substantially similar to the TrailForge provision described above. This contract is classified as High Priority.

The remaining 5 inbound license agreements do not contain change of control provisions or anti-assignment clauses that would be triggered by the reverse triangular merger. Three of these agreements are silent on assignment entirely, and two contain anti-assignment clauses that are limited to direct assignments and do not reference mergers, changes of control, or transfers by operation of law.

3. Outbound License Agreements (Pennfield Brands Licensed to Third Parties)

We reviewed 3 outbound international distribution and license agreements under which Pennfield licenses its trademarks and brand names to third-party distributors for sales in markets outside the United States:

(a) Sterling Pacific Distribution Ltd. — Asia-Pacific License. Pennfield is party to a Distribution and Trademark License Agreement dated July 1, 2022, with Sterling Pacific Distribution Ltd. ("Sterling Pacific"), under which Sterling Pacific holds an exclusive license to distribute and sell Pennfield-branded products in Australia, New Zealand, Japan, South Korea, and select Southeast Asian markets. The agreement has an initial term of five years, expiring June 30, 2027. Section 14.3 contains a mutual consent-to-assignment provision providing that neither party may assign the agreement or undergo a change of control without the prior written consent of the other party. Consent may not be unreasonably withheld.

Analysis: The mutual consent provision is triggered by the merger. Given the reasonableness standard and the fact that the license is an outbound arrangement (i.e., Pennfield is the licensor, not the licensee), the risk of non-consent is low, but formal consent should be sought. This contract is classified as Medium Priority (but should be included in the consent outreach process).

(b) Nordfjell Outdoor AG — European License. Pennfield is party to a Trademark License and Distribution Agreement dated November 1, 2023, with Nordfjell Outdoor AG ("Nordfjell"), under which Nordfjell holds a non-exclusive license to distribute and sell Pennfield-branded products in Germany, Austria, Switzerland, and the Nordic countries. The agreement has an initial term of three years, expiring October 31, 2026. The agreement is silent on change of control and contains only a narrow anti-assignment clause limited to direct assignments.

Analysis: Unlikely to be triggered. This contract is classified as Low Priority.

(c) Meridian Global Brands Inc. — Canadian License. Pennfield is party to a Distribution Agreement dated April 1, 2024, with Meridian Global Brands Inc. ("Meridian Global"), under which Meridian Global holds an exclusive license to distribute and sell Pennfield-branded products in Canada. The agreement has an initial term of two years, expiring March 31, 2026. The agreement is silent on change of control and does not contain an anti-assignment clause.

Analysis: No action required. This contract is classified as Low Priority.

4. Risk Assessment and Recommendations

Based on our review, high-priority consents are needed for approximately 4 inbound license agreements (TrailForge Footwear, Alpine Innovations, Pineridge Sports Brands, and Westbound Heritage). One additional outbound license consent (Sterling Pacific Distribution) should be obtained as a medium-priority item.

The aggregate annual royalty payments under the 4 high-priority inbound licenses are approximately $10.4 million, and the aggregate retail revenue generated by the licensed product lines is significantly higher (estimated at approximately $75 million). Loss of any of these licensing relationships could materially affect the Company's product assortment and revenue.

We cross-reference the IP Diligence Memorandum (Megan Chu, dated March 24, 2025) for further detail on the IP ownership and registration status of the licensed marks, the scope of the licensed rights, and the territorial and field-of-use restrictions applicable to each license.

D. Customer Agreements

1. Overview. Pennfield's revenue is primarily generated through retail store and e-commerce sales to individual consumers. The Company does not maintain traditional long-term customer contracts in its business-to-consumer ("B2C") channel. Individual retail transactions are conducted at the point of sale subject to the Company's standard terms of sale, return and exchange policy, and privacy policy, none of which contain change of control or anti-assignment provisions that would be triggered by the merger.

However, Pennfield maintains approximately 15 business-to-business ("B2B") and institutional customer agreements, including corporate sales programs, group purchasing arrangements, and wholesale accounts with specialty retailers. For the Company's fiscal year ended January 31, 2025 ("FY 2024"), total revenue was $1,620,000,000. B2B and institutional revenue is estimated at approximately $95 million, representing approximately 5.9% of total revenue. While B2B revenue is not the primary revenue driver, several of these relationships are strategically important and contribute disproportionately to certain product categories.

2. Key B2B / Institutional Customer Contracts

The following B2B and institutional customer contracts were identified as significant:

(a) Peakview Recreation Corp. — Corporate Sales Program Agreement. Pennfield is party to a Corporate Sales Program Agreement dated June 1, 2023, with Peakview Recreation Corp. ("Peakview"), a major outdoor recreation company that purchases Pennfield-branded apparel and gear for employee outfitting, corporate gifts, and sponsored outdoor education programs. The agreement has an initial term of three years, expiring May 31, 2026, with automatic one-year renewals. The estimated annual revenue from this account is approximately $12 million. The agreement does not contain a change of control provision or anti-assignment clause. It is terminable by either party on 90 days' written notice for any reason.

Analysis: No action required with respect to the merger. This contract is classified as Low Priority. However, we note that the termination-for-convenience clause could be exercised by Peakview at any time, and the deal team should monitor the relationship during the pendency of the Transaction.

(b) Frontier Sporting Goods, Inc. — Wholesale Supply Agreement. Pennfield is party to a Wholesale Supply Agreement dated September 1, 2024, with Frontier Sporting Goods, Inc. ("Frontier"), a regional chain of sporting goods stores with approximately 45 locations across the Pacific Northwest. The agreement has an initial term of two years, expiring August 31, 2026, with automatic one-year renewals. The estimated annual revenue from this account is approximately $8.5 million. Section 7.3 contains an anti-assignment clause providing that "[n]either party may assign this Agreement without the prior written consent of the other party." The clause is limited to direct assignment and does not expressly reference mergers, changes of control, or transfers by operation of law.

Analysis: Because the anti-assignment clause is narrowly drafted and does not reference mergers or changes of control, and because Pennfield is the surviving entity in the reverse triangular merger, this clause is likely not triggered by the Transaction. This contract is classified as Low Priority.

(c) State of Colorado — Department of Parks and Wildlife, and State of Oregon — Parks and Recreation Department — Government/Institutional Purchase Agreements. Pennfield is party to two government purchasing contracts under which state parks and recreation departments purchase outdoor apparel, uniforms, and equipment for park ranger and field staff use. These contracts are subject to standard government procurement terms and conditions, including the applicable state's standard terms for state contracts. Combined estimated annual revenue from these contracts is approximately $4.2 million. Government procurement terms typically include provisions requiring the contractor to notify the contracting agency of material changes in corporate ownership, organizational structure, or key personnel. We have identified notification requirements in both contracts but have not identified termination-for-change-of-control provisions.

Analysis: Notification should be provided to the applicable state agencies following the closing of the Transaction. This contract is classified as Low Priority (notice-only).

3. E-Commerce Platform and Marketplace Agreements

Pennfield operates a proprietary e-commerce platform (pennfield.com) and also sells through third-party online marketplaces. The Company does not have individualized customer contracts with e-commerce purchasers; all sales are made subject to the Company's standard website terms and conditions and privacy policy.

With respect to third-party marketplace agreements, we reviewed 2 marketplace seller agreements governing Pennfield's participation as a seller on major online retail platforms. These agreements are structured as standard terms of service and do not constitute negotiated bilateral contracts. One of the marketplace seller agreements (with a platform we will refer to as "Marketplace A" for confidentiality purposes) contains a provision in Section 3.8 of its Seller Terms of Service requiring sellers to notify the marketplace platform of "material changes to [the seller's] ownership structure, legal entity status, or corporate control" within 15 business days of such change. The second marketplace seller agreement (with "Marketplace B") does not contain a comparable provision.

Analysis: Notification should be provided to Marketplace A within 15 business days of closing. This requirement is classified as Low Priority (notice-only).

4. Gift Card and Loyalty Program Obligations

Pennfield operates a customer loyalty program ("Pennfield Rewards") and has outstanding gift card liabilities. The loyalty program and gift card program are administered under an agreement with ValueServe Processing, Inc. ("ValueServe"), a third-party gift card and loyalty program processor. The agreement has an initial term of three years, expiring December 31, 2025, with automatic one-year renewals. Section 10.2 of the agreement contains an anti-assignment clause, but the clause is limited to direct assignment and does not reference mergers, changes of control, or transfers by operation of law.

Analysis: Because Pennfield remains the surviving entity and the contract is not being directly assigned, the anti-assignment clause is unlikely to be triggered by the reverse triangular merger. The outstanding gift card liability (as reported on the Company's most recent consolidated balance sheet) has been reviewed in connection with the financial due diligence workstream and does not present a concern in the context of the merger. No break in service, acceleration of redemption obligations, or modification of the Company's gift card program terms is triggered by the Transaction. This contract is classified as Low Priority.

5. Risk Assessment and Recommendations

The overall risk in the customer agreement category is low. No high-priority consents are required from customer counterparties. We recommend the following actions:

• Provide post-closing notice to the State of Colorado and State of Oregon contracting agencies regarding the change in corporate ownership.

• Provide post-closing notice to Marketplace A within 15 business days of closing.

• Monitor the Peakview Recreation and Frontier Sporting Goods relationships during the pendency of the Transaction to ensure continuity.

E. Distribution and Logistics Agreements

1. Overview. We reviewed approximately 8 distribution and logistics contracts that are separate from the vendor agreements addressed in Section III.B above. These contracts cover Pennfield's distribution center operations (from a logistics services perspective; the real property lease aspects are addressed in the Real Estate & Lease Portfolio Summary), freight and transportation services, and last-mile delivery partnerships for e-commerce fulfillment.

2. Key Distribution Agreements

(a) Distribution Center Operating Agreements. Pennfield leases and operates 2 distribution centers: (i) a 425,000-square-foot facility in Bethlehem, Pennsylvania (the "East Coast DC"), and (ii) a 310,000-square-foot facility in Sparks, Nevada (the "West Coast DC"). The real property lease terms for both facilities are addressed in the Real Estate & Lease Portfolio Summary. The logistics operations at the East Coast DC are managed by Mercer Logistics Group, Inc. under the Logistics Services Agreement discussed in Section III.B.2(a) above. The West Coast DC is operated by Pennfield's own employees, with no third-party logistics management agreement in place for that facility. The West Coast DC does, however, utilize third-party warehouse management system (WMS) software provided under a software license agreement addressed in Section III.F below.

(b) Westward Freight Corp. — Freight and Transportation Master Services Agreement. Pennfield is party to a Master Transportation Services Agreement dated February 1, 2023, with Westward Freight Corp. ("Westward Freight"), under which Westward Freight provides less-than-truckload (LTL) and full-truckload (FTL) freight transportation services for the movement of inventory between distribution centers, from distribution centers to retail store locations, and from distribution centers to e-commerce fulfillment hubs. The agreement has an initial term of three years, expiring January 31, 2026, with automatic one-year renewals. The estimated annual spend under this agreement is approximately $32 million. Section 11.4 contains a change of control provision requiring written consent of the carrier prior to any change of control of Pennfield, defined as "a change in the direct or indirect ownership of more than 50% of the outstanding voting securities of Shipper [i.e., Pennfield]." The provision grants Westward Freight the right to terminate the agreement upon 60 days' notice if consent is not obtained, but provides that rates and service levels shall remain in effect during the notice period.

Analysis: The change of control provision is triggered by the merger. While the 60-day notice period and the requirement that rates and service levels remain in effect during the notice period provide some protection, the loss of this agreement would require Pennfield to source alternative freight and transportation services on potentially less favorable terms and with potential service disruptions during the transition. This contract is classified as Medium Prior

PRIVILEGED & CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGED WORK PRODUCT
This memorandum has been prepared by Calderwood & Harkness LLP at the direction of Harrowgate Private Equity Fund IV LP in anticipation of the proposed acquisition of Pennfield Holdings, Inc. and is protected by the attorney-client privilege and the work product doctrine. Distribution of this memorandum or its contents to any person other than the addressees and their authorized representatives without the prior written consent of Calderwood & Harkness LLP is strictly prohibited.
MEMORANDUM
TO: Oliver Mackenzie, Responsible Partner, M&A Practice Group Ryan Kowalski, Lead Associate, M&A Practice Group
FROM: Megan Chu, Working Associate, M&A Practice Group
DATE: March 25, 2025
RE: Material Contracts Review — Pennfield Holdings, Inc. (Project Summit)
MATTER NO.: 1003-00004
CLIENT: Harrowgate Private Equity Fund IV LP
Right-click to update Table of Contents
I. Executive Summary
This memorandum summarizes the findings of Calderwood & Harkness LLP's review of the material commercial contracts of Pennfield Holdings, Inc. ("Pennfield," the "Company," or the "Target"), a publicly traded specialty retailer listed on the Nasdaq Global Select Market under the ticker symbol PNFD. This review has been conducted in connection with the proposed take-private acquisition of Pennfield by Harrowgate Private Equity Fund IV LP ("Harrowgate," "HPE Fund IV," or the "Sponsor") for an aggregate enterprise value 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 HPE Fund IV, will merge with and into Pennfield, with Pennfield surviving as a wholly owned subsidiary of HPE Fund IV, pursuant to Section 251 of the Delaware General Corporation Law (the "DGCL").
The consummation of the merger will constitute a "change of control" under numerous Pennfield commercial agreements, thereby triggering anti-assignment provisions, consent-to-assignment requirements, acceleration clauses, fee adjustment mechanisms, and potential termination rights held by various counterparties. The scope and severity of these provisions vary significantly across the Company's contract portfolio, and this memorandum identifies and categorizes the contracts that present the greatest risk to the successful completion and post-closing operation of the Transaction.
Our review has been conducted using the Thackeray Solutions virtual data room established for Project Summit, which was opened on February 10, 2025 and has been continuously updated by Pennfield and its outside counsel, Calloway, Briggs & Harmon LLP. Our review of the data room materials is ongoing through the date of this memorandum, and we note that additional documents may be uploaded by the Company prior to signing. In total, we have reviewed approximately 340 documents across supply, vendor, licensing and franchise, customer, distribution, technology, and services categories.
Key Findings. Of the approximately 340 contracts reviewed, approximately 47 contracts contain change of control, anti-assignment, consent-to-assignment, or termination-upon-assignment provisions that may be triggered by the merger. Of these 47 contracts, approximately 18 have been categorized as high-priority, meaning that counterparty consent or advance notice is required prior to or at closing, and that failure to obtain such consent could result in termination of the contract, acceleration of obligations, or other material adverse consequences to the Company's ongoing operations. The aggregate annual value of the contracts requiring high-priority consent is approximately $520 million, representing a significant portion of the Company's cost structure and revenue-generating capacity. An additional 12 contracts have been categorized as medium-priority, where consent is preferred but the risk is manageable, and approximately 17 contracts have been categorized as low-priority, requiring only post-closing notice or containing provisions unlikely to be triggered by the specific merger structure.
Cross-References. This memorandum is intended to be read in conjunction with the following related diligence memoranda prepared by the Calderwood & Harkness deal team:
• Change of Control Analysis Memorandum (Ryan Kowalski / Megan Chu, dated March 26, 2025), which provides detailed treatment of change of control provisions in the Company's credit agreements, executive employment agreements, commercial leases, and equity incentive plans. Those categories of agreements are expressly excluded from this memorandum to avoid duplication.
• IP Diligence Memorandum (Megan Chu, dated March 24, 2025), which addresses intellectual property license agreements in greater detail, including analysis of IP ownership, registration status, and the enforceability of licensed marks.
• Real Estate & Lease Portfolio Summary (Megan Chu, dated March 25, 2025), which covers the Company's real property lease agreements, including change of control provisions in commercial leases for the Company's retail locations, distribution centers, and corporate headquarters.
This memorandum focuses exclusively on the Company's commercial contracts, including supply agreements, vendor and service agreements, franchise and licensing arrangements, customer agreements, distribution and logistics agreements, and technology and software agreements.
II. Scope and Methodology
A. Scope of Review
The contracts reviewed in connection with this memorandum were produced by Pennfield into the Project Summit virtual data room hosted on the Thackeray Solutions platform. Our review encompassed contracts contained in the following data room folders:
• Material Contracts (Folder 4.0)
• Supply & Procurement (Folder 4.1)
• Vendor Agreements (Folder 4.2)
• Customer Agreements (Folder 4.3)
• Licensing & Franchise (Folder 4.4)
• Technology & Services (Folder 4.5)
• Distribution Agreements (Folder 4.6)
The contracts included in our review were identified as material by Pennfield's General Counsel, Patricia Okafor, in consultation with the Company's outside counsel, Calloway, Briggs & Harmon LLP (Janet Alcorn, Partner / Linda Chiang, Associate). Our review further encompasses contracts that would be required to be filed as exhibits to Pennfield's Annual Report on Form 10-K pursuant to Item 601(b)(10) of Regulation S-K, including contracts not made in the ordinary course of business that are material to the registrant, as well as certain contracts made in the ordinary course that the registrant is substantially dependent upon.
Our review of each contract focused on the following specific provisions and issues:
(i) Anti-assignment and change of control clauses, including the breadth of the definitions used therein;
(ii) Consent-to-assignment provisions, including whether such consent may be unreasonably withheld, conditioned, or delayed;
(iii) Termination rights triggered by the merger or a change of control, including any cure periods or wind-down provisions;
(iv) Notice requirements, including the timing, form, and recipient of any required notices;
(v) Exclusivity and non-compete covenants that may restrict the Company's ability to source from alternative suppliers or serve certain markets post-closing;
(vi) Minimum purchase or volume commitments that impose ongoing obligations on the Company;
(vii) Most-favored-nation ("MFN") pricing clauses that may be implicated by the Company's integration with Harrowgate's existing portfolio companies;
(viii) Material adverse effect or material change triggers that could be activated by the Transaction or the announcement thereof; and
(ix) Term, renewal, and termination-for-convenience provisions that may affect the stability of the Company's commercial relationships during the pendency of the Transaction and post-closing.
B. Methodology
Each contract reviewed was categorized by type according to the following taxonomy: supply agreement, vendor agreement, customer agreement, franchise/licensing agreement, technology/services agreement, distribution agreement, or other. Within each category, the relevant provisions identified during our review were analyzed against the proposed Transaction structure.
In particular, our analysis accounts for the fact that the Transaction is structured as a reverse triangular merger in which Pinnacle Merger Sub will merge with and into Pennfield, with Pennfield surviving as a wholly owned subsidiary of HPE Fund IV. Because Pennfield is the surviving entity in the merger, its contractual relationships continue by operation of law, and there is no direct assignment of any contract from Pennfield to another entity. Accordingly, certain anti-assignment clauses that are limited to a direct assignment of the contract by one party to another may not be triggered by the merger. However, many contracts define "assignment" broadly to include any change of control, any merger transaction (whether or not the contracting party is the surviving entity), or any transfer "by operation of law." Where such broad language is present, the reverse triangular merger structure does not avoid the trigger, and counterparty consent will be required.
Each contract was assigned a priority classification based on the following criteria:
• High Priority: Consent is required under the contract language, and the failure to obtain consent could result in the termination of the contract, acceleration of obligations, or other material adverse consequences to the Company. The contract is material to the Company's operations, and the counterparty relationship may not be readily replaceable.
• Medium Priority: Consent is preferred but the risk is manageable. This classification encompasses contracts where the change of control provision is ambiguous, the consent requirement is subject to a reasonableness standard or waiver mechanism, or the economic impact of non-consent is limited and can be mitigated through alternative arrangements.
• Low Priority: The contract requires only post-closing notice to the counterparty, or the anti-assignment provision is narrowly drafted and is unlikely to be triggered by the specific reverse triangular merger structure. Alternatively, the contract is of limited economic significance.
C. Limitations
The following limitations apply to this memorandum and the review conducted hereunder:
1. Our review is based solely on documents produced to the Project Summit data room as of March 24, 2025. Pennfield may have additional contracts that have not yet been uploaded to the data room or that were not identified as material by the Company's management or outside counsel. We have requested supplemental production of any outstanding material contracts and will update our analysis upon receipt.
2. We have not reviewed any oral agreements, informal understandings, or course-of-dealing arrangements unless such arrangements are referenced in the written contracts produced to the data room. We note that Patricia Okafor has represented to us that Pennfield does not have any material oral agreements, but we have not independently verified this representation.
3. Tax, environmental, employee benefit, and ERISA-governed contracts and arrangements are being reviewed separately by Sylvia Hartwell and the applicable specialist teams within Calderwood & Harkness LLP. Those categories of agreements are excluded from this memorandum.
4. As noted above, credit agreements, executive employment agreements, commercial leases, and equity incentive plans are addressed in the separate Change of Control Analysis memorandum and are excluded from this memorandum.
5. Our analysis of governing law provisions is general in nature. Where specific questions of contract interpretation arise under the laws of jurisdictions other than Delaware and New York, we recommend engagement of local counsel as appropriate.
III. Summary of Key Findings by Contract Category
A. Supply Agreements
1. Overview. Pennfield maintains approximately 85 active supply agreements for inventory, raw materials, components, and finished goods that support the Company's 187 company-owned retail stores, 22 outlet locations, and e-commerce operations across 34 states. The Company's supply chain encompasses domestic and international suppliers providing a range of product categories, including outdoor and adventure apparel, footwear, accessories, camping and hiking equipment, and branded lifestyle merchandise.
Of the approximately 85 active supply agreements, we reviewed 62 that were identified as material based on an annual spend threshold of more than $1 million or their strategic importance to the Company's operations. The remaining supply agreements fall below the materiality threshold and were not individually reviewed, although we have confirmed through discussion with Patricia Okafor that those agreements are generally entered into on the Company's standard purchase order terms, which do not contain change of control or anti-assignment provisions.
2. Top Supplier Agreements — Change of Control / Assignment Provisions
Pennfield's supply chain is moderately concentrated, with the Company's top three suppliers collectively accounting for approximately $280 million in annual procurement spend. The following is a summary of the most significant supply agreements reviewed, organized by estimated annual spend and strategic importance:
(a) Ridgecrest Outdoor Products, Inc. Pennfield is party to a Master Supply Agreement dated June 15, 2021, as amended, with Ridgecrest Outdoor Products, Inc. ("Ridgecrest"), a domestic manufacturer and distributor of outdoor apparel and technical outerwear. Ridgecrest is Pennfield's largest single supplier, providing a broad range of proprietary and co-branded outerwear, fleece products, and base-layer garments. The estimated annual procurement spend under this agreement is approximately $115 million. The agreement has an initial term of five years, expiring June 14, 2026, with two automatic one-year renewal periods. Section 14.2 of the agreement contains a change of control provision that defines "Change of Control" as "(a) any merger, consolidation, or reorganization of a Party in which such Party is not the surviving entity, (b) any transaction or series of related transactions resulting in the acquisition by any person or group of persons of more than fifty percent (50%) of the outstanding voting securities of a Party, or (c) any sale of all or substantially all of a Party's assets." The provision further states that either party may terminate the agreement upon 60 days' written notice following the occurrence of a Change of Control of the other party, unless the non-changing party provides its written consent to the continuation of the agreement within such 60-day period.
Analysis: The reverse triangular merger will result in HPE Fund IV acquiring 100% of the outstanding voting securities of Pennfield through the merger of Merger Sub with and into Pennfield. While Pennfield will be the surviving entity (which would arguably take this outside clause (a)), clause (b) is clearly triggered because the Transaction results in the acquisition by HPE Fund IV of more than 50% of the outstanding voting securities of Pennfield. Accordingly, Ridgecrest will have a termination right unless its written consent is obtained within 60 days. This contract is classified as High Priority.
(b) Summit Trail Manufacturing Co. Pennfield is party to a Supply and Purchase Agreement dated March 1, 2022, with Summit Trail Manufacturing Co. ("Summit Trail"), a supplier of hiking boots, trail running shoes, and outdoor footwear. The estimated annual procurement spend is approximately $92 million. The agreement has an initial term of four years, expiring February 28, 2026, with a single two-year renewal period. Section 11.4 contains an anti-assignment clause providing that "[n]either party may assign, transfer, or delegate this Agreement or any of its rights or obligations hereunder, whether by operation of law, merger, change of control, or otherwise, without the prior written consent of the other party, which consent shall not be unreasonably withheld." The provision further states that any purported assignment in violation of this section shall be null and void.
Analysis: The anti-assignment clause is drafted broadly to encompass assignments "by operation of law, merger, change of control, or otherwise." Although Pennfield is the surviving entity in the reverse triangular merger, the broad language of this clause — particularly the inclusion of "change of control" as a triggering event — would require Pennfield to obtain Summit Trail's prior written consent. The reasonableness standard on the withholding of consent provides some comfort that consent should be obtainable, but the risk of a dispute over reasonableness remains. This contract is classified as High Priority.
(c) Northvane Apparel Group, LLC. Pennfield is party to a Product Supply Agreement dated January 10, 2023, with Northvane Apparel Group, LLC ("Northvane"), a supplier of casual and lifestyle apparel, including branded t-shirts, hoodies, and activewear. The estimated annual procurement spend is approximately $73 million. The agreement has an initial term of three years, expiring January 9, 2026, with automatic one-year renewals unless either party provides 90 days' notice of non-renewal. Section 9.1 contains a standard anti-assignment clause prohibiting assignment "without the prior written consent of the other party," but the clause does not expressly reference mergers, changes of control, or transfers by operation of law.
Analysis: Because the anti-assignment clause does not expressly reference mergers, changes of control, or transfers by operation of law, and because Pennfield is the surviving entity in the reverse triangular merger (meaning there is no direct assignment of the contract), this clause may not be triggered by the Transaction. Under Delaware law, a reverse triangular merger does not constitute an "assignment" of the surviving entity's contracts absent express contractual language to the contrary. However, the analysis is fact-specific, and we recommend confirming the governing law of this agreement (which is California law under Section 15.3) and assessing any California-specific precedent. This contract is classified as Medium Priority, with a recommendation to seek a comfort letter or informal acknowledgment from Northvane.
(d) Cascadia Gear Solutions, Inc. Pennfield is party to a Component Supply Agreement dated September 1, 2020, as amended, with Cascadia Gear Solutions, Inc. ("Cascadia"), a supplier of camping equipment, backpacks, and outdoor gear accessories. The estimated annual procurement spend is approximately $48 million. The agreement has an initial term of five years, expiring August 31, 2025, and is currently in its final year of the initial term. Section 12.6 contains a change of control provision substantially similar in scope to the Ridgecrest provision discussed above, providing for a termination right upon a change of control unless consent is obtained within 30 days. The shorter cure period of 30 days (as compared to Ridgecrest's 60 days) increases the urgency of counterparty engagement.
Analysis: The change of control provision is clearly triggered. Given the shorter cure period and the approaching expiration of the initial term (August 31, 2025), the Company and its advisors should consider whether it is more efficient to negotiate a new agreement with Cascadia or to seek a consent and renewal concurrently. This contract is classified as High Priority.
(e) Ironwood Textiles International Ltd. Pennfield is party to a Fabric and Materials Supply Agreement dated April 15, 2023, with Ironwood Textiles International Ltd. ("Ironwood"), a UK-based supplier of technical fabrics, performance textiles, and raw materials used in the Company's proprietary apparel manufacturing. The estimated annual procurement spend is approximately $34 million. The agreement has an initial term of three years, expiring April 14, 2026, with no automatic renewal. Section 10.3 contains an anti-assignment clause covering "any assignment, novation, or transfer of this Agreement, whether voluntary, involuntary, by merger, consolidation, dissolution, change of control, operation of law, or otherwise." The clause requires the prior written consent of the non-assigning party, with no reasonableness standard applied to the withholding of consent.
Analysis: The anti-assignment clause is among the broadest we have reviewed in the supply agreement portfolio. The absence of a reasonableness standard on the withholding of consent gives Ironwood significant leverage. The governing law of this agreement is English law (Section 18.1), and we recommend consultation with UK counsel to confirm the enforceability of the clause under English law principles. This contract is classified as High Priority.
(f) Timberpoint Equipment Corp. Pennfield is party to a Purchase Order Framework Agreement dated November 1, 2022, with Timberpoint Equipment Corp. ("Timberpoint"), a domestic supplier of ski and winter sports equipment and accessories. The estimated annual procurement spend is approximately $22 million. The agreement operates on a purchase order basis under a master framework, with individual purchase orders constituting separate contracts. Section 7.2 of the framework agreement contains an anti-assignment clause that is limited to direct assignment and does not reference mergers, changes of control, or transfers by operation of law.
Analysis: Similar to the Northvane analysis above, the narrow drafting of the anti-assignment clause likely does not encompass the reverse triangular merger. Individual purchase orders reference the framework agreement and incorporate its terms. This contract is classified as Low Priority.
(g) Greystone Provisions LLC. Pennfield is party to a Co-Packing and Private Label Supply Agreement dated February 1, 2024, with Greystone Provisions LLC ("Greystone"), a supplier of private-label outdoor food products and trail snacks sold in Pennfield retail locations. The estimated annual procurement spend is approximately $9 million. The agreement has an initial term of two years, expiring January 31, 2026, with automatic one-year renewals. Section 8.4 contains a change of control provision requiring 45 days' advance written notice of any change of control and granting the non-changing party a termination right exercisable within 30 days following receipt of such notice.
Analysis: The change of control provision is triggered, but the relatively modest annual spend and the availability of alternative co-packing suppliers mitigate the risk. This contract is classified as Medium Priority.
3. Exclusivity and Volume Commitments
Certain supply agreements contain exclusivity provisions that require Pennfield to source specified product categories exclusively from the designated counterparty. The following exclusivity provisions were identified:
• Ridgecrest Outdoor Products, Inc.: Section 5.1 of the Master Supply Agreement grants Ridgecrest exclusive supplier status for the "premium outerwear" and "technical fleece" product categories in Pennfield's retail stores, subject to certain carve-outs for the Company's proprietary house-brand products. This exclusivity provision survives a change of control and remains in effect for the duration of the agreement term.
• Summit Trail Manufacturing Co.: Section 4.3 of the Supply and Purchase Agreement provides that Pennfield shall source not less than 70% of its annual outdoor footwear inventory (by unit volume) from Summit Trail during each contract year.
• Cascadia Gear Solutions, Inc.: Section 3.2 of the Component Supply Agreement provides that Pennfield shall source its camping backpack product line exclusively from Cascadia for the duration of the agreement term.
In addition to exclusivity provisions, we identified minimum annual purchase commitments in approximately 8 supply agreements reviewed, with aggregate minimum purchase commitments of approximately $145 million for the Company's current fiscal year (ending January 31, 2026). Failure to meet minimum purchase thresholds under these agreements could trigger make-whole or shortfall payments, typically calculated as a percentage (ranging from 15% to 30%) of the difference between actual purchases and the minimum commitment. These shortfall payment provisions are important to consider in connection with any post-closing operational restructuring or changes in sourcing strategy that Harrowgate may contemplate.
4. Most-Favored-Nation (MFN) Pricing Clauses
Approximately 4 of the supply agreements reviewed contain MFN pricing provisions. These provisions generally require the supplier to offer Pennfield pricing that is no less favorable than the pricing offered to other comparable national specialty retailers purchasing similar volumes of similar products. The MFN provisions are found in the agreements with Ridgecrest Outdoor Products, Inc. (Section 6.4), Summit Trail Manufacturing Co. (Section 5.2), Northvane Apparel Group, LLC (Section 4.7), and Ironwood Textiles International Ltd. (Section 6.1).
The merger itself does not directly implicate the MFN pricing clauses, as these provisions run in Pennfield's favor (i.e., the supplier is obligated to maintain favorable pricing to Pennfield). However, post-closing integration of Pennfield's procurement operations with any existing Harrowgate portfolio companies in the retail or apparel sector could require analysis of whether the MFN provisions would extend to such portfolio companies or whether the aggregation of purchasing volumes across affiliated entities would affect the "comparable retailer" benchmarking under the MFN provisions. We recommend that this analysis be deferred to the post-closing integration planning phase.
5. Risk Assessment and Recommendations
Based on our review, high-priority consents are needed from approximately 6 supply agreement counterparties prior to or promptly after closing. These counterparties are Ridgecrest Outdoor Products, Inc., Summit Trail Manufacturing Co., Cascadia Gear Solutions, Inc., Ironwood Textiles International Ltd., and two additional suppliers whose agreements contain clearly triggered change of control provisions (detailed in Appendix B). The aggregate annual procurement spend represented by these 6 high-priority supply agreements is approximately $330 million.
We recommend early outreach to these key counterparties, coordinated with Pennfield management — specifically Maxwell Dunn, the Company's Chief Operating Officer, who maintains the primary commercial relationships with these suppliers — and with Patricia Okafor, the Company's General Counsel. The sequencing of outreach should be discussed with the Harrowgate deal team, as premature disclosure of the Transaction to counterparties prior to the public announcement could raise confidentiality concerns. To the extent that any suppliers are also publicly traded companies or subject to their own confidentiality obligations, appropriate non-disclosure arrangements should be put in place prior to engagement.
B. Vendor and Service Agreements
1. Overview. We reviewed approximately 45 vendor and professional services agreements covering a range of operational functions, including logistics and warehousing operations, IT infrastructure and managed services, payment processing, marketing and advertising services, store maintenance and facilities management, and consulting services. These agreements are distinct from the supply agreements discussed in Section III.A (which cover inventory and product procurement) and from the technology and software agreements discussed in Section III.F (which cover software licenses and SaaS arrangements).
2. Key Vendor Agreements — Change of Control / Assignment Provisions
The following vendor agreements were identified as containing change of control or anti-assignment provisions that may be triggered by the merger:
(a) Mercer Logistics Group, Inc. — Logistics and Warehousing Services Agreement. Pennfield is party to a Logistics Services Agreement dated August 1, 2021, as amended, with Mercer Logistics Group, Inc. ("Mercer Logistics"), under which Mercer Logistics operates and manages the day-to-day logistics operations at Pennfield's primary East Coast distribution center located in Bethlehem, Pennsylvania. The agreement has an initial term of five years, expiring July 31, 2026, with two automatic one-year renewal periods. The estimated annual spend under this agreement is approximately $28 million. Section 13.2 of the agreement contains a change of control provision requiring Pennfield to provide Mercer Logistics with written notice of any change of control event not less than 60 days prior to the consummation of such event. Mercer Logistics has the right to terminate the agreement upon 30 days' written notice following receipt of such change of control notice if the parties are unable to agree upon mutually acceptable terms for continuation of the agreement. If terminated, Mercer Logistics is obligated to provide transition services for a period of up to 120 days at then-current rates.
Analysis: The change of control provision is clearly triggered. The 60-day advance notice requirement is operationally significant and should be factored into the deal timeline. The transition services provision provides some comfort that an abrupt termination would not occur, but the loss of this agreement would require Pennfield to identify and onboard an alternative logistics operator for a major distribution center, which could take 6-12 months to complete. This contract is classified as High Priority.
(b) Clearpath Payment Solutions, Inc. — Payment Processing Services Agreement. Pennfield is party to a Payment Processing Services Agreement dated March 15, 2023, with Clearpath Payment Solutions, Inc. ("Clearpath"), under which Clearpath provides point-of-sale payment processing, e-commerce payment gateway services, and fraud detection and prevention services. The agreement has an initial term of three years, expiring March 14, 2026, with automatic one-year renewals. The estimated annual spend under this agreement is approximately $14 million (consisting of processing fees, gateway fees, and fraud monitoring fees). Section 9.5 of the agreement contains an anti-assignment clause that defines "Assignment" to include "any transaction or series of transactions, whether structured as a merger, consolidation, stock purchase, asset purchase, reorganization, or otherwise, that results in a change of more than fifty percent (50%) of the equity ownership or voting control of either party." The clause requires the prior written consent of the non-assigning party, and provides that any purported assignment without such consent shall constitute a material breach of the agreement, entitling the non-breaching party to terminate upon 15 days' written notice.
Analysis: The anti-assignment clause is broadly drafted and clearly encompasses the reverse triangular merger, which will result in HPE Fund IV acquiring 100% of the equity ownership of Pennfield. The 15-day cure period is notably short, and the characterization of a non-consented assignment as a "material breach" increases the risk profile. Payment processing is a critical operational function, and termination of this agreement without a replacement in place could disrupt both in-store and e-commerce sales. This contract is classified as High Priority.
(c) Sentinel Shield IT Services, LLC — IT Managed Services Agreement. Pennfield is party to an IT Managed Services Agreement dated January 1, 2022, with Sentinel Shield IT Services, LLC ("Sentinel Shield"), under which Sentinel Shield provides enterprise resource planning (ERP) system support, network management, cybersecurity monitoring, and help desk services. The agreement has an initial term of four years, expiring December 31, 2025, with a single two-year renewal option exercisable by Pennfield. The estimated annual spend is approximately $11 million. Section 16.1 of the agreement contains a change of control provision granting either party the right to terminate upon a "Change of Control Event," defined as "the acquisition by any person or entity, or group of persons or entities acting in concert, of direct or indirect ownership of more than fifty percent (50%) of the outstanding equity interests or voting power of a party, whether through merger, tender offer, exchange offer, or otherwise." The terminating party must provide 90 days' advance written notice of its intent to terminate, and the non-terminating party is entitled to a 90-day wind-down period during which services continue at then-current rates and service levels.
Analysis: The change of control provision is triggered. The relatively generous wind-down period (90 days) provides time to transition to an alternative IT services provider, and we understand from discussions with Maxwell Dunn that Harrowgate's portfolio operations team has existing relationships with IT managed services providers that could be engaged on an expedited basis. Nevertheless, the ERP system support function is deeply integrated into the Company's operations, and a transition would require careful planning. This contract is classified as High Priority, although the risk is somewhat mitigated by the 90-day wind-down period.
(d) Momentum Marketing Partners, LLC — Marketing Services Agreement. Pennfield is party to a Marketing Services Agreement dated September 1, 2024, with Momentum Marketing Partners, LLC ("Momentum"), under which Momentum provides digital marketing, social media management, seasonal campaign development, and brand strategy consulting services. The agreement has an initial term of one year, expiring August 31, 2025, with automatic one-year renewals unless either party provides 60 days' notice of non-renewal. The estimated annual spend is approximately $6.5 million. We have reviewed the agreement in its entirety and have not identified any change of control provision, anti-assignment clause, or consent requirement that would be triggered by the merger. The agreement is terminable by either party on 60 days' notice for any reason.
Analysis: No action required with respect to the merger. This contract is classified as Low Priority.
(e) Brightfield Facilities Management Corp. — Facilities Maintenance Agreement. Pennfield is party to a Master Facilities Maintenance Agreement dated April 1, 2023, with Brightfield Facilities Management Corp. ("Brightfield"), under which Brightfield provides HVAC maintenance, janitorial services, and general facilities management for the Company's 187 retail store locations and corporate headquarters. The agreement has an initial term of three years, expiring March 31, 2026, with automatic one-year renewals. The estimated annual spend is approximately $18 million. Section 8.7 contains a standard anti-assignment clause, but the clause is limited to "direct assignment or transfer of this Agreement to a third party" and does not reference mergers, changes of control, or transfers by operation of law.
Analysis: The narrowly drafted anti-assignment clause is unlikely to be triggered by the reverse triangular merger, as Pennfield remains the same legal entity and the agreement is not being directly assigned to a third party. This contract is classified as Low Priority.
(f) DataStream Analytics Corp. — Data Analytics and Consulting Agreement. Pennfield is party to a Data Analytics and Consulting Services Agreement dated July 1, 2024, with DataStream Analytics Corp. ("DataStream"), under which DataStream provides customer analytics, market intelligence, and predictive modeling services to support the Company's merchandising and inventory planning functions. The agreement has an initial term of two years, expiring June 30, 2026. The estimated annual spend is approximately $3.2 million. Section 11.1 contains a change of control provision requiring notification within 30 days of a change of control but expressly providing that a change of control does not give rise to a termination right. The provision states: "Upon a Change of Control of either party, the affected party shall provide written notice to the other party within thirty (30) days of such event. For the avoidance of doubt, a Change of Control shall not constitute a breach of this Agreement or give rise to any right of termination."
Analysis: Notification is required, but the express exclusion of termination rights renders this a low-risk provision. This contract is classified as Low Priority (notice-only).
3. Termination for Convenience Provisions
Approximately 12 of the 45 vendor agreements reviewed contain termination-for-convenience clauses that are exercisable by either party upon 30 to 90 days' prior written notice. While these provisions are not directly triggered by the merger (i.e., the merger itself does not constitute an exercise of the termination-for-convenience right), they create a risk that vendors could elect to terminate their agreements following the public announcement of the Transaction or during the pendency of the regulatory review period. Vendors may choose to exercise termination-for-convenience rights for commercial reasons unrelated to the merger, or they may use the announcement as an opportunity to renegotiate terms.
We recommend that the deal team monitor counterparty behavior following the public announcement and that the Merger Agreement include appropriate interim operating covenants requiring Pennfield to promptly notify Harrowgate of any vendor termination notices received during the pre-closing period.
4. Risk Assessment and Recommendations
Based on our review, high-priority consents are needed from approximately 3 vendor counterparties: Mercer Logistics Group, Inc., Clearpath Payment Solutions, Inc., and Sentinel Shield IT Services, LLC. The aggregate annual spend represented by these 3 high-priority vendor agreements is approximately $53 million.
The payment processing and logistics/warehousing agreements are flagged as the most critical due to their direct operational impact if terminated. Loss of the Clearpath payment processing agreement could disrupt both in-store and e-commerce sales within days, while loss of the Mercer Logistics agreement could impair the Company's ability to fulfill orders and replenish store inventory. We recommend that these counterparties be among the first contacted for consent discussions, with appropriate confidentiality protections in place.
C. Franchise and Licensing Arrangements
1. Overview. Pennfield operates primarily through company-owned retail locations — 187 full-line stores and 22 outlet locations, for a total of 209 company-operated locations across 34 states. The Company does not operate a franchise model for its retail stores and has no franchise agreements in place. Accordingly, Pennfield is not subject to federal or state franchise disclosure requirements in connection with the operation of its retail business.
However, Pennfield is party to approximately 12 licensing agreements that are material to its operations. These agreements fall into two categories:
• Inbound License Agreements (9): Agreements under which Pennfield licenses third-party brands, trademarks, and proprietary technologies for use in co-branded product lines and in connection with the Company's outdoor and adventure apparel categories.
• Outbound License Agreements (3): Agreements under which Pennfield licenses its own trademarks and brand names to international distributors for sales in markets outside the United States.
2. Inbound License Agreements (Third-Party Brands Licensed to Pennfield)
We reviewed the 9 active inbound license agreements produced to the data room. Of these, 4 inbound licenses contain change of control provisions or anti-assignment clauses that would be triggered by the merger. The most significant of these are discussed below.
(a) TrailForge Footwear, Inc. — Co-Branded Outdoor Footwear License. Pennfield is party to a Trademark License and Co-Branding Agreement dated May 1, 2021, with TrailForge Footwear, Inc. ("TrailForge"), under which Pennfield holds an exclusive license to manufacture and sell a co-branded line of outdoor hiking boots and trail shoes bearing both the Pennfield and TrailForge trademarks. The agreement has an initial term of five years, expiring April 30, 2026, with a single three-year renewal option exercisable by Pennfield subject to the achievement of minimum sales thresholds. Estimated annual royalty payments under this agreement are approximately $4.5 million, and the co-branded footwear line generated an estimated $38 million in retail revenue during the Company's most recent fiscal year. Section 12.1 of the agreement contains a change of control consent requirement, providing that "[n]either party shall undergo a Change of Control (as defined herein) without the prior written consent of the other party. For purposes of this Agreement, 'Change of Control' means any transaction or series of transactions resulting in a change in the identity of the person or entity that directly or indirectly controls more than fifty percent (50%) of the voting securities of such party." Section 12.2 provides that if a party undergoes a Change of Control without obtaining the required consent, the other party shall have the right to terminate the agreement upon 30 days' written notice.
Analysis: The change of control consent requirement is clearly triggered. The 30-day termination window is notably short, and the loss of this co-branded product line would have a meaningful impact on revenue. The renewal option, which requires achievement of minimum sales thresholds, could also be at risk if the counterparty relationship deteriorates. This contract is classified as High Priority.
(b) Alpine Innovations GmbH — Technical Fabric License. Pennfield is party to a Technology License Agreement dated October 1, 2022, with Alpine Innovations GmbH ("Alpine Innovations"), a German manufacturer and licensor of proprietary technical fabric technologies, including moisture-wicking, waterproofing, and thermal regulation technologies used in the Company's premium apparel lines. The agreement has an initial term of four years, expiring September 30, 2026. Estimated annual royalty payments are approximately $2.8 million. The agreement is silent on change of control but contains a broad anti-assignment clause in Section 15.3, which provides that "[n]either party may assign, transfer, sublicense, or otherwise dispose of this Agreement or any of its rights or obligations hereunder, whether voluntarily or involuntarily, including by any transfer, whether by operation of law, merger, or otherwise, without the prior written consent of the other party."
Analysis: Although the agreement does not contain a defined "change of control" provision, the broad anti-assignment clause — which expressly covers transfers "by operation of law, merger, or otherwise" — arguably encompasses the reverse triangular merger. While Pennfield is the surviving entity and the agreement is not being directly assigned, the change in Pennfield's ultimate equity ownership effected through the merger of Merger Sub with and into Pennfield could be construed as a transfer "by operation of law" or "by merger" within the meaning of this clause. Given the breadth of the language and the absence of a reasonableness standard, we recommend seeking Alpine Innovations' consent. The governing law of this agreement is German law (Section 21.1), and we recommend consultation with German counsel to assess enforceability. This contract is classified as High Priority.
(c) Pineridge Sports Brands LLC — Licensed Apparel Line. Pennfield is party to a Brand License Agreement dated January 15, 2023, with Pineridge Sports Brands LLC ("Pineridge"), under which Pennfield holds a non-exclusive license to manufacture and sell activewear and casual sportswear bearing the Pineridge brand name. The agreement has an initial term of three years, expiring January 14, 2026, with automatic one-year renewals. Estimated annual royalty payments are approximately $1.9 million. Section 10.4 contains a change of control provision requiring 60 days' advance notice and granting the licensor a termination right if consent is not obtained. This contract is classified as High Priority.
(d) Westbound Heritage Co. — Heritage Collection License. Pennfield is party to a Trademark License Agreement dated March 1, 2024, with Westbound Heritage Co. ("Westbound"), under which Pennfield holds an exclusive license to manufacture and sell a "heritage collection" line of classic outdoor apparel and accessories. The agreement has an initial term of two years, expiring February 28, 2026. Estimated annual royalty payments are approximately $1.2 million. Section 9.6 contains a change of control consent requirement substantially similar to the TrailForge provision described above. This contract is classified as High Priority.
The remaining 5 inbound license agreements do not contain change of control provisions or anti-assignment clauses that would be triggered by the reverse triangular merger. Three of these agreements are silent on assignment entirely, and two contain anti-assignment clauses that are limited to direct assignments and do not reference mergers, changes of control, or transfers by operation of law.
3. Outbound License Agreements (Pennfield Brands Licensed to Third Parties)
We reviewed 3 outbound international distribution and license agreements under which Pennfield licenses its trademarks and brand names to third-party distributors for sales in markets outside the United States:
(a) Sterling Pacific Distribution Ltd. — Asia-Pacific License. Pennfield is party to a Distribution and Trademark License Agreement dated July 1, 2022, with Sterling Pacific Distribution Ltd. ("Sterling Pacific"), under which Sterling Pacific holds an exclusive license to distribute and sell Pennfield-branded products in Australia, New Zealand, Japan, South Korea, and select Southeast Asian markets. The agreement has an initial term of five years, expiring June 30, 2027. Section 14.3 contains a mutual consent-to-assignment provision providing that neither party may assign the agreement or undergo a change of control without the prior written consent of the other party. Consent may not be unreasonably withheld.
Analysis: The mutual consent provision is triggered by the merger. Given the reasonableness standard and the fact that the license is an outbound arrangement (i.e., Pennfield is the licensor, not the licensee), the risk of non-consent is low, but formal consent should be sought. This contract is classified as Medium Priority (but should be included in the consent outreach process).
(b) Nordfjell Outdoor AG — European License. Pennfield is party to a Trademark License and Distribution Agreement dated November 1, 2023, with Nordfjell Outdoor AG ("Nordfjell"), under which Nordfjell holds a non-exclusive license to distribute and sell Pennfield-branded products in Germany, Austria, Switzerland, and the Nordic countries. The agreement has an initial term of three years, expiring October 31, 2026. The agreement is silent on change of control and contains only a narrow anti-assignment clause limited to direct assignments.
Analysis: Unlikely to be triggered. This contract is classified as Low Priority.
(c) Meridian Global Brands Inc. — Canadian License. Pennfield is party to a Distribution Agreement dated April 1, 2024, with Meridian Global Brands Inc. ("Meridian Global"), under which Meridian Global holds an exclusive license to distribute and sell Pennfield-branded products in Canada. The agreement has an initial term of two years, expiring March 31, 2026. The agreement is silent on change of control and does not contain an anti-assignment clause.
Analysis: No action required. This contract is classified as Low Priority.
4. Risk Assessment and Recommendations
Based on our review, high-priority consents are needed for approximately 4 inbound license agreements (TrailForge Footwear, Alpine Innovations, Pineridge Sports Brands, and Westbound Heritage). One additional outbound license consent (Sterling Pacific Distribution) should be obtained as a medium-priority item.
The aggregate annual royalty payments under the 4 high-priority inbound licenses are approximately $10.4 million, and the aggregate retail revenue generated by the licensed product lines is significantly higher (estimated at approximately $75 million). Loss of any of these licensing relationships could materially affect the Company's product assortment and revenue.
We cross-reference the IP Diligence Memorandum (Megan Chu, dated March 24, 2025) for further detail on the IP ownership and registration status of the licensed marks, the scope of the licensed rights, and the territorial and field-of-use restrictions applicable to each license.
D. Customer Agreements
1. Overview. Pennfield's revenue is primarily generated through retail store and e-commerce sales to individual consumers. The Company does not maintain traditional long-term customer contracts in its business-to-consumer ("B2C") channel. Individual retail transactions are conducted at the point of sale subject to the Company's standard terms of sale, return and exchange policy, and privacy policy, none of which contain change of control or anti-assignment provisions that would be triggered by the merger.
However, Pennfield maintains approximately 15 business-to-business ("B2B") and institutional customer agreements, including corporate sales programs, group purchasing arrangements, and wholesale accounts with specialty retailers. For the Company's fiscal year ended January 31, 2025 ("FY 2024"), total revenue was $1,620,000,000. B2B and institutional revenue is estimated at approximately $95 million, representing approximately 5.9% of total revenue. While B2B revenue is not the primary revenue driver, several of these relationships are strategically important and contribute disproportionately to certain product categories.
2. Key B2B / Institutional Customer Contracts
The following B2B and institutional customer contracts were identified as significant:
(a) Peakview Recreation Corp. — Corporate Sales Program Agreement. Pennfield is party to a Corporate Sales Program Agreement dated June 1, 2023, with Peakview Recreation Corp. ("Peakview"), a major outdoor recreation company that purchases Pennfield-branded apparel and gear for employee outfitting, corporate gifts, and sponsored outdoor education programs. The agreement has an initial term of three years, expiring May 31, 2026, with automatic one-year renewals. The estimated annual revenue from this account is approximately $12 million. The agreement does not contain a change of control provision or anti-assignment clause. It is terminable by either party on 90 days' written notice for any reason.
Analysis: No action required with respect to the merger. This contract is classified as Low Priority. However, we note that the termination-for-convenience clause could be exercised by Peakview at any time, and the deal team should monitor the relationship during the pendency of the Transaction.
(b) Frontier Sporting Goods, Inc. — Wholesale Supply Agreement. Pennfield is party to a Wholesale Supply Agreement dated September 1, 2024, with Frontier Sporting Goods, Inc. ("Frontier"), a regional chain of sporting goods stores with approximately 45 locations across the Pacific Northwest. The agreement has an initial term of two years, expiring August 31, 2026, with automatic one-year renewals. The estimated annual revenue from this account is approximately $8.5 million. Section 7.3 contains an anti-assignment clause providing that "[n]either party may assign this Agreement without the prior written consent of the other party." The clause is limited to direct assignment and does not expressly reference mergers, changes of control, or transfers by operation of law.
Analysis: Because the anti-assignment clause is narrowly drafted and does not reference mergers or changes of control, and because Pennfield is the surviving entity in the reverse triangular merger, this clause is likely not triggered by the Transaction. This contract is classified as Low Priority.
(c) State of Colorado — Department of Parks and Wildlife, and State of Oregon — Parks and Recreation Department — Government/Institutional Purchase Agreements. Pennfield is party to two government purchasing contracts under which state parks and recreation departments purchase outdoor apparel, uniforms, and equipment for park ranger and field staff use. These contracts are subject to standard government procurement terms and conditions, including the applicable state's standard terms for state contracts. Combined estimated annual revenue from these contracts is approximately $4.2 million. Government procurement terms typically include provisions requiring the contractor to notify the contracting agency of material changes in corporate ownership, organizational structure, or key personnel. We have identified notification requirements in both contracts but have not identified termination-for-change-of-control provisions.
Analysis: Notification should be provided to the applicable state agencies following the closing of the Transaction. This contract is classified as Low Priority (notice-only).
3. E-Commerce Platform and Marketplace Agreements
Pennfield operates a proprietary e-commerce platform (pennfield.com) and also sells through third-party online marketplaces. The Company does not have individualized customer contracts with e-commerce purchasers; all sales are made subject to the Company's standard website terms and conditions and privacy policy.
With respect to third-party marketplace agreements, we reviewed 2 marketplace seller agreements governing Pennfield's participation as a seller on major online retail platforms. These agreements are structured as standard terms of service and do not constitute negotiated bilateral contracts. One of the marketplace seller agreements (with a platform we will refer to as "Marketplace A" for confidentiality purposes) contains a provision in Section 3.8 of its Seller Terms of Service requiring sellers to notify the marketplace platform of "material changes to [the seller's] ownership structure, legal entity status, or corporate control" within 15 business days of such change. The second marketplace seller agreement (with "Marketplace B") does not contain a comparable provision.
Analysis: Notification should be provided to Marketplace A within 15 business days of closing. This requirement is classified as Low Priority (notice-only).
4. Gift Card and Loyalty Program Obligations
Pennfield operates a customer loyalty program ("Pennfield Rewards") and has outstanding gift card liabilities. The loyalty program and gift card program are administered under an agreement with ValueServe Processing, Inc. ("ValueServe"), a third-party gift card and loyalty program processor. The agreement has an initial term of three years, expiring December 31, 2025, with automatic one-year renewals. Section 10.2 of the agreement contains an anti-assignment clause, but the clause is limited to direct assignment and does not reference mergers, changes of control, or transfers by operation of law.
Analysis: Because Pennfield remains the surviving entity and the contract is not being directly assigned, the anti-assignment clause is unlikely to be triggered by the reverse triangular merger. The outstanding gift card liability (as reported on the Company's most recent consolidated balance sheet) has been reviewed in connection with the financial due diligence workstream and does not present a concern in the context of the merger. No break in service, acceleration of redemption obligations, or modification of the Company's gift card program terms is triggered by the Transaction. This contract is classified as Low Priority.
5. Risk Assessment and Recommendations
The overall risk in the customer agreement category is low. No high-priority consents are required from customer counterparties. We recommend the following actions:
• Provide post-closing notice to the State of Colorado and State of Oregon contracting agencies regarding the change in corporate ownership.
• Provide post-closing notice to Marketplace A within 15 business days of closing.
• Monitor the Peakview Recreation and Frontier Sporting Goods relationships during the pendency of the Transaction to ensure continuity.
E. Distribution and Logistics Agreements
1. Overview. We reviewed approximately 8 distribution and logistics contracts that are separate from the vendor agreements addressed in Section III.B above. These contracts cover Pennfield's distribution center operations (from a logistics services perspective; the real property lease aspects are addressed in the Real Estate & Lease Portfolio Summary), freight and transportation services, and last-mile delivery partnerships for e-commerce fulfillment.
2. Key Distribution Agreements
(a) Distribution Center Operating Agreements. Pennfield leases and operates 2 distribution centers: (i) a 425,000-square-foot facility in Bethlehem, Pennsylvania (the "East Coast DC"), and (ii) a 310,000-square-foot facility in Sparks, Nevada (the "West Coast DC"). The real property lease terms for both facilities are addressed in the Real Estate & Lease Portfolio Summary. The logistics operations at the East Coast DC are managed by Mercer Logistics Group, Inc. under the Logistics Services Agreement discussed in Section III.B.2(a) above. The West Coast DC is operated by Pennfield's own employees, with no third-party logistics management agreement in place for that facility. The West Coast DC does, however, utilize third-party warehouse management system (WMS) software provided under a software license agreement addressed in Section III.F below.
(b) Westward Freight Corp. — Freight and Transportation Master Services Agreement. Pennfield is party to a Master Transportation Services Agreement dated February 1, 2023, with Westward Freight Corp. ("Westward Freight"), under which Westward Freight provides less-than-truckload (LTL) and full-truckload (FTL) freight transportation services for the movement of inventory between distribution centers, from distribution centers to retail store locations, and from distribution centers to e-commerce fulfillment hubs. The agreement has an initial term of three years, expiring January 31, 2026, with automatic one-year renewals. The estimated annual spend under this agreement is approximately $32 million. Section 11.4 contains a change of control provision requiring written consent of the carrier prior to any change of control of Pennfield, defined as "a change in the direct or indirect ownership of more than 50% of the outstanding voting securities of Shipper [i.e., Pennfield]." The provision grants Westward Freight the right to terminate the agreement upon 60 days' notice if consent is not obtained, but provides that rates and service levels shall remain in effect during the notice period.
Analysis: The change of control provision is triggered by the merger. While the 60-day notice period and the requirement that rates and service levels remain in effect during the notice period provide some protection, the loss of this agreement would require Pennfield to source alternative freight and transportation services on potentially less favorable terms and with potential service disruptions during the transition. This contract is classified as Medium Prior

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