1003-00004 · Harrowgate Private Equity Fund IV LP · Transaction Documents

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AGREEMENT AND PLAN OF MERGER

EXECUTION VERSION

by and among

HARROWGATE PRIVATE EQUITY FUND IV LP, a Delaware limited partnership ("Parent")

PINNACLE MERGER SUB, INC., a Delaware corporation and wholly owned subsidiary of Parent ("Merger Sub")

and

PENNFIELD HOLDINGS, INC., a Delaware corporation (the "Company")

Dated as of April 7, 2025

AGREEMENT AND PLAN OF MERGER

This AGREEMENT AND PLAN OF MERGER (this "Agreement") is entered into as of April 7, 2025, by and among HARROWGATE PRIVATE EQUITY FUND IV LP, a Delaware limited partnership ("Parent"), PINNACLE MERGER SUB, INC., a Delaware corporation and a wholly owned subsidiary of Parent ("Merger Sub"), and PENNFIELD HOLDINGS, INC., a Delaware corporation (the "Company"). Parent, Merger Sub, and the Company are each sometimes referred to herein as a "Party" and collectively as the "Parties."

RECITALS

WHEREAS, Parent is a Delaware limited partnership with its principal office at 1200 Market Street, Suite 3100, Wilmington, Delaware 19801, managed by Harrowgate Capital Partners LLC, a Delaware limited liability company, through its general partner, Harrowgate Capital Partners IV GP LLC, a Delaware limited liability company ("HPE IV GP");

WHEREAS, Merger Sub is a Delaware corporation newly formed as a wholly owned subsidiary of Parent for the sole purpose of effecting the Merger (as defined below); Merger Sub was incorporated under the laws of the State of Delaware, with Jonah Whitfield as its sole incorporator; Merger Sub's Employer Identification Number is 93-4081562, and its registered office is located at 1200 Market Street, Suite 3100, Wilmington, Delaware 19801;

WHEREAS, the Company is a Delaware corporation, publicly traded on the Nasdaq Global Select Market under the ticker symbol "PNFD," with its principal executive offices located at 4500 Commerce Boulevard, Suite 800, Charlotte, North Carolina 28202; the Company's registered agent is Capitol Registered Agents, Inc., 850 New Burton Road, Suite 201, Dover, Delaware 19904; the Company's Employer Identification Number is 82-4917305; and the Company's CUSIP number is 708234109;

WHEREAS, the respective boards of directors of Parent (acting through the board of directors of HPE IV GP), Merger Sub, and the Company (acting upon the unanimous recommendation of a Special Committee of the Board of Directors of the Company (the "Special Committee") consisting of Gloria Vásquez (Chair), Martin Ashworth, and Diane Kauffman, each an independent, disinterested director of the have approved this Agreement and the transactions contemplated hereby, including the Merger, upon the terms and subject to the conditions set forth herein, and the Board of Directors of the Company has resolved to recommend that the stockholders of the Company adopt this Agreement;

WHEREAS, the Parties intend that Merger Sub shall merge with and into the Company (the "Merger"), with the Company surviving the Merger as a wholly owned subsidiary of Parent, pursuant to the Delaware General Corporation Law, 8 Del. C. § 251 (the "DGCL");

WHEREAS, concurrently with the execution and delivery of this Agreement, and as a condition and inducement to the Company entering into this Agreement, Parent has delivered to the Company an Equity Commitment Letter dated March 27, 2025 (the "Equity Commitment Letter"), pursuant to which Parent has committed to contribute equity financing in the aggregate amount of Three Hundred Forty Million Dollars ($340,000,000) to fund the Merger Consideration and Transaction Expenses;

WHEREAS, concurrently with the execution and delivery of this Agreement, and as a condition and inducement to the Company entering into this Agreement, Parent has delivered to the Company a Limited Guarantee dated April 7, 2025 (the "Limited Guarantee"), executed by HPE IV GP on behalf of Parent, guaranteeing certain payment obligations of Merger Sub hereunder, including the obligation to pay the Reverse Termination Fee;

WHEREAS, concurrently with the execution and delivery of this Agreement, certain members of the Company's management team — Catherine Langford (Chief Executive Officer), Derek Simmons (Chief Financial Officer), and Maxwell Dunn (Chief Operating Officer) — have entered into a Voting and Support Agreement and a Rollover Agreement with Parent (collectively, the "Support Agreements"), providing for, among other things, the rollover of Twenty-One Million Five Hundred Thousand Dollars ($21,500,000) in aggregate equity value and voting commitments in favor of the Merger;

WHEREAS, Merger Sub and the Company intend that the Merger qualify as a merger governed by Section 251 of the DGCL;

WHEREAS, debt financing commitments have been obtained from Falconer National Bank, N.A. (as Lead Arranger and Administrative Agent) and Dunmore Capital Markets LLC (as Co-Arranger and Joint Bookrunner) pursuant to a Debt Commitment Letter dated March 24, 2025 (the "Debt Commitment Letter"), providing for a Four Hundred Ninety Million Dollar ($490,000,000) Senior Secured Term Loan B facility and a One Hundred Fifty Million Dollar ($150,000,000) Senior Secured Revolving Credit Facility (collectively, the "Debt Financing"); and

WHEREAS, a buyer-side representations and warranty insurance policy has been bound by Meridian Specialty Insurance Company, effective March 28, 2025, with a policy limit of One Hundred Million Dollars ($100,000,000) and a retention of Nine Million Eight Hundred Thousand Dollars ($9,800,000) (the "R&W Insurance Policy").

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, agree as follows:

ARTICLE I — DEFINITIONS

Section 1.1 Definitions. As used in this Agreement, the following terms shall have the meanings set forth below:

"Adverse Recommendation Change" means (a) any withdrawal, amendment, modification, or qualification by the Company Board (or the Special Committee) of the Company Board Recommendation in any manner adverse to Parent or Merger Sub, (b) any failure by the Company Board (or the Special Committee) to include the Company Board Recommendation in the Proxy Statement, (c) any approval, recommendation, or endorsement by the Company Board (or the Special Committee) of any Competing Proposal, (d) any failure by the Company Board (or the Special Committee) to publicly reaffirm the Company Board Recommendation within five (5) business days after Parent requests such reaffirmation following the public announcement of a Competing Proposal (provided that Parent may make such request only once with respect to each Competing Proposal or material amendment thereto), or (e) any resolution by the Company Board (or the Special Committee) to take any of the foregoing actions.

"Affiliate" means, with respect to any Person, any other Person that, directly or indirectly, controls, is controlled by, or is under common control with, such Person. For purposes of this definition, "control" (including, with correlative meanings, "controlled by" and "under common control with") means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract, or otherwise.

"Aggregate Merger Consideration" means Nine Hundred Eighty Million Dollars ($980,000,000), being the product of the Per Share Merger Consideration multiplied by the Fully Diluted Shares.

"Business Day" means any day other than a Saturday, Sunday, or day on which banks in New York, New York or Wilmington, Delaware are authorized or obligated by applicable Law to close.

"Certificate of Merger" means the certificate of merger to be filed with the Secretary of State of the State of Delaware in connection with the Merger in accordance with Section 251 of the DGCL.

"Change of Control" means the consummation of the Merger, which constitutes a "change of control" (or any similar term, howsoever defined) as defined under the Company's existing credit agreements, executive employment agreements, commercial lease agreements, and equity incentive plans, each as identified in Company Disclosure Schedule 4.5.

"Closing" means the consummation of the Merger and the other transactions contemplated by this Agreement.

"Closing Date" means the date on which the Closing occurs, which is estimated to be June 30, 2025, subject to the satisfaction or waiver of the conditions set forth in Article VII.

"Co-Investment Agreement" means the co-investment agreement dated March 27, 2025, by and between Parent and Ashford Growth Partners LP, pursuant to which Ashford Growth Partners LP has committed to contribute co-investment equity in the amount of Sixty Million Dollars ($60,000,000).

"Code" means the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder.

"Company" means Pennfield Holdings, Inc., a Delaware corporation.

"Company Board" means the Board of Directors of the Company.

"Company Board Recommendation" has the meaning set forth in Section 6.3(b).

"Company Common Stock" means shares of common stock, par value $0.01 per share, of the Company.

"Company Disclosure Schedules" means the disclosure schedules delivered by the Company to Parent and Merger Sub concurrently with the execution and delivery of this Agreement.

"Company Material Adverse Effect" means any event, condition, change, occurrence, development, circumstance, or effect that, individually or in the aggregate with other events, conditions, changes, occurrences, developments, circumstances, or effects, (a) is or would reasonably be expected to be materially adverse to the business, assets, properties, liabilities, condition (financial or otherwise), or results of operations of the Company and its Subsidiaries, taken as a whole, or (b) would prevent or materially delay the ability of the Company to consummate the Merger or the other transactions contemplated by this Agreement; provided, however, that in the case of clause (a), none of the following shall be deemed to constitute, and none of the following shall be taken into account in determining whether there has been or would reasonably be expected to be, a Company Material Adverse Effect:

(i) changes in general economic, business, financial, or market conditions (including changes in prevailing interest rates, credit availability, currency exchange rates, commodity prices, or conditions in the capital, credit, or financial markets generally);

(ii) changes in the industries in which the Company and its Subsidiaries operate, including changes in retail, consumer products, or e-commerce sectors;

(iii) changes in applicable Law or GAAP (or authoritative interpretation thereof);

(iv) changes resulting from acts of war, sabotage, terrorism, natural disasters, or other force majeure events;

(v) changes resulting from the announcement, pendency, or consummation of the Merger or the other transactions contemplated hereby (including any impact on employees, customers, suppliers, distributors, or business partners resulting therefrom), except for purposes of the representations and warranties set forth in Section 4.4;

(vi) changes in the market price or trading volume of the Company Common Stock (provided that the underlying cause of such changes may be considered in determining whether a Company Material Adverse Effect has occurred, to the extent not otherwise excluded by this definition);

(vii) the failure of the Company to meet internal or published industry analyst projections, forecasts, or estimates of revenue, earnings, or other financial metrics for any period (provided that the underlying cause of such failure may be considered in determining whether a Company Material Adverse Effect has occurred, to the extent not otherwise excluded by this definition); or

(viii) any action taken (or omitted to be taken) by the Company at the written request or with the written consent of Parent;

provided, further, that in the case of clauses (i) through (iv) above, such events, conditions, changes, occurrences, developments, circumstances, or effects may be taken into account to the extent they have a disproportionate adverse impact on the Company and its Subsidiaries, taken as a whole, relative to other participants of similar size in the industries and geographies in which the Company and its Subsidiaries operate.

"Company RSUs" means outstanding restricted stock units of the Company granted under the Company's equity incentive plans.

"Company Stock Options" means outstanding options to purchase shares of Company Common Stock granted under the Company's equity incentive plans.

"Company Stockholder Approval" means the affirmative vote of the holders of a majority of the outstanding shares of Company Common Stock entitled to vote thereon at the Company Stockholder Meeting, in accordance with Section 251 of the DGCL, the Company's Certificate of Incorporation, and the Company's Bylaws.

"Company Stockholder Meeting" has the meaning set forth in Section 6.3(c).

"Competing Proposal" means any inquiry, proposal, or offer from any Person or group of Persons (other than Parent, Merger Sub, or any of their respective Affiliates) relating to, in a single transaction or a series of related transactions: (a) any merger, consolidation, business combination, recapitalization, liquidation, dissolution, or similar transaction involving the Company or any of its Subsidiaries whose assets, individually or in the aggregate, constitute twenty percent (20%) or more of the consolidated assets of the Company or whose revenues, individually or in the aggregate, constitute twenty percent (20%) or more of the consolidated revenues of the Company; (b) any direct or indirect acquisition (including by way of any tender offer, exchange offer, or otherwise) of twenty percent (20%) or more of the consolidated assets of the Company and its Subsidiaries; (c) any direct or indirect acquisition (including by way of any tender offer, exchange offer, or otherwise) of twenty percent (20%) or more of the outstanding shares of Company Common Stock or other voting securities of the Company; or (d) any other transaction the consummation of which would reasonably be expected to prevent, impede, or materially delay the consummation of the Merger.

"Confidentiality Agreement" means the Mutual Confidentiality Agreement, dated January 15, 2025, by and between Harrowgate Capital Partners LLC and the Company, as amended or supplemented from time to time.

"Consent" means any consent, approval, authorization, clearance, license, permit, grant, franchise, concession, waiver, exemption, or order of, or notice to, or filing, registration, or qualification with, any Governmental Authority or any other Person.

"Contract" means any legally binding contract, agreement, instrument, commitment, indenture, mortgage, deed of trust, lease, sublease, note, license, sublicense, purchase order, or other arrangement, whether written or oral.

"Debt Commitment Letter" means the debt commitment letter dated March 24, 2025, issued by Falconer National Bank, N.A. (as Lead Arranger and Administrative Agent) and Dunmore Capital Markets LLC (as Co-Arranger and Joint Bookrunner), as the same may be amended, supplemented, or modified from time to time in accordance with the terms of this Agreement.

"Debt Financing" means the debt financing contemplated by the Debt Commitment Letter, consisting of the Senior Secured Term Loan B in an aggregate principal amount of Four Hundred Ninety Million Dollars ($490,000,000) and the Senior Secured Revolving Credit Facility in an aggregate principal amount of One Hundred Fifty Million Dollars ($150,000,000).

"Debt Financing Sources" means the Persons that have committed to provide or arrange, or have otherwise entered into agreements in connection with, the Debt Financing, including Falconer National Bank, N.A. and Dunmore Capital Markets LLC, and any joinder parties, agents, arrangers, lenders, and other entities that have committed to provide or otherwise entered into agreements in connection with all or any part of the Debt Financing, together with their respective Affiliates and their and their respective Affiliates' officers, directors, employees, agents, advisors, and representatives.

"DGCL" means the Delaware General Corporation Law, Title 8 of the Delaware Code, as amended from time to time.

"Dissenting Shares" has the meaning set forth in Section 3.5.

"Effective Time" means the time at which the Certificate of Merger is duly filed with the Secretary of State of the State of Delaware in accordance with the DGCL, or such later time as the Parties may agree and specify in the Certificate of Merger.

"Equity Commitment Letter" means the equity commitment letter dated March 27, 2025, from Parent, committing to contribute equity financing in the aggregate amount of Three Hundred Forty Million Dollars ($340,000,000), as the same may be amended, supplemented, or modified from time to time in accordance with the terms of this Agreement.

"Equity Financing" means the equity contributions contemplated by the Equity Commitment Letter and the Co-Investment Agreement.

"Escrow Agent" means Grandview Trust Company, N.A.

"Escrow Agreement" means the Escrow Agreement dated as of April 7, 2025, by and among the Company, Parent, and the Escrow Agent.

"Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

"Exchange Fund" has the meaning set forth in Section 3.4(b).

"Excluded Shares" means any shares of Company Common Stock held in the treasury of the Company or owned by Parent, Merger Sub, or any wholly owned Subsidiary of the Company immediately prior to the Effective Time.

"Financing" means the Debt Financing and the Equity Financing, collectively.

"Financing Failure" means the failure of the full proceeds of the Financing (or any alternative financing) to be funded at or prior to the time required for the consummation of the Merger, to the extent such failure is not primarily caused by a breach by the Company of its obligations under this Agreement.

"Fraud" means actual and intentional common law fraud (as opposed to constructive fraud, negligent misrepresentation, or any fraud theory based on recklessness or negligence) committed by a Party in the making of any representation or warranty set forth in this Agreement, with actual knowledge that such representation or warranty is inaccurate, with the specific intent to deceive the other Parties, and upon which the other Parties have actually and justifiably relied, to their detriment.

"Fully Diluted Shares" means 61,450,000 shares, consisting of 58,200,000 shares of Company Common Stock outstanding as of the date hereof and 3,250,000 shares of Company Common Stock issuable upon exercise or settlement of outstanding Company Stock Options and Company RSUs.

"Fundamental Representations" means the representations and warranties set forth in Section 4.1 (Organization, Standing, and Power), Section 4.3 (Capital Structure), Section 4.4(a) (Authority), Section 4.17 (Brokers and Finders), Section 5.1 (Organization, Standing, and Power), Section 5.2 (Authority; No Conflict), and Section 5.9 (Brokers).

"GAAP" means United States generally accepted accounting principles, consistently applied.

"Governmental Authority" means any federal, state, provincial, local, municipal, foreign, or supranational government, any court of competent jurisdiction, administrative agency, commission, tribunal, or other governmental, quasi-governmental, or regulatory authority or body, including the SEC, the Nasdaq Stock Market LLC, the Federal Trade Commission, and the Antitrust Division of the United States Department of Justice.

"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.

"Indemnification Cap" means of the Aggregate Merger Consideration.

"Knowledge" means (a) with respect to the Company, the actual knowledge, after reasonable inquiry, of Catherine Langford, Derek Simmons, Maxwell Dunn, Patricia Okafor, and Thomas Renwick, and (b) with respect to Parent or Merger Sub, the actual knowledge, after reasonable inquiry, of Nathaniel Cross, Rebecca Talmadge, and Jonah Whitfield.

"Law" means any federal, state, provincial, local, municipal, foreign, or supranational statute, law, ordinance, regulation, rule, code, order, judgment, decree, directive, or other requirement enacted, promulgated, issued, enforced, or entered by a Governmental Authority.

"Lien" means any lien, pledge, hypothecation, charge, mortgage, deed of trust, security interest, encumbrance, restriction on transfer, claim, option, preemptive right, right of first refusal, right of first offer, community property interest, equitable interest, conditional sale or other title retention agreement, or other similar restriction or limitation.

"Limited Guarantee" means the Limited Guarantee dated April 7, 2025, executed by HPE IV GP on behalf of Parent in favor of the Company.

"Losses" means all losses, damages, liabilities, deficiencies, claims, demands, judgments, interest, awards, penalties, fines, assessments, costs, and expenses (including reasonable and documented out-of-pocket attorneys' fees and other expenses of investigation and litigation), but excluding punitive damages (except to the extent payable to a third party in connection with a Third-Party Claim), consequential damages (except to the extent reasonably foreseeable), and lost profits (except to the extent constituting direct damages).

"Marketing Period" means the first period of fifteen (15) consecutive Business Days after the date upon which the Company shall have delivered to Parent and the Debt Financing Sources the Required Financial Information, throughout which (a) the conditions set forth in Sections 7.1 and 7.2 (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of those conditions at the Closing) shall be satisfied, (b) the Company shall not have publicly announced any intention to restate any material financial statements included in the Required Financial Information, and (c) the Required Financial Information shall remain compliant in all material respects with the requirements of the Debt Commitment Letter; provided that such Marketing Period shall not include any day falling during the period from November 24 through December 1 of any calendar year, or any day on which the financial markets in New York are closed (other than by reason of a weekend); provided, further, that if the Marketing Period has not ended on or prior to the Outside Date, the Outside Date shall be automatically extended by the number of Business Days necessary to permit the Marketing Period to be completed, but in no event shall such extension exceed thirty (30) calendar days.

"Material Adverse Effect" means a Company Material Adverse Effect or a Parent Material Adverse Effect, as the context requires.

"Merger" means the merger of Merger Sub with and into the Company, with the Company surviving as the Surviving Corporation, pursuant to Section 251 of the DGCL.

"Merger Consideration" or "Per Share Merger Consideration" means Fifteen Dollars and Ninety-Five Cents ($15.95) per share of Company Common Stock, payable in cash, without interest.

"Merger Sub" means Pinnacle Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Parent.

"No-Shop Period Start Date" means April 7, 2025, being the date of execution and delivery of this Agreement.

"Order" means any order, writ, decree, ruling, injunction, judgment, award, assessment, settlement, stay, or stipulation issued, entered, or granted by any Governmental Authority or arbitrator.

"Outside Date" means September 30, 2025, subject to extension as provided in the definition of "Marketing Period."

"Outstanding Shares" means 58,200,000 shares of Company Common Stock issued and outstanding as of the date hereof.

"Parent" means Harrowgate Private Equity Fund IV LP, a Delaware limited partnership.

"Parent Disclosure Schedules" means the disclosure schedules delivered by Parent and Merger Sub to the Company concurrently with the execution and delivery of this Agreement.

"Parent Material Adverse Effect" means any event, condition, change, occurrence, development, circumstance, or effect that, individually or in the aggregate, would prevent or materially delay the ability of Parent or Merger Sub to consummate the Merger or the other transactions contemplated by this Agreement or to perform their respective obligations hereunder.

"Paying Agent" means Marlowe Asset Management Stock Transfer, Inc.

"Per Share Merger Consideration" means Fifteen Dollars and Ninety-Five Cents ($15.95) in cash, without interest, subject to applicable withholding.

"Permitted Liens" means (a) Liens for Taxes not yet due and payable or being contested in good faith by appropriate proceedings; (b) statutory workers' compensation, unemployment insurance, or similar Liens; (c) mechanics', carriers', workmen's, repairmen's, or other like Liens arising in the ordinary course of business; (d) zoning, entitlement, building, and other land use regulations imposed by any Governmental Authority; and (e) other Liens or imperfections on title that are not, individually or in the aggregate, material.

"Person" means any individual, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization, Governmental Authority, or other entity.

"Proxy Statement" means the definitive proxy statement to be filed by the Company with the SEC on Schedule 14A in connection with the Company Stockholder Meeting, together with any amendments or supplements thereto.

"R&W Insurance Policy" means the buyer-side representations and warranty insurance policy issued by Meridian Specialty Insurance Company, effective March 28, 2025, with a policy limit of One Hundred Million Dollars ($100,000,000) and a retention of Nine Million Eight Hundred Thousand Dollars ($9,800,000).

"Representatives" means, with respect to any Person, such Person's directors, officers, employees, partners, members, managers, agents, advisors (including investment bankers, financial advisors, attorneys, and accountants), and representatives.

"Required Financial Information" means the audited and unaudited financial statements and other financial information regarding the Company and its Subsidiaries of the type required by Regulation S-X and Regulation S-K under the Securities Act to be included in a registration statement on Form S-1, and of the type and form customarily included in offering documents used to syndicate term loan B facilities of the type contemplated by the Debt Commitment Letter, in each case to the extent necessary for the Debt Financing Sources to consummate the syndication of the Debt Financing.

"Reverse Termination Fee" means Fifty-Eight Million Eight Hundred Thousand Dollars ($58,800,000), being six percent (6.0%) of the Aggregate Merger Consideration.

"Rollover Agreement" means the Rollover Agreement dated as of April 7, 2025, by and among Parent, Catherine Langford, Derek Simmons, and Maxwell Dunn.

"Rollover Shares" means the shares of Company Common Stock subject to the Rollover Agreement, having an aggregate value of Twenty-One Million Five Hundred Thousand Dollars ($21,500,000) (valued at the Per Share Merger Consideration).

"SEC" means the United States Securities and Exchange Commission.

"Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

"Special Committee" means the Special Committee of the Company Board, consisting of Gloria Vásquez (Chair), Martin Ashworth, and Diane Kauffman.

"Special Committee Financial Advisor" means Whitmore Zanthor & Co.

"Subsidiary" means, with respect to any Person, any corporation, limited liability company, partnership, association, joint venture, or other entity of which such Person (either alone or together with any other Subsidiary of such Person) owns, directly or indirectly, more than fifty percent (50%) of the stock or other equity interests, the holders of which are generally entitled to vote for the election of the board of directors or other governing body of such entity.

"Superior Proposal" means a bona fide, unsolicited, written Competing Proposal (with the references in the definition of "Competing Proposal" to "twenty percent (20%)" being deemed to be references to "fifty percent (50%)" for purposes of this definition) that the Company Board (upon the recommendation of the Special Committee) determines in good faith, after consultation with the Special Committee Financial Advisor and the Company's outside legal counsel, taking into account all financial, legal, regulatory, and other aspects of such proposal that the Special Committee deems relevant (including the identity of the Person making such proposal, the conditionality, timing, and likelihood of consummation of such proposal, and any revised terms proposed by Parent), would, if consummated, result in a transaction more favorable to the holders of Company Common Stock (other than holders of Excluded Shares and Rollover Shares) than the Merger (including any changes to the terms of this Agreement proposed by Parent in response thereto).

"Surviving Corporation" means the Company, as the surviving corporation in the Merger.

"Tax" or "Taxes" means all federal, state, provincial, local, foreign, and other income, gross receipts, profits, franchise, capital stock, net worth, sales, use, value added, ad valorem, personal and real property, transfer, stamp, excise, customs, duties, payroll, employment, social security, unemployment, disability, withholding, estimated, environmental, and all other taxes, assessments, charges, duties, fees, levies, or similar governmental charges of any kind, together with all interest, penalties, and additions to tax imposed with respect thereto.

"Tax Return" means all returns, declarations, reports, forms, claims for refund, estimates, information returns, and statements relating to Taxes required to be filed with any Governmental Authority, including any schedule or attachment thereto and any amendment thereof.

"Termination Fee" means Thirty-Four Million Three Hundred Thousand Dollars ($34,300,000), being three and one-half percent (3.5%) of the Aggregate Merger Consideration.

"Third-Party Claim" has the meaning set forth in Section 9.5.

"Transaction Expenses" means all fees, costs, and expenses incurred or payable by the Company, Parent, Merger Sub, or their respective Affiliates in connection with the negotiation, execution, and performance of this Agreement and the consummation of the transactions contemplated hereby, including all fees and expenses of legal counsel, financial advisors, accountants, proxy solicitors, public relations consultants, filing fees, printing costs, and any other costs incidental thereto, estimated in the aggregate at approximately Sixty Million Dollars ($60,000,000).

"Voting and Support Agreement" means the Voting and Support Agreement dated as of April 7, 2025, by and among Parent and each of Catherine Langford, Derek Simmons, and Maxwell Dunn.

"Willful Breach" means a material breach that is a consequence of an act knowingly undertaken (or an omission knowingly made) by the breaching Party with actual knowledge that the taking of such act (or the failure to act) would, or would reasonably be expected to, constitute or result in a breach of this Agreement.

Section 1.2 Interpretation. Unless the context otherwise requires:

(a) The words "herein," "hereof," "hereto," "hereunder," and words of similar import refer to this Agreement in its entirety and not to any particular Article, Section, paragraph, or clause hereof.

(b) References to an "Article," "Section," "Exhibit," "Annex," or "Schedule" mean an Article of, a Section of, an Exhibit to, an Annex to, or a Schedule to this Agreement, as applicable.

(c) The terms "include," "includes," and "including" are not limiting and shall be deemed to be followed by the phrase "without limitation."

(d) The word "or" is not exclusive.

(e) References to any statute, rule, or regulation include any amendment, modification, supplement, or replacement thereof and all rules, regulations, and statutory instruments promulgated thereunder or pursuant thereto (unless otherwise expressly stated herein).

(f) References to any Contract (including this Agreement) mean such Contract as amended, supplemented, or otherwise modified from time to time in accordance with the terms thereof, except as otherwise expressly stated herein.

(g) References to a "Person" include such Person's successors and permitted assigns.

(h) References to "dollars" or "$" refer to the lawful currency of the United States of America.

(i) The headings and captions in this Agreement are for convenience of reference only, do not constitute a part of this Agreement, and shall not be deemed to limit, characterize, or in any way affect any provision of this Agreement.

(j) All references to "days" mean calendar days unless expressly stated to be "Business Days."

(k) Words in the singular shall include the plural, and vice versa, and words denoting any gender shall include all genders.

(l) The Parties have participated jointly in the negotiation and drafting of this Agreement, and no rule of construction based on the identity of the drafter shall apply to the interpretation of this Agreement or any provision hereof.

(m) The Company Disclosure Schedules and the Parent Disclosure Schedules, as well as all Exhibits and Annexes attached hereto, are hereby incorporated into and made a part of this Agreement. Any information disclosed in any section or subsection of the Company Disclosure Schedules or the Parent Disclosure Schedules shall be deemed to be disclosed with respect to, and shall be deemed to qualify, all other sections or subsections of this Agreement to the extent that it is reasonably apparent on the face of such disclosure that such information is relevant to such other sections or subsections.

ARTICLE II — THE MERGER

Section 2.1 The Merger. At the Effective Time, and upon the terms and subject to the conditions set forth in this Agreement, and in accordance with the applicable provisions of the DGCL, Merger Sub shall be merged with and into the Company. As a result of the Merger, the separate corporate existence of Merger Sub shall cease at the Effective Time, and the Company shall continue as the Surviving Corporation and shall be a wholly owned subsidiary of Parent. The Merger shall have the effects set forth in this Agreement and in the applicable provisions of the DGCL, including Section 259 of the DGCL.

Section 2.2 Closing. Unless this Agreement has been theretofore terminated in accordance with Article VIII, the Closing shall take place at 10:00 a.m., Eastern Time, on the third (3rd) Business Day following the satisfaction or waiver (to the extent permitted hereunder) of the conditions set forth in Article VII (other than conditions that by their nature are to be satisfied at the Closing, each of which shall be subject to satisfaction or waiver at the Closing), or at such other place, date, and time as Parent and the Company may mutually agree in writing. The estimated Closing Date is June 30, 2025. The Closing shall occur remotely via the electronic exchange of documents and signatures through email or other mutually agreed electronic transmission unless the Parties otherwise agree in writing to hold the Closing at a physical location.

Section 2.3 Effective Time. On the Closing Date, and subject to the terms and conditions of this Agreement, the Parties shall cause the Certificate of Merger to be duly executed, acknowledged, and filed with the Secretary of State of the State of Delaware in accordance with Section 251 of the DGCL. The Merger shall become effective at such time as the Certificate of Merger is duly filed with the Secretary of State of the State of Delaware, or at such later time as Parent and the Company shall agree and specify in the Certificate of Merger, and such time is hereinafter referred to as the "Effective Time."

Section 2.4 Effects of the Merger. The effects of the Merger shall be as provided in this Agreement and in the applicable provisions of the DGCL, including Section 259 of the DGCL. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time:

(a) All of the property, rights, privileges, powers, and franchises of the Company and Merger Sub shall vest in the Surviving Corporation without further act or deed, and all of the debts, liabilities, obligations, restrictions, disabilities, and duties of each of the Company and Merger Sub shall become the debts, liabilities, obligations, restrictions, disabilities, and duties of the Surviving Corporation.

(b) The Surviving Corporation shall thenceforth be responsible and liable for all of the liabilities and obligations of each of the Company and Merger Sub, and any claim existing or action or proceeding pending by or against either the Company or Merger Sub may be prosecuted as if the Merger had not taken place, or the Surviving Corporation may be substituted in such claim, action, or proceeding.

(c) Neither the rights of creditors nor any Liens upon the property of the Company or Merger Sub shall be impaired by the Merger.

Section 2.5 Certificate of Incorporation of the Surviving Corporation. At the Effective Time, the certificate of incorporation of the Surviving Corporation shall be amended and restated in its entirety to be in the form attached hereto as Exhibit A, which shall be identical to the certificate of incorporation of Merger Sub as in effect immediately prior to the Effective Time, except that the name of the Surviving Corporation shall be "Pennfield Holdings, Inc." Such amended and restated certificate of incorporation shall be the certificate of incorporation of the Surviving Corporation until thereafter amended in accordance with the DGCL and such certificate of incorporation; provided that the provisions of Section 6.9 shall be given effect.

Section 2.6 Bylaws of the Surviving Corporation. At the Effective Time, the bylaws of the Surviving Corporation shall be amended and restated in their entirety to be in the form attached hereto as Exhibit B, which shall be identical to the bylaws of Merger Sub as in effect immediately prior to the Effective Time, except that the name of the Surviving Corporation shall be "Pennfield Holdings, Inc." Such amended and restated bylaws shall be the bylaws of the Surviving Corporation until thereafter amended in accordance with the DGCL, the certificate of incorporation of the Surviving Corporation, and such bylaws; provided that the provisions of Section 6.9 shall be given effect.

Section 2.7 Directors and Officers of the Surviving Corporation.

(a) Directors. The directors of the Surviving Corporation as of the Effective Time shall be Rebecca Talmadge and Jonah Whitfield, each of whom shall be a designee of Parent, and each of whom shall hold office until his or her respective successor is duly elected or appointed and qualified, or until his or her earlier death, resignation, or removal, in accordance with the certificate of incorporation and bylaws of the Surviving Corporation.

(b) Officers. The officers of the Surviving Corporation as of the Effective Time shall be the officers of the Company immediately prior to the Effective Time, as follows: Catherine Langford, Chief Executive Officer; Derek Simmons, Chief Financial Officer; Maxwell Dunn, Chief Operating Officer; and Patricia Okafor, General Counsel and Corporate Secretary. Each such officer shall hold office

ARTICLE III — EFFECT OF THE MERGER ON CAPITAL STOCK; EXCHANGE OF CERTIFICATES

Section 3.1 Effect on Capital Stock. At the Effective Time, by virtue of the Merger and without any action on the part of Parent, Merger Sub, the Company, or the holders of any of the following securities:

(a) Company Common Stock. Each share of Company Common Stock issued and outstanding immediately prior to the Effective Time (other than Excluded Shares, Dissenting Shares, and Rollover Shares) shall be automatically converted into the right to receive Fifteen Dollars and Ninety-Five Cents ($15.95) in cash, without interest (the "Per Share Merger Consideration"). At the Effective Time, all such shares of Company Common Stock shall no longer be outstanding, shall be automatically cancelled and shall cease to exist, and each certificate (or book-entry share) formerly representing any such share shall thereafter represent only the right to receive the Per Share Merger Consideration, without interest, upon surrender of such certificate (or book-entry share) in accordance with Section 3.4. The Aggregate Merger Consideration for all Fully Diluted Shares is Nine Hundred Eighty Million Dollars ($980,000,000), based on 61,450,000 Fully Diluted Shares (consisting of 58,200,000 Outstanding Shares and 3,250,000 shares issuable upon exercise or settlement of outstanding Company Stock Options and Company RSUs).

(b) Rollover Shares. Each Rollover Share shall be treated in accordance with the terms and conditions of the Rollover Agreement. Such Rollover Shares shall not be entitled to receive the Per Share Merger Consideration but shall instead be converted, at the Effective Time, into equity interests in the Surviving Corporation or a parent entity thereof as provided in the Rollover Agreement. The Rollover Shares have an aggregate value of Twenty-One Million Five Hundred Thousand Dollars ($21,500,000), calculated at the Per Share Merger Consideration, and are allocated among the rollover participants as provided in the Rollover Agreement attached hereto as Exhibit D.

(c) Excluded Shares. Each share of Company Common Stock held in the treasury of the Company or owned by Parent, Merger Sub, or any wholly owned Subsidiary of the Company immediately prior to the Effective Time shall be automatically cancelled and shall cease to exist, and no consideration shall be delivered in exchange therefor.

(d) Merger Sub Stock. Each share of common stock of Merger Sub issued and outstanding immediately prior to the Effective Time shall be converted into one (1) validly issued, fully paid, and nonassessable share of common stock of the Surviving Corporation. From and after the Effective Time, all certificates (if any) representing the common stock of Merger Sub shall be deemed to represent shares of common stock of the Surviving Corporation.

Section 3.2 Treatment of Company Stock Options. At the Effective Time, each Company Stock Option that is outstanding and unexercised immediately prior to the Effective Time, whether vested or unvested, shall be automatically cancelled and converted into the right to receive a lump-sum cash payment (without interest) from the Surviving Corporation (or its designee) equal to the product of (a) the excess, if any, of the Per Share Merger Consideration over the exercise price per share of Company Common Stock subject to such Company Stock Option, multiplied by (b) the total number of shares of Company Common Stock subject to such Company Stock Option (such product, the "Option Consideration"), less applicable withholding Taxes required to be deducted and withheld therefrom pursuant to Section 3.6. Each Company Stock Option with an exercise price per share equal to or greater than the Per Share Merger Consideration of $15.95 shall be cancelled at the Effective Time without any consideration being payable therefor. The Surviving Corporation (or its designee) shall pay the Option Consideration to the former holders of cancelled Company Stock Options as soon as reasonably practicable following the Effective Time (and in any event within ten (10) Business Days following the Closing Date), subject to the receipt of any required documentation, through the Company's regular payroll system or such other method as the Surviving Corporation shall determine.

Section 3.3 Treatment of Company RSUs. At the Effective Time, each Company RSU that is outstanding immediately prior to the Effective Time, whether vested or unvested, shall be automatically cancelled and converted into the right to receive a lump-sum cash payment (without interest) from the Surviving Corporation (or its designee) equal to the product of (a) the Per Share Merger Consideration of $15.95, multiplied by (b) the total number of shares of Company Common Stock underlying such Company RSU (such product, the "RSU Consideration"), less applicable withholding Taxes required to be deducted and withheld therefrom pursuant to Section 3.6. The Surviving Corporation (or its designee) shall pay the RSU Consideration to the former holders of cancelled Company RSUs as soon as reasonably practicable following the Effective Time (and in any event within ten (10) Business Days following the Closing Date), subject to the receipt of any required documentation, through the Company's regular payroll system or such other method as the Surviving Corporation shall determine. For the avoidance of doubt, the aggregate number of shares of Company Common Stock subject to outstanding Company Stock Options and Company RSUs as of the date hereof is 3,250,000, representing the difference between 61,450,000 Fully Diluted Shares and 58,200,000 Outstanding Shares.

Section 3.4 Exchange Procedures.

(a) Paying Agent. Prior to the Effective Time, Parent shall appoint Marlowe Asset Management Stock Transfer, Inc. (contact: Daniel Roth, Vice President, Corporate Actions; 44 Wall Street, 6th Floor, New York, New York 10005) as the paying agent for the payment of the Per Share Merger Consideration (the "Paying Agent"). The Paying Agent shall act under an agreement that shall be in form and substance reasonably satisfactory to Parent and the Company.

(b) Exchange Fund. At or prior to the Effective Time, Parent shall deposit, or cause to be deposited, with the Paying Agent, for the benefit of the holders of shares of Company Common Stock entitled to receive the Per Share Merger Consideration, cash in immediately available funds in an aggregate amount sufficient to pay the Per Share Merger Consideration to all such holders (such amount, as may be increased or reduced from time to time in accordance with this Section 3.4, being referred to as the "Exchange Fund"). The Exchange Fund shall not be used for any purpose other than as expressly contemplated by this Agreement.

(c) Letter of Transmittal. As promptly as reasonably practicable following the Effective Time (and in any event within five (5) Business Days after the Effective Time), the Paying Agent shall mail or otherwise deliver to each record holder of shares of Company Common Stock that were converted into the right to receive the Per Share Merger Consideration pursuant to Section 3.1(a) a letter of transmittal (in customary form and containing such provisions as the Company and Parent shall reasonably agree upon, including provisions regarding the delivery of an "agent's message" with respect to book-entry shares) and instructions for surrendering certificates (or book-entry shares) in exchange for the Per Share Merger Consideration. The form of letter of transmittal is attached hereto as Exhibit K.

(d) Payments. Upon (i) surrender to the Paying Agent of a certificate (or book-entry share) representing shares of Company Common Stock for cancellation, together with a duly completed and validly executed letter of transmittal and such other documents as may be reasonably required by the Paying Agent, or (ii) receipt of an "agent's message" by the Paying Agent (or such other evidence of transfer as the Paying Agent may reasonably request) in the case of book-entry shares, the holder of such certificate (or book-entry share) shall be entitled to receive in exchange therefor the Per Share Merger Consideration of $15.95 per share for each share of Company Common Stock formerly represented by such certificate (or book-entry share), and the certificate (or book-entry share) so surrendered shall forthwith be cancelled. Until surrendered as contemplated by this Section 3.4, each certificate (or book-entry share) shall be deemed, from and after the Effective Time, to represent only the right to receive the Per Share Merger Consideration, without interest.

(e) No Interest. No interest shall accrue or be payable on any amounts payable upon due surrender of certificates (or book-entry shares) pursuant to this Section 3.4.

(f) Transfers of Ownership. If the Per Share Merger Consideration is to be paid to a Person other than the Person in whose name the surrendered certificate is registered, it shall be a condition of payment that the certificate so surrendered shall be properly endorsed or otherwise in proper form for transfer, that the signatures shall be properly guaranteed, and that the Person requesting such payment shall have paid any transfer and other Taxes required by reason of such payment being made to a Person other than the registered holder of the certificate surrendered, or such Person shall have established to the reasonable satisfaction of the Paying Agent that such Tax either has been paid or is not applicable.

(g) Unclaimed Funds. Any portion of the Exchange Fund that remains undistributed to the holders of shares of Company Common Stock twelve (12) months after the Effective Time shall be delivered to the Surviving Corporation, upon demand, and any holder of shares of Company Common Stock who has not theretofore surrendered certificates (or book-entry shares) shall thereafter look only to the Surviving Corporation (subject to abandoned property, escheat, or other similar Laws) for payment of the Per Share Merger Consideration to which such holder is entitled. Any amounts remaining unclaimed by holders of shares of Company Common Stock immediately prior to such time as such amounts would otherwise escheat to or become the property of any Governmental Authority shall, to the extent permitted by applicable Law, become the property of the Surviving Corporation, free and clear of all claims or interest of any Person previously entitled thereto.

Section 3.5 Dissenting Shares. Notwithstanding anything in this Agreement to the contrary, shares of Company Common Stock that are issued and outstanding immediately prior to the Effective Time and that are held by stockholders of the Company who have not voted in favor of the Merger (or consented thereto in writing) and who have properly demanded appraisal of their shares in accordance with Section 262 of the DGCL ("Dissenting Shares") shall not be converted into or represent the right to receive the Per Share Merger Consideration, but shall instead be entitled only to such rights as are granted by Section 262 of the DGCL; provided, however, that if, after the Effective Time, any such holder of Dissenting Shares shall fail to perfect, shall effectively withdraw, or shall otherwise lose the right to appraisal under Section 262 of the DGCL, then each such share of Company Common Stock shall thereupon be deemed to have been converted, at the Effective Time, into the right to receive the Per Share Merger Consideration, without interest thereon, upon surrender of the certificate (or book-entry share) representing such share in the manner provided in Section 3.4. The Company shall give Parent prompt notice of any demands for appraisal received by the Company, any withdrawals of such demands, and any other instruments or communications received by the Company with respect to any exercise of appraisal rights under Section 262 of the DGCL, and Parent shall have the right to direct all negotiations and proceedings with respect to such demands, subject to the prior written consent of the Company (such consent not to be unreasonably withheld, conditioned, or delayed). The Company shall not, except with the prior written consent of Parent (such consent not to be unreasonably withheld, conditioned, or delayed), voluntarily make any payment with respect to any demands for appraisal, offer to settle any such demands, or waive any failure to timely deliver a written demand for appraisal or otherwise comply with the provisions of Section 262 of the DGCL.

Section 3.6 Withholding Rights. Parent, Merger Sub, the Surviving Corporation, and the Paying Agent (and their respective agents) shall each be entitled to deduct and withhold from any amounts otherwise payable pursuant to this Agreement to any holder of shares of Company Common Stock, Company Stock Options, or Company RSUs such amounts as are required to be deducted and withheld under the Code or any provision of applicable state, local, or foreign Tax Law. To the extent that amounts are so deducted and withheld and remitted to the appropriate Governmental Authority, such amounts shall be treated for all purposes of this Agreement as having been paid to the Person in respect of which such deduction and withholding was made. Parent, Merger Sub, and the Surviving Corporation shall cooperate to minimize, to the extent permissible under applicable Law, any such withholding with respect to the Per Share Merger Consideration, including by providing reasonable advance notice to the Company or the affected holder prior to making any such deduction or withholding (other than withholding pursuant to the regular payroll practices of the Company or applicable Subsidiary with respect to Option Consideration or RSU Consideration).

Section 3.7 Lost, Stolen, or Destroyed Certificates. If any certificate representing shares of Company Common Stock shall have been lost, stolen, or destroyed, upon the making of an affidavit of that fact by the Person claiming such certificate to be lost, stolen, or destroyed and, if required by the Surviving Corporation or the Paying Agent, the posting by such Person of a bond in such reasonable amount as the Surviving Corporation or the Paying Agent may direct as indemnity against any claim that may be made against it with respect to such certificate, the Paying Agent shall deliver in exchange for such lost, stolen, or destroyed certificate the Per Share Merger Consideration to which the holder thereof is entitled pursuant to this Article III.

ARTICLE IV — REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Except as (a) set forth in the Company Disclosure Schedules (subject to Section 1.2(m)), or (b) disclosed in the Company SEC Documents filed with or furnished to the SEC on or after January 31, 2023 and at least two (2) Business Days prior to the date hereof (excluding any risk factor disclosures contained in any "Risk Factors" section, any forward-looking statement disclaimers, or other disclosures included therein to the extent that they are general, predictive, cautionary, or forward-looking in nature), the Company hereby represents and warrants to Parent and Merger Sub as follows:

Section 4.1 Organization, Standing, and Power. The Company is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware. The Company has all requisite corporate power and authority to own, lease, and operate its properties and assets and to carry on its business as presently conducted. The Company is duly qualified or licensed to do business and is in good standing (to the extent the concept of good standing is recognized) in each of the thirty-four (34) states in which it operates, including each jurisdiction in which it operates its one hundred eighty-seven (187) company-owned retail locations and twenty-two (22) outlet locations (two hundred nine (209) locations in total), except where the failure to be so qualified or licensed or in good standing would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect. The Company has made available to Parent true, correct, and complete copies of the Company's Certificate of Incorporation and Bylaws, each as amended to date and as currently in effect.

Section 4.2 Company Subsidiaries. Company Disclosure Schedule 4.2 sets forth a true, correct, and complete list of each Subsidiary of the Company, including each Subsidiary's name, jurisdiction of organization, type of entity, and ownership interest held by the Company (directly or indirectly). Each Subsidiary of the Company is duly organized, validly existing, and in good standing (to the extent the concept of good standing is recognized) under the laws of its jurisdiction of organization, has all requisite power and authority to own, lease, and operate its properties and assets and to carry on its business as presently conducted, and is duly qualified or licensed to do business and is in good standing in each jurisdiction in which the nature of its business or the character or location of the properties and assets owned, leased, or operated by it makes such qualification or licensing necessary, except where the failure to be so organized, existing, in good standing, qualified, or licensed would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect. All of the outstanding shares of capital stock of, or other equity interests in, each Subsidiary of the Company are owned, directly or indirectly, by the Company, free and clear of all Liens (other than Permitted Liens), and are duly authorized, validly issued, fully paid, and nonassessable.

Section 4.3 Capital Structure.

(a) The authorized capital stock of the Company consists of 200,000,000 shares of Company Common Stock, par value $0.01 per share, and 25,000,000 shares of preferred stock, par value $0.01 per share. As of the close of business on April 4, 2025 (the most recent practicable date prior to the date hereof): (i) 58,200,000 shares of Company Common Stock were issued and outstanding; (ii) no shares of preferred stock were issued or outstanding; (iii) 3,250,000 shares of Company Common Stock were reserved for issuance pursuant to outstanding Company Stock Options and Company RSUs granted under the Company's equity incentive plans; and (iv) 61,450,000 Fully Diluted Shares were outstanding on a fully diluted basis. All outstanding shares of Company Common Stock are duly authorized, validly issued, fully paid, and nonassessable and were not issued in violation of any preemptive or similar right.

(b) Except as set forth in Section 4.3(a), as of the date hereof, there are no issued, reserved for issuance, or outstanding (i) shares of capital stock or other voting securities or equity interests of the Company, (ii) securities of the Company convertible into or exchangeable for shares of capital stock or other voting securities or equity interests of the Company, (iii) warrants, calls, options, or other rights to acquire from the Company, or other obligations of the Company to issue, any capital stock, voting securities, equity interests, or securities convertible into or exchangeable for capital stock, voting securities, or equity interests of the Company, or (iv) restricted stock, restricted stock units, stock appreciation rights, phantom stock, profit participation, or other similar rights with respect to the Company.

(c) As of the date hereof, to the Knowledge of the Company, the following stockholders beneficially own the following shares of Company Common Stock:

(i) Stonebridge Asset Management LP: approximately 5,354,400 shares (approximately 9.2% of Outstanding Shares);

(ii) Everhart Capital Advisors LLC: approximately 3,957,600 shares (approximately 6.8% of Outstanding Shares); and

(iii) Galloway Pension Trust: approximately 2,386,200 shares (approximately 4.1% of Outstan

AGREEMENT AND PLAN OF MERGER
EXECUTION VERSION
by and among
HARROWGATE PRIVATE EQUITY FUND IV LP, a Delaware limited partnership ("Parent")
PINNACLE MERGER SUB, INC., a Delaware corporation and wholly owned subsidiary of Parent ("Merger Sub")
and
PENNFIELD HOLDINGS, INC., a Delaware corporation (the "Company")
Dated as of April 7, 2025
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement") is entered into as of April 7, 2025, by and among HARROWGATE PRIVATE EQUITY FUND IV LP, a Delaware limited partnership ("Parent"), PINNACLE MERGER SUB, INC., a Delaware corporation and a wholly owned subsidiary of Parent ("Merger Sub"), and PENNFIELD HOLDINGS, INC., a Delaware corporation (the "Company"). Parent, Merger Sub, and the Company are each sometimes referred to herein as a "Party" and collectively as the "Parties."
RECITALS
WHEREAS, Parent is a Delaware limited partnership with its principal office at 1200 Market Street, Suite 3100, Wilmington, Delaware 19801, managed by Harrowgate Capital Partners LLC, a Delaware limited liability company, through its general partner, Harrowgate Capital Partners IV GP LLC, a Delaware limited liability company ("HPE IV GP");
WHEREAS, Merger Sub is a Delaware corporation newly formed as a wholly owned subsidiary of Parent for the sole purpose of effecting the Merger (as defined below); Merger Sub was incorporated under the laws of the State of Delaware, with Jonah Whitfield as its sole incorporator; Merger Sub's Employer Identification Number is 93-4081562, and its registered office is located at 1200 Market Street, Suite 3100, Wilmington, Delaware 19801;
WHEREAS, the Company is a Delaware corporation, publicly traded on the Nasdaq Global Select Market under the ticker symbol "PNFD," with its principal executive offices located at 4500 Commerce Boulevard, Suite 800, Charlotte, North Carolina 28202; the Company's registered agent is Capitol Registered Agents, Inc., 850 New Burton Road, Suite 201, Dover, Delaware 19904; the Company's Employer Identification Number is 82-4917305; and the Company's CUSIP number is 708234109;
WHEREAS, the respective boards of directors of Parent (acting through the board of directors of HPE IV GP), Merger Sub, and the Company (acting upon the unanimous recommendation of a Special Committee of the Board of Directors of the Company (the "Special Committee") consisting of Gloria Vásquez (Chair), Martin Ashworth, and Diane Kauffman, each an independent, disinterested director of the   have approved this Agreement and the transactions contemplated hereby, including the Merger, upon the terms and subject to the conditions set forth herein, and the Board of Directors of the Company has resolved to recommend that the stockholders of the Company adopt this Agreement;
WHEREAS, the Parties intend that Merger Sub shall merge with and into the Company (the "Merger"), with the Company surviving the Merger as a wholly owned subsidiary of Parent, pursuant to the Delaware General Corporation Law, 8 Del. C. § 251 (the "DGCL");
WHEREAS, concurrently with the execution and delivery of this Agreement, and as a condition and inducement to the Company entering into this Agreement, Parent has delivered to the Company an Equity Commitment Letter dated March 27, 2025 (the "Equity Commitment Letter"), pursuant to which Parent has committed to contribute equity financing in the aggregate amount of Three Hundred Forty Million Dollars ($340,000,000) to fund the Merger Consideration and Transaction Expenses;
WHEREAS, concurrently with the execution and delivery of this Agreement, and as a condition and inducement to the Company entering into this Agreement, Parent has delivered to the Company a Limited Guarantee dated April 7, 2025 (the "Limited Guarantee"), executed by HPE IV GP on behalf of Parent, guaranteeing certain payment obligations of Merger Sub hereunder, including the obligation to pay the Reverse Termination Fee;
WHEREAS, concurrently with the execution and delivery of this Agreement, certain members of the Company's management team — Catherine Langford (Chief Executive Officer), Derek Simmons (Chief Financial Officer), and Maxwell Dunn (Chief Operating Officer) — have entered into a Voting and Support Agreement and a Rollover Agreement with Parent (collectively, the "Support Agreements"), providing for, among other things, the rollover of Twenty-One Million Five Hundred Thousand Dollars ($21,500,000) in aggregate equity value and voting commitments in favor of the Merger;
WHEREAS, Merger Sub and the Company intend that the Merger qualify as a merger governed by Section 251 of the DGCL;
WHEREAS, debt financing commitments have been obtained from Falconer National Bank, N.A. (as Lead Arranger and Administrative Agent) and Dunmore Capital Markets LLC (as Co-Arranger and Joint Bookrunner) pursuant to a Debt Commitment Letter dated March 24, 2025 (the "Debt Commitment Letter"), providing for a Four Hundred Ninety Million Dollar ($490,000,000) Senior Secured Term Loan B facility and a One Hundred Fifty Million Dollar ($150,000,000) Senior Secured Revolving Credit Facility (collectively, the "Debt Financing"); and
WHEREAS, a buyer-side representations and warranty insurance policy has been bound by Meridian Specialty Insurance Company, effective March 28, 2025, with a policy limit of One Hundred Million Dollars ($100,000,000) and a retention of Nine Million Eight Hundred Thousand Dollars ($9,800,000) (the "R&W Insurance Policy").
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, agree as follows:
ARTICLE I — DEFINITIONS
Section 1.1 Definitions. As used in this Agreement, the following terms shall have the meanings set forth below:
"Adverse Recommendation Change" means (a) any withdrawal, amendment, modification, or qualification by the Company Board (or the Special Committee) of the Company Board Recommendation in any manner adverse to Parent or Merger Sub, (b) any failure by the Company Board (or the Special Committee) to include the Company Board Recommendation in the Proxy Statement, (c) any approval, recommendation, or endorsement by the Company Board (or the Special Committee) of any Competing Proposal, (d) any failure by the Company Board (or the Special Committee) to publicly reaffirm the Company Board Recommendation within five (5) business days after Parent requests such reaffirmation following the public announcement of a Competing Proposal (provided that Parent may make such request only once with respect to each Competing Proposal or material amendment thereto), or (e) any resolution by the Company Board (or the Special Committee) to take any of the foregoing actions.
"Affiliate" means, with respect to any Person, any other Person that, directly or indirectly, controls, is controlled by, or is under common control with, such Person. For purposes of this definition, "control" (including, with correlative meanings, "controlled by" and "under common control with") means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract, or otherwise.
"Aggregate Merger Consideration" means Nine Hundred Eighty Million Dollars ($980,000,000), being the product of the Per Share Merger Consideration multiplied by the Fully Diluted Shares.
"Business Day" means any day other than a Saturday, Sunday, or day on which banks in New York, New York or Wilmington, Delaware are authorized or obligated by applicable Law to close.
"Certificate of Merger" means the certificate of merger to be filed with the Secretary of State of the State of Delaware in connection with the Merger in accordance with Section 251 of the DGCL.
"Change of Control" means the consummation of the Merger, which constitutes a "change of control" (or any similar term, howsoever defined) as defined under the Company's existing credit agreements, executive employment agreements, commercial lease agreements, and equity incentive plans, each as identified in Company Disclosure Schedule 4.5.
"Closing" means the consummation of the Merger and the other transactions contemplated by this Agreement.
"Closing Date" means the date on which the Closing occurs, which is estimated to be June 30, 2025, subject to the satisfaction or waiver of the conditions set forth in Article VII.
"Co-Investment Agreement" means the co-investment agreement dated March 27, 2025, by and between Parent and Ashford Growth Partners LP, pursuant to which Ashford Growth Partners LP has committed to contribute co-investment equity in the amount of Sixty Million Dollars ($60,000,000).
"Code" means the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder.
"Company" means Pennfield Holdings, Inc., a Delaware corporation.
"Company Board" means the Board of Directors of the Company.
"Company Board Recommendation" has the meaning set forth in Section 6.3(b).
"Company Common Stock" means shares of common stock, par value $0.01 per share, of the Company.
"Company Disclosure Schedules" means the disclosure schedules delivered by the Company to Parent and Merger Sub concurrently with the execution and delivery of this Agreement.
"Company Material Adverse Effect" means any event, condition, change, occurrence, development, circumstance, or effect that, individually or in the aggregate with other events, conditions, changes, occurrences, developments, circumstances, or effects, (a) is or would reasonably be expected to be materially adverse to the business, assets, properties, liabilities, condition (financial or otherwise), or results of operations of the Company and its Subsidiaries, taken as a whole, or (b) would prevent or materially delay the ability of the Company to consummate the Merger or the other transactions contemplated by this Agreement; provided, however, that in the case of clause (a), none of the following shall be deemed to constitute, and none of the following shall be taken into account in determining whether there has been or would reasonably be expected to be, a Company Material Adverse Effect:
(i) changes in general economic, business, financial, or market conditions (including changes in prevailing interest rates, credit availability, currency exchange rates, commodity prices, or conditions in the capital, credit, or financial markets generally);
(ii) changes in the industries in which the Company and its Subsidiaries operate, including changes in retail, consumer products, or e-commerce sectors;
(iii) changes in applicable Law or GAAP (or authoritative interpretation thereof);
(iv) changes resulting from acts of war, sabotage, terrorism, natural disasters,   or other force majeure events;
(v) changes resulting from the announcement, pendency, or consummation of the Merger or the other transactions contemplated hereby (including any impact on employees, customers, suppliers, distributors, or business partners resulting therefrom), except for purposes of the representations and warranties set forth in Section 4.4;
(vi) changes in the market price or trading volume of the Company Common Stock (provided that the underlying cause of such changes may be considered in determining whether a Company Material Adverse Effect has occurred, to the extent not otherwise excluded by this definition);
(vii) the failure of the Company to meet internal or published industry analyst projections, forecasts, or estimates of revenue, earnings, or other financial metrics for any period (provided that the underlying cause of such failure may be considered in determining whether a Company Material Adverse Effect has occurred, to the extent not otherwise excluded by this definition); or
(viii) any action taken (or omitted to be taken) by the Company at the written request or with the written consent of Parent;
provided, further, that in the case of clauses (i) through (iv) above, such events, conditions, changes, occurrences, developments, circumstances, or effects may be taken into account to the extent they have a disproportionate adverse impact on the Company and its Subsidiaries, taken as a whole, relative to other participants of similar size in the industries and geographies in which the Company and its Subsidiaries operate.
"Company RSUs" means outstanding restricted stock units of the Company granted under the Company's equity incentive plans.
"Company Stock Options" means outstanding options to purchase shares of Company Common Stock granted under the Company's equity incentive plans.
"Company Stockholder Approval" means the affirmative vote of the holders of a majority of the outstanding shares of Company Common Stock entitled to vote thereon at the Company Stockholder Meeting, in accordance with Section 251 of the DGCL, the Company's Certificate of Incorporation, and the Company's Bylaws.
"Company Stockholder Meeting" has the meaning set forth in Section 6.3(c).
"Competing Proposal" means any inquiry, proposal, or offer from any Person or group of Persons (other than Parent, Merger Sub, or any of their respective Affiliates) relating to, in a single transaction or a series of related transactions: (a) any merger, consolidation, business combination, recapitalization, liquidation, dissolution, or similar transaction involving the Company or any of its Subsidiaries whose assets, individually or in the aggregate, constitute twenty percent (20%) or more of the consolidated assets of the Company or whose revenues, individually or in the aggregate, constitute twenty percent (20%) or more of the consolidated revenues of the Company; (b) any direct or indirect acquisition (including by way of any tender offer, exchange offer, or otherwise) of twenty percent (20%) or more of the consolidated assets of the Company and its Subsidiaries; (c) any direct or indirect acquisition (including by way of any tender offer, exchange offer, or otherwise) of twenty percent (20%) or more of the outstanding shares of Company Common Stock or other voting securities of the Company; or (d) any other transaction the consummation of which would reasonably be expected to prevent, impede, or materially delay the consummation of the Merger.
"Confidentiality Agreement" means the Mutual Confidentiality Agreement, dated January 15, 2025, by and between Harrowgate Capital Partners LLC and the Company, as amended or supplemented from time to time.
"Consent" means any consent, approval, authorization, clearance, license, permit, grant, franchise, concession, waiver, exemption, or order of, or notice to, or filing, registration, or qualification with, any Governmental Authority or any other Person.
"Contract" means any legally binding contract, agreement, instrument, commitment, indenture, mortgage, deed of trust, lease, sublease, note, license, sublicense, purchase order, or other arrangement, whether written or oral.
"Debt Commitment Letter" means the debt commitment letter dated March 24, 2025, issued by Falconer National Bank, N.A. (as Lead Arranger and Administrative Agent) and Dunmore Capital Markets LLC (as Co-Arranger and Joint Bookrunner), as the same may be amended, supplemented, or modified from time to time in accordance with the terms of this Agreement.
"Debt Financing" means the debt financing contemplated by the Debt Commitment Letter, consisting of the Senior Secured Term Loan B in an aggregate principal amount of Four Hundred Ninety Million Dollars ($490,000,000) and the Senior Secured Revolving Credit Facility in an aggregate principal amount of One Hundred Fifty Million Dollars ($150,000,000).
"Debt Financing Sources" means the Persons that have committed to provide or arrange, or have otherwise entered into agreements in connection with, the Debt Financing, including Falconer National Bank, N.A. and Dunmore Capital Markets LLC, and any joinder parties, agents, arrangers, lenders, and other entities that have committed to provide or otherwise entered into agreements in connection with all or any part of the Debt Financing, together with their respective Affiliates and their and their respective Affiliates' officers, directors, employees, agents, advisors, and representatives.
"DGCL" means the Delaware General Corporation Law, Title 8 of the Delaware Code, as amended from time to time.
"Dissenting Shares" has the meaning set forth in Section 3.5.
"Effective Time" means the time at which the Certificate of Merger is duly filed with the Secretary of State of the State of Delaware in accordance with the DGCL, or such later time as the Parties may agree and specify in the Certificate of Merger.
"Equity Commitment Letter" means the equity commitment letter dated March 27, 2025, from Parent, committing to contribute equity financing in the aggregate amount of Three Hundred Forty Million Dollars ($340,000,000), as the same may be amended, supplemented, or modified from time to time in accordance with the terms of this Agreement.
"Equity Financing" means the equity contributions contemplated by the Equity Commitment Letter and the Co-Investment Agreement.
"Escrow Agent" means Grandview Trust Company, N.A.
"Escrow Agreement" means the Escrow Agreement dated as of April 7, 2025, by and among the Company, Parent, and the Escrow Agent.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
"Exchange Fund" has the meaning set forth in Section 3.4(b).
"Excluded Shares" means any shares of Company Common Stock held in the treasury of the Company or owned by Parent, Merger Sub, or any wholly owned Subsidiary of the Company immediately prior to the Effective Time.
"Financing" means the Debt Financing and the Equity Financing, collectively.
"Financing Failure" means the failure of the full proceeds of the Financing (or any alternative financing) to be funded at or prior to the time required for the consummation of the Merger, to the extent such failure is not primarily caused by a breach by the Company of its obligations under this Agreement.
"Fraud" means actual and intentional common law fraud (as opposed to constructive fraud, negligent misrepresentation, or any fraud theory based on recklessness or negligence) committed by a Party in the making of any representation or warranty set forth in this Agreement, with actual knowledge that such representation or warranty is inaccurate, with the specific intent to deceive the other Parties, and upon which the other Parties have actually and justifiably relied, to their detriment.
"Fully Diluted Shares" means 61,450,000 shares, consisting of 58,200,000 shares of Company Common Stock outstanding as of the date hereof and 3,250,000 shares of Company Common Stock issuable upon exercise or settlement of outstanding Company Stock Options and Company RSUs.
"Fundamental Representations" means the representations and warranties set forth in Section 4.1 (Organization, Standing, and Power), Section 4.3 (Capital Structure), Section 4.4(a) (Authority), Section 4.17 (Brokers and Finders), Section 5.1 (Organization, Standing, and Power), Section 5.2 (Authority; No Conflict), and Section 5.9 (Brokers).
"GAAP" means United States generally accepted accounting principles, consistently applied.
"Governmental Authority" means any federal, state, provincial, local, municipal, foreign, or supranational government, any court of competent jurisdiction, administrative agency, commission, tribunal, or other governmental, quasi-governmental, or regulatory authority or body, including the SEC, the Nasdaq Stock Market LLC, the Federal Trade Commission, and the Antitrust Division of the United States Department of Justice.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.
"Indemnification Cap" means   of the Aggregate Merger Consideration.
"Knowledge" means (a) with respect to the Company, the actual knowledge, after reasonable inquiry, of Catherine Langford, Derek Simmons, Maxwell Dunn, Patricia Okafor, and Thomas Renwick, and (b) with respect to Parent or Merger Sub, the actual knowledge, after reasonable inquiry, of Nathaniel Cross, Rebecca Talmadge, and Jonah Whitfield.
"Law" means any federal, state, provincial, local, municipal, foreign, or supranational statute, law, ordinance, regulation, rule, code, order, judgment, decree, directive, or other requirement enacted, promulgated, issued, enforced, or entered by a Governmental Authority.
"Lien" means any lien, pledge, hypothecation, charge, mortgage, deed of trust, security interest, encumbrance, restriction on transfer, claim, option, preemptive right, right of first refusal, right of first offer, community property interest, equitable interest, conditional sale or other title retention agreement, or other similar restriction or limitation.
"Limited Guarantee" means the Limited Guarantee dated April 7, 2025, executed by HPE IV GP on behalf of Parent in favor of the Company.
"Losses" means all losses, damages, liabilities, deficiencies, claims, demands, judgments, interest, awards, penalties, fines, assessments, costs, and expenses (including reasonable and documented out-of-pocket attorneys' fees and other expenses of investigation and litigation), but excluding punitive damages (except to the extent payable to a third party in connection with a Third-Party Claim), consequential damages (except to the extent reasonably foreseeable), and lost profits (except to the extent constituting direct damages).
"Marketing Period" means the first period of fifteen (15) consecutive Business Days after the date upon which the Company shall have delivered to Parent and the Debt Financing Sources the Required Financial Information, throughout which (a) the conditions set forth in Sections 7.1 and 7.2 (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of those conditions at the Closing) shall be satisfied, (b) the Company shall not have publicly announced any intention to restate any material financial statements included in the Required Financial Information, and (c) the Required Financial Information shall remain compliant in all material respects with the requirements of the Debt Commitment Letter; provided that such Marketing Period shall not include any day falling during the period from November 24 through December 1 of any calendar year, or any day on which the financial markets in New York are closed (other than by reason of a weekend); provided, further, that if the Marketing Period has not ended on or prior to the Outside Date, the Outside Date shall be automatically extended by the number of Business Days necessary to permit the Marketing Period to be completed, but in no event shall such extension exceed thirty (30) calendar days.
"Material Adverse Effect" means a Company Material Adverse Effect or a Parent Material Adverse Effect, as the context requires.
"Merger" means the merger of Merger Sub with and into the Company, with the Company surviving as the Surviving Corporation, pursuant to Section 251 of the DGCL.
"Merger Consideration" or "Per Share Merger Consideration" means Fifteen Dollars and Ninety-Five Cents ($15.95) per share of Company Common Stock, payable in cash, without interest.
"Merger Sub" means Pinnacle Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Parent.
"No-Shop Period Start Date" means April 7, 2025, being the date of execution and delivery of this Agreement.
"Order" means any order, writ, decree, ruling, injunction, judgment, award, assessment, settlement, stay, or stipulation issued, entered, or granted by any Governmental Authority or arbitrator.
"Outside Date" means September 30, 2025, subject to extension as provided in the definition of "Marketing Period."
"Outstanding Shares" means 58,200,000 shares of Company Common Stock issued and outstanding as of the date hereof.
"Parent" means Harrowgate Private Equity Fund IV LP, a Delaware limited partnership.
"Parent Disclosure Schedules" means the disclosure schedules delivered by Parent and Merger Sub to the Company concurrently with the execution and delivery of this Agreement.
"Parent Material Adverse Effect" means any event, condition, change, occurrence, development, circumstance, or effect that, individually or in the aggregate, would prevent or materially delay the ability of Parent or Merger Sub to consummate the Merger or the other transactions contemplated by this Agreement or to perform their respective obligations hereunder.
"Paying Agent" means Marlowe Asset Management Stock Transfer, Inc.
"Per Share Merger Consideration" means Fifteen Dollars and Ninety-Five Cents ($15.95) in cash, without interest, subject to applicable withholding.
"Permitted Liens" means (a) Liens for Taxes not yet due and payable or being contested in good faith by appropriate proceedings; (b) statutory workers' compensation, unemployment insurance, or similar Liens; (c) mechanics', carriers', workmen's, repairmen's, or other like Liens arising in the ordinary course of business; (d) zoning, entitlement, building, and other land use regulations imposed by any Governmental Authority; and (e) other Liens or imperfections on title that are not, individually or in the aggregate, material.
"Person" means any individual, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization, Governmental Authority, or other entity.
"Proxy Statement" means the definitive proxy statement to be filed by the Company with the SEC on Schedule 14A in connection with the Company Stockholder Meeting, together with any amendments or supplements thereto.
"R&W Insurance Policy" means the buyer-side representations and warranty insurance policy issued by Meridian Specialty Insurance Company, effective March 28, 2025, with a policy limit of One Hundred Million Dollars ($100,000,000) and a retention of Nine Million Eight Hundred Thousand Dollars ($9,800,000).
"Representatives" means, with respect to any Person, such Person's directors, officers, employees, partners, members, managers, agents, advisors (including investment bankers, financial advisors, attorneys, and accountants), and representatives.
"Required Financial Information" means the audited and unaudited financial statements and other financial information regarding the Company and its Subsidiaries of the type required by Regulation S-X and Regulation S-K under the Securities Act to be included in a registration statement on Form S-1, and of the type and form customarily included in offering documents used to syndicate term loan B facilities of the type contemplated by the Debt Commitment Letter, in each case to the extent necessary for the Debt Financing Sources to consummate the syndication of the Debt Financing.
"Reverse Termination Fee" means Fifty-Eight Million Eight Hundred Thousand Dollars ($58,800,000), being six percent (6.0%) of the Aggregate Merger Consideration.
"Rollover Agreement" means the Rollover Agreement dated as of April 7, 2025, by and among Parent, Catherine Langford, Derek Simmons, and Maxwell Dunn.
"Rollover Shares" means the shares of Company Common Stock subject to the Rollover Agreement, having an aggregate value of Twenty-One Million Five Hundred Thousand Dollars ($21,500,000) (valued at the Per Share Merger Consideration).
"SEC" means the United States Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
"Special Committee" means the Special Committee of the Company Board, consisting of Gloria Vásquez (Chair), Martin Ashworth, and Diane Kauffman.
"Special Committee Financial Advisor" means Whitmore Zanthor & Co.
"Subsidiary" means, with respect to any Person, any corporation, limited liability company, partnership, association, joint venture, or other entity of which such Person (either alone or together with any other Subsidiary of such Person) owns, directly or indirectly, more than fifty percent (50%) of the stock or other equity interests, the holders of which are generally entitled to vote for the election of the board of directors or other governing body of such entity.
"Superior Proposal" means a bona fide, unsolicited, written Competing Proposal (with the references in the definition of "Competing Proposal" to "twenty percent (20%)" being deemed to be references to "fifty percent (50%)" for purposes of this definition) that the Company Board (upon the recommendation of the Special Committee) determines in good faith, after consultation with the Special Committee Financial Advisor and the Company's outside legal counsel, taking into account all financial, legal, regulatory, and other aspects of such proposal that the Special Committee deems relevant (including the identity of the Person making such proposal, the conditionality, timing, and likelihood of consummation of such proposal, and any revised terms proposed by Parent), would, if consummated, result in a transaction more favorable to the holders of Company Common Stock (other than holders of Excluded Shares and Rollover Shares) than the Merger (including any changes to the terms of this Agreement proposed by Parent in response thereto).
"Surviving Corporation" means the Company, as the surviving corporation in the Merger.
"Tax" or "Taxes" means all federal, state, provincial, local, foreign, and other income, gross receipts, profits, franchise, capital stock, net worth, sales, use, value added, ad valorem, personal and real property, transfer, stamp, excise, customs, duties, payroll, employment, social security, unemployment, disability, withholding, estimated, environmental, and all other taxes, assessments, charges, duties, fees, levies, or similar governmental charges of any kind, together with all interest, penalties, and additions to tax imposed with respect thereto.
"Tax Return" means all returns, declarations, reports, forms, claims for refund, estimates, information returns, and statements relating to Taxes required to be filed with any Governmental Authority, including any schedule or attachment thereto and any amendment thereof.
"Termination Fee" means Thirty-Four Million Three Hundred Thousand Dollars ($34,300,000), being three and one-half percent (3.5%) of the Aggregate Merger Consideration.
"Third-Party Claim" has the meaning set forth in Section 9.5.
"Transaction Expenses" means all fees, costs, and expenses incurred or payable by the Company, Parent, Merger Sub, or their respective Affiliates in connection with the negotiation, execution, and performance of this Agreement and the consummation of the transactions contemplated hereby, including all fees and expenses of legal counsel, financial advisors, accountants, proxy solicitors, public relations consultants, filing fees, printing costs, and any other costs incidental thereto, estimated in the aggregate at approximately Sixty Million Dollars ($60,000,000).
"Voting and Support Agreement" means the Voting and Support Agreement dated as of April 7, 2025, by and among Parent and each of Catherine Langford, Derek Simmons, and Maxwell Dunn.
"Willful Breach" means a material breach that is a consequence of an act knowingly undertaken (or an omission knowingly made) by the breaching Party with actual knowledge that the taking of such act (or the failure to act) would, or would reasonably be expected to, constitute or result in a breach of this Agreement.
Section 1.2 Interpretation. Unless the context otherwise requires:
(a) The words "herein," "hereof," "hereto," "hereunder," and words of similar import refer to this Agreement in its entirety and not to any particular Article, Section, paragraph, or clause hereof.
(b) References to an "Article," "Section," "Exhibit," "Annex," or "Schedule" mean an Article of, a Section of, an Exhibit to, an Annex to, or a Schedule to this Agreement, as applicable.
(c) The terms "include," "includes," and "including" are not limiting and shall be deemed to be followed by the phrase "without limitation."
(d) The word "or" is not exclusive.
(e) References to any statute, rule, or regulation include any amendment, modification, supplement, or replacement thereof and all rules, regulations, and statutory instruments promulgated thereunder or pursuant thereto (unless otherwise expressly stated herein).
(f) References to any Contract (including this Agreement) mean such Contract as amended, supplemented, or otherwise modified from time to time in accordance with the terms thereof, except as otherwise expressly stated herein.
(g) References to a "Person" include such Person's successors and permitted assigns.
(h) References to "dollars" or "$" refer to the lawful currency of the United States of America.
(i) The headings and captions in this Agreement are for convenience of reference only, do not constitute a part of this Agreement, and shall not be deemed to limit, characterize, or in any way affect any provision of this Agreement.
(j) All references to "days" mean calendar days unless expressly stated to be "Business Days."
(k) Words in the singular shall include the plural, and vice versa, and words denoting any gender shall include all genders.
(l) The Parties have participated jointly in the negotiation and drafting of this Agreement, and no rule of construction based on the identity of the drafter shall apply to the interpretation of this Agreement or any provision hereof.
(m) The Company Disclosure Schedules and the Parent Disclosure Schedules, as well as all Exhibits and Annexes attached hereto, are hereby incorporated into and made a part of this Agreement. Any information disclosed in any section or subsection of the Company Disclosure Schedules or the Parent Disclosure Schedules shall be deemed to be disclosed with respect to, and shall be deemed to qualify, all other sections or subsections of this Agreement to the extent that it is reasonably apparent on the face of such disclosure that such information is relevant to such other sections or subsections.
ARTICLE II — THE MERGER
Section 2.1 The Merger. At the Effective Time, and upon the terms and subject to the conditions set forth in this Agreement, and in accordance with the applicable provisions of the DGCL, Merger Sub shall be merged with and into the Company. As a result of the Merger, the separate corporate existence of Merger Sub shall cease at the Effective Time, and the Company shall continue as the Surviving Corporation and shall be a wholly owned subsidiary of Parent. The Merger shall have the effects set forth in this Agreement and in the applicable provisions of the DGCL, including Section 259 of the DGCL.
Section 2.2 Closing. Unless this Agreement has been theretofore terminated in accordance with Article VIII, the Closing shall take place at 10:00 a.m., Eastern Time, on the third (3rd) Business Day following the satisfaction or waiver (to the extent permitted hereunder) of the conditions set forth in Article VII (other than conditions that by their nature are to be satisfied at the Closing, each of which shall be subject to satisfaction or waiver at the Closing), or at such other place, date, and time as Parent and the Company may mutually agree in writing. The estimated Closing Date is June 30, 2025. The Closing shall occur remotely via the electronic exchange of documents and signatures through email or other mutually agreed electronic transmission unless the Parties otherwise agree in writing to hold the Closing at a physical location.
Section 2.3 Effective Time. On the Closing Date, and subject to the terms and conditions of this Agreement, the Parties shall cause the Certificate of Merger to be duly executed, acknowledged, and filed with the Secretary of State of the State of Delaware in accordance with Section 251 of the DGCL. The Merger shall become effective at such time as the Certificate of Merger is duly filed with the Secretary of State of the State of Delaware, or at such later time as Parent and the Company shall agree and specify in the Certificate of Merger, and such time is hereinafter referred to as the "Effective Time."
Section 2.4 Effects of the Merger. The effects of the Merger shall be as provided in this Agreement and in the applicable provisions of the DGCL, including Section 259 of the DGCL. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time:
(a) All of the property, rights, privileges, powers, and franchises of the Company and Merger Sub shall vest in the Surviving Corporation without further act or deed, and all of the debts, liabilities, obligations, restrictions, disabilities, and duties of each of the Company and Merger Sub shall become the debts, liabilities, obligations, restrictions, disabilities, and duties of the Surviving Corporation.
(b) The Surviving Corporation shall thenceforth be responsible and liable for all of the liabilities and obligations of each of the Company and Merger Sub, and any claim existing or action or proceeding pending by or against either the Company or Merger Sub may be prosecuted as if the Merger had not taken place, or the Surviving Corporation may be substituted in such claim, action, or proceeding.
(c) Neither the rights of creditors nor any Liens upon the property of the Company or Merger Sub shall be impaired by the Merger.
Section 2.5 Certificate of Incorporation of the Surviving Corporation. At the Effective Time, the certificate of incorporation of the Surviving Corporation shall be amended and restated in its entirety to be in the form attached hereto as Exhibit A, which shall be identical to the certificate of incorporation of Merger Sub as in effect immediately prior to the Effective Time, except that the name of the Surviving Corporation shall be "Pennfield Holdings, Inc." Such amended and restated certificate of incorporation shall be the certificate of incorporation of the Surviving Corporation until thereafter amended in accordance with the DGCL and such certificate of incorporation; provided that the provisions of Section 6.9 shall be given effect.
Section 2.6 Bylaws of the Surviving Corporation. At the Effective Time, the bylaws of the Surviving Corporation shall be amended and restated in their entirety to be in the form attached hereto as Exhibit B, which shall be identical to the bylaws of Merger Sub as in effect immediately prior to the Effective Time, except that the name of the Surviving Corporation shall be "Pennfield Holdings, Inc." Such amended and restated bylaws shall be the bylaws of the Surviving Corporation until thereafter amended in accordance with the DGCL, the certificate of incorporation of the Surviving Corporation, and such bylaws; provided that the provisions of Section 6.9 shall be given effect.
Section 2.7 Directors and Officers of the Surviving Corporation.
(a) Directors. The directors of the Surviving Corporation as of the Effective Time shall be Rebecca Talmadge and Jonah Whitfield, each of whom shall be a designee of Parent, and each of whom shall hold office until his or her respective successor is duly elected or appointed and qualified, or until his or her earlier death, resignation, or removal, in accordance with the certificate of incorporation and bylaws of the Surviving Corporation.
(b) Officers. The officers of the Surviving Corporation as of the Effective Time shall be the officers of the Company immediately prior to the Effective Time, as follows: Catherine Langford, Chief Executive Officer; Derek Simmons, Chief Financial Officer; Maxwell Dunn, Chief Operating Officer; and Patricia Okafor, General Counsel and Corporate Secretary. Each such officer shall hold office  
ARTICLE III — EFFECT OF THE MERGER ON CAPITAL STOCK; EXCHANGE OF CERTIFICATES
Section 3.1 Effect on Capital Stock. At the Effective Time, by virtue of the Merger and without any action on the part of Parent, Merger Sub, the Company, or the holders of any of the following securities:
(a) Company Common Stock. Each share of Company Common Stock issued and outstanding immediately prior to the Effective Time (other than Excluded Shares, Dissenting Shares, and Rollover Shares) shall be automatically converted into the right to receive Fifteen Dollars and Ninety-Five Cents ($15.95) in cash, without interest (the "Per Share Merger Consideration"). At the Effective Time, all such shares of Company Common Stock shall no longer be outstanding, shall be automatically cancelled and shall cease to exist, and each certificate (or book-entry share) formerly representing any such share shall thereafter represent only the right to receive the Per Share Merger Consideration, without interest, upon surrender of such certificate (or book-entry share) in accordance with Section 3.4. The Aggregate Merger Consideration for all Fully Diluted Shares is Nine Hundred Eighty Million Dollars ($980,000,000), based on 61,450,000 Fully Diluted Shares (consisting of 58,200,000 Outstanding Shares and 3,250,000 shares issuable upon exercise or settlement of outstanding Company Stock Options and Company RSUs).
(b) Rollover Shares. Each Rollover Share shall be treated in accordance with the terms and conditions of the Rollover Agreement. Such Rollover Shares shall not be entitled to receive the Per Share Merger Consideration but shall instead be converted, at the Effective Time, into equity interests in the Surviving Corporation or a parent entity thereof as provided in the Rollover Agreement. The Rollover Shares have an aggregate value of Twenty-One Million Five Hundred Thousand Dollars ($21,500,000), calculated at the Per Share Merger Consideration, and are allocated among the rollover participants as provided in the Rollover Agreement attached hereto as Exhibit D.
(c) Excluded Shares. Each share of Company Common Stock held in the treasury of the Company or owned by Parent, Merger Sub, or any wholly owned Subsidiary of the Company immediately prior to the Effective Time shall be automatically cancelled and shall cease to exist, and no consideration shall be delivered in exchange therefor.
(d) Merger Sub Stock. Each share of common stock of Merger Sub issued and outstanding immediately prior to the Effective Time shall be converted into one (1) validly issued, fully paid, and nonassessable share of common stock of the Surviving Corporation. From and after the Effective Time, all certificates (if any) representing the common stock of Merger Sub shall be deemed to represent shares of common stock of the Surviving Corporation.
Section 3.2 Treatment of Company Stock Options. At the Effective Time, each Company Stock Option that is outstanding and unexercised immediately prior to the Effective Time, whether vested or unvested, shall be automatically cancelled and converted into the right to receive a lump-sum cash payment (without interest) from the Surviving Corporation (or its designee) equal to the product of (a) the excess, if any, of the Per Share Merger Consideration over the exercise price per share of Company Common Stock subject to such Company Stock Option, multiplied by (b) the total number of shares of Company Common Stock subject to such Company Stock Option (such product, the "Option Consideration"), less applicable withholding Taxes required to be deducted and withheld therefrom pursuant to Section 3.6. Each Company Stock Option with an exercise price per share equal to or greater than the Per Share Merger Consideration of $15.95 shall be cancelled at the Effective Time without any consideration being payable therefor. The Surviving Corporation (or its designee) shall pay the Option Consideration to the former holders of cancelled Company Stock Options as soon as reasonably practicable following the Effective Time (and in any event within ten (10) Business Days following the Closing Date), subject to the receipt of any required documentation, through the Company's regular payroll system or such other method as the Surviving Corporation shall determine.
Section 3.3 Treatment of Company RSUs. At the Effective Time, each Company RSU that is outstanding immediately prior to the Effective Time, whether vested or unvested, shall be automatically cancelled and converted into the right to receive a lump-sum cash payment (without interest) from the Surviving Corporation (or its designee) equal to the product of (a) the Per Share Merger Consideration of $15.95, multiplied by (b) the total number of shares of Company Common Stock underlying such Company RSU (such product, the "RSU Consideration"), less applicable withholding Taxes required to be deducted and withheld therefrom pursuant to Section 3.6. The Surviving Corporation (or its designee) shall pay the RSU Consideration to the former holders of cancelled Company RSUs as soon as reasonably practicable following the Effective Time (and in any event within ten (10) Business Days following the Closing Date), subject to the receipt of any required documentation, through the Company's regular payroll system or such other method as the Surviving Corporation shall determine. For the avoidance of doubt, the aggregate number of shares of Company Common Stock subject to outstanding Company Stock Options and Company RSUs as of the date hereof is 3,250,000, representing the difference between 61,450,000 Fully Diluted Shares and 58,200,000 Outstanding Shares.
Section 3.4 Exchange Procedures.
(a) Paying Agent. Prior to the Effective Time, Parent shall appoint Marlowe Asset Management Stock Transfer, Inc. (contact: Daniel Roth, Vice President, Corporate Actions; 44 Wall Street, 6th Floor, New York, New York 10005) as the paying agent for the payment of the Per Share Merger Consideration (the "Paying Agent"). The Paying Agent shall act under an agreement that shall be in form and substance reasonably satisfactory to Parent and the Company.
(b) Exchange Fund. At or prior to the Effective Time, Parent shall deposit, or cause to be deposited, with the Paying Agent, for the benefit of the holders of shares of Company Common Stock entitled to receive the Per Share Merger Consideration, cash in immediately available funds in an aggregate amount sufficient to pay the Per Share Merger Consideration to all such holders (such amount, as may be increased or reduced from time to time in accordance with this Section 3.4, being referred to as the "Exchange Fund"). The Exchange Fund shall not be used for any purpose other than as expressly contemplated by this Agreement.
(c) Letter of Transmittal. As promptly as reasonably practicable following the Effective Time (and in any event within five (5) Business Days after the Effective Time), the Paying Agent shall mail or otherwise deliver to each record holder of shares of Company Common Stock that were converted into the right to receive the Per Share Merger Consideration pursuant to Section 3.1(a) a letter of transmittal (in customary form and containing such provisions as the Company and Parent shall reasonably agree upon, including provisions regarding the delivery of an "agent's message" with respect to book-entry shares) and instructions for surrendering certificates (or book-entry shares) in exchange for the Per Share Merger Consideration. The form of letter of transmittal is attached hereto as Exhibit K.
(d) Payments. Upon (i) surrender to the Paying Agent of a certificate (or book-entry share) representing shares of Company Common Stock for cancellation, together with a duly completed and validly executed letter of transmittal and such other documents as may be reasonably required by the Paying Agent, or (ii) receipt of an "agent's message" by the Paying Agent (or such other evidence of transfer as the Paying Agent may reasonably request) in the case of book-entry shares, the holder of such certificate (or book-entry share) shall be entitled to receive in exchange therefor the Per Share Merger Consideration of $15.95 per share for each share of Company Common Stock formerly represented by such certificate (or book-entry share), and the certificate (or book-entry share) so surrendered shall forthwith be cancelled. Until surrendered as contemplated by this Section 3.4, each certificate (or book-entry share) shall be deemed, from and after the Effective Time, to represent only the right to receive the Per Share Merger Consideration, without interest.
(e) No Interest. No interest shall accrue or be payable on any amounts payable upon due surrender of certificates (or book-entry shares) pursuant to this Section 3.4.
(f) Transfers of Ownership. If the Per Share Merger Consideration is to be paid to a Person other than the Person in whose name the surrendered certificate is registered, it shall be a condition of payment that the certificate so surrendered shall be properly endorsed or otherwise in proper form for transfer, that the signatures shall be properly guaranteed, and that the Person requesting such payment shall have paid any transfer and other Taxes required by reason of such payment being made to a Person other than the registered holder of the certificate surrendered, or such Person shall have established to the reasonable satisfaction of the Paying Agent that such Tax either has been paid or is not applicable.
(g) Unclaimed Funds. Any portion of the Exchange Fund that remains undistributed to the holders of shares of Company Common Stock twelve (12) months after the Effective Time shall be delivered to the Surviving Corporation, upon demand, and any holder of shares of Company Common Stock who has not theretofore surrendered certificates (or book-entry shares) shall thereafter look only to the Surviving Corporation (subject to abandoned property, escheat, or other similar Laws) for payment of the Per Share Merger Consideration to which such holder is entitled. Any amounts remaining unclaimed by holders of shares of Company Common Stock immediately prior to such time as such amounts would otherwise escheat to or become the property of any Governmental Authority shall, to the extent permitted by applicable Law, become the property of the Surviving Corporation, free and clear of all claims or interest of any Person previously entitled thereto.
Section 3.5 Dissenting Shares. Notwithstanding anything in this Agreement to the contrary, shares of Company Common Stock that are issued and outstanding immediately prior to the Effective Time and that are held by stockholders of the Company who have not voted in favor of the Merger (or consented thereto in writing) and who have properly demanded appraisal of their shares in accordance with Section 262 of the DGCL ("Dissenting Shares") shall not be converted into or represent the right to receive the Per Share Merger Consideration, but shall instead be entitled only to such rights as are granted by Section 262 of the DGCL; provided, however, that if, after the Effective Time, any such holder of Dissenting Shares shall fail to perfect, shall effectively withdraw, or shall otherwise lose the right to appraisal under Section 262 of the DGCL, then each such share of Company Common Stock shall thereupon be deemed to have been converted, at the Effective Time, into the right to receive the Per Share Merger Consideration, without interest thereon, upon surrender of the certificate (or book-entry share) representing such share in the manner provided in Section 3.4. The Company shall give Parent prompt notice of any demands for appraisal received by the Company, any withdrawals of such demands, and any other instruments or communications received by the Company with respect to any exercise of appraisal rights under Section 262 of the DGCL, and Parent shall have the right to direct all negotiations and proceedings with respect to such demands, subject to the prior written consent of the Company (such consent not to be unreasonably withheld, conditioned, or delayed). The Company shall not, except with the prior written consent of Parent (such consent not to be unreasonably withheld, conditioned, or delayed), voluntarily make any payment with respect to any demands for appraisal, offer to settle any such demands, or waive any failure to timely deliver a written demand for appraisal or otherwise comply with the provisions of Section 262 of the DGCL. 
Section 3.6 Withholding Rights. Parent, Merger Sub, the Surviving Corporation, and the Paying Agent (and their respective agents) shall each be entitled to deduct and withhold from any amounts otherwise payable pursuant to this Agreement to any holder of shares of Company Common Stock, Company Stock Options, or Company RSUs such amounts as are required to be deducted and withheld under the Code or any provision of applicable state, local, or foreign Tax Law. To the extent that amounts are so deducted and withheld and remitted to the appropriate Governmental Authority, such amounts shall be treated for all purposes of this Agreement as having been paid to the Person in respect of which such deduction and withholding was made. Parent, Merger Sub, and the Surviving Corporation shall cooperate to minimize, to the extent permissible under applicable Law, any such withholding with respect to the Per Share Merger Consideration, including by providing reasonable advance notice to the Company or the affected holder prior to making any such deduction or withholding (other than withholding pursuant to the regular payroll practices of the Company or applicable Subsidiary with respect to Option Consideration or RSU Consideration).
Section 3.7 Lost, Stolen, or Destroyed Certificates. If any certificate representing shares of Company Common Stock shall have been lost, stolen, or destroyed, upon the making of an affidavit of that fact by the Person claiming such certificate to be lost, stolen, or destroyed and, if required by the Surviving Corporation or the Paying Agent, the posting by such Person of a bond in such reasonable amount as the Surviving Corporation or the Paying Agent may direct as indemnity against any claim that may be made against it with respect to such certificate, the Paying Agent shall deliver in exchange for such lost, stolen, or destroyed certificate the Per Share Merger Consideration to which the holder thereof is entitled pursuant to this Article III.
ARTICLE IV — REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as (a) set forth in the Company Disclosure Schedules (subject to Section 1.2(m)), or (b) disclosed in the Company SEC Documents filed with or furnished to the SEC on or after January 31, 2023 and at least two (2) Business Days prior to the date hereof (excluding any risk factor disclosures contained in any "Risk Factors" section, any forward-looking statement disclaimers, or other disclosures included therein to the extent that they are general, predictive, cautionary, or forward-looking in nature), the Company hereby represents and warrants to Parent and Merger Sub as follows:
Section 4.1 Organization, Standing, and Power. The Company is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware. The Company has all requisite corporate power and authority to own, lease, and operate its properties and assets and to carry on its business as presently conducted. The Company is duly qualified or licensed to do business and is in good standing (to the extent the concept of good standing is recognized) in each of the thirty-four (34) states in which it operates, including each jurisdiction in which it operates its one hundred eighty-seven (187) company-owned retail locations and twenty-two (22) outlet locations (two hundred nine (209) locations in total), except where the failure to be so qualified or licensed or in good standing would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect. The Company has made available to Parent true, correct, and complete copies of the Company's Certificate of Incorporation and Bylaws, each as amended to date and as currently in effect.
Section 4.2 Company Subsidiaries. Company Disclosure Schedule 4.2 sets forth a true, correct, and complete list of each Subsidiary of the Company, including each Subsidiary's name, jurisdiction of organization, type of entity, and ownership interest held by the Company (directly or indirectly). Each Subsidiary of the Company is duly organized, validly existing, and in good standing (to the extent the concept of good standing is recognized) under the laws of its jurisdiction of organization, has all requisite power and authority to own, lease, and operate its properties and assets and to carry on its business as presently conducted, and is duly qualified or licensed to do business and is in good standing in each jurisdiction in which the nature of its business or the character or location of the properties and assets owned, leased, or operated by it makes such qualification or licensing necessary, except where the failure to be so organized, existing, in good standing, qualified, or licensed would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect. All of the outstanding shares of capital stock of, or other equity interests in, each Subsidiary of the Company are owned, directly or indirectly, by the Company, free and clear of all Liens (other than Permitted Liens), and are duly authorized, validly issued, fully paid, and nonassessable.
Section 4.3 Capital Structure.
(a) The authorized capital stock of the Company consists of 200,000,000 shares of Company Common Stock, par value $0.01 per share, and 25,000,000 shares of preferred stock, par value $0.01 per share. As of the close of business on April 4, 2025 (the most recent practicable date prior to the date hereof): (i) 58,200,000 shares of Company Common Stock were issued and outstanding; (ii) no shares of preferred stock were issued or outstanding; (iii) 3,250,000 shares of Company Common Stock were reserved for issuance pursuant to outstanding Company Stock Options and Company RSUs granted under the Company's equity incentive plans; and (iv) 61,450,000 Fully Diluted Shares were outstanding on a fully diluted basis. All outstanding shares of Company Common Stock are duly authorized, validly issued, fully paid, and nonassessable and were not issued in violation of any preemptive or similar right.
(b) Except as set forth in Section 4.3(a), as of the date hereof, there are no issued, reserved for issuance, or outstanding (i) shares of capital stock or other voting securities or equity interests of the Company, (ii) securities of the Company convertible into or exchangeable for shares of capital stock or other voting securities or equity interests of the Company, (iii) warrants, calls, options, or other rights to acquire from the Company, or other obligations of the Company to issue, any capital stock, voting securities, equity interests, or securities convertible into or exchangeable for capital stock, voting securities, or equity interests of the Company, or (iv) restricted stock, restricted stock units, stock appreciation rights, phantom stock, profit participation, or other similar rights with respect to the Company.
(c) As of the date hereof, to the Knowledge of the Company, the following stockholders beneficially own the following shares of Company Common Stock:
(i) Stonebridge Asset Management LP: approximately 5,354,400 shares (approximately 9.2% of Outstanding Shares);
(ii) Everhart Capital Advisors LLC: approximately 3,957,600 shares (approximately 6.8% of Outstanding Shares); and
(iii) Galloway Pension Trust: approximately 2,386,200 shares (approximately 4.1% of Outstan

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