ROLLOVER AGREEMENT
Dated as of April 7, 2025
by and among
HARROWGATE PRIVATE EQUITY FUND IV LP
and
THE ROLLOVER PARTICIPANTS IDENTIFIED HEREIN
ROLLOVER AGREEMENT
This ROLLOVER AGREEMENT (this "Agreement") is entered into as of April 7, 2025, by and among Harrowgate Private Equity Fund IV LP, a Delaware limited partnership ("Parent" or "Investor"), and each of the management stockholders of Pennfield Holdings, Inc. identified on Schedule A hereto (each, a "Rollover Participant" and collectively, the "Rollover Participants"):
Catherine Langford, an individual residing in the State of North Carolina, serving as Chief Executive Officer of Pennfield Holdings, Inc.;
Derek Simmons, an individual residing in the State of North Carolina, serving as Chief Financial Officer of Pennfield Holdings, Inc.; and
Maxwell Dunn, an individual residing in the State of North Carolina, serving as Chief Operating Officer of Pennfield Holdings, Inc.
Parent and each Rollover Participant are referred to herein individually as a "Party" and collectively as the "Parties."
RECITALS
WHEREAS:
A. Parent, Pinnacle Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Parent ("Merger Sub"), and Pennfield Holdings, Inc., a Delaware corporation (Nasdaq: PNFD) (the "Company"), have entered into that certain Agreement and Plan of Merger dated as of April 7, 2025 (as may be amended, supplemented, or otherwise modified from time to time in accordance with its terms, the "Merger Agreement"), pursuant to which Merger Sub will merge with and into the Company (the "Merger"), with the Company surviving as a wholly owned subsidiary of Parent;
B. The Merger is structured as a reverse triangular merger under Section 251 of the Delaware General Corporation Law. The aggregate merger consideration under the Merger Agreement is Nine Hundred Eighty Million Dollars ($980,000,000), representing Fifteen Dollars and Ninety-Five Cents ($15.95) per share of Company common stock on a fully diluted basis (the "Per-Share Merger Consideration");
C. Each Rollover Participant is a stockholder and executive officer of the Company who holds shares of Company common stock, par value $0.001 per share, and/or other equity interests in the Company as more fully described on Schedule A hereto;
D. In connection with the Merger, each Rollover Participant desires to contribute certain shares of Company common stock (the "Rollover Shares") to Parent (or a designated entity controlled by Parent) in exchange for equity interests in the surviving entity or a parent thereof (the "Rollover Equity Interests"), in lieu of receiving the Per-Share Merger Consideration with respect to such Rollover Shares, on the terms and subject to the conditions set forth herein;
E. The aggregate equity value of the Rollover Shares to be contributed by all Rollover Participants is Twenty-One Million Five Hundred Thousand Dollars ($21,500,000), allocated among the Rollover Participants as follows: Catherine Langford — Twelve Million Five Hundred Thousand Dollars ($12,500,000); Derek Simmons — Five Million Dollars ($5,000,000); Maxwell Dunn — Four Million Dollars ($4,000,000);
F. The execution and delivery of this Agreement by each Rollover Participant is a material condition and inducement to Parent's willingness to enter into the Merger Agreement, and each Rollover Participant acknowledges the reliance of Parent and Merger Sub thereon in entering into the Merger Agreement and consummating the transactions contemplated thereby; and
G. Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Merger Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties 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:
"Closing" means the closing of the Merger as defined in, and in accordance with the terms and conditions of, the Merger Agreement.
"Closing Date" means the date on which the Closing occurs. The Closing Date is currently estimated to occur on or about June 30, 2025; provided, that in no event shall the Closing Date occur later than the Outside Date of September 30, 2025, as set forth in the Merger Agreement (subject to any extension thereof in accordance with the terms of the Merger Agreement).
"Code" means the Internal Revenue Code of 1986, as amended from time to time, together with the rules and regulations promulgated thereunder.
"Company" means Pennfield Holdings, Inc., a Delaware corporation, EIN 82-4917305, with its principal executive offices located at 4500 Commerce Boulevard, Suite 800, Charlotte, North Carolina 28202.
"Contribution" means the contribution, assignment, transfer, and delivery of Rollover Shares by a Rollover Participant to the Rollover Recipient in accordance with the terms of this Agreement.
"Effective Time" has the meaning set forth in the Merger Agreement.
"Equity Commitment Letter" means that certain Equity Commitment Letter dated as of March 27, 2025, from Parent to Merger Sub, pursuant to which Parent has committed to provide or cause to be provided equity financing in an aggregate amount of Three Hundred Forty Million Dollars ($340,000,000) in connection with the Merger and the other transactions contemplated by the Merger Agreement.
"Governmental Authority" means any federal, state, local, or foreign government or political subdivision thereof, or any agency, authority, board, bureau, commission, department, instrumentality, or court of any of the foregoing.
"Lien" means any lien, pledge, hypothecation, mortgage, security interest, encumbrance, claim, option, right of first refusal, preemptive right, proxy, voting agreement, community property interest, or restriction of any nature (including any restriction on the voting of any security, any restriction on the transfer of any security or other asset, any restriction on the receipt of any income derived from any asset, and any restriction on the possession, exercise, or transfer of any other attribute of ownership of any asset).
"Merger Agreement" means the Agreement and Plan of Merger dated as of April 7, 2025, by and among Parent, Merger Sub, and the Company, as the same may be amended, supplemented, or otherwise modified from time to time in accordance with its terms.
"Merger Sub" means Pinnacle Merger Sub, Inc., a Delaware corporation, EIN 93-4081562, and a wholly owned subsidiary of Parent formed solely for the purpose of effectuating the Merger.
"Parent" means Harrowgate Private Equity Fund IV LP, a Delaware limited partnership, EIN 87-2263148, with its principal office at 1200 Market Street, Suite 3100, Wilmington, Delaware 19801.
"Per-Share Merger Consideration" means Fifteen Dollars and Ninety-Five Cents ($15.95) per share of Company common stock, as set forth in the Merger Agreement.
"Person" means any individual, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization, Governmental Authority, or other entity.
"Rollover Equity Interests" means the equity interests (which may take the form of limited partnership interests, membership interests, or common stock, as determined by Parent) in the Rollover Recipient that are issued to a Rollover Participant in exchange for such Rollover Participant's Contribution.
"Rollover Participant" means each of Catherine Langford, Derek Simmons, and Maxwell Dunn, in their individual capacities.
"Rollover Recipient" means Parent or such other entity designated by Parent (in writing to the applicable Rollover Participant) to receive the Rollover Shares, which entity shall be controlled directly or indirectly by Parent. For the avoidance of doubt, Parent may designate a holding company or other acquisition vehicle formed by or on behalf of Parent as the Rollover Recipient, provided that such designation shall not relieve Parent of its obligations hereunder.
"Rollover Shares" means, with respect to each Rollover Participant, the shares of Company common stock set forth opposite such Rollover Participant's name on Schedule A hereto, which such Rollover Participant has agreed to contribute to the Rollover Recipient in accordance with the terms of this Agreement.
"Rollover Value" means, with respect to each Rollover Participant, the aggregate dollar value attributed to such Rollover Participant's Rollover Shares, calculated by multiplying the number of Rollover Shares held by such Rollover Participant by the Per-Share Merger Consideration of $15.95 per share, as set forth on Schedule A hereto.
"Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
"Stockholders Agreement" means the Stockholders Agreement, limited partnership agreement, operating agreement, or other comparable governance agreement to be entered into at or prior to Closing by the Rollover Recipient (or an affiliate thereof), the Rollover Participants, and such other equity holders of the Rollover Recipient as may be applicable, governing the Rollover Equity Interests and containing such terms and conditions as are customary for transactions of this nature.
"Surviving Company" means the Company, as the surviving corporation of the Merger.
"Tax Structure Memorandum" means the Tax Structure Memorandum dated March 28, 2025, prepared by Sylvia Hartwell of Calderwood & Harkness LLP, which addresses the treatment of management rollover equity in the reverse triangular merger structure contemplated by the Merger Agreement.
"Voting and Support Agreement" means the Voting and Support Agreement dated as of April 7, 2025, by and among Parent, Merger Sub, and each of the Rollover Participants, pursuant to which each Rollover Participant has agreed, among other things, to vote certain shares of Company common stock in favor of the adoption of the Merger Agreement.
ARTICLE II — CONTRIBUTION OF ROLLOVER SHARES
Section 2.1 — Agreement to Contribute
(a) Each Rollover Participant hereby agrees, subject to the terms and conditions set forth herein, that immediately prior to or substantially simultaneously with the Effective Time of the Merger, such Rollover Participant shall contribute, assign, transfer, convey, and deliver to the Rollover Recipient all of such Rollover Participant's right, title, and interest in and to the Rollover Shares, free and clear of all Liens (other than Liens created by this Agreement, the Stockholders Agreement, or applicable securities laws). Each Rollover Participant shall take all actions reasonably necessary or desirable to effectuate the Contribution and to vest in the Rollover Recipient good and valid title to the Rollover Shares.
(b) As a result of the Contribution, the Rollover Shares shall not be converted into the right to receive the Per-Share Merger Consideration or any other merger consideration under the Merger Agreement; instead, each Rollover Participant shall receive the Rollover Equity Interests in full consideration for, and in exchange for, the Contribution. Each Rollover Participant hereby waives any right to receive the Per-Share Merger Consideration with respect to the Rollover Shares contributed hereunder. For the avoidance of doubt, any shares of Company common stock held by a Rollover Participant in excess of the Rollover Shares (including shares subject to vesting under the Company's equity incentive plans that are not Rollover Shares) shall be entitled to receive the Per-Share Merger Consideration in accordance with the terms of the Merger Agreement.
Section 2.2 — Rollover Amounts
(a) The Rollover Value and the approximate number of Rollover Shares for each Rollover Participant are as follows:
(b) The aggregate Rollover Value of $21,500,000 represents approximately 2.2% of the total equity value of the Company of $980,000,000 as implied by the Per-Share Merger Consideration.
(c) The exact number of Rollover Shares to be contributed by each Rollover Participant shall be determined by dividing such Rollover Participant's Rollover Value by the Per-Share Merger Consideration of $15.95 per share and rounding down to the nearest whole share. Any fractional share amount resulting from such calculation shall be paid to the applicable Rollover Participant in cash at the Closing, without interest, in accordance with the payment mechanics set forth in the Merger Agreement.
(d) The specific share certificate numbers (or book-entry positions, as applicable) representing the Rollover Shares for each Rollover Participant are set forth on Schedule A hereto. Each Rollover Participant shall provide updated information regarding such share certificate numbers or book-entry positions to Parent promptly upon request.
Section 2.3 — Issuance of Rollover Equity Interests
(a) In exchange for each Contribution, the Rollover Recipient shall issue to the contributing Rollover Participant Rollover Equity Interests having a fair market value, as of the Closing Date, equal to such Rollover Participant's Rollover Value. The form of the Rollover Equity Interests (whether limited partnership interests, membership interests, common stock, or another form of equity) shall be determined by Parent in its reasonable discretion and communicated to each Rollover Participant in writing no later than ten (10) business days prior to the anticipated Closing Date.
(b) The Rollover Equity Interests shall be subject to the terms and conditions of the Stockholders Agreement, which shall be negotiated in good faith and executed and delivered by the applicable parties at or prior to the Closing. Parent shall provide each Rollover Participant with a substantially final draft of the Stockholders Agreement no later than fifteen (15) business days prior to the anticipated Closing Date.
(c) The valuation of the Rollover Equity Interests for purposes of their issuance shall be determined on a basis consistent with the same per-unit or per-share equity value implied by the total equity contribution of $340,000,000 committed by Parent and its co-investors pursuant to the Equity Commitment Letter, giving effect to any additional equity commitments obtained by Parent in connection with the Merger. Each Rollover Participant shall receive Rollover Equity Interests at the same price per unit as the equity interests acquired by Parent and its co-investors, such that no discount or premium is applied to the Rollover Equity Interests relative to the interests acquired by such other equity investors.
(d) Parent shall deliver to each Rollover Participant, on or promptly following the Closing Date, evidence of the issuance of such Rollover Participant's Rollover Equity Interests, including, as applicable, an executed counterpart of the Stockholders Agreement reflecting such Rollover Participant's equity ownership and a certificate or book-entry statement evidencing the Rollover Equity Interests.
Section 2.4 — Mechanics of Contribution
(a) Each Rollover Participant shall deliver to the Rollover Recipient, no later than two (2) business days prior to the anticipated Closing Date (as notified by Parent in writing), a duly executed stock power or letter of transmittal with respect to the Rollover Shares, in the form attached hereto as Schedule B (or such other form as may be reasonably acceptable to Parent and the Company's transfer agent), together with the original stock certificate(s) representing the Rollover Shares (or, if such shares are held in book-entry form, such other evidence of ownership and transfer instructions as may be required by the transfer agent), and such other instruments, documents, and agreements as are reasonably necessary to effect the transfer of the Rollover Shares to the Rollover Recipient.
(b) Marlowe Asset Management Stock Transfer, Inc. (the "Transfer Agent"), contact person: Daniel Roth, serving as the transfer agent for the Company's common stock, shall be instructed by the Company (with the cooperation of Parent) to cancel the Rollover Shares on the books and records of the Company and to not treat such Rollover Shares as shares entitled to receive the Per-Share Merger Consideration or any other merger consideration under the Merger Agreement. Parent shall coordinate with the Transfer Agent to ensure that the Rollover Shares are properly excluded from the payment of merger consideration at the Effective Time and that all necessary entries are made on the stock transfer records of the Company to reflect the Contribution.
(c) Each Rollover Participant shall cooperate with Parent, the Company, and the Transfer Agent in connection with all administrative and procedural matters relating to the Contribution, including by providing any medallion signature guarantees, tax identification information, or other documentation reasonably requested by the Transfer Agent or Parent.
Section 2.5 — Tax Treatment of Contribution
(a) The Parties intend that each Contribution shall be treated, for United States federal (and applicable state and local) income tax purposes, as a tax-free contribution of property to a corporation (or partnership, as applicable) in exchange for equity interests therein under Section 351 of the Code (or, to the extent the Rollover Recipient is a partnership for federal income tax purposes, under Section 721 of the Code), or as otherwise qualifying for nonrecognition treatment under applicable provisions of the Code, such that no gain or loss is recognized by any Rollover Participant or the Rollover Recipient upon the Contribution.
(b) Each Rollover Participant and Parent agree to report the Contribution consistently with such intended tax treatment on all applicable federal, state, and local income tax returns and in any audit, examination, or proceeding before any Governmental Authority, and shall not take any position inconsistent with such intended tax treatment on any tax return, attachment, or other filing, or in any audit, administrative proceeding, or judicial proceeding, unless otherwise required by a final "determination" within the meaning of Section 1313(a) of the Code or by a change in applicable law enacted after the date hereof.
(c) In connection with the foregoing, the Parties acknowledge and have reviewed the Tax Structure Memorandum dated March 28, 2025, prepared by Sylvia Hartwell of Calderwood & Harkness LLP, which addresses the treatment of management rollover equity in the context of the reverse triangular merger structure contemplated by the Merger Agreement. Each Rollover Participant acknowledges that such memorandum was prepared for the benefit of Parent and does not constitute tax advice to such Rollover Participant, and that each Rollover Participant has been advised to consult with his or her own independent tax advisors regarding the tax consequences of the Contribution and the receipt of Rollover Equity Interests.
(d) To the extent required by applicable law, each Rollover Participant shall execute and deliver such elections, statements, and returns (including, without limitation, any statement required under Treasury Regulation Section 1.351-3 or Section 1.721-1, as applicable) as may be necessary or appropriate to effectuate the intended tax treatment described in this Section 2.5.
ARTICLE III — CONDITIONS TO CONTRIBUTION
Section 3.1 — Conditions to Each Rollover Participant's Obligation
The obligation of each Rollover Participant to consummate the Contribution is subject to the satisfaction or waiver (to the extent permitted by applicable law) of each of the following conditions:
(a) No Termination of Merger Agreement. The Merger Agreement shall not have been terminated in accordance with its terms, and no event or circumstance shall have occurred that, with the giving of notice or the passage of time or both, would give rise to a right of termination under the Merger Agreement that has been exercised or is reasonably expected to be exercised.
(b) Satisfaction of Merger Agreement Conditions. All conditions to the Closing set forth in the Merger Agreement shall have been satisfied or waived (other than conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of such conditions at the Closing).
(c) Simultaneous Closing. The Closing under the Merger Agreement shall occur substantially simultaneously with the consummation of the Contribution.
(d) Issuance of Rollover Equity Interests. Parent shall have delivered to the Rollover Participant evidence reasonably satisfactory to such Rollover Participant of the authorization and issuance of the Rollover Equity Interests to be received by such Rollover Participant in exchange for such Rollover Participant's Contribution, in accordance with Section 2.3 hereof.
(e) Execution of Stockholders Agreement. The Stockholders Agreement or equivalent governance document governing the Rollover Equity Interests shall have been executed and delivered by all parties thereto (including Parent, the Rollover Recipient, and each Rollover Participant), and such Stockholders Agreement shall be in full force and effect as of the Closing.
Section 3.2 — Conditions to Parent's Obligation
The obligation of Parent to accept the Contribution and to cause the Rollover Recipient to issue the Rollover Equity Interests is subject to the satisfaction or waiver (to the extent permitted by applicable law) of each of the following conditions:
(a) Delivery of Stock Powers. Each Rollover Participant shall have delivered to Parent or the Rollover Recipient the executed stock powers, certificates, letters of transmittal, and other instruments and documents referenced in Section 2.4 hereof, in form and substance reasonably satisfactory to Parent.
(b) Accuracy of Representations and Warranties. Each Rollover Participant's representations and warranties set forth in Article IV hereof shall be true and correct in all material respects as of the Closing Date as though made on and as of such date (except that representations and warranties that are made as of a specific date shall be true and correct in all material respects as of such specific date).
(c) No Governmental Restraints. No Governmental Authority shall have enacted, issued, promulgated, enforced, or entered any statute, law, ordinance, rule, regulation, judgment, injunction, decree, or other order (whether temporary, preliminary, or permanent) that is in effect and that restrains, enjoins, prohibits, or otherwise makes illegal the consummation of the Contribution.
(d) No Termination of Merger Agreement. The Merger Agreement shall not have been terminated in accordance with its terms.
ARTICLE IV — REPRESENTATIONS AND WARRANTIES OF EACH ROLLOVER PARTICIPANT
Each Rollover Participant, severally and not jointly, hereby represents and warrants to Parent as of the date hereof and as of the Closing Date (except as otherwise specified) as follows:
Section 4.1 — Authority and Capacity
Such Rollover Participant has full legal right, power, capacity, and authority to execute, deliver, and perform this Agreement and to consummate the transactions contemplated hereby. This Agreement has been duly executed and delivered by such Rollover Participant. No consent, approval, or authorization of, or filing, registration, or qualification with, any Governmental Authority or other Person is required on the part of such Rollover Participant in connection with the execution, delivery, and performance of this Agreement, except as may be required under the Securities Act or applicable state securities laws.
Section 4.2 — Ownership of Rollover Shares
Such Rollover Participant is the sole record and beneficial owner of the Rollover Shares set forth opposite such Rollover Participant's name on Schedule A hereto, free and clear of all Liens, other than (i) restrictions on transfer under applicable federal and state securities laws, (ii) restrictions arising under the Company's equity incentive plans (to the extent applicable to the Rollover Shares), and (iii) Liens created by this Agreement. Such Rollover Participant has the sole right to vote, transfer, and dispose of the Rollover Shares, and no Person other than such Rollover Participant has any right to acquire, or any interest in, the Rollover Shares (other than as contemplated by this Agreement, the Merger Agreement, or the Voting and Support Agreement). Upon the Contribution, the Rollover Recipient will acquire good and valid title to the Rollover Shares, free and clear of all Liens (other than Liens arising under applicable securities laws or created by the Rollover Recipient).
Section 4.3 — No Conflicts
The execution, delivery, and performance of this Agreement by such Rollover Participant does not and will not (a) violate or conflict with any provision of applicable law, statute, rule, regulation, order, judgment, injunction, or decree of any Governmental Authority binding on such Rollover Participant, (b) violate or conflict with, or result in a breach of, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give rise to any right of termination, cancellation, amendment, or acceleration under, any contract, agreement, indenture, instrument, note, bond, license, permit, or other arrangement to which such Rollover Participant is a party or by which such Rollover Participant or any of such Rollover Participant's assets or properties are bound, or (c) result in the creation or imposition of any Lien upon any of the Rollover Shares.
Section 4.4 — Investment Representations
(a) Such Rollover Participant is an "accredited investor" as such term is defined in Rule 501(a) of Regulation D promulgated under the Securities Act.
(b) The Rollover Equity Interests to be received by such Rollover Participant pursuant to this Agreement are being acquired for such Rollover Participant's own account, for investment purposes only, and not with a view to, or for sale in connection with, any distribution thereof in violation of the Securities Act or any applicable state securities law.
(c) Such Rollover Participant acknowledges and understands that (i) the Rollover Equity Interests have not been registered under the Securities Act or any state securities laws, (ii) the Rollover Equity Interests are being offered and issued in reliance upon exemptions from such registration requirements, (iii) the Rollover Equity Interests may not be transferred, sold, assigned, pledged, hypothecated, or otherwise disposed of except in compliance with the terms of the Stockholders Agreement and applicable federal and state securities laws, and (iv) the Rollover Equity Interests will bear a restrictive legend (or be subject to comparable book-entry notations) reflecting the foregoing transfer restrictions.
(d) Such Rollover Participant has sufficient knowledge and experience in financial and business matters, including investments of a speculative nature, to be capable of evaluating the merits and risks of an investment in the Rollover Equity Interests. Such Rollover Participant is able to bear the economic risk of the investment in the Rollover Equity Interests, including the complete loss thereof. Such Rollover Participant has had the opportunity to ask questions of, and receive answers from, Parent and its representatives concerning the terms and conditions of the Rollover Equity Interests and the business, financial condition, and prospects of Parent and the Rollover Recipient, and to obtain additional information (to the extent Parent or its representatives possessed such information or could acquire it without unreasonable effort or expense) necessary to verify the accuracy of the information obtained.
Section 4.5 — No Broker's Fees
Such Rollover Participant has not incurred, and no Person acting on behalf of such Rollover Participant has incurred, any liability for any brokerage fee, commission, finder's fee, financial advisory fee, or similar compensation in connection with this Agreement or the transactions contemplated hereby, and no broker, finder, or investment banker is entitled to any such fee or commission in connection with this Agreement based upon arrangements made by or on behalf of such Rollover Participant.
Section 4.6 — Enforceability
This Agreement constitutes a valid and legally binding obligation of such Rollover Participant, enforceable against such Rollover Participant in accordance with its terms, subject to (a) the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium, and other similar laws relating to or affecting creditors' rights generally, and (b) general equitable principles (whether considered in a proceeding in equity or at law), including the possible unavailability of specific performance, injunctive relief, or other equitable remedies.
Section 4.7 — No Litigation
There is no action, suit, proceeding, claim, arbitration, mediation, or investigation pending or, to the knowledge of such Rollover Participant, threatened against such Rollover Participant before any Governmental Authority or arbitrator that would reasonably be expected to (a) impair or delay such Rollover Participant's ability to consummate the Contribution or any other transaction contemplated by this Agreement, (b) prevent, restrain, or enjoin the consummation of the Contribution, or (c) result in the imposition of any Lien upon any of the Rollover Shares.
ARTICLE V — REPRESENTATIONS AND WARRANTIES OF PARENT
Parent hereby represents and warrants to each Rollover Participant as of the date hereof and as of the Closing Date (except as otherwise specified) as follows:
Section 5.1 — Organization and Good Standing
Parent is a limited partnership duly organized, validly existing, and in good standing under the laws of the State of Delaware. Parent's general partner is Harrowgate Capital Partners IV GP LLC, a Delaware limited liability company ("General Partner"). Parent's investment manager is Harrowgate Capital Partners LLC, a Delaware limited liability company ("Investment Manager"). Parent has all requisite limited partnership power and authority to own, lease, and operate its properties and to carry on its business as presently conducted. Parent 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 ownership, leasing, or operation of its properties makes such qualification or licensing necessary, except where the failure to be so qualified or licensed would not, individually or in the aggregate, have a material adverse effect on Parent's ability to perform its obligations under this Agreement.
Section 5.2 — Authority
Parent has full limited partnership power and authority to execute, deliver, and perform this Agreement and to consummate the transactions contemplated hereby. The execution, delivery, and performance of this Agreement by Parent, and the consummation of the transactions contemplated hereby, have been duly authorized by all necessary limited partnership action on the part of Parent, including the approval of the General Partner. No other limited partnership proceedings or actions on the part of Parent are necessary to authorize this Agreement or the consummation of the transactions contemplated hereby.
Section 5.3 — Enforceability
This Agreement constitutes a valid and legally binding obligation of Parent, enforceable against Parent in accordance with its terms, subject to (a) the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium, and other similar laws relating to or affecting creditors' rights generally, and (b) general equitable principles (whether considered in a proceeding in equity or at law), including the possible unavailability of specific performance, injunctive relief, or other equitable remedies.
Section 5.4 — No Conflicts
The execution, delivery, and performance of this Agreement by Parent does not and will not (a) violate or conflict with the Agreement of Limited Partnership of Parent (as amended), the organizational documents of the General Partner, or any other governing document of Parent or its affiliates, (b) violate or conflict with, or result in a breach of, or constitute a default under, the Merger Agreement, the Equity Commitment Letter, or any other contract, agreement, or instrument to which Parent or any of its affiliates is a party or by which Parent or any of its affiliates or their respective properties or assets are bound, or (c) violate any applicable law, order, judgment, injunction, decree, or regulation of any Governmental Authority applicable to Parent or any of its affiliates.
Section 5.5 — Issuance of Rollover Equity Interests
The Rollover Equity Interests, when issued and delivered in accordance with the terms and conditions of this Agreement and for the consideration set forth herein, will be duly authorized, validly issued, and, to the extent applicable (including in the case of equity interests in a corporation), fully paid and nonassessable. The issuance of the Rollover Equity Interests will not be subject to any preemptive rights, rights of first refusal, or similar rights, other than as may be set forth in the Stockholders Agreement or the organizational documents of the Rollover Recipient.
ARTICLE VI — COVENANTS
Section 6.1 — Restrictions on Transfer of Rollover Shares
From the date of this Agreement until the earlier to occur of (x) the Closing and (y) the termination of this Agreement in accordance with Article VII hereof, each Rollover Participant shall not, directly or indirectly, (a) sell, transfer, assign, gift, pledge, hypothecate, encumber, or otherwise dispose of, or enter into any contract, option, or other arrangement or understanding with respect to the sale, transfer, assignment, gift, pledge, hypothecation, encumbrance, or other disposition of, any Rollover Shares, (b) deposit any Rollover Shares into a voting trust or grant any proxy or power of attorney with respect to the Rollover Shares (other than as contemplated by the Voting and Support Agreement), (c) enter into any swap, hedge, or other agreement or arrangement that transfers, in whole or in part, any of the economic consequences of ownership of any Rollover Shares, or (d) take any action that would make any representation or warranty of such Rollover Participant contained herein untrue or incorrect in any material respect or would have the effect of preventing, disabling, or delaying such Rollover Participant from performing his or her obligations hereunder. Notwithstanding the foregoing, the restrictions set forth in this Section 6.1 shall not apply to any transfer of Rollover Shares with the prior written consent of Parent (which consent may be granted or withheld in Parent's sole discretion).
Section 6.2 — Further Assurances
Each Party shall, from time to time after the date hereof, execute and deliver such additional documents, instruments, conveyances, and assurances, and take such further actions, as are reasonably necessary or desirable to carry out and effectuate the provisions of this Agreement, the Contribution, the issuance of the Rollover Equity Interests, and the consummation of the transactions contemplated hereby. Without limiting the generality of the foregoing, each Party shall cooperate with the other Parties in making all filings and obtaining all approvals, consents, and waivers of any Governmental Authority or other Person that are necessary or desirable in connection with the transactions contemplated by this Agreement.
Section 6.3 — Confidentiality
Each Rollover Participant shall keep strictly confidential the terms and conditions of this Agreement and the Rollover Equity Interests, and shall not disclose any such information to any Person, except (a) as required by applicable law, regulation, stock exchange rule, or legal process (including any subpoena or similar legal process), provided that such Rollover Participant shall, to the extent legally permitted, provide Parent with prior written notice of any such required disclosure and shall cooperate with Parent to seek a protective order or other appropriate remedy, (b) as necessary to consult with such Rollover Participant's personal legal, tax, and financial advisors, provided that such advisors are bound by confidentiality obligations no less restrictive than those set forth in this Section 6.3, (c) as disclosed in connection with filings with the Securities and Exchange Commission relating to the Merger, including the Schedule 13E-3, the Schedule 14A (proxy statement), Form 8-K, or any amendments thereto, or (d) with the prior written consent of Parent.
Section 6.4 — Cooperation with Tax Reporting
Each Rollover Participant shall cooperate fully and in a timely manner with Parent and the Surviving Company in the preparation and filing of all federal, state, and local tax returns, reports, and other tax-related documents relating to the Contribution, including (a) any filings necessary to support and substantiate the intended tax-free treatment under Section 351 (or Section 721, as applicable) of the Code as described in Section 2.5 hereof, (b) any elections, designations, or notifications required by applicable tax laws in connection with the Contribution, and (c) any requests for information from any Governmental Authority relating to the tax treatment of the Contribution. Each Rollover Participant shall provide Parent and the Surviving Company with such information and documentation as may be reasonably requested for purposes of any such filings, including completed IRS Form W-9 (or applicable successor form) and any other applicable tax forms.
Section 6.5 — Voting Agreement Cross-Reference
Each Rollover Participant acknowledges and agrees that he or she has separately entered into the Voting and Support Agreement dated as of April 7, 2025, with Parent and Merger Sub, and that the obligations of such Rollover Participant under this Agreement are in addition to, and not in limitation or substitution of, the obligations of such Rollover Participant under the Voting and Support Agreement. In the event of any conflict between the terms of this Agreement and the Voting and Support Agreement, the Voting and Support Agreement shall govern with respect to matters relating to the voting of shares, and this Agreement shall govern with respect to matters relating to the Contribution and the Rollover Equity Interests.
Section 6.6 — Stockholders Agreement
Each Rollover Participant agrees to execute and deliver, at or prior to the Closing, the Stockholders Agreement (or comparable governance document) governing the Rollover Equity Interests. The Stockholders Agreement shall include, among other things, customary provisions regarding (a) restrictions on transfer of the Rollover Equity Interests (including customary lock-up periods), (b) tag-along rights and drag-along rights, (c) information and inspection rights, (d) registration rights (if applicable), (e) preemptive rights and anti-dilution protections (if applicable), (f) board representation and governance matters, (g) distribution and allocation provisions, and (h) such other matters as are customary for management rollover arrangements in leveraged buyout transactions. Parent shall negotiate the Stockholders Agreement in good faith with the Rollover Participants and shall provide drafts thereof in accordance with the timeline set forth in Section 2.3(b) hereof.
ARTICLE VII — TERMINATION
Section 7.1 — Termination Events
This Agreement shall terminate automatically, without any action on the part of any Party, upon the earliest to occur of:
(a) the termination of the Merger Agreement in accordance with its terms, for any reason, including upon the occurrence of the Outside Date of September 30, 2025 (as such date may be extended in accordance with the terms of the Merger Agreement);
(b) the mutual written agreement of Parent and all of the Rollover Participants to terminate this Agreement; and
(c) the Closing, at which point the obligations of the Parties under Article II hereof shall be deemed fully performed and satisfied, and this Agreement shall thereafter be of no further force or effect, except for the provisions of this Agreement that expressly survive the Closing as set forth herein.
Section 7.2 — Effect of Termination
(a) Upon termination of this Agreement pursuant to Section 7.1(a) or Section 7.1(b), this Agreement shall become void and be of no further force or effect, without any liability or obligation on the part of any Party to any other Party, and all rights and obligations of the Parties hereunder shall terminate, except that (i) nothing herein shall relieve any Party from liability for any willful and material breach of this Agreement prior to the date of such termination, and (ii) the rights and remedies of the Parties in respect of any such willful and material breach shall survive the termination of this Agreement.
(b) Notwithstanding any termination of this Agreement, the following provisions shall survive such termination and shall remain in full force and effect: Section 6.3 (Confidentiality), Section 8.5 (Governing Law), Section 8.6 (Jurisdiction; Venue), Section 8.7 (Waiver of Jury Trial), Section 8.9 (Third-Party Beneficiaries), Section 8.12 (Expenses), and this Section 7.2.
ARTICLE VIII — MISCELLANEOUS
Section 8.1 — Notices
All notices, requests, demands, consents, waivers, and other communications required or permitted hereunder shall be in writing and shall be deemed duly given, made, or received (i) when delivered in person, (ii) three (3) business days after being deposited in the United States mail, first class, registered or certified, return receipt requested, postage prepaid, (iii) one (1) business day after being sent by nationally recognized overnight courier (with tracking capability and proof of delivery), or (iv) when transmitted by email (with confirmation of receipt), addressed as follows (or to such other address or email address as any Party may designate by written notice in accordance with this Section 8.1):
If to Parent:
Harrowgate Private Equity Fund IV LP 1200 Market Street, Suite 3100 Wilmington, Delaware 19801
Attention: Jonah Whitfield, Principal
Email: jwhitfield@harrowgatecapital.com
with a copy (which shall not constitute notice) to:
Calderwood & Harkness LLP One Liberty Plaza, 55th Floor New York, New York 10006
Attention: Oliver Mackenzie
Email: omackenzie@calderwoodharkness.com
If to Catherine Langford:
Catherine Langford c/o Pennfield Holdings, Inc. 4500 Commerce Boulevard, Suite 800 Charlotte, North Carolina 28202
or at such other address as set forth on Schedule A hereto.
If to Derek Simmons:
Derek Simmons c/o Pennfield Holdings, Inc. 4500 Commerce Boulevard, Suite 800 Charlotte, North Carolina 28202
or at such other address as set forth on Schedule A hereto.
If to Maxwell Dunn:
Maxwell Dunn c/o Pennfield Holdings, Inc. 4500 Commerce Boulevard, Suite 800 Charlotte, North Carolina 28202
or at such other address as set forth on Schedule A hereto.
Any Rollover Participant may designate personal counsel to receive copies of notices by written notice to Parent, which copy shall not constitute notice for purposes of this Agreement.
Section 8.2 — Entire Agreement
This Agreement (together with the Schedules hereto, which are incorporated herein by reference) constitutes the entire agreement among the Parties with respect to the subject matter hereof and supersedes all prior agreements, understandings, representations, and warranties, whether written or oral, among the Parties with respect to such subject matter. For the avoidance of doubt, this Agreement does not supersede, amend, modify, or otherwise affect the Merger Agreement, the Voting and Support Agreement, the Equity Commitment Letter, or any other agreement entered into in connection with the Merger, each of which shall remain in full force and effect in accordance with its respective terms.
Section 8.3 — Amendments and Waivers
This Agreement may not be amended, modified, or supplemented except by a written instrument signed by Parent and each Rollover Participant. No waiver of any provision of this Agreement shall be effective unless set forth in a written instrument signed by the Party against whom enforcement of such waiver is sought. No failure or delay by any Party in exercising any right, power, or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power, or remedy preclude any other or further exercise thereof or the exercise of any other right, power, or remedy. The rights and remedies provided herein are cumulative and are not exclusive of any other rights or remedies that may be available to any Party at law, in equity, or otherwise.
Section 8.4 — Severability
If any term, provision, covenant, or restriction of this Agreement is held by a court of competent jurisdiction or other Governmental Authority to be invalid, void, or unenforceable, the remainder of the terms, provisions, covenants, and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired, or invalidated, so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any Party. Upon such determination, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.
Section 8.5 — Governing Law
This Agreement and any claim, controversy, or dispute arising out of or relating to this Agreement or the transactions contemplated hereby, including the validity, interpretation, construction, performance, enforcement, and remedies hereunder, shall be governed by, and construed in accordance with, the internal laws of the State of Delaware (including its statutes of limitations), without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware.
Section 8.6 — Jurisdiction; Venue
Each Party hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of the Court of Chancery of the State of Delaware (or, if the Court of Chancery of the State of Delaware declines to accept jurisdiction over a particular matter, the Superior Court of the State of Delaware, or, if the Superior Court of the State of Delaware declines to accept jurisdiction over a particular matter, any federal court of the United States of America sitting in the District of Delaware) for any action, suit, or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby, and each Party hereby irrevocably and unconditionally (a) agrees not to commence any such action, suit, or proceeding except in such courts, (b) agrees that any claim in respect of any such action, suit, or proceeding may be heard and determined in such courts, (c) waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any such action, suit, or proceeding in any such courts, and (d) waives, to the fullest extent it may legally and effectively do so, the defense of an inconvenient forum to the maintenance of any such action, suit, or proceeding in any such courts. Each Party agrees that a final judgment in any such action, suit, or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Each Party irrevocably consents to service of process in the manner provided for notices in Section 8.1 hereof, provided that nothing in this Agreement shall affect the right of any Party to serve legal process in any other manner permitted by law.
Section 8.7 — Waiver of Jury Trial
EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING, CLAIM, OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT, OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF ANY SUCH ACTION, SUIT, OR PROCEEDING, SEEK TO ENFORCE THE FOREGOING WAIVER, (B) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) IT MAKES THIS WAIVER VOLUNTARILY, AND (D) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 8.7.
Section 8.8 — Assignment
No Rollover Participant may assign, delegate, or otherwise transfer any of his or her rights or obligations under this Agreement without the prior written consent of Parent, and any purported assignment, delegation, or transfer in violation of this Section 8.8 shall be null and void. Parent may assign its rights (but not its obligations) under this Agreement to the Rollover Recipient or to any affiliate of Parent that is controlled, directly or indirectly, by Parent or by the General Partner, provided that (a) no such assignment shall relieve Parent of any of its obligations hereunder, (b) Parent shall provide written notice of any such assignment to each Rollover Participant, and (c) any such assignee shall agree in writing to be bound by the terms and conditions of this Agreement as if it were a party hereto. Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of the Parties and their respective heirs, executors, administrators, legal representatives, successors, and permitted assigns.
Section 8.9 — Third-Party Beneficiaries
This Agreement is for the sole benefit of the Parties hereto and their respective permitted successors and assigns, and nothing contained herein, express or implied, is intended to or shall confer upon any other Person any legal or equitable right, benefit, interest, or remedy of any nature whatsoever under or by reason of this Agreement. Without limiting the generality of the foregoing, none of the Company, Merger Sub, any stockholder of the Company (other than the Rollover Participants in their capacity as parties to this Agreement), or any creditor of any Party shall be a third-party beneficiary of this Agreement.
Section 8.10 — Counterparts; Electronic Signatures
This Agreement may be executed in one or more counterparts, and by the different Parties in separate counterparts, each of which when executed shall be deemed to be an original, but all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement by facsimile, portable document format (.pdf), or other electronic transmission (including any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.Brightwater Software.com) shall be effective as delivery of an original executed counterpart of this Agreement.
Section 8.11 — Specific Performance
Each Party acknowledges and agrees that irreparable damage and harm would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached, and that monetary damages would not be an adequate remedy for such breach. Accordingly, each Party agrees that, in addition to any other rights or remedies that may be available at law or in equity, each Party shall be entitled to seek an injunction or injunctions, specific performance, or other equitable relief to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in any court of competent jurisdiction identified in Section 8.6, without the necessity of proving actual damages or posting any bond or other security (any requirement for which is hereby irrevocably waived). The Parties further agree not to assert that a remedy of specific performance is unwarranted, inequitable, or not an appropriate remedy in any such proceeding, and to waive any defenses in any action for specific performance, including the defense that a remedy at law would be adequate.
Section 8.12 — Expenses
Except as otherwise expressly provided in this Agreement, each Party shall bear and pay all costs and expenses (including attorneys' fees and expenses) incurred by such Party in connection with the negotiation, preparation, execution, delivery, and performance of this Agreement and the consummation of the transactions contemplated hereby.
[Signature Pages Follow]
IN WITNESS WHEREOF, the Parties have executed this Rollover Agreement as of the date first written above.
PARENT:
HARROWGATE PRIVATE EQUITY FUND IV LP
By: Harrowgate Capital Partners IV GP LLC, its General Partner
By: ________
Name: Nathaniel Cross
Title: Managing Partner
Date: ________
ROLLOVER PARTICIPANTS:
________________________________________
Catherine Langford Chief Executive Officer, Pennfield Holdings, Inc.
Date: ________
________________________________________
Derek Simmons Chief Financial Officer, Pennfield Holdings, Inc.
Date: ________
________________________________________
Maxwell Dunn Chief Operating Officer, Pennfield Holdings, Inc.