CONFIDENTIAL — ATTORNEY WORK PRODUCT — ATTORNEY-CLIENT PRIVILEGED
FUNDS FLOW MEMORANDUM
Closing of Co-Investment by Pellegrino Capital Group LLC in Ridgeline-Clarion Co-Invest, L.P.
January 30, 2026
Prepared by: Calderwood & Harkness LLP 200 South Biscayne Boulevard, Suite 4100 Miami, FL 33131
Matter No.: 1027-00002
DISTRIBUTION LIST:
This memorandum contains confidential and privileged information prepared by Calderwood & Harkness LLP in its capacity as counsel to Pellegrino Capital Group LLC. Distribution is limited to the persons and entities identified above. Any unauthorized distribution, copying, or use of this memorandum is strictly prohibited.
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I. PURPOSE AND SCOPE
This Funds Flow Memorandum (this "Memorandum") sets forth the flow of funds in connection with the closing on January 30, 2026 (the "Closing Date") of (a) Pellegrino Capital Group LLC's ("Pellegrino" or "PCG") capital contribution of Twenty-Five Million Dollars ($25,000,000.00) to Ridgeline-Clarion Co-Invest, L.P. (the "Co-Invest Vehicle") and (b) the Co-Invest Vehicle's equity contribution to Clarion Holdings Acquisition Corp. ("AcquisitionCo"), as part of the acquisition by AcquisitionCo of one hundred percent (100%) of the outstanding equity interests of Clarion Hospitality Holdings, Inc. (the "Target" or "Clarion") (the "Acquisition" or the "Transaction").
This Memorandum describes each step in the flow of funds, from the origination of wire transfers by Pellegrino and other co-investors through the final application of proceeds to the payment of acquisition consideration to the sellers of the Target. Each step is described in chronological sequence and is accompanied by wire instructions, timing requirements, and the conditions precedent that must be satisfied before funds may be released at each stage of the process.
All parties identified on the Distribution List above, and their respective counsel, are requested to confirm the wire instructions and account details set forth herein no later than 5:00 p.m. Eastern Time on January 29, 2026. Any discrepancies, corrections, or updates to the wire instructions contained in this Memorandum must be communicated promptly to Calderwood & Harkness LLP and Hartwell Velmoran & Pratt LLP, as applicable, in order to ensure the orderly and timely completion of the closing process.
This Memorandum supersedes all prior drafts circulated in connection with the Transaction, including the preliminary funds flow memorandum dated January 17, 2026 and the revised draft dated January 24, 2026, and is effective as of the Closing Date. In the event of any conflict between this Memorandum and the definitive transaction documents, including the Acquisition Agreement, the Co-Invest Limited Partnership Agreement (the "Co-Invest LPA"), the Subscription Agreement, the Escrow Agreement, or the Credit Agreement, the terms of such definitive documents shall control.
II. TRANSACTION OVERVIEW
The following is a summary of the Transaction structure, sources and uses of funds, and Pellegrino's participation therein. This summary is provided for reference purposes and is qualified in its entirety by the definitive transaction documents.
Transaction. AcquisitionCo, a Delaware corporation and special purpose vehicle formed by Ridgeline Equity Management LLC (the "Sponsor") for the purpose of effecting the Acquisition, will acquire one hundred percent (100%) of the outstanding equity interests of Clarion Hospitality Holdings, Inc., a Tennessee corporation. The Target operates a portfolio of branded and independent hospitality assets, principally in the southeastern United States and select Caribbean markets.
Enterprise Value. The Transaction values the Target at an aggregate enterprise value of Five Hundred Fifty-Five Million Dollars ($555,000,000.00), subject to customary purchase price adjustments as set forth in the Acquisition Agreement.
Sources of Funds. The Acquisition will be financed through a combination of new equity and debt, as follows:
Total Equity: $250,000,000.00, consisting of:
(i) Ridgeline Equity Partners Fund IV, L.P. ("Ridgeline Fund IV") equity contribution: $175,000,000.00, representing seventy percent (70%) of total new equity; and
(ii) Ridgeline-Clarion Co-Invest, L.P. (the Co-Invest Vehicle) equity contribution: $75,000,000.00, representing thirty percent (30%) of total new equity.
Senior Secured Term Loan B: $305,000,000.00, provided by Pinnacle National Bank, N.A., as Administrative Agent on behalf of the lending syndicate, pursuant to the Credit Agreement dated as of the Closing Date (the "Credit Agreement").
Revolving Credit Facility: $40,000,000.00 committed facility, available but undrawn at closing. The Revolving Credit Facility will be available on and after the Closing Date for working capital and general corporate purposes of the Target and its subsidiaries, subject to the terms and conditions of the Credit Agreement.
Uses of Funds. The aggregate sources of funds described above will be applied to the following uses:
(i) Payment to the sellers of 100% of the equity of the Target, consisting of Brindoval Growth Capital Fund II, L.P. (the "Selling Sponsor"), holding approximately eighty-two percent (82%) of the equity of the Target, and certain management rollover shareholders, holding approximately eighteen percent (18%) of the equity of the Target;
(ii) Repayment in full of all existing indebtedness of the Target and its subsidiaries outstanding as of the Closing Date, including all accrued and unpaid interest, prepayment premiums (if any), and breakage costs;
(iii) Payment of all Transaction fees and expenses, including legal fees, advisory fees, financing fees, and other closing costs, as set forth in the final settlement statement under the Acquisition Agreement; and
(iv) Funding of any escrow deposits or holdback amounts required under the Acquisition Agreement.
Management Rollover. Theodore "Ted" J. Barrington, Chief Executive Officer of the Target, and Lisa M. Kwon, Chief Financial Officer of the Target, will contribute an aggregate of approximately Thirty Million Dollars ($30,000,000.00) in rollover equity to AcquisitionCo. The management rollover is structured as a separate contribution to AcquisitionCo and is not included in the Two Hundred Fifty Million Dollars ($250,000,000.00) of new equity described above. The rollover is being documented under separate rollover agreements and equity award agreements prepared by Hartwell Velmoran & Pratt LLP.
Pellegrino's Commitment. Pellegrino has committed to contribute Twenty-Five Million Dollars ($25,000,000.00) to the Co-Invest Vehicle, representing thirty-three and one-third percent (33.33%) of the Co-Invest Vehicle's aggregate commitments of Seventy-Five Million Dollars ($75,000,000.00). Pellegrino's committed capital is being called in full at closing.
Pellegrino's Indirect Equity Ownership in AcquisitionCo. Upon consummation of the Acquisition and giving effect to the equity contributions described herein (and prior to giving effect to the management rollover, which will result in proportional dilution of all equity holders), Pellegrino will hold an indirect equity interest in AcquisitionCo equal to approximately ten percent (10.0%), calculated as 33.33% of the Co-Invest Vehicle's 30.0% equity interest in AcquisitionCo (33.33% × 30.0% = 10.0%).
III. PARTIES AND ROLES
The following is a description of each party involved in the flow of funds, together with relevant identifying information, addresses, and contact details.
A. Source of Pellegrino Funds
Pellegrino Capital Group LLC
Pellegrino Capital Group LLC is a Delaware limited liability company, foreign-qualified and authorized to transact business in the State of Florida. Pellegrino is the originator of the $25,000,000.00 wire transfer described in Step 1 below and is the limited partner and co-investor in the Co-Invest Vehicle.
Address: 1440 Brickell Avenue, Suite 3200, Miami, FL 33131
EIN: 84-3291047
Primary Contacts:
• Daniella R. Pellegrino, Chief Financial Officer
• Adriana Voss, Vice President & General Counsel
Counsel: Calderwood & Harkness LLP, 200 South Biscayne Boulevard, Suite 4100, Miami, FL 33131
Role: Limited partner / co-investor; originator of $25,000,000.00 wire to escrow
B. Escrow Agent
Continental Fiduciary Services, Inc.
Continental Fiduciary Services, Inc. serves as the escrow agent under the Escrow Agreement entered into in connection with the Co-Invest Vehicle's participation in the Acquisition.
Address: 111 Wall Street, Suite 600, New York, NY 10005
Role: Receives and holds all co-investor capital contributions in escrow pending satisfaction of closing conditions and receipt of joint written release instructions from Ridgeline-Clarion Co-Invest GP LLC and Clarion Holdings Acquisition Corp. Continental Fiduciary Services, Inc. will disburse the escrowed funds solely in accordance with the terms of the Escrow Agreement and the joint release instructions described in Section VII below.
C. Co-Investment Vehicle
Ridgeline-Clarion Co-Invest, L.P.
Ridgeline-Clarion Co-Invest, L.P. is a Delaware limited partnership formed for the purpose of making co-investment equity contributions alongside Ridgeline Fund IV in connection with the Acquisition.
EIN: 93-4817265
General Partner: Ridgeline-Clarion Co-Invest GP LLC, a Delaware limited liability company wholly owned by Ridgeline Equity Management LLC
General Partner EIN: 93-4817302
Registered Agent: Capitol Registered Agents, Inc., 850 New Burton Road, Suite 201, Dover, DE 19904
Role: Receives aggregate co-investor contributions ($75,000,000.00) from escrow upon satisfaction of closing conditions; contributes equity to AcquisitionCo in exchange for shares of common stock representing 30% of the post-closing equity of AcquisitionCo (prior to management rollover dilution)
D. Acquisition Holding Company
Clarion Holdings Acquisition Corp.
Clarion Holdings Acquisition Corp. is a Delaware corporation organized as a special purpose vehicle to acquire 100% of the outstanding equity interests of the Target.
EIN: 93-4820119
Role: Receives equity contributions from Ridgeline Fund IV ($175,000,000.00) and the Co-Invest Vehicle ($75,000,000.00), as well as Term Loan B proceeds ($305,000,000.00) from Pinnacle National Bank, N.A. Applies aggregate proceeds to payment of acquisition consideration, repayment of existing Target indebtedness, and payment of Transaction fees and expenses.
E. Sponsor Fund
Ridgeline Equity Partners Fund IV, L.P.
Ridgeline Equity Partners Fund IV, L.P. is a Delaware limited partnership and the primary sponsor fund participating in the Acquisition.
General Partner: Ridgeline Equity Partners GP IV LLC
Management Company: Ridgeline Equity Management LLC, 399 Park Avenue, 28th Floor, New York, NY 10022
Role: Contributes $175,000,000.00 in equity to AcquisitionCo in exchange for shares of common stock representing 70% of the post-closing equity of AcquisitionCo (prior to management rollover dilution). The flow of funds for Ridgeline Fund IV's equity contribution is documented in a separate funds flow memorandum prepared by Hartwell Velmoran & Pratt LLP.
F. Lender / Administrative Agent
Pinnacle National Bank, N.A.
Pinnacle National Bank, N.A. serves as the Administrative Agent under the Credit Agreement and is the lead lender in the syndicate providing the Senior Secured Term Loan B and Revolving Credit Facility.
Address: 300 Vesey Street, New York, NY 10281
Role: Funds $305,000,000.00 in Senior Secured Term Loan B proceeds to AcquisitionCo on the Closing Date pursuant to the Credit Agreement. The $40,000,000.00 Revolving Credit Facility is committed but will remain undrawn at closing.
Lender's Counsel: Borwick Aldrich LLP, 1 Liberty Plaza, 35th Floor, New York, NY 10006 (Contact: Samuel R. Ingram)
G. Sellers. Brindoval Growth Capital Fund II, L.P. and Management Rollover Shareholders
Brindoval Growth Capital Fund II, L.P. is the current private equity sponsor and holder of approximately eighty-two percent (82%) of the outstanding equity of the Target. The remaining approximately eighteen percent (18%) of the Target's equity is held by management rollover shareholders, principally Theodore "Ted" J. Barrington (CEO) and Lisa M. Kwon (CFO).
Seller's Counsel: Aldridge Mayer Stevens LLP, 1271 Avenue of the Americas, 40th Floor, New York, NY 10020 (Contact: Rebecca A. Fontaine)
Role: Recipients of aggregate acquisition consideration in exchange for the sale and transfer of 100% of the outstanding equity of the Target to AcquisitionCo, subject to the management rollover described above.
H. Target. Clarion Hospitality Holdings, Inc.
Clarion Hospitality Holdings, Inc. is a Tennessee corporation that, together with its subsidiaries, owns and operates a diversified portfolio of hospitality assets.
Address: 200 International Drive, Suite 1500, Nashville, TN 37214
EIN: 62-1784503
Role: Target company whose equity is being acquired by AcquisitionCo.
IV. STEP-BY-STEP FLOW OF FUNDS
The following sets forth each step in the flow of funds in chronological sequence on the Closing Date. All parties are expected to initiate and confirm the actions described below in a coordinated fashion to ensure simultaneous closings of the co-investment, the equity contributions, the debt financing, and the Acquisition.
Step 1: Pellegrino Wire to Escrow
From: Pellegrino Capital Group LLC
To: Continental Fiduciary Services, Inc. (as Escrow Agent)
Amount: $25,000,000.00 (Twenty-Five Million Dollars and No Cents)
Timing: Wire to be initiated no later than 10:00 a.m. ET on January 30, 2026. Pellegrino shall use commercially reasonable efforts to ensure that the wire is received and credited to the escrow account as promptly as practicable following initiation.
Reference Line: "Pellegrino Capital Group LLC — Ridgeline-Clarion Co-Invest Closing Capital Contribution"
Wire Instructions for Continental Fiduciary Services, Inc.:
Note: Pellegrino's $25,000,000.00 constitutes one hundred percent (100%) of its committed capital to the Co-Invest Vehicle, called in full at closing pursuant to the capital call notice delivered by Ridgeline-Clarion Co-Invest GP LLC on January 15, 2026, with ten (10) business days' prior written notice in compliance with Section 3.1(a) of the Co-Invest LPA. Upon initiation of the wire, Pellegrino (Daniella R. Pellegrino or Adriana Voss) shall promptly provide the Federal Reference Number to Calderwood & Harkness LLP and Continental Fiduciary Services, Inc. for tracking and confirmation purposes.
Step 2: Other Co-Investor Wires to Escrow
From: Other limited partners of the Co-Invest Vehicle (identities of which are not disclosed in this Memorandum)
To: Continental Fiduciary Services, Inc. (as Escrow Agent)
Aggregate Amount (Including Pellegrino): $75,000,000.00 (Seventy-Five Million Dollars and No Cents)
Other Co-Investor Contributions: $50,000,000.00 ($75,000,000.00 aggregate less Pellegrino's $25,000,000.00)
Timing: All other co-investor wires are to be funded concurrently with Pellegrino's wire on January 30, 2026, in accordance with the capital call notice and the terms of the Co-Invest LPA.
Note: Wire instructions for the other co-investors are being provided separately by Ridgeline-Clarion Co-Invest GP LLC and Hartwell Velmoran & Pratt LLP under a separate distribution. The identities and individual contribution amounts of the other co-investors are confidential to the Co-Invest Vehicle and are not included in this Memorandum. Calderwood & Harkness LLP has been advised that all other co-investors have confirmed their participation and are expected to fund their respective commitments in full on the Closing Date.
Step 3: Release from Escrow to Co-Invest Vehicle
From: Continental Fiduciary Services, Inc. (as Escrow Agent)
To: Ridgeline-Clarion Co-Invest, L.P.
Amount: $75,000,000.00 (Seventy-Five Million Dollars and No Cents)
Conditions for Release: Release of funds from escrow is conditioned upon receipt by the Escrow Agent of joint written release instructions from:
(a) Ridgeline-Clarion Co-Invest GP LLC (acting as general partner of the Co-Invest Vehicle); and
(b) Clarion Holdings Acquisition Corp.,
confirming the satisfaction or waiver of all conditions to closing under the Acquisition Agreement. The form of joint release instructions is attached hereto as Exhibit B. The Escrow Agent shall not disburse any funds absent receipt of such joint release instructions bearing the authorized signatures of both parties.
Wire Instructions for Ridgeline-Clarion Co-Invest, L.P.:
Timing: Immediately upon confirmation of closing conditions and receipt of joint release instructions from Ridgeline-Clarion Co-Invest GP LLC and Clarion Holdings Acquisition Corp. The parties have targeted completion of this step on the same day as Steps 1 and 2 (i.e., January 30, 2026). Continental Fiduciary Services, Inc. shall use its best efforts to process the release wire within two (2) hours of receipt of compliant joint release instructions and confirmation that all $75,000,000.00 in co-investor funds have been received and are available for immediate disbursement.
Step 4: Co-Invest Vehicle Equity Contribution to AcquisitionCo
From: Ridgeline-Clarion Co-Invest, L.P.
To: Clarion Holdings Acquisition Corp.
Amount: $75,000,000.00 (Seventy-Five Million Dollars and No Cents)
Instrument: Equity contribution in exchange for shares of common stock of AcquisitionCo representing thirty percent (30%) of the post-closing equity of AcquisitionCo (prior to dilution resulting from the management rollover).
Wire Instructions for Clarion Holdings Acquisition Corp.:
Timing: Concurrently with Step 5 (Ridgeline Fund IV equity contribution) and Step 6 (debt funding from Pinnacle National Bank, N.A.). The equity contribution by the Co-Invest Vehicle, the equity contribution by Ridgeline Fund IV, and the funding of the Term Loan B are intended to occur substantially simultaneously, and the parties and their counsel shall coordinate to ensure that each such funding is completed prior to, or concurrently with, the disbursement of acquisition consideration to the sellers.
Step 5: Ridgeline Fund IV Equity Contribution to AcquisitionCo
From: Ridgeline Equity Partners Fund IV, L.P.
To: Clarion Holdings Acquisition Corp.
Amount: $175,000,000.00 (One Hundred Seventy-Five Million Dollars and No Cents)
Instrument: Equity contribution in exchange for shares of common stock of AcquisitionCo representing seventy percent (70%) of the post-closing equity of AcquisitionCo (prior to dilution resulting from the management rollover).
Wire Instructions: Wire instructions for Ridgeline Fund IV's equity contribution are set forth in a separate funds flow memorandum prepared by Hartwell Velmoran & Pratt LLP for Ridgeline Fund IV and are not replicated herein. Pellegrino and Calderwood & Harkness LLP have been provided with a copy of such separate memorandum for reference purposes.
Timing: Concurrently with Step 4 (Co-Invest Vehicle equity contribution) and Step 6 (debt funding from Pinnacle National Bank, N.A.).
Step 6: Debt Funding from Pinnacle National Bank, N.A.
From: Pinnacle National Bank, N.A. (as Administrative Agent, on behalf of the lending syndicate)
To: Clarion Holdings Acquisition Corp.
Amount: $305,000,000.00 (Three Hundred Five Million Dollars and No Cents), representing the full initial draw on the Senior Secured Term Loan B facility.
Revolving Credit Facility: The $40,000,000.00 Revolving Credit Facility committed under the Credit Agreement will remain undrawn at closing. No proceeds of the Revolving Credit Facility are included in the sources of funds for the Acquisition.
Wire Instructions: Wire instructions for the Term Loan B funding are set forth in the Credit Agreement and in the closing instructions provided by Borwick Aldrich LLP (Samuel R. Ingram) on behalf of the lending syndicate. Such wire instructions are not replicated in this Memorandum.
Timing: Concurrently with Steps 4 and 5 (equity contributions from the Co-Invest Vehicle and Ridgeline Fund IV). The conditions precedent to the funding of the Term Loan B are set forth in Article V of the Credit Agreement and include, among other things, the receipt of equity contributions from both the Co-Invest Vehicle and Ridgeline Fund IV.
Governing Law of Credit Agreement: State of New York.
Step 7: AcquisitionCo Payment of Acquisition Consideration
From: Clarion Holdings Acquisition Corp.
To: Sellers (Brindoval Growth Capital Fund II, L.P. and management shareholders) and/or their designees, as specified in the Acquisition Agreement and the closing instructions provided by Aldridge Mayer Stevens LLP
Aggregate Amount: $555,000,000.00 enterprise value, allocated as follows:
(i) Equity consideration to sellers (net of rollover): Approximately $220,000,000.00, representing the aggregate equity value of the Target ($250,000,000.00) less the management rollover of approximately $30,000,000.00 by Theodore "Ted" J. Barrington (CEO) and Lisa M. Kwon (CFO);
(ii) Repayment of existing Target indebtedness: Amounts included within the net debt component of the enterprise value calculation, to be paid directly to existing lenders of the Target at or prior to closing in accordance with payoff letters delivered to AcquisitionCo;
(iii) Transaction fees, expenses, and adjustments: All Transaction-related fees and expenses, including legal fees, advisory fees, financing fees, title and survey costs, transfer taxes, and other closing costs, as set forth in the final settlement statement prepared and agreed upon under the Acquisition Agreement.
Management Rollover. The management rollover of approximately $30,000,000.00 by Ted Barrington and Lisa Kwon is structured as a contribution to AcquisitionCo separate from, and in addition to, the $250,000,000.00 of new equity contributions described herein. The rollover is effected through the exchange of a portion of each rolling shareholder's existing equity in the Target for shares of common stock of AcquisitionCo. Proportional dilution of all equity holders (including the Co-Invest Vehicle and, indirectly, Pellegrino) will apply upon completion of the rollover contribution.
Wire Instructions: Wire instructions for the payment of acquisition consideration to the sellers are set forth in the closing instructions provided by Aldridge Mayer Stevens LLP (Rebecca A. Fontaine) on behalf of the sellers and are not replicated in this Memorandum. AcquisitionCo shall disburse acquisition consideration to the sellers and existing lenders of the Target in accordance with the Acquisition Agreement and the final settlement statement.
Timing: Immediately upon AcquisitionCo's receipt of all equity contributions (from the Co-Invest Vehicle and Ridgeline Fund IV) and all debt proceeds (from Pinnacle National Bank, N.A.), and upon confirmation that all conditions to closing under the Acquisition Agreement have been satisfied or waived.
V. SUMMARY SOURCES AND USES TABLE
The following tables summarize the sources and uses of funds for the Transaction, as described in Sections II and IV above. All amounts are in United States Dollars.
Sources of Funds
Uses of Funds
Note: The exact allocation of uses among the line items set forth above is subject to final determination pursuant to the settlement statement prepared under the Acquisition Agreement and agreed upon by AcquisitionCo and the sellers. The amounts reflected above as approximate (~) will be confirmed upon finalization of the settlement statement. The $40,000,000.00 Revolving Credit Facility is available but undrawn at closing and is therefore excluded from both sources and uses.
VI. WIRE INSTRUCTIONS SCHEDULE
The following schedule sets forth the wire instructions for each relevant account in the flow of funds. All wire instruction details marked "[TO BE COMPLETED]" are to be confirmed by the respective parties and their counsel no later than 5:00 p.m. ET on January 29, 2026. Final confirmed wire instructions will be circulated as Exhibit A to this Memorandum upon receipt of all confirmations.
A. Pellegrino Capital Group LLC (Originating Wire)
B. Continental Fiduciary Services, Inc. (Escrow Agent — Receiving)
C. Ridgeline-Clarion Co-Invest, L.P. (Release from Escrow)
D. Clarion Holdings Acquisition Corp. (Equity Contribution)
Important Notice Regarding Wire Instructions. Each party is solely responsible for verifying the accuracy of the wire instructions applicable to its outgoing wire transfer(s). Calderwood & Harkness LLP and Hartwell Velmoran & Pratt LLP will endeavor to verify all wire instructions received but assume no responsibility for errors in wire instructions provided by third parties. In the event that any party identifies an error or discrepancy in the wire instructions set forth in this Schedule or in the confirmed instructions circulated as Exhibit A, such party shall immediately notify Calderwood & Harkness LLP (Owen Fischer or Stephen Adler) and Hartwell Velmoran & Pratt LLP (Douglas W. Cheng or Meredith L. Tanaka) by telephone and email. All parties are cautioned to independently verify wire instructions through trusted channels and to be vigilant against wire fraud and social engineering attempts.
VII. CONDITIONS TO RELEASE OF ESCROW FUNDS
Release of funds from escrow held by Continental Fiduciary Services, Inc. is subject to the satisfaction of each of the following conditions:
1. Receipt of Aggregate Co-Investor Capital Contributions. The Escrow Agent shall have received, in immediately available funds, the aggregate co-investor capital contributions of $75,000,000.00, consisting of Pellegrino's $25,000,000.00 contribution and $50,000,000.00 in contributions from the other co-investors of the Co-Invest Vehicle.
2. Joint Written Release Instructions. The Escrow Agent shall have received joint written release instructions, substantially in the form attached hereto as Exhibit B, signed by an authorized representative of each of (a) Ridgeline-Clarion Co-Invest GP LLC and (b) Clarion Holdings Acquisition Corp., directing the Escrow Agent to release the escrowed funds to the Co-Invest Vehicle.
3. Satisfaction of Acquisition Agreement Closing Conditions. The joint release instructions described in condition (2) above shall include a confirmation that all conditions to closing under the Acquisition Agreement, dated as of December 19, 2025, by and among Clarion Holdings Acquisition Corp., Brindoval Growth Capital Fund II, L.P., and the other parties thereto, have been satisfied or waived in accordance with the terms thereof, including without limitation all regulatory approvals, third-party consents, and customary closing deliverables.
4. Ridgeline Fund IV Equity Contribution. The Escrow Agent shall have received confirmation, from Hartwell Velmoran & Pratt LLP or Ridgeline-Clarion Co-Invest GP LLC, that Ridgeline Fund IV's $175,000,000.00 equity contribution to AcquisitionCo has been funded or is being funded simultaneously with the release of escrowed funds.
5. Term Loan B Funding. The Escrow Agent shall have received confirmation, from Borwick Aldrich LLP or Pinnacle National Bank, N.A., that the $305,000,000.00 in Senior Secured Term Loan B proceeds have been funded or are being funded simultaneously with the release of escrowed funds.
The Escrow Agent shall not release any escrowed funds until each of the foregoing conditions has been satisfied or waived by the parties entitled to provide such waiver. In the event that one or more of the foregoing conditions cannot be satisfied by the Outside Date (as defined below), the escrowed funds shall be returned to the contributing co-investors in accordance with Section X of this Memorandum.
VIII. REQUIRED CONFIRMATIONS AND NOTIFICATIONS
The following confirmations and notifications are required to be provided by the indicated parties at the specified times. Each party and its counsel are responsible for ensuring that all required confirmations are delivered in a timely manner. Confirmations may be delivered by email to the working group distribution list maintained by Calderwood & Harkness LLP and Hartwell Velmoran & Pratt LLP.
A. Pre-Closing Confirmations (Due by 5:00 p.m. ET, January 29, 2026)
1. Wire Instruction Confirmation. Each party shall confirm the accuracy and completeness of the wire instructions set forth in Section VI of this Memorandum and shall promptly notify Calderwood & Harkness LLP and Hartwell Velmoran & Pratt LLP of any corrections or updates.
2. Escrow Agent Readiness. Continental Fiduciary Services, Inc. shall confirm its readiness to receive and hold funds in the escrow account identified in Section VI.B above and shall confirm that the escrow account is open, active, and capable of receiving incoming wire transfers in the aggregate amount of $75,000,000.00.
3. Capital Call Notice Compliance. Ridgeline-Clarion Co-Invest GP LLC shall confirm that all co-investor capital call notices have been delivered in compliance with the ten (10) business day notice requirement under Section 3.1(a) of the Co-Invest LPA and that no co-investor has exercised any right to be excused from funding its commitment.
4. Term Loan B Conditions Precedent. Pinnacle National Bank, N.A. (or Borwick Aldrich LLP on its behalf) shall confirm satisfaction of all conditions precedent to the funding of the $305,000,000.00 Senior Secured Term Loan B under the Credit Agreement, or shall identify any outstanding conditions that remain to be satisfied on or prior to the Closing Date.
B. Day-of-Closing Confirmations (January 30, 2026)
1. Pellegrino Wire Initiation. Pellegrino Capital Group LLC (Daniella R. Pellegrino or Adriana Voss) shall confirm initiation of the $25,000,000.00 wire transfer to the escrow account and shall provide the Federal Reference Number to Calderwood & Harkness LLP and Continental Fiduciary Services, Inc. promptly following initiation.
2. Escrow Agent Receipt Confirmation. Continental Fiduciary Services, Inc. shall confirm (a) receipt of Pellegrino's $25,000,000.00 wire transfer in immediately available funds and (b) receipt of the aggregate $75,000,000.00 in co-investor capital contributions from all co-investors of the Co-Invest Vehicle.
3. Co-Invest GP Release Authorization. Ridgeline-Clarion Co-Invest GP LLC (Connor M. Rafferty) shall execute and deliver its portion of the joint written release instructions to Continental Fiduciary Services, Inc., authorizing the release of escrowed funds to the Co-Invest Vehicle.
4. AcquisitionCo Release Authorization. Clarion Holdings Acquisition Corp. shall execute and deliver its portion of the joint written release instructions to Continental Fiduciary Services, Inc., authorizing the release of escrowed funds to the Co-Invest Vehicle.
5. Co-Invest Vehicle Receipt Confirmation. Ridgeline-Clarion Co-Invest, L.P. shall confirm receipt of the $75,000,000.00 in co-investor capital contributions released from escrow in immediately available funds.
6. AcquisitionCo Funding Confirmation. Clarion Holdings Acquisition Corp. shall confirm receipt of (a) $75,000,000.00 from the Co-Invest Vehicle, (b) $175,000,000.00 from Ridgeline Fund IV, and (c) $305,000,000.00 from Pinnacle National Bank, N.A., in each case in immediately available funds.
7. Seller Receipt Confirmation. Aldridge Mayer Stevens LLP (Rebecca A. Fontaine) shall confirm that the acquisition consideration has been received by the sellers (Brindoval Growth Capital Fund II, L.P. and management shareholders) and/or their designees in accordance with the Acquisition Agreement and the closing instructions.
C. Post-Closing Confirmations
1. Escrow Account Closure. Continental Fiduciary Services, Inc. shall deliver written confirmation to all parties that the escrow account has been fully disbursed and closed, with a final accounting of all receipts and disbursements.
2. Limited Partner Notice. Ridgeline-Clarion Co-Invest GP LLC shall deliver written notice to all limited partners of the Co-Invest Vehicle (including Pellegrino Capital Group LLC) confirming (a) the consummation of the closing, (b) the aggregate capital contribution amounts received from each limited partner, and (c) each limited partner's percentage interest in the Co-Invest Vehicle.
3. Calderwood & Harkness Closing Confirmation. Calderwood & Harkness LLP shall confirm to Pellegrino Capital Group LLC that all closing deliverables have been received by or on behalf of Pellegrino, that the funds flow has been completed in accordance with this Memorandum, and that the Acquisition has been consummated.
IX. FLOW OF FUNDS DIAGRAM
The following is a textual description of the flow of funds described in this Memorandum. A graphical version of this diagram will be attached as Exhibit C.
FLOW OF FUNDS — TEXTUAL DIAGRAM
box 1: Pellegrino Capital Group LLC $25,000,000 wire transfer →
box 2: Continental Fiduciary Services, Inc. (Escrow Agent) ← Also receives $50,000,000 from Other Co-Investors (Aggregate held in escrow: $75,000,000)
↓ Upon receipt of joint release instructions from Co-Invest GP and AcquisitionCo
box 3: Ridgeline-Clarion Co-Invest, L.P. (Receives $75,000,000 aggregate co-investor capital contributions)
↓ Equity contribution ($75,000,000)
box 4: Clarion Holdings Acquisition Corp. ← Also receives $175,000,000 equity contribution from Ridgeline Equity Partners Fund IV, L.P. ← Also receives $305,000,000 Senior Secured Term Loan B proceeds from Pinnacle National Bank, N.A. ← ~$30,000,000 management rollover contribution from Theodore "Ted" J. Barrington (CEO) and Lisa M. Kwon (CFO) (structured separately) (Total funds available for closing: $555,000,000 + ~$30,000,000 rollover)
↓ Acquisition consideration
box 5: Sellers / Existing Lender Payoffs
• Brindoval Growth Capital Fund II, L.P. (~82% equity holder) — receives equity consideration
• Management rollover shareholders (~18% equity holder) — receive equity consideration (net of rollover)
• Existing lenders of the Target — receive payoff amounts per payoff letters
X. FAILURE TO CLOSE / RETURN OF FUNDS
In the event that the Closing does not occur on January 30, 2026, or such later date as may be agreed upon in writing by the parties to the Acquisition Agreement (the "Outside Date"), the following procedures shall apply:
(a) Return of Escrowed Funds. Continental Fiduciary Services, Inc. shall return all escrowed co-investor capital contributions, including Pellegrino's $25,000,000.00, to the respective originating accounts from which such funds were received, by wire transfer of immediately available funds, within two (2) business days following receipt of written instructions from Ridgeline-Clarion Co-Invest GP LLC directing such return. The Escrow Agent shall use the originating account information on file for each co-investor to process such return wires.
(b) No Accrual of Interest. Unless otherwise expressly provided in the Escrow Agreement, no interest shall accrue on escrowed amounts during the period in which such amounts are held by the Escrow Agent. To the extent that the escrow account generates any de minimis interest income during the holding period, the allocation and tax treatment of such income shall be governed by the terms of the Escrow Agreement.
(c) Notification to Pellegrino. Calderwood & Harkness LLP shall promptly notify Pellegrino Capital Group LLC (Daniella R. Pellegrino and Adriana Voss) of any material delay in the closing process or any determination that the Closing will not occur on the scheduled Closing Date. In the event of a failure to close, Calderwood & Harkness LLP shall advise Pellegrino as to the reasons for such failure, the expected timeline for return of funds, and any actions that may be required on Pellegrino's part.