Contract analysis

From: Derek Okonkwo <dokonkwo@calderwoodharkness.com> To: Theodore Langford <ted.langford@cascaderetail.com> Cc: Harrison Wexford <hwexford@calderwoodharkness.com> Date: Tue, 20 May 2025 06:47:00 -0000 Subject: NovaMart Acquisition — Signing Deliverables Confirmed; Pre-Closing Roadmap

I am pleased to confirm that we have reached a significant milestone this evening. Set forth below is a comprehensive summary of the signing deliverables and the pre-closing roadmap for the team's reference.

The Stock Purchase Agreement, dated as of May 20, 2025 (the "SPA"), has been fully executed and delivered by all parties:

- **Cascade Retail Holdings Inc.** (as Buyer); - **NovaMart Global Inc.** (the "Company"); and - **The Selling Stockholders:** Ridgeline Equity Partners, LP (41.2%), Brindoval Ventures Fund III, LP (22.8%), Julian Reeves (18.5%), Priya Narasimhan (8.3%), and the other management and employee stockholders (9.2% in the aggregate).

Executed counterpart signature pages have been received from all parties and are currently being compiled into a fully conformed set. Richard Calloway and Simone Adesanya at Calloway, Brandt & Loewe LLP have confirmed delivery of all executed pages on behalf of the Sellers and NovaMart.

**II. ANCILLARY SIGNING DELIVERABLES — CONFIRMED EXECUTED/DELIVERED**

The following ancillary documents have been confirmed as executed and delivered at signing:

1. **Escrow Agreement** — Executed by Cascade, Ridgeline Equity Partners, LP (acting as Stockholder Representative, through Franklin Osei), and Marlowe Asset Management Trust Company, N.A. (Patricia Keane), governing the $96,000,000 escrow deposit (representing 8% of the $1,200,000,000 purchase price) to be funded at closing.

2. **Stockholder Representative Agreement** — Executed, appointing Ridgeline Equity Partners, LP (Franklin Osei) as Stockholder Representative for purposes of post-closing indemnification claims, working capital adjustment, and escrow releases.

3. **SPA Disclosure Schedules (Seller)** — Delivered by NovaMart and the Selling Stockholders, setting forth exceptions to their respective representations and warranties.

4. **SPA Disclosure Schedules (Buyer)** — Delivered by Cascade.

5. **NovaMart Stockholder Written Consent** — Written consent of all Selling Stockholders approving the stock purchase transaction has been executed and delivered in accordance with Section 228 of the DGCL.

6. **Cascade Board Resolutions (Signing)** — Resolutions of the Cascade Board of Directors adopted May 20, 2025, approving the SPA, the $750,000,000 Term Loan B incurrence, and the $200,000,000 draw on the existing revolving credit facility.

7. **Working Capital Methodology Agreement** — Executed as an exhibit to the SPA, establishing a net working capital target of $78,500,000 with a $5,000,000 collar.

In addition, the **R&W Insurance Policy Binder** from Meridian Specialty Insurance Company (Policy No. MSI-RWI-2025-07832; $216,000,000 aggregate limit; $12,000,000 retention) was bound effective as of signing. The premium of $5,400,000 is due per the agreed payment schedule. The policy was brokered by Northbridge Risk Advisors LLC (Thomas Ellingsen).

For ease of reference, the principal terms now locked in under the executed SPA:

| Term | Detail | |---|---| | Purchase Price | $1,200,000,000 (all cash; no earnout) | | Escrow | $96,000,000 (8%) — 24-month hold with Marlowe Asset Management Trust | | Net Cash to Sellers at Closing (pre-WC adj.) | $1,104,000,000 | | Indemnification Cap | $216,000,000 (18%) | | Survival — General Reps | 24 months | | Survival — Fundamental Reps | Indefinite | | Survival — Tax Reps | 60 days past applicable statute

**IV. PRE-CLOSING WORKSTREAMS AND NEXT STEPS**

With signing complete, we are pivoting immediately to the pre-closing period. Below is a summary of the key workstreams, organized by area.

**1. HSR / Antitrust Clearance (Critical Path)**

As you are aware, the DOJ issued a Second Request on May 8, 2025 (prior to what would have been expiration of the initial 30-day waiting period on May 11). Howard Bellamy and Gabriela Montoya at Whitfield & Crane LLP are leading the Second Request response on Cascade's behalf.

- We are targeting substantial compliance by **August 2025**, with HSR clearance expected in the **September–October 2025** timeframe. - The document production plan, custodian identification, and privilege review protocol are being finalized consistent with the strategy memorandum previously circulated. - The white paper on market definition and competitive effects — incorporating Dr. Henrik Johansson's economic ana

**2. Third-Party Consents (Change of Control)**

Approximately 34 NovaMart contracts contain change of control provisions requiring counterparty consent or notice. Consent solicitation letters are being sent to the following key counterparties, among others:

- Pinnacle Cloud Solutions Inc. (Master Services Agreement — cloud hosting) - Redline Freight Corp. (Logistics Partnership Agreement — freight/3PL) - Arcwave Software LLC (Technology License Agreement — search algorithm license) - Stratton Digital Media Inc. (Advertising Revenue Share Agreement) - PayStream Financial Technologies Inc. (Payment Processing Agreement) - Congress Tower Partners LP (Austin HQ office lease

Calloway, Brandt & Loewe (coordinating with Amanda Trevino at NovaMart) is managing the Seller-side outreach. We are maintaining a master change of control consent tracker spreadsheet and will circulate updated versions on a weekly basis.

- The **Commitment Letter** (Reference: CL-2025-0515-CRNB) for the $750,000,000 Senior Secured Term Loan B from Cornerstone National Bank, N.A. (Robert Frankel) and Caluvori Capital Partners, Inc. (Irene Matsuda) was executed on May 15, 2025. - Draft **Term Loan B Credit Agreement** and **Guarantee and Collateral Agreement** are under active negotiation with the lender group. - An **amendment to Cascade's existing $5

**4. Payoff of NovaMart's Existing Credit Facility**

NovaMart's existing $150,000,000 revolving credit facility with Ashford Savings Bank, N.A. must be repaid in full and terminated at closing. A draft payoff letter is being prepared; estimated outstanding principal is approximately $143.2 million plus accrued interest. UCC termination statements and lien releases will be delivered at closing.

- Draft employment agreements for **Julian Reeves** (3-year term; $625,000 base salary; 75% target bonus; 150,000 restricted Cascade shares vesting ratably over 3 years) and **Priya Narasimhan** (3-year term; $575,000 base salary; 70% target bonus; 125,000 restricted Cascade shares) are being circulated to Calloway, Brandt & Loewe for review and comment. - The **$18,000,000 key employee retention pool** (50% payable

**6. Interim Operating Covenant Monitoring**

Under SPA Section 6.01, NovaMart is required to operate in the ordinary course between signing and closing and to obtain Cascade's prior written consent for any actions outside the ordinary course. Calderwood & Harkness is establishing a monitoring protocol and reporting cadence, and we will circulate the interim operating covenant compliance memorandum shortly.

We are beginning preparation of closing deliverables, including:

- Officer's and Secretary's Certificates (Cascade and NovaMart) - Good standing certificates — NovaMart: Delaware (state of incorporation), Texas (principal place of business), and all qualification states (CA, NJ, GA, OH, IL, PA, TN, FL, WA) - FIRPTA non-foreign person certificate from NovaMart (EIN: 84-3291547) - Cascade Board Resolutions (Closing) — draft to be prepared closer to closing - Forms of stock powers an

Calderwood & Harkness will maintain and circulate on a periodic basis a closing conditions status tracker covering all conditions precedent to closing under SPA Article VII. The key conditions to closing are: (a) HSR clearance; (b) receipt of required third-party consents; (c) no-Material-Adverse-Effect certification; (d) financing confirmation; (e) accuracy of representations and warranties at closing (subject to ap

As a brief note, estimated buyer-side transaction costs remain at approximately **$47.3 million** in the aggregate (encompassing legal fees, financial advisory fees, HSR filing fee, R&W insurance premium, financing fees, D&O tail premium, and miscellaneous expenses). These costs will be funded from Cascade's working capital, separate from and in addition to the $1.2 billion purchase price.

I would suggest we establish a **regular pre-closing status call** — weekly or biweekly — with the core deal team: Cascade (Ted, Elena, Rajiv), Calderwood & Harkness (Harrison, Tiffany, and me), and Hargrove Mead & Co. (Christopher Dunleavy). If that works, please let us know your preferred day and time, and we will send a recurring calendar invitation.

We will circulate the **master closing checklist** and the **change of control consent tracker** by end of this week. Additionally, Harrison will be sending a more detailed post-signing summary letter directly to Elena for Cascade's files.

The following documents are available on the deal site and will also be circulated separately as they are finalized:

- Executed SPA and ancillary documents (conformed set to follow) - Master closing checklist - Change of control consent tracker - Interim operating covenant compliance monitoring memo - Closing conditions status tracker

Congratulations to you and the entire Cascade team on reaching signing — this is a significant milestone. There is, of course, considerable work ahead between now and the targeted October 15 closing, but the deal team is well-positioned and we are moving with purpose. Please do not hesitate to reach out with any questions in the meantime.

**Derek Okonkwo** Associate Calderwood & Harkness LLP 599 Lexington Avenue, 38th Floor New York, NY 10022 T: (212) 558-3740 E: dokonkwo@calderwoodharkness.com

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