Contract analysis

I. Executive Summary A. Purpose and Transaction Overview This memorandum presents the findings and analysis of Calderwood & Harkness LLP's pre-signing tax due diligence review of NovaMart Global Inc. ("NovaMart," the "Company," or the "Target") in connection with the proposed acquisition by Cascade Retail Holdings Inc. ("Cascade" or the "Buyer") of 100% of the outstanding capital stock of NovaMart for an aggregate ca

1. Section 382 NOL Limitation. The Transaction will constitute an "ownership change" within the meaning of Section 382 of the Code, which will impose an annual limitation on NovaMart's ability to utilize its pre-change net operating loss ("NOL") carryforwards to offset post-change taxable income. The magnitude of this limitation is discussed in detail in Section VIII.

2. Sales Tax Nexus and Compliance Exposure. While NovaMart's marketplace facilitator compliance appears generally adequate, we have identified certain product taxability determination issues in specific states, and the Company's documentation supporting certain exemption certificates could be strengthened.

3. Transfer Pricing. Intercompany transactions between NovaMart and its logistics operations appear to be conducted at arm's length based on available documentation, but the contemporaneous transfer pricing documentation could be more robust.

4. Section 280G Golden Parachute Exposure. Payments to certain NovaMart executives and founders in connection with the change of control may constitute "excess parachute payments" under Section 280G, potentially resulting in non-deductibility to the Company and a 20% excise tax to the affected individuals under Section 4999.

5. Open Audit Years and State Tax Exposure. We have identified potential economic nexus exposure in states where NovaMart has not historically filed income tax returns, which warrants further analysis.

6. No Section 338(h)(10) Election. The absence of a Section 338(h)(10) election means Cascade will not receive a stepped-up tax basis in NovaMart's assets, which will impact Cascade's post-closing tax position. No material unresolved tax controversies have been identified as of the date of this memorandum. E. Sources of Information The analysis in this memorandum is based upon the following sources: (i) federal and s

II. Scope and Methodology A. Scope of Review In connection with the preparation of this memorandum, Calderwood & Harkness LLP reviewed the following categories of documents and information:

1. Federal Income Tax Returns. Forms 1120 (U.S. Corporation Income Tax Return) filed by NovaMart for fiscal years 2019 through 2024, together with all supporting schedules, statements, and workpapers.

2. State Income and Franchise Tax Returns. State income, franchise, and similar tax returns filed by NovaMart in all filing jurisdictions for fiscal years 2019 through 2024, including Texas franchise tax reports, the Delaware franchise tax filings, and income tax returns for California, New Jersey, Georgia, Ohio, Illinois, Pennsylvania, Tennessee, Florida, and Washington.

3. Sales and Use Tax Returns and Nexus Analyses. Sales and use tax returns filed by NovaMart in all applicable jurisdictions, together with NovaMart's internal nexus analysis documentation and marketplace facilitator compliance files.

4. Employment and Payroll Tax Records. Federal employment tax filings (Forms 941, 940) and state employment tax records, including state unemployment insurance filings and state income tax withholding records.

5. Tax Provisions and Deferred Tax Schedules. NovaMart's ASC 740 tax provision workpapers, deferred tax asset and liability schedules, and uncertain tax position (FIN 48) analyses for fiscal years 2019 through 2024.

6. Transfer Pricing Documentation. Available transfer pricing documentation, including intercompany agreements, cost-sharing arrangements, and any contemporaneous transfer pricing studies.

7. Tax Sharing or Tax Allocation Agreements. Any tax sharing agreements, tax allocation agreements, or tax indemnification agreements to which NovaMart is a party.

8. NOL and Credit Carryforward Schedules. Schedules of net operating loss carryforwards and tax credit carryforwards, including R&D tax credit documentation.

9. Correspondence with Taxing Authorities. All correspondence between NovaMart and the Internal Revenue Service ("IRS") and state taxing authorities, including audit notices, deficiency notices, closing letters, and private letter rulings.

10. Tax Opinions and Memoranda. Tax opinions, memoranda, and other written advice prepared by NovaMart's external tax advisors.

11. Equity Compensation and Stock Option Records. Documentation relating to NovaMart's stock option plan, including option grant agreements, Section 409A valuation reports, Section 83(b) election records, and ISO/NQSO classification documentation. B. Methodology Our tax due diligence review was conducted using the following methodology: Document Review. The Calderwood & Harkness LLP tax due diligence team commenced i

1. Reliance on Provided Materials. Our analysis is based upon the documents and information provided to us in the Data Room and through discussions with NovaMart management and counsel as of the diligence cut-off date of May 9, 2025. We have not independently verified the accuracy or completeness of the information provided to us, and we have relied upon the representations of NovaMart management and their advisors w

2. No Independent Audit. We have not conducted an independent audit of NovaMart's tax returns or tax compliance. Our review was conducted at a level of detail appropriate for a pre-signing tax due diligence engagement and should not be construed as a comprehensive tax audit.

3. Not a Tax Opinion. This memorandum does not constitute a tax opinion. It is a factual and analytical summary of identified tax issues and risks intended to inform Cascade's decision-making in connection with the Transaction and the negotiation of the SPA.

4. Evolving Tax Law. Tax laws, regulations, and administrative guidance are subject to change, and our analysis is based on the law in effect as of the date of this memorandum. Future changes in applicable tax law could affect the conclusions expressed herein.

5. Pending Items. Certain items identified during our review remain pending further documentation or clarification from NovaMart. These items are noted throughout this memorandum and should be resolved prior to closing.

III. Corporate Structure and Tax Status A. Entity Classification NovaMart Global Inc. NovaMart Global Inc. is a C corporation organized under the laws of the State of Delaware. The Company was incorporated on March 14, 2016, and has been classified as a C corporation for federal income tax purposes since its inception. NovaMart's Employer Identification Number ("EIN") is 84-3291547. Its Delaware registered agent is P

Section 409A Compliance. Section 409A of the Code imposes strict requirements on the deferral of compensation, including stock options. We have reviewed NovaMart's Section 409A valuation reports (commonly referred to as "409A valuations") prepared by an independent valuation firm, Hargrove & Associates LLC. NovaMart has obtained annual 409A valuations, and the exercise prices of options granted under the Plan appear

Section 83(b) Elections. We have reviewed the Data Room for evidence of Section 83(b) elections filed by NovaMart's founders and early employees. Based on the records provided, Julian Reeves and Priya Narasimhan each filed timely Section 83(b) elections in connection with the original issuance of founder shares in March 2016. We have reviewed copies of these elections and the accompanying Forms 1040 filed by Mr. Reev

Section 338(h)(10) Election. As noted in the Executive Summary, no election under Section 338(h)(10) of the Code is contemplated for the Transaction. The parties engaged in negotiations regarding a potential Section 338(h)(10) election, but were unable to agree on the pricing adjustment that would be necessary to compensate the Sellers for the additional tax cost of treating the stock sale as a deemed asset sale. The

IV. Federal Income Tax Analysis A. Tax Return Filing History and Compliance NovaMart has filed federal Form 1120 for each taxable year since its incorporation in 2016. Our review focused on the fiscal years 2019 through 2024, which represent the most relevant period for purposes of this due diligence analysis. We have confirmed the following with respect to NovaMart's federal income tax filing history: Timely Filing.

Section 163(j) of the Code, as amended by the TCJA, generally limits the deduction for business interest expense to the sum of (i) business interest income, (ii) 30% of adjusted taxable income ("ATI"), and (iii) floor plan financing interest. For tax years beginning after December 31, 2021, ATI is computed without adding back depreciation, amortization, or depletion (i.e., the calculation reverts to the "EBIT" basis

V. State Income and Franchise Tax Analysis A. Overview of State Tax Footprint NovaMart files income, franchise, or similar tax returns in 11 state and local jurisdictions, based on physical nexus (through fulfillment center operations, employee presence, and headquarter location) and, in certain cases, economic nexus. The following table summarizes NovaMart's state tax filing obligations: NovaMart's aggregate state a

VI. Sales and Use Tax Analysis A. Sales Tax Nexus Overview NovaMart's sales tax obligations are primarily driven by its status as a "marketplace facilitator" under the laws of virtually all U.S. states that impose sales tax. Following the Supreme Court's 2018 Wayfair decision, all 45 states (plus the District of Columbia) that impose a general sales tax have enacted economic nexus legislation establishing sales volum