Contract analysis

I. Executive Summary The purpose of this memorandum is to summarize the material pending and threatened litigation, government investigations, regulatory inquiries, and compliance matters identified during our due diligence review of NovaMart Global Inc. in connection with the Transaction, and to translate those findings into concrete recommendations regarding the Stock Purchase Agreement (the "SPA"), the Seller Disc

1. Consumer protection and platform integrity (elevated risk) — driven primarily by an ongoing FTC staff inquiry under Section 5 of the FTC Act and parallel state AG inquiries;

2. Employment, wage-and-hour, and worker classification (moderate-to-elevated risk) — driven principally by a pending FLSA collective action affecting fulfillment center operations;

3. Intellectual property (low-to-moderate risk) — a single active patent matter and no material trademark disputes;

4. Commercial disputes (low risk) — routine seller and vendor litigation, none individually material; and

5. Data privacy and cybersecurity (moderate risk) — addressed principally in a separate memorandum, but implicated by the California AG's CCPA/CPRA-related inquiry summarized in Section V.B. We do not, at this time, identify any matter that, individually or in the aggregate, is reasonably likely to constitute a Material Adverse Effect under the SPA definition, subject to the ongoing-monitoring recommendations set for

II. Methodology and Scope of Review A. Document Review We reviewed all materials made available through the "Litigation & Regulatory" folders of the Project Dunmore virtual data room, including: pleadings and dockets for all pending litigation; correspondence with regulators (including the FTC, the California Attorney General, and the New York Attorney General); all outstanding civil investigative demands and subpoen

1. PACER searches for federal district court, bankruptcy court, and circuit court dockets, covering the period January 1, 2020 through March 28, 2025;

2. State court docket searches in each state listed above, using each state's principal e-filing or unified case-management system;

3. Bankruptcy searches and federal and state judgment-lien searches; and

4. UCC-1 financing statement searches (which are cross-referenced in the Corporate Due Diligence Memorandum but reviewed here for any evidence of litigation-related liens or judgment enrollments). C. Interviews and Supplemental Inquiries We conducted interviews with: • Amanda Trevino, General Counsel of NovaMart, in person at NovaMart's Austin headquarters on March 5, 2025, and via videoconference on March 20 and Mar

III. Pending Litigation A. Commercial Disputes 1. *Silverline Home Goods LLC v. NovaMart Global Inc.* — Breach of Contract Claim by Former Marketplace Seller. Parties. Silverline Home Goods LLC ("Silverline"), a former marketplace seller of home décor and kitchenware, is plaintiff; NovaMart is defendant. Court and Jurisdiction. District Court of Travis County, Texas, 353rd Judicial District, Case No. D-1-GN-24-004128

3. Other Commercial Litigation. The Company has identified seven additional pending commercial matters, none of which individually presents claimed damages in excess of $250,000, and none of which we regard as material either individually or in the aggregate. Each is summarized in Appendix A, together with the applicable court, nature of claim, amount, status, and risk rating (all rated Low). Aggregate exposure acros

3. Other Employment Matters. The Company has identified an additional four pending EEOC charges and two state-agency complaints (one in Georgia and one in Florida), each in early administrative stages, together with three individual employment claims in litigation (two in Texas and one in Illinois), none of which individually exceeds $200,000 in claimed damages. Aggregate additional employment litigation exposure is

2. Trademark Matters. We have identified two pending TTAB proceedings: • Opposition No. 91282471, filed by Nova Marketing Solutions, Inc. against NovaMart's application to register NOVASHIP (Serial No. 97/456,182) in Class 39; and • a Section 8/15 maintenance filing accepted by the USPTO on February 3, 2025 for the NOVAMART word mark in Class 35 (no pending contest). The Nova Marketing opposition is in the discovery

IV. Threatened Litigation and Pre-Litigation Disputes A. Demand Letters and Pre-Suit Claims The Company has produced a schedule of currently-open demand letters and pre-suit notices, of which we identify the following as material:

1. Demand from Concordia Vendor Alliance LLC dated January 14, 2025 — alleging on behalf of an unspecified group of sellers that NovaMart's revised commission structure (effective October 2024) violates certain seller-agreement notice provisions and (in a novel theory) certain state unfair-competition statutes. Demand: rescission of the fee change and $8,000,000 in claimed damages. NovaMart has responded through Call

2. EEOC charge tender letter received February 3, 2025, from counsel to a former engineering employee, previewing an age-discrimination claim. NovaMart has retained counsel and is engaged in early settlement discussions. Estimated exposure: $250,000–$500,000.

3. Cease-and-desist letter received December 20, 2024, from counsel to a competitor alleging trademark and trade-dress infringement in NovaMart's "seller storefront" UI redesign. NovaMart has responded denying infringement; no follow-up correspondence in more than 60 days. We regard the risk of suit as low. Approximately eleven additional demand letters of lesser magnitude are catalogued in Appendix A and, individual

V. Government Investigations and Regulatory Inquiries A. Federal Trade Commission — Consumer Protection Inquiry

1. Background and Nature. By letter dated October 17, 2024, the FTC Bureau of Consumer Protection, Division of Advertising Practices, initiated a staff inquiry into certain of NovaMart's consumer-facing marketplace practices. The inquiry has focused on five topical areas: • Advertising and price disclosures, including "strike-through" pricing and "was/now" comparative price representations displayed on marketplace li

2. Timeline and Procedural History. • October 17, 2024: Initial access letter received. • November 12, 2024: Civil Investigative Demand ("CID") No. 2024-BC-1148 served on NovaMart, seeking production of documents and written interrogatory responses across all five topical areas. • December 20, 2024: NovaMart made a partial rolling production; interrogatory responses served January 15, 2025. • February 6, 2025: FTC st

3. NovaMart's Response and Position. NovaMart is cooperating in full and has advanced the position that its practices comply with Section 5 and applicable rules. It has not admitted any violation. Concurrently, and on the advice of counsel, NovaMart has voluntarily implemented the following remedial steps: (i) a UI refresh of the NovaMart Plus cancellation flow, deployed February 2025, that we believe substantially c

4. Potential Exposure and Risk Assessment. The realistic outcome distribution ranges from (i) a closing letter with no action, to (ii) a consent order requiring specific injunctive relief without monetary component, to (iii) a consent order with monetary relief in the form of consumer redress, disgorgement, or civil penalties (the last of which would require a violation of a rule or prior order). Based on comparable

1. California Attorney General — CCPA/CPRA Inquiry. Nature. By letter dated January 8, 2025, the California Attorney General's Consumer Protection Section opened an inquiry into NovaMart's compliance with the California Consumer Privacy Act (as amended by the CPRA), focused on: (i) the sufficiency of NovaMart's "Do Not Sell or Share My Personal Information" mechanism; (ii) NovaMart's handling of consumer deletion and

2. New York Attorney General — Marketplace Seller Practices Inquiry. Nature. By letter dated February 10, 2025, the Bureau of Internet and Technology of the New York Attorney General's office initiated an inquiry into NovaMart's marketplace seller practices, focused on: (i) transparency and predictability of NovaMart's fee schedule; (ii) the timing and mechanics of seller-fund disbursement, including chargeback reser

3. Other State AG Inquiries. We identified two additional low-level inquiries: (i) a consumer-complaint referral from the Texas Attorney General's Consumer Protection Division (January 2025) that has been resolved by written response and is closed; and (ii) an informal inquiry from the Washington Attorney General's office concerning holiday-season delivery representations (December 2024), currently in dormant status.

1. Payment Processing and Financial Regulation. We have reviewed NovaMart's payment-processing arrangements with PayStream Financial Technologies Inc. and confirm that NovaMart operates in a "payment facilitator" configuration in which PayStream, not NovaMart, holds the funds-transmitter licenses in the relevant states. We have identified no pending inquiry from any state banking regulator or the CFPB. Risk: Low, sub

2. Occupational Safety and Health Administration. Across the 14 fulfillment centers, the Company has had six OSHA inspections in the last 36 months, resulting in three sets of citations: (i) a general-duty clause citation in Fresno, California (2023) — abated and closed; (ii) a lockout/tagout citation in Edison, New Jersey (2024) — abated and closed; and (iii) an ergonomic-hazard citation in Memphis, Tennessee (Decem

3. International Trade and Customs. CBP has issued one seizure notice (December 2023) relating to counterfeit apparel offered by a marketplace seller through NovaMart's platform. NovaMart cooperated, removed the seller, and the matter closed without penalty. No inquiries are currently pending.

VI. Regulatory Compliance Program Review A. Compliance Infrastructure NovaMart's legal and compliance function is led by Amanda Trevino, General Counsel, who reports to the Chief Executive Officer and has dotted-line reporting to the Audit Committee of the Board of Directors. The legal department comprises 11 attorneys (including Ms. Trevino), 3 paralegals, and a dedicated Trust & Safety compliance team of 24 personn

VII. Insurance Coverage for Litigation and Regulatory Matters NovaMart maintains the following insurance policies of principal relevance to litigation and regulatory exposure. Cross-reference to the Insurance Due Diligence Memorandum is made for full policy-by-policy analysis, including terms, exclusions, and claims history. D&O Tail. At closing, a 6-year run-off ("tail") policy will be procured from Sovereign Assura

VIII. Implications for Transaction Documentation A. SPA Representations and Warranties The findings in this memorandum principally implicate the following representations in Article III of the SPA: • § 3.13 (Litigation) — All matters described in Sections III and IV of this memorandum must be scheduled on Schedule 3.13. We have circulated a draft schedule to Simone Adesanya at Calloway, Brandt & Loewe LLP for coordin

Section 6.01 of the SPA requires NovaMart to conduct business in the ordinary course between signing (targeted for May 20, 2025) and closing. Litigation-specific covenants require that: • Material settlements (defined as any settlement in excess of $500,000 or involving material injunctive relief) require Cascade's prior written consent; • NovaMart must promptly notify Cascade (within five business days) of any new l

IX. Recommendations and Action Items A. Priority Matters Requiring Ongoing Monitoring The following matters should be actively tracked through closing: B. Additional Diligence or Investigation The following diligence items remain open as of the date of this memorandum:

1. Production of the full FTC CID response, including the interrogatory responses served January 15, 2025 (partial production received to date; supplement requested).

2. Production of NovaMart's internal investigation summary (non-privileged) with respect to the review-manipulation subject matter of the FTC inquiry.

3. Confirmation from NovaMart of the status of the New Jersey Division of Taxation protest.

4. Detailed damages contentions and disclosure of expert reports (once available) in Perales.

5. Copy of the reservation-of-rights letter from Chubb in the product-liability matter noted in Section VII. C. Disclosure Schedule Items We have prepared draft entries for Schedules 3.13, 3.14, and 3.15 covering: • all 12 pending litigation matters described in Section III; • the three material demand letters described in Section IV.A; • the FTC inquiry (Section V.A); • the California and New York AG inquiries (Sect

X. Conclusion Based on our review, NovaMart Global Inc.'s litigation and regulatory profile is broadly consistent with that of an established mid-market online marketplace platform of NovaMart's scale and operational footprint. We do not identify any matter that, individually or in the aggregate, is reasonably likely to constitute a Material Adverse Effect on NovaMart under the SPA definition, subject to the ongoing

1. FTC CID No. 2024-BC-1148 — issued November 12, 2024; subject: consumer protection inquiry (Section V.A); supplemental request February 6, 2025; next production due April 30, 2025; in progress; counsel: Calloway, Brandt & Loewe LLP.

2. California AG informal request — dated January 8, 2025; subject: CCPA/CPRA compliance; initial response served February 21, 2025; no current deadline; counsel: Calloway, Brandt & Loewe LLP.

3. New York AG informal request — dated February 10, 2025; subject: marketplace seller practices; initial response served March 14, 2025; no current deadline; counsel: Calloway, Brandt & Loewe LLP.

4. Third-party civil subpoena — issued March 3, 2025; subject: records concerning a marketplace seller of consumer electronics named as co-defendant in an unrelated products-liability action pending in Los Angeles County Superior Court; response due April 18, 2025; being handled in-house. No grand-jury or other criminal-investigation process is outstanding. Appendix D — Litigation Search Jurisdictions and Parameters