Contract analysis

I. Executive Summary This memorandum presents the results of our comprehensive analysis of the enforceability of existing restrictive covenant agreements—including non-competition, non-solicitation, and intellectual property assignment provisions—currently in place between NovaMart Global Inc. ("NovaMart" or the "Company") and its employees, founders, and key personnel, across all jurisdictions in which NovaMart main

II. Scope of Review and Agreements Analyzed A. Categories of Agreements Reviewed In conducting this analysis, we reviewed the following categories of restrictive covenant agreements produced by NovaMart in the virtual data room maintained by Calloway, Brandt & Loewe LLP (Richard Calloway and Simone Adesanya, lead counsel for NovaMart):

1. Executive Non-Competition and Non-Solicitation Agreements. NovaMart has entered into standalone non-competition and non-solicitation agreements with approximately sixteen (16) senior executives. These include agreements with Julian Reeves (CEO), Priya Narasimhan (CTO), Douglas "Doug" Whitfield (CFO), Amanda Trevino (General Counsel), and approximately twelve (12) additional senior executives and vice presidents ho

2. Employee Confidentiality, Invention Assignment, and Non-Solicitation Agreements ("CIIA"). NovaMart requires substantially all of its employees—approximately 2,400 individuals—to execute a standard-form Confidentiality, Invention Assignment, and Non-Solicitation Agreement as a condition of employment. The CIIA exists in three principal versions: (i) a Texas-specific version, (ii) a California-specific version, and

3. Offer Letter Restrictive Covenants. For certain mid-level employees (principally managers and senior individual contributors hired between 2019 and 2023), NovaMart included restrictive covenant language directly in the employee's offer letter rather than in a standalone agreement. These offer letter provisions typically include a non-solicitation of employees covenant (twelve months) and, in some cases, a limited

4. Stock Option Agreement Restrictive Covenants. NovaMart's equity incentive plan and form stock option agreements contain non-competition and non-solicitation provisions applicable to all employees holding vested stock options. These covenants operate as a condition of the option grant and provide that the optionee agrees not to compete with NovaMart or solicit NovaMart's employees or customers for a period of twelv

5. Contractor and Consultant IP Assignment Agreements. NovaMart has entered into IP and work product assignment agreements with independent contractors and consultants engaged to perform development, design, and other creative or technical work. These agreements assign to NovaMart all intellectual property, work product, deliverables, and inventions created by the contractor in the course of performing services for N

III. Structural Considerations: Stock Purchase and Restrictive Covenant Continuity A. Impact of Stock Purchase Structure on Existing Agreements A threshold consideration in any M&A transaction is whether the transaction structure affects the continuity and enforceability of the target company's existing restrictive covenant agreements. The answer depends primarily on whether the target company continues as the same l

IV. State-by-State Enforceability Analysis The following analysis addresses the enforceability of NovaMart's restrictive covenant agreements under the laws of each of the ten (10) states in which NovaMart maintains employees or operations. We have organized this analysis beginning with the jurisdictions of greatest significance to the Transaction—Texas (NovaMart's headquarters and the location of its most senior exec

1. Applicable Law. Texas law governing the enforceability of covenants not to compete is set forth in the Texas Business and Commerce Code, Section 15.50 et seq. (the "Texas Covenants Act"). Under the Texas Covenants Act, a covenant not to compete is enforceable if it is "ancillary to or part of an otherwise enforceable agreement at the time the agreement is made" and the restraint is "reasonable" as to time, geograp

2. Non-Competition Agreements. NovaMart's executive non-competition agreements for Texas-based personnel contain non-competition durations ranging from twelve (12) to twenty-four (24) months, a nationwide geographic scope, and activity restrictions covering the "online marketplace industry" or, in some cases, the broader "online marketplace and ecommerce technology" industry. We assess these provisions as follows: Du

3. Non-Solicitation Agreements. Employee non-solicitation and customer non-solicitation provisions are analyzed under the same framework as non-competition provisions under the Texas Covenants Act. The covenants must be ancillary to an otherwise enforceable agreement and reasonable in scope, duration, and geographic area. NovaMart's executive non-solicitation provisions, which range from twelve (12) to twenty-four (2

4. IP Assignment Agreements. Intellectual property assignment provisions are fully enforceable under Texas law. Texas does not have a statutory equivalent to California Labor Code § 2870 or Washington RCW § 49.44.140 mandating a carve-out for inventions made entirely on an employee's own time without employer resources. As a matter of contract law, Texas courts enforce IP assignment provisions according to their term

5. Assessment. Risk Level: Low. NovaMart's restrictive covenant agreements for Texas-based personnel are generally enforceable under the Texas Covenants Act. The durations (12-24 months), nationwide geographic scope, and activity restrictions (online marketplace industry) are within the range that Texas courts have upheld. Even if a court were to find any particular provision overbroad, the mandatory reformation doct

1. Applicable Law. California law governing the enforceability of restrictive covenants is set forth in California Business and Professions Code § 16600 et seq., as interpreted by the California Supreme Court in Edwards v. Kraft Quill CPAs LLP, 44 Cal. 4th 937 (2008), and as amended by recent legislation including AB 1076 (2020), SB 699 (2023), and AB 1197 (2023). California's legal framework represents the most rest

2. Non-Competition Agreements — Unenforceable. California Business and Professions Code § 16600 provides, in relevant part, that "every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void." The California Supreme Court has interpreted this prohibition broadly. In Edwards v. Kraft Quill CPAs LLP, 44 Cal. 4th 937, 945 (2008), the court held

3. Non-Solicitation Agreements — Significant Risk. California's treatment of non-solicitation provisions has become increasingly restrictive in recent years, and the enforceability of such provisions under California law is uncertain and evolving. Customer Non-Solicitation. California courts have increasingly treated customer non-solicitation provisions as de facto non-competition restrictions that are void under § 1

4. IP Assignment Agreements — Enforceable with Statutory Limitations. Intellectual property assignment provisions are enforceable in California, subject to the mandatory limitations set forth in California Labor Code § 2870. Section 2870 provides that any provision in an employment agreement that requires an employee to assign inventions to the employer "shall not apply to an invention that the employee developed ent

Section 2870 further requires that the employment agreement include a notice to the employee setting forth the limitations of § 2870 on the employer's right to require assignment. Our review of NovaMart's California-specific CIIA confirms that it includes the required § 2870 notice and appropriately carves out inventions that are subject to the § 2870 exemption. The existing California CIIA agreements appear complian

5. Assessment. Risk Level: High for Non-Competes and Non-Solicitation. Non-competition provisions applicable to California-based employees are void under § 16600 and cannot be enforced. Customer non-solicitation provisions face significant risk of being held void under § 16600 following AMN Healthcare and its progeny. Employee non-solicitation provisions are of uncertain enforceability. IP assignment provisions are e

1. Applicable Law. Washington's law governing non-competition agreements is set forth in the Washington Noncompetition Covenants Act, RCW § 49.62 (the "Washington Act"), which became effective on January 1, 2020. The Washington Act represents a significant legislative intervention in the enforceability of non-competition agreements and imposes specific requirements that must be satisfied for a non-compete to be enfor

2. Non-Competition Agreements. Under the Washington Act, a non-competition covenant is enforceable against an employee only if the following conditions are met: (a) Earnings Threshold. The employee earns more than the applicable annual earnings threshold, which is adjusted annually for inflation. As of 2025, the threshold for employees is approximately $116,594 (adjusted from the original $100,000 base amount). Non-c

3. Non-Solicitation Agreements. The Washington Act expressly excludes non-solicitation agreements from its scope. RCW § 49.62.010(4) provides that "nonsolicitation agreement" means "an agreement between an employer and employee that prohibits or restrains the employee from soliciting or hiring employees of the employer," and the Act's restrictions on non-competition covenants do not apply to nonsolicitation agreement

4. IP Assignment Agreements. Washington Revised Code § 49.44.140 provides a statutory carve-out for employee inventions similar to California's § 2870. Under RCW § 49.44.140, an employer may not require an employee to assign any invention for which the employee has not used the employer's equipment, supplies, facilities, or trade secret information, and the invention was developed entirely on the employee's own time,

5. Assessment. Risk Level: Moderate. Non-competition covenants are enforceable for above-threshold earners in Washington, provided the statutory disclosure and duration requirements were met, but are void for below-threshold employees. Given that many fulfillment center employees may earn below the threshold, a significant portion of NovaMart's Washington workforce is not subject to enforceable non-competition restri

1. Applicable Law. New Jersey does not have a comprehensive statute governing the enforceability of non-competition agreements. Instead, New Jersey courts analyze non-competition agreements under common law reasonableness standards as articulated in Solari Industries, Inc. v. Malady, 55 N.J. 571 (1970), and Whitmyer Brothers, Inc. v. Doyle, 58 N.J. 25 (1971), and their progeny. Under the New Jersey common law framewo

2. Non-Competition Agreements. New Jersey courts are generally willing to enforce non-competition agreements that satisfy the three-part test described above. Importantly for NovaMart's covenants, New Jersey courts have recognized that the geographic scope of a non-competition covenant may appropriately be broader for businesses that operate on a national or internet-based scale. See, e.g., Coskey's Television & Radi

3. Non-Solicitation and IP Assignment. Non-solicitation provisions are analyzed under the same common law reasonableness framework as non-competition agreements and are generally enforceable in New Jersey if they satisfy the Solari Industries three-part test. NovaMart's standard non-solicitation durations (12-24 months) are reasonable. IP assignment provisions are enforceable under New Jersey contract law. New Jersey

4. Assessment. Risk Level: Low to Moderate. NovaMart's non-competition and non-solicitation agreements are generally enforceable in New Jersey under the common law reasonableness standard. Reformation is available as a backstop for overbroad provisions. IP assignment provisions are fully enforceable. The principal risk is that a court could find the nationwide scope or two-year duration of certain executive covenants

1. Applicable Law. Georgia's law governing the enforceability of restrictive covenants underwent a significant transformation with the adoption of the Georgia Restrictive Covenants Act, O.C.G.A. § 13-8-50 et seq. (the "Georgia Act"), which became effective on November 3, 2011. The Georgia Act applies to agreements entered into on or after its effective date and provides a more permissive framework for enforcing restr

2. Non-Competition Agreements. Under the Georgia Act, a non-competition agreement is enforceable if the restraint is reasonable in time, geographic area, and scope of prohibited activities. The Act does not specify maximum durations or geographic areas, instead deferring to a fact-specific analysis of reasonableness in light of the particular circumstances. Georgia courts applying the Act have upheld non-competition

3. Non-Solicitation and IP Assignment. Non-solicitation provisions are enforceable under the Georgia Act if reasonable in scope and duration. The Act expressly authorizes covenants restricting the solicitation of customers and employees. O.C.G.A. § 13-8-53(a). IP assignment provisions are fully enforceable under Georgia contract law. Georgia does not have a statutory carve-out comparable to California's § 2870 or Was

4. Assessment. Risk Level: Low. NovaMart's restrictive covenant agreements are generally enforceable in Georgia under the Georgia Restrictive Covenants Act, provided the agreements were entered into after the Act's November 2011 effective date. For agreements entered into prior to that date (which may apply to certain long-tenured employees), the stricter pre-Act common law framework may apply. Reformation is availab

1. Applicable Law. Ohio courts analyze non-competition agreements under a common law reasonableness standard established by the Ohio Supreme Court in Raimonde v. Van Vlerah, 42 Ohio St. 2d 21 (1975). Under the Raimonde framework, a non-competition agreement is enforceable if: (a) The restraint is no greater than is required for the protection of the employer's legitimate business interests, including trade secrets, c

2. Assessment. NovaMart's standard non-competition and non-solicitation provisions are enforceable in Ohio under the Raimonde framework. Ohio courts will blue-pencil overbroad provisions to make them reasonable rather than voiding them entirely. See Lake Land Employment Grp. of Akron, LLC v. Columber, 101 Ohio St. 3d 242 (2004) (continued employment constitutes sufficient consideration for a non-compete entered into

1. Applicable Law. Illinois enacted the Illinois Freedom to Work Act (820 ILCS 90/1 et seq.) (the "Illinois FTW Act"), which became effective on January 1, 2022, and was amended in August 2024. The Illinois FTW Act represents a significant legislative reform of Illinois non-compete law and imposes specific requirements that must be satisfied for a non-competition or non-solicitation agreement to be enforceable. The k

2. Assessment. NovaMart has approximately 15 to 20 employees at its Illinois fulfillment center, based on the employee census data provided through diligence. The enforceability of their restrictive covenants depends on the following factors: Earnings Thresholds. Fulfillment center employees who earn below $75,000 per year (for non-competes) or $45,000 per year (for non-solicitation) are not subject to enforceable re