Contract analysis

I. Executive Summary The purpose of this memorandum is to analyze in detail the scope, mechanics, and interplay of the tax indemnification provisions set forth in the Stock Purchase Agreement (the "SPA") dated May 20, 2025, by and among Cascade Retail Holdings Inc. ("Cascade" or "Buyer"), NovaMart Global Inc. ("NovaMart" or the "Company"), and the Selling Stockholders identified therein (collectively, the "Sellers").

1. Tax Indemnification by Sellers Is Uncapped. The Sellers' obligation to indemnify Cascade for pre-closing tax liabilities of NovaMart and its subsidiaries is explicitly carved out from the general indemnification cap of $216,000,000 (18% of the aggregate purchase price). Sellers are liable on a dollar-for-dollar basis for all pre-closing Taxes without any ceiling on the aggregate amount of such indemnification. Thi

2. Extended Survival Period for Tax Representations. The tax representations and warranties set forth in the SPA survive until 60 days after the expiration of the applicable statute of limitations (including any extensions or waivers thereof). This stands in contrast to the 24-month general survival period applicable to non-fundamental representations. The practical effect of this provision is that Cascade's ability

3. Favorable Structure for Cascade as Buyer. The combination of uncapped indemnification, first-dollar recovery (no basket or deductible), and extended survival provides Cascade with robust and comprehensive protection against pre-closing tax liabilities of NovaMart (EIN: 84-3291547). This is particularly important given that NovaMart files tax returns in multiple jurisdictions, including federal, Texas (franchise ta

4. Coordination with R&W Insurance Policy Requires Careful Analysis. The R&W Policy placed with Meridian Specialty Insurance Company generally covers losses arising from breaches of the Sellers' representations and warranties, including tax representations. However, the R&W Policy contains specific exclusions and limitations applicable to tax matters, including exclusions for known tax issues, transfer pricing adjust

5. Stockholder Representative. Ridgeline Equity Partners, LP (acting through Franklin Osei) serves as the Stockholder Representative for purposes of all post-closing indemnification claims, including tax indemnification claims. All notices, negotiations, and settlements of tax indemnification claims on behalf of the Sellers will be channeled through the Stockholder Representative.

6. Escrow Availability. An escrow in the amount of $96,000,000 (representing 8% of the aggregate purchase price) has been established with Marlowe Asset Management Trust Company, N.A. and is available to fund indemnification claims, including tax indemnification claims. Importantly, however, Sellers' tax indemnification obligations are not limited to the escrow; Cascade may pursue direct claims against the Selling St

II. Transaction Overview and Relevant SPA Provisions A. Transaction Structure The SPA contemplates a stock purchase in which Cascade will acquire 100% of the outstanding capital stock of NovaMart from the Selling Stockholders. The aggregate purchase price for the transaction is $1,200,000,000, payable entirely in cash at closing, subject to customary purchase price adjustments for working capital, indebtedness, unpai

Article V — Representations and Warranties of the Company and Selling Stockholders. Article V sets forth the comprehensive representations and warranties made by NovaMart and the Selling Stockholders to Cascade, including Section 5.13 (Tax Representations), which contains detailed representations regarding NovaMart's tax compliance, filing history, tax liabilities, absence of tax liens, tax elections, and other tax-r

Article VI — Covenants. Article VI contains the pre-closing and post-closing covenants of the parties, including Section 6.09 (Pre-Closing Tax Covenants), which governs NovaMart's tax conduct during the interim period between signing and closing, and Section 6.10 (Tax Return Preparation and Filing), which addresses the preparation and filing of tax returns for pre-closing periods and Straddle Periods.

Article VII — Conditions Precedent to Closing. Article VII sets forth the conditions that must be satisfied or waived prior to the closing of the transaction, including customary conditions relating to the accuracy of representations and warranties and the performance of covenants.

Article VIII — Termination. Article VIII governs the circumstances under which the SPA may be terminated prior to closing, including termination fees.

Article IX — Indemnification. Article IX establishes the general indemnification framework applicable to the transaction, including the general indemnification cap, baskets, survival periods, and claim procedures. Article IX also contains the specific carve-outs for tax indemnification and fundamental representations that are central to this analysis.

Article X — Tax Matters. Article X is the comprehensive tax provision of the SPA, addressing Straddle Period allocation, cooperation obligations, tax contest procedures, tax refunds, transfer taxes, and other tax-specific matters that supplement and in certain cases supersede the general indemnification procedures in Article IX. Escrow Agreement. The Escrow Agreement, entered into by and among Cascade, Ridgeline Equi

III. Scope of Sellers' Tax Indemnification Obligations A. Pre-Closing Tax Liabilities — Comprehensive Indemnification The cornerstone of the tax indemnification regime in the SPA is the Sellers' obligation to indemnify Cascade, NovaMart, and their respective affiliates and successors (collectively, the "Buyer Indemnified Parties") for all Taxes of NovaMart and its subsidiaries attributable to any Pre-Closing Tax Peri

IV. Interplay with General Indemnification Framework (SPA Article IX) A. General Indemnification Cap

Article IX of the SPA establishes the general indemnification framework for the transaction. Under this framework, the Sellers' aggregate indemnification liability for breaches of non-fundamental, non-tax representations and warranties is subject to a cap of $216,000,000, representing 18% of the aggregate purchase price of $1,200,000,000. This cap represents the maximum amount that Cascade may recover from the Seller

V. Coordination with R&W Insurance Policy A. Overview of R&W Policy In connection with the transaction, Cascade has procured a Buyer-side representations and warranties insurance policy (the "R&W Policy") with the following terms: • Carrier: Meridian Specialty Insurance Company • Policy Number: MSI-RWI-2025-07832 • Broker: Northbridge Risk Advisors LLC (Thomas Ellingsen, Senior Vice President) • Policy Limit: $216,00

Section 382 Limitations on NOL Carryforwards. The stock purchase by Cascade will constitute an "ownership change" under IRC Section 382. Following the closing, NovaMart's ability to utilize any pre-closing net operating loss (NOL) carryforwards will be subject to annual Section 382 limitations based on the value of NovaMart's stock immediately before the ownership change, multiplied by the applicable long-term tax-ex

VI. Pre-Closing Tax Covenants and Tax Return Preparation A. Pre-Closing Tax Covenants (SPA Section 6.09)

Section 6.09 of the SPA sets forth the pre-closing tax covenants that govern NovaMart's tax conduct during the interim period between the signing of the SPA and the closing of the transaction. These covenants are designed to protect Cascade against adverse changes to NovaMart's tax position during the pre-closing period and to ensure that NovaMart continues to comply with its tax obligations in the ordinary course. T

VII. Tax Contest Provisions A. Notice and Control of Tax Audits The Tax Contest provisions of Article X establish the procedures and allocation of control for audits, assessments, and litigation with taxing authorities relating to NovaMart's pre-closing tax liabilities. These provisions are among the most important in the SPA because the conduct of a tax contest can have a significant impact on the ultimate amount of