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SOLVENCY CERTIFICATE

Delivered pursuant to Section 4.01(a)(ix) of that certain Credit Agreement dated as of May 4, 2023 (the "Credit Agreement"), among Cascade Retail Holdings Inc., a Delaware corporation ("CRH" or the "Borrower"), Cascade Retail Operating Company LLC, a Delaware limited liability company (the "Co-Borrower"), the Guarantors party thereto, the Lenders from time to time party thereto, and Crescent Harbor Bank, N.A., as Administrative Agent and Collateral Agent

Date: May 19, 2023

Capitalized terms used but not otherwise defined herein shall have the meanings assigned to such terms in the Credit Agreement. All references herein to the "Borrower and its Subsidiaries" shall mean CRH and each of its direct and indirect Subsidiaries (including the Co-Borrower and each Guarantor), taken together on a consolidated basis and after giving pro forma effect to the Transactions (as defined below), unless the context otherwise requires.

Section 1 — Identity of Certifying Officer

The undersigned, Elena Kowalski, is the duly appointed and acting Chief Financial Officer of Cascade Retail Holdings Inc., a corporation organized and existing under the laws of the State of Delaware. The undersigned is delivering this Solvency Certificate (this "Certificate") in her capacity as Chief Financial Officer of CRH, on behalf of the Borrower and its Subsidiaries on a consolidated basis.

This Certificate is delivered pursuant to Section 4.01(a)(ix) of the Credit Agreement as a condition precedent to the effectiveness of the Credit Agreement and the initial extension of credit thereunder on the date hereof (the "Closing Date"). The delivery of this Certificate is required as one of the conditions to the obligations of the Administrative Agent, the Collateral Agent, and the Lenders to make the initial Loans and otherwise extend credit under the Credit Agreement.

The undersigned hereby certifies that she is familiar with the financial condition, properties, business, and affairs of the Borrower and its Subsidiaries and has access to, and has reviewed, the books and records of the Borrower and its Subsidiaries. The undersigned further certifies that she has such knowledge and experience in financial and business matters as are necessary to render the certifications set forth herein and that she has made such investigations and inquiries as she deems necessary and appropriate in connection with the delivery of this Certificate.

Section 2 — Definitions

For purposes of this Certificate, the following terms shall have the meanings specified below:

"Credit Agreement" means the Credit Agreement dated as of May 4, 2023, among Cascade Retail Holdings Inc., Cascade Retail Operating Company LLC, the Guarantors party thereto, the Lenders from time to time party thereto, and Crescent Harbor Bank, N.A., in its capacity as Administrative Agent and Collateral Agent, providing for a $300,000,000 Senior Secured Asset-Based Revolving Credit Facility (as the same may be amended, restated, supplemented, or otherwise modified from time to time in accordance with its terms).

"Transactions" means the transactions contemplated by the Credit Agreement and the other Loan Documents, including without limitation:

(a) the initial borrowing of $150,000,000 under the Credit Agreement on the Closing Date;

(b) the repayment in full and payoff of $112,450,000 outstanding under the existing $175,000,000 revolving asset-based credit facility with Harborview Lending Group, LLC, dated as of September 15, 2019 (as previously amended, the "Existing Facility"), including the termination of all commitments thereunder and the release of all liens and security interests granted in connection therewith;

(c) the payment of closing costs, fees, and expenses in the aggregate amount of approximately $3,175,000, including arrangement fees, agency fees, legal fees, appraisal costs, field examination expenses, and other customary closing costs incurred in connection with the Credit Agreement;

(d) the granting of Liens on the Collateral in favor of the Collateral Agent for the benefit of the Secured Parties pursuant to the Security Agreement and the other Loan Documents; and

(e) the execution and delivery of the Guaranty Agreement, Security Agreement, Pledge Agreement, intellectual Property Security Agreement, and each other Loan Document required to be executed and delivered on or prior to the Closing Date.

"Solvent" and "Solvency" shall have the meanings ascribed thereto in the Credit Agreement and, as further elaborated in the certifications set forth in Section 4 below, shall be determined with respect to the Borrower and its Subsidiaries on a consolidated basis and after giving effect to the Transactions.

"Fair Value" means the amount at which the assets (both tangible and intangible), in their entirety, of the Borrower and its Subsidiaries on a consolidated basis would change hands between a willing buyer and a willing seller, within a commercially reasonable period of time, each having reasonable knowledge of the relevant facts, with neither being under any compulsion to act. For purposes of this definition, a "commercially reasonable period of time" means such period of time as would be required to market and consummate a sale of such assets in an orderly manner, taking into account the nature and characteristics of such assets and the prevailing market conditions at the time of such determination.

"Fair Salable Value" means the amount that could be obtained if the assets of the Borrower and its Subsidiaries on a consolidated basis were sold as a going concern in a commercially reasonable period of time, assuming a willing buyer and a willing seller, each having reasonable knowledge of the relevant facts, with neither being under any compulsion to act.

"Stated Liabilities" means the recorded liabilities (including contingent liabilities that would be recorded in accordance with GAAP) of the Borrower and its Subsidiaries on a consolidated basis, as of the date hereof and after giving effect to the Transactions. For the avoidance of doubt, Stated Liabilities include subordinated, unsubordinated, secured, unsecured, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, and all other liabilities of the Borrower and its Subsidiaries, in each case determined in accordance with GAAP as in effect on the date hereof.

Section 3 — Basis of Certifications; Due Diligence Statement

In reaching the conclusions and certifications set forth in Section 4 below, the undersigned has conducted a thorough review and analysis of the financial condition and prospects of the Borrower and its Subsidiaries. Without limiting the generality of the foregoing, the undersigned has:

(a) Reviewed the audited consolidated financial statements of CRH and its Subsidiaries for the fiscal year ended December 31, 2022 ("FY2022"), including the consolidated balance sheet, the consolidated statements of operations, comprehensive income, stockholders' equity, and cash flows, together with all related notes thereto, as audited by Kessler & Hodge LLP, independent registered public accounting firm. Such financial statements reflect, among other things, total consolidated revenue of approximately $1.82 billion, total consolidated assets of approximately $1.14 billion, and Consolidated EBITDA (as defined in the Credit Agreement) of approximately $148,500,000. The unqualified opinion of Kessler & Hodge LLP on such financial statements was issued on March 8, 2023, and contained no going-concern qualification or emphasis-of-matter paragraph relating to the financial condition of the Borrower or any of its Subsidiaries.

(b) Reviewed the unaudited interim consolidated financial statements of CRH and its Subsidiaries for the fiscal quarter ended March 31, 2023 (the most recent interim period for which financial statements are available), including the unaudited consolidated balance sheet and unaudited consolidated statements of operations and cash flows for such period, which have been prepared in accordance with GAAP (subject to normal year-end audit adjustments and the absence of footnotes).

(c) Reviewed the Borrowing Base Certificate dated May 19, 2023, delivered to the Administrative Agent at closing, which reflects a Net Borrowing Base of $326,400,000, calculated as follows:

(i) Eligible Receivables of $187,000,000 multiplied by the applicable advance rate of 85%, yielding a receivables availability of $158,950,000;

(ii) plus Eligible Inventory (valued at Net Orderly Liquidation Value) of $294,000,000 multiplied by the applicable advance rate of 65%, yielding an inventory availability of $191,100,000;

(iii) yielding a Gross Borrowing Base of $350,050,000;

(iv) less Availability Reserves of $23,650,000 (consisting of rent reserves, dilution reserves, gift card reserves, and other customary reserves established by the Administrative Agent);

(v) yielding a Net Borrowing Base of $326,400,000.

(d) Reviewed the field examination and appraisal report dated March 31, 2023, prepared by Ridgeline Asset Advisors LLC, an independent third-party appraisal firm engaged by the Administrative Agent, which provided a comprehensive assessment of the Borrower's and its Subsidiaries' accounts receivable, inventory, and other assets included in the Borrowing Base, including a determination of Net Orderly Liquidation Value of inventory and an analysis of receivables aging and dilution trends.

(e) Reviewed financial projections and forecasts prepared by the management of CRH, including five-year revenue, EBITDA, and cash flow projections, capital expenditure budgets, and working capital analyses, which have been prepared in good faith and based on assumptions that the undersigned believes to be reasonable as of the date hereof, taking into account the current competitive environment, general economic conditions, and the Borrower's and its Subsidiaries' historical operating performance.

(f) Considered the application of proceeds from the initial draw of $150,000,000 under the Credit Agreement, consisting of:

(i) $112,450,000 to be used to repay in full and terminate the Existing Facility with Harborview Lending Group, LLC;

(ii) $3,175,000 to be used to pay closing costs, fees, and expenses in connection with the Credit Agreement and the other Loan Documents; and

(iii) $34,375,000 to be used for general corporate purposes and working capital needs of the Borrower and its Subsidiaries.

(g) Considered the post-closing undrawn availability of $150,000,000 under the Credit Agreement (calculated as the $300,000,000 in aggregate Revolving Credit Commitments less the $150,000,000 initial draw on the Closing Date), which represents a substantial source of additional liquidity available to the Borrower and its Subsidiaries. The undersigned notes that the Net Borrowing Base of $326,400,000 exceeds the aggregate outstanding Revolving Credit Loans following the initial draw by $176,400,000, providing significant borrowing capacity in excess of current utilization.

(h) Applied her reasonable business judgment, based on her knowledge and experience as Chief Financial Officer of CRH and her familiarity with the business, operations, financial condition, and prospects of the Borrower and its Subsidiaries, in making the certifications set forth below.

Section 4 — Solvency Certifications

After giving effect to the Transactions (including the initial borrowing of $150,000,000 under the Credit Agreement, the repayment and payoff of the Existing Facility, the payment of closing costs, fees, and expenses, the incurrence of all related obligations under the Credit Agreement and the other Loan Documents, and the consummation of all other transactions contemplated thereby on the Closing Date), the undersigned hereby certifies, to the best of her knowledge and belief, as follows:

(a) Fair Value Exceeds Total Liabilities (Balance Sheet Test)

The Fair Value of the assets of the Borrower and its Subsidiaries, on a consolidated basis, exceeds and will, as of the Closing Date after giving effect to the Transactions, exceed their total Stated Liabilities (including subordinated, unsubordinated, secured, unsecured, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, and all other liabilities of every type and nature, whether or not reflected on the consolidated balance sheet of the Borrower and its Subsidiaries). As of December 31, 2022, the consolidated total assets of the Borrower and its Subsidiaries were approximately $1.14 billion as reflected in the audited financial statements of CRH for FY2022. The undersigned has determined, after giving pro forma effect to the Transactions, that the Fair Value of such assets continues to exceed the aggregate amount of all Stated Liabilities of the Borrower and its Subsidiaries, and the Borrower and its Subsidiaries are not, and will not be rendered, insolvent by reason of the Transactions.

(b) Fair Salable Value Exceeds Total Liabilities

The present Fair Salable Value of the assets of the Borrower and its Subsidiaries, on a consolidated basis, is and will be, as of the Closing Date and after giving effect to the Transactions, greater than the amount that will be required to pay the probable liability on their total existing debts and other liabilities (including subordinated, unsubordinated, secured, unsecured, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, and all other liabilities of every type and nature) as such debts and liabilities become absolute and matured. The undersigned has considered the going-concern value of the business of the Borrower and its Subsidiaries, the quality and nature of the assets (including accounts receivable, inventory, real property, intellectual property, and other tangible and intangible assets), and the orderly liquidation values reflected in the Ridgeline Asset Advisors LLC appraisal report in reaching this determination.

The Borrower and its Subsidiaries, on a consolidated basis, are able to and will be able to pay their debts and other liabilities (including subordinated, unsubordinated, secured, unsecured, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, and all other liabilities of every type and nature) as such debts and liabilities become absolute and matured in the ordinary course of business. In reaching this certification, the undersigned has considered, among other things:

(i) the $150,000,000 of undrawn availability under the Credit Agreement (representing the excess of the $300,000,000 in aggregate Revolving Credit Commitments over the $150,000,000 initial draw), which provides a substantial liquidity cushion available to the Borrower and its Subsidiaries to meet their ongoing operating obligations and debt service requirements;

(ii) the strong historical cash flow generation of the Borrower and its Subsidiaries, as evidenced by FY2022 Consolidated EBITDA of approximately $148,500,000 and FY2022 Fixed Charges of approximately $87,200,000, resulting in a Fixed Charge Coverage Ratio ("FCCR") of approximately 1.70:1.00, demonstrating that the Borrower and its Subsidiaries generate cash flows substantially in excess of their fixed charges and recurring obligations;

(iii) the additional borrowing capacity represented by the excess of the Net Borrowing Base ($326,400,000) over the aggregate outstanding Revolving Credit Loans ($150,000,000), which provides $176,400,000 of additional availability (subject to the terms and conditions of the Credit Agreement); and

(iv) the management projections and forecasts reviewed by the undersigned, which indicate that the Borrower and its Subsidiaries are reasonably expected to generate sufficient cash flow from operations to meet their debt service and other payment obligations as they become due in the ordinary course of business.

(d) Adequate Capital / Unreasonably Small Capital Test

The Borrower and its Subsidiaries, on a consolidated basis, do not have and will not have, as of the Closing Date and after giving effect to the Transactions, unreasonably small capital with which to conduct their business as currently conducted and as proposed to be conducted following the Closing Date. The capital of the Borrower and its Subsidiaries is not and will not become unreasonably small in relation to the business of the Borrower and its Subsidiaries or any transaction contemplated to be undertaken by the Borrower or any of its Subsidiaries. The undersigned has considered the nature and scope of the Borrower's and its Subsidiaries' business operations, their capital requirements (including anticipated capital expenditures, working capital needs, and debt service obligations), and the availability of credit under the Credit Agreement in reaching this determination, and has concluded that the Borrower and its Subsidiaries possess capital that is more than adequate to conduct their businesses as presently conducted and as contemplated to be conducted.

(e) No Intent to Hinder, Delay, or Defraud

The Borrower and its Subsidiaries have not incurred and do not intend to incur, and do not believe that they will incur, debts or other liabilities (including contingent obligations, guarantees, and other commitments) beyond their ability to pay such debts and liabilities as they mature. Neither the Borrower nor any of its Subsidiaries has entered into the Transactions or any of the Loan Documents with the actual intent to hinder, delay, or defraud any present or future creditor of the Borrower or any of its Subsidiaries.

Section 5 — Assumptions and Qualifications

The certifications set forth in Section 4 of this Certificate are given and made as of the date hereof, after giving effect to the Transactions on the Closing Date, and are based upon the information available to the undersigned as of the date hereof.

In making the certifications set forth in Section 4 above, the undersigned has assumed that:

(a) the Borrower and its Subsidiaries will continue to operate their businesses in the ordinary course consistent with past practices and in accordance with prudent industry standards, and will not undertake any material change in the nature or scope of their business operations outside of the ordinary course;

(b) the financial projections and forecasts reviewed by the undersigned in connection with this Certificate have been prepared in good faith by the management of the Borrower based on assumptions believed to be reasonable at the time of preparation, it being understood that projections and forecasts by their nature are subject to significant uncertainties and contingencies, many of which are beyond the control of the Borrower and its Subsidiaries, and that no assurance can be given that such projections or forecasts will be realized; and

(c) the Borrower and its Subsidiaries will comply with the terms and conditions of the Credit Agreement and the other Loan Documents in all material respects, including, without limitation, compliance with all financial covenants, reporting obligations, and negative covenants contained therein.

The undersigned has not made an independent appraisal or valuation of any specific assets of the Borrower or its Subsidiaries, but has relied upon (i) the audited consolidated financial statements of the Borrower and its Subsidiaries for FY2022 as prepared in accordance with GAAP and audited by Kessler & Hodge LLP, (ii) the field examination and appraisal report dated March 31, 2023 prepared by Ridgeline Asset Advisors LLC, (iii) the unaudited interim financial statements for the fiscal quarter ended March 31, 2023, (iv) the Borrowing Base Certificate dated May 19, 2023, and (v) such other management information, reports, and data as the undersigned has deemed relevant and appropriate in forming her opinion. The undersigned believes that her reliance on such sources is reasonable and appropriate under the circumstances.

This Certificate is made solely for the benefit of the Administrative Agent, the Collateral Agent, and the Lenders under the Credit Agreement and is delivered in satisfaction of a condition precedent to the effectiveness of the Credit Agreement and the initial extension of credit thereunder. This Certificate may not be relied upon by any other Person for any purpose, and no other Person shall be entitled to claim any benefit or right hereunder.

Section 6 — Reliance; No Personal Liability

This Solvency Certificate is being delivered by Elena Kowalski solely in her capacity as Chief Financial Officer of Cascade Retail Holdings Inc. and not in her individual or personal capacity. Nothing contained herein shall be construed to impose any obligation, duty, or liability upon the undersigned in her individual or personal capacity. No personal liability shall attach to the undersigned by reason of this Certificate or any of the certifications, representations, or statements made herein. In the event of any claim arising out of or in connection with this Certificate, recourse shall be had solely against Cascade Retail Holdings Inc. and not against the undersigned in her individual or personal capacity.

The Administrative Agent, the Collateral Agent, and the Lenders are entitled to rely on this Certificate and the certifications set forth herein in connection with the Credit Agreement and the initial extension of credit thereunder. Such reliance shall be deemed reasonable and made in good faith for all purposes of the Credit Agreement and the other Loan Documents.

Section 7 — Governing Law

This Solvency Certificate shall be governed by, and construed and interpreted in accordance with, the laws of the State of New York, without regard to conflicts of law principles thereof (other than Section 5-1401 of the New York General Obligations Law).

[Signature Page Follows]

[Signature Page to Solvency Certificate]

IN WITNESS WHEREOF, the undersigned has executed this Solvency Certificate as of the date first set forth above.

CASCADE RETAIL HOLDINGS INC.

By: ________

Name: Elena Kowalski

Title: Chief Financial Officer

Date: May 19, 2023

Address for notices:

Cascade Retail Holdings Inc. 2200 Elliott Avenue, Suite 1400 Seattle, WA 98121

Attention: Chief Financial Officer

SOLVENCY CERTIFICATE
Delivered pursuant to Section 4.01(a)(ix) of that certain Credit Agreement dated as of May 4, 2023 (the "Credit Agreement"), among Cascade Retail Holdings Inc., a Delaware corporation ("CRH" or the "Borrower"), Cascade Retail Operating Company LLC, a Delaware limited liability company (the "Co-Borrower"), the Guarantors party thereto, the Lenders from time to time party thereto, and Crescent Harbor Bank, N.A., as Administrative Agent and Collateral Agent
Date: May 19, 2023
Capitalized terms used but not otherwise defined herein shall have the meanings assigned to such terms in the Credit Agreement. All references herein to the "Borrower and its Subsidiaries" shall mean CRH and each of its direct and indirect Subsidiaries (including the Co-Borrower and each Guarantor), taken together on a consolidated basis and after giving pro forma effect to the Transactions (as defined below), unless the context otherwise requires.
Section 1 — Identity of Certifying Officer
The undersigned, Elena Kowalski, is the duly appointed and acting Chief Financial Officer of Cascade Retail Holdings Inc., a corporation organized and existing under the laws of the State of Delaware. The undersigned is delivering this Solvency Certificate (this "Certificate") in her capacity as Chief Financial Officer of CRH, on behalf of the Borrower and its Subsidiaries on a consolidated basis.
This Certificate is delivered pursuant to Section 4.01(a)(ix) of the Credit Agreement as a condition precedent to the effectiveness of the Credit Agreement and the initial extension of credit thereunder on the date hereof (the "Closing Date"). The delivery of this Certificate is required as one of the conditions to the obligations of the Administrative Agent, the Collateral Agent, and the Lenders to make the initial Loans and otherwise extend credit under the Credit Agreement.
The undersigned hereby certifies that she is familiar with the financial condition, properties, business, and affairs of the Borrower and its Subsidiaries and has access to, and has reviewed, the books and records of the Borrower and its Subsidiaries. The undersigned further certifies that she has such knowledge and experience in financial and business matters as are necessary to render the certifications set forth herein and that she has made such investigations and inquiries as she deems necessary and appropriate in connection with the delivery of this Certificate.
Section 2 — Definitions
For purposes of this Certificate, the following terms shall have the meanings specified below:
"Credit Agreement" means the Credit Agreement dated as of May 4, 2023, among Cascade Retail Holdings Inc., Cascade Retail Operating Company LLC, the Guarantors party thereto, the Lenders from time to time party thereto, and Crescent Harbor Bank, N.A., in its capacity as Administrative Agent and Collateral Agent, providing for a $300,000,000 Senior Secured Asset-Based Revolving Credit Facility (as the same may be amended, restated, supplemented, or otherwise modified from time to time in accordance with its terms).
"Transactions" means the transactions contemplated by the Credit Agreement and the other Loan Documents, including without limitation:
(a) the initial borrowing of $150,000,000 under the Credit Agreement on the Closing Date;
(b) the repayment in full and payoff of $112,450,000 outstanding under the existing $175,000,000 revolving asset-based credit facility with Harborview Lending Group, LLC, dated as of September 15, 2019 (as previously amended, the "Existing Facility"), including the termination of all commitments thereunder and the release of all liens and security interests granted in connection therewith;
(c) the payment of closing costs, fees, and expenses in the aggregate amount of approximately $3,175,000, including arrangement fees, agency fees, legal fees, appraisal costs, field examination expenses, and other customary closing costs incurred in connection with the Credit Agreement;
(d) the granting of Liens on the Collateral in favor of the Collateral Agent for the benefit of the Secured Parties pursuant to the Security Agreement and the other Loan Documents; and
(e) the execution and delivery of the Guaranty Agreement, Security Agreement, Pledge Agreement, intellectual Property Security Agreement, and each other Loan Document required to be executed and delivered on or prior to the Closing Date.
"Solvent" and "Solvency" shall have the meanings ascribed thereto in the Credit Agreement and, as further elaborated in the certifications set forth in Section 4 below, shall be determined with respect to the Borrower and its Subsidiaries on a consolidated basis and after giving effect to the Transactions.
"Fair Value" means the amount at which the assets (both tangible and intangible), in their entirety, of the Borrower and its Subsidiaries on a consolidated basis would change hands between a willing buyer and a willing seller, within a commercially reasonable period of time, each having reasonable knowledge of the relevant facts, with neither being under any compulsion to act. For purposes of this definition, a "commercially reasonable period of time" means such period of time as would be required to market and consummate a sale of such assets in an orderly manner, taking into account the nature and characteristics of such assets and the prevailing market conditions at the time of such determination.
"Fair Salable Value" means the amount that could be obtained if the assets of the Borrower and its Subsidiaries on a consolidated basis were sold as a going concern in a commercially reasonable period of time, assuming a willing buyer and a willing seller, each having reasonable knowledge of the relevant facts, with neither being under any compulsion to act.
"Stated Liabilities" means the recorded liabilities (including contingent liabilities that would be recorded in accordance with GAAP) of the Borrower and its Subsidiaries on a consolidated basis, as of the date hereof and after giving effect to the Transactions. For the avoidance of doubt, Stated Liabilities include subordinated, unsubordinated, secured, unsecured, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, and all other liabilities of the Borrower and its Subsidiaries, in each case determined in accordance with GAAP as in effect on the date hereof.
Section 3 — Basis of Certifications; Due Diligence Statement
In reaching the conclusions and certifications set forth in Section 4 below, the undersigned has conducted a thorough review and analysis of the financial condition and prospects of the Borrower and its Subsidiaries. Without limiting the generality of the foregoing, the undersigned has:
(a) Reviewed the audited consolidated financial statements of CRH and its Subsidiaries for the fiscal year ended December 31, 2022 ("FY2022"), including the consolidated balance sheet, the consolidated statements of operations, comprehensive income, stockholders' equity, and cash flows, together with all related notes thereto, as audited by Kessler & Hodge LLP, independent registered public accounting firm. Such financial statements reflect, among other things, total consolidated revenue of approximately $1.82 billion, total consolidated assets of approximately $1.14 billion, and Consolidated EBITDA (as defined in the Credit Agreement) of approximately $148,500,000. The unqualified opinion of Kessler & Hodge LLP on such financial statements was issued on March 8, 2023, and contained no going-concern qualification or emphasis-of-matter paragraph relating to the financial condition of the Borrower or any of its Subsidiaries.
(b) Reviewed the unaudited interim consolidated financial statements of CRH and its Subsidiaries for the fiscal quarter ended March 31, 2023 (the most recent interim period for which financial statements are available), including the unaudited consolidated balance sheet and unaudited consolidated statements of operations and cash flows for such period, which have been prepared in accordance with GAAP (subject to normal year-end audit adjustments and the absence of footnotes).
(c) Reviewed the Borrowing Base Certificate dated May 19, 2023, delivered to the Administrative Agent at closing, which reflects a Net Borrowing Base of $326,400,000, calculated as follows:
(i) Eligible Receivables of $187,000,000 multiplied by the applicable advance rate of 85%, yielding a receivables availability of $158,950,000;
(ii) plus Eligible Inventory (valued at Net Orderly Liquidation Value) of $294,000,000 multiplied by the applicable advance rate of 65%, yielding an inventory availability of $191,100,000;
(iii) yielding a Gross Borrowing Base of $350,050,000;
(iv) less Availability Reserves of $23,650,000 (consisting of rent reserves, dilution reserves, gift card reserves, and other customary reserves established by the Administrative Agent);
(v) yielding a Net Borrowing Base of $326,400,000.
(d) Reviewed the field examination and appraisal report dated March 31, 2023, prepared by Ridgeline Asset Advisors LLC, an independent third-party appraisal firm engaged by the Administrative Agent, which provided a comprehensive assessment of the Borrower's and its Subsidiaries' accounts receivable, inventory, and other assets included in the Borrowing Base, including a determination of Net Orderly Liquidation Value of inventory and an analysis of receivables aging and dilution trends.
(e) Reviewed financial projections and forecasts prepared by the management of CRH, including five-year revenue, EBITDA, and cash flow projections, capital expenditure budgets, and working capital analyses, which have been prepared in good faith and based on assumptions that the undersigned believes to be reasonable as of the date hereof, taking into account the current competitive environment, general economic conditions, and the Borrower's and its Subsidiaries' historical operating performance.
(f) Considered the application of proceeds from the initial draw of $150,000,000 under the Credit Agreement, consisting of:
(i) $112,450,000 to be used to repay in full and terminate the Existing Facility with Harborview Lending Group, LLC;
(ii) $3,175,000 to be used to pay closing costs, fees, and expenses in connection with the Credit Agreement and the other Loan Documents; and
(iii) $34,375,000 to be used for general corporate purposes and working capital needs of the Borrower and its Subsidiaries.
(g) Considered the post-closing undrawn availability of $150,000,000 under the Credit Agreement (calculated as the $300,000,000 in aggregate Revolving Credit Commitments less the $150,000,000 initial draw on the Closing Date), which represents a substantial source of additional liquidity available to the Borrower and its Subsidiaries. The undersigned notes that the Net Borrowing Base of $326,400,000 exceeds the aggregate outstanding Revolving Credit Loans following the initial draw by $176,400,000, providing significant borrowing capacity in excess of current utilization.
(h) Applied her reasonable business judgment, based on her knowledge and experience as Chief Financial Officer of CRH and her familiarity with the business, operations, financial condition, and prospects of the Borrower and its Subsidiaries, in making the certifications set forth below.
Section 4 — Solvency Certifications
After giving effect to the Transactions (including the initial borrowing of $150,000,000 under the Credit Agreement, the repayment and payoff of the Existing Facility, the payment of closing costs, fees, and expenses, the incurrence of all related obligations under the Credit Agreement and the other Loan Documents, and the consummation of all other transactions contemplated thereby on the Closing Date), the undersigned hereby certifies, to the best of her knowledge and belief, as follows:
(a) Fair Value Exceeds Total Liabilities (Balance Sheet Test)
The Fair Value of the assets of the Borrower and its Subsidiaries, on a consolidated basis, exceeds and will, as of the Closing Date after giving effect to the Transactions, exceed their total Stated Liabilities (including subordinated, unsubordinated, secured, unsecured, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, and all other liabilities of every type and nature, whether or not reflected on the consolidated balance sheet of the Borrower and its Subsidiaries). As of December 31, 2022, the consolidated total assets of the Borrower and its Subsidiaries were approximately $1.14 billion as reflected in the audited financial statements of CRH for FY2022. The undersigned has determined, after giving pro forma effect to the Transactions, that the Fair Value of such assets continues to exceed the aggregate amount of all Stated Liabilities of the Borrower and its Subsidiaries, and the Borrower and its Subsidiaries are not, and will not be rendered, insolvent by reason of the Transactions.
(b) Fair Salable Value Exceeds Total Liabilities
The present Fair Salable Value of the assets of the Borrower and its Subsidiaries, on a consolidated basis, is and will be, as of the Closing Date and after giving effect to the Transactions, greater than the amount that will be required to pay the probable liability on their total existing debts and other liabilities (including subordinated, unsubordinated, secured, unsecured, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, and all other liabilities of every type and nature) as such debts and liabilities become absolute and matured. The undersigned has considered the going-concern value of the business of the Borrower and its Subsidiaries, the quality and nature of the assets (including accounts receivable, inventory, real property, intellectual property, and other tangible and intangible assets), and the orderly liquidation values reflected in the Ridgeline Asset Advisors LLC appraisal report in reaching this determination.
(c) Ability to Pay Debts as They Become Due (Cash Flow Test)
The Borrower and its Subsidiaries, on a consolidated basis, are able to and will be able to pay their debts and other liabilities (including subordinated, unsubordinated, secured, unsecured, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, and all other liabilities of every type and nature) as such debts and liabilities become absolute and matured in the ordinary course of business. In reaching this certification, the undersigned has considered, among other things:
(i) the $150,000,000 of undrawn availability under the Credit Agreement (representing the excess of the $300,000,000 in aggregate Revolving Credit Commitments over the $150,000,000 initial draw), which provides a substantial liquidity cushion available to the Borrower and its Subsidiaries to meet their ongoing operating obligations and debt service requirements;
(ii) the strong historical cash flow generation of the Borrower and its Subsidiaries, as evidenced by FY2022 Consolidated EBITDA of approximately $148,500,000 and FY2022 Fixed Charges of approximately $87,200,000, resulting in a Fixed Charge Coverage Ratio ("FCCR") of approximately 1.70:1.00, demonstrating that the Borrower and its Subsidiaries generate cash flows substantially in excess of their fixed charges and recurring obligations;
(iii) the additional borrowing capacity represented by the excess of the Net Borrowing Base ($326,400,000) over the aggregate outstanding Revolving Credit Loans ($150,000,000), which provides $176,400,000 of additional availability (subject to the terms and conditions of the Credit Agreement); and
(iv) the management projections and forecasts reviewed by the undersigned, which indicate that the Borrower and its Subsidiaries are reasonably expected to generate sufficient cash flow from operations to meet their debt service and other payment obligations as they become due in the ordinary course of business.
(d) Adequate Capital / Unreasonably Small Capital Test
The Borrower and its Subsidiaries, on a consolidated basis, do not have and will not have, as of the Closing Date and after giving effect to the Transactions, unreasonably small capital with which to conduct their business as currently conducted and as proposed to be conducted following the Closing Date. The capital of the Borrower and its Subsidiaries is not and will not become unreasonably small in relation to the business of the Borrower and its Subsidiaries or any transaction contemplated to be undertaken by the Borrower or any of its Subsidiaries. The undersigned has considered the nature and scope of the Borrower's and its Subsidiaries' business operations, their capital requirements (including anticipated capital expenditures, working capital needs, and debt service obligations), and the availability of credit under the Credit Agreement in reaching this determination, and has concluded that the Borrower and its Subsidiaries possess capital that is more than adequate to conduct their businesses as presently conducted and as contemplated to be conducted.
(e) No Intent to Hinder, Delay, or Defraud
The Borrower and its Subsidiaries have not incurred and do not intend to incur, and do not believe that they will incur, debts or other liabilities (including contingent obligations, guarantees, and other commitments) beyond their ability to pay such debts and liabilities as they mature. Neither the Borrower nor any of its Subsidiaries has entered into the Transactions or any of the Loan Documents with the actual intent to hinder, delay, or defraud any present or future creditor of the Borrower or any of its Subsidiaries.
Section 5 — Assumptions and Qualifications
The certifications set forth in Section 4 of this Certificate are given and made as of the date hereof, after giving effect to the Transactions on the Closing Date, and are based upon the information available to the undersigned as of the date hereof.
In making the certifications set forth in Section 4 above, the undersigned has assumed that:
(a) the Borrower and its Subsidiaries will continue to operate their businesses in the ordinary course consistent with past practices and in accordance with prudent industry standards, and will not undertake any material change in the nature or scope of their business operations outside of the ordinary course;
(b) the financial projections and forecasts reviewed by the undersigned in connection with this Certificate have been prepared in good faith by the management of the Borrower based on assumptions believed to be reasonable at the time of preparation, it being understood that projections and forecasts by their nature are subject to significant uncertainties and contingencies, many of which are beyond the control of the Borrower and its Subsidiaries, and that no assurance can be given that such projections or forecasts will be realized; and
(c) the Borrower and its Subsidiaries will comply with the terms and conditions of the Credit Agreement and the other Loan Documents in all material respects, including, without limitation, compliance with all financial covenants, reporting obligations, and negative covenants contained therein.
The undersigned has not made an independent appraisal or valuation of any specific assets of the Borrower or its Subsidiaries, but has relied upon (i) the audited consolidated financial statements of the Borrower and its Subsidiaries for FY2022 as prepared in accordance with GAAP and audited by Kessler & Hodge LLP, (ii) the field examination and appraisal report dated March 31, 2023 prepared by Ridgeline Asset Advisors LLC, (iii) the unaudited interim financial statements for the fiscal quarter ended March 31, 2023, (iv) the Borrowing Base Certificate dated May 19, 2023, and (v) such other management information, reports, and data as the undersigned has deemed relevant and appropriate in forming her opinion. The undersigned believes that her reliance on such sources is reasonable and appropriate under the circumstances.
This Certificate is made solely for the benefit of the Administrative Agent, the Collateral Agent, and the Lenders under the Credit Agreement and is delivered in satisfaction of a condition precedent to the effectiveness of the Credit Agreement and the initial extension of credit thereunder. This Certificate may not be relied upon by any other Person for any purpose, and no other Person shall be entitled to claim any benefit or right hereunder.
Section 6 — Reliance; No Personal Liability
This Solvency Certificate is being delivered by Elena Kowalski solely in her capacity as Chief Financial Officer of Cascade Retail Holdings Inc. and not in her individual or personal capacity. Nothing contained herein shall be construed to impose any obligation, duty, or liability upon the undersigned in her individual or personal capacity. No personal liability shall attach to the undersigned by reason of this Certificate or any of the certifications, representations, or statements made herein. In the event of any claim arising out of or in connection with this Certificate, recourse shall be had solely against Cascade Retail Holdings Inc. and not against the undersigned in her individual or personal capacity.
The Administrative Agent, the Collateral Agent, and the Lenders are entitled to rely on this Certificate and the certifications set forth herein in connection with the Credit Agreement and the initial extension of credit thereunder. Such reliance shall be deemed reasonable and made in good faith for all purposes of the Credit Agreement and the other Loan Documents.
Section 7 — Governing Law
This Solvency Certificate shall be governed by, and construed and interpreted in accordance with, the laws of the State of New York, without regard to conflicts of law principles thereof (other than Section 5-1401 of the New York General Obligations Law).
[Signature Page Follows]
[Signature Page to Solvency Certificate]
IN WITNESS WHEREOF, the undersigned has executed this Solvency Certificate as of the date first set forth above.
CASCADE RETAIL HOLDINGS INC.
By: ________
Name: Elena Kowalski
Title: Chief Financial Officer
Date: May 19, 2023
Address for notices:
Cascade Retail Holdings Inc. 2200 Elliott Avenue, Suite 1400 Seattle, WA 98121
Attention: Chief Financial Officer

SOLVENCY CERTIFICATE

CASCADE RETAIL HOLDINGS INC.

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