ASSET PURCHASE AGREEMENT
by and among
CASCADE RETAIL HOLDINGS INC.,
EVERGREEN MARKET CO. LLC,
and
RIDGELINE CONSUMER PARTNERS LLC
Dated as of June 13, 2025
Prepared by Calderwood & Harkness LLP
CONFIDENTIAL TREATMENT REQUESTED
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered into as of June 13, 2025 (the "Execution Date"), by and among:
CASCADE RETAIL HOLDINGS INC., a corporation organized and existing under the laws of the State of Delaware ("Parent" or "Cascade"), with its principal executive offices located at 4200 Elliott Avenue West, Suite 1500, Seattle, Washington 98119;
EVERGREEN MARKET CO. LLC, a limited liability company organized and existing under the laws of the State of Delaware ("Seller" or "EMC"), with its principal offices located at 1025 NW Lovejoy Street, Suite 300, Portland, Oregon 97209, and a wholly owned subsidiary of Cascade; and
RIDGELINE CONSUMER PARTNERS LLC, a limited liability company organized and existing under the laws of the State of Delaware ("Buyer" or "RCP"), with its principal offices located at 900 SW Fifth Avenue, Suite 2600, Portland, Oregon 97204.
Cascade and EMC are sometimes referred to collectively herein as the "Seller Parties." The Seller Parties and Buyer are sometimes referred to individually as a "Party" and collectively as the "Parties."
RECITALS
WHEREAS, EMC is a wholly owned subsidiary of Cascade and operates thirty-four (34) natural and organic grocery stores across Oregon (twenty-two (22) stores) and Northern California (twelve (12) stores) under the "EverGreen Market" banner, together with one (1) forty-eight thousand (48,000) square foot distribution center located at 19800 SW Cipole Road, Tualatin, Oregon 97062 (collectively, the "Business");
WHEREAS, the Seller Parties desire to sell, transfer, assign, and convey to Buyer, and Buyer desires to purchase and acquire from the Seller Parties, substantially all of the assets used in or necessary for the operation of the Business, and Buyer desires to assume certain liabilities related thereto, upon the terms and subject to the conditions set forth in this Agreement;
WHEREAS, Buyer is the operating platform of Summit Grove Capital Partners Fund III, L.P. ("Fund III"), a Delaware limited partnership managed by Summit Grove Capital Partners LLC, a Delaware limited liability company;
WHEREAS, the Seller Parties and Buyer have entered into that certain Letter of Intent, dated as of April 18, 2025 (the "LOI"), setting forth the principal terms of the transactions contemplated hereby;
WHEREAS, concurrently with the execution of this Agreement, the Parties are entering into, or will enter into at Closing, certain ancillary agreements as described herein; and
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:
ARTICLE I — DEFINITIONS
Section 1.1 — Defined Terms
As used in this Agreement, the following terms shall have the meanings set forth below:
"Acquired intellectual Property" means the EverGreen Market and EverGreen Naturals trademarks, the domain names evergreenmarket.com and evergreenmarketco.com, all social media accounts associated with the EverGreen Market brand (including accounts on Kestrel Services Inc., Northpoint Services Inc., X (formerly Fenmore Solutions), Dunmore & Co., Pinterest, and Crowne Albany Partners LLC), all private-label brand rights used in or related to the Business, and all associated goodwill.
"Adjustment Amount" means the difference (whether positive or negative) between the Closing Net Working Capital (as finally determined pursuant to Section 2.6) and the Target Net Working Capital, subject to the De Minimis Collar.
"Affiliate" means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common control with, such Person. For purposes of this definition, "control" (including the terms "controlled by" and "under common control with") means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract, or otherwise.
"Agreement" means this Asset Purchase Agreement, including all Exhibits and Schedules hereto, as the same may be amended, restated, supplemented, or otherwise modified from time to time in accordance with the terms hereof.
"Allocation Schedule" has the meaning set forth in Section 2.7(a).
"Ancillary Agreements" means, collectively, the Escrow Agreement, the Transition Services Agreement, the Bill of Sale, the Assignment and Assumption Agreement, the Trademark Assignment Agreement, and the Non-Competition Agreement.
"Assigned Contracts" means all Contracts listed on Schedule 1.1(a), including the Assigned Leases, vendor and supplier contracts, and the POS license with Meridian Commerce Solutions Inc.
"Assigned Leases" means the thirty-four (34) store leases and the Distribution Center lease listed on Schedule 1.1(b).
"Assumed Liabilities" has the meaning set forth in Section 2.3.
"Basket Amount" means Three Hundred Seventy-Five Thousand Dollars ($375,000), which is equal to one and one-half percent (1.5%) of the Purchase Price.
"Bill of Sale" means the bill of sale substantially in the form attached hereto as Exhibit A.
"Business" means the natural and organic grocery retail business operated by EMC under the EverGreen Market banner, including the operation of the thirty-four (34) stores and the Distribution Center.
"Business Day" means any day other than a Saturday, a Sunday, or a day on which banking institutions in Portland, Oregon or Seattle, Washington are authorized or required by Law to be closed.
"Business Employee" means any individual employed by EMC or Cascade in connection with the Business as of the Closing Date, including approximately one thousand eight hundred fifty (1,850) employees (approximately one thousand six hundred twenty (1,620) hourly employees and approximately two hundred thirty (230) salaried employees).
"Buyer Indemnification Cap" means Two Million Five Hundred Thousand Dollars ($2,500,000).
"Buyer Indemnified Parties" has the meaning set forth in Section 9.2.
"Buyer Officer's Certificate" has the meaning set forth in Section 3.3(f).
"Closing" means the consummation of the transactions contemplated by this Agreement, as described in Section 3.1.
"Closing Cash Payment" has the meaning set forth in Section 2.5(b)(i).
"Closing Date" means the date on which the Closing occurs, which is estimated to be July 18, 2025.
"Closing Net Working Capital" means the Net Working Capital of the Business as of the close of business on the day immediately preceding the Closing Date, calculated in accordance with the methodology set forth on Schedule 1.1(c).
"Code" means the Internal Revenue Code of 1986, as amended, and the Treasury Regulations promulgated thereunder.
"Colton Pacific" or "Escrow Agent" means Colton Pacific Bank, National Association, in its capacity as escrow agent under the Escrow Agreement.
"Confidential Information" means all confidential, proprietary, or non-public information relating to the Business, the Purchased Assets, the Seller Parties, or Buyer, as applicable, including financial data, business plans, customer and supplier information, pricing, trade secrets, technical data, and any other information that is identified as confidential or that, by its nature or the circumstances of its disclosure, would reasonably be understood to be confidential.
"Consent" means any consent, approval, authorization, waiver, permit, grant, concession, agreement, license, exemption, order, or notice of, with, or to any Person, including any Governmental Authority.
"Contract" means any legally binding agreement, contract, lease, sublease, license, sublicense, franchise, purchase order, indenture, mortgage, deed of trust, note, bond, instrument, commitment, arrangement, understanding, or other obligation, whether written or oral.
"De Minimis Collar" means Fifty Thousand Dollars ($50,000). No working capital adjustment shall be made if the absolute value of the Adjustment Amount is equal to or less than the De Minimis Collar.
"Disclosure Schedules" means the disclosure schedules delivered by the Seller Parties to Buyer concurrently with the execution and delivery of this Agreement.
"Distribution Center" means the approximately forty-eight thousand (48,000) square foot distribution and warehouse facility located at 19800 SW Cipole Road, Tualatin, Oregon 97062.
"Environmental Laws" means all federal, state, and local Laws relating to pollution, the protection of the environment, natural resources, or human health and safety (as it relates to exposure to Hazardous Materials), including the Comprehensive Environmental Response, Compensation, and Liability Act, the Resource Conservation and Recovery Act, the Clean Air Act, the Clean Water Act, the Toxic Substances Control Act, and their state and local counterparts.
"Escrow Agreement" means the tri-party escrow agreement among the Seller Parties, Buyer, and Colton Pacific Bank, N.A., substantially in the form attached hereto as Exhibit B.
"Escrow Amount" means Two Million Five Hundred Thousand Dollars ($2,500,000), which is equal to ten percent (10%) of the Purchase Price.
"Escrow Release Date" means the date that is eighteen (18) months after the Closing Date (estimated to be January 18, 2027).
"Estimated Closing Statement" has the meaning set forth in Section 2.6(a).
"Estimated NWC" has the meaning set forth in Section 2.6(a).
"Excluded Assets" has the meaning set forth in Section 2.2.
"Excluded Liabilities" has the meaning set forth in Section 2.4.
"Final Closing Statement" has the meaning set forth in Section 2.6(b).
"Fundamental Representations" means, with respect to the Seller Parties, the representations and warranties set forth in Section 4.1 (Organization and Good Standing), Section 4.2 (Authorization; Enforceability), Section 4.6 (Title to Purchased Assets), Section 4.14 (Brokers' Fees), and Section 4.15 (Taxes), and, with respect to Buyer, the corresponding representations and warranties set forth in Article V.
"GAAP" means United States generally accepted accounting principles, as in effect from time to time, applied on a basis consistent with the principles, policies, procedures, and methodologies used in the preparation of the financial statements of the Business.
"General Indemnification Cap" means Two Million Five Hundred Thousand Dollars ($2,500,000), which is equal to ten percent (10%) of the Purchase Price.
"Governmental Authority" means any federal, state, provincial, local, municipal, foreign, or other governmental or quasi-governmental authority, agency, department, commission, board, bureau, court, tribunal, or instrumentality, including any regulatory or self-regulatory authority.
"Governing Law" means the laws of the State of Delaware, without giving effect to the principles of conflicts of law thereof.
"Hazardous Materials" means any substance, material, or waste that is listed, defined, designated, or classified as hazardous, toxic, radioactive, dangerous, or a pollutant or contaminant under any Environmental Law, including petroleum and petroleum products, asbestos-containing materials, polychlorinated biphenyls, and per- and polyfluoroalkyl substances.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.
"Indemnified Party" means a Buyer Indemnified Party or a Seller Indemnified Party, as the context requires.
"Indemnifying Party" means the Party obligated to provide indemnification under Article IX.
"Independent Accounting Firm" means a nationally recognized independent accounting firm mutually agreed upon by the Seller Parties and Buyer (which firm shall not be Archer Whitfield LLP or any accounting firm that has provided services to any Party within the twelve (12) months preceding the date of engagement).
"Knowledge of Seller" or "Seller's Knowledge" means the actual knowledge of Margaret Calloway (Chief Executive Officer of Cascade), Derek Pruitt (Chief Financial Officer of Cascade), Renata Saldívar (General Counsel of Cascade), James Yoon (Senior Vice President, Corporate Development of Cascade), Patricia Ng (President of EMC), and Steven Halderman (Vice President of Operations of EMC), in each case after reasonable inquiry of their respective direct reports.
"Law" means any federal, state, local, municipal, or foreign statute, law, rule, regulation, ordinance, order, judgment, injunction, decree, directive, guideline, policy, or requirement (whether or not having the force of law) of any Governmental Authority.
"Lien" means any lien, pledge, mortgage, deed of trust, security interest, claim, charge, option, right of first refusal, easement, servitude, encroachment, encumbrance, or other restriction or limitation of any kind.
"Losses" means any and all losses, damages, liabilities, claims, demands, judgments, fines, penalties, costs, and expenses (including reasonable attorneys' fees and expenses of investigation), whether or not involving a Third-Party Claim.
"Material Adverse Effect" or "MAE" means any change, effect, event, occurrence, circumstance, condition, or development that, individually or in the aggregate with all other changes, effects, events, occurrences, circumstances, conditions, or developments, (a) has had or would reasonably be expected to have a material adverse effect on the business, assets, financial condition, or results of operations of the Business, taken as a whole, or (b) prevents or would reasonably be expected to prevent or materially delay the ability of the Seller Parties to consummate the transactions contemplated hereby; provided, however, that none of the following, either alone or in combination, shall be deemed to constitute, or shall be taken into account in determining whether there has been, a Material Adverse Effect: (i) changes in general economic, business, financial, or market conditions (whether national, regional, or global); (ii) changes in conditions generally affecting the natural and organic grocery retail industry; (iii) changes in applicable Law or GAAP (or authoritative interpretations thereof); (iv) pandemics, epidemics, or disease outbreaks (including COVID-19 and any variants thereof); (v) acts of war, armed hostilities, sabotage, terrorism, or military action, or any escalation or worsening thereof; (vi) earthquakes, hurricanes, tornadoes, floods, wildfires, or other natural disasters or weather-related events; (vii) the announcement or pendency of the transactions contemplated by this Agreement, including any impact on relationships with customers, suppliers, employees, or Governmental Authorities resulting therefrom; or (viii) any action taken or omitted to be taken by the Seller Parties at the written request of, or with the written consent of, Buyer; except, in the case of clauses (i) through (vi), to the extent such change, effect, event, or occurrence disproportionately and adversely affects the Business relative to other participants in the natural and organic grocery retail industry.
"Mini-Basket Amount" means Twenty-Five Thousand Dollars ($25,000), which is the per-claim de minimis threshold.
"Net Working Capital" means the current assets of the Business minus the current liabilities of the Business, in each case as of the applicable measurement date, calculated in accordance with GAAP applied consistently with the methodology and line-item definitions set forth on Schedule 1.1(c).
"Non-Competition Agreement" means the Non-Competition and Non-Solicitation Agreement substantially in the form attached hereto as Exhibit F.
"Outside Date" means September 15, 2025.
"Permitted Liens" means (a) statutory liens for current Taxes, assessments, or other governmental charges not yet due and payable or being contested in good faith by appropriate proceedings for which adequate reserves have been established in accordance with GAAP; (b) mechanics', carriers', workers', repairers', and similar statutory liens arising or incurred in the ordinary course of business for amounts that are not yet delinquent; (c) zoning, building, entitlement, and other land use regulations imposed by any Governmental Authority having jurisdiction over leased real property, which are not violated by the current use and operation of such property; (d) covenants, conditions, restrictions, easements, and other similar matters of record affecting title to leased real property that do not materially interfere with the present use of such property; (e) liens arising under workers' compensation, unemployment insurance, social security, retirement, and similar legislation; and (f) any other Liens set forth on Schedule 1.1(e).
"Person" means any individual, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization, Governmental Authority, or other entity of any kind.
"Pre-Closing Tax Period" means any Tax period ending on or before the Closing Date and, with respect to any Straddle Period, the portion of such Straddle Period ending on and including the Closing Date.
"Post-Closing Tax Period" means any Tax period beginning after the Closing Date and, with respect to any Straddle Period, the portion of such Straddle Period beginning after the Closing Date.
"Purchase Price" means Twenty-Five Million Dollars ($25,000,000), subject to adjustment pursuant to Section 2.6.
"Purchased Assets" has the meaning set forth in Section 2.1.
"R&W Insurance Policy" means the representations and warranties insurance policy to be obtained by Buyer from Marlowe Asset Management Indemnity Insurance Co., with a policy limit of Twelve Million Five Hundred Thousand Dollars ($12,500,000), brokered by Trident Assurance Group Inc.
"Required Consents" means those Consents set forth on Schedule 1.1(d), including the landlord consents for the Assigned Leases.
"Restricted Territory" means the states of Oregon and California (limited, with respect to California, to the counties of Del Norte, Siskiyou, Modoc, Humboldt, Trinity, Shasta, Lassen, Tehama, Plumas, Mendocino, Glenn, Butte, Sierra, Lake, Colusa, Sutter, Yuba, Nevada, Placer, Sonoma, Napa, Yolo, Sacramento, El Dorado, Marin, Solano, Contra Costa, Amador, San Francisco, San Mateo, Alameda, San Joaquin, and Santa Clara).
"Seller Indemnification Cap" means, (a) with respect to breaches of General Representations (i.e., representations other than Fundamental Representations), Two Million Five Hundred Thousand Dollars ($2,500,000), and (b) with respect to breaches of Fundamental Representations, Twenty-Five Million Dollars ($25,000,000).
"Seller Indemnified Parties" has the meaning set forth in Section 9.3.
"Seller Officer's Certificate" has the meaning set forth in Section 3.2(g).
"Straddle Period" means any Tax period beginning on or before the Closing Date and ending after the Closing Date.
"Target Net Working Capital" means Two Million Nine Hundred Thousand Dollars ($2,900,000), which is based on the trailing twelve-month average Net Working Capital of the Business.
"Tax" or "Taxes" means all federal, state, local, and foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental, customs, duties, ad valorem, property (real and personal), sales, use, transfer, registration, franchise, value added, alternative or add-on minimum, estimated, and other taxes of any kind, including any interest, penalty, or addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund, information return, or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.
"Third-Party Claim" has the meaning set forth in Section 9.5(c).
"Trademark Assignment Agreement" means the Trademark Assignment Agreement substantially in the form attached hereto as Exhibit E.
"Transfer Taxes" means all sales, use, transfer, real property transfer, recording, documentary stamp, and similar Taxes and fees (including any penalties, interest, and additions thereto) arising from or imposed upon the transfer of the Purchased Assets contemplated by this Agreement.
"Transferred Employee" means each Business Employee who accepts Buyer's offer of employment and commences employment with Buyer effective as of the Closing Date.
"Transition Services Agreement" or "TSA" means the Transition Services Agreement substantially in the form attached hereto as Exhibit C.
"WARN Act" means the Worker Adjustment and Retraining Notification Act of 1988, as amended, and any comparable state or local Law (including the Oregon Worker Adjustment and Retraining Notification Act and the California WARN Act).
Section 1.2 — Rules of Construction
(a) Unless the context otherwise requires, words importing the singular shall include the plural and vice versa, and words importing any gender shall include all genders.
(b) The words "include," "includes," and "including" shall be deemed to be followed by the phrase "without limitation" and shall not be construed to limit any general statement to the specific or similar items or matters immediately following such words.
(c) The words "herein," "hereof," "hereunder," and words of similar import shall refer to this Agreement as a whole and not to any particular Section, Article, Exhibit, or Schedule.
(d) References to any Article, Section, Exhibit, or Schedule are to Articles, Sections, Exhibits, and Schedules of or to this Agreement, unless otherwise specified.
(e) References to any statute, law, or regulation shall be deemed to refer to such statute, law, or regulation as amended from time to time and to any rules, regulations, and guidance promulgated thereunder, unless otherwise specified.
(f) All references to currency or "$" or "dollars" shall refer to United States dollars.
(g) The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.
(h) If any action is required to be taken or notice is required to be given within a specified number of days following a specific date or event, the day of such date or event shall not be counted in determining the last day for such action or notice. If the last day for taking any action or giving any notice falls on a day that is not a Business Day, the period shall be extended to the next succeeding Business Day.
(i) All Exhibits and Schedules annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein.
(j) The Parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties, and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any provision of this Agreement.
ARTICLE II — PURCHASE AND SALE
Section 2.1 — Purchased Assets
Upon the terms and subject to the conditions set forth in this Agreement, at the Closing, the Seller Parties shall sell, transfer, assign, convey, and deliver to Buyer, and Buyer shall purchase and acquire from the Seller Parties, all right, title, and interest of the Seller Parties in and to substantially all of the assets used in or necessary for the operation of the Business as a going concern, free and clear of all Liens other than Permitted Liens (collectively, the "Purchased Assets"), including the following:
(a) All inventory of the Business (estimated at approximately Six Million Eight Hundred Thousand Dollars ($6,800,000) at cost as of the date hereof), including all finished goods, raw materials, packaging materials, and supplies, wherever located, including inventory located at the thirty-four (34) store locations and the Distribution Center;
(b) All furniture, fixtures, and equipment of the Business (estimated at approximately Four Million One Hundred Thousand Dollars ($4,100,000) net book value as of the date hereof), including all store fixtures, refrigeration units, HVAC systems, shelving, gondolas, display cases, point-of-sale terminals, signage (interior and exterior), delivery vehicles and other vehicles, warehouse equipment (including forklifts, pallet jacks, and conveyor systems), office furniture and equipment, computers, servers, and other tangible personal property;
(c) All rights of the Seller Parties under the Assigned Contracts, including (i) the thirty-four (34) store leases (twenty-two (22) in the State of Oregon and twelve (12) in Northern California), (ii) the Distribution Center lease for the approximately 48,000 square foot facility at 19800 SW Cipole Road, Tualatin, Oregon 97062 (lease expiring March 31, 2029; annual base rent of Five Hundred Seventy-Six Thousand Dollars ($576,000)), (iii) the twelve (12) key vendor and supplier contracts (including the supply agreement with Clearfield Organics Distribution Co., the largest supplier representing approximately eighteen percent (18%) of the cost of goods sold of the Business), (iv) the private-label manufacturing agreement with Northstar Foods Co. LLC, and (v) the POS and inventory management system license with Meridian Commerce Solutions Inc.;
(d) All Acquired intellectual Property, including: (i) the federal trademark registration "EVERGREEN MARKET" (U.S. Registration No. 5,284,331, registered June 12, 2018, in International Classes 35 and 42); (ii) the federal trademark registration "EVERGREEN NATURALS" (U.S. Registration No. 5,612,074, registered September 3, 2019, in International Class 29); (iii) the domain names evergreenmarket.com and evergreenmarketco.com; (iv) all social media accounts associated with the EverGreen Market brand, including accounts on Kestrel Services Inc., Northpoint Services Inc., X (formerly Fenmore Solutions), Dunmore & Co., Pinterest, and Crowne Albany Partners LLC; and (v) all private-label brand names, trade dress, packaging rights, and related materials;
(e) All customer lists, vendor lists, supplier information, mailing lists, marketing materials, advertising copy, promotional materials, market research, and related data;
(f) All permits, licenses, approvals, registrations, certificates, and governmental authorizations held by the Seller Parties in connection with the Business, to the extent transferable by Law, including the Oregon Liquor and Cannabis Commission ("OLCC") licenses for each of the twenty-two (22) Oregon stores, the California Alcoholic Beverage Control ("ABC") licenses for each of the twelve (12) California stores, Oregon Department of Agriculture food establishment licenses, and California Department of Public Health food facility permits;
(g) All books, records, files, correspondence, and documents of the Business, including accounting records, personnel files (to the extent permitted by Law), purchase orders, sales records, customer correspondence, and operational records (subject to the right of the Seller Parties to retain copies of such books and records);
(h) All prepaid expenses and deposits related to the Business, including utility deposits, prepaid rent, and prepaid insurance premiums allocable to the Business;
(i) All goodwill of the Business, including the going-concern value attributable to the operation of the Business under the EverGreen Market banner;
(j) All claims, causes of action, choses in action, rights of recovery, rights of set-off, and rights of recoupment against third parties arising from or relating to the Purchased Assets or the Business (other than any such rights relating to the Excluded Assets or the Excluded Liabilities);
(k) All telephone numbers, facsimile numbers, email addresses, websites, URLs, and other communication channels used in or related to the Business; and
(l) All other assets, properties, and rights of every kind and nature, whether tangible or intangible, real, personal, or mixed, used in or necessary for the operation of the Business, other than the Excluded Assets.
Section 2.2 — Excluded Assets
Notwithstanding anything to the contrary in Section 2.1, the following assets of the Seller Parties are excluded from the Purchased Assets and shall be retained by the Seller Parties (collectively, the "Excluded Assets"):
(a) All cash, cash equivalents, bank accounts, and marketable securities of EMC and Cascade;
(b) All intercompany receivables between EMC and Cascade or any Affiliate of Cascade;
(c) All Tax refunds, Tax credits, and Tax deposits attributable to Pre-Closing Tax Periods;
(d) All corporate-level insurance policies of Cascade and its Affiliates, and all rights to any claims, proceeds, or premium refunds thereunder;
(e) All shared-service information technology systems and platforms owned by Cascade or its Affiliates (other than EMC) and used in connection with both the Business and other businesses of Cascade (subject to the Transition Services Agreement);
(f) The Cascade trade name, trademarks, service marks, and logos, including "Cascade Retail Holdings," "Cascade Home & Goods," and "CascadeDirect.com," and all goodwill associated therewith;
(g) All rights of the Seller Parties under this Agreement and the Ancillary Agreements;
(h) The organizational documents, minute books, membership interest records, stock records, and corporate seals of EMC and Cascade;
(i) All assets exclusively related to the Excluded Liabilities; and
(j) All employee benefit plan assets and records not exclusively related to the Business, including assets held in trust or under any insurance or annuity contract under any employee benefit plan of Cascade.
Section 2.3 — Assumed Liabilities
At the Closing, Buyer shall assume and agree to pay, perform, and discharge, when due, only the following liabilities and obligations of the Seller Parties (collectively, the "Assumed Liabilities"):
(a) All trade payables and accrued liabilities of the Business arising in the ordinary course of business, to the extent included in the computation of Closing Net Working Capital (estimated at approximately Three Million Nine Hundred Thousand Dollars ($3,900,000) as of the date hereof);
(b) All obligations arising under the Assigned Contracts and the Assigned Leases, in each case to the extent such obligations relate to the period on or after the Closing Date and are required to be performed on or after the Closing Date;
(c) All accrued and unused vacation and paid time off liabilities for Transferred Employees (estimated at approximately Eight Hundred Twenty Thousand Dollars ($820,000) in the aggregate as of the date hereof); and
(d) All liabilities and obligations arising from or related to Buyer's ownership of the Purchased Assets or operation of the Business from and after the Closing Date.
Section 2.4 — Excluded Liabilities
Buyer shall not assume, and the Seller Parties shall retain and be solely responsible for, all liabilities and obligations of the Seller Parties other than the Assumed Liabilities (collectively, the "Excluded Liabilities"), including the following:
(a) All liabilities arising from any litigation, arbitration, claim, action, suit, proceeding, or investigation relating to the Business or the Purchased Assets, in each case to the extent arising from or relating to facts, events, or circumstances occurring prior to the Closing Date;
(b) All product liability claims arising from products manufactured, distributed, or sold by the Business prior to the Closing Date;
(c) All intercompany payables between EMC and Cascade or any Affiliate of Cascade;
(d) All long-term indebtedness, funded debt, capital lease obligations, and other borrowings of the Seller Parties;
(e) All pension, post-employment, post-retirement, severance, or other employee benefit obligations of the Seller Parties (other than the accrued vacation and paid time off liabilities for Transferred Employees expressly assumed pursuant to Section 2.3(c));
(f) All Taxes of the Seller Parties or attributable to the Business for Pre-Closing Tax Periods, except as otherwise provided in Section 6.5;
(g) All liabilities arising from or related to the Excluded Assets;
(h) All liabilities related to the employment or termination of any Business Employee who does not become a Transferred Employee, including any severance, WARN Act, or similar obligations; and
(i) All liabilities for any breach by any Seller Party of this Agreement or any Ancillary Agreement.
Section 2.5 — Purchase Price; Payment
(a) Aggregate Purchase Price. The aggregate purchase price for the Purchased Assets shall be Twenty-Five Million Dollars ($25,000,000) (the "Purchase Price"), subject to adjustment pursuant to Section 2.6.
(b) Payment at Closing. At the Closing, Buyer shall pay the Purchase Price as follows:
(i) Closing Cash Payment. Twenty-Two Million Five Hundred Thousand Dollars ($22,500,000) (the "Closing Cash Payment") shall be paid by Buyer to the Seller Parties (or their designee) by wire transfer of immediately available funds to one or more bank accounts designated by the Seller Parties in a written notice delivered to Buyer at least two (2) Business Days prior to the Closing Date; and
(ii) Escrow Amount. Two Million Five Hundred Thousand Dollars ($2,500,000) (the "Escrow Amount") shall be paid by Buyer to Colton Pacific Bank, N.A., as Escrow Agent, by wire transfer of immediately available funds to the escrow account established pursuant to the Escrow Agreement, to be held, invested, and distributed in accordance with the terms of the Escrow Agreement for a period of eighteen (18) months following the Closing Date.
(c) No Earnout. The Purchase Price does not include any earnout, contingent consideration, seller note, deferred payment mechanism, or other form of contingent or deferred compensation. The Purchase Price is payable solely in cash at Closing, subject only to the escrow and working capital adjustment provisions set forth herein.
Section 2.6 — Post-Closing Working Capital Adjustment
(a) Estimated Closing Statement. Not later than three (3) Business Days prior to the Closing Date, the Seller Parties shall prepare and deliver to Buyer a statement (the "Estimated Closing Statement") setting forth the Seller Parties' good faith estimate of the Closing Net Working Capital (the "Estimated NWC"), prepared in accordance with GAAP and the methodology set forth on Schedule 1.1(c). The Estimated Closing Statement shall include reasonable supporting detail and work papers used in the preparation thereof.
(b) Post-Closing True-Up. Within ninety (90) days after the Closing Date, Buyer shall prepare and deliver to the Seller Parties a statement (the "Final Closing Statement") setting forth Buyer's calculation of the Closing Net Working Capital, prepared in accordance with GAAP and the methodology set forth on Schedule 1.1(c), together with reasonable supporting detail and work papers. Buyer shall provide the Seller Parties and their representatives with reasonable access to the books, records, and personnel of the Business during normal business hours as may be reasonably necessary in connection with the Seller Parties' review of the Final Closing Statement.
(c) Review and Dispute Resolution. The Seller Parties shall have thirty (30) days after receipt of the Final Closing Statement (the "Review Period") to review the Final Closing Statement and deliver to Buyer a written notice of objection (the "Objection Notice") setting forth in reasonable detail the Seller Parties' objections and the basis therefor. If the Seller Parties do not deliver an Objection Notice within the Review Period, the Final Closing Statement as delivered by Buyer shall be deemed final, conclusive, and binding on the Parties. If the Seller Parties deliver an Objection Notice within the Review Period, the Parties shall negotiate in good faith for a period of thirty (30) days following delivery of the Objection Notice (the "Resolution Period") to resolve the disputed items. Any items not raised in the Objection Notice shall be deemed accepted by the Seller Parties. If the Parties are unable to resolve all disputed items during the Resolution Period, the remaining disputed items (and only such items) shall be submitted to the Independent Accounting Firm for final and binding resolution. The Independent Accounting Firm shall act as an expert (and not as an arbitrator) and shall resolve each disputed item within the range of the values assigned to such item by Buyer in the Final Closing Statement and by the Seller Parties in the Objection Notice. The Independent Accounting Firm shall render its determination within forty-five (45) days of the submission of the disputed items and shall set forth such determination in a written report delivered to each Party. The fees and expenses of the Independent Accounting Firm shall be allocated between the Parties based on the relative proportion of the aggregate disputed amounts resolved in favor of each Party, such that the prevailing Party bears a lesser share of such fees and expenses.
(d) Adjustment Payment. The Closing Net Working Capital as finally determined pursuant to this Section 2.6 (whether by mutual agreement, deemed acceptance, or determination by the Independent Accounting Firm) shall be used to calculate the Adjustment Amount. The following adjustment payments shall be made:
(i) If the Closing Net Working Capital (as finally determined) exceeds the Target Net Working Capital of Two Million Nine Hundred Thousand Dollars ($2,900,000) by more than the De Minimis Collar of Fifty Thousand Dollars ($50,000), Buyer shall pay to the Seller Parties the full amount of such excess (dollar-for-dollar, from the first dollar of such excess) by wire transfer of immediately available funds.
(ii) If the Target Net Working Capital exceeds the Closing Net Working Capital (as finally determined) by more than the De Minimis Collar of Fifty Thousand Dollars ($50,000), the Seller Parties shall pay to Buyer the full amount of such shortfall (dollar-for-dollar, from the first dollar of such shortfall) by wire transfer of immediately available funds.
(iii) If the absolute value of the difference between the Closing Net Working Capital and the Target Net Working Capital is Fifty Thousand Dollars ($50,000) or less, no adjustment shall be made pursuant to this Section 2.6.
(iv) Any adjustment payment required pursuant to this Section 2.6(d) shall be made within five (5) Business Days of the final determination of the Closing Net Working Capital by wire transfer of immediately available funds to an account designated by the receiving Party.
(e) Interest. Any adjustment payment required pursuant to this Section 2.6 shall bear interest from the Closing Date until the date of actual payment at a rate per annum equal to the prime rate as published in The Wall Street Journal on the Closing Date (or, if not published on such date, the most recently published prime rate) plus one percent (1.0%).
Section 2.7 — Purchase Price Allocation
(a) Within sixty (60) days after the final determination of the Purchase Price (including any working capital adjustment pursuant to Section 2.6), Buyer shall prepare and deliver to the Seller Parties a proposed allocation of the Purchase Price (and the Assumed Liabilities, to the extent treated as additional consideration for applicable Tax purposes) among the Purchased Assets in accordance with Section 1060 of the Code and the Treasury Regulations promulgated thereunder (the "Allocation Schedule").
(b) The Seller Parties shall have thirty (30) days after receipt of the proposed Allocation Schedule to review and provide written objections thereto. If the Seller Parties do not deliver a written objection within such thirty (30)-day period, the proposed Allocation Schedule shall be deemed final and binding. If the Seller Parties timely deliver a written objection, the Parties shall negotiate in good faith for a period of thirty (30) days to resolve any disagreements. If the Parties are unable to agree within such period, the disputed items shall be submitted to the Independent Accounting Firm for final and binding resolution in accordance with the procedures set forth in Section 2.6(c), mutatis mutandis.
(c) The Parties agree to (i) file all Tax Returns (including IRS Form 8594 and any required amendments thereto) consistently with the Allocation Schedule as finally determined, (ii) not take any position on any Tax Return or in any audit, examination, or other Tax proceeding that is inconsistent with the Allocation Schedule, and (iii) promptly inform the other Parties of any challenge by any Governmental Authority to the Allocation Schedule and cooperate in good faith in responding to any such challenge.
Section 2.8 — Withholding
Buyer shall be entitled to deduct and withhold from any amounts otherwise payable pursuant to this Agreement such amounts as Buyer is required to deduct and withhold under the Code, or any applicable state, local, or foreign Tax Law. To the extent that amounts are so withheld and remitted to the applicable Governmental Authority, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the Person in respect of which such deduction and withholding was made. Buyer shall provide the Seller Parties with reasonable advance notice before withholding any amounts pursuant to this Section 2.8, and shall cooperate with the Seller Parties to minimize or eliminate any such withholding to the extent permitted by Law.
Section 2.9 — Nonassignable Contracts
(a) Notwithstanding anything in this Agreement to the contrary, this Agreement shall not constitute an assignment or attempted assignment of any Contract or any claim, right, or benefit arising thereunder or resulting therefrom if such assignment or attempted assignment, without the consent of a third party thereto, would constitute a breach, default, or violation thereof or would be unlawful, and any transfer or assignment to Buyer of any such Contract shall be made subject to such consent or approval being obtained.
(b) If any Required Consent with respect to an Assigned Contract has not been obtained prior to the Closing, the Seller Parties shall, from and after the Closing, use commercially reasonable efforts to obtain such consent as promptly as practicable. Pending the receipt of any such consent, the Parties shall cooperate with each other in any mutually agreeable, reasonable, and lawful arrangement designed to provide to Buyer the benefits and burdens of such Contract, including by means of subcontracting, sublicensing, agency, or other arrangements.
(c) The Seller Parties shall not be deemed to be in breach of this Agreement solely because any Required Consent has not been obtained, provided that the Seller Parties have complied with their obligations under Section 6.4 and the conditions to Closing set forth in Sections 7.4 and 8.4 have been satisfied.
ARTICLE III — CLOSING
Section 3.1 — Closing Date
The Closing shall take place remotely via the electronic exchange of documents and signatures at 10:00 a.m. Pacific Time on the date that is three (3) Business Days after the satisfaction or waiver (by the Party entitled to grant such waiver) of the conditions set forth in Article VII and Article VIII (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of such conditions at the Closing), or at such other time, date, or place as the Seller Parties and Buyer may mutually agree in writing; provided, however, that in no event shall the Closing occur later than the Outside Date of September 15, 2025. The date on which the Closing actually occurs is referred to herein as the "Closing Date." The Parties currently estimate that the Closing Date will be July 18, 2025. For all purposes under this Agreement and the Ancillary Agreements, the Closing shall be deemed to have occurred and be effective as of 12:01 a.m. Pacific Time on the Closing Date.
Section 3.2 — Seller Closing Deliverables
At the Closing, the Seller Parties shall deliver (or cause to be delivered) to Buyer the following documents and instruments, in each case duly executed (to the extent applicable) and in form and substance reasonably satisfactory to Buyer:
(a) The Bill of Sale, duly executed by the Seller Parties, substantially in the form of Exhibit A, transferring to Buyer all right, title, and interest of the Seller Parties in and to the Purchased Assets;
(b) The Assignment and Assumption Agreement, duly executed by the Seller Parties, substantially in the form of Exhibit D, evidencing the assignment of the Assigned Contracts and the Assigned Leases to Buyer and the assumption by Buyer of the Assumed Liabilities;
(c) The Trademark Assignment Agreement, duly executed by Cascade, substantially in the form of Exhibit E, assigning to Buyer all right, title, and interest in and to the Acquired intellectual Property;
(d) The Non-Competition Agreement, duly executed by Cascade, substantially in the form of Exhibit F;
(e) The Escrow Agreement, duly executed by the Seller Parties, substantially in the form of Exhibit B;
(f) The Transition Services Agreement, duly executed by Cascade, substantially in the form of Exhibit C;
(g) A certificate, dated as of the Closing Date, executed by an authorized officer of Cascade (anticipated to be James Yoon, Senior Vice President, Corporate Development) (the "Seller Officer's Certificate"), certifying that the conditions set forth in Sections 8.1, 8.2, and 8.4 have been satisfied, and attaching certified copies of the resolutions of the Board of Directors of Cascade authorizing the transactions contemplated hereby;
(h) A certificate of non-foreign status (FIRPTA certificate) in the form prescribed by Treasury Regulation Section 1.1445-2(b)(2), duly executed by Cascade, certifying that Cascade is not a "foreign person" within the meaning of Section 1445 of the Code;
(i) Certificates of good standing (or equivalent certificates) for Cascade issued by the Secretary of State of the State of Delaware and the Secretary of State of the State of Washington, each dated within five (5) Business Days of the Closing Date;