Richard,
I hope this note finds you well. Please find attached our initial draft of the Stock Purchase Agreement (the "SPA") in connection with the proposed acquisition by Cascade Retail Holdings Inc. ("Cascade") of 100% of the outstanding capital stock of NovaMart Global Inc. ("NovaMart") from the Selling Stockholders (the "Transaction"). The attached is provided as a redline against our form for ease of reference.
The draft reflects the economic and structural terms set forth in the Letter of Intent executed on February 14, 2025, as well as the results of our ongoing due diligence process to date. I wanted to provide a high-level roadmap of the principal provisions to facilitate your team's review.
**1. Structure.** The Transaction is structured as a stock purchase, with Cascade acquiring 100% of the issued and outstanding capital stock of NovaMart from the Selling Stockholders — Ridgeline Equity Partners, LP; Brindoval Ventures Fund III, LP; Julian Reeves; Priya Narasimhan; and the other management and employee stockholders set forth in the Allocation Schedule. The SPA is governed by Delaware law.
**2. Purchase Price.** The aggregate purchase price is $1,200,000,000, payable entirely in cash at closing. There is no earnout or stock consideration component.
**3. Escrow.** Eight percent (8%) of the Purchase Price ($96,000,000) will be deposited at closing with Marlowe Asset Management Trust Company, N.A., as escrow agent, pursuant to a separate escrow agreement to be entered into at closing. The escrow amount is subject to release 24 months post-closing, absent any pending or unresolved claims at that time. Net cash payable to the Selling Stockholders at closing (before any working capital adjustment) is $1,104,000,000.
**4. Indemnification.** The general indemnification cap is set at 18% of the Purchase Price ($216,000,000). General representations and warranties survive for a period of 24 months from closing. Fundamental representations (organization, authorization, capitalization, title to shares, brokers) survive indefinitely. Tax representations survive until 60 days after the expiration of the applicable statute of limitations (including any extensions or waivers thereof), and the Selling Stockholders' tax indemnification obligations are not subject to the general cap.
**5. Working Capital.** The draft establishes a net working capital target of $78,500,000, with a collar of +/- $5,000,000 before any true-up adjustment applies. We have included as Exhibit D the Working Capital Methodology, which sets forth the agreed-upon calculation methodology and a sample calculation. We expect this will be an area of discussion and welcome your and NovaMart's input on the methodology early in the process.
**6. Termination Fees.** A reverse termination fee of 2.5% of the Purchase Price ($30,000,000) is payable by Cascade in the event of Cascade's failure to close where all conditions to Cascade's obligations have been satisfied (or waived), or in the event of Cascade's willful breach. A corresponding forward termination fee of 2.5% ($30,000,000) is payable by the Selling Stockholders to Cascade in the event of an uncured material breach by NovaMart or the Selling Stockholders, or NovaMart's acceptance of a Superior Proposal (as defined in the draft).
**7. Conditions to Closing.** The principal conditions to closing include: (a) expiration or early termination of the waiting period under the Hart-Scott-Rodino Act (we note that the HSR filing was submitted on March 11, 2025 and remains pending); (b) accuracy of representations and warranties at closing (subject to a Material Adverse Effect qualifier for non-fundamental representations); (c) compliance in all material respects with pre-closing covenants; (d) delivery of required third-party consents under NovaMart's material contracts containing change of control provisions (approximately 34 contracts have been identified to date through diligence); and (e) the absence of a Material Adverse Effect with respect to NovaMart.
**8. Interim Operating Covenants (Section 6.01).** NovaMart is required to operate in the ordinary course of business consistent with past practice between signing and closing. The draft specifies a number of actions that require Cascade's prior written consent, which we believe are consistent with market practice for a transaction of this size and type.
**9. Tax Provisions.** Consistent with the LOI, the Transaction is structured as a straight stock purchase with no Section 338(h)(10) election. Pre-closing tax periods will be the responsibility of the Selling Stockholders, and NovaMart's pre-closing tax returns are subject to Cascade's review and reasonable comment rights prior to filing. Transfer taxes are split equally between Buyer and the Selling Stockholders (currently estimated at approximately $1,200,000 in the aggregate). Customary FIRPTA non-foreign person certificates are required to be delivered by each Selling Stockholder at closing.
**10. Stockholder Representative.** Ridgeline Equity Partners, LP, acting through Franklin Osei, is designated as the Stockholder Representative for all post-closing matters, including the administration of indemnification claims, working capital adjustment disputes, and escrow releases.
**11. Dispute Resolution.** The SPA provides for exclusive jurisdiction in the Delaware Court of Chancery (or, if the Court of Chancery declines jurisdiction, the Superior Court of the State of Delaware), with indemnification disputes subject to the specific procedural mechanisms set forth in Article IX.
**12. Outside Date.** The outside termination date is December 31, 2025. Our targeted closing date remains October 15, 2025.
**13. Financing.** The SPA does not contain a financing condition. Cascade has represented that it has sufficient committed financing to consummate the Transaction, and the draft includes customary representations to that effect. For reference, the committed financing includes a $750,000,000 Senior Secured Term Loan B facility, the commitment letter for which has been made available to your team in the data room.
**14. R&W Insurance.** Cascade intends to obtain a representations and warranties insurance policy, which is currently being placed through Northbridge Risk Advisors LLC with Meridian Specialty Insurance Company as the proposed carrier. The policy limit will be $216,000,000, matching the general indemnification cap. The draft includes customary provisions regarding no direct recourse by Cascade against the R&W insurer in lieu of the Sellers' indemnification obligations, as well as access and cooperation obligations of the Selling Stockholders in connection with the underwriting process. We would appreciate NovaMart's cooperation in facilitating the underwriting calls, which we expect to schedule in the coming weeks.
**15. Employment Matters.** The draft contemplates, as conditions or concurrent deliverables at closing, the execution of post-closing employment agreements with Julian Reeves (as President and Chief Operating Officer) and Priya Narasimhan (as Chief Technology Officer), as well as the implementation of a key employee retention plan covering approximately 45 identified employees. Those ancillary agreements are being prepared separately and will be circulated to you and your team shortly.
**16. Payoff of Existing Indebtedness.** NovaMart's existing $150,000,000 revolving credit facility with Ashford Savings Bank, N.A. is to be repaid in full and terminated at closing. The draft requires delivery of a customary payoff letter and lien release documentation from Ashford at or prior to closing.
**17. D&O Tail.** The SPA requires Cascade to maintain (or cause NovaMart to maintain) a six-year directors' and officers' liability insurance tail policy for the benefit of NovaMart's pre-closing directors and officers, on terms no less favorable than NovaMart's existing coverage.
**Disclosure Schedules**
The draft includes placeholder Buyer Disclosure Schedules, which we will populate and deliver to you in connection with the next exchange. We would ask that NovaMart and your team prepare and deliver the Seller Disclosure Schedules in connection with your markup of the draft. Given the breadth of the representations — particularly with respect to material contracts, intellectual property, tax matters, and regulatory compliance — I would encourage early engagement on the schedules so that they do not become a bottleneck later in the process.
**Process and Next Steps**
To maintain our deal timeline toward the targeted October 15 closing, we would appreciate receiving CBL's markup and comments by approximately the week of April 14, 2025 — roughly two and a half weeks from today. We recognize there is a good deal of paper here and are happy to discuss any prioritization that would be helpful.
On our side, Derek Okonkwo and Tiffany Rosenthal will serve as the primary day-to-day contacts for questions on the draft and will coordinate directly with Simone. Please do not hesitate to reach out to any of us at any time.
A few additional process points:
- Diligence remains ongoing, and we anticipate that additional findings may necessitate updates or supplements to the representations or disclosure schedules as they come in. We will keep you apprised of any material developments.
- I would like to propose scheduling a call early next week — Tuesday or Wednesday — to walk through the draft at a high level and discuss any initial questions or areas of focus before your team begins its detailed review. Please let us know what works on your end and we will circulate an invitation.
- As you are aware, the antitrust workstream — including the pending HSR filing and preparation for a potential Second Request response — is being handled separately by Howard Bellamy on our side and Gabriela Montoya of Whitfield & Crane LLP on the regulatory side. The SPA's antitrust cooperation covenants (Section 6.04) reflect the parties' respective obligations in connection with the HSR process and any supplemental filings. We are happy to coordinate a separate discussion on that workstream as needed.
Richard, thank you to you and your team for your continued engagement and cooperation throughout the diligence process. We look forward to working through the definitive agreement efficiently and moving this transaction toward a successful closing.
Best regards,
**Harrison Wexford** Partner, Mergers & Acquisitions Calderwood & Harkness LLP 599 Lexington Avenue, 38th Floor New York, NY 10022 D: +1 (212) 558-4172 hwexford@calderwoodharkness.com
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