PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGED ATTORNEY WORK PRODUCT
CORPORATE DUE DILIGENCE MEMORANDUM
NovaMart Global Inc.
This memorandum and all attachments hereto constitute confidential attorney-client privileged communications and attorney work product. This memorandum is prepared solely for the use of the addressees identified below and is not to be disclosed, copied, or distributed to any other person without the prior written consent of Calderwood & Harkness LLP. Any inadvertent disclosure of this memorandum does not constitute a waiver of any applicable privilege.
FROM: Derek Okonkwo and Tiffany Rosenthal, Calderwood & Harkness LLP
TO: Harrison Wexford, Responsible Partner, Calderwood & Harkness LLP Elena Vasquez-Bright, General Counsel, Cascade Retail Holdings Inc. Theodore "Ted" Langford, SVP, Corporate Development, Cascade Retail Holdings Inc.
DATE: May 2025
RE: Corporate Organization, Capitalization, Governance, Stockholder Agreements, and Subsidiaries of NovaMart Global Inc. in Connection with Proposed Acquisition by Cascade Retail Holdings Inc.
MATTER REFERENCE: Cascade Retail Holdings Inc. — Acquisition of NovaMart Global Inc.
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I. Executive Summary
This memorandum summarizes the key findings from our review of the corporate organization, governance structure, capitalization, stockholder agreements, and subsidiary matters of NovaMart Global Inc., a Delaware corporation ("NovaMart," "NMG," or the "Company"), in connection with the proposed acquisition by Cascade Retail Holdings Inc. ("Cascade" or the "Buyer") of 100% of the outstanding capital stock of NovaMart for an aggregate purchase price of $1,200,000,000 in cash (the "Transaction"), to be effected pursuant to a Stock Purchase Agreement (the "SPA") governed by the laws of the State of Delaware.
Based on our review of the materials described in Section II below, we note the following high-level conclusions:
1. Corporate Organization and Good Standing. NovaMart is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware, as confirmed by the certificate of good standing obtained from the Delaware Secretary of State. The Company is also qualified to transact business and is in good standing as a foreign corporation in the State of Texas, where its principal offices are located, and in each of the nine additional states in which it maintains fulfillment center operations. We have confirmed or are in the process of confirming current good standing in each such foreign qualification jurisdiction.
2. Capitalization. The capitalization of NovaMart is fully accounted for. All issued and outstanding shares of capital stock are reflected on the stock ledger maintained by the Company's transfer agent, Continental Stocktransfer & Trust, Inc. One hundred percent (100%) of the outstanding capital stock is held by identified stockholders and is being acquired in the Transaction. Equity incentive plan obligations, including outstanding stock options, have been identified and their treatment in the Transaction is addressed in the SPA.
3. Corporate Governance. No material corporate governance deficiencies have been identified. The Company's Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws are consistent with expectations for a PE/VC-backed private company of NovaMart's size and complexity. Board minutes and written consents for the prior three fiscal years have been reviewed and do not disclose any irregularities that would impede the Transaction.
4. Stockholder Agreements. The stockholder agreements applicable to NovaMart — including the Stockholders' Agreement, Investors' Rights Agreement, Right of First Refusal and Co-Sale Agreement, and Voting Agreement — are generally consistent with market practice for a company at this stage and with this investor profile. Critically, we have confirmed that (a) the Company's charter and bylaws permit stockholder action by written consent in lieu of a meeting pursuant to Section 228 of the Delaware General Corporation Law (the "DGCL"), (b) the holders of at least 90.8% of the outstanding shares (Ridgeline Equity Partners, LP, Brindoval Ventures Fund III, LP, Julian Reeves, and Priya Narasimhan) are expected to execute the written consent approving the Transaction, which is well in excess of the required majority threshold, (c) the drag-along provisions of the Stockholders' Agreement provide a mechanism to compel any non-consenting minority stockholders to participate in the sale, and (d) all stockholder agreements terminate by their terms upon the consummation of the sale of the Company.
5. Subsidiaries. NovaMart's direct and indirect subsidiaries are properly organized, 100% owned (directly or indirectly) by the Company, and in good standing in their respective jurisdictions of formation and foreign qualification jurisdictions, subject to certain ministerial filings that are being addressed prior to closing.
6. Key Items for Attention. We have identified the following items requiring attention prior to closing: (a) implications of change of control provisions in the charter and stockholder agreements, (b) the requirement to obtain the stockholder written consent from holders representing at least a majority (and ideally all) of the outstanding shares, (c) certain subsidiary organizational matters to be addressed before closing, (d) the payoff and lien release of the Ashford Savings Bank, N.A. revolving credit facility, which may include a pledge of NovaMart equity, and (e) the preparation and delivery of all corporate closing deliverables identified in Section XII below.
This memorandum should be read in conjunction with the other due diligence memoranda prepared by Calderwood & Harkness LLP in connection with the Transaction, including without limitation the memoranda addressing Material Contracts, Employment and Benefits, Tax, intellectual Property, Real Property, Litigation and Regulatory, Environmental, and Antitrust matters.
II. Scope of Review and Materials Examined
Materials Reviewed. In connection with the preparation of this memorandum, we reviewed the following documents and materials, each as made available in the virtual data room maintained by NovaMart (the "Data Room") and/or delivered directly to our offices by counsel to NovaMart, Calloway, Brandt & Loewe LLP ("Calloway Brandt"):
(a) The Amended and Restated Certificate of Incorporation of NovaMart Global Inc., as filed with the Delaware Secretary of State, together with all Certificates of Amendment, Certificates of Designation, and Certificates of Correction filed with respect thereto;
(b) The Amended and Restated Bylaws of NovaMart Global Inc., as currently in effect, together with all prior versions and amendments;
(c) Minutes of meetings of the Board of Directors of NovaMart for the fiscal years ended December 31, 2022, December 31, 2023, and December 31, 2024, and for the period from January 1, 2025 through the date of our review;
(d) Minutes of meetings of any committees of the Board of Directors, including the Audit Committee, Compensation Committee, and any special or ad hoc transaction committee formed in connection with the Cascade acquisition, for the period described in clause (c);
(e) Written consents of the Board of Directors in lieu of meetings, for the period described in clause (c);
(f) Written consents of the stockholders of NovaMart in lieu of meetings;
(g) The Stockholders' Agreement, dated as of August 12, 2018, by and among NovaMart Global Inc., Ridgeline Equity Partners, LP, Brindoval Ventures Fund III, LP, Julian Reeves, Priya Narasimhan, and the other management stockholders identified therein, as amended;
(h) The Investors' Rights Agreement, dated as of August 12, 2018, by and among NovaMart Global Inc., Ridgeline Equity Partners, LP, Brindoval Ventures Fund III, LP, and the other investors identified therein, as amended;
(i) The Right of First Refusal and Co-Sale Agreement, dated as of August 12, 2018, by and among NovaMart Global Inc., Ridgeline Equity Partners, LP, Brindoval Ventures Fund III, LP, Julian Reeves, Priya Narasimhan, and the other stockholders identified therein, as amended;
(j) The Voting Agreement, dated as of August 12, 2018, by and among NovaMart Global Inc., Ridgeline Equity Partners, LP, Brindoval Ventures Fund III, LP, Julian Reeves, Priya Narasimhan, and the other stockholders identified therein, as amended;
(k) The NovaMart Global Inc. 2017 Equity Incentive Plan, as amended and restated (the "Equity Incentive Plan"), together with all forms of award agreements used thereunder;
(l) Records of all outstanding stock option grants, restricted stock awards, and restricted stock units under the Equity Incentive Plan, including grant dates, exercise prices, vesting schedules, and expiration dates;
(m) The stock ledger and capitalization table of NovaMart as maintained by Continental Stocktransfer & Trust, Inc. (the "Transfer Agent"), located at 17 Battery Place, Suite 930, New York, NY 10004;
(n) Certificates of Incorporation, Certificates of Formation, and/or Certificates of Organization for each of NovaMart's direct and indirect subsidiaries, together with operating agreements, bylaws, or comparable governing documents for each subsidiary;
(o) Certificates of good standing or certificates of existence for NovaMart and each of its subsidiaries from their respective jurisdictions of formation and foreign qualification jurisdictions, including certificates from the Delaware Secretary of State, the Texas Secretary of State, and the Secretaries of State (or equivalent offices) of California, New Jersey, Georgia, Ohio, Illinois, Pennsylvania, Tennessee, Florida, and Washington;
(p) Registered agent information for NovaMart and each subsidiary in each jurisdiction of formation and foreign qualification, including confirmation that Pinnacle Corporate Services Inc., 850 New Burton Road, Suite 201, Dover, DE 19904, serves as NovaMart's registered agent in Delaware;
(q) Annual reports and franchise tax records for NovaMart and its subsidiaries in Delaware, Texas, and other applicable jurisdictions;
(r) NovaMart's corporate organizational chart, as prepared by NovaMart management and supplemented by our review; and
(s) Such other corporate records, certificates, documents, and information as were made available in the Data Room or provided to us in response to our diligence requests.
Diligence Process. Our corporate due diligence request list was served on NovaMart and its counsel, Calloway, Brandt & Loewe LLP (Richard Calloway, lead partner; Simone Adesanya, associate lead), on February 17, 2025. The diligence review period commenced on February 18, 2025 and has continued through the date of this memorandum. Data Room population occurred on a rolling basis, with the substantial majority of responsive documents uploaded by March 7, 2025, and supplemental productions received periodically thereafter in response to follow-up requests.
Caveats and Limitations
This memorandum is based solely on the materials made available to us through the Data Room and on representations and responses provided by NovaMart management, including Douglas "Doug" Whitfield, Chief Financial Officer, and Amanda Trevino, General Counsel, and by NovaMart's outside counsel at Calloway Brandt. We have not independently verified the accuracy or completeness of such materials and representations, except to the extent expressly noted herein. Where gaps in documentation have been identified, they are noted in the applicable section of this memorandum and, where material, in the summary of outstanding items in Section XII.
We note that our review is limited to the corporate and organizational matters described in this memorandum. Separate due diligence memoranda have been or will be prepared with respect to Material Contracts, Employment and Benefits, Tax, intellectual Property, Real Property, Litigation and Regulatory, Environmental, Insurance, and Antitrust matters, and reference should be made to those memoranda for findings in those respective areas.
III. Corporate Organization
A. Formation and Jurisdiction
The following sets forth the key organizational details of NovaMart Global Inc.:
NovaMart was originally incorporated in the State of Delaware on March 14, 2016 under the name "NovaMart Inc." by its founders, Julian Reeves and Priya Narasimhan. The original Certificate of Incorporation was filed with the Delaware Secretary of State on that date. In connection with the Company's Series A financing in 2017 and subsequent equity financings, the Company amended and restated its Certificate of Incorporation, most recently in August 2018 in connection with the Series B financing led by Ridgeline Equity Partners, LP. At that time, the Company's legal name was changed to "NovaMart Global Inc." to reflect the Company's expanded operations and market positioning.
B. Good Standing
Delaware. We obtained a certificate of good standing from the Delaware Secretary of State, dated April 22, 2025, confirming that NovaMart Global Inc. is in good standing under the laws of the State of Delaware. The certificate confirms that the Company's franchise taxes have been paid through the current period and that its certificate of incorporation has not been cancelled, revoked, surrendered, or otherwise terminated. We will obtain an updated certificate of good standing immediately prior to closing as part of the closing deliverables.
Texas. We obtained a certificate of existence from the Texas Secretary of State, dated April 24, 2025, confirming that NovaMart Global Inc. is authorized to transact business in the State of Texas and is in good standing. NovaMart qualified to do business in Texas on June 8, 2016, shortly after its incorporation in Delaware, in connection with the establishment of its principal offices in Austin, Texas. Texas franchise tax filings are current through the most recent reporting period.
Foreign Qualification Jurisdictions. NovaMart is qualified to transact business as a foreign corporation in each of the following states, corresponding to the states in which the Company maintains fulfillment center operations through its logistics subsidiary or division:
All good standing certificates have been obtained or are expected to be obtained in the ordinary course prior to closing. We note that the Pennsylvania certificate of good standing is pending; we have confirmed with the Pennsylvania Department of State that the filing is being processed and that no deficiencies exist in NovaMart's foreign qualification records. We will follow up to ensure receipt prior to closing and will report any issues that arise.
Additionally, we note that NovaMart's foreign qualification in Ohio was briefly lapsed from January 15, 2021 to March 2, 2021 due to an inadvertent failure to file an annual report. The qualification was reinstated on March 2, 2021 upon filing of the delinquent report and payment of all applicable late fees. Based on our review, this brief lapse does not appear to have resulted in any material adverse consequences to the Company's operations or contractual relationships in Ohio during the lapsed period, and the qualification has been continuously maintained in good standing since reinstatement. Notwithstanding the foregoing, we recommend that NovaMart's representation in the SPA regarding continuous good standing in all qualified jurisdictions be appropriately qualified to account for this historical lapse, or that the lapse be disclosed in the Company's disclosure schedules.
Delaware Franchise Tax Compliance. We have confirmed that NovaMart's Delaware franchise tax payments are current through the 2024 tax year, as reflected in the certificate of good standing and in franchise tax records reviewed in the Data Room. The 2025 franchise tax installment is not yet due.
Texas Franchise Tax Compliance. We have confirmed that NovaMart's Texas franchise tax filings and payments are current through the most recent reporting period, as reflected in the certificate of existence from the Texas Secretary of State.
C. Registered Agent
NovaMart's registered agent information is as follows:
Delaware: Pinnacle Corporate Services Inc., 850 New Burton Road, Suite 201, Dover, DE 19904. The registered agent appointment is current and in effect.
Texas: Pinnacle Corporate Services Inc., 1021 Main Street, Suite 1850, Houston, TX 77002. The registered agent appointment is current and in effect.
For each of NovaMart's foreign qualification jurisdictions, registered agent appointments are maintained with Pinnacle Corporate Services Inc. or its local affiliates. We have confirmed that all registered agent appointments are current in all jurisdictions. A summary of registered agent details by jurisdiction is maintained in the good standing tracking spreadsheet referenced in Appendix E.
IV. Certificate of Incorporation
A. Authorized Capital Stock
Pursuant to the Amended and Restated Certificate of Incorporation of NovaMart Global Inc., as currently in effect (the "Charter"), the authorized capital stock of the Company consists of the following:
(a) Common Stock. 100,000,000 shares of Common Stock, par value $0.001 per share (the "Common Stock"). The Common Stock is the sole class of equity currently outstanding, as all preferred stock previously issued by the Company was converted into Common Stock in connection with the Series B financing recapitalization in August 2018.
(b) Preferred Stock. 25,000,000 shares of Preferred Stock, par value $0.001 per share (the "Preferred Stock"). The Charter authorizes the Board of Directors to issue Preferred Stock in one or more series and to fix the designations, powers, preferences, rights, qualifications, limitations, and restrictions of each such series by resolution, without further stockholder approval (so-called "blank check" preferred stock). As of the date of this memorandum, no shares of Preferred Stock are issued or outstanding.
The total authorized shares of the Company are therefore 125,000,000 shares ($0.001 par value per share). Any increase or decrease in the number of authorized shares requires an amendment to the Charter approved by the holders of a majority of the outstanding shares entitled to vote thereon, in accordance with DGCL Section 242.
We note that all previously outstanding shares of Series A Preferred Stock and Series B Preferred Stock were converted into Common Stock on a one-for-one basis in August 2018 as part of the recapitalization undertaken in connection with the Ridgeline-led Series B financing, pursuant to which the Company's capital structure was simplified into a single class of Common Stock. The certificates of designation for the former Series A and Series B Preferred Stock were eliminated in the Amended and Restated Certificate of Incorporation. No shares of Preferred Stock have been issued since that time, and the blank check authority has not been exercised.
B. Key Charter Provisions
We have reviewed the Charter in its entirety and summarize below the material provisions relevant to the Transaction:
Purpose. The Charter provides that the purpose of the Company is to engage in any lawful act or activity for which corporations may be organized under the DGCL. This is a standard general corporate purpose clause and does not limit the Company's authority to enter into the Transaction.
Board of Directors — Size and Structure. Article V of the Charter provides that the number of directors constituting the Board of Directors shall be fixed from time to time exclusively by resolution of the Board of Directors, subject to the board designation rights set forth in the Stockholders' Agreement. The Charter does not establish a classified or staggered board; all directors are elected annually and hold office until their successors are duly elected and qualified, or until their earlier resignation, removal, or death.
Director Election and Removal. Directors are elected by a plurality of the votes cast by stockholders entitled to vote at any annual meeting or by written consent. Directors may be removed from office with or without cause by the affirmative vote of the holders of a majority of the outstanding shares entitled to vote at an election of directors. Vacancies on the Board may be filled by a majority of the remaining directors, even if less than a quorum, or by a sole remaining director, or by the stockholders.
Indemnification and Exculpation. Article VII of the Charter includes a director exculpation provision pursuant to DGCL Section 102(b)(7), eliminating or limiting the personal liability of directors to the Company or its stockholders for monetary damages for breach of fiduciary duty as a director, to the fullest extent permitted by the DGCL. The exculpation provision does not eliminate or limit liability for (i) breaches of the duty of loyalty, (ii) acts or omissions not in good faith or involving intentional misconduct or a knowing violation of law, (iii) unlawful dividends or stock repurchases under DGCL Section 174, or (iv) transactions from which the director derived an improper personal benefit. Article VIII of the Charter provides for mandatory indemnification of directors and officers to the fullest extent permitted by DGCL Section 145, including advancement of expenses. These provisions are consistent with market practice for Delaware corporations and are supplemented by the indemnification provisions in the Bylaws as described in Section V below.
Amendment Provisions. The Charter may be amended in accordance with the DGCL, which generally requires Board approval and the affirmative vote of a majority of the outstanding shares entitled to vote thereon (DGCL Section 242). The Charter does not impose any supermajority voting requirements for amendments thereto, except as described below with respect to certain protective provisions.
Anti-Takeover Provisions. The Charter does not include a staggered board or any other typical anti-takeover devices. The Company has not opted out of DGCL Section 203 (the Delaware business combination statute); however, we note that Section 203 is generally applicable only to "business combinations" with "interested stockholders" (i.e., stockholders owning 15% or more of the Company's voting stock) and, given that the Transaction involves the acquisition of all outstanding shares with the consent of holders representing at least 90.8% of the outstanding shares, Section 203 is not expected to present an impediment. Moreover, to the extent applicable, the board approval of the Transaction and the stockholder written consent should satisfy the requirements for an exception under Section 203(a)(1) and/or 203(a)(3).
Stockholder Action by Written Consent. Article VI of the Charter expressly permits stockholder action by written consent in lieu of a meeting, in accordance with DGCL Section 228. Specifically, the Charter provides that any action required or permitted to be taken at any annual or special meeting of stockholders may be taken without a meeting, without prior notice, and without a vote, if a consent or consents in writing, setting forth the action so taken, are signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. This provision is critical to the contemplated transaction approval mechanism, as the SPA provides that the stockholders of NovaMart will approve the Transaction by written consent rather than at a noticed stockholder meeting.
Special Meetings of Stockholders. The Charter provides that special meetings of the stockholders may be called by the Board of Directors, the Chairman of the Board, or the Chief Executive Officer, or at the written request of stockholders holding at least twenty-five percent (25%) of the outstanding shares entitled to vote. This provision is broadly consistent with market practice but is not directly relevant to the Transaction, which will be approved by written consent.
Supermajority Voting Requirements. The Charter does not impose any supermajority voting requirements for stockholder action generally, including for the approval of a sale of the Company or a change of control transaction. Action by the stockholders generally requires the affirmative vote (or written consent) of the holders of a majority of the outstanding shares entitled to vote thereon, unless a greater vote is required by the DGCL.
Preemptive Rights. The Charter does not provide stockholders with preemptive rights to acquire additional shares of capital stock upon any new issuance. However, we note that certain preemptive rights are granted to investors under the Stockholders' Agreement, as discussed in Section VIII below. These contractual preemptive rights do not apply to the Transaction and, in any event, will terminate at closing.
Drag-Along and Tag-Along. The Charter does not itself contain drag-along or tag-along provisions but incorporates by reference the drag-along and tag-along rights set forth in the Stockholders' Agreement. The Charter provides that all shares of Common Stock are subject to the terms and conditions of the Stockholders' Agreement, and that any transfer of shares in violation of the Stockholders' Agreement shall be void. This cross-reference ensures that the drag-along mechanism in the Stockholders' Agreement is enforceable against all stockholders, including those who acquired shares after the date of the Stockholders' Agreement.
Change of Control and Transfer Restrictions. Aside from the cross-reference to the Stockholders' Agreement described above, the Charter does not contain any independent change of control provisions or transfer restrictions.
C. Amendments History
The following is a chronological summary of all amendments and restatements to the Certificate of Incorporation since the Company's original incorporation on March 14, 2016:
1. Original Certificate of Incorporation — Filed March 14, 2016. Established the Company as "NovaMart Inc." with authorized capital of 10,000,000 shares of Common Stock ($0.001 par value) and 5,000,000 shares of Preferred Stock ($0.001 par value).
2. Certificate of Amendment — Filed July 28, 2017. Increased authorized Common Stock to 50,000,000 shares and authorized 10,000,000 shares of Series A Preferred Stock in connection with the Company's Series A financing round led by Brindoval Ventures Fund III, LP.
3. Certificate of Amendment — Filed August 12, 2018. Effected the following changes in connection with the Company's Series B financing led by Ridgeline Equity Partners, LP: (a) changed the Company's name from "NovaMart Inc." to "NovaMart Global Inc."; (b) effected the conversion of all outstanding shares of Series A Preferred Stock into Common Stock on a one-for-one basis; (c) effected the authorization and issuance of Series B Preferred Stock; and (d) authorized the immediate conversion of Series B Preferred Stock into Common Stock as part of the recapitalization of the Company's capital structure.
4. Amended and Restated Certificate of Incorporation — Filed August 12, 2018. Simultaneously with the Certificate of Amendment described above, the Company filed its Amended and Restated Certificate of Incorporation, which restated and integrated the Charter in its entirety to reflect the completed recapitalization, the new authorized share structure (100,000,000 shares of Common Stock and 25,000,000 shares of Preferred Stock, each at $0.001 par value), the elimination of all outstanding Preferred Stock series, the updated governance provisions, and the cross-references to the new Stockholders' Agreement and related agreements.
5. Certificate of Correction — Filed October 4, 2018. Corrected a clerical error in Article IV of the Amended and Restated Certificate of Incorporation regarding the reference to the conversion ratio for the former Series A Preferred Stock, which had been inadvertently stated as "one-for-two" rather than "one-for-one."
No further amendments to the Charter have been filed since October 4, 2018. The Amended and Restated Certificate of Incorporation, as corrected, remains in full force and effect as of the date of this memorandum.
V. Bylaws
A. Summary of Key Bylaw Provisions
We have reviewed the Amended and Restated Bylaws of NovaMart Global Inc. (the "Bylaws"), most recently amended effective August 12, 2018, in connection with the Series B financing and the execution of the Stockholders' Agreement. The following summarizes the material provisions of the Bylaws:
Board of Directors — Size, Quorum, and Vacancies. The Bylaws provide that the number of directors shall be determined from time to time by resolution of the Board, consistent with the Charter. Currently, the Board consists of seven (7) directors. A majority of the total number of directors then in office constitutes a quorum for the transaction of business. Vacancies may be filled as described in the Charter. The Board may act by the affirmative vote of a majority of the directors present at a meeting at which a quorum is present, or by unanimous written consent in lieu of a meeting.
Committees. The Bylaws authorize the Board to establish committees by resolution, each consisting of one or more directors. The Board has established the following standing committees:
(i) Audit Committee — responsible for oversight of financial reporting, internal controls, and the engagement of the Company's independent auditors. The Audit Committee currently consists of three directors.
(ii) Compensation Committee — responsible for oversight of executive compensation, equity incentive plans, and related matters. The Compensation Committee currently consists of three directors.
(iii) Nominating and Governance Committee — responsible for recommending director candidates and overseeing corporate governance matters. The Nominating and Governance Committee currently consists of two directors.
Each committee operates under a written charter that defines its authority, responsibilities, and procedures. Copies of each committee charter were provided in the Data Room.
Officers. The Bylaws provide that the officers of the Company shall consist of a Chief Executive Officer, a President (if appointed), one or more Vice Presidents, a Secretary, a Treasurer (or Chief Financial Officer), and such other officers as the Board may from time to time appoint. Officers are appointed by the Board and serve at the pleasure of the Board, subject to any rights under employment agreements. Any officer may be removed by the Board with or without cause at any time.
Stockholder Meetings. The Bylaws provide that an annual meeting of stockholders shall be held at such time and place as determined by the Board for the purpose of electing directors and transacting such other business as may properly come before the meeting. Special meetings of stockholders may be called as provided in the Charter (i.e., by the Board, the Chairman, the CEO, or upon written request of 25% stockholders). Written notice of any stockholder meeting must be given not less than ten (10) nor more than sixty (60) days before the meeting date. Stockholders of record holding a majority of the outstanding shares entitled to vote constitute a quorum.
Record Dates. The Board may fix a record date for determining stockholders entitled to notice of and to vote at any meeting, which record date shall not be more than sixty (60) nor less than ten (10) days before the meeting, and shall not precede the date upon which the resolution fixing the record date is adopted by the Board. For written consents, the Board may fix a record date not more than ten (10) days after the resolution fixing such record date, in accordance with DGCL Section 213.
Action by Written Consent of Stockholders. Consistent with the Charter, the Bylaws expressly permit stockholder action by written consent in lieu of a meeting, pursuant to DGCL Section 228. The Bylaws do not restrict, condition, or eliminate this right. This confirmation is critical to the Transaction, as the SPA contemplates that the stockholders of NovaMart will approve the sale by executing a written consent rather than holding a formal stockholder meeting. The Bylaws further provide that prompt notice of the taking of any action by written consent shall be given to those stockholders who did not consent in writing, as required by DGCL Section 228(e).
Indemnification and Advancement of Expenses. Article IX of the Bylaws provides for mandatory indemnification of directors, officers, and in certain cases employees and agents, to the fullest extent permitted by DGCL Section 145. The Bylaws further provide for mandatory advancement of expenses (including attorneys' fees) incurred by any director or officer in connection with any proceeding, upon receipt of an undertaking to repay such amounts if it is ultimately determined that the individual is not entitled to indemnification. These provisions are consistent with and supplementary to the indemnification and exculpation provisions in the Charter and represent market-standard protections for directors and officers of Delaware corporations.
Transfer Restrictions. The Bylaws do not independently impose transfer restrictions on shares of the Company's capital stock, but do provide that any transfer of shares must be made in compliance with the Stockholders' Agreement and other applicable agreements, and that the Company shall not register any transfer on its books that is not in compliance therewith. This is a cross-reference mechanism consistent with the Charter provision described in Section IV above.
Amendment of Bylaws. The Bylaws may be amended, altered, or repealed by the affirmative vote of a majority of the Board of Directors at any regular or special meeting, or by the affirmative vote (or written consent) of the holders of a majority of the outstanding shares entitled to vote. No supermajority requirement applies to amendments of the Bylaws.
Forum Selection. Article XII of the Bylaws includes a forum selection clause designating the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, the Superior Court of the State of Delaware, or, if no state court has jurisdiction, the United States District Court for the District of Delaware) as the sole and exclusive forum for (a) any derivative action or proceeding brought on behalf of the Company, (b) any action asserting a claim of breach of fiduciary duty owed by any director, officer, or other employee of the Company to the Company or its stockholders, (c) any action asserting a claim arising pursuant to any provision of the DGCL or the Charter or the Bylaws, or (d) any action asserting a claim governed by the internal affairs doctrine. This exclusive forum provision is consistent with the exclusive jurisdiction provision in the SPA, which designates the Delaware courts.
Conflict of Interest / Interested Transaction Procedures. The Bylaws incorporate the standards of DGCL Section 144, providing that no contract or transaction between the Company and one or more of its directors or officers, or between the Company and any entity in which one or more of its directors or officers are directors, officers, or have a financial interest, shall be void or voidable solely for that reason, provided that (i) the material facts are disclosed and the transaction is approved by a majority of disinterested directors, (ii) the material facts are disclosed and the transaction is approved by a stockholder vote, or (iii) the transaction is fair to the Company at the time it is authorized. These procedures are relevant to the board approval of the Transaction, given that certain directors (including Julian Reeves and designees of Ridgeline and Brindoval) are also stockholders who will receive consideration in the Transaction.
B. Amendments History
The following is a summary of all amendments to the Bylaws:
1. Original Bylaws — Adopted March 14, 2016 in connection with the Company's incorporation.
2. Amended Bylaws — Adopted July 28, 2017, in connection with the Series A financing, to reflect updated board composition and committee structure provisions.
3. Amended and Restated Bylaws — Adopted August 12, 2018, in connection with the Series B financing and execution of the Stockholders' Agreement. This version, which remains in effect, reflected the comprehensive governance structure agreed upon among the Company, its founders, and its institutional investors.
No further amendments to the Bylaws have been adopted since August 12, 2018.
VI. Capitalization
A. Overview. NovaMart Global Inc. is a privately held company. No class of the Company's securities is registered under the Securities Exchange Act of 1934, as amended, and no shares of the Company's capital stock are listed or traded on any securities exchange or over-the-counter market. All outstanding shares of Common Stock were issued in private transactions exempt from registration under the Securities Act of 1933, as amended, including pursuant to Section 4(a)(2) thereof and Rule 506 of Regulation D promulgated thereunder.
As described in Section IV.A above, the Company's authorized capital stock consists of 100,000,000 shares of Common Stock ($0.001 par value) and 25,000,000 shares of Preferred Stock ($0.001 par value). As of the date of this memorandum, 48,362,500 shares of Common Stock are issued and outstanding, and no shares of Preferred Stock are issued or outstanding.
In the Transaction, Cascade will acquire 100% of the outstanding capital stock of NovaMart from the selling stockholders (collectively, the "Selling Stockholders") for an aggregate cash purchase price of $1,200,000,000, subject to customary adjustments for working capital, indebtedness, transaction expenses, and cash as set forth in the SPA.
B. Capitalization Table — Common Stock
Based on our review of the stock ledger maintained by the Transfer Agent and the capitalization table provided by NovaMart management, the outstanding Common Stock of NovaMart is held as follows:
We have confirmed that the sum of all ownership percentages equals 100.0% (41.2% + 22.8% + 18.5% + 8.3% + 9.2% = 100.0%). The "Other Management and Employee Stockholders" category consists of approximately twenty-three (23) individuals, the majority of whom are current or former employees of NovaMart who acquired shares through the exercise of vested stock options under the Equity Incentive Plan. A detailed schedule of these individual stockholders, including name, share count, and percentage, is set forth in the detailed capitalization table attached as Appendix B to this memorandum.
Classes of Stock. We confirm that all 48,362,500 outstanding shares represent a single class of Common Stock. As noted in Section IV.C above, all previously issued shares of Series A Preferred Stock and Series B Preferred Stock were converted into Common Stock in August 2018, and no Preferred Stock has been issued since that time. No other class or series of equity is outstanding. Each share of Common Stock is entitled to one vote per share on all matters submitted to a vote of stockholders and has equal rights to dividends and distributions and to participate ratably in any liquidation, dissolution, or winding up of the Company.
Transfer Agent. The stock ledger and all records of share ownership are maintained by Continental Stocktransfer & Trust, Inc., located at 17 Battery Place, Suite 930, New York, NY 10004. We have reconciled the capitalization table provided by NovaMart management with the records of the Transfer Agent and confirmed that no discrepancies exist.
C. Stock Options and Other Equity Incentives
Equity Incentive Plan. NovaMart maintains the NovaMart Global Inc. 2017 Equity Incentive Plan (as amended and restated effective August 12, 2018) (the "Plan"). The Plan provides for the grant of incentive stock options ("ISOs"), nonqualified stock options ("NQOs"), restricted stock awards, restricted stock units ("RSUs"), and other stock-based awards to employees, directors, and consultants of the Company and its subsidiaries. The Plan is administered by the Compensation Committee of the Board of Directors.
Shares Reserved. A total of 8,500,000 shares of Common Stock are reserved for issuance under the Plan. Of this amount, 4,449,324 shares have been issued upon the exercise of vested stock options and are included in the outstanding Common Stock shown in the capitalization table above (within the "Other Management and Employee Stockholders" category). The following summarizes the status of the remaining shares under the Plan:
Outstanding Options. As of the most recent records reviewed (April 30, 2025), there are 2,875,000 stock options outstanding under the Plan, with the following characteristics:
• Weighted average exercise price: $11.42 per share
• Range of exercise prices: $4.25 to $18.90 per share
• Vesting schedule: Generally four-year vesting with a one-year cliff (25% vesting on the first anniversary of the grant date, with the remaining 75% vesting in equal monthly installments over the subsequent 36 months), subject to individual variations in certain grant agreements
• Options vested and exercisable as of April 30, 2025: 1,937,500
• Options unvested as of April 30, 2025: 937,500
• Expiration: Options generally expire ten years from the date of grant
Treatment of Options in the Transaction. Section 2.5 of the SPA provides that, at the effective time of the closing, all outstanding stock options under the Plan (whether vested or unvested) shall be cancelled and converted into the right to receive a cash payment equal to the product of (x) the number of shares of Common Stock subject to such option and (y) the excess, if any, of the per-share purchase price over the applicable per-share exercise price of such option, less applicable tax withholdings. Any options with an exercise price equal to or greater than the per-share purchase price (i.e., "underwater" options) shall be cancelled for no consideration. Based on the aggregate purchase price of $1,200,000,000 and the 48,362,500 fully diluted shares (as described in Section VI.D below), the implied per-share purchase price is approximately $24.81 per share. All 2,875,000 outstanding options are in-the-money at this per-share price, as the highest exercise price ($18.90) is below the per-share purchase price.
Restricted Stock Units. There are 325,000 RSUs outstanding under the Plan as of April 30, 2025, all of which remain unvested. The SPA provides that all outstanding RSUs shall be cancelled at closing and converted into the right to receive a cash payment equal to the product of the number of shares underlying such RSUs and the per-share purchase price, less applicable tax withholdings, without regard to vesting.
No Other Equity Awards. We have confirmed that there are no other outstanding equity awards, restricted stock grants (other than the RSUs described above), stock appreciation rights, phantom stock awards, profit interests, or other equity-based compensation arrangements in effect at NovaMart.
Warrants and Convertible Securities. We have confirmed that NovaMart has no outstanding warrants, convertible notes, or other convertible securities that would entitle any person to acquire shares of Common Stock or other equity interests in the Company. A convertible note in the original principal amount of $2,000,000 was issued to Brindoval Ventures Fund III, LP in October 2017 in connection with bridge financing prior to the Series B round; this note was converted into Common Stock in August 2018 and is no longer outstanding.
D. Fully Diluted Capitalization
For purposes of calculating the per-share purchase price and the amounts payable to option holders and RSU holders at closing, the fully diluted capitalization of NovaMart is as follows:
The implied per-share purchase price, calculated by dividing the aggregate purchase price of $1,200,000,000 by the fully diluted share count of 51,562,500 shares (assuming all options are in-the-money and treating all RSUs as fully vested), is approximately $23.27 per share. We note that the precise per-share purchase price will be subject to the allocation methodology and adjustment mechanisms set forth in the SPA, including the waterfall distribution provisions, the escrow holdback, and the working capital true-up.
We have confirmed that, other than the outstanding stock options and RSUs described above, there are no other outstanding rights, options, warrants, conversion rights, exchange rights, preemptive rights, subscription rights, or other agreements or commitments obligating NovaMart to issue, deliver, or sell, or cause to be issued, delivered, or sold, any shares of its capital stock or any securities convertible into, exchangeable for, or evidencing the right to subscribe for any shares of capital stock.
VII. Governance Documents and Board Matters
A. Board of Directors Composition
As of the date of this memorandum, the Board of Directors of NovaMart consists of seven (7) members, as follows:
The composition of the Board is governed by the board designation rights in the Stockholders' Agreement, which provides as follows:
(a) Ridgeline Equity Partners, LP, as the holder of at least 35% of the outstanding Common Stock, is entitled to designate three (3) directors (currently Franklin Osei, Isabelle Marchetti, and Marcus Houghton);
(b) Brindoval Ventures Fund III, LP, as the holder of at least 15% of the outstanding Common Stock, is entitled to designate two (2) directors (currently Naomi Katzenbach and Aaron Fishburne);
(c) The founders (Julian Reeves and Priya Narasimhan), for so long as they each hold at least 5% of the outstanding Common Stock, are each entitled to a seat on the Board; and
(d) The Stockholders' Agreement contemplates the ability to designate one (1) independent director approved by a majority of the Board, but no such independent director has been appointed as of the date of this memorandum. The Board therefore currently consists of seven (7) directors rather than the maximum eight (8) provided for in the governance structure.
Board Observer Rights. In addition to the director seats described above, the Investors' Rights Agreement provides that Brindoval Ventures Fund III, LP has the right to appoint one (1) board observer who is entitled to attend and participate in all Board meetings (other than those from which the observer is excluded due to conflict of interest or privilege concerns) but who does not have a vote. We understand that this right has been exercised by Brindoval, with the current observer being Daniel Yoon, a Vice President at Brindoval.
Vacancy Provisions. In the event of a vacancy in any board seat allocated to a particular designating party, the Stockholders' Agreement provides that the replacement director shall be designated by the same party that designated the departing director.
B. Board Committees
The following standing committees of the Board have been established:
Audit Committee. The Audit Committee consists of Isabelle Marchetti (Chair), Aaron Fishburne, and Naomi Katzenbach. The Audit Committee operates under a written charter, most recently adopted on August 12, 2018. The committee is responsible for overseeing the Company's financial reporting, internal accounting controls, and engagement and performance of the Company's independent auditors, Beck Morriven CPAs LLP.
Compensation Committee. The Compensation Committee consists of Marcus Houghton (Chair), Naomi Katzenbach, and Franklin Osei. The Compensation Committee operates under a written charter, most recently adopted on August 12, 2018. The committee is responsible for reviewing and approving executive compensation, administering the Equity Incentive Plan, and overseeing the Company's compensation policies and practices.
Transaction Committee. In connection with the Cascade acquisition, the Board formed an ad hoc Transaction Committee, consisting of Franklin Osei (Chair), Naomi Katzenbach, and Julian Reeves. The Transaction Committee was authorized by Board resolution adopted on January 8, 2025 to evaluate, negotiate, and make recommendations to the full Board with respect to strategic alternatives, including the proposed sale of the Company to Cascade. We note that the members of the Transaction Committee include representatives of Ridgeline (Franklin Osei) and Brindoval (Naomi Katzenbach), both of which are stockholders that will receive consideration in the Transaction, as well as Julian Reeves, who is the founder, CEO, and an 18.5% stockholder. While the composition of the Transaction Committee raises interested director considerations, we note that the full Board (including all seven directors) ultimately approved the Transaction, and the Transaction was subjected to the DGCL Section 144 analysis described in Section VII.D below.
C. Board Minutes and Consent Review
We have reviewed the minutes of all meetings of the Board of Directors and each committee for the fiscal years ended December 31, 2022, December 31, 2023, and December 31, 2024, and for the period from January 1, 2025 through April 30, 2025. We have also reviewed all written consents of the Board adopted in lieu of meetings during this period.
The Board met a total of approximately thirty-six (36) times during the review period (approximately ten to twelve meetings per year), including regular quarterly meetings and special meetings called to address specific matters. Committee meetings were held regularly in accordance with their respective charters.
The key actions and topics reflected in the Board minutes during the review period include:
• Approval of annual budgets and operating plans for fiscal years 2023, 2024, and 2025;
• Review and approval of quarterly and annual financial statements;
• Approval of the Company's annual audit engagement with Beck Morriven CPAs LLP;
• Authorization of the $150,000,000 revolving credit facility with Ashford Savings Bank, N.A. (approved March 2023) and subsequent amendments thereto;
• Approval of material commercial agreements, including key vendor and supplier agreements and fulfillment center leases;
• Review and approval of executive compensation matters, including annual salary adjustments, bonus determinations, and equity incentive grants;
• Consideration of strategic alternatives, beginning in Q3 2024, including engagement of Pinnacle Capital Markets as financial advisor;
• Authorization of the Transaction Committee (January 8, 2025);
• Updates on the negotiation of the SPA and related transaction documents with Cascade;
• Review of litigation matters, including a pending trade secret misappropriation claim by a former vendor (referred to the Litigation and Regulatory Due Diligence Memorandum for further analysis);
• Expansion of fulfillment center operations, including approval of new lease agreements for fulfillment centers in Florida (Lakeland facility, opened August 2022) and Washington (Kent facility, opened March 2024); and
• Board approval of the SPA and related transaction documents (described in Section VII.D below).
We did not identify any material irregularities, unauthorized actions, or departures from proper corporate governance procedures in our review of the Board minutes and consents. Minutes were generally well-maintained and reflected proper notice, quorum, and voting procedures.
D. Board Approval of the Transaction
The Board of Directors of NovaMart unanimously approved the Stock Purchase Agreement, the ancillary transaction documents (including the Stockholder Representative Agreement, the Escrow Agreement, and the form of Stockholder Written Consent), and the consummation of the transactions contemplated thereby, by resolutions adopted at a special meeting of the Board held on May 4, 2025. All seven (7) directors were present at the meeting (either in person or by teleconference), and the vote was unanimous (7-0).
The Board resolutions include, among other things, the following authorizations:
(a) Approval of the SPA and all ancillary documents substantially in the forms presented to the Board;
(b) Authorization of the officers of the Company (specifically, Julian Reeves as CEO and Amanda Trevino as General Counsel) to execute and deliver the SPA and all ancillary documents on behalf of the Company;
(c) Recommendation that the stockholders of NovaMart approve the Transaction by written consent;
(d) Authorization of the solicitation of stockholder written consents;
(e) Authorization of all actions necessary or appropriate to consummate the closing, including preparation and delivery of all closing deliverables; and
(f) Appointment of Ridgeline Equity Partners, LP (acting through Franklin Osei as its authorized representative) as the Stockholder Representative for purposes of the Stockholder Representative Agreement.
Interested Director Analysis. As noted above, certain members of the Board have a financial interest in the Transaction as stockholders (or affiliates of stockholders) who will receive consideration at closing. Specifically:
• Franklin Osei, Isabelle Marchetti, and Marcus Houghton are designees of Ridgeline Equity Partners, LP, which holds 41.2% of the outstanding Common Stock;
• Naomi Katzenbach and Aaron Fishburne are designees of Brindoval Ventures Fund III, LP, which holds 22.8% of the outstanding Common Stock;
• Julian Reeves holds 18.5% of the outstanding Common Stock; and
• Priya Narasimhan holds 8.3% of the outstanding Common Stock.
Accordingly, all seven directors have a direct or indirect financial interest in the Transaction. Notwithstanding this universal interest, the Transaction was approved in compliance with DGCL Section 144. Specifically, (i) the material facts as to each director's relationship or interest in the Transaction were disclosed to and acknowledged by the Board prior to the vote, (ii) the Board determined that the Transaction was approved in good faith and that the terms of the SPA are fair and reasonable to the Company and its stockholders, and (iii) the Transaction will be further ratified by the written consent of stockholders holding at least a majority (and expected to be at least 90.8%) of the outstanding shares. In addition, the Transaction Committee's process, which included engagement of independent financial advisors and arm's-length negotiations with Cascade, supports the conclusion that the Transaction represents a fair price for the Company's equity.
We note that the SPA was negotiated at arm's length between Cascade and NovaMart, with each party represented by independent legal and financial advisors. Cascade was represented by Calderwood & Harkness LLP (legal) and Ashford Bancorp (financial), and NovaMart was represented by Calloway, Brandt & Loewe LLP (legal) and Pinnacle Capital Markets (financial). The consideration of $1,200,000,000 was the product of extensive negotiation and is supported by Drayton Securities's financial analysis. These facts further mitigate any concerns regarding the interested director aspects of the Board approval.
VIII. Stockholder Agreements
A. Stockholders' Agreement
Parties. The Stockholders' Agreement, dated as of August 12, 2018 (the "Stockholders' Agreement"), is by and among NovaMart Global Inc., Ridgeline Equity Partners, LP, Brindoval Ventures Fund III, LP, Julian Reeves, Priya Narasimhan, and each of the other management and employee stockholders identified on Schedule A thereto (together with any persons who subsequently became parties thereto by executing joinder agreements).
Key Provisions:
Board Designation Rights. As described in Section VII.A above, the Stockholders' Agreement grants Ridgeline the right to designate three (3) directors, Brindoval the right to designate two (2) directors, and each of Julian Reeves and Priya Narasimhan (each a "Founder") the right to a board seat, in each case subject to specified minimum ownership thresholds. The Stockholders' Agreement contemplates a Board of up to eight (8) directors, including one independent director.
Transfer Restrictions. Section 4 of the Stockholders' Agreement imposes comprehensive transfer restrictions on all shares of Common Stock held by the parties. No stockholder may sell, transfer, assign, pledge, encumber, or otherwise dispose of any shares (or any interest therein) without the prior written consent of Ridgeline and the Company, except for (i) transfers to permitted transferees (defined to include family members, trusts for the benefit of the stockholder or family members, and affiliated entities, provided such transferees execute a joinder to the Stockholders' Agreement), (ii) transfers pursuant to the drag-along provisions described below, and (iii) transfers approved by the Board. The transfer restrictions apply to all forms of disposition, including voluntary sales, pledges, gifts, and involuntary transfers by operation of law. Any purported transfer in violation of the Stockholders' Agreement is void and shall not be recorded on the Company's books.
Right of First Refusal. Section 5 of the Stockholders' Agreement grants the Company and the investors (Ridgeline and Brindoval, in that order of priority) a right of first refusal on any proposed transfer of shares by any management or employee stockholder, excluding transfers to permitted transferees. The selling stockholder must deliver written notice to the Company and the investors specifying the terms of the proposed transfer, and the Company and investors have thirty (30) days to exercise their ROFR on the same terms and conditions.
Co-Sale / Tag-Along Rights. Section 6 of the Stockholders' Agreement grants each stockholder tag-along rights in connection with any proposed transfer of shares by Ridgeline, Brindoval, or any Founder (each a "Tag-Along Sale"). If any such stockholder proposes to sell shares to a third party, each other stockholder has the right to participate in such sale on a pro rata basis and on the same terms and conditions. This provision ensures that minority stockholders have the right to participate in any sale of a control block.
Drag-Along Rights. Section 7 of the Stockholders' Agreement (the "Drag-Along Provision") provides that if holders of at least a majority of the outstanding Common Stock (the "Dragging Stockholders") approve a sale of the Company (defined to include a merger, stock sale, asset sale, or other change of control transaction) to a bona fide third-party acquiror at arm's length, then the Dragging Stockholders may require all other stockholders (the "Dragged Stockholders") to participate in such sale on the same terms and conditions. The drag-along mechanism requires the Dragging Stockholders to deliver written notice to the Dragged Stockholders at least twenty (20) days prior to the expected closing of the sale, specifying the material terms of the transaction. Each Dragged Stockholder is then obligated to (i) execute and deliver the definitive transaction agreements and all related documents, (ii) deliver their stock certificates and executed stock powers, and (iii) take all other actions reasonably requested to consummate the transaction.
For purposes of the Transaction, Ridgeline (41.2%) alone constitutes sufficient ownership to trigger the drag-along, but Ridgeline together with Brindoval (22.8%), Julian Reeves (18.5%), and Priya Narasimhan (8.3%) collectively hold 90.8% of the outstanding shares — overwhelmingly in excess of the majority threshold. Accordingly, even if any management or employee stockholder in the 9.2% "Other" category were to decline to execute the stockholder written consent or otherwise resist participation i