1038-00009 · Client 1038 · Financing

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PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGE ATTORNEY WORK PRODUCT

MEMORANDUM

FROM: Harrison Wexford, Responsible Partner, and Derek Okonkwo, Lead Associate, Calderwood & Harkness LLP

TO: Elena Vasquez-Bright, General Counsel, Cascade Retail Holdings Inc. Rajiv Sundaram, Chief Financial Officer, Cascade Retail Holdings Inc. Theodore ("Ted") Langford, Senior Vice President, Corporate Development, Cascade Retail Holdings Inc.

CC: Beatrice Holloway, Billing Partner, Calderwood & Harkness LLP Sylvia Hartwell, Specialist Partner, Tax, Calderwood & Harkness LLP

DATE: May 18, 2025

RE: Review and Analysis of Commitment Letter (Reference: CL-2025-0515-CRNB) dated May 15, 2025, from Cornerstone National Bank, N.A. and Caluvori Capital Partners, Inc. — $750,000,000 Senior Secured Term Loan B Facility in Connection with the Acquisition of NovaMart Global Inc.

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I. Executive Summary

This memorandum sets forth the analysis and recommendations of Calderwood & Harkness LLP ("Calderwood & Harkness" or "we") with respect to the commitment letter dated May 15, 2025 (the "Commitment Letter," Reference: CL-2025-0515-CRNB), pursuant to which Cornerstone National Bank, N.A. ("Cornerstone"), acting in its capacity as Administrative Agent and Lead Left Arranger, and Caluvori Capital Partners, Inc. ("Marlowe Crane CPAs LLPP"), acting in its capacity as Co-Lead Arranger (Cornerstone and Marlowe Crane CPAs LLPP, collectively, the "Commitment Parties"), have committed to provide a $750,000,000 Senior Secured Term Loan B facility (the "Term Loan B" or the "Facility") to Cascade Retail Holdings Inc. ("Cascade," "CRH," or the "Company"). The Term Loan B is intended to finance, in part, the acquisition (the "Acquisition") of 100% of the outstanding capital stock of NovaMart Global Inc. ("NovaMart" or the "Target") for an aggregate purchase price of $1,200,000,000 (the "Purchase Price").

The key contacts at the Commitment Parties are Robert Frankel, Senior Vice President, Leveraged Finance, at Cornerstone National Bank, N.A. (227 West Monroe Street, Chicago, IL 60606), and Irene Matsuda, Director, at Caluvori Capital Partners, Inc. (350 California Street, Suite 1800, San Francisco, CA 94104). We have engaged in preliminary discussions with counsel to Cornerstone, and anticipate receiving their initial comments on a parallel basis with our transmittal of the proposed markup described herein.

The Stock Purchase Agreement for the Acquisition (the "SPA") is expected to be executed on May 20, 2025. The Commitment Letter was secured five days in advance of the targeted SPA signing date to satisfy Cascade's obligation under the SPA to have committed financing in place at the time of execution. This timing dynamic is important context for the negotiations: the Commitment Letter must be in final (or substantially final) form no later than May 19, 2025, to allow for internal Cascade approvals prior to SPA execution the following day.

Overall Assessment. The Commitment Letter is largely market-standard for a Term Loan B facility of this size and type in the current lending environment. The conditionality is appropriately narrow, the specified representations approach is favorable to the borrower, and no syndication or due diligence condition is imposed. However, the Commitment Letter contains several flex provisions and conditions that warrant negotiation or clarification prior to SPA execution. Most critically, the market MAC provision creates a risk of funding failure that is particularly acute given the five-month window between SPA signing and targeted closing.

We underscore at the outset that the SPA does not contain a financing condition. Cascade has represented to the Selling Stockholders (defined below) that it will have sufficient committed financing to consummate the Acquisition. This representation makes the certainty of the Commitment Letter and the narrowness of its conditions critically important. Any gap between the SPA's closing conditions and the Commitment Letter's funding conditions creates exposure for Cascade—a situation in which the Company would be obligated to close the Acquisition but unable to draw on the committed financing to do so. As detailed in this memorandum, we have identified one such gap—the market MAC provision—and we recommend that its elimination or substantial narrowing be treated as the highest-priority negotiation item.

This memorandum is organized as follows: Section II provides transaction context and sources and uses. Section III summarizes the key terms of the Commitment Letter. Section IV analyzes the conditions precedent to funding. Section V addresses the flex provisions. Section VI discusses the market MAC and company-specific MAC provisions. Section VII covers the syndication provisions. Section VIII addresses termination and expiration. Section IX provides a high-level summary of the Fee Letter. Section X compares the Commitment Letter to the SPA requirements. Section XI sets forth our negotiation recommendations in summary form. Section XII outlines next steps. Section XIII identifies attachments.

II. Transaction Context and Sources and Uses

A. Transaction Overview

Cascade Retail Holdings Inc., a Delaware corporation publicly traded on the Nasdaq Global Select Market (Ticker: CRHI; EIN: 91-2847653; headquarters at 4500 Elliott Avenue West, Suite 3200, Seattle, WA 98119), proposes to acquire 100% of the outstanding capital stock of NovaMart Global Inc., a Delaware corporation, through an all-cash stock purchase transaction. The aggregate Purchase Price for the Acquisition is $1,200,000,000.

The selling stockholders of NovaMart (collectively, the "Selling Stockholders") and their respective ownership interests are as follows:

Ridgeline Equity Partners, LP, as the majority holder, is expected to serve as the Stockholder Representative under the SPA, with Franklin Osei acting as designated representative. The SPA will be governed by the laws of the State of Delaware, and the parties have agreed to exclusive jurisdiction in the Court of Chancery of the State of Delaware (or, if the Court of Chancery declines jurisdiction, in the United States District Court for the District of Delaware).

The targeted closing date for the Acquisition is October 15, 2025. The outside date under the SPA (the "Outside Date") is December 31, 2025. The period between SPA signing and targeted closing—approximately five months—reflects the expected timeline for completion of the DOJ Second Request process under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), as well as customary post-signing integration planning. We note that the Second Request was issued on April 28, 2025, and substantial compliance efforts are underway under the direction of Howard Bellamy and Gabriela Montoya at Whitfield & Crane LLP. The antitrust clearance timeline is the principal gating item for closing.

B. Sources and Uses

The financing structure for the Acquisition contemplates three sources of funds, as set forth below. We note that the aggregate sources exceed the Purchase Price, as Cascade must also fund the payoff of NovaMart's existing indebtedness and estimated transaction costs.

Sources of Funds:

In addition to the foregoing, approximately $47,300,000 in estimated transaction costs will be funded from Cascade's existing working capital and operating cash flow. The total capital requirement for the transaction is therefore approximately $1,247,300,000.

Uses of Funds:

The net cash consideration to Selling Stockholders at closing represents the Purchase Price of $1,200,000,000, less the $96,000,000 escrow deposit (equal to 8% of total deal value). The escrow deposit will be held by Marlowe Asset Management Trust Company, N.A. as escrow agent and will secure the Selling Stockholders' indemnification obligations under the SPA, subject to customary release mechanics.

The payoff of NovaMart's existing revolving credit facility with Ashford Savings Bank, N.A. is required as a condition to closing under the SPA. The facility has a total commitment of $150,000,000, with an estimated outstanding principal balance of approximately $143,200,000 as of the projected closing date, plus accrued and unpaid interest. Payoff letters will be obtained from Ashford Savings Bank in advance of closing.

The estimated transaction costs of approximately $47,300,000 are comprised of the following components:

We note that the financing OID of 1.5% on the Term Loan B ($11,250,000) is addressed in the separate Fee Letter (Reference: CL-2025-0515-CRNB-FL), which is reviewed in a companion memorandum to be distributed under separate cover on a restricted basis. The Fee Letter contains highly sensitive commercial terms and its distribution should be limited to the addressees of this memorandum and Cascade's board of directors.

C. Interplay with Existing Revolving Credit Facility

Cascade's existing $500,000,000 senior secured revolving credit facility (the "Existing Revolver") has Cornerstone National Bank, N.A. as Administrative Agent and includes a syndicate of five additional lenders. The Existing Revolver was entered into on March 14, 2022, and was most recently amended on November 8, 2024. It matures on March 14, 2027.

The Existing Revolver contains negative covenants that, among other things, restrict Cascade's ability to consummate acquisitions above a specified dollar threshold, incur additional secured indebtedness, and make draws in excess of a specified percentage of the total commitment for acquisition-related purposes. As currently drafted, the Acquisition and the incurrence of the Term Loan B would violate several of these negative covenants, and the $200,000,000 draw at closing would require a specific waiver of the acquisition-related borrowing limitation.

Accordingly, the Existing Revolver will require an amendment (the "Revolver Amendment") to: (i) permit the Acquisition; (ii) permit the incurrence of the Term Loan B; (iii) authorize the $200,000,000 draw at closing for acquisition-related purposes; (iv) add NovaMart and its material domestic subsidiaries as guarantors; and (v) modify the financial covenants to reflect the pro forma leverage profile of the combined company. Calderwood & Harkness is separately preparing and negotiating the Revolver Amendment, and a separate memorandum on that process will be provided. We expect the Revolver Amendment to require the consent of lenders holding a majority of the revolving commitments, and Cornerstone (as both Administrative Agent under the Existing Revolver and Lead Left Arranger for the Term Loan B) has indicated its willingness to support the amendment process.

The intercreditor relationship between the Existing Revolver and the Term Loan B will be governed by a first-lien intercreditor agreement, to be negotiated as part of the definitive documentation process. Both facilities will share a first-priority lien on substantially all assets of Cascade and, post-closing, NovaMart and its subsidiaries, with customary "equal and ratable" sharing provisions.

III. Summary of Key Terms of the Commitment Letter

A. Parties. The key parties to the Commitment Letter and their respective roles are as follows:

Borrower: Cascade Retail Holdings Inc. Cascade is a Delaware corporation, publicly traded on the Nasdaq Global Select Market under the ticker symbol "CRHI." Cascade's Employer Identification Number is 91-2847653. Cascade's principal offices are located at 4500 Elliott Avenue West, Suite 3200, Seattle, WA 98119.

Administrative Agent and Lead Left Arranger: Cornerstone National Bank, N.A. Cornerstone will serve as Administrative Agent under the definitive credit agreement and as Lead Left Arranger for the syndication of the Term Loan B. Cornerstone's role as Lead Left Arranger gives it primary responsibility for structuring the Facility and managing the syndication process. Cornerstone also serves as Administrative Agent under Cascade's Existing Revolver, a relationship that provides institutional familiarity with Cascade's credit profile and business operations, and which should facilitate the amendment process described in Section II.C above.

Co-Lead Arranger: Caluvori Capital Partners, Inc. Marlowe Crane CPAs LLPP will serve as Co-Lead Arranger and will participate in the syndication process alongside Cornerstone. Marlowe Crane CPAs LLPP's commitment share is not specified in the Commitment Letter (allocation as between Cornerstone and Marlowe Crane CPAs LLPP is addressed in the Fee Letter), but both parties are jointly and severally committed to fund the full $750,000,000 if syndication is not completed prior to closing.

Syndication: The Commitment Letter provides that Cornerstone and Marlowe Crane CPAs LLPP shall have the right to syndicate the Facility to additional institutional lenders (the "Lenders") on terms consistent with the Commitment Letter and Term Sheet. Critically, no minimum level of syndication is a condition to funding. The Commitment Parties retain the full underwriting risk of the $750,000,000 commitment, subject to the market MAC provision discussed in Section VI below.

B. Facility Terms

The principal financial and structural terms of the Term Loan B, as set forth in the Commitment Letter and the attached Summary Term Sheet, are as follows:

Type: Senior Secured Term Loan B. The facility is structured as a single-draw term loan to be advanced in full on the closing date. No delayed-draw or incremental features are contemplated in the Commitment Letter, although the definitive credit agreement may include a customary incremental facility provision.

Amount: $750,000,000. The full principal amount is to be drawn at closing.

Interest Rate: The Term Loan B will bear interest at a rate per annum equal to the Adjusted Term SOFR (as defined in the definitive credit agreement) plus a margin of 275 basis points (2.75%). The Commitment Letter specifies a SOFR floor of 0.50%, meaning that if the Adjusted Term SOFR rate falls below 0.50%, the borrower will be deemed to be borrowing at 0.50% plus the applicable margin. At current Adjusted Term SOFR levels (approximately 4.30% as of the date of this memorandum), the all-in interest rate would be approximately 7.05% per annum, resulting in annual interest expense of approximately $52,875,000 on the full $750,000,000 principal balance. The interest rate is subject to the pricing flex provisions discussed in Section V.A below.

Maturity: The Term Loan B will mature seven (7) years from the closing date. Assuming a closing date of October 15, 2025, the maturity date would be October 15, 2032. This is a standard maturity for an institutional Term Loan B facility.

Amortization: The Term Loan B will amortize at a rate of 1% per annum of the original principal amount, payable in equal quarterly installments of $1,875,000 each ($7,500,000 per annum). This is the minimum standard amortization rate for Term Loan B facilities and is favorable. The remaining principal balance will be due and payable in full at maturity.

Optional Prepayment: The Term Loan B will be prepayable at par at any time after the first six (6) months following the closing date, without premium or penalty. During the first six (6) months, a soft call premium of 101% of the principal amount being prepaid will apply, but only in connection with "repricing transactions"—i.e., prepayments funded with the proceeds of a new term loan facility at a lower interest rate, or amendments to the credit agreement that reduce the applicable margin. Voluntary prepayments not constituting repricing transactions may be made at par during the initial six-month period.

Mandatory Prepayment: The Commitment Letter provides for customary mandatory prepayment provisions, including:

(a) Excess Cash Flow Sweep. The borrower will be required to prepay the Term Loan B in an amount equal to 50% of Excess Cash Flow (as defined in the definitive credit agreement) for each fiscal year, stepping down to 25% of Excess Cash Flow when the Total Net Leverage Ratio falls below a specified threshold and stepping down to 0% when the Total Net Leverage Ratio falls below a lower specified threshold. The specific leverage ratio thresholds will be set forth in the definitive credit agreement. The excess cash flow sweep is a standard feature of Term Loan B facilities and provides for accelerated deleveraging in periods of strong cash flow performance.

(b) Asset Sale Proceeds. Net cash proceeds from asset dispositions (subject to customary reinvestment rights and a de minimis threshold) will be required to be applied to prepay the Term Loan B.

(c) Insurance and Condemnation Proceeds. Net cash proceeds from casualty events or condemnation proceedings (subject to customary reinvestment rights) will be required to be applied to prepay the Term Loan B.

(d) Debt Issuance Proceeds. Net cash proceeds from the issuance of indebtedness not otherwise permitted under the credit agreement will be required to be applied to prepay the Term Loan B.

Security: The Term Loan B will be secured by a first-priority lien on substantially all assets of Cascade, including but not limited to inventory, accounts receivable, equipment, intellectual property, real property (subject to a customary fair market value threshold), and equity interests in domestic subsidiaries and 65% of equity interests in first-tier foreign subsidiaries. Following the closing of the Acquisition, the security package will be extended to include substantially all assets of NovaMart and its domestic subsidiaries. The security interests will be documented in a Guarantee and Collateral Agreement to be negotiated as part of the definitive documentation process.

Guarantors: Following the closing of the Acquisition, NovaMart and each of its material domestic subsidiaries will be required to guarantee the obligations under the Term Loan B. The definition of "material domestic subsidiary" will be set forth in the definitive credit agreement and will typically include any domestic subsidiary whose total assets or total revenues exceed a specified percentage (customarily 5%) of the consolidated total assets or revenues of Cascade and its subsidiaries.

C. Purpose. The proceeds of the Term Loan B are to be used to finance, in part, the Acquisition of NovaMart Global Inc. and to pay related transaction fees, costs, and expenses. No other use of proceeds is contemplated or permitted.

D. Governing Law

The Commitment Letter, the Fee Letter, and the definitive credit agreement and related loan documents are governed by the laws of the State of New York, without regard to principles of conflicts of laws. This is standard for leveraged finance transactions of this type and is consistent with the governing law provisions of the Existing Revolver.

IV. Conditions Precedent to Funding

A. Overview of Conditions

The Commitment Letter sets forth a series of conditions precedent that must be satisfied (or waived by the Commitment Parties) on or prior to the funding date in order for the Commitment Parties to be obligated to fund the Term Loan B. These conditions are of paramount importance because, as noted above, the SPA contains no financing condition. If any condition precedent to funding is not satisfied and the Commitment Parties decline to waive such condition, Cascade will not receive the committed financing and will be unable to fund the Acquisition—but will remain obligated to close under the SPA or face the reverse termination fee and potential specific performance claims. Accordingly, the conditions must be scrutinized to ensure that each one either (i) will be automatically satisfied if the SPA closing conditions are satisfied, or (ii) is within Cascade's control to satisfy.

We summarize below each material condition precedent, together with our analysis and recommendations.

B. Specific Conditions Analyzed

1. Execution of Definitive Documentation. Condition as Drafted: The Commitment Letter requires the execution and delivery of the definitive credit agreement, the guarantee and collateral agreement, and all related loan documents, in each case in form and substance "reasonably satisfactory" to the Administrative Agent.

Analysis: The use of a "reasonably satisfactory" standard is generally market for committed financing letters. However, this formulation grants the Administrative Agent a degree of subjective discretion over the form and substance of the definitive documentation that creates risk. In theory, the Administrative Agent could assert that it is not "reasonably satisfied" with particular provisions of the credit agreement and refuse to fund on that basis. While a court would likely apply an objective standard to evaluate the reasonableness of such an assertion, litigation over the meaning of "reasonably satisfactory" in the midst of a time-sensitive closing would be commercially impractical and damaging to the transaction.

Recommendation: We recommend negotiating to replace the "reasonably satisfactory" standard with a more objective formulation. Specifically, we recommend that the Commitment Letter provide that the definitive documentation shall be "substantially consistent with the terms set forth in the Commitment Letter and the attached Summary Term Sheet and otherwise customary for institutional Term Loan B facilities of this type and size." In addition, we recommend adding a provision that the definitive documentation shall not contain conditions to borrowing that are not set forth in the Commitment Letter. This approach limits the Administrative Agent's discretion to matters not addressed in the Commitment Letter and Term Sheet, while still allowing for the inclusion of customary terms that are expected in a credit agreement of this type but are not typically set forth in a commitment letter.

2. Acquisition Consummation. Condition as Drafted: The Acquisition of NovaMart shall be consummated substantially concurrently with the initial funding under the Term Loan B, in accordance with the Stock Purchase Agreement, without giving effect to any amendment, modification, waiver, or consent under the SPA that is materially adverse to the interests of the Lenders, unless approved by Cornerstone (such approval not to be unreasonably withheld, conditioned, or delayed).

Analysis: This is a standard "SunGard" provision, so named after the landmark SunGard acquisition financing structure that established the market practice of conditioning commitment letters on consummation of the underlying acquisition in accordance with the acquisition agreement. The provision serves two purposes: it ensures that the financing is used for its intended purpose (the Acquisition), and it protects the Lenders against post-signing modifications to the SPA that could materially change the risk profile of the transaction from a financing perspective.

The limitation on SPA amendments adverse to the Lenders requires careful monitoring throughout the period between SPA signing and closing. Any proposed amendment, waiver, or consent under the SPA—whether initiated by Cascade, the Selling Stockholders, or both—must be reviewed by Calderwood & Harkness for potential lender impact before it is executed. Amendments that could be deemed "materially adverse to the interests of the Lenders" would include, among other things, increases to the Purchase Price, changes to the allocation of assets or liabilities between closing and post-closing, modifications to the escrow structure that reduce the Lenders' effective collateral base, or changes to the guarantor or subsidiary structure of NovaMart.

Recommendation: We recommend confirming that the standard for "materially adverse to the interests of the Lenders" is an objective standard and that the consent right is limited in scope to changes that directly affect financing matters—specifically, changes that affect the Purchase Price (and therefore the required financing amount), the collateral package, the guarantor structure, or the representations and warranties that form the basis of the "specified representations" condition in the Commitment Letter. Changes to other SPA provisions—such as employee benefit matters, indemnification thresholds, or non-competition covenants—should not require Lender consent. We further recommend adding a provision that Cornerstone's consent (not to be unreasonably withheld) shall be deemed given if Cornerstone has not responded within five (5) business days of receipt of the proposed amendment.

3. Representations and Warranties. Condition as Drafted: Certain specified representations and warranties in the definitive credit agreement shall be true and correct in all material respects as of the funding date (or, in the case of representations that speak as of a specified date, as of such date).

Analysis: The Commitment Letter adopts a "specified representations" approach, which is the borrower-favorable market standard for Term Loan B facilities. Under this approach, only a limited, enumerated set of representations must be true at funding. The specified representations listed in the Commitment Letter are:

(a) corporate existence and good standing;

(b) corporate power and authority to enter into and perform the loan documents;

(d) due authorization, execution, delivery, validity, and enforceability of the loan documents;

(e) compliance with Federal Reserve margin regulations (Regulations T, U, and X);

(f) the borrower's status under the Investment Company Act of 1940;

(g) compliance with the USA PATRIOT Act;

(h) compliance with OFAC sanctions programs;

(i) compliance with anti-corruption laws (including the Foreign Corrupt Practices Act).

This specified representations approach is distinctly more favorable to the borrower than an alternative approach (sometimes seen in less borrower-friendly commitment letters) that would require a bring-down of all representations in the SPA or all representations in the credit agreement as a condition to funding. The specified representations listed above are narrow, factual, and within Cascade's control to ensure are accurate. They do not include representations regarding the target's business, financial condition, or compliance with law—matters that are inherently less within the borrower's control and more likely to give rise to disputes.

Recommendation: We recommend confirming that the list of specified representations in the Commitment Letter is exhaustive and cannot be expanded in the definitive credit agreement. We further recommend adding a provision to the Commitment Letter stating that "no representation or warranty other than the Specified Representations shall be a condition to funding under this Commitment Letter or the Definitive Credit Agreement." This ensures that Cornerstone's counsel cannot, during the drafting of the definitive credit agreement, attempt to add additional representations to the closing condition.

4. No Company Material Adverse Effect. Condition as Drafted: Since the date of the Stock Purchase Agreement, there shall not have occurred a "Company Material Adverse Effect" as such term is defined in the Stock Purchase Agreement as in effect on the date of the Commitment Letter.

Analysis: This condition is commonly referred to as the "back-to-back" MAE condition, and it is the borrower-favorable market standard. Under this approach, the Lenders' right to refuse funding on the basis of a material adverse effect on the target company mirrors exactly Cascade's right to refuse to close the Acquisition under the SPA on the same basis. If a Company Material Adverse Effect has occurred that is sufficiently severe to permit Cascade to walk away from the SPA, then the Lenders may also refuse to fund. Conversely, if the MAE is not severe enough to permit Cascade to terminate the SPA—i.e., if Cascade is obligated to close notwithstanding the adverse development—then the Lenders are also obligated to fund. This alignment is precisely what the "back-to-back" structure is designed to achieve.

We note that the Company Material Adverse Effect definition in the SPA will be subject to negotiation between Cascade and the Selling Stockholders. The Commitment Letter's cross-reference is to the SPA "as in effect on the date of the Commitment Letter," which is the date the SPA is executed (May 20, 2025). This means that if the MAE definition in the SPA is narrowed during negotiations between the Commitment Letter date and SPA signing—resulting in fewer carve-outs from the definition, for example—the Commitment Parties would have a broader right to refuse funding than Cascade has to refuse to close. Conversely, if the MAE definition is broadened during negotiations (additional carve-outs, higher materiality thresholds), the Commitment Parties' funding obligation could be triggered in circumstances where Cascade could walk away from the SPA.

Recommendation: We recommend ensuring that the defined term "Company Material Adverse Effect" in the Commitment Letter tracks exactly to the final negotiated definition in the SPA. If the SPA MAE definition is modified during the five-day window between the Commitment Letter date (May 15, 2025) and SPA execution (May 20, 2025), the Commitment Letter should be amended (or a side letter executed) to reflect the final definition. Alternatively, the Commitment Letter could be revised to cross-reference the SPA "as executed" rather than "as in effect on the date of the Commitment Letter," which would automatically capture any pre-signing modifications.

5. Solvency. Condition as Drafted: Delivery by the Chief Financial Officer of Cascade of a solvency certificate, in form reasonably acceptable to the Administrative Agent, certifying that Cascade and its subsidiaries, on a consolidated basis and after giving pro forma effect to the Acquisition and the financing, are solvent.

Analysis: This is a standard condition for acquisition financings. The solvency certificate is typically structured to certify that, after giving effect to the transaction: (i) the fair value of the consolidated assets of the borrower and its subsidiaries exceeds the consolidated liabilities (including contingent and subordinated liabilities) of the borrower and its subsidiaries; (ii) the present fair saleable value of the consolidated assets of the borrower and its subsidiaries is greater than the probable aggregate amount of all debts and other liabilities (including contingent and subordinated liabilities) of the borrower and its subsidiaries as such debts and liabilities become absolute and matured; (iii) the borrower and its subsidiaries, on a consolidated basis, are able to pay their debts and liabilities as they mature in the ordinary course of business; and (iv) the borrower and its subsidiaries, on a consolidated basis, do not have unreasonably small capital with which to conduct their present and proposed business.

The certificate is to be delivered by Rajiv Sundaram in his capacity as CFO of Cascade. The form of the solvency certificate will be negotiated as an exhibit to the definitive credit agreement. The solvency test is on a consolidated basis—meaning that the test is applied to the entire combined enterprise of Cascade and its subsidiaries (including, after giving effect to the Acquisition, NovaMart and its subsidiaries), rather than on an entity-by-entity basis. Consolidated solvency testing is significantly more favorable to the borrower, as individual entities within a corporate group may have negative net worth even if the group as a whole is solvent.

Recommendation: We recommend confirming that: (i) solvency is tested exclusively on a consolidated basis (not entity by entity); (ii) the certificate is delivered by the CFO of Cascade (not an independent financial advisor or third-party valuation firm); and (iii) the form of the certificate is consistent with market precedent for Term Loan B facilities. We will prepare a draft solvency certificate for inclusion in the definitive credit agreement.

6. Financial Statements. Condition as Drafted: Delivery of (i) audited consolidated financial statements of NovaMart for fiscal years ending December 31, 2022, December 31, 2023, and December 31, 2024 (FY2022, FY2023, and FY2024), prepared in accordance with GAAP and audited by a nationally recognized independent registered public accounting firm, and (ii) unaudited interim consolidated financial statements of NovaMart for each fiscal quarter ended after the most recent fiscal year-end (December 31, 2024) and at least forty-five (45) days before the closing date.

Analysis: NovaMart's audited consolidated financial statements for FY2022, FY2023, and FY2024 should be available, as NovaMart is a mature company with established financial reporting practices. For reference, NovaMart's key financial metrics for FY2024 include: total revenue of $891,000,000, EBITDA of $134,000,000, and gross merchandise value (GMV) of $6,200,000,000. The audited financial statements were prepared by Severin Beck CPAs LLP and are expected to be in the customary form required by the Commitment Letter.

The interim financial statement delivery condition requires more careful attention. Given the targeted closing date of October 15, 2025, and the 45-day look-back period, the most recent fiscal quarter-end for which interim financials must be delivered would be the quarter ending June 30, 2025 (Q2 2025), which is more than 45 days before October 15, 2025. The unaudited interim financial statements for Q2 2025 would need to be available no later than the closing date. If closing were delayed beyond mid-November 2025, the Q3 2025 interim financials (through September 30, 2025) would also need to be delivered.

Delivery of NovaMart's financial statements is not within Cascade's unilateral control—it requires the cooperation of NovaMart's management team, specifically Doug Whitfield (NovaMart CFO) and Amanda Trevino (NovaMart General Counsel). The SPA will contain covenants requiring NovaMart to cooperate with Cascade's financing efforts, but any delay or difficulty in obtaining the required financial statements could jeopardize the funding condition.

Recommendation: We recommend promptly coordinating with NovaMart's management team—through Calloway, Brandt & Loewe LLP (Richard Calloway and Simone Adesanya), who serve as counsel to NovaMart—to confirm that the required audited financial statements are available in the form required by the Commitment Letter and that NovaMart's internal processes will produce the Q2 2025 interim financial statements in the required timeframe. We further recommend that the SPA include a specific covenant requiring NovaMart to deliver financial statements meeting the specifications of the Commitment Letter within specified time periods.

7. Lender KYC / Patriot Act. Condition as Drafted: Completion of "know your customer" due diligence and all documentation required under the USA PATRIOT Act, the Bank Secrecy Act, and applicable anti-money laundering laws and regulations with respect to Cascade, no later than three (3) business days prior to the closing date.

Analysis: This is a standard condition and is required by federal banking regulations applicable to Cornerstone. KYC due diligence typically involves the provision of organizational documents, beneficial ownership certifications (IRS Form W-9, FinCEN beneficial ownership forms), identification of authorized signatories, and verification of the borrower's legal name, address, and taxpayer identification number. The 3-business-day advance requirement is important—KYC materials must be submitted with sufficient lead time to allow the Commitment Parties' compliance teams to process and approve the documentation.

In addition to Cascade's own KYC process, NovaMart and its material domestic subsidiaries will need to undergo KYC clearance in connection with their post-closing obligations as guarantors under the credit agreement. While post-closing guarantor KYC is not a condition to initial funding, it will be a condition to NovaMart's joinder as guarantor and any delay could trigger a default under the credit agreement.

Recommendation: We recommend initiating the KYC process with Cornerstone and Marlowe Crane CPAs LLPP immediately. Cascade's corporate secretary and treasury team should compile all required documentation and submit it to the Commitment Parties at the earliest opportunity. Additionally, we recommend requesting from NovaMart (through Calloway, Brandt & Loewe LLP) the organizational and beneficial ownership documentation that will be needed for NovaMart's post-closing guarantor KYC process, so that this information can be submitted to the Commitment Parties promptly after closing.

8. Payment of Fees and Expenses. Condition as Drafted: Payment of all fees, costs, and expenses required to be paid on the closing date pursuant to the Commitment Letter, the Fee Letter, and the definitive credit agreement, including without limitation the original issue discount, arrangement fees, and reimbursement of the Commitment Parties' reasonable and documented out-of-pocket expenses (including legal fees of counsel to the Administrative Agent).

Analysis: This is a standard ministerial condition. The fees payable at closing include the original issue discount of $11,250,000 (1.5% of $750,000,000), arrangement fees as specified in the Fee Letter, and reimbursement of the Commitment Parties' legal and other out-of-pocket expenses. The OID is typically netted against the loan proceeds (i.e., Cascade will receive net proceeds of $738,750,000 rather than the full $750,000,000, with the $11,250,000 difference representing the OID). The arrangement fees and expense reimbursement will be paid separately at closing.

Recommendation: No specific negotiation recommended on this condition. We note that the aggregate fee obligations at closing are substantial, and Cascade's treasury team should ensure that sufficient working capital is available to fund these payments on the closing date.

C. Conditions NOT Present (Favorable)

We note for completeness that the following conditions, which are sometimes found in commitment letters for leveraged finance transactions but which are generally considered unfavorable to borrowers, are not present in the Commitment Letter:

• No due diligence condition. The Commitment Parties have not reserved the right to conduct (or the right to be satisfied with the results of) any due diligence investigation of Cascade or NovaMart as a condition to funding.

• No syndication condition. Funding of the Term Loan B is not conditioned on the successful syndication of any portion of the Facility. The Commitment Parties bear the full underwriting risk.

• No absence-of-litigation condition. There is no standalone condition requiring the absence of litigation against Cascade or NovaMart. To the extent litigation would be relevant, it would be captured only through the SPA closing conditions (which are incorporated by reference through the Acquisition consummation condition).

• No minimum ratings condition. The Term Loan B does not require Cascade or the Facility to obtain a specific credit rating from any rating agency as a condition to funding. While the arrangers may seek ratings as part of the syndication process, the absence of a ratings condition ensures that funding cannot be held up by delays in the ratings process.

• No separate market disruption or market MAC condition at funding (other than the provision discussed in Section VI). There is no standalone condition permitting the Commitment Parties to refuse funding based on disruptions in the broader capital markets, except through the market MAC provision (which is analyzed separately and in detail in Section VI below).

The absence of these conditions is consistent with current market practice for underwritten Term Loan B commitment letters and is favorable to Cascade.

V. Flex Provisions

Flex provisions are contractual rights granted to the arrangers that permit them to modify certain terms of the Facility in order to facilitate successful syndication. These provisions are a standard feature of underwritten commitment letters, as they provide the arrangers with the ability to respond to investor feedback and market conditions during the syndication process. However, flex provisions also create cost and structural uncertainty for the borrower, and their scope should be carefully negotiated.

A. Pricing Flex

Upward Pricing Flex: The Commitment Letter grants Cornerstone and Marlowe Crane CPAs LLPP the right to increase the interest rate spread by up to 50 basis points (from SOFR + 275 bps to SOFR + 325 bps) and/or increase the original issue discount by up to 50 basis points (from 1.5% to 2.0%) if, in the reasonable judgment of the Commitment Parties, such increases are necessary to achieve successful syndication of the Term Loan B.

Impact of Full Pricing Flex Exercise. The financial impact of a full exercise of the pricing flex is as follows:

The additional annual interest cost at maximum spread flex is $3,750,000 per year ($750,000,000 × 0.50%), or approximately $26,250,000 over the 7-year term (undiscounted, assuming no prepayment). The additional OID of $3,750,000 is a one-time upfront cost that reduces net loan proceeds at closing. The combined incremental cost of full flex exercise in the first year of the facility is $7,500,000—a meaningful sum that would reduce Cascade's post-closing free cash flow and debt service capacity.

Analysis: The pricing flex range of 50 basis points on spread and 50 basis points on OID is within market norms for a committed Term Loan B facility of this size and credit profile. However, the cumulative potential flex of 100 basis points (50 bps spread + 50 bps OID) is at the wide end of the market range, and we note that some recent comparable transactions have featured tighter flex ranges (e.g., 25 bps spread + 25 bps OID, or a combined cap of 50 bps). In addition, the Commitment Letter does not impose a procedural requirement on the Commitment Parties to demonstrate that syndication efforts have been unsuccessful at existing pricing before exercising flex—a feature that would provide Cascade with a degree of protection against unnecessary or premature flex exercise.

Recommendation: We recommend negotiating the following modifications to the pricing flex provisions:

(a) Combined Cap. Impose a combined cap on total flex exercise of 50 basis points across spread and OID, rather than 50 basis points on each. This would allow the Commitment Parties to increase the spread by 50 bps (but not the OID), or the OID by 50 bps (but not the spread), or some combination (e.g., 25 bps on each), but would prevent the cumulative 100 basis point flex that is currently permitted. This approach reduces Cascade's maximum incremental cost from $7,500,000 to approximately $3,750,000 in year one.

(b) Market Check Mechanism. Require that the Commitment Parties may only exercise pricing flex after demonstrating, to Cascade's reasonable satisfaction, that syndication efforts at existing pricing have been unsuccessful over a specified period (e.g., 30 days). This procedural safeguard prevents premature flex exercise and ensures that the borrower's interests are considered.

(c) Reverse Flex. Request a "reverse flex" provision that would require the Commitment Parties to reduce the interest rate spread or OID if syndication demand exceeds a specified threshold (e.g., if the facility is oversubscribed by more than 150%). Reverse flex is increasingly common in the current market and would allow Cascade to benefit from favorable syndication outcomes.

B. Structure Flex

In addition to pricing flex, the Commitment Letter grants Cornerstone and Marlowe Crane CPAs LLPP certain structural flex rights that permit modifications to the terms and structure of the Facility to facilitate syndication. Specifically, the Commitment Parties have the right to:

(a) Facility Reallocation. Reallocate up to $100,000,000 of the Term Loan B commitment to a first-lien revolving credit tranche or to a first-lien/second-lien bifurcated structure. This reallocation right would allow the Commitment Parties to carve out a portion of the term loan and repackage it as a different facility type if investor demand favors such a structure. The reallocation could result in a smaller term loan (e.g., $650,000,000) paired with a $100,000,000 revolving tranche, or in a $650,000,000 first-lien term loan and a $100,000,000 second-lien term loan.

(b) Excess Cash Flow Sweep Modification. Modify the excess cash flow sweep percentages within specified ranges (the specific ranges are set forth in the Term Sheet but have not been finalized).

Analysis: Structural flex is a standard feature of commitment letters and reflects the reality that the syndication process may reveal investor preferences that differ from the borrower's preferred structure. However, each structural flex component has potential cost implications for Cascade:

The $100,000,000 reallocation right is the most significant structural flex item. If exercised to create a revolving tranche, Cascade would bear the cost of a commitment fee on the undrawn portion of the revolving commitment, in addition to the interest cost on drawn amounts. If exercised to create a second-lien tranche, the interest rate on the second-lien portion would almost certainly be higher than on the first-lien portion, increasing Cascade's blended cost of debt. Moreover, a bifurcated first-lien/second-lien structure would require negotiation of an intercreditor agreement, adding complexity and potentially delaying closing.

The SOFR floor increase from 0.50% to 0.75% would increase Cascade's interest cost in low-rate environments. At current SOFR levels (approximately 4.30%), the floor is not binding and the flex would have no immediate cost impact. However, if SOFR were to decline below 0.75% during the term of the facility, the increased floor would result in higher interest payments than would apply under the base case 0.50% floor.

Recommendation: We recommend the following modifications to the structural flex provisions:

(a) Reduce the facility reallocation amount from $100,000,000 to $50,000,000, limiting the Commitment Parties' ability to modify the facility structure.

(b) Cap the SOFR floor flex at 0.625% (rather than 0.75%), representing a compromise between the base case and the Commitment Parties' requested maximum.

(c) Add a provision that any structural changes resulting from the exercise of structural flex shall not: (i) create any additional conditions to funding not set forth in the Commitment Letter; (ii) change the scheduled maturity date of any portion of the facility; or (iii) result in aggregate annual amortization in excess of 1% of the original aggregate principal amount.

C. Sunset on Flex

Provision as Drafted: The flex provisions expire on the earlier of (i) successful syndication (defined as allocation of commitments to syndicate lenders and receipt of signed commitment documentation from such lenders) and (ii) ninety (90) days after the closing date.

Analysis: The flex sunset is standard and acceptable. The 90-day post-closing sunset provides a reasonable period for the Commitment Parties to complete syndication efforts after funding. Once the flex period expires, the terms of the Facility are fixed.

Recommendation: No modification recommended. The sunset provision is market-standard and provides adequate certainty to Cascade.

VI. Market MAC / Material Adverse Change Provisions

A. Market MAC in Commitment Letter

Provision as Drafted: The Commitment Letter contains a "market MAC" condition that permits the Commitment Parties to terminate their commitments if, prior to the funding date, there shall have occurred a "material adverse change in the syndicated loan market or high-yield bond market generally" that "makes it impracticable to syndicate the Term Loan B on terms substantially consistent with those set forth in the Commitment Letter and the Term Sheet (even after giving effect to the exercise of the Flex Provisions)."

Analysis: This is the single most significant risk factor in the Commitment Letter. The market MAC provision is a broad market-out clause that creates a path for the Commitment Parties to refuse to fund the Term Loan B if, during the approximately five-month period between SPA signing (May 20, 2025) and targeted closing (October 15, 2025), there is a significant disruption or deterioration in the syndicated loan or high-yield bond markets.

Several aspects of the market MAC provision are particularly concerning:

(a) Breadth of Triggering Event. The triggering event is defined as a "material adverse change in the syndicated loan market or high-yield bond market generally." This standard does not require that the market change be unprecedented, catastrophic, or permanent—only that it be "material" and that it affect the markets "generally." A significant but temporary market dislocation—such as the type that occurred during various periods of volatility in recent years—could potentially satisfy this standard.

(b) "Impracticable" Standard. The provision is triggered when the market change makes syndication "impracticable" rather than "impossible." "Impracticable" is a lower threshold than "impossible" and introduces additional subjectivity. A court applying this standard would likely consider whether syndication remained feasible at any price, but the impracticability standard suggests that the Commitment Parties need not exhaust every possible avenue before invoking the clause.

(c) Duration of Exposure. The approximately five-month window between SPA signing and targeted closing creates extended exposure to market volatility. While this period is driven by the HSR Act Second Request timeline and is not within Cascade's control, it significantly increases the probability that a market disruption could occur during the exposure period.

(d) Commitment Parties' Incentives. If market conditions deteriorate, the Commitment Parties face a tension between their contractual obligation to fund and their economic interest in avoiding a loss-making underwriting. The market MAC provision provides a potential exit that the Commitment Parties may be tempted to invoke in adverse conditions, even in cases where the provision's requirements are arguably not fully satisfied.

Critical Issue: Because the SPA contains no financing condition, the market MAC provision creates a scenario in which Cascade could be "caught between" its obligations. Specifically, if the Commitment Parties invoke the market MAC and refuse to fund the Term Loan B, Cascade would be obligated to close the Acquisition under the SPA but would lack $750,000,000 of the required financing. The consequences of this scenario would include:

(a) Failure to close the Acquisition on the targeted closing date, potentially triggering the reverse termination fee of $30,000,000 (equal to 2.5% of the $1,200,000,000 Purchase Price) payable to the Stockholder Representative (Ridgeline Equity Partners, LP / Franklin Osei);

(b) Potential claims by the Selling Stockholders for specific performance of Cascade's obligations under the SPA;

(c) Reputational damage to Cascade in the capital markets, which could adversely affect its ability to secure alternative financing or complete future transactions; and

(d) Potential breach of Cascade's representations in the SPA regarding the sufficiency of its committed financing.

Recommendation: We strongly recommend that the elimination or substantial narrowing of the market MAC provision be treated as the highest-priority negotiation item with the Commitment Parties. Our recommended approach, in order of preference, is as follows:

First Preference: Elimination. The market MAC provision should be deleted entirely. The Commitment Parties have committed to underwrite the full $750,000,000, and the flex provisions already provide them with the ability to adjust pricing and structure in response to market conditions. If the Commitment Parties have adequate flex, there should be no circumstance in which syndication is impracticable. The Commitment Parties accepted the underwriting risk when they issued the Commitment Letter, and the market MAC effectively shifts that risk back to Cascade.

Second Preference: Narrow to "Impossibility." If the Commitment Parties insist on retaining a market-out provision, the standard should be narrowed from "impracticable" to "impossible." This is a significantly higher threshold that would limit the provision to truly extraordinary market disruptions (e.g., a complete shutdown of the syndicated loan market, a declaration of banking holidays, or similar force majeure events). In addition, the provision should require that the Commitment Parties have first exhausted all available flex before invoking the market MAC.

Third Preference: Hold-to-Close Underwriting. As an alternative to eliminating the market MAC, require the Commitment Parties to fund the full $750,000,000 as underwriters (i.e., hold the entire facility on their own balance sheets) if syndication cannot be completed, even in adverse market conditions. The market MAC would then apply only to the Commitment Parties' syndication efforts, not to their funding obligation. This approach ensures that Cascade receives the committed financing regardless of market conditions, while acknowledging the Commitment Parties' legitimate interest in being relieved of their syndication obligations in extreme circumstances.

Alternative Mitigation: If the market MAC cannot be fully eliminated or narrowed to an acceptable standard, Cascade should consider the following risk mitigation strategies:

(a) Backstop Commitment. Procure a backstop commitment from a third-party lender (or a group of lenders) that would provide replacement financing in the event the Commitment Parties invoke the market MAC. This would require separate negotiations and would involve additional commitment fees, but would eliminate the risk of a funding gap.

(b) Increased Cash Component. Increase the cash-on-hand component of the sources of funds (currently $250,000,000) by retaining additional cash from operations during the pre-closing period, thereby reducing reliance on the Term Loan B.

(c) Parent Support. If Cascade has access to any shareholder or parent-level financing (including through its relationship with its existing equity investors), such support could serve as an additional backstop.

B. Company-Specific MAC

As noted in Section IV.B.4 above, the company-specific MAC condition in the Commitment Letter cross-references the "Company Material Adverse Effect" definition in the SPA as in effect on the date of the Commitment Letter. This back-to-back approach is favorable and ensures alignment between the SPA and the Commitment Letter.

We note favorably that the Commitment Letter does not contain a separate MAC condition relating to Cascade itself (as borrower), as distinct from NovaMart (as target). Some commitment letters include a "borrower MAC" that permits the Commitment Parties to refuse funding if the borrower's own business or financial condition has suffered a material adverse effect. The absence of such a condition is favorable to Cascade.

VII. Syndication Provisions

A. Syndication Process

Provision as Drafted: Cornerstone, in its capacity as Lead Left Arranger, and Marlowe Crane CPAs LLPP, in its capacity as Co-Lead Arranger, will manage the syndication of the Term Loan B to a group of institutional lenders. The syndication process will be conducted in accordance with a timeline and strategy to be agreed upon between the Commitment Parties and Cascade.

Cascade is required to provide "reasonable cooperation" in the syndication process, including without limitation:

(i) making members of senior management available for lender meetings, presentations, and one-on-one sessions as reasonably requested by the Commitment Parties;

(ii) preparing, with the assistance of the Commitment Parties, a confidential information memorandum (commonly referred to as a "bank book" or "CIM") describing Cascade's business and financial condition, NovaMart's business and financial condition, the pro forma combined entity, the Acquisition, and the terms of the Facility;

(iii) providing the Commitment Parties with financial information regarding Cascade and NovaMart, including historical financial statements, projections, and pro forma financial information; and

(iv) using commercially reasonable efforts to obtain, at Cascade's expense, a corporate family rating and a facility rating from at least one nationally recognized statistical rating organization (although such ratings are not a condition to funding).

Analysis: The cooperation obligations set forth in the Commitment Letter are standard for underwritten commitment letters and are generally acceptable. Cascade's management team, led by Rajiv Sundaram (CFO) and Ted Langford (SVP, Corporate Development), has experience with institutional lender presentations and should be well-equipped to participate in the syndication process.

However, the preparation and dissemination of the confidential information memorandum raises specific concerns in this transaction. The bank book will necessarily contain detailed information about NovaMart's business, including financial data, competitive positioning, growth strategy, and customer and supplier relationships. Several sensitivities must be addressed:

(a) Antitrust Sensitivities. Cascade is currently subject to a DOJ Second Request in connection with the Acquisition. The Second Request process imposes restrictions on the exchange of competitively sensitive information between Cascade and NovaMart, as governed by the Clean Team / Antitrust Protocol Agreement. Information included in the bank book regarding NovaMart's competitive position, pricing strategies, customer relationships, and market share could raise concerns under the Clean Team protocols and could potentially be used by the DOJ as evidence that the parties engaged in premature coordination. The bank book must be carefully reviewed by antitrust counsel (Howard Bellamy and Gabriela Montoya at Whitfield & Crane LLP) to ensure compliance with the Clean Team protocols.

(b) Confidentiality. The bank book will be distributed to a potentially large number of prospective syndicate lenders. While each prospective lender will be required to execute a confidentiality agreement (or click-through acknowledgment on the syndication platform) before receiving the bank book, the broad distribution increases the risk of information leakage. Particular care must be taken to ensure that no material nonpublic information regarding Cascade (a publicly traded company) is included in the bank book in a manner that could give rise to insider trading concerns.

(c) Accuracy and Completeness. Cascade will bear responsibility for the accuracy and completeness of the information in the bank book, as the bank book will contain a customary 10b-5 negative assurance letter from Cascade's management. Calderwood & Harkness will need to review the bank book carefully to ensure that all statements are accurate and not misleading.

Recommendation: We recommend negotiating a provision in the Commitment Letter that any information regarding NovaMart to be included in the bank book or other syndication materials is subject to Cascade's prior written review and approval. This approval right should be exercisable within a specified timeframe (e.g., three business days after receipt of the draft materials) so as not to unduly delay the syndication process. In add

PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGE ATTORNEY WORK PRODUCT
MEMORANDUM
FROM: Harrison Wexford, Responsible Partner, and Derek Okonkwo, Lead Associate, Calderwood & Harkness LLP
TO: Elena Vasquez-Bright, General Counsel, Cascade Retail Holdings Inc. Rajiv Sundaram, Chief Financial Officer, Cascade Retail Holdings Inc. Theodore ("Ted") Langford, Senior Vice President, Corporate Development, Cascade Retail Holdings Inc.
CC: Beatrice Holloway, Billing Partner, Calderwood & Harkness LLP Sylvia Hartwell, Specialist Partner, Tax, Calderwood & Harkness LLP
DATE: May 18, 2025
RE: Review and Analysis of Commitment Letter (Reference: CL-2025-0515-CRNB) dated May 15, 2025, from Cornerstone National Bank, N.A. and Caluvori Capital Partners, Inc. — $750,000,000 Senior Secured Term Loan B Facility in Connection with the Acquisition of NovaMart Global Inc.
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I. Executive Summary
This memorandum sets forth the analysis and recommendations of Calderwood & Harkness LLP ("Calderwood & Harkness" or "we") with respect to the commitment letter dated May 15, 2025 (the "Commitment Letter," Reference: CL-2025-0515-CRNB), pursuant to which Cornerstone National Bank, N.A. ("Cornerstone"), acting in its capacity as Administrative Agent and Lead Left Arranger, and Caluvori Capital Partners, Inc. ("Marlowe Crane CPAs LLPP"), acting in its capacity as Co-Lead Arranger (Cornerstone and Marlowe Crane CPAs LLPP, collectively, the "Commitment Parties"), have committed to provide a $750,000,000 Senior Secured Term Loan B facility (the "Term Loan B" or the "Facility") to Cascade Retail Holdings Inc. ("Cascade," "CRH," or the "Company"). The Term Loan B is intended to finance, in part, the acquisition (the "Acquisition") of 100% of the outstanding capital stock of NovaMart Global Inc. ("NovaMart" or the "Target") for an aggregate purchase price of $1,200,000,000 (the "Purchase Price").
The key contacts at the Commitment Parties are Robert Frankel, Senior Vice President, Leveraged Finance, at Cornerstone National Bank, N.A. (227 West Monroe Street, Chicago, IL 60606), and Irene Matsuda, Director, at Caluvori Capital Partners, Inc. (350 California Street, Suite 1800, San Francisco, CA 94104). We have engaged in preliminary discussions with counsel to Cornerstone, and anticipate receiving their initial comments on a parallel basis with our transmittal of the proposed markup described herein.
The Stock Purchase Agreement for the Acquisition (the "SPA") is expected to be executed on May 20, 2025. The Commitment Letter was secured five days in advance of the targeted SPA signing date to satisfy Cascade's obligation under the SPA to have committed financing in place at the time of execution. This timing dynamic is important context for the negotiations: the Commitment Letter must be in final (or substantially final) form no later than May 19, 2025, to allow for internal Cascade approvals prior to SPA execution the following day.
Overall Assessment. The Commitment Letter is largely market-standard for a Term Loan B facility of this size and type in the current lending environment. The conditionality is appropriately narrow, the specified representations approach is favorable to the borrower, and no syndication or due diligence condition is imposed. However, the Commitment Letter contains several flex provisions and conditions that warrant negotiation or clarification prior to SPA execution. Most critically, the market MAC provision creates a risk of funding failure that is particularly acute given the five-month window between SPA signing and targeted closing.
We underscore at the outset that the SPA does not contain a financing condition. Cascade has represented to the Selling Stockholders (defined below) that it will have sufficient committed financing to consummate the Acquisition. This representation makes the certainty of the Commitment Letter and the narrowness of its conditions critically important. Any gap between the SPA's closing conditions and the Commitment Letter's funding conditions creates exposure for Cascade—a situation in which the Company would be obligated to close the Acquisition but unable to draw on the committed financing to do so. As detailed in this memorandum, we have identified one such gap—the market MAC provision—and we recommend that its elimination or substantial narrowing be treated as the highest-priority negotiation item.
This memorandum is organized as follows: Section II provides transaction context and sources and uses. Section III summarizes the key terms of the Commitment Letter. Section IV analyzes the conditions precedent to funding. Section V addresses the flex provisions. Section VI discusses the market MAC and company-specific MAC provisions. Section VII covers the syndication provisions. Section VIII addresses termination and expiration. Section IX provides a high-level summary of the Fee Letter. Section X compares the Commitment Letter to the SPA requirements. Section XI sets forth our negotiation recommendations in summary form. Section XII outlines next steps. Section XIII identifies attachments.
II. Transaction Context and Sources and Uses
A. Transaction Overview
Cascade Retail Holdings Inc., a Delaware corporation publicly traded on the Nasdaq Global Select Market (Ticker: CRHI; EIN: 91-2847653; headquarters at 4500 Elliott Avenue West, Suite 3200, Seattle, WA 98119), proposes to acquire 100% of the outstanding capital stock of NovaMart Global Inc., a Delaware corporation, through an all-cash stock purchase transaction. The aggregate Purchase Price for the Acquisition is $1,200,000,000.
The selling stockholders of NovaMart (collectively, the "Selling Stockholders") and their respective ownership interests are as follows:
Ridgeline Equity Partners, LP, as the majority holder, is expected to serve as the Stockholder Representative under the SPA, with Franklin Osei acting as designated representative. The SPA will be governed by the laws of the State of Delaware, and the parties have agreed to exclusive jurisdiction in the Court of Chancery of the State of Delaware (or, if the Court of Chancery declines jurisdiction, in the United States District Court for the District of Delaware).
The targeted closing date for the Acquisition is October 15, 2025. The outside date under the SPA (the "Outside Date") is December 31, 2025. The period between SPA signing and targeted closing—approximately five months—reflects the expected timeline for completion of the DOJ Second Request process under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), as well as customary post-signing integration planning. We note that the Second Request was issued on April 28, 2025, and substantial compliance efforts are underway under the direction of Howard Bellamy and Gabriela Montoya at Whitfield & Crane LLP. The antitrust clearance timeline is the principal gating item for closing.
B. Sources and Uses
The financing structure for the Acquisition contemplates three sources of funds, as set forth below. We note that the aggregate sources exceed the Purchase Price, as Cascade must also fund the payoff of NovaMart's existing indebtedness and estimated transaction costs.
Sources of Funds:
In addition to the foregoing, approximately $47,300,000 in estimated transaction costs will be funded from Cascade's existing working capital and operating cash flow. The total capital requirement for the transaction is therefore approximately $1,247,300,000.
Uses of Funds:
The net cash consideration to Selling Stockholders at closing represents the Purchase Price of $1,200,000,000, less the $96,000,000 escrow deposit (equal to 8% of total deal value). The escrow deposit will be held by Marlowe Asset Management Trust Company, N.A. as escrow agent and will secure the Selling Stockholders' indemnification obligations under the SPA, subject to customary release mechanics.
The payoff of NovaMart's existing revolving credit facility with Ashford Savings Bank, N.A. is required as a condition to closing under the SPA. The facility has a total commitment of $150,000,000, with an estimated outstanding principal balance of approximately $143,200,000 as of the projected closing date, plus accrued and unpaid interest. Payoff letters will be obtained from Ashford Savings Bank in advance of closing.
The estimated transaction costs of approximately $47,300,000 are comprised of the following components:
We note that the financing OID of 1.5% on the Term Loan B ($11,250,000) is addressed in the separate Fee Letter (Reference: CL-2025-0515-CRNB-FL), which is reviewed in a companion memorandum to be distributed under separate cover on a restricted basis. The Fee Letter contains highly sensitive commercial terms and its distribution should be limited to the addressees of this memorandum and Cascade's board of directors.
C. Interplay with Existing Revolving Credit Facility
Cascade's existing $500,000,000 senior secured revolving credit facility (the "Existing Revolver") has Cornerstone National Bank, N.A. as Administrative Agent and includes a syndicate of five additional lenders. The Existing Revolver was entered into on March 14, 2022, and was most recently amended on November 8, 2024. It matures on March 14, 2027.
The Existing Revolver contains negative covenants that, among other things, restrict Cascade's ability to consummate acquisitions above a specified dollar threshold, incur additional secured indebtedness, and make draws in excess of a specified percentage of the total commitment for acquisition-related purposes. As currently drafted, the Acquisition and the incurrence of the Term Loan B would violate several of these negative covenants, and the $200,000,000 draw at closing would require a specific waiver of the acquisition-related borrowing limitation.
Accordingly, the Existing Revolver will require an amendment (the "Revolver Amendment") to: (i) permit the Acquisition; (ii) permit the incurrence of the Term Loan B; (iii) authorize the $200,000,000 draw at closing for acquisition-related purposes; (iv) add NovaMart and its material domestic subsidiaries as guarantors; and (v) modify the financial covenants to reflect the pro forma leverage profile of the combined company. Calderwood & Harkness is separately preparing and negotiating the Revolver Amendment, and a separate memorandum on that process will be provided. We expect the Revolver Amendment to require the consent of lenders holding a majority of the revolving commitments, and Cornerstone (as both Administrative Agent under the Existing Revolver and Lead Left Arranger for the Term Loan B) has indicated its willingness to support the amendment process.
The intercreditor relationship between the Existing Revolver and the Term Loan B will be governed by a first-lien intercreditor agreement, to be negotiated as part of the definitive documentation process. Both facilities will share a first-priority lien on substantially all assets of Cascade and, post-closing, NovaMart and its subsidiaries, with customary "equal and ratable" sharing provisions.
III. Summary of Key Terms of the Commitment Letter
A. Parties. The key parties to the Commitment Letter and their respective roles are as follows:
Borrower: Cascade Retail Holdings Inc. Cascade is a Delaware corporation, publicly traded on the Nasdaq Global Select Market under the ticker symbol "CRHI." Cascade's Employer Identification Number is 91-2847653. Cascade's principal offices are located at 4500 Elliott Avenue West, Suite 3200, Seattle, WA 98119.
Administrative Agent and Lead Left Arranger: Cornerstone National Bank, N.A. Cornerstone will serve as Administrative Agent under the definitive credit agreement and as Lead Left Arranger for the syndication of the Term Loan B. Cornerstone's role as Lead Left Arranger gives it primary responsibility for structuring the Facility and managing the syndication process. Cornerstone also serves as Administrative Agent under Cascade's Existing Revolver, a relationship that provides institutional familiarity with Cascade's credit profile and business operations, and which should facilitate the amendment process described in Section II.C above.
Co-Lead Arranger: Caluvori Capital Partners, Inc. Marlowe Crane CPAs LLPP will serve as Co-Lead Arranger and will participate in the syndication process alongside Cornerstone. Marlowe Crane CPAs LLPP's commitment share is not specified in the Commitment Letter (allocation as between Cornerstone and Marlowe Crane CPAs LLPP is addressed in the Fee Letter), but both parties are jointly and severally committed to fund the full $750,000,000 if syndication is not completed prior to closing.
Syndication: The Commitment Letter provides that Cornerstone and Marlowe Crane CPAs LLPP shall have the right to syndicate the Facility to additional institutional lenders (the "Lenders") on terms consistent with the Commitment Letter and Term Sheet. Critically, no minimum level of syndication is a condition to funding. The Commitment Parties retain the full underwriting risk of the $750,000,000 commitment, subject to the market MAC provision discussed in Section VI below.
B. Facility Terms
The principal financial and structural terms of the Term Loan B, as set forth in the Commitment Letter and the attached Summary Term Sheet, are as follows:
Type: Senior Secured Term Loan B. The facility is structured as a single-draw term loan to be advanced in full on the closing date. No delayed-draw or incremental features are contemplated in the Commitment Letter, although the definitive credit agreement may include a customary incremental facility provision.
Amount: $750,000,000. The full principal amount is to be drawn at closing.
Interest Rate: The Term Loan B will bear interest at a rate per annum equal to the Adjusted Term SOFR (as defined in the definitive credit agreement) plus a margin of 275 basis points (2.75%). The Commitment Letter specifies a SOFR floor of 0.50%, meaning that if the Adjusted Term SOFR rate falls below 0.50%, the borrower will be deemed to be borrowing at 0.50% plus the applicable margin. At current Adjusted Term SOFR levels (approximately 4.30% as of the date of this memorandum), the all-in interest rate would be approximately 7.05% per annum, resulting in annual interest expense of approximately $52,875,000 on the full $750,000,000 principal balance. The interest rate is subject to the pricing flex provisions discussed in Section V.A below.
Maturity: The Term Loan B will mature seven (7) years from the closing date. Assuming a closing date of October 15, 2025, the maturity date would be October 15, 2032. This is a standard maturity for an institutional Term Loan B facility.
Amortization: The Term Loan B will amortize at a rate of 1% per annum of the original principal amount, payable in equal quarterly installments of $1,875,000 each ($7,500,000 per annum). This is the minimum standard amortization rate for Term Loan B facilities and is favorable. The remaining principal balance will be due and payable in full at maturity.
Optional Prepayment: The Term Loan B will be prepayable at par at any time after the first six (6) months following the closing date, without premium or penalty. During the first six (6) months, a soft call premium of 101% of the principal amount being prepaid will apply, but only in connection with "repricing transactions"—i.e., prepayments funded with the proceeds of a new term loan facility at a lower interest rate, or amendments to the credit agreement that reduce the applicable margin. Voluntary prepayments not constituting repricing transactions may be made at par during the initial six-month period.
Mandatory Prepayment: The Commitment Letter provides for customary mandatory prepayment provisions, including:
(a) Excess Cash Flow Sweep. The borrower will be required to prepay the Term Loan B in an amount equal to 50% of Excess Cash Flow (as defined in the definitive credit agreement) for each fiscal year, stepping down to 25% of Excess Cash Flow when the Total Net Leverage Ratio falls below a specified threshold and stepping down to 0% when the Total Net Leverage Ratio falls below a lower specified threshold. The specific leverage ratio thresholds will be set forth in the definitive credit agreement. The excess cash flow sweep is a standard feature of Term Loan B facilities and provides for accelerated deleveraging in periods of strong cash flow performance.
(b) Asset Sale Proceeds. Net cash proceeds from asset dispositions (subject to customary reinvestment rights and a de minimis threshold) will be required to be applied to prepay the Term Loan B.
(c) Insurance and Condemnation Proceeds. Net cash proceeds from casualty events or condemnation proceedings (subject to customary reinvestment rights) will be required to be applied to prepay the Term Loan B.
(d) Debt Issuance Proceeds. Net cash proceeds from the issuance of indebtedness not otherwise permitted under the credit agreement will be required to be applied to prepay the Term Loan B.
Security: The Term Loan B will be secured by a first-priority lien on substantially all assets of Cascade, including but not limited to inventory, accounts receivable, equipment, intellectual property, real property (subject to a customary fair market value threshold), and equity interests in domestic subsidiaries and 65% of equity interests in first-tier foreign subsidiaries. Following the closing of the Acquisition, the security package will be extended to include substantially all assets of NovaMart and its domestic subsidiaries. The security interests will be documented in a Guarantee and Collateral Agreement to be negotiated as part of the definitive documentation process.
Guarantors: Following the closing of the Acquisition, NovaMart and each of its material domestic subsidiaries will be required to guarantee the obligations under the Term Loan B. The definition of "material domestic subsidiary" will be set forth in the definitive credit agreement and will typically include any domestic subsidiary whose total assets or total revenues exceed a specified percentage (customarily 5%) of the consolidated total assets or revenues of Cascade and its subsidiaries.
C. Purpose. The proceeds of the Term Loan B are to be used to finance, in part, the Acquisition of NovaMart Global Inc. and to pay related transaction fees, costs, and expenses. No other use of proceeds is contemplated or permitted.
D. Governing Law
The Commitment Letter, the Fee Letter, and the definitive credit agreement and related loan documents are governed by the laws of the State of New York, without regard to principles of conflicts of laws. This is standard for leveraged finance transactions of this type and is consistent with the governing law provisions of the Existing Revolver.
IV. Conditions Precedent to Funding
A. Overview of Conditions
The Commitment Letter sets forth a series of conditions precedent that must be satisfied (or waived by the Commitment Parties) on or prior to the funding date in order for the Commitment Parties to be obligated to fund the Term Loan B. These conditions are of paramount importance because, as noted above, the SPA contains no financing condition. If any condition precedent to funding is not satisfied and the Commitment Parties decline to waive such condition, Cascade will not receive the committed financing and will be unable to fund the Acquisition—but will remain obligated to close under the SPA or face the reverse termination fee and potential specific performance claims. Accordingly, the conditions must be scrutinized to ensure that each one either (i) will be automatically satisfied if the SPA closing conditions are satisfied, or (ii) is within Cascade's control to satisfy.
We summarize below each material condition precedent, together with our analysis and recommendations.
B. Specific Conditions Analyzed
1. Execution of Definitive Documentation. Condition as Drafted: The Commitment Letter requires the execution and delivery of the definitive credit agreement, the guarantee and collateral agreement, and all related loan documents, in each case in form and substance "reasonably satisfactory" to the Administrative Agent.
Analysis: The use of a "reasonably satisfactory" standard is generally market for committed financing letters. However, this formulation grants the Administrative Agent a degree of subjective discretion over the form and substance of the definitive documentation that creates risk. In theory, the Administrative Agent could assert that it is not "reasonably satisfied" with particular provisions of the credit agreement and refuse to fund on that basis. While a court would likely apply an objective standard to evaluate the reasonableness of such an assertion, litigation over the meaning of "reasonably satisfactory" in the midst of a time-sensitive closing would be commercially impractical and damaging to the transaction.
Recommendation: We recommend negotiating to replace the "reasonably satisfactory" standard with a more objective formulation. Specifically, we recommend that the Commitment Letter provide that the definitive documentation shall be "substantially consistent with the terms set forth in the Commitment Letter and the attached Summary Term Sheet and otherwise customary for institutional Term Loan B facilities of this type and size." In addition, we recommend adding a provision that the definitive documentation shall not contain conditions to borrowing that are not set forth in the Commitment Letter. This approach limits the Administrative Agent's discretion to matters not addressed in the Commitment Letter and Term Sheet, while still allowing for the inclusion of customary terms that are expected in a credit agreement of this type but are not typically set forth in a commitment letter.
2. Acquisition Consummation. Condition as Drafted: The Acquisition of NovaMart shall be consummated substantially concurrently with the initial funding under the Term Loan B, in accordance with the Stock Purchase Agreement, without giving effect to any amendment, modification, waiver, or consent under the SPA that is materially adverse to the interests of the Lenders, unless approved by Cornerstone (such approval not to be unreasonably withheld, conditioned, or delayed).
Analysis: This is a standard "SunGard" provision, so named after the landmark SunGard acquisition financing structure that established the market practice of conditioning commitment letters on consummation of the underlying acquisition in accordance with the acquisition agreement. The provision serves two purposes: it ensures that the financing is used for its intended purpose (the Acquisition), and it protects the Lenders against post-signing modifications to the SPA that could materially change the risk profile of the transaction from a financing perspective.
The limitation on SPA amendments adverse to the Lenders requires careful monitoring throughout the period between SPA signing and closing. Any proposed amendment, waiver, or consent under the SPA—whether initiated by Cascade, the Selling Stockholders, or both—must be reviewed by Calderwood & Harkness for potential lender impact before it is executed. Amendments that could be deemed "materially adverse to the interests of the Lenders" would include, among other things, increases to the Purchase Price, changes to the allocation of assets or liabilities between closing and post-closing, modifications to the escrow structure that reduce the Lenders' effective collateral base, or changes to the guarantor or subsidiary structure of NovaMart.
Recommendation: We recommend confirming that the standard for "materially adverse to the interests of the Lenders" is an objective standard and that the consent right is limited in scope to changes that directly affect financing matters—specifically, changes that affect the Purchase Price (and therefore the required financing amount), the collateral package, the guarantor structure, or the representations and warranties that form the basis of the "specified representations" condition in the Commitment Letter. Changes to other SPA provisions—such as employee benefit matters, indemnification thresholds, or non-competition covenants—should not require Lender consent. We further recommend adding a provision that Cornerstone's consent (not to be unreasonably withheld) shall be deemed given if Cornerstone has not responded within five (5) business days of receipt of the proposed amendment.
3. Representations and Warranties. Condition as Drafted: Certain specified representations and warranties in the definitive credit agreement shall be true and correct in all material respects as of the funding date (or, in the case of representations that speak as of a specified date, as of such date).
Analysis: The Commitment Letter adopts a "specified representations" approach, which is the borrower-favorable market standard for Term Loan B facilities. Under this approach, only a limited, enumerated set of representations must be true at funding. The specified representations listed in the Commitment Letter are:
(a) corporate existence and good standing;
(b) corporate power and authority to enter into and perform the loan documents;
(c) no conflict of the loan documents with organizational documents;
(d) due authorization, execution, delivery, validity, and enforceability of the loan documents;
(e) compliance with Federal Reserve margin regulations (Regulations T, U, and X);
(f) the borrower's status under the Investment Company Act of 1940;
(g) compliance with the USA PATRIOT Act;
(h) compliance with OFAC sanctions programs;
(i) compliance with anti-corruption laws (including the Foreign Corrupt Practices Act).
This specified representations approach is distinctly more favorable to the borrower than an alternative approach (sometimes seen in less borrower-friendly commitment letters) that would require a bring-down of all representations in the SPA or all representations in the credit agreement as a condition to funding. The specified representations listed above are narrow, factual, and within Cascade's control to ensure are accurate. They do not include representations regarding the target's business, financial condition, or compliance with law—matters that are inherently less within the borrower's control and more likely to give rise to disputes.
Recommendation: We recommend confirming that the list of specified representations in the Commitment Letter is exhaustive and cannot be expanded in the definitive credit agreement. We further recommend adding a provision to the Commitment Letter stating that "no representation or warranty other than the Specified Representations shall be a condition to funding under this Commitment Letter or the Definitive Credit Agreement." This ensures that Cornerstone's counsel cannot, during the drafting of the definitive credit agreement, attempt to add additional representations to the closing condition.
4. No Company Material Adverse Effect. Condition as Drafted: Since the date of the Stock Purchase Agreement, there shall not have occurred a "Company Material Adverse Effect" as such term is defined in the Stock Purchase Agreement as in effect on the date of the Commitment Letter.
Analysis: This condition is commonly referred to as the "back-to-back" MAE condition, and it is the borrower-favorable market standard. Under this approach, the Lenders' right to refuse funding on the basis of a material adverse effect on the target company mirrors exactly Cascade's right to refuse to close the Acquisition under the SPA on the same basis. If a Company Material Adverse Effect has occurred that is sufficiently severe to permit Cascade to walk away from the SPA, then the Lenders may also refuse to fund. Conversely, if the MAE is not severe enough to permit Cascade to terminate the SPA—i.e., if Cascade is obligated to close notwithstanding the adverse development—then the Lenders are also obligated to fund. This alignment is precisely what the "back-to-back" structure is designed to achieve.
We note that the Company Material Adverse Effect definition in the SPA will be subject to negotiation between Cascade and the Selling Stockholders. The Commitment Letter's cross-reference is to the SPA "as in effect on the date of the Commitment Letter," which is the date the SPA is executed (May 20, 2025). This means that if the MAE definition in the SPA is narrowed during negotiations between the Commitment Letter date and SPA signing—resulting in fewer carve-outs from the definition, for example—the Commitment Parties would have a broader right to refuse funding than Cascade has to refuse to close. Conversely, if the MAE definition is broadened during negotiations (additional carve-outs, higher materiality thresholds), the Commitment Parties' funding obligation could be triggered in circumstances where Cascade could walk away from the SPA.
Recommendation: We recommend ensuring that the defined term "Company Material Adverse Effect" in the Commitment Letter tracks exactly to the final negotiated definition in the SPA. If the SPA MAE definition is modified during the five-day window between the Commitment Letter date (May 15, 2025) and SPA execution (May 20, 2025), the Commitment Letter should be amended (or a side letter executed) to reflect the final definition. Alternatively, the Commitment Letter could be revised to cross-reference the SPA "as executed" rather than "as in effect on the date of the Commitment Letter," which would automatically capture any pre-signing modifications.
5. Solvency. Condition as Drafted: Delivery by the Chief Financial Officer of Cascade of a solvency certificate, in form reasonably acceptable to the Administrative Agent, certifying that Cascade and its subsidiaries, on a consolidated basis and after giving pro forma effect to the Acquisition and the financing, are solvent.
Analysis: This is a standard condition for acquisition financings. The solvency certificate is typically structured to certify that, after giving effect to the transaction: (i) the fair value of the consolidated assets of the borrower and its subsidiaries exceeds the consolidated liabilities (including contingent and subordinated liabilities) of the borrower and its subsidiaries; (ii) the present fair saleable value of the consolidated assets of the borrower and its subsidiaries is greater than the probable aggregate amount of all debts and other liabilities (including contingent and subordinated liabilities) of the borrower and its subsidiaries as such debts and liabilities become absolute and matured; (iii) the borrower and its subsidiaries, on a consolidated basis, are able to pay their debts and liabilities as they mature in the ordinary course of business; and (iv) the borrower and its subsidiaries, on a consolidated basis, do not have unreasonably small capital with which to conduct their present and proposed business.
The certificate is to be delivered by Rajiv Sundaram in his capacity as CFO of Cascade. The form of the solvency certificate will be negotiated as an exhibit to the definitive credit agreement. The solvency test is on a consolidated basis—meaning that the test is applied to the entire combined enterprise of Cascade and its subsidiaries (including, after giving effect to the Acquisition, NovaMart and its subsidiaries), rather than on an entity-by-entity basis. Consolidated solvency testing is significantly more favorable to the borrower, as individual entities within a corporate group may have negative net worth even if the group as a whole is solvent.
Recommendation: We recommend confirming that: (i) solvency is tested exclusively on a consolidated basis (not entity by entity); (ii) the certificate is delivered by the CFO of Cascade (not an independent financial advisor or third-party valuation firm); and (iii) the form of the certificate is consistent with market precedent for Term Loan B facilities. We will prepare a draft solvency certificate for inclusion in the definitive credit agreement.
6. Financial Statements. Condition as Drafted: Delivery of (i) audited consolidated financial statements of NovaMart for fiscal years ending December 31, 2022, December 31, 2023, and December 31, 2024 (FY2022, FY2023, and FY2024), prepared in accordance with GAAP and audited by a nationally recognized independent registered public accounting firm, and (ii) unaudited interim consolidated financial statements of NovaMart for each fiscal quarter ended after the most recent fiscal year-end (December 31, 2024) and at least forty-five (45) days before the closing date.
Analysis: NovaMart's audited consolidated financial statements for FY2022, FY2023, and FY2024 should be available, as NovaMart is a mature company with established financial reporting practices. For reference, NovaMart's key financial metrics for FY2024 include: total revenue of $891,000,000, EBITDA of $134,000,000, and gross merchandise value (GMV) of $6,200,000,000. The audited financial statements were prepared by Severin Beck CPAs LLP and are expected to be in the customary form required by the Commitment Letter.
The interim financial statement delivery condition requires more careful attention. Given the targeted closing date of October 15, 2025, and the 45-day look-back period, the most recent fiscal quarter-end for which interim financials must be delivered would be the quarter ending June 30, 2025 (Q2 2025), which is more than 45 days before October 15, 2025. The unaudited interim financial statements for Q2 2025 would need to be available no later than the closing date. If closing were delayed beyond mid-November 2025, the Q3 2025 interim financials (through September 30, 2025) would also need to be delivered.
Delivery of NovaMart's financial statements is not within Cascade's unilateral control—it requires the cooperation of NovaMart's management team, specifically Doug Whitfield (NovaMart CFO) and Amanda Trevino (NovaMart General Counsel). The SPA will contain covenants requiring NovaMart to cooperate with Cascade's financing efforts, but any delay or difficulty in obtaining the required financial statements could jeopardize the funding condition.
Recommendation: We recommend promptly coordinating with NovaMart's management team—through Calloway, Brandt & Loewe LLP (Richard Calloway and Simone Adesanya), who serve as counsel to NovaMart—to confirm that the required audited financial statements are available in the form required by the Commitment Letter and that NovaMart's internal processes will produce the Q2 2025 interim financial statements in the required timeframe. We further recommend that the SPA include a specific covenant requiring NovaMart to deliver financial statements meeting the specifications of the Commitment Letter within specified time periods.
7. Lender KYC / Patriot Act. Condition as Drafted: Completion of "know your customer" due diligence and all documentation required under the USA PATRIOT Act, the Bank Secrecy Act, and applicable anti-money laundering laws and regulations with respect to Cascade, no later than three (3) business days prior to the closing date.
Analysis: This is a standard condition and is required by federal banking regulations applicable to Cornerstone. KYC due diligence typically involves the provision of organizational documents, beneficial ownership certifications (IRS Form W-9, FinCEN beneficial ownership forms), identification of authorized signatories, and verification of the borrower's legal name, address, and taxpayer identification number. The 3-business-day advance requirement is important—KYC materials must be submitted with sufficient lead time to allow the Commitment Parties' compliance teams to process and approve the documentation.
In addition to Cascade's own KYC process, NovaMart and its material domestic subsidiaries will need to undergo KYC clearance in connection with their post-closing obligations as guarantors under the credit agreement. While post-closing guarantor KYC is not a condition to initial funding, it will be a condition to NovaMart's joinder as guarantor and any delay could trigger a default under the credit agreement.
Recommendation: We recommend initiating the KYC process with Cornerstone and Marlowe Crane CPAs LLPP immediately. Cascade's corporate secretary and treasury team should compile all required documentation and submit it to the Commitment Parties at the earliest opportunity. Additionally, we recommend requesting from NovaMart (through Calloway, Brandt & Loewe LLP) the organizational and beneficial ownership documentation that will be needed for NovaMart's post-closing guarantor KYC process, so that this information can be submitted to the Commitment Parties promptly after closing.
8. Payment of Fees and Expenses. Condition as Drafted: Payment of all fees, costs, and expenses required to be paid on the closing date pursuant to the Commitment Letter, the Fee Letter, and the definitive credit agreement, including without limitation the original issue discount, arrangement fees, and reimbursement of the Commitment Parties' reasonable and documented out-of-pocket expenses (including legal fees of counsel to the Administrative Agent).
Analysis: This is a standard ministerial condition. The fees payable at closing include the original issue discount of $11,250,000 (1.5% of $750,000,000), arrangement fees as specified in the Fee Letter, and reimbursement of the Commitment Parties' legal and other out-of-pocket expenses. The OID is typically netted against the loan proceeds (i.e., Cascade will receive net proceeds of $738,750,000 rather than the full $750,000,000, with the $11,250,000 difference representing the OID). The arrangement fees and expense reimbursement will be paid separately at closing.
Recommendation: No specific negotiation recommended on this condition. We note that the aggregate fee obligations at closing are substantial, and Cascade's treasury team should ensure that sufficient working capital is available to fund these payments on the closing date.
C. Conditions NOT Present (Favorable)
We note for completeness that the following conditions, which are sometimes found in commitment letters for leveraged finance transactions but which are generally considered unfavorable to borrowers, are not present in the Commitment Letter:
• No due diligence condition. The Commitment Parties have not reserved the right to conduct (or the right to be satisfied with the results of) any due diligence investigation of Cascade or NovaMart as a condition to funding.
• No syndication condition. Funding of the Term Loan B is not conditioned on the successful syndication of any portion of the Facility. The Commitment Parties bear the full underwriting risk.
• No absence-of-litigation condition. There is no standalone condition requiring the absence of litigation against Cascade or NovaMart. To the extent litigation would be relevant, it would be captured only through the SPA closing conditions (which are incorporated by reference through the Acquisition consummation condition).
• No minimum ratings condition. The Term Loan B does not require Cascade or the Facility to obtain a specific credit rating from any rating agency as a condition to funding. While the arrangers may seek ratings as part of the syndication process, the absence of a ratings condition ensures that funding cannot be held up by delays in the ratings process.
• No separate market disruption or market MAC condition at funding (other than the provision discussed in Section VI). There is no standalone condition permitting the Commitment Parties to refuse funding based on disruptions in the broader capital markets, except through the market MAC provision (which is analyzed separately and in detail in Section VI below).
The absence of these conditions is consistent with current market practice for underwritten Term Loan B commitment letters and is favorable to Cascade.
V. Flex Provisions
Flex provisions are contractual rights granted to the arrangers that permit them to modify certain terms of the Facility in order to facilitate successful syndication. These provisions are a standard feature of underwritten commitment letters, as they provide the arrangers with the ability to respond to investor feedback and market conditions during the syndication process. However, flex provisions also create cost and structural uncertainty for the borrower, and their scope should be carefully negotiated.
A. Pricing Flex
Upward Pricing Flex: The Commitment Letter grants Cornerstone and Marlowe Crane CPAs LLPP the right to increase the interest rate spread by up to 50 basis points (from SOFR + 275 bps to SOFR + 325 bps) and/or increase the original issue discount by up to 50 basis points (from 1.5% to 2.0%) if, in the reasonable judgment of the Commitment Parties, such increases are necessary to achieve successful syndication of the Term Loan B.
Impact of Full Pricing Flex Exercise. The financial impact of a full exercise of the pricing flex is as follows:
The additional annual interest cost at maximum spread flex is $3,750,000 per year ($750,000,000 × 0.50%), or approximately $26,250,000 over the 7-year term (undiscounted, assuming no prepayment). The additional OID of $3,750,000 is a one-time upfront cost that reduces net loan proceeds at closing. The combined incremental cost of full flex exercise in the first year of the facility is $7,500,000—a meaningful sum that would reduce Cascade's post-closing free cash flow and debt service capacity.
Analysis: The pricing flex range of 50 basis points on spread and 50 basis points on OID is within market norms for a committed Term Loan B facility of this size and credit profile. However, the cumulative potential flex of 100 basis points (50 bps spread + 50 bps OID) is at the wide end of the market range, and we note that some recent comparable transactions have featured tighter flex ranges (e.g., 25 bps spread + 25 bps OID, or a combined cap of 50 bps). In addition, the Commitment Letter does not impose a procedural requirement on the Commitment Parties to demonstrate that syndication efforts have been unsuccessful at existing pricing before exercising flex—a feature that would provide Cascade with a degree of protection against unnecessary or premature flex exercise.
Recommendation: We recommend negotiating the following modifications to the pricing flex provisions:
(a) Combined Cap. Impose a combined cap on total flex exercise of 50 basis points across spread and OID, rather than 50 basis points on each. This would allow the Commitment Parties to increase the spread by 50 bps (but not the OID), or the OID by 50 bps (but not the spread), or some combination (e.g., 25 bps on each), but would prevent the cumulative 100 basis point flex that is currently permitted. This approach reduces Cascade's maximum incremental cost from $7,500,000 to approximately $3,750,000 in year one.
(b) Market Check Mechanism. Require that the Commitment Parties may only exercise pricing flex after demonstrating, to Cascade's reasonable satisfaction, that syndication efforts at existing pricing have been unsuccessful over a specified period (e.g., 30 days). This procedural safeguard prevents premature flex exercise and ensures that the borrower's interests are considered.
(c) Reverse Flex. Request a "reverse flex" provision that would require the Commitment Parties to reduce the interest rate spread or OID if syndication demand exceeds a specified threshold (e.g., if the facility is oversubscribed by more than 150%). Reverse flex is increasingly common in the current market and would allow Cascade to benefit from favorable syndication outcomes.
B. Structure Flex
In addition to pricing flex, the Commitment Letter grants Cornerstone and Marlowe Crane CPAs LLPP certain structural flex rights that permit modifications to the terms and structure of the Facility to facilitate syndication. Specifically, the Commitment Parties have the right to:
(a) Facility Reallocation. Reallocate up to $100,000,000 of the Term Loan B commitment to a first-lien revolving credit tranche or to a first-lien/second-lien bifurcated structure. This reallocation right would allow the Commitment Parties to carve out a portion of the term loan and repackage it as a different facility type if investor demand favors such a structure. The reallocation could result in a smaller term loan (e.g., $650,000,000) paired with a $100,000,000 revolving tranche, or in a $650,000,000 first-lien term loan and a $100,000,000 second-lien term loan.
(b) Excess Cash Flow Sweep Modification. Modify the excess cash flow sweep percentages within specified ranges (the specific ranges are set forth in the Term Sheet but have not been finalized).
(c) SOFR Floor Modification. Increase the SOFR floor from 0.50% to as high as 0.75%.
Analysis: Structural flex is a standard feature of commitment letters and reflects the reality that the syndication process may reveal investor preferences that differ from the borrower's preferred structure. However, each structural flex component has potential cost implications for Cascade:
The $100,000,000 reallocation right is the most significant structural flex item. If exercised to create a revolving tranche, Cascade would bear the cost of a commitment fee on the undrawn portion of the revolving commitment, in addition to the interest cost on drawn amounts. If exercised to create a second-lien tranche, the interest rate on the second-lien portion would almost certainly be higher than on the first-lien portion, increasing Cascade's blended cost of debt. Moreover, a bifurcated first-lien/second-lien structure would require negotiation of an intercreditor agreement, adding complexity and potentially delaying closing.
The SOFR floor increase from 0.50% to 0.75% would increase Cascade's interest cost in low-rate environments. At current SOFR levels (approximately 4.30%), the floor is not binding and the flex would have no immediate cost impact. However, if SOFR were to decline below 0.75% during the term of the facility, the increased floor would result in higher interest payments than would apply under the base case 0.50% floor.
Recommendation: We recommend the following modifications to the structural flex provisions:
(a) Reduce the facility reallocation amount from $100,000,000 to $50,000,000, limiting the Commitment Parties' ability to modify the facility structure.
(b) Cap the SOFR floor flex at 0.625% (rather than 0.75%), representing a compromise between the base case and the Commitment Parties' requested maximum.
(c) Add a provision that any structural changes resulting from the exercise of structural flex shall not: (i) create any additional conditions to funding not set forth in the Commitment Letter; (ii) change the scheduled maturity date of any portion of the facility; or (iii) result in aggregate annual amortization in excess of 1% of the original aggregate principal amount.
C. Sunset on Flex
Provision as Drafted: The flex provisions expire on the earlier of (i) successful syndication (defined as allocation of commitments to syndicate lenders and receipt of signed commitment documentation from such lenders) and (ii) ninety (90) days after the closing date.
Analysis: The flex sunset is standard and acceptable. The 90-day post-closing sunset provides a reasonable period for the Commitment Parties to complete syndication efforts after funding. Once the flex period expires, the terms of the Facility are fixed.
Recommendation: No modification recommended. The sunset provision is market-standard and provides adequate certainty to Cascade.
VI. Market MAC / Material Adverse Change Provisions
A. Market MAC in Commitment Letter
Provision as Drafted: The Commitment Letter contains a "market MAC" condition that permits the Commitment Parties to terminate their commitments if, prior to the funding date, there shall have occurred a "material adverse change in the syndicated loan market or high-yield bond market generally" that "makes it impracticable to syndicate the Term Loan B on terms substantially consistent with those set forth in the Commitment Letter and the Term Sheet (even after giving effect to the exercise of the Flex Provisions)."
Analysis: This is the single most significant risk factor in the Commitment Letter. The market MAC provision is a broad market-out clause that creates a path for the Commitment Parties to refuse to fund the Term Loan B if, during the approximately five-month period between SPA signing (May 20, 2025) and targeted closing (October 15, 2025), there is a significant disruption or deterioration in the syndicated loan or high-yield bond markets.
Several aspects of the market MAC provision are particularly concerning:
(a) Breadth of Triggering Event. The triggering event is defined as a "material adverse change in the syndicated loan market or high-yield bond market generally." This standard does not require that the market change be unprecedented, catastrophic, or permanent—only that it be "material" and that it affect the markets "generally." A significant but temporary market dislocation—such as the type that occurred during various periods of volatility in recent years—could potentially satisfy this standard.
(b) "Impracticable" Standard. The provision is triggered when the market change makes syndication "impracticable" rather than "impossible." "Impracticable" is a lower threshold than "impossible" and introduces additional subjectivity. A court applying this standard would likely consider whether syndication remained feasible at any price, but the impracticability standard suggests that the Commitment Parties need not exhaust every possible avenue before invoking the clause.
(c) Duration of Exposure. The approximately five-month window between SPA signing and targeted closing creates extended exposure to market volatility. While this period is driven by the HSR Act Second Request timeline and is not within Cascade's control, it significantly increases the probability that a market disruption could occur during the exposure period.
(d) Commitment Parties' Incentives. If market conditions deteriorate, the Commitment Parties face a tension between their contractual obligation to fund and their economic interest in avoiding a loss-making underwriting. The market MAC provision provides a potential exit that the Commitment Parties may be tempted to invoke in adverse conditions, even in cases where the provision's requirements are arguably not fully satisfied.
Critical Issue: Because the SPA contains no financing condition, the market MAC provision creates a scenario in which Cascade could be "caught between" its obligations. Specifically, if the Commitment Parties invoke the market MAC and refuse to fund the Term Loan B, Cascade would be obligated to close the Acquisition under the SPA but would lack $750,000,000 of the required financing. The consequences of this scenario would include:
(a) Failure to close the Acquisition on the targeted closing date, potentially triggering the reverse termination fee of $30,000,000 (equal to 2.5% of the $1,200,000,000 Purchase Price) payable to the Stockholder Representative (Ridgeline Equity Partners, LP / Franklin Osei);
(b) Potential claims by the Selling Stockholders for specific performance of Cascade's obligations under the SPA;
(c) Reputational damage to Cascade in the capital markets, which could adversely affect its ability to secure alternative financing or complete future transactions; and
(d) Potential breach of Cascade's representations in the SPA regarding the sufficiency of its committed financing.
Recommendation: We strongly recommend that the elimination or substantial narrowing of the market MAC provision be treated as the highest-priority negotiation item with the Commitment Parties. Our recommended approach, in order of preference, is as follows:
First Preference: Elimination. The market MAC provision should be deleted entirely. The Commitment Parties have committed to underwrite the full $750,000,000, and the flex provisions already provide them with the ability to adjust pricing and structure in response to market conditions. If the Commitment Parties have adequate flex, there should be no circumstance in which syndication is impracticable. The Commitment Parties accepted the underwriting risk when they issued the Commitment Letter, and the market MAC effectively shifts that risk back to Cascade.
Second Preference: Narrow to "Impossibility." If the Commitment Parties insist on retaining a market-out provision, the standard should be narrowed from "impracticable" to "impossible." This is a significantly higher threshold that would limit the provision to truly extraordinary market disruptions (e.g., a complete shutdown of the syndicated loan market, a declaration of banking holidays, or similar force majeure events). In addition, the provision should require that the Commitment Parties have first exhausted all available flex before invoking the market MAC.
Third Preference: Hold-to-Close Underwriting. As an alternative to eliminating the market MAC, require the Commitment Parties to fund the full $750,000,000 as underwriters (i.e., hold the entire facility on their own balance sheets) if syndication cannot be completed, even in adverse market conditions. The market MAC would then apply only to the Commitment Parties' syndication efforts, not to their funding obligation. This approach ensures that Cascade receives the committed financing regardless of market conditions, while acknowledging the Commitment Parties' legitimate interest in being relieved of their syndication obligations in extreme circumstances.
Alternative Mitigation: If the market MAC cannot be fully eliminated or narrowed to an acceptable standard, Cascade should consider the following risk mitigation strategies:
(a) Backstop Commitment. Procure a backstop commitment from a third-party lender (or a group of lenders) that would provide replacement financing in the event the Commitment Parties invoke the market MAC. This would require separate negotiations and would involve additional commitment fees, but would eliminate the risk of a funding gap.
(b) Increased Cash Component. Increase the cash-on-hand component of the sources of funds (currently $250,000,000) by retaining additional cash from operations during the pre-closing period, thereby reducing reliance on the Term Loan B.
(c) Parent Support. If Cascade has access to any shareholder or parent-level financing (including through its relationship with its existing equity investors), such support could serve as an additional backstop.
B. Company-Specific MAC
As noted in Section IV.B.4 above, the company-specific MAC condition in the Commitment Letter cross-references the "Company Material Adverse Effect" definition in the SPA as in effect on the date of the Commitment Letter. This back-to-back approach is favorable and ensures alignment between the SPA and the Commitment Letter.
We note favorably that the Commitment Letter does not contain a separate MAC condition relating to Cascade itself (as borrower), as distinct from NovaMart (as target). Some commitment letters include a "borrower MAC" that permits the Commitment Parties to refuse funding if the borrower's own business or financial condition has suffered a material adverse effect. The absence of such a condition is favorable to Cascade.
VII. Syndication Provisions
A. Syndication Process
Provision as Drafted: Cornerstone, in its capacity as Lead Left Arranger, and Marlowe Crane CPAs LLPP, in its capacity as Co-Lead Arranger, will manage the syndication of the Term Loan B to a group of institutional lenders. The syndication process will be conducted in accordance with a timeline and strategy to be agreed upon between the Commitment Parties and Cascade.
Cascade is required to provide "reasonable cooperation" in the syndication process, including without limitation:
(i) making members of senior management available for lender meetings, presentations, and one-on-one sessions as reasonably requested by the Commitment Parties;
(ii) preparing, with the assistance of the Commitment Parties, a confidential information memorandum (commonly referred to as a "bank book" or "CIM") describing Cascade's business and financial condition, NovaMart's business and financial condition, the pro forma combined entity, the Acquisition, and the terms of the Facility;
(iii) providing the Commitment Parties with financial information regarding Cascade and NovaMart, including historical financial statements, projections, and pro forma financial information; and
(iv) using commercially reasonable efforts to obtain, at Cascade's expense, a corporate family rating and a facility rating from at least one nationally recognized statistical rating organization (although such ratings are not a condition to funding).
Analysis: The cooperation obligations set forth in the Commitment Letter are standard for underwritten commitment letters and are generally acceptable. Cascade's management team, led by Rajiv Sundaram (CFO) and Ted Langford (SVP, Corporate Development), has experience with institutional lender presentations and should be well-equipped to participate in the syndication process.
However, the preparation and dissemination of the confidential information memorandum raises specific concerns in this transaction. The bank book will necessarily contain detailed information about NovaMart's business, including financial data, competitive positioning, growth strategy, and customer and supplier relationships. Several sensitivities must be addressed:
(a) Antitrust Sensitivities. Cascade is currently subject to a DOJ Second Request in connection with the Acquisition. The Second Request process imposes restrictions on the exchange of competitively sensitive information between Cascade and NovaMart, as governed by the Clean Team / Antitrust Protocol Agreement. Information included in the bank book regarding NovaMart's competitive position, pricing strategies, customer relationships, and market share could raise concerns under the Clean Team protocols and could potentially be used by the DOJ as evidence that the parties engaged in premature coordination. The bank book must be carefully reviewed by antitrust counsel (Howard Bellamy and Gabriela Montoya at Whitfield & Crane LLP) to ensure compliance with the Clean Team protocols.
(b) Confidentiality. The bank book will be distributed to a potentially large number of prospective syndicate lenders. While each prospective lender will be required to execute a confidentiality agreement (or click-through acknowledgment on the syndication platform) before receiving the bank book, the broad distribution increases the risk of information leakage. Particular care must be taken to ensure that no material nonpublic information regarding Cascade (a publicly traded company) is included in the bank book in a manner that could give rise to insider trading concerns.
(c) Accuracy and Completeness. Cascade will bear responsibility for the accuracy and completeness of the information in the bank book, as the bank book will contain a customary 10b-5 negative assurance letter from Cascade's management. Calderwood & Harkness will need to review the bank book carefully to ensure that all statements are accurate and not misleading.
Recommendation: We recommend negotiating a provision in the Commitment Letter that any information regarding NovaMart to be included in the bank book or other syndication materials is subject to Cascade's prior written review and approval. This approval right should be exercisable within a specified timeframe (e.g., three business days after receipt of the draft materials) so as not to unduly delay the syndication process. In add

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