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PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION

MEMORANDUM

From: Sylvia Hartwell, Partner, Tax Group Calderwood & Harkness LLP 599 Lexington Avenue, 38th Floor New York, NY 10022

To: Harrison Wexford, Responsible Partner, M&A Derek Okonkwo, Lead Associate, M&A Elena Vasquez-Bright, General Counsel, Cascade Retail Holdings Inc.

CC: Beatrice Holloway, Billing Partner, M&A Tiffany Rosenthal, Working Associate, M&A Sandra Chiu, Engagement Partner, Whitmore & Paige LLP

Date: May 18, 2025

Re: FIRPTA Withholding Analysis — Acquisition of 100% of the Capital Stock of NovaMart Global Inc. (EIN 84-3291547) by Cascade Retail Holdings Inc. (EIN 91-2847653)

Matter: Cascade Retail Holdings Inc. — Acquisition of NovaMart Global Inc.

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I. Executive Summary

The purpose of this memorandum is to analyze the applicability of the Foreign Investment in Real Property Tax Act of 1980 ("FIRPTA"), as codified in Sections 897 and 1445 of the Internal Revenue Code of 1986, as amended (the "Code" or "IRC"), to the proposed acquisition by Cascade Retail Holdings Inc. ("Cascade," "CRH," or the "Buyer"), a Delaware corporation publicly traded on the Nasdaq Stock Market (ticker: CRHI), of 100% of the issued and outstanding capital stock of NovaMart Global Inc. ("NovaMart" or the "Company"), a Delaware corporation (privately held), from the stockholders of NovaMart (the "Selling Stockholders"), for an aggregate purchase price of $1,200,000,000 in an all-cash stock purchase transaction (the "Transaction"). The Transaction is governed by the Stock Purchase Agreement to be executed on May 20, 2025 (the "SPA"), with a targeted closing date of October 15, 2025, and an outside date of December 31, 2025.

Key Conclusion. Based on the analysis set forth in this memorandum, FIRPTA withholding under IRC Section 1445 can be fully avoided at closing through the delivery by NovaMart of a properly executed FIRPTA non-foreign person certificate (also referred to as a "FIRPTA affidavit" or a "Section 1445 certificate") certifying that NovaMart is not a "foreign person" within the meaning of IRC Section 1445, in accordance with Treasury Regulations Section 1.1445-2(b)(2). Because NovaMart is a Delaware corporation — and therefore a domestic corporation under the Code — it is by definition not a "foreign person," and a certificate to that effect satisfies the regulatory safe harbor for elimination of the buyer's withholding obligation.

Additionally, this memorandum provides an analysis of whether NovaMart qualifies as a "United States real property holding corporation" ("USRPHC") under IRC Section 897(c)(2) as a secondary safeguard. This analysis is relevant because NovaMart owns and leases real property in the United States, including fourteen (14) fulfillment centers located across nine states and its corporate headquarters in Austin, Texas. Based on diligence conducted to date, NovaMart is not a USRPHC, as the fair market value of its U.S. real property interests does not equal or exceed 50% of the aggregate fair market value of all of its assets. However, as discussed below, the USRPHC determination is not dispositive for purposes of this Transaction because the non-foreign person certificate exemption provides a more direct and reliable basis for avoiding withholding.

The Selling Stockholders consist of Ridgeline Equity Partners, LP (holding 41.2% of NovaMart's common stock), Brindoval Ventures Fund III, LP (22.8%), Julian Reeves (18.5%), Priya Narasimhan (8.3%), and other management and employee stockholders (approximately 9.2% in aggregate). All known Selling Stockholders are U.S. persons. Accordingly, even absent the entity-level NovaMart certificate, withholding under Section 1445 would not apply to the Transaction provided that individual non-foreign person certifications were obtained from each Selling Stockholder. However, the entity-level certificate from NovaMart is the more efficient and customary approach, particularly in light of the multiple employee stockholders for whom individual certifications would be administratively burdensome.

The form of FIRPTA Non-Foreign Person Certificate is being prepared as a separate closing deliverable and is designated as Document 66 in the master closing checklist. That form certificate will be circulated to NovaMart's counsel, Calloway, Brandt & Loewe LLP, for review and comment in advance of closing.

II. Background of the Transaction

A. Transaction Structure

The Transaction is structured as a stock purchase in which Cascade will acquire 100% of the issued and outstanding capital stock of NovaMart from the Selling Stockholders. The Transaction is not structured as an asset purchase, a merger, or any other form of business combination. No election under IRC Section 338(h)(10) is contemplated in connection with the Transaction, and accordingly the Transaction will be treated for federal income tax purposes as a purchase of stock rather than as a deemed purchase of assets. The tax treatment of the Transaction as a stock purchase is addressed separately in the Tax Structure Memorandum prepared by the undersigned.

The aggregate purchase price for the Transaction is $1,200,000,000, payable entirely in cash. There is no stock component, no contingent consideration, no earnout, and no seller financing. Of the total purchase price, $96,000,000 (representing 8% of the aggregate purchase price) will be deposited at closing into an indemnification escrow account maintained by Marlowe Asset Management Trust Company, N.A. (the "Escrow Agent"), pursuant to the terms of the Escrow Agreement to be entered into among Cascade, the Sellers' Representative, and the Escrow Agent at closing. The net cash payable to the Selling Stockholders at closing is $1,104,000,000, subject to an estimated working capital adjustment. The target working capital is $78,500,000, with a customary collar of ±$5,000,000 (i.e., no adjustment for deviations within the collar range), and a post-closing true-up mechanism operating in the ninety (90) days following closing.

The Transaction is governed by the Stock Purchase Agreement, which is expected to be executed on May 20, 2025 (the "Signing Date"). The SPA is governed by the laws of the State of Delaware, without regard to conflicts-of-law principles. The targeted closing date is October 15, 2025. The outside date, after which either party may terminate the SPA if closing has not occurred (subject to customary exceptions), is December 31, 2025. The closing is subject to customary conditions precedent, including regulatory approvals under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, the accuracy of representations and warranties, compliance with covenants, and the delivery of certain closing documents — including, as relevant to this memorandum, the FIRPTA Non-Foreign Person Certificate.

B. The Selling Stockholders

The Selling Stockholders in the Transaction are as follows:

1. Ridgeline Equity Partners, LP — a Delaware limited partnership (EIN 83-4127896), holding approximately 41.2% of NovaMart's outstanding common stock. Ridgeline's principal place of business is located at 200 Park Avenue South, 14th Floor, New York, New York 10003. Ridgeline is a domestic entity organized under the laws of the State of Delaware and is not a foreign person for purposes of FIRPTA.

2. Brindoval Ventures Fund III, LP — a Delaware limited partnership (EIN 94-6238154), holding approximately 22.8% of NovaMart's outstanding common stock. Brindoval's principal place of business is located at 555 Mission Street, Suite 2900, San Francisco, California 94105. Brindoval is a domestic entity organized under the laws of the State of Delaware and is not a foreign person for purposes of FIRPTA.

3. Julian Reeves — an individual, United States citizen, Founder and Chief Executive Officer of NovaMart, holding approximately 18.5% of NovaMart's outstanding common stock. Mr. Reeves resides in Austin, Texas.

4. Priya Narasimhan — an individual, United States citizen, Co-Founder and Chief Technology Officer of NovaMart, holding approximately 8.3% of NovaMart's outstanding common stock. Ms. Narasimhan resides in Austin, Texas.

5. Other management and employee stockholders — holding approximately 9.2% of NovaMart's outstanding common stock in the aggregate, including shares issuable upon exercise of vested stock options under NovaMart's 2018 Equity Incentive Plan. Based on a review of NovaMart's capitalization table, employment records, and W-9 forms collected in connection with due diligence, all of these stockholders are believed to be U.S. persons (either U.S. citizens or resident aliens).

No foreign persons have been identified among NovaMart's stockholders or option holders based on due diligence conducted to date. Ridgeline Equity Partners, LP has been designated as the Sellers' Representative for purposes of the SPA, including with respect to post-closing adjustments, indemnification claims, and the escrow.

C. NovaMart's Real Property Holdings

NovaMart's principal executive offices are located at 1100 Congress Avenue, Suite 800, Austin, Texas 78701. The Austin headquarters space is leased from Congress Tower Partners LP pursuant to a commercial lease agreement. NovaMart does not own the Austin headquarters building.

In addition to its headquarters, NovaMart operates fourteen (14) fulfillment centers across nine states, as follows:

• California: Three (3) fulfillment centers (Riverside, San Bernardino, and Tracy)

• New Jersey: Two (2) fulfillment centers (Edison and Carteret)

• Georgia: Two (2) fulfillment centers (Atlanta metro area and Savannah)

• Ohio: One (1) fulfillment center (Columbus)

• Illinois: One (1) fulfillment center (Joliet)

• Pennsylvania: One (1) fulfillment center (Carlisle)

• Tennessee: One (1) fulfillment center (Chattanooga)

• Florida: Two (2) fulfillment centers (Jacksonville and Lakeland)

• Washington: One (1) fulfillment center (Kent)

The fulfillment centers are a combination of owned and leased properties. Title insurance is being provided by Ridgecrest Title Group Inc. (underwriter: Janet Morales) for any owned real property in connection with the Transaction. A detailed schedule of NovaMart's real property interests, including the distinction between owned and leased facilities, lease terms, and estimated fair market values, has been prepared separately in connection with the real property due diligence workstream.

The relevance of NovaMart's real property holdings to this FIRPTA analysis is twofold. First, NovaMart's ownership and leasehold interests in U.S. real property constitute "United States real property interests" ("USRPIs") under IRC Section 897(c)(1)(A). Second, the existence of these USRPIs raises the threshold question of whether NovaMart is a USRPHC under IRC Section 897(c)(2). However, as discussed in detail in Section IV.C below, the primary mechanism for avoiding FIRPTA withholding in this Transaction is the non-foreign person certificate at the transferor level, not a determination of NovaMart's USRPHC status.

III. Statutory Framework — FIRPTA and IRC Section 1445

A. Overview of FIRPTA (IRC Section 897)

The Foreign Investment in Real Property Tax Act of 1980 ("FIRPTA") was enacted to ensure that foreign persons who invest in U.S. real property are subject to U.S. federal income tax on gains derived from the disposition of such property. Prior to the enactment of FIRPTA, foreign investors could in many cases dispose of U.S. real property interests without being subject to U.S. income tax, because gains from the sale of real property were generally treated as capital gains and were not effectively connected with the conduct of a U.S. trade or business.

FIRPTA, as codified principally in IRC Section 897, addresses this concern by treating any gain or loss recognized by a foreign person from the disposition of a "United States real property interest" ("USRPI") as if such gain or loss were effectively connected with the conduct of a trade or business within the United States. This treatment subjects the gain to U.S. federal income tax at the regular graduated rates applicable to effectively connected income, rather than the flat 30% withholding rate applicable to fixed or determinable annual or periodical income under IRC Section 871(a) or 881(a).

A "United States real property interest" is defined in IRC Section 897(c)(1) to include:

(i) an interest in real property (including an interest in a mine, well, or other natural deposit) located in the United States or the Virgin Islands; and

(ii) any interest (other than an interest solely as a creditor) in a domestic corporation that is a "United States real property holding corporation" ("USRPHC").

The concept of a USRPHC is defined in IRC Section 897(c)(2). A corporation is a USRPHC if the fair market value of its USRPIs equals or exceeds 50% of the sum of the fair market values of:

(a) its USRPIs;

(b) its interests in real property located outside the United States; and

This test is commonly referred to as the "50% test" or the "asset composition test." It requires a comparison of the fair market value of the corporation's U.S. real property interests to the fair market value of its total assets (measured as the sum of U.S. real property interests, foreign real property interests, and other trade or business assets). A corporation that meets or exceeds the 50% threshold is classified as a USRPHC, and stock in such a corporation held by a foreign person constitutes a USRPI.

Importantly, stock in a domestic corporation is a USRPI only if the corporation is, or was at any time during the shorter of (x) the period during which the taxpayer held such stock, or (y) the five-year period ending on the date of the disposition, a USRPHC. See IRC Section 897(c)(1)(A)(ii). If the domestic corporation has never been a USRPHC during the applicable lookback period, its stock is not a USRPI, and the disposition of such stock by a foreign person is not subject to tax under FIRPTA (though it may be subject to tax under other provisions of the Code if the gain is effectively connected income).

B. Withholding Under IRC Section 1445

Congress enacted the withholding regime under IRC Section 1445 as a companion enforcement mechanism to the substantive tax imposed by IRC Section 897. The withholding rules are designed to ensure that the IRS is able to collect the tax due on dispositions of USRPIs by foreign persons, who might otherwise leave the United States without paying the tax.

IRC Section 1445(a) provides that a transferee of a USRPI is required to deduct and withhold a tax equal to 15% of the "amount realized" on the disposition if the transferor is a foreign person. The withholding rate was increased from 10% to 15% by the Protecting Americans from Tax Hikes Act of 2015 (the "PATH Act"), effective for dispositions occurring after February 16, 2016. The 15% rate applies to the Transaction.

In the context of this Transaction, the "amount realized" on the disposition is the aggregate purchase price of $1,200,000,000. Accordingly, if FIRPTA withholding were triggered, the potential withholding liability would be $180,000,000 (15% × $1,200,000,000). This is a substantial sum — representing a significant portion of the consideration payable to the Selling Stockholders — and underscores the importance of ensuring that the withholding obligation is properly addressed and, where applicable, avoided.

The withholding obligation under Section 1445(a) is imposed on the transferee — in this case, Cascade. The transferee is liable for the amount required to be withheld, and a failure to withhold can result in liability under IRC Section 1461, together with interest and penalties. The transferee's liability is not limited to the amount of tax actually owed by the foreign transferor; rather, the transferee is liable for the full amount required to be withheld (15% of the amount realized), regardless of the transferor's actual tax liability. In practice, this means that a buyer that fails to withhold when required to do so may be required to pay the withholding amount out of its own funds, and would then have a right of contribution against the selling stockholder or stockholders for the amount so paid.

Critically, the withholding obligation under Section 1445 applies only where the transferor is a "foreign person." A "foreign person" is defined, by reference to IRC Section 7701, as a nonresident alien individual, a foreign corporation, a foreign partnership, a foreign trust, or a foreign estate. The withholding obligation does not arise where the transferor is a domestic (U.S.) person — i.e., a U.S. citizen, a resident alien individual, a domestic corporation, a domestic partnership, or a domestic trust or estate.

C. Exceptions and Exemptions from Withholding

The Treasury Regulations under Section 1445 provide several exceptions and exemptions from the withholding obligation. The most relevant exception for purposes of this Transaction is set forth in Treasury Regulations Section 1.1445-2(b)(2), which provides that a transferee is not required to withhold under Section 1445(a) if the transferor furnishes to the transferee an affidavit (the "FIRPTA certificate" or "non-foreign person affidavit") stating, under penalties of perjury, that the transferor is not a foreign person. The affidavit must include the transferor's:

(i) name;

(ii) U.S. taxpayer identification number (i.e., Social Security Number for an individual, or Employer Identification Number for an entity); and

(iii) home address (in the case of an individual) or office address (in the case of an entity).

This is the primary mechanism by which FIRPTA withholding is customarily avoided in the vast majority of domestic M&A transactions.

In the context of a stock purchase transaction such as this one, the "transferor" for purposes of Section 1445 is technically each Selling Stockholder — not the corporation whose stock is being transferred. Accordingly, in a transaction involving multiple selling stockholders, withholding can be avoided by obtaining a non-foreign person certificate from each individual selling stockholder. However, Treasury Regulations Section 1.1445-2(b)(2)(i) also permits the entity whose interest is being transferred to furnish the certificate. Specifically, the regulation provides that a transferor that is not a foreign person includes a domestic corporation. Because NovaMart is a Delaware corporation — and therefore a domestic corporation for purposes of the Code — NovaMart itself may furnish the non-foreign person certificate, certifying its own status as a domestic corporation. This entity-level certificate approach is widely used in practice and is the approach we recommend for this Transaction.

The entity-level certificate approach is particularly advantageous in a multi-seller stock purchase transaction such as this one, where approximately 9.2% of NovaMart's outstanding equity is held by management and employee stockholders. Obtaining individual non-foreign person certifications from each of these holders — some of whom may hold relatively small positions through exercised stock options — would be administratively burdensome and would introduce logistical risk to the closing process. The entity-level NovaMart certificate avoids these difficulties by providing a single, centralized certification that NovaMart is not a foreign person.

For completeness, we note the additional exception set forth in Treasury Regulations Section 1.1445-2(d), which provides that withholding is not required if the transferee receives a "qualifying statement" from the IRS (sometimes referred to as a "withholding certificate" or a "Section 1445(b)(4) determination") confirming that the transferor's gain is exempt from tax or that the amount to be withheld should be reduced. This mechanism requires an application to the IRS and is typically used only in transactions where the transferor is in fact a foreign person but can demonstrate that the withholding amount exceeds the transferor's maximum tax liability. Because NovaMart is a domestic corporation and all Selling Stockholders are domestic persons, there is no need to pursue a withholding certificate from the IRS, and we do not recommend doing so.

IV. Analysis — Applicability of FIRPTA Withholding to the NovaMart Acquisition

A. NovaMart's Status as a Domestic Corporation

NovaMart Global Inc. is a corporation organized and existing under the laws of the State of Delaware. NovaMart's status as a Delaware corporation has been confirmed through a Certificate of Good Standing issued by the Delaware Secretary of State, which has been obtained as part of the due diligence process and will be updated as of the closing date. NovaMart's registered agent in Delaware is Pinnacle Corporate Services Inc., located at 850 New Burton Road, Suite 201, Dover, Delaware 19904. NovaMart's Employer Identification Number is 84-3291547.

Under IRC Section 7701(a)(4), a "domestic" corporation is defined as a corporation created or organized in the United States or under the law of the United States or of any State. Because NovaMart was created and organized under the laws of the State of Delaware, NovaMart is a "domestic" corporation within the meaning of the Code. Conversely, under IRC Section 7701(a)(5), a "foreign" corporation is a corporation that is not domestic. Because NovaMart is a domestic corporation, it is by definition not a foreign corporation.

IRC Section 1445(f)(3) defines "foreign person" as a nonresident alien individual, a foreign corporation, a foreign partnership, a foreign trust, or a foreign estate. Because NovaMart is a domestic corporation, NovaMart is not a "foreign person" within the meaning of Section 1445(f)(3). This determination is straightforward and does not require any subjective analysis — NovaMart's status as a domestic corporation is a matter of public record, determinable by reference to its certificate of incorporation filed with the Delaware Secretary of State.

Because NovaMart is not a foreign person, and because Treasury Regulations Section 1.1445-2(b)(2) permits a transferor that is not a foreign person to furnish a non-foreign person certificate to the transferee, NovaMart may execute and deliver the FIRPTA Non-Foreign Person Certificate to Cascade at closing. Upon receipt of such certificate, Cascade's withholding obligation under IRC Section 1445(a) will be eliminated with respect to the Transaction, provided that Cascade does not have "actual knowledge" that the certificate is false (a standard discussed further in Section IX.C below).

B. Selling Stockholders' Status

Although the entity-level NovaMart certificate is the primary mechanism for avoiding withholding in this Transaction, it is worth confirming the status of each Selling Stockholder independently, as a supplementary analysis and to provide additional comfort to Cascade.

As noted in Section II.B above, all identified Selling Stockholders are domestic (U.S.) persons:

• Ridgeline Equity Partners, LP is a Delaware limited partnership. Under IRC Section 7701(a)(4), a partnership created or organized in the United States or under the law of the United States or of any State is a "domestic" partnership. Ridgeline is therefore a domestic partnership and is not a foreign person.

• Brindoval Ventures Fund III, LP is a Delaware limited partnership. For the same reasons, Brindoval is a domestic partnership and is not a foreign person.

• Julian Reeves is an individual who is a U.S. citizen. Under IRC Section 7701(b), a U.S. citizen is by definition a "United States person." Mr. Reeves is not a foreign person.

• Priya Narasimhan is an individual who is a U.S. citizen. For the same reasons, Ms. Narasimhan is a United States person and is not a foreign person.

• Other management and employee stockholders (approximately 9.2% in aggregate) are all believed to be U.S. persons based on due diligence, including a review of employment records, Internal Revenue Service Form W-9 certifications, and NovaMart's payroll records. No foreign person has been identified among this group.

Because all identified Selling Stockholders are domestic U.S. persons, FIRPTA withholding under Section 1445(a) would not apply to any of them even in the absence of the entity-level NovaMart certificate. However, as noted above, obtaining individual non-foreign person certificates from each of the management and employee stockholders — who may number several dozen individuals — would be logistically challenging and could create closing delays. The entity-level NovaMart certificate is therefore the preferred approach.

We note that the SPA is expected to contain a representation by each Selling Stockholder as to such Selling Stockholder's status as a non-foreign person. This representation serves as an additional contractual safeguard and would support an indemnification claim against any Selling Stockholder whose representation proved to be inaccurate, to the extent Cascade were required to withhold or pay tax as a result.

C. USRPHC Analysis (Secondary Analysis)

Although the non-foreign person certificate eliminates the need for a determination of NovaMart's status as a USRPHC, we provide the following analysis as a secondary safeguard and for completeness. In the unlikely event that the FIRPTA certificate were not delivered at closing (e.g., due to an administrative failure), and if a foreign person were identified among the Selling Stockholders, NovaMart's USRPHC status would become relevant because stock in a domestic corporation that is not a USRPHC is not a USRPI, and the disposition of such stock by a foreign person would not trigger FIRPTA.

As noted in Section III.A above, a corporation is a USRPHC under IRC Section 897(c)(2) if the fair market value of its USRPIs equals or exceeds 50% of the sum of the fair market values of its USRPIs, foreign real property interests, and other trade or business assets. This test is applied on a determination date, which for purposes of this Transaction would be the closing date.

NovaMart's Assets. NovaMart's assets include the following principal categories:

U.S. Real Property Interests (USRPIs): NovaMart owns certain fulfillment center properties and holds leasehold interests in others (as well as in its Austin headquarters). Owned real property and certain capital leasehold improvements constitute USRPIs. Based on the real property due diligence conducted to date, the aggregate fair market value of NovaMart's owned real property and those leasehold interests that constitute USRPIs is estimated to be well below 50% of NovaMart's total asset value. The precise valuation is being finalized by the real property diligence team, but preliminary estimates suggest that the aggregate fair market value of NovaMart's USRPIs is in the range of $120,000,000 to $180,000,000.

Intangible Assets: The vast majority of NovaMart's enterprise value is attributable to its intangible assets, including its proprietary marketplace technology platform, software, trademarks (including the NovaMart and NovaShip marks), trade names, trade secrets, customer relationships, and marketplace network effects. These intangible assets are not USRPIs.

Goodwill: A significant portion of the purchase price represents goodwill attributable to NovaMart's market position, brand recognition, supplier relationships, and growth prospects. Goodwill is not a USRPI.

Inventory and Other Trade/Business Assets: NovaMart's inventory of marketplace operations, accounts receivable, cash and cash equivalents, and other working capital items are trade or business assets that are not USRPIs.

Foreign Real Property: NovaMart does not own or lease any material real property outside the United States.

Financial Metrics. NovaMart's financial performance is consistent with a technology and marketplace business, not a real-property-intensive business. For FY2024, NovaMart reported revenue of $891,000,000, EBITDA of $134,000,000, and gross merchandise value ("GMV") of $6,200,000,000. The implied enterprise value based on the purchase price is $1,200,000,000, yielding an implied EV/EBITDA multiple of approximately 8.96x and an implied EV/Revenue multiple of approximately 1.35x. These multiples are characteristic of technology and e-commerce marketplace businesses and are significantly above the multiples typically observed for real-property-intensive businesses such as REITs or industrial real estate companies.

Conclusion on USRPHC Status. Based on the foregoing analysis, NovaMart is very unlikely to be a USRPHC under IRC Section 897(c)(2). The fair market value of NovaMart's USRPIs (estimated at $120,000,000 to $180,000,000) represents approximately 10% to 15% of NovaMart's implied enterprise value of $1,200,000,000 — well below the 50% threshold required for USRPHC status. The vast majority of NovaMart's value resides in its technology platform, marketplace network effects, customer base, and intellectual property, none of which constitute USRPIs.

Even if NovaMart were determined to be a USRPHC — which we do not believe to be the case — FIRPTA withholding under Section 1445 would apply only with respect to foreign transferors. Because all identified Selling Stockholders are domestic U.S. persons, no withholding would be required regardless of NovaMart's USRPHC status. The USRPHC analysis is therefore of secondary importance to this Transaction and is provided for informational purposes and as an additional layer of comfort.

V. Recommended Approach — Non-Foreign Person Certificate

A. Entity-Level Certificate from NovaMart

Based on the analysis set forth in this memorandum, we recommend that NovaMart Global Inc. deliver to Cascade at closing a FIRPTA Non-Foreign Person Certificate in accordance with Treasury Regulations Section 1.1445-2(b)(2). The certificate is the most efficient and reliable mechanism for eliminating Cascade's withholding obligation under IRC Section 1445(a) in connection with the Transaction.

The certificate must contain the following elements, as required by the applicable Treasury Regulations:

(i) A statement, made under penalties of perjury, that NovaMart Global Inc. is not a foreign corporation, foreign partnership, foreign trust, or foreign estate, as those terms are defined in the Internal Revenue Code and Treasury Regulations.

(ii) NovaMart's U.S. taxpayer identification number (Employer Identification Number: 84-3291547).

(iii) NovaMart's office address: 1100 Congress Avenue, Suite 800, Austin, Texas 78701.

The certificate must be signed by a responsible officer of NovaMart who is authorized to execute documents on the Company's behalf. We recommend that the certificate be signed by Douglas "Doug" Whitfield, NovaMart's Chief Financial Officer, or Amanda Trevino, NovaMart's General Counsel. The selection of the signing officer should be coordinated with NovaMart's counsel at Calloway, Brandt & Loewe LLP (Richard Calloway and Simone Adesanya).

Upon delivery of the executed certificate at closing, Cascade must retain the certificate for a period of five (5) years following the calendar year in which the closing occurs, as required by Treasury Regulations Section 1.1445-2(b)(3). For example, if closing occurs on October 15, 2025, Cascade must retain the certificate until at least December 31, 2030. We recommend that the certificate be maintained in Cascade's permanent tax records and that a copy be included in the closing binder maintained by outside counsel.

Failure to Deliver. If NovaMart fails or refuses to deliver the FIRPTA certificate at closing, Cascade would face two alternatives:

(i) Individual Certificates: Cascade could obtain individual non-foreign person certificates from each of the Selling Stockholders, certifying each stockholder's status as a non-foreign person. This approach would be effective but would be administratively burdensome given the number of employee stockholders (estimated at approximately 9.2% of total equity held across multiple individuals).

(ii) Withholding: In the absence of any applicable certificate or exemption, Cascade would be required to withhold 15% of the amount realized allocable to any stockholder who does not provide a non-foreign person certificate. As discussed further in Section V.B below, the SPA addresses this contingency.

B. SPA Provisions

The Stock Purchase Agreement to be executed on May 20, 2025 contains several provisions relevant to FIRPTA compliance:

Closing Deliverable. The SPA requires NovaMart to deliver to Cascade at closing a FIRPTA Non-Foreign Person Certificate in the form agreed upon by the parties. This delivery obligation is included as a condition precedent to Cascade's obligation to close under Article VII of the SPA. If NovaMart fails to deliver the certificate, Cascade has the right (but not the obligation) to waive such condition and proceed to close, or alternatively to refuse to close. Given the significance of the FIRPTA withholding amount ($180,000,000 if withholding were triggered at 15%), we strongly recommend that Cascade not waive this closing condition without first consulting with tax counsel.

Non-Foreign Person Representation. The SPA includes a representation by each Selling Stockholder that such Selling Stockholder is not a "foreign person" within the meaning of IRC Section 1445(f)(3). This representation survives closing and is subject to the indemnification provisions of Article IX of the SPA. If any Selling Stockholder's representation proves to be inaccurate and Cascade incurs liability as a result (e.g., penalties for failure to withhold), Cascade would have a contractual indemnification claim against the applicable Selling Stockholder.

Withholding Rights. The SPA includes a provision authorizing Cascade to deduct and withhold from the purchase price any amounts required to be deducted and withheld under applicable tax law, including IRC Section 1445. Any amounts so withheld and paid to the applicable taxing authority would be treated as having been paid to the applicable Selling Stockholder for all purposes under the SPA. This provision is customary in stock purchase agreements and provides Cascade with a contractual basis for withholding if necessary.

C. Notification to IRS

Under Treasury Regulations Section 1.1445-2(b)(2)(ii), Cascade is not required to file the FIRPTA Non-Foreign Person Certificate with the Internal Revenue Service. The certificate is a document that is delivered by the transferor to the transferee and retained by the transferee; it is not submitted to or reviewed by the IRS as a matter of course. Cascade's sole obligation with respect to the certificate is to retain it for the prescribed five-year period.

However, the regulations do provide that the transferee's reliance on the certificate is invalid if the transferee has "actual knowledge" that the certificate is false. This standard is discussed further in Section IX.C below. Based on the facts and circumstances of this Transaction, there is no reason to believe that the certificate would be false. NovaMart is a Delaware corporation, a fact that is independently verifiable through the records of the Delaware Secretary of State, and all known Selling Stockholders are domestic U.S. persons.

No application for a withholding certificate under IRC Section 1445(b)(4) is necessary or recommended in connection with this Transaction. That mechanism is designed for transactions involving foreign transferors and is not relevant here.

VI. Treatment of Escrow Amount

As described in Section II.A above, $96,000,000 of the aggregate purchase price (representing 8% of $1,200,000,000) will be deposited into an indemnification escrow account maintained by Marlowe Asset Management Trust Company, N.A. (contact: Patricia Keane, Vice President, Escrow Services). The escrow is being established to secure the Selling Stockholders' indemnification obligations under Article IX of the SPA.

For FIRPTA purposes, the escrow amount is part of the "amount realized" by the Selling Stockholders on the disposition of their NovaMart stock. The amount realized includes the full purchase price, without reduction for amounts deposited into escrow, because the Selling Stockholders are treated as having constructively received the escrow amount at closing (subject to contingent repayment obligations). See, e.g., Treasury Regulations Section 1.1001-1(a); Commissioner v. Tufts, 461 U.S. 300 (1983).

Because FIRPTA withholding is being avoided in this Transaction through the delivery of the NovaMart non-foreign person certificate, no portion of the escrow amount needs to be withheld or remitted to the IRS on account of FIRPTA. The full $96,000,000 escrow amount will be deposited into the escrow account and will be available for indemnification claims, with any unreleased amounts distributed to the Selling Stockholders in accordance with the terms of the Escrow Agreement upon expiration of the escrow period.

In the unlikely event that FIRPTA withholding were required with respect to any Selling Stockholder — for example, if a foreign person were identified among the employee stockholders and no certificate were provided with respect to such person — the escrow mechanism could potentially be used as a source for satisfying the withholding obligation allocable to such person's pro rata share of the purchase price. However, this contingency is not anticipated based on current diligence, and the escrow should not be treated as a FIRPTA withholding reserve.

VII. State Tax Considerations

FIRPTA is exclusively a federal tax regime. There is no state-level equivalent of FIRPTA, in the sense that no state imposes a tax on foreign persons' dispositions of interests in real property holding corporations that mirrors the federal FIRPTA framework. However, several states impose withholding requirements on non-residents (including foreign persons and out-of-state domestic persons) who recognize gain from the disposition of real property or interests in entities that own real property within the state.

Given that all identified Selling Stockholders are domestic U.S. persons, and the Transaction is structured as a stock purchase (not an asset purchase), state-level non-resident withholding requirements are unlikely to apply to this Transaction. The Selling Stockholders are selling stock in NovaMart — they are not directly selling real property located in any particular state. Moreover, to the extent any state withholding requirement were applicable, it would apply only to non-resident sellers, and all known sellers are U.S. persons (though not all are residents of the states where NovaMart's real property is located).

NovaMart has nexus — through its fulfillment center operations and other business activities — in the following states: California, New Jersey, Georgia, Ohio, Illinois, Pennsylvania, Tennessee, Florida, and Washington. NovaMart also has nexus in Texas through its corporate headquarters. We have reviewed the withholding requirements applicable to dispositions of real property interests in each of these states and confirm that no state-level FIRPTA-analog withholding is expected to apply to this Transaction given the stock purchase structure and the domestic status of all identified Selling Stockholders.

We note separately that transfer taxes applicable to the Transaction are addressed in the Transfer Tax Analysis Memorandum prepared by the undersigned. Transfer taxes of approximately $1,200,000 are anticipated and will be split equally between Cascade and the Selling Stockholders pursuant to Section 6.12 of the SPA. Transfer taxes are distinct from FIRPTA withholding and do not affect the analysis set forth in this memorandum.

VIII. Form of FIRPTA Non-Foreign Person Certificate

A form FIRPTA Non-Foreign Person Certificate has been prepared by Calderwood & Harkness LLP as a separate closing deliverable and is designated as Document 66 in the master closing checklist. The form certificate will be circulated to NovaMart's counsel at Calloway, Brandt & Loewe LLP (Richard Calloway and Simone Adesanya) for review and comment in advance of closing. The final form of the certificate will be included in the closing binder and executed by NovaMart at or immediately prior to closing.

The form certificate includes the following elements:

Title: "Certification of Non-Foreign Status Pursuant to Treasury Regulations Section 1.1445-2(b)(2)"

Certifying Party: NovaMart Global Inc., a Delaware corporation

Employer Identification Number: 84-3291547

Office Address: 1100 Congress Avenue, Suite 800, Austin, Texas 78701

Substantive Certification: A statement that NovaMart Global Inc. is not a "foreign person" as defined in IRC Section 1445(f)(3) — specifically, that NovaMart is not a nonresident alien individual, a foreign corporation, a foreign partnership, a foreign trust, or a foreign estate.

Perjury Acknowledgment: An acknowledgment that the certification is made under penalties of perjury pursuant to 28 U.S.C. Section 1746, and that the certifying officer understands that this certification may be disclosed to the Internal Revenue Service and that any false statement contained therein could be punished by fine, imprisonment, or both.

Signature block: A signature line for an authorized officer of NovaMart Global Inc. (recommended signatory: Douglas Whitfield, CFO, or Amanda Trevino, General Counsel).

Date: The certificate will be dated as of the closing date of the Transaction.

The form certificate follows the model language recommended by the Treasury Regulations and is consistent with the form of certificate customarily used in stock purchase transactions. A copy of the draft form certificate has been provided to Harrison Wexford and Derek Okonkwo under separate cover for review by the M&A team.

IX. Risk Factors and Contingencies

A. Failure to Deliver Certificate

The principal risk identified in this memorandum is the failure by NovaMart to deliver the FIRPTA Non-Foreign Person Certificate at closing. If NovaMart were to fail or refuse to deliver the certificate, Cascade would be without the regulatory safe harbor provided by Treasury Regulations Section 1.1445-2(b)(2) and would be obligated to withhold 15% of the amount realized from the proceeds allocable to any foreign transferor. Given that the potential withholding amount is $180,000,000, the financial exposure to Cascade from a failure to withhold is significant.

Mitigation. This risk is substantially mitigated by the terms of the SPA. As described in Section V.B above, the SPA makes delivery of the FIRPTA certificate a condition precedent to Cascade's obligation to close under Article VII. If NovaMart does not deliver the certificate, Cascade has the contractual right to refuse to close the Transaction. In the deal team's judgment, NovaMart has every incentive to deliver the certificate — it is a routine closing deliverable that imposes no meaningful burden on NovaMart and merely certifies an objectively verifiable fact (NovaMart's status as a Delaware corporation).

Alternative. If for any reason the entity-level NovaMart certificate cannot be obtained, Cascade could alternatively obtain individual non-foreign person certifications from each of the Selling Stockholders. The institutional stockholders (Ridgeline and Brindoval) and the individual founders (Mr. Reeves and Ms. Narasimhan) can readily provide such certifications. The administrative challenge would arise principally with respect to the management and employee stockholders (approximately 9.2% of total equity), whose certifications would need to be individually collected and reviewed. We recommend that, as a precautionary measure, the closing checklist include a notation that individual certifications should be prepared as a backup in the event the entity-level certificate cannot be obtained.

B. Discovery of Foreign Persons Among Employee Stockholders

Current diligence has not identified any foreign persons among NovaMart's approximately 2,400 employees or among NovaMart's stockholders and option holders. The diligence review included an examination of NovaMart's capitalization table, employment records, and W-9 forms collected from stockholders.

However, it is possible that a foreign person could be identified among the employee stockholders before closing — for example, if an employee who holds vested stock options is or becomes a nonresident alien. If such a person were identified, individual withholding under IRC Section 1445(a) would be required with respect to that person's pro rata share of the amount realized, unless the person provided an individual non-foreign person certificate or the parties obtained a withholding certificate from the IRS.

It is important to note that the entity-level NovaMart certificate technically certifies NovaMart's own status as a domestic corporation — it does not certify the status of NovaMart's individual stockholders. For a stock purchase, the "transferor" for purposes of Section 1445 is each Selling Stockholder, and the NovaMart entity-level certificate is used as a practical proxy because NovaMart is the domestic entity whose stock is being sold. In a transaction where the Selling Stockholders include a known foreign person, the entity-level certificate from the target does not, standing alone, eliminate the withholding obligation with respect to that foreign person's proceeds. Separate arrangements — either individual certification, a withholding certificate application, or actual withholding — would be required.

To address this contingency, we recommend that the closing checklist include a bring-down confirmation from NovaMart's General Counsel, Amanda Trevino, certifying as of the closing date that no foreign persons have been identified among NovaMart's stockholders, option holders, or other equity holders. This bring-down confirmation is separate from the FIRPTA Non-Foreign Person Certificate itself and serves as an additional layer of diligence and documentation.

C. Knowledge of Falsity

Under Treasury Regulations Section 1.1445-2(b)(2)(i), a transferee's reliance on a non-foreign person certificate is invalid if the transferee has "actual knowledge" that the certificate is false. The "actual knowledge" standard is a subjective standard — it requires that the transferee actually know that the certificate is false, not merely that the transferee should have known or had reason to know. Constructive knowledge, negligence, or failure to investigate do not rise to the level of "actual knowledge" under the regulation.

In this Transaction, there are no facts suggesting that the NovaMart FIRPTA Non-Foreign Person Certificate would be false. NovaMart is a Delaware corporation, and its domestic status is a matter of public record that can be independently verified through the Delaware Secretary of State's office. There is no basis for Cascade to have "actual knowledge" that NovaMart is a foreign person, because NovaMart is in fact a domestic corporation.

Accordingly, Cascade is entitled to rely in good faith on the NovaMart certificate without further investigation or inquiry. We are not aware of any facts or circumstances that would undermine the validity of NovaMart's certificate or that would impose upon Cascade any obligation to look behind the certificate.

X. Coordination with Other Tax Matters

This memorandum addresses exclusively the FIRPTA withholding analysis applicable to the Transaction. Several related tax matters are addressed in separate memoranda and documents prepared by the undersigned and the Calderwood & Harkness tax group:

Tax Structure Memorandum. The overall tax structure of the Transaction — including the treatment of the Transaction as a stock purchase for federal income tax purposes, the absence of an IRC Section 338(h)(10) election, and the tax consequences to Cascade and the Selling Stockholders — is addressed in a separate Tax Structure Memorandum prepared by the undersigned.

Tax Indemnification Provisions Analysis. The tax indemnification provisions of Article IX of the SPA are addressed in a separate memorandum analyzing the Selling Stockholders' indemnification obligations with respect to pre-closing tax liabilities. The tax indemnification is not subject to the general indemnification cap and survives until sixty (60) days after the expiration of the applicable statute of limitations. These indemnification obligations would cover any FIRPTA-related liability arising from pre-closing matters, including any liability arising from an inaccurate non-foreign person representation by a Selling Stockholder.

Transfer Tax Analysis Memorandum. The transfer tax analysis — including the estimated transfer taxes of approximately $1,200,000 (split equally between Cascade and the Selling Stockholders pursuant to Section 6.12 of the SPA) — is addressed in a separate memorandum. Transfer taxes are separate from and unrelated to FIRPTA withholding.

Pre-Closing Tax Covenant Compliance Checklist. NovaMart's obligations with respect to the filing of pre-closing tax returns and Cascade's review rights with respect to such returns are addressed in a separate compliance checklist. NovaMart's estimated FY2024 federal income tax liability is approximately $23,800,000. This liability is separate from any FIRPTA considerations and relates to NovaMart's ordinary course income tax obligations.

The foregoing documents should be reviewed in conjunction with this memorandum to provide a comprehensive understanding of the tax aspects of the Transaction.

XI. Action Items and Recommendations

Based on the analysis set forth in this memorandum, we recommend the following action items:

1. Finalize the Form FIRPTA Non-Foreign Person Certificate. The draft form certificate (Document 66 in the closing checklist) should be finalized and circulated to NovaMart's counsel at Calloway, Brandt & Loewe LLP (Richard Calloway and Simone Adesanya) for review and comment. Any comments should be reviewed by the Calderwood & Harkness tax group to ensure that the certificate complies with the requirements of Treasury Regulations Section 1.1445-2(b)(2). Coordination with Amanda Trevino, NovaMart's General Counsel, is recommended.

2. Include the FIRPTA Certificate in the Master Closing Checklist. The FIRPTA Non-Foreign Person Certificate should be included as a required closing deliverable under SPA Article VII and should be tracked on the master closing checklist as Document 66. Responsibility for delivery should be assigned to NovaMart's counsel.

3. Confirm the Identity of the Signing Officer. Coordination with NovaMart should confirm whether the FIRPTA certificate will be signed by Douglas "Doug" Whitfield, CFO, or Amanda Trevino, General Counsel (or another authorized officer). The signing officer should be identified in advance of closing to avoid last-minute delays.

4. Cascade to Retain the Executed Certificate. Upon receipt of the executed FIRPTA certificate at closing, Cascade must retain the original certificate for a period of five (5) years following the calendar year in which the closing occurs, as required by Treasury Regulations Section 1.1445-2(b)(3). We recommend that the certificate be maintained in Cascade's permanent tax files and that a copy be included in the closing binder. Elena Vasquez-Bright and Cascade's internal tax team should be notified of this retention requirement.

5. Obtain Bring-Down Confirmation. A bring-down confirmation from NovaMart's General Counsel, Amanda Trevino, should be obtained at or immediately prior to closing, confirming that no foreign persons have been identified among NovaMart's stockholders, option holders, or other equity holders as of the closing date. This confirmation is a precautionary measure that supplements the entity-level FIRPTA certificate.

6. No IRS Withholding Certificate Application. No application for a withholding certificate under IRC Section 1445(b)(4) is necessary or recommended in connection with this Transaction. The non-foreign person certificate is the appropriate and sufficient mechanism for avoiding withholding.

7. No FIRPTA Withholding at Closing. No FIRPTA withholding should be deducted from the purchase price or the escrow amount at closing, provided the NovaMart FIRPTA Non-Foreign Person Certificate is duly executed and delivered. The full purchase price of $1,200,000,000 should be distributed in accordance with the funds flow memorandum without any FIRPTA reduction.

XII. Conclusion

Based on the foregoing analysis, FIRPTA withholding under IRC Section 1445 is not required in connection with the acquisition by Cascade Retail Holdings Inc. of 100% of the outstanding capital stock of NovaMart Global Inc., provided that NovaMart delivers a duly executed non-foreign person certificate at closing in the form prepared by Calderwood & Harkness LLP and in compliance with Treasury Regulations Section 1.1445-2(b)(2).

All identified Selling Stockholders are domestic U.S. persons, and NovaMart is a Delaware corporation — a domestic corporation within the meaning of the Code. No foreign person involvement has been identified in connection with the Transaction based on due diligence conducted to date.

NovaMart is not believed to be a USRPHC under IRC Section 897(c)(2), as the fair market value of its U.S. real property interests is estimated to represent approximately 10% to 15% of its total enterprise value — well below the 50% threshold. However, this determination is not dispositive of the withholding analysis, given the independent availability of the non-foreign person certificate exemption under Treasury Regulations Section 1.1445-2(b)(2).

We recommend proceeding with the entity-level certificate approach as outlined above. The form certificate should be finalized, circulated to NovaMart's counsel for review, and executed at closing in accordance with the closing checklist and the SPA.

This memorandum does not address the substantive income tax consequences of the Transaction to Cascade or the Selling Stockholders, which are addressed in separate memoranda. This memorandum also does not constitute tax advice to any party other than the addressees named above and should not be relied upon by any other person or entity without the prior written consent of Calderwood & Harkness LLP.

XIII. Contact Information

Please direct any questions regarding this memorandum to:

Sylvia Hartwell Partner, Tax Group Calderwood & Harkness LLP 599 Lexington Avenue, 38th Floor New York, New York 10022 Telephone: (212) 555-7800

Email: shartwell@calderwoodharkness.com

Sandra Chiu Engagement Partner Whitmore & Paige LLP 100 Federal Street, Suite 2500 Boston, Massachusetts 02110 Telephone: (617) 555-3200

Email: schiu@whitmorepaige.com

Appendix A: Summary Table — FIRPTA Withholding Analysis

Appendix B: Cross-Reference to Related Documents

The following documents are related to or referenced in this memorandum and should be reviewed in conjunction herewith:

This memorandum is intended solely for the use of the addressees identified above and is protected by the attorney-client privilege and the work product doctrine. This memorandum should not be disclosed to any third party without the prior written consent of Calderwood & Harkness LLP. The analysis and conclusions set forth herein are based on the facts as known to us as of the date of this memorandum and on the provisions of the Internal Revenue Code, Treasury Regulations, and other applicable authorities in effect as of such date. Changes in the facts or in applicable law could affect the analysis and conclusions herein. This memorandum does not constitute a guarantee or assurance of any particular tax result.

Element	Detail
Transaction	Stock purchase — 100% of NovaMart Global Inc. capital stock
Buyer	Cascade Retail Holdings Inc. (EIN 91-2847653)
Target/Transferor Entity	NovaMart Global Inc. (EIN 84-3291547)
Purchase Price	$1,200,000,000 (all cash)
Potential Withholding (if applicable)	$180,000,000 (15% × $1,200,000,000)
NovaMart Entity Type	Delaware corporation (domestic)
NovaMart EIN	84-3291547
All Sellers Domestic?	Yes (based on current diligence)
USRPHC?	No (secondary analysis; not dispositive)
Estimated USRPI Value	$120,000,000–$180,000,000 (approx. 10%–15% of enterprise value)
Withholding Required?	No — provided non-foreign person certificate is delivered at closing
Certificate Type	Entity-level FIRPTA non-foreign person certificate per Treas. Reg. § 1.1445-2(b)(2)
Certificate Signatory	Douglas Whitfield, CFO, or Amanda Trevino, General Counsel, NovaMart
Certificate Retention Period	5 years following calendar year of closing
IRS Filing Required?	No
Closing Checklist Document No.	Document 66
Escrow Amount	$96,000,000 (no FIRPTA withholding from escrow)
Transfer Taxes	$1,200,000 (separate from FIRPTA; split equally)
Targeted Closing Date	October 15, 2025
Outside Date	December 31, 2025
No.	Document	Status	Prepared By
1	Form FIRPTA Non-Foreign Person Certificate (Closing Deliverable — Document 66)	Draft; to be finalized and circulated to NovaMart's counsel	Calderwood & Harkness LLP (S. Hartwell)
2	Tax Structure Memorandum	In progress	Calderwood & Harkness LLP (S. Hartwell)
3	Tax Indemnification Provisions Analysis Memorandum	In progress	Calderwood & Harkness LLP (S. Hartwell)

4	Transfer Tax Analysis Memorandum	In progress	Calderwood & Harkness LLP (S. Hartwell)
5	Pre-Closing Tax Covenant Compliance Checklist	In progress	Calderwood & Harkness LLP (S. Hartwell / T. Rosenthal)
6	Stock Purchase Agreement (Execution Version) — Article VII (Closing Conditions); Article IX (Indemnification)	To be executed May 20, 2025	Calderwood & Harkness LLP (H. Wexford / D. Okonkwo); Calloway, Brandt & Loewe LLP (R. Calloway / S. Adesanya)
7	Master Closing Checklist	In progress	Calderwood & Harkness LLP (D. Okonkwo / T. Rosenthal)
8	Funds Flow Memorandum	To be prepared prior to closing	Calderwood & Harkness LLP (D. Okonkwo)
9	Escrow Agreement	To be executed at closing	Calderwood & Harkness LLP; Calloway, Brandt & Loewe LLP; Marlowe Asset Management Trust Company, N.A.

PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION
MEMORANDUM
From: Sylvia Hartwell, Partner, Tax Group Calderwood & Harkness LLP 599 Lexington Avenue, 38th Floor New York, NY 10022
To: Harrison Wexford, Responsible Partner, M&A Derek Okonkwo, Lead Associate, M&A Elena Vasquez-Bright, General Counsel, Cascade Retail Holdings Inc.
CC: Beatrice Holloway, Billing Partner, M&A Tiffany Rosenthal, Working Associate, M&A Sandra Chiu, Engagement Partner, Whitmore & Paige LLP
Date: May 18, 2025
Re: FIRPTA Withholding Analysis — Acquisition of 100% of the Capital Stock of NovaMart Global Inc. (EIN 84-3291547) by Cascade Retail Holdings Inc. (EIN 91-2847653)
Matter: Cascade Retail Holdings Inc. — Acquisition of NovaMart Global Inc.
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I. Executive Summary
The purpose of this memorandum is to analyze the applicability of the Foreign Investment in Real Property Tax Act of 1980 ("FIRPTA"), as codified in Sections 897 and 1445 of the Internal Revenue Code of 1986, as amended (the "Code" or "IRC"), to the proposed acquisition by Cascade Retail Holdings Inc. ("Cascade," "CRH," or the "Buyer"), a Delaware corporation publicly traded on the Nasdaq Stock Market (ticker: CRHI), of 100% of the issued and outstanding capital stock of NovaMart Global Inc. ("NovaMart" or the "Company"), a Delaware corporation (privately held), from the stockholders of NovaMart (the "Selling Stockholders"), for an aggregate purchase price of $1,200,000,000 in an all-cash stock purchase transaction (the "Transaction"). The Transaction is governed by the Stock Purchase Agreement to be executed on May 20, 2025 (the "SPA"), with a targeted closing date of October 15, 2025, and an outside date of December 31, 2025.
Key Conclusion. Based on the analysis set forth in this memorandum, FIRPTA withholding under IRC Section 1445 can be fully avoided at closing through the delivery by NovaMart of a properly executed FIRPTA non-foreign person certificate (also referred to as a "FIRPTA affidavit" or a "Section 1445 certificate") certifying that NovaMart is not a "foreign person" within the meaning of IRC Section 1445, in accordance with Treasury Regulations Section 1.1445-2(b)(2). Because NovaMart is a Delaware corporation — and therefore a domestic corporation under the Code — it is by definition not a "foreign person," and a certificate to that effect satisfies the regulatory safe harbor for elimination of the buyer's withholding obligation.
Additionally, this memorandum provides an analysis of whether NovaMart qualifies as a "United States real property holding corporation" ("USRPHC") under IRC Section 897(c)(2) as a secondary safeguard. This analysis is relevant because NovaMart owns and leases real property in the United States, including fourteen (14) fulfillment centers located across nine states and its corporate headquarters in Austin, Texas. Based on diligence conducted to date, NovaMart is not a USRPHC, as the fair market value of its U.S. real property interests does not equal or exceed 50% of the aggregate fair market value of all of its assets. However, as discussed below, the USRPHC determination is not dispositive for purposes of this Transaction because the non-foreign person certificate exemption provides a more direct and reliable basis for avoiding withholding.
The Selling Stockholders consist of Ridgeline Equity Partners, LP (holding 41.2% of NovaMart's common stock), Brindoval Ventures Fund III, LP (22.8%), Julian Reeves (18.5%), Priya Narasimhan (8.3%), and other management and employee stockholders (approximately 9.2% in aggregate). All known Selling Stockholders are U.S. persons. Accordingly, even absent the entity-level NovaMart certificate, withholding under Section 1445 would not apply to the Transaction provided that individual non-foreign person certifications were obtained from each Selling Stockholder. However, the entity-level certificate from NovaMart is the more efficient and customary approach, particularly in light of the multiple employee stockholders for whom individual certifications would be administratively burdensome.
The form of FIRPTA Non-Foreign Person Certificate is being prepared as a separate closing deliverable and is designated as Document 66 in the master closing checklist. That form certificate will be circulated to NovaMart's counsel, Calloway, Brandt & Loewe LLP, for review and comment in advance of closing.
II. Background of the Transaction
A. Transaction Structure
The Transaction is structured as a stock purchase in which Cascade will acquire 100% of the issued and outstanding capital stock of NovaMart from the Selling Stockholders. The Transaction is not structured as an asset purchase, a merger, or any other form of business combination. No election under IRC Section 338(h)(10) is contemplated in connection with the Transaction, and accordingly the Transaction will be treated for federal income tax purposes as a purchase of stock rather than as a deemed purchase of assets. The tax treatment of the Transaction as a stock purchase is addressed separately in the Tax Structure Memorandum prepared by the undersigned.
The aggregate purchase price for the Transaction is $1,200,000,000, payable entirely in cash. There is no stock component, no contingent consideration, no earnout, and no seller financing. Of the total purchase price, $96,000,000 (representing 8% of the aggregate purchase price) will be deposited at closing into an indemnification escrow account maintained by Marlowe Asset Management Trust Company, N.A. (the "Escrow Agent"), pursuant to the terms of the Escrow Agreement to be entered into among Cascade, the Sellers' Representative, and the Escrow Agent at closing. The net cash payable to the Selling Stockholders at closing is $1,104,000,000, subject to an estimated working capital adjustment. The target working capital is $78,500,000, with a customary collar of ±$5,000,000 (i.e., no adjustment for deviations within the collar range), and a post-closing true-up mechanism operating in the ninety (90) days following closing.
The Transaction is governed by the Stock Purchase Agreement, which is expected to be executed on May 20, 2025 (the "Signing Date"). The SPA is governed by the laws of the State of Delaware, without regard to conflicts-of-law principles. The targeted closing date is October 15, 2025. The outside date, after which either party may terminate the SPA if closing has not occurred (subject to customary exceptions), is December 31, 2025. The closing is subject to customary conditions precedent, including regulatory approvals under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, the accuracy of representations and warranties, compliance with covenants, and the delivery of certain closing documents — including, as relevant to this memorandum, the FIRPTA Non-Foreign Person Certificate.
B. The Selling Stockholders
The Selling Stockholders in the Transaction are as follows:
1.  Ridgeline Equity Partners, LP — a Delaware limited partnership (EIN 83-4127896), holding approximately 41.2% of NovaMart's outstanding common stock. Ridgeline's principal place of business is located at 200 Park Avenue South, 14th Floor, New York, New York 10003. Ridgeline is a domestic entity organized under the laws of the State of Delaware and is not a foreign person for purposes of FIRPTA.
2.  Brindoval Ventures Fund III, LP — a Delaware limited partnership (EIN 94-6238154), holding approximately 22.8% of NovaMart's outstanding common stock. Brindoval's principal place of business is located at 555 Mission Street, Suite 2900, San Francisco, California 94105. Brindoval is a domestic entity organized under the laws of the State of Delaware and is not a foreign person for purposes of FIRPTA.
3.  Julian Reeves — an individual, United States citizen, Founder and Chief Executive Officer of NovaMart, holding approximately 18.5% of NovaMart's outstanding common stock. Mr. Reeves resides in Austin, Texas.
4.  Priya Narasimhan — an individual, United States citizen, Co-Founder and Chief Technology Officer of NovaMart, holding approximately 8.3% of NovaMart's outstanding common stock. Ms. Narasimhan resides in Austin, Texas.
5.  Other management and employee stockholders — holding approximately 9.2% of NovaMart's outstanding common stock in the aggregate, including shares issuable upon exercise of vested stock options under NovaMart's 2018 Equity Incentive Plan. Based on a review of NovaMart's capitalization table, employment records, and W-9 forms collected in connection with due diligence, all of these stockholders are believed to be U.S. persons (either U.S. citizens or resident aliens).
No foreign persons have been identified among NovaMart's stockholders or option holders based on due diligence conducted to date. Ridgeline Equity Partners, LP has been designated as the Sellers' Representative for purposes of the SPA, including with respect to post-closing adjustments, indemnification claims, and the escrow.
C. NovaMart's Real Property Holdings
NovaMart's principal executive offices are located at 1100 Congress Avenue, Suite 800, Austin, Texas 78701. The Austin headquarters space is leased from Congress Tower Partners LP pursuant to a commercial lease agreement. NovaMart does not own the Austin headquarters building.
In addition to its headquarters, NovaMart operates fourteen (14) fulfillment centers across nine states, as follows:
•  California: Three (3) fulfillment centers (Riverside, San Bernardino, and Tracy)
•  New Jersey: Two (2) fulfillment centers (Edison and Carteret)
•  Georgia: Two (2) fulfillment centers (Atlanta metro area and Savannah)
•  Ohio: One (1) fulfillment center (Columbus)
•  Illinois: One (1) fulfillment center (Joliet)
•  Pennsylvania: One (1) fulfillment center (Carlisle)
•  Tennessee: One (1) fulfillment center (Chattanooga)
•  Florida: Two (2) fulfillment centers (Jacksonville and Lakeland)
•  Washington: One (1) fulfillment center (Kent)
The fulfillment centers are a combination of owned and leased properties. Title insurance is being provided by Ridgecrest Title Group Inc. (underwriter: Janet Morales) for any owned real property in connection with the Transaction. A detailed schedule of NovaMart's real property interests, including the distinction between owned and leased facilities, lease terms, and estimated fair market values, has been prepared separately in connection with the real property due diligence workstream.
The relevance of NovaMart's real property holdings to this FIRPTA analysis is twofold. First, NovaMart's ownership and leasehold interests in U.S. real property constitute "United States real property interests" ("USRPIs") under IRC Section 897(c)(1)(A). Second, the existence of these USRPIs raises the threshold question of whether NovaMart is a USRPHC under IRC Section 897(c)(2). However, as discussed in detail in Section IV.C below, the primary mechanism for avoiding FIRPTA withholding in this Transaction is the non-foreign person certificate at the transferor level, not a determination of NovaMart's USRPHC status.
III. Statutory Framework — FIRPTA and IRC Section 1445
A. Overview of FIRPTA (IRC Section 897)
The Foreign Investment in Real Property Tax Act of 1980 ("FIRPTA") was enacted to ensure that foreign persons who invest in U.S. real property are subject to U.S. federal income tax on gains derived from the disposition of such property. Prior to the enactment of FIRPTA, foreign investors could in many cases dispose of U.S. real property interests without being subject to U.S. income tax, because gains from the sale of real property were generally treated as capital gains and were not effectively connected with the conduct of a U.S. trade or business.
FIRPTA, as codified principally in IRC Section 897, addresses this concern by treating any gain or loss recognized by a foreign person from the disposition of a "United States real property interest" ("USRPI") as if such gain or loss were effectively connected with the conduct of a trade or business within the United States. This treatment subjects the gain to U.S. federal income tax at the regular graduated rates applicable to effectively connected income, rather than the flat 30% withholding rate applicable to fixed or determinable annual or periodical income under IRC Section 871(a) or 881(a).
A "United States real property interest" is defined in IRC Section 897(c)(1) to include:
(i) an interest in real property (including an interest in a mine, well, or other natural deposit) located in the United States or the Virgin Islands; and
(ii) any interest (other than an interest solely as a creditor) in a domestic corporation that is a "United States real property holding corporation" ("USRPHC").
The concept of a USRPHC is defined in IRC Section 897(c)(2). A corporation is a USRPHC if the fair market value of its USRPIs equals or exceeds 50% of the sum of the fair market values of:
(a) its USRPIs;
(b) its interests in real property located outside the United States; and
(c) any other of its assets which are used or held for use in a trade or business.
This test is commonly referred to as the "50% test" or the "asset composition test." It requires a comparison of the fair market value of the corporation's U.S. real property interests to the fair market value of its total assets (measured as the sum of U.S. real property interests, foreign real property interests, and other trade or business assets). A corporation that meets or exceeds the 50% threshold is classified as a USRPHC, and stock in such a corporation held by a foreign person constitutes a USRPI.
Importantly, stock in a domestic corporation is a USRPI only if the corporation is, or was at any time during the shorter of (x) the period during which the taxpayer held such stock, or (y) the five-year period ending on the date of the disposition, a USRPHC. See IRC Section 897(c)(1)(A)(ii). If the domestic corporation has never been a USRPHC during the applicable lookback period, its stock is not a USRPI, and the disposition of such stock by a foreign person is not subject to tax under FIRPTA (though it may be subject to tax under other provisions of the Code if the gain is effectively connected income).
B. Withholding Under IRC Section 1445
Congress enacted the withholding regime under IRC Section 1445 as a companion enforcement mechanism to the substantive tax imposed by IRC Section 897. The withholding rules are designed to ensure that the IRS is able to collect the tax due on dispositions of USRPIs by foreign persons, who might otherwise leave the United States without paying the tax.
IRC Section 1445(a) provides that a transferee of a USRPI is required to deduct and withhold a tax equal to 15% of the "amount realized" on the disposition if the transferor is a foreign person. The withholding rate was increased from 10% to 15% by the Protecting Americans from Tax Hikes Act of 2015 (the "PATH Act"), effective for dispositions occurring after February 16, 2016. The 15% rate applies to the Transaction.
In the context of this Transaction, the "amount realized" on the disposition is the aggregate purchase price of $1,200,000,000. Accordingly, if FIRPTA withholding were triggered, the potential withholding liability would be $180,000,000 (15% × $1,200,000,000). This is a substantial sum — representing a significant portion of the consideration payable to the Selling Stockholders — and underscores the importance of ensuring that the withholding obligation is properly addressed and, where applicable, avoided.
The withholding obligation under Section 1445(a) is imposed on the transferee — in this case, Cascade. The transferee is liable for the amount required to be withheld, and a failure to withhold can result in liability under IRC Section 1461, together with interest and penalties. The transferee's liability is not limited to the amount of tax actually owed by the foreign transferor; rather, the transferee is liable for the full amount required to be withheld (15% of the amount realized), regardless of the transferor's actual tax liability. In practice, this means that a buyer that fails to withhold when required to do so may be required to pay the withholding amount out of its own funds, and would then have a right of contribution against the selling stockholder or stockholders for the amount so paid.
Critically, the withholding obligation under Section 1445 applies only where the transferor is a "foreign person." A "foreign person" is defined, by reference to IRC Section 7701, as a nonresident alien individual, a foreign corporation, a foreign partnership, a foreign trust, or a foreign estate. The withholding obligation does not arise where the transferor is a domestic (U.S.) person — i.e., a U.S. citizen, a resident alien individual, a domestic corporation, a domestic partnership, or a domestic trust or estate.
C. Exceptions and Exemptions from Withholding
The Treasury Regulations under Section 1445 provide several exceptions and exemptions from the withholding obligation. The most relevant exception for purposes of this Transaction is set forth in Treasury Regulations Section 1.1445-2(b)(2), which provides that a transferee is not required to withhold under Section 1445(a) if the transferor furnishes to the transferee an affidavit (the "FIRPTA certificate" or "non-foreign person affidavit") stating, under penalties of perjury, that the transferor is not a foreign person. The affidavit must include the transferor's:
(i) name;
(ii) U.S. taxpayer identification number (i.e., Social Security Number for an individual, or Employer Identification Number for an entity); and
(iii) home address (in the case of an individual) or office address (in the case of an entity).
This is the primary mechanism by which FIRPTA withholding is customarily avoided in the vast majority of domestic M&A transactions.
In the context of a stock purchase transaction such as this one, the "transferor" for purposes of Section 1445 is technically each Selling Stockholder — not the corporation whose stock is being transferred. Accordingly, in a transaction involving multiple selling stockholders, withholding can be avoided by obtaining a non-foreign person certificate from each individual selling stockholder. However, Treasury Regulations Section 1.1445-2(b)(2)(i) also permits the entity whose interest is being transferred to furnish the certificate. Specifically, the regulation provides that a transferor that is not a foreign person includes a domestic corporation. Because NovaMart is a Delaware corporation — and therefore a domestic corporation for purposes of the Code — NovaMart itself may furnish the non-foreign person certificate, certifying its own status as a domestic corporation. This entity-level certificate approach is widely used in practice and is the approach we recommend for this Transaction.
The entity-level certificate approach is particularly advantageous in a multi-seller stock purchase transaction such as this one, where approximately 9.2% of NovaMart's outstanding equity is held by management and employee stockholders. Obtaining individual non-foreign person certifications from each of these holders — some of whom may hold relatively small positions through exercised stock options — would be administratively burdensome and would introduce logistical risk to the closing process. The entity-level NovaMart certificate avoids these difficulties by providing a single, centralized certification that NovaMart is not a foreign person.
For completeness, we note the additional exception set forth in Treasury Regulations Section 1.1445-2(d), which provides that withholding is not required if the transferee receives a "qualifying statement" from the IRS (sometimes referred to as a "withholding certificate" or a "Section 1445(b)(4) determination") confirming that the transferor's gain is exempt from tax or that the amount to be withheld should be reduced. This mechanism requires an application to the IRS and is typically used only in transactions where the transferor is in fact a foreign person but can demonstrate that the withholding amount exceeds the transferor's maximum tax liability. Because NovaMart is a domestic corporation and all Selling Stockholders are domestic persons, there is no need to pursue a withholding certificate from the IRS, and we do not recommend doing so.
IV. Analysis — Applicability of FIRPTA Withholding to the NovaMart Acquisition
A. NovaMart's Status as a Domestic Corporation
NovaMart Global Inc. is a corporation organized and existing under the laws of the State of Delaware. NovaMart's status as a Delaware corporation has been confirmed through a Certificate of Good Standing issued by the Delaware Secretary of State, which has been obtained as part of the due diligence process and will be updated as of the closing date. NovaMart's registered agent in Delaware is Pinnacle Corporate Services Inc., located at 850 New Burton Road, Suite 201, Dover, Delaware 19904. NovaMart's Employer Identification Number is 84-3291547.
Under IRC Section 7701(a)(4), a "domestic" corporation is defined as a corporation created or organized in the United States or under the law of the United States or of any State. Because NovaMart was created and organized under the laws of the State of Delaware, NovaMart is a "domestic" corporation within the meaning of the Code. Conversely, under IRC Section 7701(a)(5), a "foreign" corporation is a corporation that is not domestic. Because NovaMart is a domestic corporation, it is by definition not a foreign corporation.
IRC Section 1445(f)(3) defines "foreign person" as a nonresident alien individual, a foreign corporation, a foreign partnership, a foreign trust, or a foreign estate. Because NovaMart is a domestic corporation, NovaMart is not a "foreign person" within the meaning of Section 1445(f)(3). This determination is straightforward and does not require any subjective analysis — NovaMart's status as a domestic corporation is a matter of public record, determinable by reference to its certificate of incorporation filed with the Delaware Secretary of State.
Because NovaMart is not a foreign person, and because Treasury Regulations Section 1.1445-2(b)(2) permits a transferor that is not a foreign person to furnish a non-foreign person certificate to the transferee, NovaMart may execute and deliver the FIRPTA Non-Foreign Person Certificate to Cascade at closing. Upon receipt of such certificate, Cascade's withholding obligation under IRC Section 1445(a) will be eliminated with respect to the Transaction, provided that Cascade does not have "actual knowledge" that the certificate is false (a standard discussed further in Section IX.C below).
B. Selling Stockholders' Status
Although the entity-level NovaMart certificate is the primary mechanism for avoiding withholding in this Transaction, it is worth confirming the status of each Selling Stockholder independently, as a supplementary analysis and to provide additional comfort to Cascade.
As noted in Section II.B above, all identified Selling Stockholders are domestic (U.S.) persons:
•  Ridgeline Equity Partners, LP is a Delaware limited partnership. Under IRC Section 7701(a)(4), a partnership created or organized in the United States or under the law of the United States or of any State is a "domestic" partnership. Ridgeline is therefore a domestic partnership and is not a foreign person.
•  Brindoval Ventures Fund III, LP is a Delaware limited partnership. For the same reasons, Brindoval is a domestic partnership and is not a foreign person.
•  Julian Reeves is an individual who is a U.S. citizen. Under IRC Section 7701(b), a U.S. citizen is by definition a "United States person." Mr. Reeves is not a foreign person.
•  Priya Narasimhan is an individual who is a U.S. citizen. For the same reasons, Ms. Narasimhan is a United States person and is not a foreign person.
•  Other management and employee stockholders (approximately 9.2% in aggregate) are all believed to be U.S. persons based on due diligence, including a review of employment records, Internal Revenue Service Form W-9 certifications, and NovaMart's payroll records. No foreign person has been identified among this group.
Because all identified Selling Stockholders are domestic U.S. persons, FIRPTA withholding under Section 1445(a) would not apply to any of them even in the absence of the entity-level NovaMart certificate. However, as noted above, obtaining individual non-foreign person certificates from each of the management and employee stockholders — who may number several dozen individuals — would be logistically challenging and could create closing delays. The entity-level NovaMart certificate is therefore the preferred approach.
We note that the SPA is expected to contain a representation by each Selling Stockholder as to such Selling Stockholder's status as a non-foreign person. This representation serves as an additional contractual safeguard and would support an indemnification claim against any Selling Stockholder whose representation proved to be inaccurate, to the extent Cascade were required to withhold or pay tax as a result.
C. USRPHC Analysis (Secondary Analysis)
Although the non-foreign person certificate eliminates the need for a determination of NovaMart's status as a USRPHC, we provide the following analysis as a secondary safeguard and for completeness. In the unlikely event that the FIRPTA certificate were not delivered at closing (e.g., due to an administrative failure), and if a foreign person were identified among the Selling Stockholders, NovaMart's USRPHC status would become relevant because stock in a domestic corporation that is not a USRPHC is not a USRPI, and the disposition of such stock by a foreign person would not trigger FIRPTA.
As noted in Section III.A above, a corporation is a USRPHC under IRC Section 897(c)(2) if the fair market value of its USRPIs equals or exceeds 50% of the sum of the fair market values of its USRPIs, foreign real property interests, and other trade or business assets. This test is applied on a determination date, which for purposes of this Transaction would be the closing date.
NovaMart's Assets. NovaMart's assets include the following principal categories:
U.S. Real Property Interests (USRPIs): NovaMart owns certain fulfillment center properties and holds leasehold interests in others (as well as in its Austin headquarters). Owned real property and certain capital leasehold improvements constitute USRPIs. Based on the real property due diligence conducted to date, the aggregate fair market value of NovaMart's owned real property and those leasehold interests that constitute USRPIs is estimated to be well below 50% of NovaMart's total asset value. The precise valuation is being finalized by the real property diligence team, but preliminary estimates suggest that the aggregate fair market value of NovaMart's USRPIs is in the range of $120,000,000 to $180,000,000.
Intangible Assets: The vast majority of NovaMart's enterprise value is attributable to its intangible assets, including its proprietary marketplace technology platform, software, trademarks (including the NovaMart and NovaShip marks), trade names, trade secrets, customer relationships, and marketplace network effects. These intangible assets are not USRPIs.
Goodwill: A significant portion of the purchase price represents goodwill attributable to NovaMart's market position, brand recognition, supplier relationships, and growth prospects. Goodwill is not a USRPI.
Inventory and Other Trade/Business Assets: NovaMart's inventory of marketplace operations, accounts receivable, cash and cash equivalents, and other working capital items are trade or business assets that are not USRPIs.
Foreign Real Property: NovaMart does not own or lease any material real property outside the United States.
Financial Metrics. NovaMart's financial performance is consistent with a technology and marketplace business, not a real-property-intensive business. For FY2024, NovaMart reported revenue of $891,000,000, EBITDA of $134,000,000, and gross merchandise value ("GMV") of $6,200,000,000. The implied enterprise value based on the purchase price is $1,200,000,000, yielding an implied EV/EBITDA multiple of approximately 8.96x and an implied EV/Revenue multiple of approximately 1.35x. These multiples are characteristic of technology and e-commerce marketplace businesses and are significantly above the multiples typically observed for real-property-intensive businesses such as REITs or industrial real estate companies.
Conclusion on USRPHC Status. Based on the foregoing analysis, NovaMart is very unlikely to be a USRPHC under IRC Section 897(c)(2). The fair market value of NovaMart's USRPIs (estimated at $120,000,000 to $180,000,000) represents approximately 10% to 15% of NovaMart's implied enterprise value of $1,200,000,000 — well below the 50% threshold required for USRPHC status. The vast majority of NovaMart's value resides in its technology platform, marketplace network effects, customer base, and intellectual property, none of which constitute USRPIs.
Even if NovaMart were determined to be a USRPHC — which we do not believe to be the case — FIRPTA withholding under Section 1445 would apply only with respect to foreign transferors. Because all identified Selling Stockholders are domestic U.S. persons, no withholding would be required regardless of NovaMart's USRPHC status. The USRPHC analysis is therefore of secondary importance to this Transaction and is provided for informational purposes and as an additional layer of comfort.
V. Recommended Approach — Non-Foreign Person Certificate
A. Entity-Level Certificate from NovaMart
Based on the analysis set forth in this memorandum, we recommend that NovaMart Global Inc. deliver to Cascade at closing a FIRPTA Non-Foreign Person Certificate in accordance with Treasury Regulations Section 1.1445-2(b)(2). The certificate is the most efficient and reliable mechanism for eliminating Cascade's withholding obligation under IRC Section 1445(a) in connection with the Transaction.
The certificate must contain the following elements, as required by the applicable Treasury Regulations:
(i) A statement, made under penalties of perjury, that NovaMart Global Inc. is not a foreign corporation, foreign partnership, foreign trust, or foreign estate, as those terms are defined in the Internal Revenue Code and Treasury Regulations.
(ii) NovaMart's U.S. taxpayer identification number (Employer Identification Number: 84-3291547).
(iii) NovaMart's office address: 1100 Congress Avenue, Suite 800, Austin, Texas 78701.
The certificate must be signed by a responsible officer of NovaMart who is authorized to execute documents on the Company's behalf. We recommend that the certificate be signed by Douglas "Doug" Whitfield, NovaMart's Chief Financial Officer, or Amanda Trevino, NovaMart's General Counsel. The selection of the signing officer should be coordinated with NovaMart's counsel at Calloway, Brandt & Loewe LLP (Richard Calloway and Simone Adesanya).
Upon delivery of the executed certificate at closing, Cascade must retain the certificate for a period of five (5) years following the calendar year in which the closing occurs, as required by Treasury Regulations Section 1.1445-2(b)(3). For example, if closing occurs on October 15, 2025, Cascade must retain the certificate until at least December 31, 2030. We recommend that the certificate be maintained in Cascade's permanent tax records and that a copy be included in the closing binder maintained by outside counsel.
Failure to Deliver. If NovaMart fails or refuses to deliver the FIRPTA certificate at closing, Cascade would face two alternatives:
(i) Individual Certificates: Cascade could obtain individual non-foreign person certificates from each of the Selling Stockholders, certifying each stockholder's status as a non-foreign person. This approach would be effective but would be administratively burdensome given the number of employee stockholders (estimated at approximately 9.2% of total equity held across multiple individuals).
(ii) Withholding: In the absence of any applicable certificate or exemption, Cascade would be required to withhold 15% of the amount realized allocable to any stockholder who does not provide a non-foreign person certificate. As discussed further in Section V.B below, the SPA addresses this contingency.
B. SPA Provisions
The Stock Purchase Agreement to be executed on May 20, 2025 contains several provisions relevant to FIRPTA compliance:
Closing Deliverable. The SPA requires NovaMart to deliver to Cascade at closing a FIRPTA Non-Foreign Person Certificate in the form agreed upon by the parties. This delivery obligation is included as a condition precedent to Cascade's obligation to close under Article VII of the SPA. If NovaMart fails to deliver the certificate, Cascade has the right (but not the obligation) to waive such condition and proceed to close, or alternatively to refuse to close. Given the significance of the FIRPTA withholding amount ($180,000,000 if withholding were triggered at 15%), we strongly recommend that Cascade not waive this closing condition without first consulting with tax counsel.
Non-Foreign Person Representation. The SPA includes a representation by each Selling Stockholder that such Selling Stockholder is not a "foreign person" within the meaning of IRC Section 1445(f)(3). This representation survives closing and is subject to the indemnification provisions of Article IX of the SPA. If any Selling Stockholder's representation proves to be inaccurate and Cascade incurs liability as a result (e.g., penalties for failure to withhold), Cascade would have a contractual indemnification claim against the applicable Selling Stockholder.
Withholding Rights. The SPA includes a provision authorizing Cascade to deduct and withhold from the purchase price any amounts required to be deducted and withheld under applicable tax law, including IRC Section 1445. Any amounts so withheld and paid to the applicable taxing authority would be treated as having been paid to the applicable Selling Stockholder for all purposes under the SPA. This provision is customary in stock purchase agreements and provides Cascade with a contractual basis for withholding if necessary.
C. Notification to IRS
Under Treasury Regulations Section 1.1445-2(b)(2)(ii), Cascade is not required to file the FIRPTA Non-Foreign Person Certificate with the Internal Revenue Service. The certificate is a document that is delivered by the transferor to the transferee and retained by the transferee; it is not submitted to or reviewed by the IRS as a matter of course. Cascade's sole obligation with respect to the certificate is to retain it for the prescribed five-year period.
However, the regulations do provide that the transferee's reliance on the certificate is invalid if the transferee has "actual knowledge" that the certificate is false. This standard is discussed further in Section IX.C below. Based on the facts and circumstances of this Transaction, there is no reason to believe that the certificate would be false. NovaMart is a Delaware corporation, a fact that is independently verifiable through the records of the Delaware Secretary of State, and all known Selling Stockholders are domestic U.S. persons.
No application for a withholding certificate under IRC Section 1445(b)(4) is necessary or recommended in connection with this Transaction. That mechanism is designed for transactions involving foreign transferors and is not relevant here.
VI. Treatment of Escrow Amount
As described in Section II.A above, $96,000,000 of the aggregate purchase price (representing 8% of $1,200,000,000) will be deposited into an indemnification escrow account maintained by Marlowe Asset Management Trust Company, N.A. (contact: Patricia Keane, Vice President, Escrow Services). The escrow is being established to secure the Selling Stockholders' indemnification obligations under Article IX of the SPA.
For FIRPTA purposes, the escrow amount is part of the "amount realized" by the Selling Stockholders on the disposition of their NovaMart stock. The amount realized includes the full purchase price, without reduction for amounts deposited into escrow, because the Selling Stockholders are treated as having constructively received the escrow amount at closing (subject to contingent repayment obligations). See, e.g., Treasury Regulations Section 1.1001-1(a); Commissioner v. Tufts, 461 U.S. 300 (1983).
Because FIRPTA withholding is being avoided in this Transaction through the delivery of the NovaMart non-foreign person certificate, no portion of the escrow amount needs to be withheld or remitted to the IRS on account of FIRPTA. The full $96,000,000 escrow amount will be deposited into the escrow account and will be available for indemnification claims, with any unreleased amounts distributed to the Selling Stockholders in accordance with the terms of the Escrow Agreement upon expiration of the escrow period.
In the unlikely event that FIRPTA withholding were required with respect to any Selling Stockholder — for example, if a foreign person were identified among the employee stockholders and no certificate were provided with respect to such person — the escrow mechanism could potentially be used as a source for satisfying the withholding obligation allocable to such person's pro rata share of the purchase price. However, this contingency is not anticipated based on current diligence, and the escrow should not be treated as a FIRPTA withholding reserve.
VII. State Tax Considerations
FIRPTA is exclusively a federal tax regime. There is no state-level equivalent of FIRPTA, in the sense that no state imposes a tax on foreign persons' dispositions of interests in real property holding corporations that mirrors the federal FIRPTA framework. However, several states impose withholding requirements on non-residents (including foreign persons and out-of-state domestic persons) who recognize gain from the disposition of real property or interests in entities that own real property within the state.
Given that all identified Selling Stockholders are domestic U.S. persons, and the Transaction is structured as a stock purchase (not an asset purchase), state-level non-resident withholding requirements are unlikely to apply to this Transaction. The Selling Stockholders are selling stock in NovaMart — they are not directly selling real property located in any particular state. Moreover, to the extent any state withholding requirement were applicable, it would apply only to non-resident sellers, and all known sellers are U.S. persons (though not all are residents of the states where NovaMart's real property is located).
NovaMart has nexus — through its fulfillment center operations and other business activities — in the following states: California, New Jersey, Georgia, Ohio, Illinois, Pennsylvania, Tennessee, Florida, and Washington. NovaMart also has nexus in Texas through its corporate headquarters. We have reviewed the withholding requirements applicable to dispositions of real property interests in each of these states and confirm that no state-level FIRPTA-analog withholding is expected to apply to this Transaction given the stock purchase structure and the domestic status of all identified Selling Stockholders.
We note separately that transfer taxes applicable to the Transaction are addressed in the Transfer Tax Analysis Memorandum prepared by the undersigned. Transfer taxes of approximately $1,200,000 are anticipated and will be split equally between Cascade and the Selling Stockholders pursuant to Section 6.12 of the SPA. Transfer taxes are distinct from FIRPTA withholding and do not affect the analysis set forth in this memorandum.
VIII. Form of FIRPTA Non-Foreign Person Certificate
A form FIRPTA Non-Foreign Person Certificate has been prepared by Calderwood & Harkness LLP as a separate closing deliverable and is designated as Document 66 in the master closing checklist. The form certificate will be circulated to NovaMart's counsel at Calloway, Brandt & Loewe LLP (Richard Calloway and Simone Adesanya) for review and comment in advance of closing. The final form of the certificate will be included in the closing binder and executed by NovaMart at or immediately prior to closing.
The form certificate includes the following elements:
Title: "Certification of Non-Foreign Status Pursuant to Treasury Regulations Section 1.1445-2(b)(2)"
Certifying Party: NovaMart Global Inc., a Delaware corporation
Employer Identification Number: 84-3291547
Office Address: 1100 Congress Avenue, Suite 800, Austin, Texas 78701
Substantive Certification: A statement that NovaMart Global Inc. is not a "foreign person" as defined in IRC Section 1445(f)(3) — specifically, that NovaMart is not a nonresident alien individual, a foreign corporation, a foreign partnership, a foreign trust, or a foreign estate.
Perjury Acknowledgment: An acknowledgment that the certification is made under penalties of perjury pursuant to 28 U.S.C. Section 1746, and that the certifying officer understands that this certification may be disclosed to the Internal Revenue Service and that any false statement contained therein could be punished by fine, imprisonment, or both.
Signature block: A signature line for an authorized officer of NovaMart Global Inc. (recommended signatory: Douglas Whitfield, CFO, or Amanda Trevino, General Counsel).
Date: The certificate will be dated as of the closing date of the Transaction.
The form certificate follows the model language recommended by the Treasury Regulations and is consistent with the form of certificate customarily used in stock purchase transactions. A copy of the draft form certificate has been provided to Harrison Wexford and Derek Okonkwo under separate cover for review by the M&A team.
IX. Risk Factors and Contingencies
A. Failure to Deliver Certificate
The principal risk identified in this memorandum is the failure by NovaMart to deliver the FIRPTA Non-Foreign Person Certificate at closing. If NovaMart were to fail or refuse to deliver the certificate, Cascade would be without the regulatory safe harbor provided by Treasury Regulations Section 1.1445-2(b)(2) and would be obligated to withhold 15% of the amount realized from the proceeds allocable to any foreign transferor. Given that the potential withholding amount is $180,000,000, the financial exposure to Cascade from a failure to withhold is significant.
Mitigation. This risk is substantially mitigated by the terms of the SPA. As described in Section V.B above, the SPA makes delivery of the FIRPTA certificate a condition precedent to Cascade's obligation to close under Article VII. If NovaMart does not deliver the certificate, Cascade has the contractual right to refuse to close the Transaction. In the deal team's judgment, NovaMart has every incentive to deliver the certificate — it is a routine closing deliverable that imposes no meaningful burden on NovaMart and merely certifies an objectively verifiable fact (NovaMart's status as a Delaware corporation).
Alternative. If for any reason the entity-level NovaMart certificate cannot be obtained, Cascade could alternatively obtain individual non-foreign person certifications from each of the Selling Stockholders. The institutional stockholders (Ridgeline and Brindoval) and the individual founders (Mr. Reeves and Ms. Narasimhan) can readily provide such certifications. The administrative challenge would arise principally with respect to the management and employee stockholders (approximately 9.2% of total equity), whose certifications would need to be individually collected and reviewed. We recommend that, as a precautionary measure, the closing checklist include a notation that individual certifications should be prepared as a backup in the event the entity-level certificate cannot be obtained.
B. Discovery of Foreign Persons Among Employee Stockholders
Current diligence has not identified any foreign persons among NovaMart's approximately 2,400 employees or among NovaMart's stockholders and option holders. The diligence review included an examination of NovaMart's capitalization table, employment records, and W-9 forms collected from stockholders.
However, it is possible that a foreign person could be identified among the employee stockholders before closing — for example, if an employee who holds vested stock options is or becomes a nonresident alien. If such a person were identified, individual withholding under IRC Section 1445(a) would be required with respect to that person's pro rata share of the amount realized, unless the person provided an individual non-foreign person certificate or the parties obtained a withholding certificate from the IRS.
It is important to note that the entity-level NovaMart certificate technically certifies NovaMart's own status as a domestic corporation — it does not certify the status of NovaMart's individual stockholders. For a stock purchase, the "transferor" for purposes of Section 1445 is each Selling Stockholder, and the NovaMart entity-level certificate is used as a practical proxy because NovaMart is the domestic entity whose stock is being sold. In a transaction where the Selling Stockholders include a known foreign person, the entity-level certificate from the target does not, standing alone, eliminate the withholding obligation with respect to that foreign person's proceeds. Separate arrangements — either individual certification, a withholding certificate application, or actual withholding — would be required.
To address this contingency, we recommend that the closing checklist include a bring-down confirmation from NovaMart's General Counsel, Amanda Trevino, certifying as of the closing date that no foreign persons have been identified among NovaMart's stockholders, option holders, or other equity holders. This bring-down confirmation is separate from the FIRPTA Non-Foreign Person Certificate itself and serves as an additional layer of diligence and documentation.
C. Knowledge of Falsity
Under Treasury Regulations Section 1.1445-2(b)(2)(i), a transferee's reliance on a non-foreign person certificate is invalid if the transferee has "actual knowledge" that the certificate is false. The "actual knowledge" standard is a subjective standard — it requires that the transferee actually know that the certificate is false, not merely that the transferee should have known or had reason to know. Constructive knowledge, negligence, or failure to investigate do not rise to the level of "actual knowledge" under the regulation.
In this Transaction, there are no facts suggesting that the NovaMart FIRPTA Non-Foreign Person Certificate would be false. NovaMart is a Delaware corporation, and its domestic status is a matter of public record that can be independently verified through the Delaware Secretary of State's office. There is no basis for Cascade to have "actual knowledge" that NovaMart is a foreign person, because NovaMart is in fact a domestic corporation.
Accordingly, Cascade is entitled to rely in good faith on the NovaMart certificate without further investigation or inquiry. We are not aware of any facts or circumstances that would undermine the validity of NovaMart's certificate or that would impose upon Cascade any obligation to look behind the certificate.
X. Coordination with Other Tax Matters
This memorandum addresses exclusively the FIRPTA withholding analysis applicable to the Transaction. Several related tax matters are addressed in separate memoranda and documents prepared by the undersigned and the Calderwood & Harkness tax group:
Tax Structure Memorandum. The overall tax structure of the Transaction — including the treatment of the Transaction as a stock purchase for federal income tax purposes, the absence of an IRC Section 338(h)(10) election, and the tax consequences to Cascade and the Selling Stockholders — is addressed in a separate Tax Structure Memorandum prepared by the undersigned.
Tax Indemnification Provisions Analysis. The tax indemnification provisions of Article IX of the SPA are addressed in a separate memorandum analyzing the Selling Stockholders' indemnification obligations with respect to pre-closing tax liabilities. The tax indemnification is not subject to the general indemnification cap and survives until sixty (60) days after the expiration of the applicable statute of limitations. These indemnification obligations would cover any FIRPTA-related liability arising from pre-closing matters, including any liability arising from an inaccurate non-foreign person representation by a Selling Stockholder.
Transfer Tax Analysis Memorandum. The transfer tax analysis — including the estimated transfer taxes of approximately $1,200,000 (split equally between Cascade and the Selling Stockholders pursuant to Section 6.12 of the SPA) — is addressed in a separate memorandum. Transfer taxes are separate from and unrelated to FIRPTA withholding.
Pre-Closing Tax Covenant Compliance Checklist. NovaMart's obligations with respect to the filing of pre-closing tax returns and Cascade's review rights with respect to such returns are addressed in a separate compliance checklist. NovaMart's estimated FY2024 federal income tax liability is approximately $23,800,000. This liability is separate from any FIRPTA considerations and relates to NovaMart's ordinary course income tax obligations.
The foregoing documents should be reviewed in conjunction with this memorandum to provide a comprehensive understanding of the tax aspects of the Transaction.
XI. Action Items and Recommendations
Based on the analysis set forth in this memorandum, we recommend the following action items:
1.  Finalize the Form FIRPTA Non-Foreign Person Certificate. The draft form certificate (Document 66 in the closing checklist) should be finalized and circulated to NovaMart's counsel at Calloway, Brandt & Loewe LLP (Richard Calloway and Simone Adesanya) for review and comment. Any comments should be reviewed by the Calderwood & Harkness tax group to ensure that the certificate complies with the requirements of Treasury Regulations Section 1.1445-2(b)(2). Coordination with Amanda Trevino, NovaMart's General Counsel, is recommended.
2.  Include the FIRPTA Certificate in the Master Closing Checklist. The FIRPTA Non-Foreign Person Certificate should be included as a required closing deliverable under SPA Article VII and should be tracked on the master closing checklist as Document 66. Responsibility for delivery should be assigned to NovaMart's counsel.
3.  Confirm the Identity of the Signing Officer. Coordination with NovaMart should confirm whether the FIRPTA certificate will be signed by Douglas "Doug" Whitfield, CFO, or Amanda Trevino, General Counsel (or another authorized officer). The signing officer should be identified in advance of closing to avoid last-minute delays.
4.  Cascade to Retain the Executed Certificate. Upon receipt of the executed FIRPTA certificate at closing, Cascade must retain the original certificate for a period of five (5) years following the calendar year in which the closing occurs, as required by Treasury Regulations Section 1.1445-2(b)(3). We recommend that the certificate be maintained in Cascade's permanent tax files and that a copy be included in the closing binder. Elena Vasquez-Bright and Cascade's internal tax team should be notified of this retention requirement.
5.  Obtain Bring-Down Confirmation. A bring-down confirmation from NovaMart's General Counsel, Amanda Trevino, should be obtained at or immediately prior to closing, confirming that no foreign persons have been identified among NovaMart's stockholders, option holders, or other equity holders as of the closing date. This confirmation is a precautionary measure that supplements the entity-level FIRPTA certificate.
6.  No IRS Withholding Certificate Application. No application for a withholding certificate under IRC Section 1445(b)(4) is necessary or recommended in connection with this Transaction. The non-foreign person certificate is the appropriate and sufficient mechanism for avoiding withholding.
7.  No FIRPTA Withholding at Closing. No FIRPTA withholding should be deducted from the purchase price or the escrow amount at closing, provided the NovaMart FIRPTA Non-Foreign Person Certificate is duly executed and delivered. The full purchase price of $1,200,000,000 should be distributed in accordance with the funds flow memorandum without any FIRPTA reduction.
XII. Conclusion
Based on the foregoing analysis, FIRPTA withholding under IRC Section 1445 is not required in connection with the acquisition by Cascade Retail Holdings Inc. of 100% of the outstanding capital stock of NovaMart Global Inc., provided that NovaMart delivers a duly executed non-foreign person certificate at closing in the form prepared by Calderwood & Harkness LLP and in compliance with Treasury Regulations Section 1.1445-2(b)(2).
All identified Selling Stockholders are domestic U.S. persons, and NovaMart is a Delaware corporation — a domestic corporation within the meaning of the Code. No foreign person involvement has been identified in connection with the Transaction based on due diligence conducted to date.
NovaMart is not believed to be a USRPHC under IRC Section 897(c)(2), as the fair market value of its U.S. real property interests is estimated to represent approximately 10% to 15% of its total enterprise value — well below the 50% threshold. However, this determination is not dispositive of the withholding analysis, given the independent availability of the non-foreign person certificate exemption under Treasury Regulations Section 1.1445-2(b)(2).
We recommend proceeding with the entity-level certificate approach as outlined above. The form certificate should be finalized, circulated to NovaMart's counsel for review, and executed at closing in accordance with the closing checklist and the SPA.
This memorandum does not address the substantive income tax consequences of the Transaction to Cascade or the Selling Stockholders, which are addressed in separate memoranda. This memorandum also does not constitute tax advice to any party other than the addressees named above and should not be relied upon by any other person or entity without the prior written consent of Calderwood & Harkness LLP.
XIII. Contact Information
Please direct any questions regarding this memorandum to:
Sylvia Hartwell Partner, Tax Group Calderwood & Harkness LLP 599 Lexington Avenue, 38th Floor New York, New York 10022 Telephone: (212) 555-7800
Email: shartwell@calderwoodharkness.com
Sandra Chiu Engagement Partner Whitmore & Paige LLP 100 Federal Street, Suite 2500 Boston, Massachusetts 02110 Telephone: (617) 555-3200
Email: schiu@whitmorepaige.com
Appendix A: Summary Table — FIRPTA Withholding Analysis
Appendix B: Cross-Reference to Related Documents
The following documents are related to or referenced in this memorandum and should be reviewed in conjunction herewith:
This memorandum is intended solely for the use of the addressees identified above and is protected by the attorney-client privilege and the work product doctrine. This memorandum should not be disclosed to any third party without the prior written consent of Calderwood & Harkness LLP. The analysis and conclusions set forth herein are based on the facts as known to us as of the date of this memorandum and on the provisions of the Internal Revenue Code, Treasury Regulations, and other applicable authorities in effect as of such date. Changes in the facts or in applicable law could affect the analysis and conclusions herein. This memorandum does not constitute a guarantee or assurance of any particular tax result.
Element | Detail
Transaction | Stock purchase — 100% of NovaMart Global Inc. capital stock
Buyer | Cascade Retail Holdings Inc. (EIN 91-2847653)
Target/Transferor Entity | NovaMart Global Inc. (EIN 84-3291547)
Purchase Price | $1,200,000,000 (all cash)
Potential Withholding (if applicable) | $180,000,000 (15% × $1,200,000,000)
NovaMart Entity Type | Delaware corporation (domestic)
NovaMart EIN | 84-3291547
All Sellers Domestic? | Yes (based on current diligence)
USRPHC? | No (secondary analysis; not dispositive)
Estimated USRPI Value | $120,000,000–$180,000,000 (approx. 10%–15% of enterprise value)
Withholding Required? | No — provided non-foreign person certificate is delivered at closing
Certificate Type | Entity-level FIRPTA non-foreign person certificate per Treas. Reg. § 1.1445-2(b)(2)
Certificate Signatory | Douglas Whitfield, CFO, or Amanda Trevino, General Counsel, NovaMart
Certificate Retention Period | 5 years following calendar year of closing
IRS Filing Required? | No
Closing Checklist Document No. | Document 66
Escrow Amount | $96,000,000 (no FIRPTA withholding from escrow)
Transfer Taxes | $1,200,000 (separate from FIRPTA; split equally)
Targeted Closing Date | October 15, 2025
Outside Date | December 31, 2025
No. | Document | Status | Prepared By
1 | Form FIRPTA Non-Foreign Person Certificate (Closing Deliverable — Document 66) | Draft; to be finalized and circulated to NovaMart's counsel | Calderwood & Harkness LLP (S. Hartwell)
2 | Tax Structure Memorandum | In progress | Calderwood & Harkness LLP (S. Hartwell)
3 | Tax Indemnification Provisions Analysis Memorandum | In progress | Calderwood & Harkness LLP (S. Hartwell)
4 | Transfer Tax Analysis Memorandum | In progress | Calderwood & Harkness LLP (S. Hartwell)
5 | Pre-Closing Tax Covenant Compliance Checklist | In progress | Calderwood & Harkness LLP (S. Hartwell / T. Rosenthal)
6 | Stock Purchase Agreement (Execution Version) — Article VII (Closing Conditions); Article IX (Indemnification) | To be executed May 20, 2025 | Calderwood & Harkness LLP (H. Wexford / D. Okonkwo); Calloway, Brandt & Loewe LLP (R. Calloway / S. Adesanya)
7 | Master Closing Checklist | In progress | Calderwood & Harkness LLP (D. Okonkwo / T. Rosenthal)
8 | Funds Flow Memorandum | To be prepared prior to closing | Calderwood & Harkness LLP (D. Okonkwo)
9 | Escrow Agreement | To be executed at closing | Calderwood & Harkness LLP; Calloway, Brandt & Loewe LLP; Marlowe Asset Management Trust Company, N.A.

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