DISCLOSURE SCHEDULES OF CASCADE RETAIL HOLDINGS INC.
(THE "BUYER")
TO THE STOCK PURCHASE AGREEMENT
Stock Purchase Agreement, dated as of May 20, 2025
by and among
Cascade Retail Holdings Inc. a Delaware corporation ("Buyer")
NovaMart Global Inc. a Delaware corporation (the "Company")
and
The Selling Stockholders Named Therein
Prepared by:
Calderwood & Harkness LLP 599 Lexington Avenue, 38th Floor New York, NY 10022
May 20, 2025
CONFIDENTIAL — Subject to the terms of the Agreement. These Disclosure Schedules contain confidential and proprietary information of Cascade Retail Holdings Inc. and are delivered solely in connection with the Stock Purchase Agreement referenced herein. These Disclosure Schedules may not be reproduced, distributed, or disclosed to any Person other than in accordance with the confidentiality provisions of the Agreement.
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INTRODUCTORY NOTES AND GENERAL DISCLAIMERS
These Disclosure Schedules (these "Disclosure Schedules") are delivered by Cascade Retail Holdings Inc., a Delaware corporation ("Buyer"), pursuant to, and in connection with the execution and delivery of, that certain Stock Purchase Agreement, dated as of May 20, 2025 (the "Agreement"), by and among the Buyer, NovaMart Global Inc., a Delaware corporation (the "Company"), and the Selling Stockholders named therein. These Disclosure Schedules form an integral part of the Agreement and should be read in conjunction therewith.
Capitalized terms used but not otherwise defined in these Disclosure Schedules shall have the respective meanings ascribed to such terms in the Agreement. All references to "Sections" or "Articles" herein refer to the corresponding Sections or Articles of the Agreement unless otherwise specified.
The section numbers of these Disclosure Schedules correspond to the section numbers of the representations and warranties of the Buyer set forth in Article V of the Agreement. Each Schedule herein qualifies the correspondingly numbered representation and warranty (or covenant, as applicable) set forth in the Agreement.
The inclusion of any item, matter, event, circumstance, or other disclosure in these Disclosure Schedules shall not be construed as an admission or acknowledgment by the Buyer that such item is material, constitutes or represents a breach or violation of any representation, warranty, covenant, or obligation of the Buyer under the Agreement, or would be required to be disclosed absent the specific terms of the applicable representation, warranty, covenant, or obligation. Nothing in these Disclosure Schedules is intended to, nor shall it be construed to, broaden or otherwise expand the scope of any representation, warranty, covenant, or obligation of the Buyer set forth in the Agreement.
Information set forth in or otherwise disclosed in any particular Schedule of these Disclosure Schedules shall be deemed to qualify, modify, or supplement (a) the correspondingly numbered representation and warranty (or covenant, as applicable) set forth in the Agreement and (b) any other representation, warranty, covenant, or obligation of the Buyer set forth in the Agreement to the extent that the relevance of such information to such other representation, warranty, covenant, or obligation is reasonably apparent on its face, notwithstanding the absence of a specific cross-reference to such other representation, warranty, covenant, or obligation. The Buyer shall not be required to make specific cross-references to ensure the applicability of any particular disclosure to multiple Schedules, provided that such applicability is reasonably apparent from the text of the disclosure.
The headings and brief descriptions or summary characterizations of the matters disclosed in these Disclosure Schedules are included for convenience of reference only and shall not be deemed to limit, expand, alter, or otherwise affect the scope of the disclosure set forth therein. In the event of any conflict between a heading or summary characterization and the full text of a disclosure, the full text of the disclosure shall control.
These Disclosure Schedules may include items that are disclosed for informational purposes only, even where not strictly required to be disclosed under the terms of the applicable representation, warranty, covenant, or obligation of the Agreement. Such voluntary or precautionary disclosure shall not be deemed to establish, expand, or alter the scope of any representation, warranty, covenant, or obligation of the Buyer under the Agreement, and shall not create any inference that any undisclosed item or matter of similar or lesser significance is material or required to be disclosed.
Any dollar thresholds or materiality qualifiers referenced in the representations and warranties or covenants of the Agreement for purposes of determining which items are required to be disclosed in these Disclosure Schedules do not establish, and shall not be deemed to establish, materiality for any other purpose under the Agreement, including for purposes of the indemnification provisions set forth in Article IX of the Agreement or for purposes of determining whether a Material Adverse Effect has occurred.
The information contained in these Disclosure Schedules is provided solely for the purpose of disclosing items required or deemed advisable to be disclosed pursuant to the Agreement, and shall not be used, cited, or relied upon by any Person for any purpose other than as contemplated by the Agreement.
SCHEDULE 5.01
Organization and Good Standing
Pursuant to Section 5.01 of the Agreement, the Buyer discloses the following:
1. Organization.
The Buyer is Cascade Retail Holdings Inc., a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware. The Buyer was originally incorporated in the State of Delaware on September 14, 1987, under the name "Cascade Department Stores, Inc." and subsequently amended its certificate of incorporation on various occasions, including an amendment filed with the Secretary of State of the State of Delaware on April 2, 2003, pursuant to which the Buyer changed its name to "Cascade Retail Holdings Inc."
2. Registered Agent.
The Buyer's registered agent in the State of Delaware is:
Capitol Registered Agents LLC 1209 Orange Street Wilmington, Delaware 19801
3. Principal Place of Business.
The Buyer's principal place of business is located at:
4500 Elliott Avenue West, Suite 3200 Seattle, Washington 98119 Telephone: (206) 555-3400
4. Good Standing and Qualification.
The Buyer is in good standing under the laws of the State of Delaware and is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction in which the nature of its business or the ownership, leasing, or operation of its properties requires such qualification, except where the failure to be so qualified or in good standing would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the Buyer or its ability to consummate the transactions contemplated by the Agreement.
As of the date hereof, the Buyer is qualified to do business as a foreign corporation in the following jurisdictions, which represent the states and territories in which the Buyer operates its approximately 380 retail locations across North America and maintains its ecommerce operations, distribution centers, corporate offices, and other facilities:
5. No Exceptions.
No exceptions are noted to the representation set forth in Section 5.01 of the Agreement that the Buyer has all requisite corporate power and authority to own, lease, and operate its assets and properties and to carry on its business as currently conducted.
SCHEDULE 5.02
Authorization; Binding Effect
Pursuant to Section 5.02 of the Agreement, the Buyer discloses the following:
No exceptions are noted to the representations and warranties set forth in Section 5.02 of the Agreement.
For informational purposes only, the Buyer notes the following:
The Board of Directors of Cascade Retail Holdings Inc. (the "Board"), at a duly convened meeting held on May 20, 2025, at which a quorum was present throughout, unanimously adopted resolutions (the "Board Resolutions") authorizing and approving, among other things:
(a) the execution, delivery, and performance by the Buyer of the Agreement and each of the Ancillary Agreements to which the Buyer is a party;
(b) the incurrence of the $750,000,000 Senior Secured Term Loan B facility (the "Term Loan B") pursuant to the Commitment Letter dated May 15, 2025 (Reference: CL-2025-0515-CRNB) from Cornerstone National Bank, N.A., as Administrative Agent, and Caluvori Capital Partners, Inc., as Co-Lead Arranger, including the execution and delivery of definitive credit documentation in connection therewith;
(c) the draw of $200,000,000 on the Buyer's existing $500,000,000 Revolving Credit Facility with Cornerstone National Bank, N.A., as Administrative Agent (the "Revolving Credit Facility"), in connection with the consummation of the transactions contemplated by the Agreement, subject to the execution of the required amendment to the Revolving Credit Facility as described in Schedule 5.03(a) hereof;
(d) the payment of the Purchase Price of $1,200,000,000 to the Selling Stockholders in accordance with the terms and conditions of the Agreement;
(e) the payment of all transaction costs and expenses in connection with the foregoing; and
(f) the consummation of all other transactions contemplated by the Agreement and the Ancillary Agreements, including the entry into post-closing employment agreements with Julian Reeves and Priya Narasimhan and the issuance of restricted shares of Cascade common stock (CRHI) in connection therewith.
The Board Resolutions remain in full force and effect and have not been amended, modified, rescinded, or revoked in any respect.
No stockholder approval of the Buyer is required under applicable law (including the Delaware General Corporation Law), the rules or listing standards of The Nasdaq Stock Market LLC ("Nasdaq"), the Buyer's Amended and Restated Certificate of Incorporation (as amended), or the Buyer's Amended and Restated Bylaws (as amended) for the execution, delivery, and performance of the Agreement by the Buyer or the consummation of the transactions contemplated thereby. The transactions contemplated by the Agreement do not involve the issuance of common stock of the Buyer in excess of the thresholds that would require stockholder approval under Nasdaq Listing Rule 5635, nor do such transactions otherwise trigger any stockholder approval requirements applicable to the Buyer.
SCHEDULE 5.03
No Conflicts; Consents and Approvals
Pursuant to Section 5.03 of the Agreement, the Buyer discloses the following:
Section 5.03(a) — No Conflicts. Except as set forth below, the execution, delivery, and performance of the Agreement by the Buyer and the consummation of the transactions contemplated thereby, including the incurrence of the acquisition financing described herein, will not (i) conflict with or result in a violation or breach of any provision of the Buyer's Amended and Restated Certificate of Incorporation or Amended and Restated Bylaws, (ii) conflict with or result in a violation or breach of any Law or Order applicable to the Buyer or any of its Subsidiaries or by which any of their respective properties or assets are bound, or (iii) require any consent, waiver, or approval of, or result in a conflict with, violation or breach of, or constitute a default (or an event that, with notice or lapse of time or both, would constitute a default) under, any Contract to which the Buyer or any of its Subsidiaries is a party or by which any of their respective properties or assets are bound, except, in the case of clauses (ii) and (iii), as would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the Buyer or its ability to consummate the transactions contemplated by the Agreement, subject to the following disclosures:
1. Revolving Credit Facility Amendment Requirement.
The Buyer is party to that certain Credit Agreement, dated as of March 17, 2022 (as amended by the First Amendment dated November 9, 2023, and the Second Amendment dated June 14, 2024, the "Revolving Credit Agreement"), among the Buyer, as borrower, Cornerstone National Bank, N.A., as Administrative Agent, and the lenders party thereto from time to time, providing for a $500,000,000 senior unsecured revolving credit facility (the "Revolving Credit Facility") maturing on March 17, 2029.
The Revolving Credit Agreement, as currently in effect, contains certain covenants and restrictions that require an amendment to permit the following actions in connection with the transactions contemplated by the Agreement:
(i) the acquisition by the Buyer of all of the issued and outstanding shares of capital stock of the Company;
(ii) the incurrence by the Buyer of the $750,000,000 Senior Secured Term Loan B, which constitutes additional Indebtedness (as defined in the Revolving Credit Agreement) and would result in the grant of Liens (as defined in the Revolving Credit Agreement) on certain of the Buyer's and its Subsidiaries' assets in favor of the Term Loan B lenders, in each case exceeding the thresholds and baskets currently permitted under Sections 7.01 (Limitation on Liens) and 7.03 (Limitation on Indebtedness) of the Revolving Credit Agreement; and
(iii) the draw of $200,000,000 under the Revolving Credit Facility at or immediately prior to the Closing, which, together with amounts currently outstanding under the Revolving Credit Facility (approximately $85,000,000 as of the date hereof), would bring total outstanding borrowings under the Revolving Credit Facility to approximately $285,000,000, and which draw, when considered together with the incurrence of the Term Loan B, could cause a breach of the maximum Total Leverage Ratio (as defined in the Revolving Credit Agreement) of 4.00:1.00 set forth in Section 7.10 of the Revolving Credit Agreement.
The Buyer, Cornerstone National Bank, N.A. (as Administrative Agent), and the Required Lenders (as defined in the Revolving Credit Agreement) have negotiated and reached agreement in principle on the terms of a Third Amendment to the Revolving Credit Agreement (the "Third Amendment"), which is in agreed form as of the date hereof. The Third Amendment, among other things, (a) permits the acquisition of the Company, (b) permits the incurrence of the Term Loan B and the related Liens, (c) increases the maximum Total Leverage Ratio to 5.50:1.00 for the four fiscal quarters immediately following the Closing, stepping down to 5.00:1.00, 4.50:1.00, and 4.00:1.00 in each subsequent four-quarter period thereafter, and (d) makes certain conforming changes to the definitions of "Permitted Acquisition," "Permitted Indebtedness," and "Permitted Liens" in the Revolving Credit Agreement. The Third Amendment is expected to be executed and become effective prior to the Closing. Pending execution and effectiveness of the Third Amendment, the consummation of the transactions contemplated by the Agreement could constitute a Default or an Event of Default (each as defined in the Revolving Credit Agreement) under the Revolving Credit Agreement.
2. Counterparty Notices and Consents Under Commercial Agreements.
Certain commercial agreements to which the Buyer or its Subsidiaries are a party contain provisions that require notice to, or in certain limited cases the prior written consent of, the applicable counterparty in connection with (a) a material acquisition by the Buyer or its Subsidiaries, (b) a material change in the Buyer's capital structure, or (c) the incurrence of Indebtedness above specified thresholds. These provisions are contained in various supply agreements, vendor agreements, licensing agreements, distribution agreements, and joint venture agreements entered into by the Buyer and its Subsidiaries in the ordinary course of business.
As of the date hereof, the Buyer is in the process of identifying all such agreements and determining which agreements require notice, consent, or both. The Buyer has engaged its internal legal, procurement, and supply chain teams to conduct a comprehensive review of its commercial contract portfolio. The Buyer expects to deliver all required notices and obtain all required consents in advance of the Closing. The Buyer does not believe that the failure to obtain any such consent or deliver any such notice would, individually or in the aggregate, reasonably be expected to have a material adverse effect on the Buyer or its ability to consummate the transactions contemplated by the Agreement.
Section 5.03(b) — Governmental Consents and Approvals. The execution, delivery, and performance of the Agreement by the Buyer and the consummation of the transactions contemplated thereby require the following governmental consents, approvals, filings, or notifications:
1. Hart-Scott-Rodino Act Filing.
A filing under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), with the Federal Trade Commission (the "FTC") and the Antitrust Division of the United States Department of Justice (the "DOJ") is required in connection with the acquisition of the Company by the Buyer.
• The Buyer and the Selling Stockholders submitted the required Notification and Report Forms pursuant to the HSR Act on April 11, 2025.
• HSR Filing Fee: $2,390,000 (paid by the Buyer in accordance with Section 7.05(b) of the Agreement).
• Internal Tracking Number: 1038-00009.
• The initial 30-day waiting period under the HSR Act was set to expire on May 11, 2025; however, the DOJ issued a Request for Additional Information and Documentary Material (a "Second Request") to both the Buyer and the Company on May 8, 2025, which superseded and extended the initial waiting period.
• The Buyer is cooperating fully with the DOJ in responding to the Second Request and has retained outside antitrust counsel (Whitfield & Crane LLP, Washington, DC) and an economic consulting firm (Apex Economics LLC, Washington, DC) to assist in the preparation of the response.
• Based on the Buyer's preliminary assessment of the competitive landscape, the Buyer anticipates that clearance under the HSR Act will be obtained during the September–October 2025 timeframe, subject to the DOJ's review timeline and any further inquiries or conditions that may be imposed.
• The Buyer is not currently aware of any basis on which the DOJ would seek to block or impose material conditions on the consummation of the transactions, although there can be no assurance that the DOJ will not assert competitive concerns or require divestitures or other remedial actions.
2. SEC Filings.
The Buyer is required to file a Current Report on Form 8-K with the Securities and Exchange Commission (the "SEC") in connection with the execution of the Agreement and, subsequently, in connection with the consummation of the transactions contemplated thereby. The Form 8-K relating to the execution of the Agreement is expected to be filed within four (4) business days of the date hereof. Additional SEC filings may be required in connection with the Closing, including any amendments to the Form 8-K filed at signing and any required financial statements of the Company to be filed pursuant to Rule 3-05 of Regulation S-X.
3. Nasdaq Notifications.
Any required filings with, or notifications to, The Nasdaq Stock Market LLC in connection with the transactions contemplated by the Agreement, including any required notice relating to:
(a) the issuance of 150,000 restricted shares of Cascade common stock (CRHI) to Julian Reeves pursuant to the post-closing employment agreement to be entered into between the Buyer and Mr. Reeves, the terms of which are set forth in the form of employment agreement attached as Exhibit D-1 to the Agreement;
(b) the issuance of 125,000 restricted shares of Cascade common stock (CRHI) to Priya Narasimhan pursuant to the post-closing employment agreement to be entered into between the Buyer and Ms. Narasimhan, the terms of which are set forth in the form of employment agreement attached as Exhibit D-2 to the Agreement; and
(c) any retention equity awards to be granted to employees of the Company following the Closing, as contemplated by Section 7.12 of the Agreement.
The Buyer does not anticipate that the aggregate number of shares issuable in connection with the foregoing will exceed the thresholds requiring stockholder approval under Nasdaq Listing Rules, but will make all required filings and notifications to Nasdaq in a timely manner.
4. State-Level Filings.
Any state-level antitrust, regulatory, or blue sky filings identified as applicable in connection with the transactions contemplated by the Agreement. As of the date hereof, the Buyer has not identified any state-level antitrust filings that are required in connection with the transactions. The Buyer will continue to evaluate whether any state-level regulatory or blue sky filings are required and will make all such filings in a timely manner prior to the Closing.
SCHEDULE 5.04
Capitalization. Pursuant to Section 5.04 of the Agreement, the Buyer discloses the following:
1. Authorized and Outstanding Capital Stock.
As of the date of the Agreement, the authorized capital stock of the Buyer consists of (a) 1,000,000,000 shares of common stock, par value $0.01 per share ("Common Stock"), and (b) 50,000,000 shares of preferred stock, par value $0.01 per share ("Preferred Stock"). As of the close of business on May 19, 2025 (the most recent practicable date prior to the date of the Agreement):
(i) approximately 412,000,000 shares of Common Stock were issued and outstanding;
(ii) no shares of Preferred Stock were issued and outstanding;
(iii) approximately 31,500,000 shares of Common Stock were reserved for issuance under the Buyer's equity incentive plans (as described below); and
(iv) approximately 22,000,000 shares of Common Stock were held in treasury.
2. Listing.
The Common Stock is listed on The Nasdaq Stock Market LLC under the ticker symbol "CRHI." The Buyer is in compliance in all material respects with all applicable listing requirements of Nasdaq as of the date hereof.
3. Market Capitalization.
Based on the closing price of the Common Stock on Nasdaq on May 19, 2025 (the last trading day prior to the date of the Agreement), the Buyer's approximate market capitalization was approximately $22,400,000,000.
4. Equity Incentive Plans and Outstanding Awards.
The Buyer maintains the following equity incentive plans (collectively, the "Buyer Equity Plans"):
(a) Cascade Retail Holdings Inc. 2018 Omnibus Incentive Plan (the "2018 Plan"), as amended and restated, under which the Buyer may grant stock options, restricted stock, restricted stock units ("RSUs"), performance stock units ("PSUs"), stock appreciation rights, and other equity-based awards to employees, directors, and consultants of the Buyer and its Subsidiaries.
(b) Cascade Retail Holdings Inc. 2023 Employee Stock Purchase Plan (the "ESPP"), under which eligible employees of the Buyer and its designated Subsidiaries may purchase shares of Common Stock at a discount through regular payroll deductions.
As of the close of business on May 19, 2025, the following equity awards were outstanding under the Buyer Equity Plans:
5. Post-Closing Equity Issuances.
In connection with the transactions contemplated by the Agreement, the Buyer intends to issue the following shares of restricted Common Stock pursuant to post-closing employment agreements:
(a) 150,000 restricted shares of Common Stock to Julian Reeves, the current Chief Executive Officer of the Company, pursuant to the post-closing employment agreement to be entered into between the Buyer and Mr. Reeves on terms set forth in Exhibit D-1 to the Agreement, such shares to vest ratably over four (4) years from the Closing Date, subject to Mr. Reeves's continued employment with the Buyer or its Subsidiaries; and
(b) 125,000 restricted shares of Common Stock to Priya Narasimhan, the current Chief Financial Officer of the Company, pursuant to the post-closing employment agreement to be entered into between the Buyer and Ms. Narasimhan on terms set forth in Exhibit D-2 to the Agreement, such shares to vest ratably over four (4) years from the Closing Date, subject to Ms. Narasimhan's continued employment with the Buyer or its Subsidiaries.
Such shares will be issued under the 2018 Plan (to the extent shares are available for issuance thereunder) or pursuant to an applicable exemption from registration under the Securities Act of 1933, as amended. The Buyer intends to file a registration statement on Form S-8 to register such shares, to the extent required and not already covered by an existing registration statement.
6. Stockholder Rights Plan; Anti-Dilution and Preemptive Rights.
The Buyer does not currently have in effect any stockholder rights plan, "poison pill," or similar arrangement. The Buyer's Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws do not contain any preemptive rights, anti-dilution provisions, or other similar rights that would be triggered by, or that would impede the consummation of, the transactions contemplated by the Agreement, including the incurrence of the acquisition financing or the issuance of restricted shares to Mr. Reeves and Ms. Narasimhan as described above.
No exceptions are noted to the representation that there are no outstanding obligations of the Buyer to repurchase, redeem, or otherwise acquire any shares of capital stock of the Buyer, other than pursuant to the Buyer's publicly disclosed share repurchase program (which has been temporarily suspended pending the consummation of the transactions contemplated by the Agreement).
SCHEDULE 5.05
SEC Filings and Financial Statements
Pursuant to Section 5.05 of the Agreement, the Buyer discloses the following:
1. Timely Filings.
Since January 1, 2023, the Buyer has filed all required reports, schedules, forms, statements, and other documents with the Securities and Exchange Commission (the "SEC") in a timely manner, including all Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements, and other filings required under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and regulations promulgated thereunder. No extensions of filing deadlines under Rule 12b-25 have been requested or obtained by the Buyer since January 1, 2023.
2. Material Misstatements or Omissions.
No exceptions are noted to the representation set forth in Section 5.05 of the Agreement that such filings, as of their respective dates (or, if amended or superseded by a filing prior to the date hereof, as of the date of such amendment or superseding filing), did not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.
3. Financial Highlights.
The following financial data is provided for informational purposes:
• Buyer FY2024 (fiscal year ended January 31, 2025) Revenue: $14,700,000,000
• Buyer FY2024 EBITDA: $1,830,000,000
• Buyer FY2024 Net Income: $812,000,000
• Buyer FY2024 Total Assets: $18,200,000,000
• Buyer FY2024 Total Debt (as of January 31, 2025): $2,150,000,000
4. Incorporation by Reference.
For completeness, the Buyer's most recent Annual Report on Form 10-K for the fiscal year ended January 31, 2025, filed with the SEC on April 1, 2025, and the Buyer's subsequent Quarterly Report on Form 10-Q for the fiscal quarter ended May 3, 2025 (to be filed with the SEC on or before June 12, 2025), together with all exhibits, financial statements, and notes thereto, are incorporated by reference herein for informational purposes. Such filings contain the complete audited consolidated financial statements of the Buyer and its Subsidiaries, including the report of the Buyer's independent registered public accounting firm.
5. Independent Auditors.
The Buyer's independent registered public accounting firm is:
Whitmore & Paige LLP 100 Federal Street, Suite 2500 Boston, Massachusetts 02110 Engagement Partner: Sandra Chiu
Whitmore & Paige LLP has audited the Buyer's consolidated financial statements for each of the fiscal years ended January 31, 2025, January 31, 2024, and January 31, 2023, and has issued unqualified opinions with respect to each such fiscal year. Whitmore & Paige LLP has not withdrawn or modified any such opinion.
SCHEDULE 5.06
Absence of Certain Changes
Pursuant to Section 5.06 of the Agreement, the Buyer discloses the following:
No Material Adverse Effect has occurred with respect to the Buyer since December 31, 2024.
No exceptions are noted to the representations and warranties set forth in Section 5.06 of the Agreement.
For informational purposes only, the Buyer notes the following:
On May 15, 2025, the Buyer entered into that certain Commitment Letter (Reference: CL-2025-0515-CRNB) with Cornerstone National Bank, N.A., as Administrative Agent, and Caluvori Capital Partners, Inc., as Co-Lead Arranger (collectively, the "Commitment Parties"), pursuant to which the Commitment Parties committed to provide a $750,000,000 Senior Secured Term Loan B facility (the "Term Loan B") to the Buyer in connection with the consummation of the transactions contemplated by the Agreement. The Term Loan B, upon funding at the Closing, will increase the Buyer's consolidated indebtedness by $750,000,000 (less the original issue discount of $11,250,000, representing 1.5% of the principal amount of the Term Loan B).
In addition, the Buyer intends to draw $200,000,000 under its existing Revolving Credit Facility at or immediately prior to the Closing, as described in Schedules 5.03(a) and 5.08 hereof. The combined effect of the Term Loan B and the revolver draw will increase the Buyer's total consolidated indebtedness from approximately $2,150,000,000 (as of January 31, 2025) to approximately $3,100,000,000 on a pro forma basis at the Closing (exclusive of the approximately $85,000,000 currently outstanding under the Revolving Credit Facility as of the date hereof).
The Buyer believes that its capital structure, on a pro forma basis after giving effect to the transactions contemplated by the Agreement, will remain within prudent levels and consistent with the Buyer's stated financial policies and investment-grade credit profile objectives.
SCHEDULE 5.07
Litigation. Pursuant to Section 5.07 of the Agreement, the Buyer discloses the following:
1. No Proceedings That Would Impair or Delay the Transactions.
No Actions (as defined in the Agreement) are pending or, to the Buyer's Knowledge, threatened against the Buyer or any of its Subsidiaries before any Governmental Authority that seek to, or would reasonably be expected to, enjoin, restrain, prohibit, or otherwise challenge the consummation of the transactions contemplated by the Agreement, or that would reasonably be expected to impair or delay the Buyer's ability to consummate the transactions contemplated by the Agreement.
2. No Proceedings That Would Prevent Performance of the Agreement.
No Actions are pending or, to the Buyer's Knowledge, threatened against the Buyer or any of its Subsidiaries that would reasonably be expected to prevent, materially delay, or materially impair the ability of the Buyer to perform its obligations under the Agreement or to consummate the transactions contemplated thereby.
3. Routine Litigation Matters.
For informational purposes, the Buyer notes that it and its Subsidiaries are, from time to time, party to various legal proceedings, claims, disputes, regulatory inquiries, and governmental investigations arising in the ordinary course of business. These routine litigation matters are described in the Buyer's public filings with the SEC, including:
(a) Item 3 (Legal Proceedings) of the Buyer's Annual Report on Form 10-K for the fiscal year ended January 31, 2025;
(b) Notes to the Consolidated Financial Statements (including Note 15 — Commitments and Contingencies) included in the Buyer's Annual Report on Form 10-K for the fiscal year ended January 31, 2025; and
(c) corresponding disclosures in the Buyer's subsequent Quarterly Reports on Form 10-Q.
None of such routine litigation matters are expected to have, individually or in the aggregate, a material adverse effect on the Buyer's ability to consummate the transactions contemplated by the Agreement. The Buyer's management and legal counsel have assessed these matters and concluded that, while the outcomes of such matters cannot be predicted with certainty, the resolution of such matters is not expected to impair or delay the consummation of the transactions contemplated by the Agreement.
SCHEDULE 5.08
Financing. Pursuant to Section 5.08 of the Agreement, the Buyer discloses the following:
1. Sources of Funds.
The Buyer has arranged financing sufficient to pay the Purchase Price of $1,200,000,000 and to consummate the transactions contemplated by the Agreement. The sources of funds for the Purchase Price are as follows:
In addition to the foregoing, estimated Buyer-side transaction costs of approximately $47,300,000 will be funded from the Buyer's existing working capital.
2. Senior Secured Term Loan B.
The Buyer has obtained a commitment for the Senior Secured Term Loan B pursuant to a Commitment Letter dated May 15, 2025 (Reference: CL-2025-0515-CRNB) (the "Commitment Letter"), entered into by and among the Buyer, Cornerstone National Bank, N.A., as Administrative Agent, and Caluvori Capital Partners, Inc., as Co-Lead Arranger (collectively, the "Commitment Parties"). The principal terms of the Term Loan B are as follows:
• Facility Amount: $750,000,000
• Type: Senior Secured Term Loan B
• Borrower: Cascade Retail Holdings Inc.
• Administrative Agent: Cornerstone National Bank, N.A.
• Contact: Robert Frankel, Senior Vice President, Leveraged Finance
• Address: 227 West Monroe Street, Chicago, Illinois 60606
• Co-Lead Arranger: Caluvori Capital Partners, Inc.
• Contact: Irene Matsuda, Director
• Address: 350 California Street, Suite 1800, San Francisco, California 94104
• Interest Rate: Term SOFR + 275 basis points per annum
• Maturity: Seven (7) years from the Closing Date
• Amortization: 1% per annum (payable quarterly at 0.25% of the original principal amount)
• Original Issue discount ("OID"): 1.5% ($11,250,000)
• Security: First-priority Liens on substantially all assets of the Buyer and its material domestic Subsidiaries (subject to certain customary exceptions and exclusions)
• Guarantors: Each material domestic Subsidiary of the Buyer
• Prepayment: Voluntary prepayment permitted at any time without premium or penalty (subject to a 101 soft-call premium for repricing transactions within the first six months)
A true, correct, and complete copy of the Commitment Letter (together with the related Fee Letter, redacted as to fee amounts and market flex provisions, as permitted under Section 5.08(c) of the Agreement) has been provided to the Company and the Selling Stockholders.
3. Revolving Credit Facility Draw.
The Buyer intends to draw $200,000,000 under its existing $500,000,000 Revolving Credit Facility at or immediately prior to the Closing. The Revolving Credit Facility is governed by the Revolving Credit Agreement described in Schedule 5.03(a) hereof. The material terms of the Revolving Credit Facility relevant to the contemplated draw are as follows:
• Facility Amount: $500,000,000
• Current Outstanding Borrowings (as of the date hereof): approximately $85,000,000
• Available Capacity (prior to contemplated draw): approximately $415,000,000
• Interest Rate: Term SOFR + 200 basis points per annum
• Maturity: March 17, 2029
• Administrative Agent: Cornerstone National Bank, N.A.
• Amendment Required: Yes — the Third Amendment to the Revolving Credit Agreement, as described in Schedule 5.03(a), must be executed and effective prior to the draw (and the Closing)
4. Cash on Hand.
As of the date hereof, the Buyer has cash and cash equivalents of approximately $680,000,000 on a consolidated basis. Of this amount, $250,000,000 has been designated as the cash-on-hand component of the Purchase Price. The remaining cash and cash equivalents are available for the Buyer's ongoing working capital needs, transaction costs, and other general corporate purposes.
5. No Financing Condition.
The Agreement is not subject to a financing condition. As set forth in Section 5.08(a) of the Agreement, the Buyer has represented that it has sufficient committed financing to pay the Purchase Price and all related transaction costs and to consummate the transactions contemplated by the Agreement.
6. Conditions to Funding Under the Commitment Letter.
The Commitment Letter contains customary conditions to the funding of the Term Loan B, including, without limitation:
(a) the absence of a Company Material Adverse Effect (as such term is defined in the Agreement, and as such definition is incorporated by reference in the Commitment Letter);
(b) the accuracy in all material respects of the Specified Representations (as defined in the Commitment Letter) of the Company and the Selling Stockholders set forth in the Agreement, and the accuracy in all material respects of the Specified Buyer Representations (as defined in the Commitment Letter);
(c) the execution and delivery of definitive credit documentation consistent with the terms set forth in the Commitment Letter and the Term Sheet attached thereto as Exhibit A;
(d) the delivery of customary closing deliverables, including officer's certificates, legal opinions, solvency certificates, UCC financing statements, and other collateral documentation;
(e) the payment of all fees and expenses required to be paid on the Closing Date under the Commitment Letter and the related Fee Letter; and
(f) the substantially concurrent consummation of the acquisition of the Company on the terms described in the Agreement, without giving effect to any amendment, modification, or waiver of the Agreement that is materially adverse to the interests of the Commitment Parties, unless consented to by the Commitment Parties.
7. Flex Provisions.