CONFIDENTIAL
CALDERWOOD & HARKNESS LLP Attorneys at Law
1301 K Street NW, Suite 1200 Washington, DC 20005 Telephone: (202) 555-7400 Facsimile: (202) 555-7401 www.calderwoodharkness.com
April 14, 2025
Aldwyn Compliance Solutions LLC
Attention: Marcus J. Aldwyn, Managing Principal
1700 Market Street, Suite 2800 Philadelphia, PA 19103
Re: Engagement as Independent Compliance Monitor — In the Matter of Cascade Retail Holdings Inc. v. Priya Rathore et al., C.A. No. 2025-0198-MTZ (Delaware Court of Chancery)
Standstill and Settlement Agreement dated April 14, 2025 (the "Settlement Agreement") Consent Order entered by Vice Chancellor Margaret T. Zhao (the "Consent Order")
C&H Matter No. 1038-00006
Dear Mr. Aldwyn:
This letter (together with all annexes hereto, this "Engagement Letter") sets forth the terms and conditions under which Aldwyn Compliance Solutions LLC ("Aldwyn" or the "Monitor") is engaged as the independent compliance monitor in the above-referenced matter. This Engagement Letter is being delivered to Aldwyn in connection with, and is contemplated by, the Standstill and Settlement Agreement dated April 14, 2025, by and among Cascade Retail Holdings Inc., Verdana Commerce Group, Inc., and the individual defendants identified below (the "Settlement Agreement"), and the Consent Order entered by Vice Chancellor Margaret T. Zhao of the Delaware Court of Chancery in C.A. No. 2025-0198-MTZ on the date hereof (the "Consent Order"). Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Settlement Agreement.
SECTION 1: RECITALS AND BACKGROUND
1.1 Cascade Retail Holdings Inc. ("CRH") is a corporation organized and existing under the laws of the State of Delaware, publicly traded on the Nasdaq Global Select Market under the ticker symbol "CRHL," with its principal executive offices located at 2200 Elliott Avenue West, Suite 3400, Seattle, Washington 98119 (EIN: 91-2847351). CRH is a leading multi-channel retailer specializing in home goods, seasonal décor, and private-label consumer products.
1.2 Verdana Commerce Group, Inc. ("Verdana" or "VCG") is a corporation organized and existing under the laws of the State of Delaware, with its principal offices located at 400 Christiana Gateway, Suite 700, Wilmington, Delaware 19801 (EIN: 51-3982647). Verdana is a competitor of CRH in certain product verticals, including home goods and seasonal décor, and is a portfolio company of Greystone Capital Partners, LP, acting through Greystone Capital Fund VII, LP.
1.3 On or about March 3, 2025, CRH commenced an action in the Delaware Court of Chancery, docketed as C.A. No. 2025-0198-MTZ, against the following eight former CRH employees (collectively, the "Rathore Group") and Verdana, asserting claims including breach of restrictive covenant, breach of confidentiality obligations, misappropriation of trade secrets under the Delaware Uniform Trade Secrets Act (6 Del. C. § 2001 et seq.), tortious interference with contractual relations, and civil conspiracy:
(a) Priya Rathore — former Senior Vice President, Merchandising;
(b) Derek Linden — former Vice President, Hardlines Merchandising;
(c) Sonia Kaczmarek — former Vice President, Softlines Merchandising;
(d) Amara Osei — former Director, Private Label Strategy;
(e) Brent Halvorsen — former Director, Seasonal Planning & Analytics;
(f) Lucia Fernandez-Gill — former Director, Vendor Relations (Domestic);
(g) Nathan Tsao — former Senior Manager, eCommerce Merchandising; and
(h) Kira Johansson — former Senior Manager, Category Analytics.
Each member of the Rathore Group resigned from CRH on or about February 7, 2025, and thereafter commenced employment with Verdana in various merchandising, planning, and analytics roles.
1.4 CRH's verified complaint alleged, among other things, that members of the Rathore Group, acting in coordination and at the direction of Priya Rathore, exfiltrated approximately 14,327 files (totaling approximately 2.8 gigabytes) from CRH's Aldermere Systems and Pinnacle Health IT environments between January 10 and February 4, 2025. The exfiltrated materials included, without limitation, Project Ridgeline strategic planning materials, vendor negotiation term sheets, private-label cost models, customer segmentation data, and proprietary seasonal buying algorithms.
1.5 Following an expedited discovery period and preliminary injunction proceedings, the parties, through their respective counsel, negotiated and entered into the Settlement Agreement on April 14, 2025. On the same date, Vice Chancellor Margaret T. Zhao entered the Consent Order, which incorporates modified restrictive covenant terms applicable to each member of the Rathore Group and comprehensive data return and destruction obligations applicable to the Rathore Group and Verdana.
1.6 The Settlement Agreement, at Section 7.2 thereof and as further described in Exhibit D thereto, provides for the appointment of an independent compliance monitor to verify adherence by the Rathore Group and Verdana to: (a) the modified non-compete restrictions; (b) the employee and vendor non-solicitation restrictions; and (c) the data return and destruction obligations set forth in Exhibit B to the Settlement Agreement.
1.7 In connection with the foregoing proceedings:
(a) CRH is represented by Calderwood & Harkness LLP, with Bernard Crawford serving as Responsible Partner and Renata Vasquez serving as Billing Partner;
(b) Verdana is represented by Blackhall & Soren LLP, with Gavin Blackhall serving as Lead Partner; and
(c) The individual members of the Rathore Group are represented by Whitfield, Nygaard & Doyle LLP ("WND"), with Catherine Nygaard serving as Lead Partner.
1.8 Aldwyn Compliance Solutions LLC has been jointly selected by CRH and Verdana, with the express consent of the Rathore Group (acting through WND), to serve as the independent compliance monitor in accordance with the Selection Procedures set forth in Exhibit D to the Settlement Agreement. Aldwyn possesses substantial experience in compliance monitoring, trade secret protection, and restrictive covenant enforcement matters, and its qualifications are set forth in the proposal submitted to the parties on March 28, 2025.
SECTION 2: APPOINTMENT AND TERM
2.1 Appointment
Aldwyn Compliance Solutions LLC is hereby engaged as the independent compliance monitor pursuant to Section 7.2 of the Settlement Agreement and Paragraph 4 of the Consent Order. Aldwyn's appointment shall be effective as of the date of execution of this Engagement Letter by all parties set forth in Section 13 hereof, which the parties intend to be April 14, 2025. From and after such date, Aldwyn shall have the authority, rights, and obligations set forth in this Engagement Letter, the Settlement Agreement, and the Consent Order.
Aldwyn shall serve in a neutral, independent capacity throughout the engagement. Aldwyn shall not serve as an advocate for any party, shall not provide legal advice to any party, and shall not act as an agent, employee, or fiduciary of any party. The Monitor's role is limited to verification of compliance with the specific obligations identified in Section 3 below, and the Monitor shall exercise independent judgment in the discharge of its responsibilities. Nothing in this Engagement Letter shall be construed to create an attorney-client relationship between Aldwyn and any party.
2.2 Term
The monitoring period shall commence on April 14, 2025 (the "Effective Date") and shall continue for a period of twelve (12) months, expiring at 11:59 p.m. Eastern Time on April 14, 2026 (the "Monitoring Period"). The Monitoring Period is coextensive with the period specified in Section 7.2(b) of the Settlement Agreement and Paragraph 4(b) of the Consent Order.
The Monitoring Period may be extended beyond April 14, 2026, or shortened to an earlier date, only by written agreement executed by CRH and Verdana, with notice to WND (on behalf of the Rathore Group), and with the approval of the Court. Any extension or shortening of the Monitoring Period shall be reflected in a written amendment to this Engagement Letter.
Upon the expiration or earlier termination of the Monitoring Period, Aldwyn shall deliver to all parties and their respective counsel the final compliance report described in Section 3.6 below (the "Final Compliance Report") within thirty (30) days of the end of the Monitoring Period, and shall return or destroy all Confidential Information (as defined in Section 7) in accordance with Section 7.3 below.
2.3 Early Termination
Either CRH or Verdana may seek termination of the Monitor engagement for cause by joint application to the Delaware Court of Chancery. For purposes of this Section 2.3, "cause" shall mean: (a) a material breach by Aldwyn of its obligations under this Engagement Letter that is not cured within fifteen (15) business days after written notice thereof; (b) the existence of a conflict of interest that cannot be waived or remedied; or (c) other good cause as determined by the Court. In the event of any application to terminate the Monitor for cause, Aldwyn shall be afforded a reasonable opportunity to be heard by the Court prior to any order of removal.
Aldwyn may resign as Monitor upon not less than thirty (30) days' prior written notice to all parties, their respective counsel, and the Court, provided that a successor monitor is appointed by agreement of the parties or by order of the Court, or the parties otherwise agree in writing to an alternative arrangement for monitoring the balance of the Monitoring Period. In the event of Aldwyn's resignation, Aldwyn shall cooperate fully with any successor monitor, including by transferring all monitoring files, work papers, and Confidential Information to such successor in a secure manner.
SECTION 3: SCOPE OF MONITORING ACTIVITIES
3.1 Overview
Aldwyn shall conduct quarterly verification of compliance by the members of the Rathore Group and Verdana with the modified restrictive covenant terms set forth in Exhibit A to the Settlement Agreement, as incorporated in and given the force of law by the Consent Order. Aldwyn's monitoring activities shall encompass three principal areas, each of which is described in detail below:
(a) Modified non-compete compliance (Section 3.2);
(b) Non-solicitation compliance, including both employee non-solicitation and vendor non-solicitation (Sections 3.3 and 3.4); and
(c) Data return and destruction compliance (Section 3.5).
Aldwyn shall carry out its monitoring activities in accordance with the procedures and methodologies set forth in the Compliance Monitoring Protocol (Detailed Procedures Annex dated April 11, 2025) (the "Monitoring Protocol"), which has been reviewed and approved by all parties and their counsel and is incorporated herein by reference. To the extent any monitoring procedure requires adjustment during the Monitoring Period due to changed circumstances, Aldwyn shall propose such adjustment to all parties in writing and obtain the written consent of CRH and Verdana before implementing the revised procedure.
3.2 Modified Non-Compete Verification
3.2.1 Priya Rathore
Aldwyn shall verify that Priya Rathore does not, directly or indirectly, engage in competitive activities in the three restricted product categories — home goods, seasonal décor, and private-label apparel — through the expiration of her twelve (12)-month modified non-compete period, which runs from February 7, 2025 through February 6, 2026. "Competitive activities" shall have the meaning set forth in Section 2(a) of Exhibit A to the Settlement Agreement, which includes, without limitation, supervision, management, strategic direction, or material involvement in the development, sourcing, pricing, or marketing of products in any of the three restricted product categories on behalf of any entity other than CRH.
3.2.2 Remaining Members of the Rathore Group
Aldwyn shall verify that each of the following seven individuals does not, directly or indirectly, engage in competitive activities in the same three restricted product categories through the expiration of their respective nine (9)-month modified non-compete periods, which run from February 7, 2025 through November 6, 2025:
(a) Derek Linden; (b) Sonia Kaczmarek; (c) Amara Osei; (d) Brent Halvorsen; (e) Lucia Fernandez-Gill; (f) Nathan Tsao; and (g) Kira Johansson.
3.2.3 Monitoring Procedures for Non-Compete Verification
In conducting the non-compete verification described in Sections 3.2.1 and 3.2.2, Aldwyn's monitoring activities shall include, without limitation:
(a) Review of the current job titles, job descriptions, reporting structures, and functional responsibilities of each monitored individual at Verdana, as reflected in employment records, internal postings, and human resources documentation;
(b) Review of current Verdana organizational charts, including divisional and departmental structures for all merchandising, product development, and related functions;
(c) Confidential interviews with each monitored individual and, as necessary, with relevant Verdana personnel who have supervisory or functional knowledge of the monitored individuals' duties and responsibilities;
(d) Review of any internal or external communications that reflect the scope of the monitored individuals' work at Verdana, to the extent made available by the parties or discoverable through reasonable inquiry; and
(e) Such additional procedures as are specified in the Monitoring Protocol or as Aldwyn reasonably determines are necessary to fulfill its monitoring obligations.
3.2.4 Transition After Nine-Month Non-Compete Expiration
After the expiration of the nine (9)-month modified non-compete periods for Derek Linden, Sonia Kaczmarek, Amara Osei, Brent Halvorsen, Lucia Fernandez-Gill, Nathan Tsao, and Kira Johansson on November 6, 2025, Aldwyn's monitoring of those seven individuals' non-compete compliance shall cease. For the avoidance of doubt, however, Aldwyn shall continue to monitor those individuals' compliance with the employee non-solicitation and vendor non-solicitation obligations described in Sections 3.3 and 3.4 below for the duration of the Monitoring Period. Monitoring of Priya Rathore's non-compete compliance shall continue through February 6, 2026.
3.3 Non-Solicitation (Employee) Verification
Aldwyn shall verify that all eight (8) members of the Rathore Group refrain from directly or indirectly soliciting, recruiting, hiring, or inducing any employee of CRH to leave CRH's employment during the eighteen (18)-month employee non-solicitation period, which runs from February 7, 2025 through August 6, 2026, as set forth in Section 3(a) of Exhibit A to the Settlement Agreement.
The parties acknowledge that, because the Monitoring Period expires on April 14, 2026, Aldwyn's monitoring of the employee non-solicitation obligation will cover only that portion of the non-solicitation period falling within the Monitoring Period — that is, from April 14, 2025 through April 14, 2026. The parties retain all rights to seek enforcement of the employee non-solicitation obligation directly through the Court for the period from April 15, 2026 through August 6, 2026, independent of any monitoring by Aldwyn.
In conducting the employee non-solicitation verification, Aldwyn's monitoring activities shall include, without limitation:
(a) Review of Verdana's hiring records for any individuals who were, at any time during the Monitoring Period, employees of CRH, including new hire documentation, offer letters, and recruitment correspondence;
(b) Review of relevant communications (to the extent voluntarily disclosed by the parties or produced pursuant to the access provisions of Section 4 below) between members of the Rathore Group and current or former CRH employees relating to potential employment or engagement by Verdana;
(c) Quarterly interviews with each member of the Rathore Group regarding any contact with current CRH employees concerning potential employment opportunities at Verdana or elsewhere; and
(d) Such additional procedures as are specified in the Monitoring Protocol.
3.4 Non-Solicitation (Vendor) Verification
Aldwyn shall verify that all eight (8) members of the Rathore Group refrain from directly or indirectly soliciting, contacting for business purposes, or interfering with CRH's relationships with CRH's top fifty (50) vendors by spend, as identified in Exhibit C to the Settlement Agreement (filed under seal with the Court), during the twelve (12)-month vendor non-solicitation period, which runs from February 7, 2025 through February 6, 2026, as set forth in Section 3(b) of Exhibit A to the Settlement Agreement.
In conducting the vendor non-solicitation verification, Aldwyn's monitoring activities shall include, without limitation:
(a) Review of Verdana's vendor engagement records, including new vendor agreements, amendments to existing vendor agreements, and vendor correspondence, to identify any engagement with vendors appearing on the Exhibit C vendor list during the vendor non-solicitation period;
(b) Comparison of Verdana's vendor engagement activity against the unredacted Exhibit C vendor list provided by CRH;
(c) Inquiry of each monitored individual regarding any contact with vendors on the Exhibit C list; and
(d) Such additional procedures as are specified in the Monitoring Protocol.
CRH shall provide Aldwyn with the unredacted Exhibit C vendor list within five (5) business days of the Effective Date, subject to the confidentiality protections set forth in Section 7 of this Engagement Letter and such additional protections as may be agreed among the parties. The Exhibit C vendor list constitutes Confidential Information of CRH and shall be treated accordingly.
3.5 Data Return and Destruction Verification
3.5.1 Initial Verification
Aldwyn shall verify compliance by the Rathore Group and Verdana with the Data Return and Destruction Protocol set forth in Exhibit B to the Settlement Agreement, including:
(a) Confirmation that all exfiltrated CRH data — comprising the approximately 14,327 files (approximately 2.8 gigabytes in aggregate) downloaded from CRH's Aldermere Systems and Pinnacle Health IT environments between January 10 and February 4, 2025 — has been returned to CRH or certified as permanently destroyed in accordance with Exhibit B within ten (10) business days of the execution of the Settlement Agreement (i.e., by no later than April 28, 2025);
(b) Coordination with Pinnacle Forensics LLC ("Pinnacle Forensics"), the independent digital forensics firm engaged to conduct a forensic audit of Verdana's systems. Pinnacle Forensics is led by Dr. Rajiv Anand, Engagement Lead, and shall conduct the forensic audit at Verdana's sole expense, subject to a fee cap of one hundred seventy-five thousand dollars ($175,000) as specified in Section 8.3 of the Settlement Agreement. Aldwyn shall review and evaluate Pinnacle Forensics' forensic audit report and incorporate the findings thereof into Aldwyn's compliance reports;
(c) Confirmation that no copies, derivatives, summaries, analyses, or other reproductions of Project Ridgeline materials, vendor negotiation term sheets, private-label cost models, customer segmentation data, seasonal buying algorithms, or any other CRH Confidential Information (as defined in the Settlement Agreement) remain in the possession, custody, or control of any member of the Rathore Group or Verdana, whether in electronic, physical, or any other format; and
(d) Receipt and review of written certifications of data return and destruction from each member of the Rathore Group and from Verdana (through its General Counsel, Helen Tsoi), as required by Section 4 of Exhibit B to the Settlement Agreement.
3.5.2 Ongoing Verification
During subsequent quarters of the Monitoring Period, Aldwyn shall conduct ongoing verification that no re-acquisition, reconstruction, or use of CRH Confidential Information has occurred. Such ongoing verification may include follow-up interviews with the monitored individuals, review of Verdana's information technology access logs (to the extent made available by Verdana), and coordination with Pinnacle Forensics as necessary.
3.6 Quarterly Reporting
Aldwyn shall prepare and deliver written compliance reports to the following recipients on a quarterly basis:
(a) Cascade Retail Holdings Inc. — Attention: Theresa Yun-Park, General Counsel;
(b) Verdana Commerce Group, Inc. — Attention: Helen Tsoi, General Counsel;
(c) Calderwood & Harkness LLP — Attention: Bernard Crawford, Responsible Partner (counsel to CRH);
(d) Blackhall & Soren LLP — Attention: Gavin Blackhall, Lead Partner (counsel to Verdana); and
(e) Whitfield, Nygaard & Doyle LLP — Attention: Catherine Nygaard, Lead Partner (counsel to the Rathore Group).
The quarterly compliance reports shall be delivered in accordance with the following schedule:
(i) Q1 Compliance Report (covering the period from April 14, 2025 through July 13, 2025): due on or before July 14, 2025;
(ii) Q2 Compliance Report (covering the period from July 14, 2025 through October 13, 2025): due on or before October 14, 2025;
(iii) Q3 Compliance Report (covering the period from October 14, 2025 through January 13, 2026): due on or before January 14, 2026; and
(iv) Q4 / Final Compliance Report (covering the period from January 14, 2026 through April 14, 2026): due on or before April 14, 2026.
Each quarterly compliance report shall include the following components:
(a) A summary of all monitoring activities conducted during the reporting period, including the nature, scope, and methodology of each activity;
(b) Detailed findings regarding compliance or non-compliance with each category of obligation monitored (non-compete, employee non-solicitation, vendor non-solicitation, and data return/destruction);
(c) Identification of any concerns, anomalies, or potential violations observed during the monitoring activities, together with any supporting evidence; and
(d) Recommendations, if any, regarding additional monitoring procedures, remedial actions, or other steps that Aldwyn believes would be appropriate in light of its findings.
The quarterly compliance reports shall be marked "Confidential — Subject to Consent Order" and shall be subject to the confidentiality provisions of Section 7 of this Engagement Letter and the Protective Order entered in the underlying litigation. Quarterly compliance reports shall also be made available to the Court upon request of the Court or as required by the terms of the Consent Order.
3.7 Escalation of Suspected Violations
In the event that Aldwyn identifies, at any point during the Monitoring Period, a suspected violation of the Settlement Agreement or Consent Order, Aldwyn shall promptly (and in no event later than five (5) business days after becoming aware of such suspected violation) notify all parties and their respective counsel in writing. Such notification shall include:
(a) A detailed description of the suspected violation;
(b) The identity of the individual(s) or entity involved;
(c) The evidence and factual basis supporting the finding of a suspected violation; and
(d) Any steps taken or recommended by Aldwyn in connection with the suspected violation.
Following delivery of such notification, the parties shall have ten (10) business days to respond in writing to Aldwyn's findings. During this response period, Aldwyn shall consider any additional information or explanation provided by the parties before reaching a final determination. Upon the expiration of the ten (10)-business-day response period, Aldwyn shall, if it continues to believe that a violation has occurred, include a detailed report of the suspected violation and the parties' responses in its next quarterly compliance report or, if directed by the Court or at Aldwyn's reasonable discretion, file an interim report with the Court.
Notwithstanding the foregoing, in the event that the suspected violation involves ongoing or imminent irreparable harm to any party — including, without limitation, ongoing use of misappropriated CRH trade secrets or confidential information — Aldwyn may provide immediate notification to the Court without awaiting the expiration of the ten (10)-business-day response period.
Nothing in this Section 3.7 shall limit any party's independent right to seek enforcement of the Settlement Agreement or Consent Order directly through the Court, whether or not a suspected violation has been identified by Aldwyn.
SECTION 4: ACCESS AND COOPERATION
4.1 Obligations of Verdana
Verdana Commerce Group, Inc. shall provide Aldwyn with reasonable access to its premises, records, organizational charts, hiring records, vendor engagement records, information technology systems and access logs (to the extent specified in the Monitoring Protocol), and relevant personnel, in each case as reasonably necessary for Aldwyn to perform its monitoring obligations under this Engagement Letter. The specific scope and procedures for Verdana's cooperation are further set forth in the Letter Agreement Among CRH, Verdana, and Aldwyn re: Information-Sharing and Access for Monitor, dated April 14, 2025, which is executed concurrently herewith (the "Access Letter Agreement").
Verdana shall instruct all relevant employees — including, without limitation, each member of the Rathore Group in their respective capacities as Verdana employees — to cooperate fully and in good faith with Aldwyn's monitoring activities. Such cooperation shall include, without limitation, responding truthfully and completely to Aldwyn's inquiries, making themselves available for scheduled quarterly interviews, and providing documents and information reasonably requested by Aldwyn.
Verdana designates Helen Tsoi, General Counsel, Verdana Commerce Group, Inc., as its primary point of contact for all communications with Aldwyn in connection with the monitoring engagement. All requests for access, information, or interviews shall be directed to Ms. Tsoi in the first instance, unless Aldwyn and Verdana mutually agree to an alternative contact.
4.2 Obligations of the Rathore Group
Each member of the Rathore Group shall cooperate with Aldwyn's monitoring activities as an individual obligation arising under Section 7.4 of the Settlement Agreement and Paragraph 4(d) of the Consent Order. Such cooperation shall include, without limitation:
(a) Providing truthful and complete responses to inquiries from Aldwyn, whether submitted in writing or posed during interviews;
(b) Making themselves available for quarterly interviews at mutually convenient times, which interviews may be conducted in person at Verdana's offices or remotely by secure videoconference at Aldwyn's discretion;
(c) Providing written certifications of compliance upon reasonable request by Aldwyn; and
(d) Promptly notifying Aldwyn of any change in their employment status, job responsibilities, or reporting structure at Verdana that may be relevant to the monitoring of the modified restrictive covenants.
The Rathore Group's cooperation obligations are set forth in the Settlement Agreement and enforceable through the Consent Order, and any failure to comply with such obligations may be addressed by application to the Court.
4.3 Obligations of CRH
Cascade Retail Holdings Inc. shall provide Aldwyn with all information reasonably necessary for Aldwyn to conduct its monitoring activities, including, without limitation:
(a) The unredacted list of CRH's top fifty (50) vendors by spend, as set forth in Exhibit C to the Settlement Agreement;
(b) Copies of the relevant restrictive covenant, confidentiality, and non-solicitation provisions of the employment agreements between CRH and each member of the Rathore Group, to the extent not already provided in the Settlement Agreement;
(c) Such additional information as CRH reasonably believes is relevant to compliance monitoring, including any evidence or information that comes to CRH's attention regarding potential violations of the Settlement Agreement or Consent Order; and
(d) Access to CRH personnel, as reasonably necessary, for purposes of verifying hiring activity, vendor relationship status, and related matters.
CRH designates Theresa Yun-Park, General Counsel, Cascade Retail Holdings Inc., as its primary point of contact for all communications with Aldwyn in connection with the monitoring engagement. CRH's outside counsel, Bernard Crawford of Calderwood & Harkness LLP, shall also be available to Aldwyn as needed to facilitate information sharing and address any legal issues arising in connection with the monitoring activities.
4.4 Limitations
Aldwyn's access rights under this Section 4 are subject to the following limitations:
(a) Aldwyn's access rights do not extend to privileged attorney-client communications or attorney work product of any party, and no party shall be required to produce or disclose any document or information that is protected by the attorney-client privilege, the work product doctrine, or any other applicable privilege or immunity;
(b) All information received by Aldwyn in connection with its monitoring activities shall be treated as Confidential Information and used solely for the purposes of the monitoring engagement, in accordance with the confidentiality provisions set forth in Section 7 of this Engagement Letter; and
(c) Aldwyn shall conduct its monitoring activities in a manner that minimizes disruption to the ordinary business operations of CRH and Verdana, and shall provide reasonable advance notice of site visits, interviews, and document requests.
SECTION 5: INDEPENDENCE AND CONFLICTS
5.1 Independence
Aldwyn shall maintain its independence from all parties throughout the Monitoring Period. Aldwyn's independence is a foundational condition of its engagement and is required by Section 7.2(c) of the Settlement Agreement and Paragraph 4(c) of the Consent Order.
During the Monitoring Period and for a period of twelve (12) months following the expiration or earlier termination thereof, Aldwyn shall not accept any engagement, consulting assignment, employment, or other professional relationship with Cascade Retail Holdings Inc., Verdana Commerce Group, Inc., Greystone Capital Partners, LP (including Greystone Capital Fund VII, LP and any other affiliated fund or portfolio company), any member of the Rathore Group, or any affiliate, subsidiary, or successor of any of the foregoing, without the prior written consent of all parties and, if required by the Court, the approval of the Court.
Aldwyn confirms that, as of the date hereof, it has no existing business relationship, financial interest, family relationship, or other connection with any party, any party's counsel, or any affiliate of any party that would impair or reasonably appear to impair its independence in performing the monitoring obligations described herein.
5.2 Conflicts Check
In advance of its engagement, Aldwyn conducted a comprehensive conflicts check against the following parties, their affiliates, and their counsel of record:
(a) Cascade Retail Holdings Inc. and its officers, directors, and affiliates;
(b) Verdana Commerce Group, Inc. and its officers, directors, and affiliates;
(c) Greystone Capital Partners, LP and Greystone Capital Fund VII, LP;
(d) Calderwood & Harkness LLP (counsel to CRH);
(e) Whitfield, Nygaard & Doyle LLP (counsel to the Rathore Group);
(f) Blackhall & Soren LLP (counsel to Verdana);
(g) Priya Rathore;
(h) Derek Linden;
(i) Sonia Kaczmarek;
(j) Amara Osei;
(k) Brent Halvorsen;
(l) Lucia Fernandez-Gill;
(m) Nathan Tsao; and
(n) Kira Johansson.
Based on the results of such conflicts check, Aldwyn hereby certifies that no conflicts of interest exist that would prevent Aldwyn from serving as independent compliance monitor in this matter. Aldwyn further agrees that, in the event any actual or potential conflict of interest arises during the Monitoring Period, it shall immediately disclose such conflict to all parties and their counsel and shall take such steps as are necessary to resolve or mitigate the conflict, including resignation if the conflict cannot be satisfactorily resolved.
SECTION 6: FEES AND EXPENSES
6.1 Total Estimated Fees
The total estimated fees for the twelve (12)-month Monitoring Period are three hundred sixty thousand dollars ($360,000.00), which amount is inclusive of all professional fees, personnel costs, and routine out-of-pocket expenses (including, without limitation, travel within the continental United States, standard office supplies, secure document management, and telecommunications expenses) incurred by Aldwyn in connection with its monitoring activities.
Fees shall be billed quarterly in arrears, in four (4) equal installments of ninety thousand dollars ($90,000.00) each, due and payable within thirty (30) days of delivery of the corresponding quarterly compliance report. Each quarterly invoice shall be accompanied by a reasonably detailed description of the monitoring activities performed during the applicable reporting period.
6.2 Cost Allocation
Pursuant to Section 8.1 of the Settlement Agreement, the costs of the independent compliance monitor shall be allocated between CRH and Verdana as follows:
(a) Verdana Commerce Group, Inc.: sixty percent (60%), equaling two hundred sixteen thousand dollars ($216,000.00) over the full Monitoring Period, or fifty-four thousand dollars ($54,000.00) per quarterly installment; and
(b) Cascade Retail Holdings Inc.: forty percent (40%), equaling one hundred forty-four thousand dollars ($144,000.00) over the full Monitoring Period, or thirty-six thousand dollars ($36,000.00) per quarterly installment.
Aldwyn shall issue separate invoices to CRH and Verdana reflecting their respective shares of each quarterly installment.
Invoices to CRH shall be directed to:
Theresa Yun-Park, General Counsel Cascade Retail Holdings Inc. 2200 Elliott Avenue West, Suite 3400 Seattle, WA 98119
Invoices to Verdana shall be directed to:
Helen Tsoi, General Counsel Verdana Commerce Group, Inc. 400 Christiana Gateway, Suite 700 Wilmington, DE 19801
6.3 Extraordinary Expenses
In the event that Aldwyn incurs or anticipates incurring extraordinary expenses not contemplated in the three hundred sixty thousand dollar ($360,000.00) fee estimate set forth in Section 6.1 — including, by way of example and not limitation, expenses arising from additional investigations necessitated by a suspected violation, engagement of specialized sub-consultants, additional court appearances, or other activities outside the ordinary scope of the Monitoring Protocol — Aldwyn shall obtain prior written approval from both CRH and Verdana before incurring such expenses. Aldwyn shall submit a written estimate of the extraordinary expenses to both parties and shall not proceed until both parties have provided written authorization.
Extraordinary expenses approved pursuant to this Section 6.3 shall be allocated sixty percent (60%) to Verdana and forty percent (40%) to CRH, consistent with the fee allocation set forth in Section 6.2, unless the parties agree in writing to a different allocation or the Court orders a different allocation.
For the avoidance of doubt, the costs and fees of the independent forensic audit of Verdana's information technology systems conducted by Pinnacle Forensics LLC (Dr. Rajiv Anand, Engagement Lead), which are capped at one hundred seventy-five thousand dollars ($175,000.00) pursuant to Section 8.3 of the Settlement Agreement, are separate from and not included in the Monitor's fees set forth in this Section 6 and are borne entirely by Verdana pursuant to the Settlement Agreement.
6.4 Payment Terms
All invoices issued by Aldwyn under this Engagement Letter are due and payable within thirty (30) days of receipt by the responsible party. Any amount not paid when due shall accrue interest at the rate of one percent (1%) per month (or, if lower, the maximum rate permitted by applicable law), computed from the date such payment was due until the date of actual payment.
In the event that either CRH or Verdana fails to pay its respective share of any invoice within the thirty (30)-day payment period, the other party may (but shall not be obligated to) advance such unpaid amount on behalf of the non-paying party. Any amounts so advanced shall be reimbursable to the advancing party by the non-paying party, together with interest at the rate specified above, and the advancing party may seek enforcement of such reimbursement obligation through the Court under the continuing jurisdiction provisions of the Consent Order.
SECTION 7: CONFIDENTIALITY
7.1 Confidential Information
Aldwyn acknowledges that, in connection with its monitoring activities under this Engagement Letter, it will receive and have access to confidential, proprietary, and trade secret information belonging to CRH, Verdana, and, to the extent applicable, members of the Rathore Group. Such information includes, but is not limited to:
(a) The unredacted list of CRH's top fifty (50) vendors by spend (Exhibit C to the Settlement Agreement);
(b) Project Ridgeline materials, vendor negotiation term sheets, private-label cost models, customer segmentation data, and seasonal buying algorithms, to the extent necessary for verification of data return and destruction;
(c) Verdana organizational charts, hiring records, vendor engagement records, and internal business information;
(d) Employment agreements, restrictive covenant provisions, and related documentation;
(e) Pinnacle Forensics' forensic audit report and underlying forensic data;
(f) The terms and conditions of the Settlement Agreement (including all Exhibits thereto), the Consent Order, and this Engagement Letter; and
(g) Any other information designated as confidential by any party in connection with the monitoring engagement.
All such information shall be collectively referred to herein as "Confidential Information." Confidential Information shall also include the contents of Aldwyn's compliance reports, work papers, interview notes, and internal analyses prepared in connection with this engagement, to the extent they contain or reflect any of the foregoing.
7.2 Use Restrictions
Aldwyn shall use Confidential Information solely for the purpose of performing its obligations under this Engagement Letter and shall not use Confidential Information for any other purpose whatsoever, including, without limitation, for the benefit of Aldwyn or any third party.
Aldwyn shall not disclose Confidential Information to any third party except:
(a) In its quarterly compliance reports delivered to the parties and their respective counsel in accordance with Section 3.6;
(b) As required by the Court, by applicable law, or by valid subpoena or other legal process, provided that Aldwyn shall, to the extent legally permitted, provide prompt written notice to the affected party prior to any such disclosure and shall cooperate with such party in seeking a protective order or other appropriate remedy;