CALDERWOOD & HARKNESS LLP Attorneys at Law 1301 K Street NW, Suite 1200 Washington, DC 20005 Telephone: (202) 555-7100 Facsimile: (202) 555-7199 www.calderwoodharkness.com
April 14, 2025
Matter No. 1038-00006 C.A. No. 2025-0198-MTZ (Delaware Court of Chancery)
VIA ELECTRONIC MAIL AND HAND DELIVERY
Cascade Retail Holdings Inc. 2200 Elliott Avenue West, Suite 3400 Seattle, WA 98119
Attn: Theresa Yun-Park, General Counsel
Verdana Commerce Group, Inc. 400 Christiana Gateway, Suite 700 Wilmington, DE 19801
Attn: Helen Tsoi, General Counsel
Aldwyn Compliance Solutions LLC 1700 Market Street, Suite 2800 Philadelphia, PA 19103
Copies to:
Catherine Nygaard, Esq. Whitfield, Nygaard & Doyle LLP 1000 North Market Street, Suite 1500 Wilmington, DE 19801
Gavin Blackhall, Esq. Blackhall & Soren LLP 300 Delaware Avenue, Suite 900 Wilmington, DE 19801
Re: Letter Agreement Among Cascade Retail Holdings Inc., Verdana Commerce Group, Inc., and Aldwyn Compliance Solutions LLC Regarding Information-Sharing, Access to Records, and Cooperation Obligations for Independent Compliance Monitor
Dear Mses. Yun-Park and Tsoi, and Representatives of Aldwyn Compliance Solutions LLC:
This letter agreement (this "Letter Agreement") is entered into as of the date first set forth above by and among Cascade Retail Holdings Inc., a Delaware corporation ("CRH"), Verdana Commerce Group, Inc., a Delaware corporation ("Verdana"), and Aldwyn Compliance Solutions LLC, a Delaware limited liability company (the "Monitor," and together with CRH and Verdana, the "Parties").
RECITALS
WHEREAS, CRH, Priya Rathore, Derek Linden, Sonia Kaczmarek, Amara Osei, Brent Halvorsen, Lucia Fernandez-Gill, Nathan Tsao, Kira Johansson (collectively, the "Individual Defendants"), and Verdana are parties to that certain Standstill and Settlement Agreement of even date herewith (the "Settlement Agreement"), which resolves the claims asserted in C.A. No. 2025-0198-MTZ pending in the Delaware Court of Chancery;
WHEREAS, on or about the date hereof, Vice Chancellor Margaret T. Zhao has entered a Consent Order in C.A. No. 2025-0198-MTZ (the "Consent Order") incorporating the modified restrictive covenant terms set forth in the Settlement Agreement, establishing data-destruction obligations, and retaining jurisdiction of the Court for enforcement purposes throughout the applicable covenant periods;
WHEREAS, Exhibit D to the Settlement Agreement sets forth the Form of Compliance Monitor Engagement Letter, and CRH, Verdana, and the Monitor have entered into the Compliance Monitor Engagement Letter of even date herewith (the "Engagement Letter"), pursuant to which the Monitor has been retained as an independent compliance monitor for the purposes described therein;
WHEREAS, the Settlement Agreement provides for the appointment of Aldwyn Compliance Solutions LLC as independent compliance monitor for a twelve (12)-month term commencing April 14, 2025 and ending April 14, 2026 (the "Monitoring Period"), to verify adherence by the Individual Defendants and Verdana to the modified non-compete, non-solicitation, and data-destruction obligations set forth in the Settlement Agreement and the Consent Order, with total estimated monitor fees of Three Hundred Sixty Thousand Dollars ($360,000), allocated sixty percent (60%) to Verdana (Two Hundred Sixteen Thousand Dollars ($216,000)) and forty percent (40%) to CRH (One Hundred Forty-Four Thousand Dollars ($144,000));
WHEREAS, the Parties have also agreed upon the Compliance Monitoring Protocol (Detailed Procedures Annex dated April 11, 2025) (the "Monitoring Protocol"), which sets forth the quarterly reporting schedule, document review standards, employee interview protocols, and escalation procedures applicable during the Monitoring Period; and
WHEREAS, the Parties now desire to establish the detailed framework for information sharing, access to records, and cooperation obligations of CRH and Verdana during the Monitoring Period in support of the Monitor's independent review and reporting functions.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, the Parties agree as follows:
Section 1: Definitions
As used in this Letter Agreement, the following terms shall have the meanings set forth below. Capitalized terms used but not defined in this Letter Agreement shall have the meanings ascribed to them in the Settlement Agreement, the Consent Order, or the Engagement Letter, as applicable.
"Confidential Monitor Information" means all information received or generated by the Monitor in connection with the performance of its monitoring duties under the Engagement Letter, this Letter Agreement, and the Monitoring Protocol, including without limitation all Quarterly Reports, draft reports, interview notes, memoranda, correspondence, work papers, analytical summaries, forensic audit findings communicated to the Monitor by Pinnacle Forensics LLC, and any other documentation prepared or compiled by the Monitor or its personnel in the course of the Monitoring Period.
"Consent Order" means the Consent Order entered by Vice Chancellor Margaret T. Zhao in C.A. No. 2025-0198-MTZ on or about the date hereof, which incorporates the Modified Covenants, establishes the Data Destruction Obligations, and retains Court jurisdiction for enforcement purposes throughout the applicable restrictive covenant periods and the Monitoring Period.
"CRH Confidential Information" means proprietary and confidential information of CRH, including but not limited to: (i) all materials, analyses, memoranda, presentations, and work product relating to the strategic initiative internally designated as "Project Ridgeline"; (ii) vendor negotiation playbooks and related pricing strategies; (iii) seasonal buying algorithms and demand-forecasting models; (iv) private-label sourcing strategies, cost structures, and supplier agreements; (v) category expansion roadmaps, including pipeline product development plans; (vi) customer segmentation data, including loyalty program analytics and customer lifetime value modeling; and (vii) any other information designated by CRH as confidential and provided to the Monitor in connection with the Monitor's performance of its duties hereunder. For the avoidance of doubt, CRH Confidential Information includes all such information as referenced in the Settlement Agreement and the Consent Order, regardless of the form in which it is provided to the Monitor.
"Data Destruction Obligations" means the obligations of Verdana and the Individual Defendants under Exhibit B to the Settlement Agreement (the "Data Return and Destruction Protocol") regarding the return to CRH, or the certified destruction, of all exfiltrated CRH data identified by the Parties as comprising fourteen thousand three hundred twenty-seven (14,327) files totaling approximately 2.8 gigabytes of data, as well as the independent forensic audit to be performed by Pinnacle Forensics LLC (under the direction of Dr. Rajiv Anand) at Verdana's expense (subject to a fee cap of One Hundred Seventy-Five Thousand Dollars ($175,000)), all as more fully described in Exhibit B to the Settlement Agreement.
"Individual Defendants" means Priya Rathore, Derek Linden, Sonia Kaczmarek, Amara Osei, Brent Halvorsen, Lucia Fernandez-Gill, Nathan Tsao, and Kira Johansson.
"Modified Covenants" means the modified restrictive covenant terms set forth in Exhibit A to the Settlement Agreement and incorporated into the Consent Order, consisting of the following:
(a) A twelve (12)-month non-competition covenant applicable to Priya Rathore, running through February 6, 2026, limited in scope to the product categories of home goods, seasonal décor, and private-label apparel;
(b) Nine (9)-month non-competition covenants applicable to Derek Linden, Sonia Kaczmarek, Amara Osei, Brent Halvorsen, Lucia Fernandez-Gill, Nathan Tsao, and Kira Johansson, running through November 6, 2025, limited in scope to the same three product categories identified in clause (a);
(c) Eighteen (18)-month employee non-solicitation covenants applicable to all eight Individual Defendants, running through August 6, 2026, restricting the solicitation, recruitment, or inducement of any current CRH employee to terminate his or her employment with CRH; and
(d) Twelve (12)-month vendor non-solicitation covenants applicable to all eight Individual Defendants, running through February 6, 2026, restricting the solicitation or interference with CRH's business relationships with CRH's top fifty (50) vendors as identified in Exhibit C to the Settlement Agreement.
"Monitoring Period" means the twelve (12)-month period commencing on April 14, 2025 and ending on April 14, 2026, during which the Monitor shall perform the compliance monitoring functions described in the Engagement Letter, this Letter Agreement, and the Monitoring Protocol.
"Monitoring Protocol" means the Compliance Monitoring Protocol (Detailed Procedures Annex dated April 11, 2025), as agreed to by the Parties, which sets forth the procedures for quarterly reporting, document review, employee interviews, forensic audit coordination, and escalation of suspected violations during the Monitoring Period.
"Quarterly Reports" means the written compliance reports to be prepared and delivered by the Monitor on a quarterly basis in accordance with the schedule set forth in Section 3 of this Letter Agreement and the corresponding provisions of the Monitoring Protocol.
"Settlement Agreement" means the Standstill and Settlement Agreement of even date herewith among CRH, the Individual Defendants, and Verdana, as it may be amended from time to time in accordance with its terms.
Except as otherwise provided herein, all terms defined in the Settlement Agreement and used in this Letter Agreement without independent definition shall have the same meanings when used herein. In the event of any conflict between the definitions set forth in this Letter Agreement and those set forth in the Settlement Agreement or the Engagement Letter, the definitions in the Settlement Agreement shall control.
Section 2: Scope of Monitor Access and Information-Sharing Rights
2.1 Verdana's Obligations
Verdana acknowledges and agrees that, during the Monitoring Period, it shall provide the Monitor with reasonable access to the following categories of information and records, subject to the confidentiality protections set forth in Section 6 and the procedural requirements set forth in Sections 4 and 5:
(a) Personnel Records and Organizational Charts. Verdana shall provide the Monitor with current and updated personnel records and organizational charts reflecting the roles, responsibilities, reporting lines, and departmental assignments of each Individual Defendant employed by Verdana at any time during the Monitoring Period. Such records shall include, without limitation, offer letters, position descriptions, reporting structure diagrams, and any amendments to the terms of employment of the Individual Defendants during the Monitoring Period.
(b) Product Category Assignments. Verdana shall provide the Monitor with records sufficient to identify the product category assignments for each Individual Defendant, with particular specificity as to whether any Individual Defendant has been assigned to, or has participated in any work relating to, the home goods, seasonal décor, or private-label apparel categories (the "Restricted Categories") during any period in which such Individual Defendant's non-competition covenant under the Modified Covenants remains in effect.
(c) Vendor Contact Records. Verdana shall provide the Monitor with communications logs, meeting records (including calendar entries, agendas, and minutes), and any other documentation reflecting any contact, communication, or interaction between any Individual Defendant and any of CRH's top fifty (50) vendors identified in Exhibit C to the Settlement Agreement. For the avoidance of doubt, such records include email correspondence, instant messages, videoconference logs, telephone records, and records of in-person meetings, to the extent maintained by Verdana in the ordinary course of business.
(d) Recruiting and Solicitation Records. Verdana shall provide the Monitor with records of any recruiting, solicitation, or hiring activities directed at current CRH employees by any Individual Defendant, or by any Verdana personnel under the supervision or direction of any Individual Defendant, during the applicable non-solicitation period under the Modified Covenants. Such records include, without limitation, job postings targeting CRH employees, communications with recruiting firms referencing CRH personnel, and internal approvals or requisitions for positions ultimately filled by former CRH employees.
In addition to the foregoing document and record access obligations, Verdana shall cooperate fully with the independent forensic audit to be conducted by Pinnacle Forensics LLC (under the direction of Dr. Rajiv Anand) to verify the completion and sufficiency of data destruction in accordance with the Data Destruction Obligations set forth in Exhibit B to the Settlement Agreement. Such cooperation shall include, without limitation, providing Pinnacle Forensics LLC and the Monitor with access to Verdana's IT systems, servers (including on-premises and cloud-hosted environments), cloud storage platforms, email archives, and all devices (including laptops, desktops, tablets, and mobile devices) used by or accessible to any Individual Defendant at any time during the Individual Defendant's employment with Verdana. The cost of the forensic audit conducted by Pinnacle Forensics LLC shall be borne entirely by Verdana, subject to the fee cap of One Hundred Seventy-Five Thousand Dollars ($175,000) established in the Settlement Agreement, and shall not be included in or offset against the Monitor fee allocation described in Section 8 hereof.
Verdana shall make available for interview by the Monitor, upon reasonable notice of not less than ten (10) business days, the following persons:
(i) Helen Tsoi, General Counsel of Verdana;
(ii) Warren Dietrich, Chief Executive Officer of Verdana;
(iii) Any direct supervisor of any Individual Defendant at Verdana during the Monitoring Period; and
(iv) Any information technology or human resources personnel designated by Verdana as points of contact for compliance matters relating to the Modified Covenants and the Data Destruction Obligations.
Verdana shall designate a single point of contact for all communications between the Monitor and Verdana. Unless Verdana notifies the Monitor and CRH in writing to the contrary, such designated point of contact shall be Helen Tsoi, General Counsel, or her designee as communicated in writing to the other Parties. The designated point of contact shall be responsible for coordinating all document productions, interview scheduling, and general communications on behalf of Verdana in connection with the Monitor's duties.
2.2 CRH's Obligations
CRH acknowledges and agrees that, during the Monitoring Period, it shall provide the Monitor with reasonable access to the following categories of information and records, subject to the confidentiality protections set forth in Section 6 and the procedural requirements set forth in Sections 4 and 5:
(a) Employment Agreements. CRH shall provide the Monitor with complete and unredacted copies of the original employment agreements (including all amendments, addenda, and schedules thereto) of each of the eight Individual Defendants, including without limitation Priya Rathore's Amended and Restated Employment Agreement dated March 15, 2021 and the restrictive covenant agreements appended thereto, as well as the standard form non-compete and non-solicitation agreements executed by the other seven Individual Defendants during their respective tenures at CRH.
(b) Top 50 Vendor List. CRH shall provide the Monitor with a complete and unredacted copy of Exhibit C to the Settlement Agreement, identifying CRH's top fifty (50) vendors by name, primary contact, and applicable product category. CRH shall promptly notify the Monitor of any material changes to the composition of the top 50 vendor list during the Monitoring Period.
(c) Suspected Violation Reports. CRH shall provide the Monitor with records of any suspected violations of, or concerns regarding compliance with, the Modified Covenants or the Data Destruction Obligations that come to CRH's attention during the Monitoring Period. CRH shall use reasonable efforts to bring any such suspected violations or concerns to the Monitor's attention within ten (10) business days of CRH becoming aware of such information.
(d) Merchandising Division Employee Roster. CRH shall provide the Monitor with a current employee roster for CRH's merchandising division, updated quarterly, to facilitate the Monitor's assessment of compliance with the employee non-solicitation provisions of the Modified Covenants. Such roster shall include employee names, titles, dates of hire, and department or team assignments within the merchandising division.
CRH shall make available for interview by the Monitor, upon reasonable notice of not less than ten (10) business days, the following persons:
(i) Theresa Yun-Park, General Counsel of CRH;
(ii) Roland Ashby, Chief People Officer of CRH;
(iii) Martin Cho, Vice President, Merchandising, and Interim Senior Vice President, of CRH; and
(iv) Any other CRH personnel whose testimony or information the Monitor reasonably determines to be relevant to the Monitor's compliance review, subject to CRH's right to raise objections on grounds of relevance or proportionality as set forth in Section 4.2.
CRH shall designate a single point of contact for all communications between the Monitor and CRH. Unless CRH notifies the Monitor and Verdana in writing to the contrary, such designated point of contact shall be Theresa Yun-Park, General Counsel, or her designee as communicated in writing to the other Parties. The designated point of contact shall be responsible for coordinating all document productions, interview scheduling, and general communications on behalf of CRH in connection with the Monitor's duties.
2.3 Individual Defendants' Cooperation
The Individual Defendants' obligations to cooperate with the Monitor are established in the Settlement Agreement, specifically Section 7.4 thereof, and are incorporated into and enforceable under the Consent Order. Nothing in this Letter Agreement is intended to diminish or limit the cooperation obligations imposed on the Individual Defendants by the Settlement Agreement or the Consent Order.
Verdana shall use commercially reasonable efforts to ensure that each Individual Defendant employed by Verdana cooperates in good faith with the Monitor's interview requests and document requests during the Monitoring Period. Such commercially reasonable efforts shall include, without limitation, reminding each Individual Defendant of his or her cooperation obligations under the Settlement Agreement and providing reasonable work-time accommodations for interviews and document collection.
Each Individual Defendant shall have the right, at his or her own election and expense, to have personal counsel from Whitfield, Nygaard & Doyle LLP (Catherine Nygaard) or other counsel of his or her choosing present during any interview conducted by the Monitor. The presence of personal counsel shall not serve as a basis for delaying or rescheduling an interview that has been properly noticed in accordance with Section 5.1 of this Letter Agreement.
Section 3: Quarterly Reporting Procedures
3.1 Report Schedule
The Monitor shall prepare and deliver Quarterly Reports in accordance with the following schedule:
(a) First Quarterly Report: Due no later than July 14, 2025, covering the period from April 14, 2025 through July 13, 2025.
(b) Second Quarterly Report: Due no later than October 14, 2025, covering the period from July 14, 2025 through October 13, 2025. The Parties acknowledge that the nine (9)-month non-competition covenants applicable to Derek Linden, Sonia Kaczmarek, Amara Osei, Brent Halvorsen, Lucia Fernandez-Gill, Nathan Tsao, and Kira Johansson expire on November 6, 2025, which falls after the close of the second reporting period. Accordingly, the Monitor may, in its discretion, issue a supplemental update to the Second Quarterly Report on or after November 6, 2025 to address compliance matters relating to the expiration of those covenants.
(c) Third Quarterly Report: Due no later than January 14, 2026, covering the period from October 14, 2025 through January 13, 2026. The Third Quarterly Report shall address, among other matters, the approaching expiration of Priya Rathore's twelve (12)-month non-competition covenant (February 6, 2026) and the twelve (12)-month vendor non-solicitation covenants applicable to all eight Individual Defendants (also expiring February 6, 2026), and shall include any assessment the Monitor deems appropriate regarding compliance in the final weeks before such expirations.
(d) Final Quarterly Report and Closing Certificate: Due no later than April 14, 2026, covering the period from January 14, 2026 through April 14, 2026. The Final Quarterly Report shall include a closing certificate summarizing the Monitor's overall findings and conclusions with respect to compliance during the entire Monitoring Period, including a statement as to whether, in the Monitor's professional judgment, any material violations of the Modified Covenants or Data Destruction Obligations occurred during the Monitoring Period.
3.2 Report Distribution
Each Quarterly Report shall be delivered simultaneously by electronic transmission (and, where requested, by hard copy via overnight courier) to each of the following recipients:
(i) Theresa Yun-Park, General Counsel, Cascade Retail Holdings Inc.;
(ii) Helen Tsoi, General Counsel, Verdana Commerce Group, Inc.;
(iii) Bernard Crawford, Partner, Calderwood & Harkness LLP, counsel to CRH;
(iv) Catherine Nygaard, Partner, Whitfield, Nygaard & Doyle LLP, counsel to the Individual Defendants; and
(v) Gavin Blackhall, Partner, Blackhall & Soren LLP, counsel to Verdana.
All Quarterly Reports (and any supplemental or interim reports) shall bear the following legend on each page: "CONFIDENTIAL — Subject to Consent Order, C.A. No. 2025-0198-MTZ." Distribution of Quarterly Reports to any person or entity not listed above shall require the prior written consent of both CRH and Verdana, except as may be required by applicable law, court order, or as necessary for enforcement proceedings under the Consent Order.
3.3 Report Content
Each Quarterly Report shall address, at a minimum, the following subjects:
(a) Compliance with Modified Covenants. A detailed assessment of compliance by each Individual Defendant (and, where applicable, by Verdana) with each component of the Modified Covenants, including the non-competition, employee non-solicitation, and vendor non-solicitation provisions, during the applicable reporting period. Where a particular covenant has expired during the reporting period, the report shall address compliance through the date of expiration.
(b) Status of Data Destruction Verification. A report on the status of the forensic audit being conducted by Pinnacle Forensics LLC and the Monitor's assessment of compliance with the Data Destruction Obligations set forth in Exhibit B to the Settlement Agreement. This topic is expected to be of primary significance in the First Quarterly Report (July 14, 2025), but shall be addressed in subsequent reports to the extent that issues remain open or new information comes to light.
(c) Areas of Concern or Potential Non-Compliance. A description of any areas of concern, potential non-compliance, or ambiguity identified by the Monitor during the reporting period, including any matters that required or may require escalation under Section 7 of this Letter Agreement.
(d) Summary of Interviews and Document Review. A summary of all interviews conducted by the Monitor during the reporting period (identifying the interviewees by name and role), the categories of documents reviewed, and any significant findings arising from such interviews and document review.
(e) Recommendations. Any recommendations the Monitor deems appropriate for enhanced compliance measures, additional monitoring steps, or other actions by CRH, Verdana, or the Individual Defendants to improve adherence to the Modified Covenants and Data Destruction Obligations during the remainder of the Monitoring Period.
Section 4: Document Request and Production Procedures
4.1 Request Protocol
The Monitor shall submit all document requests to the designated points of contact at CRH and Verdana (as identified pursuant to Sections 2.1 and 2.2, respectively) in writing, whether by email or formal correspondence. Each document request shall be reasonably specific in its description of the categories of documents sought and shall be tailored to the scope of the Modified Covenants and the Data Destruction Obligations. The Monitor shall not issue document requests that are unreasonably broad, unduly burdensome, or outside the scope of the compliance monitoring functions described in the Engagement Letter, this Letter Agreement, and the Monitoring Protocol.
The responding party (whether CRH or Verdana, as applicable) shall produce all responsive, non-privileged documents within fifteen (15) business days of receipt of a written document request from the Monitor. In the event that a responding party requires additional time to complete a production, it shall provide a written explanation of the reasons for any delay, along with a good-faith estimate of the date by which production will be completed, to the Monitor and the other party within the initial fifteen (15) business day period.
4.2 Objections. Either CRH or Verdana may object to a document request issued by the Monitor on grounds of relevance, proportionality, undue burden, or privilege. Any such objection shall be communicated to the Monitor and the other party in writing within ten (10) business days of receipt of the document request giving rise to the objection. The written objection shall describe with reasonable specificity the basis for the objection and the categories of documents to which the objection applies.
Upon receipt of an objection, the Monitor shall confer in good faith with the objecting party (and, where appropriate, with the other party) to attempt to resolve the objection informally. The Parties agree that informal resolution of document request disputes is strongly preferred and that any dispute should, where possible, be resolved through reasonable compromise regarding the scope or form of production.
If an objection cannot be resolved informally within ten (10) business days following the Monitor's receipt of the objection, either CRH or Verdana may submit the dispute to Vice Chancellor Margaret T. Zhao for resolution pursuant to the retained jurisdiction provisions of the Consent Order. The Monitor may, at the request of either party or on its own initiative, provide a written submission to the Court setting forth the Monitor's position regarding the relevance and proportionality of the disputed request.
4.3 Form of Production
Documents shall be produced in their native electronic format where available. Where native electronic format is not available or is impracticable (e.g., documents maintained only in hardcopy form), documents shall be produced as searchable PDF copies. Metadata shall be preserved in native format productions to the extent reasonably practicable. All document productions made pursuant to this Letter Agreement shall be subject to the confidentiality protections set forth in Section 6 hereof.
The Monitor shall maintain a log of all document requests issued and all productions received during the Monitoring Period, which log shall be available for review by the designated points of contact at CRH and Verdana upon request.
Section 5: Interview Procedures
5.1 Scheduling. The Monitor shall provide not less than ten (10) business days' written notice to the designated point of contact at the relevant party (CRH or Verdana, as applicable) prior to conducting any interview. The notice shall identify the proposed interviewee, the general subject matter of the interview, and the proposed date, time, and location (or videoconference platform) for the interview.
Interviews shall be conducted at mutually agreed locations or, at the election of the interviewee's employer, via secure videoconference. The Parties agree that videoconference interviews shall be conducted using an enterprise-grade, encrypted platform mutually agreed upon by the Monitor and the relevant party. The Monitor shall use reasonable efforts to accommodate the scheduling preferences and business needs of the interviewees and their employers.
Each interview shall not exceed two (2) hours per interviewee per quarterly reporting cycle, unless the interviewee's employer (CRH or Verdana, as applicable) consents in writing to a longer interview. The Monitor may request follow-up interviews in subsequent quarterly cycles, subject to the same ten (10) business day notice requirement and two (2)-hour time limitation.
5.2 Scope of Interviews
All interviews conducted by the Monitor shall be limited in scope to matters within the scope of the Modified Covenants and the Data Destruction Obligations. The Monitor shall not inquire into matters unrelated to compliance with the Settlement Agreement and the Consent Order.
Interviewees may decline to answer questions that call for information protected by the attorney-client privilege, the work product doctrine, or any other applicable privilege or protection. In the event that an interviewee asserts a privilege in response to a question, the Monitor shall make a notation on the privilege log to be maintained by the Monitor, identifying the question posed, the privilege asserted, and the identity of the interviewee. The privilege log shall be made available to the designated points of contact at CRH and Verdana upon request, subject to appropriate redactions to protect the privileged communications of the other party.
5.3 Attendance. The following attendance protocols shall govern all interviews conducted by the Monitor during the Monitoring Period:
(a) CRH Interviews. When the Monitor conducts an interview of a CRH employee or officer, CRH in-house counsel (including Theresa Yun-Park or her designee) or a representative of Calderwood & Harkness LLP may attend the interview.
(b) Verdana Interviews. When the Monitor conducts an interview of a Verdana employee or officer (other than an Individual Defendant interviewed in his or her capacity as an Individual Defendant), Verdana in-house counsel (including Helen Tsoi or her designee) or a representative of Blackhall & Soren LLP may attend the interview.
(c) Individual Defendant Interviews. When the Monitor conducts an interview of an Individual Defendant, a representative of Whitfield, Nygaard & Doyle LLP (including Catherine Nygaard) may attend the interview at the Individual Defendant's election and expense. Verdana in-house counsel or a representative of Blackhall & Soren LLP may also attend, to the extent the Individual Defendant is being interviewed in his or her capacity as a Verdana employee, unless the Individual Defendant objects to such attendance.
No recording of interviews shall be made without the prior written consent of the interviewee and the interviewee's counsel (if any). The Monitor may take contemporaneous notes during interviews, which notes shall constitute Confidential Monitor Information subject to the protections of Section 6.
Section 6: Confidentiality and Use Restrictions
6.1 Confidentiality of Monitor Information
All Confidential Monitor Information shall be treated as strictly confidential by all Parties and their respective counsel. No Party shall disclose Confidential Monitor Information to any third party, except: (a) as required by applicable law, regulation, or valid court order; (b) as necessary for enforcement proceedings under the Consent Order in C.A. No. 2025-0198-MTZ; (c) as expressly permitted by the Settlement Agreement or the Consent Order; or (d) with the prior written consent of all Parties.
The Monitor, CRH, and Verdana shall each execute mutual confidentiality undertakings consistent with and supplementary to the confidentiality provisions of the Settlement Agreement. Such undertakings shall be executed and exchanged within five (5) business days of the date of this Letter Agreement. Each Party shall ensure that its officers, directors, employees, and outside counsel who have access to Confidential Monitor Information are made aware of and agree to be bound by the confidentiality obligations set forth herein.
6.2 CRH Confidential Information
CRH Confidential Information provided to the Monitor in connection with the Monitor's duties under this Letter Agreement — including, without limitation, Project Ridgeline materials, the unredacted top 50 vendor list (Exhibit C), vendor negotiation playbooks, seasonal buying algorithms, private-label sourcing strategies, category expansion roadmaps, customer segmentation data, and any other proprietary information of CRH — shall be used by the Monitor solely and exclusively for the purposes of performing the monitoring and compliance verification duties described in the Engagement Letter, this Letter Agreement, and the Monitoring Protocol. Under no circumstances shall the Monitor disclose, transmit, or otherwise make available any CRH Confidential Information to Verdana, any Individual Defendant, or any other third party, except as expressly required by court order or as necessary for the preparation and distribution of Quarterly Reports (in which case the Monitor shall redact or summarize CRH Confidential Information to the maximum extent consistent with the Monitor's reporting obligations).
The Monitor shall maintain all CRH Confidential Information in secure, access-controlled systems with appropriate technical and administrative safeguards, including, at a minimum, encryption at rest and in transit, multi-factor authentication, and role-based access controls limiting access to authorized Monitor personnel. At the conclusion of the Monitoring Period (or upon earlier termination of this Letter Agreement), the Monitor shall, at CRH's election, return all CRH Confidential Information to CRH or destroy such information (including all copies and derivative materials) and provide CRH with a written certification of destruction.
6.3 Verdana Confidential Information
Any confidential business information of Verdana provided to the Monitor in connection with the Monitor's duties — including, without limitation, organizational charts, personnel records, product category strategies, vendor relationships, and internal communications — shall be used by the Monitor solely and exclusively for the purposes of performing the monitoring and compliance verification duties described in the Engagement Letter, this Letter Agreement, and the Monitoring Protocol. Under no circumstances shall the Monitor disclose, transmit, or otherwise make available any Verdana confidential information to CRH or any other third party, except as expressly required by court order or as necessary for the preparation and distribution of Quarterly Reports (in which case the Monitor shall redact or summarize Verdana confidential information to the maximum extent consistent with the Monitor's reporting obligations).
The Monitor shall maintain all Verdana confidential information in secure, access-controlled systems with appropriate technical and administrative safeguards consistent with those described in Section 6.2 above. At the conclusion of the Monitoring Period (or upon earlier termination of this Letter Agreement), the Monitor shall, at Verdana's election, return all Verdana confidential information to Verdana or destroy such information (including all copies and derivative materials) and provide Verdana with a written certification of destruction.
6.4 Information Barriers
The Monitor shall implement and maintain appropriate information barriers (commonly referred to as "ethical walls" or "Chinese walls") to prevent the cross-disclosure of one party's confidential information to the other party. Such information barriers shall include, at a minimum: (i) physical or logical separation of CRH Confidential Information and Verdana confidential information in the Monitor's systems; (ii) designation of specific Monitor personnel with access to CRH Confidential Information and separate personnel with access to Verdana confidential information, with no single individual having concurrent access to both categories except to the extent necessary for the preparation of Quarterly Reports under the supervision of senior Monitor personnel; and (iii) written protocols governing the handling, storage, and destruction of confidential information received from each party.
The Monitor shall describe its information barrier procedures in a written memorandum to be delivered to both CRH and Verdana (and their respective counsel) within ten (10) business days of the commencement of the Monitoring Period. CRH and Verdana shall each have five (5) business days following receipt of such memorandum to raise any objections or request modifications to the Monitor's proposed procedures. The Monitor shall make good-faith efforts to accommodate reasonable objection or modification requests.
Section 7: Escalation and Suspected Violations
7.1 Notification of Suspected Violations
If, during the course of performing its monitoring duties, the Monitor identifies facts, circumstances, documentation, or other information suggesting a potential violation of the Modified Covenants or the Data Destruction Obligations by any Individual Defendant, Verdana, or any other person or entity subject to the terms of the Settlement Agreement or the Consent Order, the Monitor shall promptly — and in no event later than five (5) business days following the Monitor's identification of such potential violation — provide written notice thereof to the designated points of contact at both CRH and Verdana, as well as to counsel of record for all parties: Bernard Crawford of Calderwood & Harkness LLP (counsel to CRH), Catherine Nygaard of Whitfield, Nygaard & Doyle LLP (counsel to the Individual Defendants), and Gavin Blackhall of Blackhall & Soren LLP (counsel to Verdana).
Such notice shall describe, with reasonable specificity, the facts and circumstances giving rise to the Monitor's concern, the specific provision(s) of the Modified Covenants or Data Destruction Obligations that may have been violated, and the identity of the Individual Defendant(s) or other person(s) involved.
7.2 Investigation of Suspected Violations
Upon receipt of a notice of suspected violation from the Monitor, the party against whom the suspected violation is alleged (whether CRH, Verdana, or an Individual Defendant through Verdana as his or her employer) shall have fifteen (15) business days to provide the Monitor with a written response and any supporting documentation. The written response shall address the facts and circumstances identified in the Monitor's notice and shall set forth any explanation, justification, or mitigating factors that the responding party believes are relevant.
The Monitor shall evaluate the response and supporting documentation in good faith, considering the totality of the available evidence. If, following such evaluation, the Monitor determines that the concern has been adequately resolved, the Monitor shall so notify all Parties in writing and shall include a summary of the matter and its resolution in the next Quarterly Report.
If the Monitor determines that the concern has not been adequately resolved following receipt of the responding party's written response, the Monitor shall include a detailed description and analysis of the suspected violation in the next Quarterly Report. In circumstances where the Monitor determines that the suspected violation is of sufficient severity or urgency that delay until the next Quarterly Report would be inappropriate, the Monitor may issue a special interim report to all recipients listed in Section 3.2, setting forth the Monitor's findings and analysis in detail.
7.3 Court Referral
If a violation of the Modified Covenants or the Data Destruction Obligations is confirmed by the Monitor, or if a party fails to cooperate with the Monitor's investigation of a suspected violation (including failure to provide a timely written response under Section 7.2 or failure to produce responsive documents under Section 4.1), either CRH or Verdana may seek appropriate relief from Vice Chancellor Margaret T. Zhao under the retained jurisdiction provisions of the Consent Order. The Monitor's findings, Quarterly Reports, interim reports, and supporting documentation may be submitted to the Court as evidence in any enforcement proceeding arising under the Consent Order, subject to such evidentiary rulings as the Court may make.
Nothing in this Section 7 shall be construed to limit either CRH's or Verdana's right to seek relief from the Court on any basis available under the Consent Order or applicable law, regardless of whether the Monitor has completed its investigation or issued a report regarding the matter at issue.
Section 8: Costs and Expenses
8.1 Monitor Fees
The total estimated fees for the Monitor's services during the twelve (12)-month Monitoring Period are Three Hundred Sixty Thousand Dollars ($360,000). Such fees shall be allocated between the Parties as follows:
(a) Verdana share (60%): Two Hundred Sixteen Thousand Dollars ($216,000).
(b) CRH share (40%): One Hundred Forty-Four Thousand Dollars ($144,000).
Monitor fees shall be paid quarterly in advance, in four (4) equal installments of Ninety Thousand Dollars ($90,000) each, with Verdana responsible for Fifty-Four Thousand Dollars ($54,000) per quarter and CRH responsible for Thirty-Six Thousand Dollars ($36,000) per quarter. Quarterly fee installments shall be due and payable as follows: (i) the first installment on or before April 21, 2025; (ii) the second installment on or before July 14, 2025; (iii) the third installment on or before October 14, 2025; and (iv) the fourth installment on or before January 14, 2026. Payments shall be made by wire transfer to the account designated by the Monitor in the Engagement Letter.
8.2 Additional Costs
Any reasonable out-of-pocket expenses incurred by the Monitor in connection with the performance of its duties under this Letter Agreement and the Engagement Letter — including, without limitation, travel expenses, document hosting and review platform costs, technology expenses, and third-party vendor fees (other than the Pinnacle Forensics LLC forensic audit fees) — shall be allocated between the Parties in the same sixty percent (60%) / forty percent (40%) ratio (Verdana / CRH). Such expenses shall be invoiced by the Monitor on a monthly basis, with payment due within thirty (30) days of receipt of invoice. The Monitor shall provide reasonable documentation supporting all invoiced expenses.
For the avoidance of doubt, the independent forensic audit to be conducted by Pinnacle Forensics LLC (Dr. Rajiv Anand) is a separate cost to be borne entirely by Verdana, subject to the fee cap of One Hundred Seventy-Five Thousand Dollars ($175,000) established in the Settlement Agreement, and is not included in the Monitor fee allocation described in Section 8.1 or the expense allocation described in this Section 8.2.
8.3 Dispute Regarding Costs
Any dispute arising between CRH and Verdana regarding the Monitor's fees, the reasonableness of out-of-pocket expenses, or the allocation of costs under this Section 8 shall be resolved in the first instance by good-faith negotiation between the designated points of contact at CRH and Verdana. If the Parties are unable to resolve such dispute within fifteen (15) business days of written notice of the dispute, either Party may submit the dispute to Vice Chancellor Margaret T. Zhao for resolution under the retained jurisdiction provisions of the Consent Order.
Section 9: Independence of the Monitor
Aldwyn Compliance Solutions LLC hereby confirms and represents that it is independent of, and has no financial interest in or material business relationship with, any of the following: CRH; Verdana; Greystone Capital Partners LP (a principal investor in Verdana); Calderwood & Harkness LLP; Whitfield, Nygaard & Doyle LLP; Blackhall & Soren LLP; or any of the Individual Defendants. The Monitor has disclosed to the Parties all relationships, engagements, and financial interests that could reasonably be perceived as bearing on its independence, and the Parties have confirmed their satisfaction that no disqualifying conflict of interest exists.
During the Monitoring Period, the Monitor shall not accept any other engagement, retainer, consulting arrangement, or advisory role from CRH, Verdana, Greystone Capital Partners LP, or any affiliate of the foregoing, without the prior written consent of all Parties. In the event that a potential engagement conflict arises during the Monitoring Period, the Monitor shall promptly disclose the potential conflict to all Parties and shall refrain from accepting the engagement unless and until written consent is obtained from both CRH and Verdana.
The Parties acknowledge and agree that the Monitor's role under this Letter Agreement and the Engagement Letter is limited to verifying compliance with the Modified Covenants and the Data Destruction Obligations and reporting its findings to the Parties and their counsel. The Monitor shall not provide legal advice to any Party, shall not act as an advocate for any Party, and shall not make binding determinations as to whether a breach of the Modified Covenants or the Data Destruction Obligations has occurred. The Monitor's findings and conclusions are advisory in nature and are subject to adjudication by the Court in any enforcement proceeding under the Consent Order.
Section 10: Term and Termination
10.1 Term. This Letter Agreement shall be effective as of the date of execution hereof (April 14, 2025) and shall remain in full force and effect through the conclusion of the Monitoring Period (April 14, 2026), unless earlier terminated in accordance with Section 10.2 or extended by mutual written agreement of the Parties or by order of the Court.
10.2 Early Termination
This Letter Agreement may be terminated prior to the expiration of the Monitoring Period only under one or more of the following circumstances:
(a) By mutual written agreement of CRH and Verdana, with written notice to the Monitor, counsel for the Individual Defendants, and the Court;
(b) By order of Vice Chancellor Margaret T. Zhao, upon motion of any Party or upon the Court's own initiative; or
(c) Upon entry of the Stipulation for Dismissal with Prejudice contemplated by the Settlement Agreement, if filed prior to the expiration of the Monitoring Period, provided that such stipulation expressly provides for the termination of the Monitor's engagement.
In the event of early termination, the Monitor shall deliver a final report to all recipients listed in Section 3.2 within fifteen (15) business days of the effective date of termination, summarizing the Monitor's findings through the date of termination and the status of all open matters.
10.3 Survival. Notwithstanding the expiration or earlier termination of this Letter Agreement, the following provisions shall survive and remain in full force and effect: (a) Section 6 (Confidentiality and Use Restrictions), including all obligations regarding the return or destruction of confidential information; and (b) Section 9 (Independence of the Monitor), including all representations and restrictions regarding conflicts of interest.
Section 11: Miscellaneous Provisions
11.1 Governing Law
This Letter Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without regard to principles of conflicts of law that would result in the application of the laws of any other jurisdiction. The Parties acknowledge that Delaware law governs the Settlement Agreement, the Consent Order, and the underlying employment agreements of the Individual Defendants, and the Parties intend that this Letter Agreement be interpreted consistently with those instruments.
11.2 Jurisdiction. The Parties irrevocably consent to the exclusive jurisdiction of the Delaware Court of Chancery for the resolution of any and all disputes arising under or in connection with this Letter Agreement, including without limitation disputes regarding the interpretation, performance, or enforcement of any provision hereof. Such consent is consistent with, and supplementary to, the retained jurisdiction provisions of the Consent Order entered in C.A. No. 2025-0198-MTZ.
11.3 Amendments. This Letter Agreement may not be amended, modified, or supplemented except by a written instrument duly executed by each of CRH, Verdana, and the Monitor. No waiver of any provision of this Letter Agreement shall be effective unless set forth in a written instrument signed by the Party against which enforcement of the waiver is sought.
11.4 Notices. All notices, requests, demands, and other communications required or permitted under this Letter Agreement shall be in writing and shall be deemed duly given: (a) when delivered personally; (b) on the next business day following deposit with a nationally recognized overnight courier service; (c) on the third business day following deposit in the United States mail, postage prepaid, registered or certified mail, return receipt requested; or (d) when transmitted by electronic mail, with confirmation of receipt. Notices shall be addressed as follows:
If to CRH:
Theresa Yun-Park, General Counsel Cascade Retail Holdings Inc. 2200 Elliott Avenue West, Suite 3400 Seattle, WA 98119
with a copy (which shall not constitute notice) to:
Bernard Crawford, Partner Calderwood & Harkness LLP 1301 K Street NW, Suite 1200 Washington, DC 20005
If to Verdana:
Helen Tsoi, General Counsel Verdana Commerce Group, Inc. 400 Christiana Gateway, Suite 700 Wilmington, DE 19801
with a copy (which shall not constitute notice) to:
Gavin Blackhall, Partner Blackhall & Soren LLP 300 Delaware Avenue, Suite 900 Wilmington, DE 19801
If to the Monitor:
Aldwyn Compliance Solutions LLC 1700 Market Street, Suite 2800 Philadelphia, PA 19103
Copy to counsel for Individual Defendants:
Catherine Nygaard, Partner Whitfield, Nygaard & Doyle LLP 1000 North Market Street, Suite 1500 Wilmington, DE 19801
Any Party may change its address for notices by providing written notice thereof to the other Parties in accordance with this Section 11.4.
11.5 Entire Agreement
This Letter Agreement, together with the Settlement Agreement, the Consent Order, the Engagement Letter, and the Monitoring Protocol (including all exhibits, schedules, and annexes thereto), constitutes the entire agreement among the Parties with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements, understandings, negotiations, and discussions, whether oral or written, among the Parties relating to the information-sharing and access framework for the Monitor during the Monitoring Period.
11.6 Counterparts. This Letter Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Execution and delivery of this Letter Agreement by electronic transmission (including by PDF or other electronic signature) shall be deemed to be, and shall have the same legal effect as, execution and delivery of an original signed copy.
11.7 No Third-Party Beneficiaries
Except for the Individual Defendants — who are intended third-party beneficiaries solely with respect to the confidentiality provisions of Section 6 and the interview provisions of Sections 2.3 and 5 of this Letter Agreement — this Letter Agreement shall not confer any rights, remedies, or benefits upon any person or entity that is not a Party hereto. The Individual Defendants' status as intended third-party beneficiaries shall not be deemed to grant them any right to enforce any other provision of this Letter Agreement.
If the foregoing accurately reflects our mutual understanding and agreement, please indicate your acceptance by signing in the spaces provided below and returning executed counterparts to the undersigned.
Very truly yours,
CALDERWOOD & HARKNESS LLP
Bernard Crawford, Partner Counsel to Cascade Retail Holdings Inc.
AGREED AND ACCEPTED:
CASCADE RETAIL HOLDINGS INC.
By: ________
Name: Theresa Yun-Park
Title: General Counsel
Date: April 14, 2025
VERDANA COMMERCE GROUP, INC.
By: ________
Name: Helen Tsoi
Title: General Counsel