CLEAN TEAM / ANTITRUST PROTOCOL AGREEMENT
Dated as of February 18, 2025
by and between
CASCADE RETAIL HOLDINGS INC. a Delaware corporation ("Cascade" or the "Buyer")
and
NOVAMART GLOBAL INC. a Delaware corporation ("NovaMart" or the "Company")
Relating to the Proposed Acquisition of 100% of the Outstanding Capital Stock of NovaMart Global Inc. by Cascade Retail Holdings Inc. for an Aggregate Purchase Price of $1,200,000,000
This Clean Team / Antitrust Protocol Agreement (this "Agreement") is entered into as of February 18, 2025, by and between Cascade Retail Holdings Inc., a Delaware corporation ("Cascade" or the "Buyer"), and NovaMart Global Inc., a Delaware corporation ("NovaMart" or the "Company," and together with Cascade, each a "Party" and collectively, the "Parties").
This Agreement is entered into in connection with, and supplemental to, (a) the Mutual Confidentiality and Non-Disclosure Agreement dated February 10, 2025 between the Parties (the "NDA") and (b) the Letter of Intent dated February 14, 2025 between the Parties (the "LOI"), pursuant to which Cascade has proposed to acquire 100% of the outstanding capital stock of NovaMart from NovaMart's stockholders (the "Selling Stockholders") for an aggregate purchase price of One Billion Two Hundred Million Dollars ($1,200,000,000) (the "Transaction"). Due diligence in connection with the Transaction is commencing as of the date hereof.
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RECITALS
WHEREAS, Cascade is a publicly traded omnichannel retail and ecommerce company headquartered at 4500 Elliott Avenue West, Suite 3200, Seattle, Washington 98119, listed on The Nasdaq Stock Market LLC under the ticker symbol "CRHI," operating over 380 brick-and-mortar retail locations across North America and a proprietary ecommerce platform (CascadeDirect.com) serving approximately 28 million active customers, and is engaged in the business of retail sales and marketplace operations in direct competition with other participants in the online marketplace and ecommerce sector;
WHEREAS, NovaMart is a privately held online marketplace platform headquartered at 1100 Congress Avenue, Suite 800, Austin, Texas 78701, operating a third-party marketplace with approximately 62,400 active sellers, approximately 9.1 million registered buyers, and fiscal year 2024 gross merchandise value ("GMV") of approximately $6.2 billion, including a proprietary logistics network branded as "NovaShip" operating 14 fulfillment centers across nine states, and is similarly engaged in the business of marketplace operations in direct competition with other participants in the online marketplace and ecommerce sector, including Cascade;
WHEREAS, the Parties are both participants in the online marketplace and ecommerce sector and, as competitors, possess competitively sensitive information the disclosure of which, absent appropriate safeguards, could raise concerns under the antitrust laws of the United States, including, without limitation, Section 1 of the Sherman Antitrust Act of 1890, as amended (15 U.S.C. § 1), Section 5 of the Federal Trade Commission Act of 1914, as amended (15 U.S.C. § 45), and the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act") (15 U.S.C. § 18a);
WHEREAS, the Parties intend to file a Notification and Report Form under the HSR Act with the Federal Trade Commission (the "FTC") and the Antitrust Division of the United States Department of Justice (the "DOJ") in connection with the Transaction, and anticipate that such filings will require the production and exchange of competitively sensitive information;
WHEREAS, the Parties desire to establish protocols for the exchange of competitively sensitive information during the due diligence process and thereafter through the pendency of the Transaction, in order to ensure compliance with applicable antitrust laws and regulations while permitting Cascade to conduct reasonable and customary due diligence of NovaMart and its business, operations, financial condition, and prospects;
WHEREAS, this Agreement has been prepared jointly by Calderwood & Harkness LLP (Howard Bellamy, Specialist Partner, Antitrust & Competition) and Whitfield & Crane LLP (Gabriela Montoya, Partner), outside counsel to Cascade, in consultation with Calloway, Brandt & Loewe LLP (Richard Calloway, Lead Partner), outside counsel to NovaMart and the Selling Stockholders, and reflects the considered judgment of Antitrust Counsel for both Parties as to appropriate safeguards under the circumstances; and
WHEREAS, the Parties recognize that adherence to the protocols set forth in this Agreement is essential to preserving the integrity of the Transaction, maintaining compliance with applicable antitrust laws, and protecting the legitimate competitive interests of both Parties throughout the diligence process and pre-closing period.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by each Party, the Parties agree as follows:
ARTICLE I — DEFINITIONS
Section 1.1 — Defined Terms
As used in this Agreement, the following terms shall have the meanings set forth below:
"Antitrust Counsel" means: (a) with respect to Cascade, Calderwood & Harkness LLP (Howard Bellamy, Specialist Partner, Antitrust & Competition, 599 Lexington Avenue, 38th Floor, New York, New York 10022) and Whitfield & Crane LLP (Gabriela Montoya, Partner, 1200 New Hampshire Avenue NW, Suite 500, Washington, DC 20036); and (b) with respect to NovaMart, Calloway, Brandt & Loewe LLP (Richard Calloway, Lead Partner, and Simone Adesanya, Associate Lead, 600 Travis Street, Suite 4500, Houston, Texas 77002).
"Buyer's Clean Team" has the meaning set forth in Section 2.2, and refers to the specific individuals employed by or acting on behalf of Cascade who have been designated and approved to receive Highly Confidential Information, subject to the restrictions and limitations of this Agreement.
"Buyer's Outside Advisors" means, collectively: (a) Calderwood & Harkness LLP (including specifically Harrison Wexford, Responsible Partner, M&A; Beatrice Holloway; Derek Okonkwo, Lead Associate, M&A; Tiffany Rosenthal, Working Associate, M&A; Sylvia Hartwell, Specialist Partner, Tax; and Howard Bellamy, Specialist Partner, Antitrust & Competition); (b) Whitfield & Crane LLP (Gabriela Montoya, Partner, and her team); (c) Hargrove Mead & Co. (Christopher Dunleavy, Managing Director, 383 Madison Avenue, 22nd Floor, New York, New York 10179); (d) Whitmore & Paige LLP (Sandra Chiu, Engagement Partner, 100 Federal Street, Suite 2500, Boston, Massachusetts 02110); and (e) Apex Economics LLC (Dr. Henrik Johansson, 900 G Street NW, Suite 700, Washington, DC 20001); each in their capacity as outside professional advisors retained by Cascade in connection with the Transaction.
"Clean Team Materials" means the subset of Highly Confidential Information that has been designated for access only by Clean Team Members pursuant to Article III of this Agreement, including all documents, data, analyses, presentations, notes, summaries, and derivative works derived therefrom.
"Clean Team Members" means, collectively, the Buyer's Clean Team and the Seller's Clean Team, as identified on Exhibit A attached hereto, together with the Outside Advisor Clean Team members identified therein.
"Competitively Sensitive Information" or "CSI" has the meaning set forth in Section 1.2.
"Disclosing Party" means the Party disclosing information to the other Party in connection with the Transaction. For purposes of the due diligence process, NovaMart shall generally be the Disclosing Party, although Cascade may also serve as the Disclosing Party with respect to information disclosed reciprocally to NovaMart.
"Firewall" means the informational barrier established pursuant to Article IV between Clean Team Members and Non-Clean Team Personnel of the respective Parties, as more fully described therein.
"Highly Confidential Information" or "HCI" means the subset of Competitively Sensitive Information that has been designated as "HIGHLY CONFIDENTIAL — CLEAN TEAM ONLY" pursuant to Section 3.1 of this Agreement, access to which is restricted exclusively to Clean Team Members in accordance with the terms hereof. The term includes, without limitation, all documents, data sets, databases, analyses, reports, presentations, and other materials bearing such designation, as well as all copies, notes, summaries, and derivative analyses prepared therefrom.
"LOI" means the Letter of Intent dated February 14, 2025 between Cascade and NovaMart.
"NDA" means the Mutual Confidentiality and Non-Disclosure Agreement dated February 10, 2025 between Cascade and NovaMart.
"Non-Clean Team Personnel" means any employee, officer, director, consultant, independent contractor, or agent of either Party who is not a designated Clean Team Member listed on Exhibit A (as such exhibit may be amended from time to time in accordance with Section 2.4).
"Outside Advisor Clean Team" means those individuals at the Buyer's Outside Advisors and the Seller's Outside Advisors who are designated to receive HCI, as identified on Exhibit A.
"Party" and "Parties" means Cascade and NovaMart, individually and collectively, as the context requires.
"Receiving Party" means the Party receiving information from the other Party in connection with the Transaction.
"Screened Summaries" means summaries, conclusions, and recommendations derived from HCI that have been reviewed and approved by Antitrust Counsel in accordance with Section 4.3 for dissemination to Non-Clean Team Personnel.
"Seller's Clean Team" has the meaning set forth in Section 2.3, and refers to the specific individuals employed by or acting on behalf of NovaMart (and the Selling Stockholders) who have been designated to participate in the preparation and review of Clean Team Materials.
"Seller's Outside Advisors" means, collectively: (a) Calloway, Brandt & Loewe LLP (Richard Calloway, Lead Partner, and Simone Adesanya, Associate Lead); and (b) Pemberton Strauss Advisory LLC (Vivian Hong, Senior Managing Director, 1345 Avenue of the Americas, 30th Floor, New York, New York 10105); each in their capacity as outside professional advisors retained by NovaMart and the Selling Stockholders in connection with the Transaction.
"Selling Stockholders" means the stockholders of NovaMart who will sell 100% of the outstanding capital stock of NovaMart to Cascade in the Transaction, including Ridgeline Equity Partners, LP and Brindoval Ventures Fund III, LP.
"Stock Purchase Agreement" or "SPA" means the definitive stock purchase agreement to be entered into between Cascade, NovaMart, and the Selling Stockholders in connection with the Transaction.
"Transaction" means the proposed acquisition by Cascade of 100% of the outstanding capital stock of NovaMart from the Selling Stockholders for an aggregate purchase price of One Billion Two Hundred Million Dollars ($1,200,000,000), as more fully described in the LOI.
Section 1.2 — Competitively Sensitive Information
(a) Definition. "Competitively Sensitive Information" or "CSI" means any non-public information of either Party that relates to competitive strategy, pricing, margins, customer-specific terms, supplier-specific terms, vendor costs, bidding strategies, future product or service plans, marketing plans, advertising strategies, promotional campaigns, customer acquisition costs, customer lists with individualized data, seller-specific or merchant-specific revenue or commission data, algorithms or proprietary analytics relating to pricing or search ranking, logistics costs at the individual route or facility level, capacity plans, technology roadmaps, and any other information the disclosure of which between competitors could facilitate coordinated or anticompetitive behavior in violation of applicable antitrust laws.
(b) Specific Examples — Cascade CSI. Without limiting the generality of the foregoing, CSI of Cascade includes, without limitation, the following categories of information:
(i) CascadeDirect.com marketplace pricing algorithms, including dynamic pricing models, take rates by product category, and margin targets;
(ii) advertising pricing to third-party sellers on the CascadeDirect.com platform, including cost-per-click rates, sponsored listing fees, and preferred placement terms;
(iii) customer-level purchasing data, including individual customer transaction histories, purchasing frequency, average order values, and segmentation data;
(iv) individual vendor contracts and terms, including wholesale pricing, volume discount schedules, markdown allowances, and exclusivity arrangements;
(v) promotional calendars, including planned markdowns, seasonal campaigns, flash sale schedules, and loyalty program terms;
(vi) planned product category expansions, new market entries, and competitive positioning strategies; and
(vii) any other information of Cascade that would, if disclosed to a competitor, provide a material competitive advantage or facilitate coordinated behavior.
(c) Specific Examples — NovaMart CSI. Without limiting the generality of the foregoing, CSI of NovaMart includes, without limitation, the following categories of information:
(i) NovaMart marketplace take-rate schedules by seller tier, including graduated commission structures, promotional rate offers, and onboarding incentives for new sellers;
(ii) NovaShip logistics cost data, including per-facility operating costs, per-route shipping and handling costs, last-mile delivery economics, and capacity utilization rates, across NovaMart's 14 fulfillment centers located in California, New Jersey, Georgia, Ohio, Illinois, Pennsylvania, Tennessee, Florida, and Washington;
(iii) advertising revenue share terms, including specifically the terms and economics under NovaMart's agreement with Stratton Digital Media Inc. for sponsored advertising placements on the NovaMart platform;
(iv) seller-specific revenue data for NovaMart's approximately 62,400 active sellers, including individual seller gross merchandise value, commission revenue, chargeback rates, and performance metrics;
(v) search algorithm parameters, including ranking methodology, relevance scoring, conversion optimization variables, and personalization logic, including those components licensed from Arcwave Software LLC under existing technology agreements;
(vi) payment processing terms, including specifically the terms, fees, interchange economics, and service levels under NovaMart's agreement with PayStream Financial Technologies Inc.;
(vii) future platform development plans, including technology roadmaps, planned feature releases, mobile application enhancements, and artificial intelligence or machine learning initiatives;
(viii) capacity expansion plans for fulfillment centers, including planned new facility openings, lease negotiations, capital expenditure projections, and geographic coverage targets; and
(ix) buyer-specific data for NovaMart's approximately 9.1 million registered buyers, including purchasing patterns, demographic information, retention metrics, and lifetime value analyses.
Section 1.3 — Categories of Information
For purposes of this Agreement, all information exchanged between the Parties in connection with the Transaction shall be classified into one of three tiers, as follows:
(a) Tier 1 — Public/Non-Sensitive Information. Information that is publicly available (including information contained in public filings, press releases, published reports, or otherwise available in the public domain) or does not constitute CSI. Tier 1 information may be shared freely between the Parties and their respective representatives, subject only to the confidentiality obligations set forth in the NDA. No special handling or access restrictions under this Agreement apply to Tier 1 information.
(b) Tier 2 — Confidential — Restricted Access. Information that constitutes CSI but is not designated as HCI. Tier 2 information may be shared with the Buyer's Outside Advisors and designated Cascade business personnel who have executed the Clean Team Acknowledgment and Agreement attached as Exhibit B, subject to the use restrictions set forth in Article V of this Agreement. Tier 2 information shall be marked "CONFIDENTIAL — RESTRICTED ACCESS" and shall not be disseminated beyond the approved recipient list without prior authorization from the Disclosing Party's Antitrust Counsel.
(c) Tier 3 — Highly Confidential — Clean Team Only (HCI). The most competitively sensitive information, as determined by the Disclosing Party's Antitrust Counsel, the disclosure of which to Non-Clean Team Personnel could create a material risk of competitive harm or antitrust liability. Tier 3 information shall be designated "HIGHLY CONFIDENTIAL — CLEAN TEAM ONLY" and shall be restricted exclusively to Clean Team Members as set forth in Article III of this Agreement. Under no circumstances shall HCI be disclosed to Non-Clean Team Personnel except in the form of Screened Summaries prepared and approved in accordance with Section 4.3.
ARTICLE II — CLEAN TEAM COMPOSITION AND DESIGNATION
Section 2.1 — General Principles
(a) Each Party shall designate a limited number of individuals as Clean Team Members, taking into account the principle that access to HCI should be limited to those individuals who have a legitimate and demonstrable need for such access in connection with evaluating, negotiating, and consummating the Transaction.
(b) No individual who is primarily responsible for day-to-day competitive decision-making for either Party's online marketplace business shall serve as a Clean Team Member. For purposes of this Agreement, "day-to-day competitive decision-making" includes, without limitation, responsibility for pricing decisions, marketing campaign development and execution, seller or merchant acquisition and relationship management, merchandising strategy, or logistics network operations. An individual shall be deemed "primarily responsible" for such activities if such activities constitute a substantial portion of such individual's regular duties or if such individual has direct authority to set or materially influence pricing, promotional, or competitive strategies. Notwithstanding the foregoing, an individual described in this Section 2.1(b) may serve as a Clean Team Member if approved in writing by both Parties' Antitrust Counsel, which approval shall be documented and maintained in the compliance records established pursuant to Section 6.4.
(c) All Clean Team Members must execute the Clean Team Acknowledgment and Agreement attached as Exhibit B to this Agreement before receiving any HCI. No HCI shall be disclosed to any individual who has not executed such acknowledgment, regardless of such individual's designation on Exhibit A.
(d) Each Party shall be responsible for ensuring that its Clean Team Members understand and comply with the obligations imposed by this Agreement, and each Party's Clean Team Lead (as identified in Sections 2.2 and 2.3) shall serve as the primary point of contact for Clean Team-related matters on behalf of such Party.
Section 2.2 — Buyer's Clean Team
(a) Cascade Internal Designees. The following individuals employed by Cascade are designated as members of the Buyer's Clean Team and are listed on Exhibit A:
(i) Theodore "Ted" Langford, Senior Vice President, Corporate Development — Clean Team Lead for Cascade. Mr. Langford shall serve as the primary point of contact for all Clean Team matters on behalf of Cascade and shall be responsible for ensuring that Cascade's internal Clean Team Members comply with the obligations of this Agreement.
(ii) Elena Vasquez-Bright, General Counsel — designated for legal oversight purposes only. Ms. Vasquez-Bright's access to HCI shall be limited to information reasonably necessary for her to fulfill her responsibilities as General Counsel in connection with the Transaction, including legal due diligence, regulatory compliance, and oversight of the Firewall.
(iii) Rajiv Sundaram, Chief Financial Officer — designated for financial analysis purposes only. Mr. Sundaram's access to HCI shall be limited to financial information reasonably necessary for his evaluation of NovaMart's financial condition, projections, and valuation in connection with the Transaction.
(iv) Up to three (3) additional Cascade personnel from the corporate development, finance, or legal teams, as may be approved by NovaMart's Antitrust Counsel (such approval not to be unreasonably withheld, conditioned, or delayed). Any such additional designees shall be identified by name, title, and function on an amended Exhibit A and shall execute the Clean Team Acknowledgment and Agreement in the form of Exhibit B prior to receiving any HCI.
(b) Exclusion of CEO. The Parties specifically acknowledge and agree that Margaret "Meg" Alderton, Chief Executive Officer of Cascade, shall not serve as a Clean Team Member and shall not have direct access to any HCI. Ms. Alderton may, however, receive Screened Summaries of HCI findings that have been reviewed and approved by Antitrust Counsel in accordance with Section 4.3 (such approved summaries, the "Screened Summaries"), solely for the purpose of evaluating and approving the Transaction on behalf of Cascade and its Board of Directors. Under no circumstances shall Ms. Alderton receive individual-level, counterparty-specific, or competitively actionable data points derived from HCI.
(c) Buyer's Outside Advisor Designees. The following individuals at the Buyer's Outside Advisors are designated as members of the Outside Advisor Clean Team and are listed on Exhibit A:
(i) Calderwood & Harkness LLP: Harrison Wexford (Responsible Partner, M&A), Derek Okonkwo (Lead Associate, M&A), Tiffany Rosenthal (Working Associate, M&A), Sylvia Hartwell (Specialist Partner, Tax), and Howard Bellamy (Specialist Partner, Antitrust & Competition).
(ii) Whitfield & Crane LLP: Gabriela Montoya (Partner) and up to two associates to be designated by Ms. Montoya and identified on Exhibit A.
(iii) Hargrove Mead & Co.: Christopher Dunleavy (Managing Director) and up to two analysts to be designated by Mr. Dunleavy and identified on Exhibit A.
(iv) Whitmore & Paige LLP: Sandra Chiu (Engagement Partner) and up to two team members to be designated by Ms. Chiu and identified on Exhibit A.
(v) Apex Economics LLC: Dr. Henrik Johansson (Economic Consultant) and up to two research assistants to be designated by Dr. Johansson and identified on Exhibit A.
(d) Each Outside Advisor Clean Team member shall execute the Clean Team Acknowledgment and Agreement in the form of Exhibit B and shall be bound by the terms of this Agreement to the same extent as the Cascade internal designees.
Section 2.3 — Seller's Clean Team
(a) NovaMart Internal Designees. The following individuals employed by NovaMart are designated as members of the Seller's Clean Team and are listed on Exhibit A:
(i) Douglas "Doug" Whitfield, Chief Financial Officer — Clean Team Lead for NovaMart. Mr. Whitfield shall serve as the primary point of contact for all Clean Team matters on behalf of NovaMart and shall be responsible for coordinating the production of HCI and ensuring compliance with this Agreement on the NovaMart side.
(ii) Amanda Trevino, General Counsel — designated for legal oversight purposes in connection with the Transaction, including supervision of the diligence process, regulatory compliance, and coordination with NovaMart's Antitrust Counsel.
(iii) Up to two (2) additional NovaMart personnel, as may be approved by Cascade's Antitrust Counsel (such approval not to be unreasonably withheld, conditioned, or delayed). Any such additional designees shall be identified by name, title, and function on an amended Exhibit A and shall execute the Clean Team Acknowledgment and Agreement in the form of Exhibit B prior to receiving any HCI.
(b) Selling Stockholder Designees. The following individuals are designated as members of the Seller's Clean Team in their capacity as representatives of the Selling Stockholders:
(i) Franklin Osei, Managing Partner, Ridgeline Equity Partners, LP.
(ii) Naomi Katzenbach, General Partner, Brindoval Ventures Fund III, LP.
(c) Seller's Outside Advisor Designees. The following individuals at the Seller's Outside Advisors are designated as members of the Outside Advisor Clean Team and are listed on Exhibit A:
(i) Calloway, Brandt & Loewe LLP: Richard Calloway (Lead Partner), Simone Adesanya (Associate Lead), and up to two associates to be designated by Mr. Calloway and identified on Exhibit A.
(ii) Pemberton Strauss Advisory LLC: Vivian Hong (Senior Managing Director) and up to two analysts to be designated by Ms. Hong and identified on Exhibit A.
(d) Each Selling Stockholder designee and each Seller's Outside Advisor designee shall execute the Clean Team Acknowledgment and Agreement in the form of Exhibit B prior to receiving any HCI.
Section 2.4 — Modifications to Clean Team Membership
(a) Additions. Either Party may propose additions to the Clean Team by delivering written notice to the other Party's Antitrust Counsel, identifying the proposed individual by name, title, organizational affiliation, and the specific reason for the proposed addition. No individual may be added to the Clean Team without the prior written consent of both Parties' Antitrust Counsel, which consent may be withheld in the reasonable discretion of either Party's Antitrust Counsel if such Antitrust Counsel determines in good faith that the addition would create a material risk of competitive harm or antitrust concern.
(b) Removals. Either Party may remove its own designated Clean Team Members from the Clean Team at any time by delivering written notice to the other Party's Antitrust Counsel. Additionally, either Party's Antitrust Counsel may request that the other Party remove a designated Clean Team Member if such Antitrust Counsel has a reasonable, good-faith basis to believe that such individual has violated or is likely to violate the terms of this Agreement.
(c) Obligations Upon Removal. Any person removed from the Clean Team (whether voluntarily or involuntarily) shall promptly:
(i) return to the Disclosing Party (or destroy, at the direction of Antitrust Counsel) all HCI in such person's possession, custody, or control, including all copies, notes, analyses, summaries, and derivative materials;
(ii) certify in writing to both Parties' Antitrust Counsel that such person has complied with the return or destruction obligation set forth in clause (i); and
(iii) continue to be bound by the use restrictions, confidentiality obligations, and Firewall obligations of this Agreement with respect to any HCI previously accessed by such person, notwithstanding such person's removal from the Clean Team.
(d) Updated Exhibit A. Upon any addition to or removal from the Clean Team, Antitrust Counsel for both Parties shall promptly prepare and circulate an updated Exhibit A reflecting the current membership of the Clean Team.
ARTICLE III — DESIGNATION AND HANDLING OF HIGHLY CONFIDENTIAL INFORMATION
Section 3.1 — Designation Procedures
(a) Marking Requirement. NovaMart, as the Disclosing Party for purposes of the due diligence process, shall mark or designate all HCI documents and materials with the legend "HIGHLY CONFIDENTIAL — CLEAN TEAM ONLY" in a prominent and conspicuous manner before any such documents or materials are disclosed to Cascade or its representatives. For electronic documents, such designation shall appear on the first page and in the document metadata or file naming convention. For physical documents, such designation shall appear as a stamp or watermark on each page.
(b) Antitrust Counsel Review. NovaMart's Antitrust Counsel, Calloway, Brandt & Loewe LLP, shall be responsible for reviewing and designating documents prior to production in the data room or otherwise. NovaMart's Antitrust Counsel shall exercise reasonable professional judgment in determining whether a particular document or category of documents warrants HCI designation, applying the standards and principles set forth in Section 1.2 and Section 1.3 of this Agreement.
(c) Reciprocal Designations. In the event that Cascade provides reciprocal information to NovaMart in connection with the Transaction (including, without limitation, information concerning CascadeDirect.com marketplace operations, competitive strategy, or forward-looking business plans), Cascade may designate its own documents and materials as HCI in accordance with the procedures set forth in this Section 3.1. Cascade's Antitrust Counsel shall be responsible for reviewing and designating any such Cascade documents.
(d) Disputes. Any dispute regarding the designation of a particular document or category of documents as HCI shall be resolved by the Parties' Antitrust Counsel in good faith through consultation and discussion. In the event that the Parties' Antitrust Counsel are unable to resolve such dispute within five (5) business days after the dispute is raised, the designating Party's classification shall control pending resolution, and the non-designating Party shall treat such documents in accordance with the designating Party's classification until a different classification is agreed upon.
Section 3.2 — Examples of HCI in this Transaction
(a) Categories Likely to Be Designated HCI. Based on the nature of the Parties' respective businesses and the competitive landscape of the online marketplace and ecommerce sector, the following categories of information are expected to be designated as HCI (Tier 3) in connection with this Transaction:
(i) NovaMart seller-level take-rate data and commission schedules, including graduated rate structures, promotional rates, negotiated individual seller agreements, and any seller-tier-specific pricing methodologies;
(ii) NovaMart customer acquisition cost data at the channel or campaign level, including per-click costs, per-conversion costs, channel mix allocations, and return-on-ad-spend metrics for individual marketing channels;
(iii) NovaMart advertising pricing and revenue share terms, including specifically the terms, economics, and performance metrics under NovaMart's agreement with Stratton Digital Media Inc. for sponsored advertising placements, display advertising, and programmatic ad inventory on the NovaMart platform;
(iv) NovaMart NovaShip logistics cost data by facility and by route, including per-unit fulfillment costs, inbound and outbound shipping rates, last-mile delivery unit economics, labor cost allocations, and capacity utilization metrics, covering all 14 fulfillment centers located in the states of California, New Jersey, Georgia, Ohio, Illinois, Pennsylvania, Tennessee, Florida, and Washington;
(v) NovaMart search algorithm tuning parameters and ranking methodology, including relevance scoring weights, conversion probability models, personalization parameters, advertising integration rules, and any proprietary machine learning models, including those components developed by NovaMart or licensed from Arcwave Software LLC;
(vi) NovaMart forward-looking strategic plans, budgets, and projections for fiscal year 2025 and beyond, including long-range plans, growth forecasts, market share targets, competitive positioning strategies, and planned capital expenditures;
(vii) NovaMart seller-specific and buyer-specific data for the approximately 62,400 active sellers and approximately 9.1 million registered buyers, including individual seller gross merchandise volume, commission revenue, churn rates, performance scorecards, and individual buyer purchasing histories, demographic profiles, and lifetime value calculations;
(viii) Payment processing terms under NovaMart's agreement with PayStream Financial Technologies Inc., including interchange rates, processing fees, settlement terms, fraud liability allocation, and performance guarantees;
(ix) Cascade CascadeDirect.com marketplace take rates, seller economics, and forward-looking competitive plans, if disclosed reciprocally by Cascade to NovaMart; and
(x) any other information designated as HCI by either Party's Antitrust Counsel in accordance with Section 3.1.
(b) Categories Generally Not Constituting HCI. The following categories of information would generally not constitute HCI and would ordinarily be classified as Tier 2 (Confidential — Restricted Access) or Tier 1 (Public/Non-Sensitive Information):
(i) aggregated financial data at the entity level, including NovaMart's fiscal year 2024 revenue of approximately $891 million, EBITDA of approximately $134 million, and GMV of approximately $6.2 billion, to the extent presented in aggregate without facility-level, seller-level, or customer-level breakdowns;
(ii) historical audited financial statements, including balance sheets, income statements, cash flow statements, and related notes, prepared in accordance with generally accepted accounting principles;
(iii) general corporate organizational documents, including certificates of incorporation, bylaws, board resolutions, stockholder agreements, and capitalization data (other than data that directly reveals competitively sensitive pricing or economic terms);
(iv) real property lease summaries without competitively sensitive pricing or cost data (e.g., general location, square footage, and lease expiration dates, but excluding per-square-foot rental rates or build-out costs that could reveal facility-level logistics economics);
(v) general employee headcount (approximately 2,400 employees), benefit plan summaries, and other human resources information that does not reveal compensation structures specific to competitively sensitive functions; and
(vi) publicly available information about either Party, including information contained in public filings, press releases, industry reports, and published market analyses.
(c) Antitrust Counsel Guidance. Antitrust Counsel for both Parties may issue supplemental guidance from time to time regarding the appropriate classification of specific categories of information as Tier 1, Tier 2, or Tier 3. Such guidance shall be communicated in writing to both Parties' Clean Team Leads and shall be incorporated into the compliance training materials described in Section 6.3.
Section 3.3 — Data Room Protocols
(a) Segregated Access. All HCI shall be placed in a separate, access-restricted section (the "Clean Team Room") of NovaMart's electronic data room. The Clean Team Room shall be technically segregated from other sections of the data room through the use of role-based access controls, and access to the Clean Team Room shall be limited exclusively to Clean Team Members as identified on Exhibit A (as updated from time to time).
(b) Data Room Administration. Calloway, Brandt & Loewe LLP, as NovaMart's counsel and data room administrator, shall be responsible for configuring and maintaining the access controls for the Clean Team Room, uploading HCI documents to the Clean Team Room, and ensuring that no Non-Clean Team Personnel are granted access. The data room administrator shall maintain detailed access logs recording the identity of each individual accessing the Clean Team Room, the date and time of each access, the specific documents or folders viewed, and the duration of each session. Such access logs shall be provided to both Parties' Antitrust Counsel on a periodic basis (no less frequently than bi-weekly) and upon reasonable request.
(c) No Downloading, Printing, or Copying — General Rule. As a general rule, no downloading, printing, or copying of HCI documents from the Clean Team Room shall be permitted. Documents in the Clean Team Room shall be available for online viewing only.
(d) Exception for Outside Advisor Clean Team. Notwithstanding Section 3.3(c), Outside Advisor Clean Team members who require physical or electronic copies of HCI documents for purposes of conducting financial, legal, economic, or accounting analysis in connection with the Transaction may download, print, or copy such documents, subject to the following conditions:
(i) all such copies shall be numbered, tracked, and logged by the data room administrator or by Antitrust Counsel;
(ii) all such copies shall bear the "HIGHLY CONFIDENTIAL — CLEAN TEAM ONLY" designation in a prominent manner;
(iii) all such copies shall be stored securely and shall not be left unattended or accessible to Non-Clean Team Personnel; and
(iv) all such copies shall be returned or destroyed in accordance with Section 8.2 at the conclusion of the Transaction (whether consummated or terminated).
(e) Conclusion of Transaction. At the conclusion of the Transaction (whether consummated or terminated), all HCI materials in the data room (including the Clean Team Room), together with all copies, notes, analyses, summaries, and derivative materials in the possession of any Clean Team Member or Outside Advisor Clean Team member, shall be returned or destroyed in accordance with Section 8.2 of this Agreement.
ARTICLE IV — FIREWALLS AND INFORMATION BARRIERS
Section 4.1 — Firewall Obligations
(a) Clean Team Members shall not disclose, discuss, share, communicate, transmit, or otherwise make available HCI or the substance thereof to any Non-Clean Team Personnel of their respective organizations, whether orally, in writing, electronically, or by any other means, except as expressly permitted by this Agreement (including through the preparation and dissemination of Screened Summaries in accordance with Section 4.3).
(b) The obligation set forth in Section 4.1(a) extends to all forms of communication, including, without limitation, in-person conversations, telephone calls, videoconferences, email correspondence, text messages, instant messages, internal memoranda, presentations, reports, and any other form of direct or indirect communication.
(c) The Firewall shall remain in place at all times during the diligence process and pre-closing period and shall survive the closing or termination of the Transaction as provided in Article VIII.
(d) Each Party shall implement appropriate physical and technological measures to support the Firewall, including, where practicable, the use of separate meeting rooms, restricted-access file storage, and access-controlled electronic folders for Clean Team Materials.
Section 4.2 — Cascade-Specific Firewall
(a) HCI received by Cascade's Clean Team Members shall not be disclosed, directly or indirectly, to any of the following categories of Cascade personnel:
(i) Cascade personnel responsible for day-to-day pricing decisions for the CascadeDirect.com online marketplace, including the pricing analytics team, the category management team, and the dynamic pricing group;
(ii) Cascade personnel responsible for marketing, advertising, and customer acquisition for CascadeDirect.com, including the digital marketing team, the performance marketing group, and the brand marketing division;
(iii) Cascade personnel responsible for merchandising strategy, product assortment, and category planning for either CascadeDirect.com or Cascade's brick-and-mortar retail locations;
(iv) Cascade personnel responsible for seller or merchant relations, including the seller acquisition team, the seller success team, and the marketplace operations group;
(v) Cascade personnel responsible for logistics and supply chain operations, including the fulfillment operations team, the transportation and distribution group, and the last-mile delivery team;
(vi) any Cascade retail store management personnel, including regional directors, district managers, and store managers; and
(vii) any other Cascade employee, officer, director, consultant, or agent not listed on Exhibit A as a Clean Team Member, unless such individual has been added to the Clean Team pursuant to Section 2.4.
(b) Clean Team Lead Responsibility. Theodore "Ted" Langford, as Clean Team Lead for Cascade, shall be responsible for ensuring compliance with the Firewall on the Cascade side. Mr. Langford shall serve as the primary gatekeeper for all HCI within Cascade and shall be responsible for monitoring compliance, addressing questions from Clean Team Members regarding the scope of the Firewall, and reporting any suspected violations to Cascade's Antitrust Counsel.
(c) Compliance Officer. Elena Vasquez-Bright, General Counsel of Cascade, shall serve as the Cascade compliance officer for Firewall-related matters. Ms. Vasquez-Bright shall have the authority to investigate any suspected Firewall violations and to take appropriate remedial action, in consultation with Cascade's Antitrust Counsel.
Section 4.3 — Screened Summaries and Board-Level Communications
(a) Preparation of Screened Summaries. Clean Team Members may prepare Screened Summaries of HCI findings for use by Non-Clean Team Personnel (including the Cascade Board of Directors and Margaret "Meg" Alderton, CEO) solely for the purpose of evaluating and approving the Transaction. Screened Summaries may include high-level conclusions, observations, and recommendations derived from HCI, but shall not include individual data points, counterparty-specific information, or competitively actionable specifics.
(b) Antitrust Counsel Review and Approval. All Screened Summaries must be reviewed and approved in writing by Cascade's Antitrust Counsel (Howard Bellamy of Calderwood & Harkness LLP or Gabriela Montoya of Whitfield & Crane LLP) before dissemination to any Non-Clean Team Personnel. The reviewing Antitrust Counsel shall complete and execute the Screened Summary Review Certification in the form of Exhibit C attached hereto, confirming that the Screened Summary meets the requirements of this Section 4.3.
(c) Format Requirements. Screened Summaries shall present information in one or more of the following formats:
(i) aggregated form (e.g., "NovaMart's average take rate across all seller tiers is in the range of X% to Y%," rather than identifying specific rates for individual seller tiers or individual sellers);
(ii) anonymized form (e.g., referring to "Seller A" and "Seller B" rather than identifying specific seller names or accounts);
(iii) indexed form (e.g., expressing data as indices relative to a benchmark rather than in absolute terms); or
(iv) ranged form (e.g., presenting data within a specified range rather than as a single precise figure).
(d) Marking. All Screened Summaries shall be marked "CONFIDENTIAL — DERIVED FROM CLEAN TEAM MATERIALS — NOT FOR COMPETITIVE USE" in a prominent and conspicuous manner.
(e) Limitations on Use. Recipients of Screened Summaries shall use such summaries solely for the purpose of evaluating and approving the Transaction and shall not use any information contained therein for any competitive purpose or to inform any pricing, marketing, merchandising, or operational decision of Cascade.
Section 4.4 — NovaMart-Specific Firewall
(a) Any Cascade CSI provided to NovaMart's Clean Team in connection with the Transaction shall not be disclosed, directly or indirectly, to NovaMart personnel responsible for competitive decision-making vis-à-vis Cascade, including, without limitation, NovaMart personnel responsible for marketplace pricing, seller acquisition and relations, marketing strategy, platform development, or NovaShip logistics operations.
(b) Exclusion of CEO and CTO. Julian Reeves, Chief Executive Officer of NovaMart, and Priya Narasimhan, Chief Technology Officer of NovaMart, shall not serve as Clean Team Members unless specifically approved in writing by Cascade's Antitrust Counsel and shall not receive HCI directly. Mr. Reeves and Ms. Narasimhan may receive Screened Summaries that have been reviewed and approved by NovaMart's Antitrust Counsel (Richard Calloway of Calloway, Brandt & Loewe LLP) in accordance with the standards and procedures set forth in Section 4.3, mutatis mutandis.
(c) Douglas "Doug" Whitfield, as Clean Team Lead for NovaMart, and Amanda Trevino, as General Counsel, shall be responsible for ensuring compliance with the NovaMart-specific Firewall in a manner consistent with the obligations of Cascade's Clean Team Lead and compliance officer as described in Section 4.2.
ARTICLE V — PERMITTED AND RESTRICTED USES OF INFORMATION
Section 5.1 — Permitted Uses
HCI and other CSI received by either Party in connection with the Transaction may be used solely for the following purposes, and for no other purpose:
(a) Evaluating whether to proceed with the Transaction, including assessing the strategic rationale, business fit, and risk profile of the proposed acquisition;
(b) Conducting due diligence in connection with the Transaction, including financial, legal, tax, regulatory, commercial, operational, environmental, technological, and intellectual property due diligence;
(c) Negotiating the terms of the Stock Purchase Agreement and ancillary transaction documents, including disclosure schedules, representations and warranties, indemnification provisions, and closing conditions;
(d) Preparing and filing the HSR Notification and Report Forms with the FTC and DOJ, which filings are currently planned for on or about April 11, 2025, including the preparation of Item 4(c) and Item 4(d) documents and the completion of revenue and sales data required by the Notification Form;
(e) Responding to any inquiry, request for additional information or documentary material (including a Second Request), investigation, or proceeding by the FTC, DOJ, or any other governmental authority in connection with the Transaction, including the preparation of advocacy materials, written submissions, and presentations to the reviewing agency;
(f) Preparing antitrust advocacy materials in connection with the Transaction, including white papers, economic analyses, market studies, competitive effects analyses, and efficiencies presentations, in each case for submission to or use in discussions with the FTC, DOJ, or other governmental authorities;
(g) Obtaining financing commitments and negotiating financing documentation in connection with the Transaction, including the $750,000,000 Term Loan B facility from Cornerstone National Bank, N.A. and Caluvori Capital Partners, Inc., and any related credit agreements, intercreditor agreements, or security documents; provided, however, that only Screened Summaries (and not raw HCI or unredacted CSI) shall be shared with financing sources, their counsel, or their agents, and such Screened Summaries shall have been reviewed and approved by Antitrust Counsel in accordance with Section 4.3;
(h) Securing representations and warranties insurance in connection with the Transaction, including the policy being brokered by Northbridge Risk Advisors LLC with Meridian Specialty Insurance Company, and related underwriting submissions and policy negotiations; provided, however, that only Screened Summaries (and not raw HCI or unredacted CSI) shall be shared with insurance parties, their counsel, or their agents, and such Screened Summaries shall have been reviewed and approved by Antitrust Counsel in accordance with Section 4.3; and
(i) Integration planning in connection with the Transaction, but only to the extent that such planning: (A) is limited to high-level, general planning for post-closing integration activities; (B) does not constitute premature coordination of competitive activities prior to consummation of the Transaction and receipt of antitrust clearance; and (C) complies in all respects with the gun-jumping prohibitions set forth in Section 5.3 of this Agreement.
Section 5.2 — Restricted Uses
Under no circumstances may CSI or HCI received by either Party in connection with the Transaction be used for any of the following purposes:
(a) Making or influencing any pricing, marketing, bidding, or competitive decision of either Party, whether in the online marketplace sector, brick-and-mortar retail sector, logistics sector, or any other line of business, or otherwise exploiting such information for competitive advantage;
(b) Coordinating competitive behavior between Cascade and NovaMart, whether directly or indirectly, including, without limitation, any agreement, understanding, or concerted practice relating to pricing, output, market allocation, customer allocation, or seller allocation;
(c) Soliciting or redirecting customers, sellers, vendors, suppliers, or employees of the other Party, whether directly or indirectly (subject to, and without limiting, the non-solicitation provisions set forth in Section 7 of the NDA dated February 10, 2025);
(d) Any purpose unrelated to the evaluation, negotiation, and consummation of the Transaction, including, without limitation, any use of CSI or HCI for the benefit of any business, division, or affiliate of either Party that is not directly involved in the Transaction; and
(e) Sharing with any third party (other than Clean Team Members, Outside Advisor Clean Team members, and recipients of Screened Summaries as permitted under Section 5.1) without the prior written consent of the Disclosing Party's Antitrust Counsel. For the avoidance of doubt, no CSI or HCI shall be shared with any portfolio company, affiliate, joint venture partner, or other business associate of either Party without the express prior written consent of the Disclosing Party's Antitrust Counsel.
Section 5.3 — Gun-Jumping Prohibition
(a) Continued Independence. The Parties acknowledge and agree that, prior to the closing of the Transaction and the expiration or early termination of the applicable waiting period under the HSR Act (or receipt of affirmative clearance from the DOJ or FTC, as applicable), Cascade and NovaMart must continue to operate as independent, separate companies. Each Party shall make its own independent competitive decisions regarding all aspects of its business, including pricing, marketing, sales, product development, customer service, and logistics, without regard to the CSI or HCI received from the other Party.
(b) No Operational Control. Neither Party shall exercise (or attempt to exercise) operational control over the other Party's business, assets, or employees prior to the closing of the Transaction. Without limiting the generality of the foregoing, neither Party shall:
(i) direct, approve, or veto the other Party's business decisions, including decisions relating to pricing, product offerings, promotional activities, or capital expenditures;
(ii) direct, approve, or veto the other Party's hiring, firing, compensation, or employee assignment decisions, other than as specifically contemplated in connection with the post-closing employment agreements for Julian Reeves (CEO of NovaMart) and Priya Narasimhan (CTO of NovaMart) and the $18,000,000 retention pool established for key NovaMart employees, which agreements are being negotiated in connection with the Transaction but shall not become effective until the closing of the Transaction;
(iii) share or exchange real-time sales data, inventory data, or operational data between Cascade and NovaMart; or