Contract analysis

From: Bernard Crawford <bcrawford@calderwoodharkness.com> To: Catherine Nygaard <cnygaard@wndlaw.com> Cc: James Underwood <junderwood@calderwoodharkness.com> Date: Tue, 01 Apr 2025 03:47:00 -0000 Subject: CRH v. Rathore et al. (C.A. No. 2025-0198-MTZ) – Open Points on Modified Non-Compete Scope

I hope this finds you well. I am writing to address the three remaining open points on the definition and scope of the modified non-compete product categories in Exhibit A (Modified Restrictive Covenant Terms) of the Standstill and Settlement Agreement.

As you know, we circulated the second draft on March 31 incorporating the comments received from your team and from Blackhall & Soren. I am pleased that the majority of the issues raised in the second draft have been resolved or are close to resolution. What remains, as I see it, are three definitional questions within the product-category restrictions—questions that go to the heart of the framework the parties agree

I address each in turn below and offer what I believe are workable compromise positions. My goal is to narrow these gaps efficiently so that the third draft can be circulated on schedule.

The revised term sheet established that the modified non-compete for Ms. Rathore (12 months, running through February 6, 2026) and the other seven employees (9 months, through November 6, 2025) would be limited to three product categories: home goods, seasonal décor, and private-label apparel. In the second draft, CRH proposed a definition of "home goods" encompassing furniture, home textiles, kitchenware, bath acces

I have reviewed your team's comment that this definition is overbroad, particularly with respect to the "decorative home accessories" subcategory, which WND argues overlaps with the separately defined "seasonal décor" category and could effectively create a double restriction. I think that concern has merit and can be addressed directly.

We would propose the following compromise: define "home goods" to cover furniture, home textiles, kitchenware, bath accessories, and home storage and organization, and expressly exclude from the "home goods" definition any decorative items that fall within the separately defined "seasonal décor" category. This approach is consistent with CRH's internal category taxonomy as used in its merchandising division (which ge

This point requires somewhat more discussion. I understand WND's position to be that "seasonal décor" should be limited to holiday-specific merchandise—Christmas, Halloween, Easter, and the like—and should not encompass year-round decorative items. CRH does not disagree with the latter proposition. However, CRH's position is that the term must include seasonal outdoor living and seasonal entertaining categories. Thes

We would propose the following definition:

> "Seasonal Décor" means merchandise marketed or positioned for sale in connection with specific calendar seasons or holidays, including but not limited to holiday décor, seasonal outdoor living products, and seasonal entertaining products, but excluding permanent or year-round home décor items not tied to a specific season or holiday.

I believe this definition is narrow enough to satisfy Delaware's reasonableness standard while protecting the specific competitive interests at stake—particularly given the Rathore Group's documented access to the Project Ridgeline five-year category expansion roadmap, which covers precisely these categories. The definition draws a clear line: if it is tied to a season or holiday, it is captured; if it is a permanent

**3. Definition of "Private-Label Apparel"**

This is, I believe, the least contentious of the three open points. Your team's comment requested clarification that the restriction covers only private-label apparel brands owned or developed by CRH, not all private-label apparel generally. That is a reasonable clarification, and we are prepared to accept it in substance.

We would propose the following language: the restriction would cover "apparel products sold under private-label brands that are owned, developed, or exclusively sourced by Cascade Retail Holdings Inc. or any of its subsidiaries, or any private-label apparel brands that are substantially similar to or derivative of such CRH private-label brands."

I want to flag that the "substantially similar or derivative" language is, in our view, necessary to prevent circumvention—for example, Verdana launching a near-identical private-label line using CRH's proprietary sourcing strategies obtained through the exfiltrated files. As you are aware, the Pinnacle Forensics preliminary analysis identified 14,327 exfiltrated files, including private-label cost models that would

I would appreciate your team's response on these three points by close of business Thursday, April 3, so that the agreed definitions can be incorporated into the third draft, which we aim to circulate by Friday, April 4. Separately, James Underwood is corresponding with Meredith Lau regarding the data destruction protocol and forensic audit mechanics, including Pinnacle Forensics' role and the $175,000 cost cap to be

If these three points can be resolved, I believe the parties will be well positioned to move to a near-final fourth draft by approximately April 8 and to meet the April 14 target execution date. I would note that the Consent Order to be filed with Vice Chancellor Zhao will incorporate these definitions by reference to Exhibit A of the Settlement Agreement, so precision in the drafting is important for enforcement pur

If it would be helpful, I am happy to schedule a call with you and, if appropriate, Gavin Blackhall to work through any remaining disagreement on these points. I am generally available Thursday morning or Friday before noon.

Thank you, Catherine, for your team's constructive engagement throughout the documentation process. It has made a meaningful difference in keeping this on track.

Bernard Crawford Partner Calderwood & Harkness LLP 1301 K Street NW, Suite 1200 Washington, DC 20005 Tel: (202) 555-4100 bcrawford@calderwoodharkness.com Matter No. 1038-00006

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