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PRIVILEGED AND CONFIDENTIAL ATTORNEY WORK PRODUCT ATTORNEY-CLIENT COMMUNICATION

CALDERWOOD & HARKNESS LLP 1301 K Street NW, Suite 1200 Washington, DC 20005

601 South Figueroa Street, Suite 4200 Los Angeles, CA 90017

April 11, 2025

MEMORANDUM

Theresa:

Enclosed for your review and comment is draft disclosure language for Cascade Retail Holdings Inc.'s ("CRH" or the "Company") Form 8-K Current Report to be filed with the Securities and Exchange Commission under Item 8.01 (Other Events) following execution of the Standstill and Settlement Agreement with Verdana Commerce Group, Inc. and the Individual Defendants and entry of the Consent Order by the Delaware Court of Chancery.

This draft is intended to serve as the operative filing language. However, before finalization, we recommend the following coordination steps:

1. Outside Auditors. This draft should be circulated to Denise Wheatley and her engagement team at Hargrove & Tillett CPA, PLLC for their review and input, particularly as it relates to the quantification of the economic recovery and any interaction with the pre-existing litigation contingency accrual carried on CRH's balance sheet. We understand that the existing accrual of $3,500,000 recorded under ASC 450 will need to be reversed or adjusted in light of the settlement proceeds, and this adjustment will likely be addressed in the Company's Q1 2025 Form 10-Q subsequent events disclosure. Coordination with Hargrove & Tillett will help ensure consistency between the 8-K narrative and the quarterly financial statement treatment.

2. Internal Securities Counsel. We recommend that CRH's internal securities disclosure counsel review the draft for conformity with CRH's established disclosure practices, including the Company's preferred formatting conventions, boilerplate language, and any additional risk factor cross-references that CRH's disclosure committee believes are appropriate.

3. Companion Memorandum. Our companion memorandum dated April 9, 2025 (SEC Disclosure Considerations — Materiality Analysis and Filing Obligations) provides a detailed analysis of the materiality threshold and the bases for filing. As noted in that memorandum, while the total economic recovery of approximately $10,024,500 is relatively modest in relation to CRH's $6.82 billion FY2024 revenue (approximately 0.15%) and approximately $4.1 billion market capitalization (approximately 0.24%), we recommend voluntary, precautionary filing under Item 8.01 given the qualitative significance of the underlying subject matter, including the coordinated departure of senior merchandising personnel, the trade secret allegations, and the involvement of a direct competitor.

4. Filing Timeline. We recommend filing promptly following execution of the Settlement Agreement and entry of the Consent Order. If the target execution date of April 14, 2025 holds, the 8-K should be filed on or before April 18, 2025 (four business days from the triggering event). We recommend same-day filing on April 14, 2025 if practicable.

We have included internal notes to the client in the appendix to this memorandum identifying additional action items that should be addressed concurrently with or promptly following the filing. These notes are not intended for inclusion in the 8-K and are provided solely for CRH's internal planning purposes.

Please do not hesitate to contact Bernard Crawford at (202) 555-0147 or James Underwood at (202) 555-0239 with any questions or comments.

DRAFT FORM 8-K CURRENT REPORT DISCLOSURE LANGUAGE

Prepared for Cascade Retail Holdings Inc. Calderwood & Harkness LLP — Matter No. 1038-00006 April 11, 2025

SECTION 1: FORM 8-K HEADER / COVER PAGE LANGUAGE

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): April 14, 2025

CASCADE RETAIL HOLDINGS INC. (Exact name of registrant as specified in its charter)

2200 Elliott Avenue West, Suite 3400 Seattle, Washington 98119 (Address of principal executive offices, including zip code)

(206) [___]-[____] (Registrant's telephone number, including area code)

Not Applicable (Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

• Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

• Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

• Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

• Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

SECTION 2: ITEM 8.01 — OTHER EVENTS

Item 8.01. Other Events.

Settlement of Covenant-Enforcement Litigation

On April 14, 2025, Cascade Retail Holdings Inc. (the "Company") entered into a Standstill and Settlement Agreement (the "Settlement Agreement") with Verdana Commerce Group, Inc. ("Verdana"), a privately held omnichannel retail company, and eight former employees of the Company (the "Individual Defendants" and, together with Verdana, the "Defendants"), resolving in its entirety the litigation captioned Cascade Retail Holdings Inc. v. Rathore et al., C.A. No. 2025-0198-MTZ (the "Action"), pending in the Court of Chancery of the State of Delaware before Vice Chancellor Margaret T. Zhao. In connection with the Settlement Agreement, the parties filed a Stipulation of Settlement and Proposed Consent Order with the Court of Chancery (the "Consent Order"), which was entered by Vice Chancellor Zhao on April 14, 2025.

Background of the Litigation

In February 2025, the Company discovered that a group of eight senior merchandising employees, led by Priya Rathore, the Company's former Senior Vice President of Merchandising, had resigned from the Company in a coordinated departure and accepted employment with Verdana, a direct competitor of the Company in the retail merchandising sector. The coordinated resignations occurred on or about February 7, 2025. The departing employees included individuals holding senior roles in the Company's merchandising division with significant access to the Company's proprietary data, merchandising strategies, vendor relationships, and trade secrets.

On March 5, 2025, the Company filed a Verified Complaint in the Court of Chancery of the State of Delaware against the Individual Defendants and Verdana. The Verified Complaint asserted the following causes of action: (i) breach of restrictive covenant obligations, including non-competition, non-solicitation, and non-disclosure agreements, against the Individual Defendants; (ii) breach of confidentiality obligations against the Individual Defendants; (iii) misappropriation of trade secrets under the Delaware Uniform Trade Secrets Act, 6 Del. C. § 2001 et seq., against all Defendants; (iv) tortious interference with contractual relations against Verdana; and (v) civil conspiracy against all Defendants.

On March 7, 2025, the Court granted the Company's motion for a temporary restraining order (the "TRO"), restraining the Individual Defendants from commencing employment in merchandising roles at Verdana or engaging in any activities in violation of their restrictive covenant obligations, pending further order of the Court. The Company posted a cash injunction bond in the amount of $2,500,000 in connection with the TRO.

Following entry of the TRO, the parties engaged in expedited discovery and, at the direction of the Court, participated in a court-supervised mediation conducted by a mediator appointed by Vice Chancellor Zhao. On March 20, 2025, the parties reached a settlement framework during the mediation, which formed the basis for the Settlement Agreement executed on April 14, 2025.

Summary of Settlement Terms

The material terms of the Settlement Agreement are as follows:

Monetary Payment. Pursuant to the Settlement Agreement, Verdana will pay the Company $8,750,000 in cash (the "Settlement Payment") within thirty (30) days of the date of execution of the Settlement Agreement.

Litigation Cost Reimbursement. In addition to the Settlement Payment, Verdana will reimburse the Company $425,000 toward litigation costs and expenses incurred by the Company in connection with the Action.

Equity Forfeitures. The Individual Defendants have agreed to forfeit unvested and clawed-back equity awards previously granted under the Company's equity incentive plans with an aggregate value of approximately $849,500, comprising approximately $362,500 attributable to Ms. Rathore and approximately $487,000 in the aggregate attributable to the remaining seven Individual Defendants. The forfeited awards consist of restricted stock units and performance share awards that were subject to continued employment vesting conditions or were subject to clawback provisions triggered by the Individual Defendants' breaches of their restrictive covenant obligations.

Total Economic Recovery. The total economic recovery to the Company under the Settlement Agreement is approximately $10,024,500, consisting of (i) the $8,750,000 Settlement Payment, (ii) $849,500 in equity forfeitures, and (iii) $425,000 in litigation cost reimbursement.

Modified Restrictive Covenants. The Settlement Agreement provides for modified restrictive covenant obligations applicable to the Individual Defendants, which supersede the original restrictive covenants set forth in the Individual Defendants' employment agreements with the Company. The modified restrictive covenants include:

(a) Non-Competition Restrictions. Each Individual Defendant is restricted from engaging in competitive activities with respect to specified product categories — namely, home goods, seasonal décor, and private-label apparel — for periods ranging from nine (9) to twelve (12) months from the date of resignation (February 7, 2025), with the applicable period determined on an individual basis based on the seniority and role of each Individual Defendant. The modified non-competition restrictions are narrower in scope than the original contractual restrictions in that they are limited to the specified product categories rather than applying to the Company's full range of merchandising operations.

(b) Non-Solicitation of Employees. Each Individual Defendant is restricted from soliciting, recruiting, or inducing the resignation of any employee of the Company for a period of eighteen (18) months from the date of resignation (February 7, 2025).

(c) Non-Solicitation of Vendors. Each Individual Defendant is restricted from soliciting, diverting, or interfering with the Company's relationships with certain identified Company vendors for a period of twelve (12) months from the date of resignation (February 7, 2025). The list of covered vendors is set forth in a confidential exhibit to the Settlement Agreement.

Data Return and Destruction. The Individual Defendants and Verdana have agreed to return to the Company, or certify the destruction of, all Company proprietary data, including trade secrets, confidential business information, merchandising strategies, vendor pricing data, and customer analytics, within ten (10) business days of execution of the Settlement Agreement. In addition, Verdana has agreed to permit an independent forensic audit of its information systems and devices to verify compliance with the data return and destruction obligations. The forensic audit will be conducted by an independent forensic technology firm selected by mutual agreement of the parties. The cost of the forensic audit will be borne by Verdana, subject to a cost cap of $175,000.

Compliance Monitor. The parties have agreed to the appointment of an independent compliance monitor (the "Monitor") for a twelve (12) month period commencing on the date of entry of the Consent Order. The Monitor will be responsible for verifying adherence by the Individual Defendants and Verdana to the modified restrictive covenant obligations and the data-destruction obligations set forth in the Settlement Agreement and the Consent Order. The estimated total cost of the compliance monitoring engagement is $360,000, which will be shared between Verdana (60%) and the Company (40%).

Consent Order and Court Jurisdiction. In connection with the Settlement Agreement, the parties filed a Stipulation of Settlement and Proposed Consent Order with the Court of Chancery, which was entered by Vice Chancellor Zhao on April 14, 2025. The Consent Order incorporates the modified restrictive covenant terms and the data return and destruction obligations and provides that the Court of Chancery will retain jurisdiction over the Action for purposes of enforcement of the Consent Order and resolution of any disputes arising under the Settlement Agreement during the compliance monitoring period.

Dismissal. The Action is expected to be dismissed with prejudice upon successful completion of the twelve (12) month compliance monitoring period, subject to the Court's approval.

No Admission of Liability. The Settlement Agreement does not constitute an admission of wrongdoing or liability by any party. Each of the Defendants entered into the Settlement Agreement without admitting or denying any of the claims, allegations, or causes of action set forth in the Verified Complaint.

Additional Information. The Company's merchandising division is a core component of the Company's retail operations and generated approximately $2.3 billion in gross merchandise value in fiscal year 2024. The Company has taken steps to ensure continuity of its merchandising operations, including the reallocation of responsibilities among existing personnel and the recruitment of replacement merchandising leadership. The Company believes that the terms of the Settlement Agreement, including the modified restrictive covenants, the data return and destruction obligations, and the compliance monitoring provisions, adequately protect the Company's proprietary information, trade secrets, and confidential business strategies and are in the best interests of the Company and its stockholders.

[Note to CRH: The foregoing paragraph is optional. Please advise whether the Company wishes to include this additional context regarding the merchandising division and operational impact, or whether the Company prefers to limit the disclosure to the settlement terms. We recommend inclusion for completeness and to provide context for investors, but the paragraph can be removed without affecting the sufficiency of the disclosure.]

SECTION 3: ITEM 9.01 — FINANCIAL STATEMENTS AND EXHIBITS

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

[Note to CRH: Exhibit 99.1 is a placeholder. Please advise whether the Company intends to issue a press release in connection with the settlement. If so, we will prepare companion press release language for the Company's review. If the Company does not intend to issue a press release, this exhibit line should be deleted from the filing.]*

[Note to CRH: We do not presently contemplate filing the Settlement Agreement itself as an exhibit to the Form 8-K. As discussed in our companion memorandum dated April 9, 2025 (SEC Disclosure Considerations), the Settlement Agreement is not expected to qualify as a "material contract" requiring filing under Item 601(b)(10) of Regulation S-K given that the total economic recovery of approximately $10,024,500 represents approximately 0.15% of CRH's $6.82 billion FY2024 revenue and approximately 0.24% of CRH's approximately $4.1 billion market capitalization. Filing of the Settlement Agreement as Exhibit 10.1 would also raise confidentiality concerns, as the agreement contains a confidential vendor list and other commercially sensitive terms. However, we recommend discussing this determination with CRH's securities disclosure counsel and Hargrove & Tillett, and we are prepared to make a Confidential Treatment Request under Rule 24b-2 if the Company determines that filing is advisable or required. Please confirm CRH's preference.]

SECTION 4: CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Cautionary Statement Regarding Forward-Looking Statements

This Current Report on Form 8-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are subject to the "safe harbor" created by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, but are not limited to, statements regarding the expected timeline for dismissal of the Action, the anticipated outcomes of the compliance monitoring period, the expected effectiveness of the modified restrictive covenants and data return and destruction obligations, the Company's expectations regarding operational continuity of its merchandising division, the timing and receipt of the Settlement Payment, and other statements that are not historical facts. In some cases, forward-looking statements can be identified by words such as "expect," "anticipate," "believe," "estimate," "intend," "plan," "will," "may," "should," "could," "would," or similar expressions.

These forward-looking statements are based on the Company's current expectations and assumptions regarding the Settlement Agreement, the Consent Order, and the Company's business operations as of the date of this report. Actual results may differ materially from those expressed or implied in these forward-looking statements due to range factors, including, but not limited to:

• the ability of the Company and the compliance monitor to effectively enforce the modified restrictive covenants against the Individual Defendants;

• the success or failure of the data destruction and forensic audit processes, including the risk that Company proprietary data may have been disseminated, copied, or retained beyond the scope of the forensic audit;

• the potential for future competitive harm from the Individual Defendants' knowledge of the Company's merchandising strategies, vendor relationships, and trade secrets, notwithstanding the Settlement Agreement;

• the risk that Verdana or the Individual Defendants may fail to comply with the terms of the Settlement Agreement or the Consent Order, resulting in further litigation or enforcement proceedings;

• the risk that the Settlement Payment or litigation cost reimbursement may not be received in the amounts or within the timeframes contemplated by the Settlement Agreement;

• the Company's ability to recruit and retain qualified merchandising personnel to replace the departing employees;

• general economic conditions and conditions in the retail industry, including shifts in consumer demand and competitive dynamics;

• other risks and uncertainties described under "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2025, as filed with the Securities and Exchange Commission, and in other filings the Company makes with the Securities and Exchange Commission from time to time.

The Company cautions readers not to place undue reliance on any forward-looking statements, which speak only as of the date of this report. The Company undertakes no obligation to publicly update or revise any forward-looking statement after the date of this report, whether as a result of new information, future events, or otherwise, except as required by law.

SECTION 5: SIGNATURES

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

CASCADE RETAIL HOLDINGS INC.

Date: April __, 2025

By: ________

Name: Theresa Yun-Park

Title: General Counsel and Secretary

[Note to CRH: Please confirm the appropriate signatory for the Form 8-K. We have designated Theresa Yun-Park, General Counsel and Secretary, as the signatory. If CRH prefers that the filing be signed by a different authorized officer (e.g., the Chief Financial Officer or Chief Executive Officer), please advise and we will revise accordingly.]

APPENDIX: CALDERWOOD & HARKNESS INTERNAL NOTES TO CLIENT

NOT FOR FILING — PRIVILEGED AND CONFIDENTIAL ATTORNEY WORK PRODUCT

The following internal notes are provided to Cascade Retail Holdings Inc. for coordination purposes in connection with the filing of the Form 8-K. These notes are attorney work product and attorney-client privileged communications and should not be included in the 8-K filing or distributed outside of the Company's legal department without prior consultation with Calderwood & Harkness.

1. Coordination with Outside Auditors (Hargrove & Tillett CPA, PLLC).

This draft should be reviewed by Denise Wheatley and her engagement team at Hargrove & Tillett CPA, PLLC, the Company's independent registered public accounting firm. In particular, the following items should be coordinated with Hargrove & Tillett:

(a) Litigation Contingency Accrual. The Company's balance sheet as of January 31, 2025 (fiscal year-end) reflects a litigation contingency accrual of $3,500,000 under ASC 450-20 related to the potential exposure arising from the Rathore litigation and the TRO proceedings. In light of the Settlement Agreement, under which the Company is the recipient of settlement proceeds rather than a payor, this accrual will need to be reversed or adjusted. The reversal of the accrual and the recognition of the settlement proceeds should be discussed with Hargrove & Tillett to ensure proper accounting treatment under ASC 450 and ASC 606 (or other applicable guidance) and to determine the appropriate period for recognition.

(b) Q1 2025 Form 10-Q Subsequent Events Disclosure. The settlement will occur during the Company's first fiscal quarter of 2025 (February 1, 2025 – May 2, 2025). If execution occurs on April 14, 2025, the settlement will constitute a recognized subsequent event under ASC 855-10-25 that should be reflected in the Company's Q1 2025 financial statements and disclosed in the notes to the interim financial statements included in the Form 10-Q. We recommend coordinating the 8-K disclosure language with the Form 10-Q subsequent events note to ensure consistency.

(c) Quantification of Equity Forfeitures. The aggregate value of the equity forfeitures ($849,500) should be confirmed with Hargrove & Tillett to ensure consistency with the Company's equity compensation records and stock plan administration records. The valuation methodology (i.e., whether the forfeiture value is based on the fair market value of the awards at the date of resignation, the date of the Settlement Agreement, or another measurement date) should be documented and consistently applied.

2. Notification to Keypoint National Bank, N.A. under Credit Facility.

Section 6.02(c) of the Company's $750,000,000 Senior Secured Revolving Credit Agreement, dated as of June 15, 2023, by and among the Company, the lenders party thereto, and Keypoint National Bank, N.A., as administrative agent (as amended), requires the Company to provide prompt written notice to the administrative agent of the settlement, compromise, or final adjudication of any litigation or proceeding that, individually or in the aggregate, could reasonably be expected to have a material adverse effect on the Company or that involves a payment or receipt in excess of $5,000,000. While the settlement is favorable to the Company, the $8,750,000 Settlement Payment exceeds the $5,000,000 notice threshold. Accordingly, a written notification letter to Keypoint National Bank, N.A. should be sent concurrently with or promptly following the filing of the 8-K. We are prepared to assist with the preparation of this notification letter upon the Company's request.

3. Board Approval and Ratification.

Please cross-reference the Board memorandum dated April 10, 2025, prepared by Calderwood & Harkness and circulated to the Board of Directors of the Company, recommending approval of the Settlement Agreement. The draft board resolution authorizing execution of the Settlement Agreement and ratification of the settlement terms should be adopted by the Board (or by the Litigation Committee of the Board, if the Board has delegated such authority) prior to or contemporaneously with execution on April 14, 2025. We recommend confirming that the board resolution has been duly adopted and that a copy of the executed resolution is maintained in the Company's minute books prior to filing the 8-K.

4. Filing Timeline and Mechanics.

Under Form 8-K, the filing must be made within four (4) business days of the date of the earliest event requiring disclosure. If the Settlement Agreement is executed on April 14, 2025 (Monday), the four-business-day deadline is April 18, 2025 (Friday). We recommend same-day filing on April 14, 2025 if practicable, or at the latest on April 15, 2025, to minimize the window between execution and public disclosure. The Company's EDGAR filing agent should be notified and placed on standby in advance of the execution date.

5. Press Release Considerations.

Please advise whether the Company intends to issue a press release in connection with the settlement. If a press release is issued, we recommend coordinating the timing of the press release with the 8-K filing. The press release would be filed as Exhibit 99.1 to the 8-K and furnished under Item 7.01 (Regulation FD Disclosure). We are prepared to assist with the preparation of press release language upon the Company's request.

6. Contact Information.

For questions regarding this draft or the settlement generally, please contact:

Bernard Crawford, Partner Calderwood & Harkness LLP 1301 K Street NW, Suite 1200 Washington, DC 20005 Telephone: (202) 555-0147

Email: bcrawford@calderwoodharkness.com

Renata Vasquez, Partner Calderwood & Harkness LLP 601 South Figueroa Street, Suite 4200 Los Angeles, CA 90017 Telephone: (213) 555-0382

Email: rvasquez@calderwoodharkness.com

James Underwood, Associate Calderwood & Harkness LLP 1301 K Street NW, Suite 1200 Washington, DC 20005 Telephone: (202) 555-0239

Email: junderwood@calderwoodharkness.com

— END OF DRAFT —

TO:	Theresa Yun-Park, General Counsel and Secretary, Cascade Retail Holdings Inc.
FROM:	Bernard Crawford, Partner, Calderwood & Harkness LLP

James Underwood, Associate, Calderwood & Harkness LLP

RE:	Draft Form 8-K Current Report Disclosure Language — Settlement of Cascade Retail Holdings Inc. v. Rathore et al., C.A. No. 2025-0198-MTZ (Del. Ch.)
MATTER NO.:	1038-00006
Delaware	[___]-[______]	91-2847351
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification Number)
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	CRHL	The Nasdaq Stock Market LLC
Exhibit No.	Description
99.1	Press Release of Cascade Retail Holdings Inc. dated April 14, 2025.*
104	Cover Page Interactive Data File (embedded within the Inline XBRL document).

PRIVILEGED AND CONFIDENTIAL ATTORNEY WORK PRODUCT ATTORNEY-CLIENT COMMUNICATION
CALDERWOOD & HARKNESS LLP 1301 K Street NW, Suite 1200 Washington, DC 20005
601 South Figueroa Street, Suite 4200 Los Angeles, CA 90017
April 11, 2025
MEMORANDUM
Theresa:
Enclosed for your review and comment is draft disclosure language for Cascade Retail Holdings Inc.'s ("CRH" or the "Company") Form 8-K Current Report to be filed with the Securities and Exchange Commission under Item 8.01 (Other Events) following execution of the Standstill and Settlement Agreement with Verdana Commerce Group, Inc. and the Individual Defendants and entry of the Consent Order by the Delaware Court of Chancery.
This draft is intended to serve as the operative filing language. However, before finalization, we recommend the following coordination steps:
1.  Outside Auditors. This draft should be circulated to Denise Wheatley and her engagement team at Hargrove & Tillett CPA, PLLC for their review and input, particularly as it relates to the quantification of the economic recovery and any interaction with the pre-existing litigation contingency accrual carried on CRH's balance sheet. We understand that the existing accrual of $3,500,000 recorded under ASC 450 will need to be reversed or adjusted in light of the settlement proceeds, and this adjustment will likely be addressed in the Company's Q1 2025 Form 10-Q subsequent events disclosure. Coordination with Hargrove & Tillett will help ensure consistency between the 8-K narrative and the quarterly financial statement treatment.
2.  Internal Securities Counsel. We recommend that CRH's internal securities disclosure counsel review the draft for conformity with CRH's established disclosure practices, including the Company's preferred formatting conventions, boilerplate language, and any additional risk factor cross-references that CRH's disclosure committee believes are appropriate.
3.  Companion Memorandum. Our companion memorandum dated April 9, 2025 (SEC Disclosure Considerations — Materiality Analysis and Filing Obligations) provides a detailed analysis of the materiality threshold and the bases for filing. As noted in that memorandum, while the total economic recovery of approximately $10,024,500 is relatively modest in relation to CRH's $6.82 billion FY2024 revenue (approximately 0.15%) and approximately $4.1 billion market capitalization (approximately 0.24%), we recommend voluntary, precautionary filing under Item 8.01 given the qualitative significance of the underlying subject matter, including the coordinated departure of senior merchandising personnel, the trade secret allegations, and the involvement of a direct competitor.
4.  Filing Timeline. We recommend filing promptly following execution of the Settlement Agreement and entry of the Consent Order. If the target execution date of April 14, 2025 holds, the 8-K should be filed on or before April 18, 2025 (four business days from the triggering event). We recommend same-day filing on April 14, 2025 if practicable.
We have included internal notes to the client in the appendix to this memorandum identifying additional action items that should be addressed concurrently with or promptly following the filing. These notes are not intended for inclusion in the 8-K and are provided solely for CRH's internal planning purposes.
Please do not hesitate to contact Bernard Crawford at (202) 555-0147 or James Underwood at (202) 555-0239 with any questions or comments.
DRAFT FORM 8-K CURRENT REPORT DISCLOSURE LANGUAGE
Prepared for Cascade Retail Holdings Inc. Calderwood & Harkness LLP — Matter No. 1038-00006 April 11, 2025
SECTION 1: FORM 8-K HEADER / COVER PAGE LANGUAGE
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 14, 2025
CASCADE RETAIL HOLDINGS INC. (Exact name of registrant as specified in its charter)
2200 Elliott Avenue West, Suite 3400 Seattle, Washington 98119 (Address of principal executive offices, including zip code)
(206) [___]-[____] (Registrant's telephone number, including area code)
Not Applicable (Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
•  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
•  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
•  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
•  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
SECTION 2: ITEM 8.01 — OTHER EVENTS
Item 8.01. Other Events.
Settlement of Covenant-Enforcement Litigation
On April 14, 2025, Cascade Retail Holdings Inc. (the "Company") entered into a Standstill and Settlement Agreement (the "Settlement Agreement") with Verdana Commerce Group, Inc. ("Verdana"), a privately held omnichannel retail company, and eight former employees of the Company (the "Individual Defendants" and, together with Verdana, the "Defendants"), resolving in its entirety the litigation captioned Cascade Retail Holdings Inc. v. Rathore et al., C.A. No. 2025-0198-MTZ (the "Action"), pending in the Court of Chancery of the State of Delaware before Vice Chancellor Margaret T. Zhao. In connection with the Settlement Agreement, the parties filed a Stipulation of Settlement and Proposed Consent Order with the Court of Chancery (the "Consent Order"), which was entered by Vice Chancellor Zhao on April 14, 2025.
Background of the Litigation
In February 2025, the Company discovered that a group of eight senior merchandising employees, led by Priya Rathore, the Company's former Senior Vice President of Merchandising, had resigned from the Company in a coordinated departure and accepted employment with Verdana, a direct competitor of the Company in the retail merchandising sector. The coordinated resignations occurred on or about February 7, 2025. The departing employees included individuals holding senior roles in the Company's merchandising division with significant access to the Company's proprietary data, merchandising strategies, vendor relationships, and trade secrets.
On March 5, 2025, the Company filed a Verified Complaint in the Court of Chancery of the State of Delaware against the Individual Defendants and Verdana. The Verified Complaint asserted the following causes of action: (i) breach of restrictive covenant obligations, including non-competition, non-solicitation, and non-disclosure agreements, against the Individual Defendants; (ii) breach of confidentiality obligations against the Individual Defendants; (iii) misappropriation of trade secrets under the Delaware Uniform Trade Secrets Act, 6 Del. C. § 2001 et seq., against all Defendants; (iv) tortious interference with contractual relations against Verdana; and (v) civil conspiracy against all Defendants.
On March 7, 2025, the Court granted the Company's motion for a temporary restraining order (the "TRO"), restraining the Individual Defendants from commencing employment in merchandising roles at Verdana or engaging in any activities in violation of their restrictive covenant obligations, pending further order of the Court. The Company posted a cash injunction bond in the amount of $2,500,000 in connection with the TRO.
Following entry of the TRO, the parties engaged in expedited discovery and, at the direction of the Court, participated in a court-supervised mediation conducted by a mediator appointed by Vice Chancellor Zhao. On March 20, 2025, the parties reached a settlement framework during the mediation, which formed the basis for the Settlement Agreement executed on April 14, 2025.
Summary of Settlement Terms
The material terms of the Settlement Agreement are as follows:
Monetary Payment. Pursuant to the Settlement Agreement, Verdana will pay the Company $8,750,000 in cash (the "Settlement Payment") within thirty (30) days of the date of execution of the Settlement Agreement.
Litigation Cost Reimbursement. In addition to the Settlement Payment, Verdana will reimburse the Company $425,000 toward litigation costs and expenses incurred by the Company in connection with the Action.
Equity Forfeitures. The Individual Defendants have agreed to forfeit unvested and clawed-back equity awards previously granted under the Company's equity incentive plans with an aggregate value of approximately $849,500, comprising approximately $362,500 attributable to Ms. Rathore and approximately $487,000 in the aggregate attributable to the remaining seven Individual Defendants. The forfeited awards consist of restricted stock units and performance share awards that were subject to continued employment vesting conditions or were subject to clawback provisions triggered by the Individual Defendants' breaches of their restrictive covenant obligations.
Total Economic Recovery. The total economic recovery to the Company under the Settlement Agreement is approximately $10,024,500, consisting of (i) the $8,750,000 Settlement Payment, (ii) $849,500 in equity forfeitures, and (iii) $425,000 in litigation cost reimbursement.
Modified Restrictive Covenants. The Settlement Agreement provides for modified restrictive covenant obligations applicable to the Individual Defendants, which supersede the original restrictive covenants set forth in the Individual Defendants' employment agreements with the Company. The modified restrictive covenants include:
(a) Non-Competition Restrictions. Each Individual Defendant is restricted from engaging in competitive activities with respect to specified product categories — namely, home goods, seasonal décor, and private-label apparel — for periods ranging from nine (9) to twelve (12) months from the date of resignation (February 7, 2025), with the applicable period determined on an individual basis based on the seniority and role of each Individual Defendant. The modified non-competition restrictions are narrower in scope than the original contractual restrictions in that they are limited to the specified product categories rather than applying to the Company's full range of merchandising operations.
(b) Non-Solicitation of Employees. Each Individual Defendant is restricted from soliciting, recruiting, or inducing the resignation of any employee of the Company for a period of eighteen (18) months from the date of resignation (February 7, 2025).
(c) Non-Solicitation of Vendors. Each Individual Defendant is restricted from soliciting, diverting, or interfering with the Company's relationships with certain identified Company vendors for a period of twelve (12) months from the date of resignation (February 7, 2025). The list of covered vendors is set forth in a confidential exhibit to the Settlement Agreement.
Data Return and Destruction. The Individual Defendants and Verdana have agreed to return to the Company, or certify the destruction of, all Company proprietary data, including trade secrets, confidential business information, merchandising strategies, vendor pricing data, and customer analytics, within ten (10) business days of execution of the Settlement Agreement. In addition, Verdana has agreed to permit an independent forensic audit of its information systems and devices to verify compliance with the data return and destruction obligations. The forensic audit will be conducted by an independent forensic technology firm selected by mutual agreement of the parties. The cost of the forensic audit will be borne by Verdana, subject to a cost cap of $175,000.
Compliance Monitor. The parties have agreed to the appointment of an independent compliance monitor (the "Monitor") for a twelve (12) month period commencing on the date of entry of the Consent Order. The Monitor will be responsible for verifying adherence by the Individual Defendants and Verdana to the modified restrictive covenant obligations and the data-destruction obligations set forth in the Settlement Agreement and the Consent Order. The estimated total cost of the compliance monitoring engagement is $360,000, which will be shared between Verdana (60%) and the Company (40%).
Consent Order and Court Jurisdiction. In connection with the Settlement Agreement, the parties filed a Stipulation of Settlement and Proposed Consent Order with the Court of Chancery, which was entered by Vice Chancellor Zhao on April 14, 2025. The Consent Order incorporates the modified restrictive covenant terms and the data return and destruction obligations and provides that the Court of Chancery will retain jurisdiction over the Action for purposes of enforcement of the Consent Order and resolution of any disputes arising under the Settlement Agreement during the compliance monitoring period.
Dismissal. The Action is expected to be dismissed with prejudice upon successful completion of the twelve (12) month compliance monitoring period, subject to the Court's approval.
No Admission of Liability. The Settlement Agreement does not constitute an admission of wrongdoing or liability by any party. Each of the Defendants entered into the Settlement Agreement without admitting or denying any of the claims, allegations, or causes of action set forth in the Verified Complaint.
Additional Information.  The Company's merchandising division is a core component of the Company's retail operations and generated approximately $2.3 billion in gross merchandise value in fiscal year 2024. The Company has taken steps to ensure continuity of its merchandising operations, including the reallocation of responsibilities among existing personnel and the recruitment of replacement merchandising leadership. The Company believes that the terms of the Settlement Agreement, including the modified restrictive covenants, the data return and destruction obligations, and the compliance monitoring provisions, adequately protect the Company's proprietary information, trade secrets, and confidential business strategies and are in the best interests of the Company and its stockholders.
[Note to CRH: The foregoing paragraph is optional. Please advise whether the Company wishes to include this additional context regarding the merchandising division and operational impact, or whether the Company prefers to limit the disclosure to the settlement terms. We recommend inclusion for completeness and to provide context for investors, but the paragraph can be removed without affecting the sufficiency of the disclosure.]
SECTION 3: ITEM 9.01 — FINANCIAL STATEMENTS AND EXHIBITS
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
[Note to CRH: Exhibit 99.1 is a placeholder. Please advise whether the Company intends to issue a press release in connection with the settlement. If so, we will prepare companion press release language for the Company's review. If the Company does not intend to issue a press release, this exhibit line should be deleted from the filing.]*
[Note to CRH: We do not presently contemplate filing the Settlement Agreement itself as an exhibit to the Form 8-K. As discussed in our companion memorandum dated April 9, 2025 (SEC Disclosure Considerations), the Settlement Agreement is not expected to qualify as a "material contract" requiring filing under Item 601(b)(10) of Regulation S-K given that the total economic recovery of approximately $10,024,500 represents approximately 0.15% of CRH's $6.82 billion FY2024 revenue and approximately 0.24% of CRH's approximately $4.1 billion market capitalization. Filing of the Settlement Agreement as Exhibit 10.1 would also raise confidentiality concerns, as the agreement contains a confidential vendor list and other commercially sensitive terms. However, we recommend discussing this determination with CRH's securities disclosure counsel and Hargrove & Tillett, and we are prepared to make a Confidential Treatment Request under Rule 24b-2 if the Company determines that filing is advisable or required. Please confirm CRH's preference.]
SECTION 4: CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Cautionary Statement Regarding Forward-Looking Statements
This Current Report on Form 8-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are subject to the "safe harbor" created by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, but are not limited to, statements regarding the expected timeline for dismissal of the Action, the anticipated outcomes of the compliance monitoring period, the expected effectiveness of the modified restrictive covenants and data return and destruction obligations, the Company's expectations regarding operational continuity of its merchandising division, the timing and receipt of the Settlement Payment, and other statements that are not historical facts. In some cases, forward-looking statements can be identified by words such as "expect," "anticipate," "believe," "estimate," "intend," "plan," "will," "may," "should," "could," "would," or similar expressions.
These forward-looking statements are based on the Company's current expectations and assumptions regarding the Settlement Agreement, the Consent Order, and the Company's business operations as of the date of this report. Actual results may differ materially from those expressed or implied in these forward-looking statements due to range factors, including, but not limited to:
•  the ability of the Company and the compliance monitor to effectively enforce the modified restrictive covenants against the Individual Defendants;
•  the success or failure of the data destruction and forensic audit processes, including the risk that Company proprietary data may have been disseminated, copied, or retained beyond the scope of the forensic audit;
•  the potential for future competitive harm from the Individual Defendants' knowledge of the Company's merchandising strategies, vendor relationships, and trade secrets, notwithstanding the Settlement Agreement;
•  the risk that Verdana or the Individual Defendants may fail to comply with the terms of the Settlement Agreement or the Consent Order, resulting in further litigation or enforcement proceedings;
•  the risk that the Settlement Payment or litigation cost reimbursement may not be received in the amounts or within the timeframes contemplated by the Settlement Agreement;
•  the Company's ability to recruit and retain qualified merchandising personnel to replace the departing employees;
•  general economic conditions and conditions in the retail industry, including shifts in consumer demand and competitive dynamics;
•  other risks and uncertainties described under "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2025, as filed with the Securities and Exchange Commission, and in other filings the Company makes with the Securities and Exchange Commission from time to time.
The Company cautions readers not to place undue reliance on any forward-looking statements, which speak only as of the date of this report. The Company undertakes no obligation to publicly update or revise any forward-looking statement after the date of this report, whether as a result of new information, future events, or otherwise, except as required by law.
SECTION 5: SIGNATURES
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
CASCADE RETAIL HOLDINGS INC.
Date: April __, 2025
By: ________
Name: Theresa Yun-Park
Title: General Counsel and Secretary
[Note to CRH: Please confirm the appropriate signatory for the Form 8-K. We have designated Theresa Yun-Park, General Counsel and Secretary, as the signatory. If CRH prefers that the filing be signed by a different authorized officer (e.g., the Chief Financial Officer or Chief Executive Officer), please advise and we will revise accordingly.]
APPENDIX: CALDERWOOD & HARKNESS INTERNAL NOTES TO CLIENT
NOT FOR FILING — PRIVILEGED AND CONFIDENTIAL ATTORNEY WORK PRODUCT
The following internal notes are provided to Cascade Retail Holdings Inc. for coordination purposes in connection with the filing of the Form 8-K. These notes are attorney work product and attorney-client privileged communications and should not be included in the 8-K filing or distributed outside of the Company's legal department without prior consultation with Calderwood & Harkness.
1. Coordination with Outside Auditors (Hargrove & Tillett CPA, PLLC).
This draft should be reviewed by Denise Wheatley and her engagement team at Hargrove & Tillett CPA, PLLC, the Company's independent registered public accounting firm. In particular, the following items should be coordinated with Hargrove & Tillett:
(a) Litigation Contingency Accrual. The Company's balance sheet as of January 31, 2025 (fiscal year-end) reflects a litigation contingency accrual of $3,500,000 under ASC 450-20 related to the potential exposure arising from the Rathore litigation and the TRO proceedings. In light of the Settlement Agreement, under which the Company is the recipient of settlement proceeds rather than a payor, this accrual will need to be reversed or adjusted. The reversal of the accrual and the recognition of the settlement proceeds should be discussed with Hargrove & Tillett to ensure proper accounting treatment under ASC 450 and ASC 606 (or other applicable guidance) and to determine the appropriate period for recognition.
(b) Q1 2025 Form 10-Q Subsequent Events Disclosure. The settlement will occur during the Company's first fiscal quarter of 2025 (February 1, 2025 – May 2, 2025). If execution occurs on April 14, 2025, the settlement will constitute a recognized subsequent event under ASC 855-10-25 that should be reflected in the Company's Q1 2025 financial statements and disclosed in the notes to the interim financial statements included in the Form 10-Q. We recommend coordinating the 8-K disclosure language with the Form 10-Q subsequent events note to ensure consistency.
(c) Quantification of Equity Forfeitures. The aggregate value of the equity forfeitures ($849,500) should be confirmed with Hargrove & Tillett to ensure consistency with the Company's equity compensation records and stock plan administration records. The valuation methodology (i.e., whether the forfeiture value is based on the fair market value of the awards at the date of resignation, the date of the Settlement Agreement, or another measurement date) should be documented and consistently applied.
2. Notification to Keypoint National Bank, N.A. under Credit Facility.
Section 6.02(c) of the Company's $750,000,000 Senior Secured Revolving Credit Agreement, dated as of June 15, 2023, by and among the Company, the lenders party thereto, and Keypoint National Bank, N.A., as administrative agent (as amended), requires the Company to provide prompt written notice to the administrative agent of the settlement, compromise, or final adjudication of any litigation or proceeding that, individually or in the aggregate, could reasonably be expected to have a material adverse effect on the Company or that involves a payment or receipt in excess of $5,000,000. While the settlement is favorable to the Company, the $8,750,000 Settlement Payment exceeds the $5,000,000 notice threshold. Accordingly, a written notification letter to Keypoint National Bank, N.A. should be sent concurrently with or promptly following the filing of the 8-K. We are prepared to assist with the preparation of this notification letter upon the Company's request.
3. Board Approval and Ratification.
Please cross-reference the Board memorandum dated April 10, 2025, prepared by Calderwood & Harkness and circulated to the Board of Directors of the Company, recommending approval of the Settlement Agreement. The draft board resolution authorizing execution of the Settlement Agreement and ratification of the settlement terms should be adopted by the Board (or by the Litigation Committee of the Board, if the Board has delegated such authority) prior to or contemporaneously with execution on April 14, 2025. We recommend confirming that the board resolution has been duly adopted and that a copy of the executed resolution is maintained in the Company's minute books prior to filing the 8-K.
4. Filing Timeline and Mechanics.
Under Form 8-K, the filing must be made within four (4) business days of the date of the earliest event requiring disclosure. If the Settlement Agreement is executed on April 14, 2025 (Monday), the four-business-day deadline is April 18, 2025 (Friday). We recommend same-day filing on April 14, 2025 if practicable, or at the latest on April 15, 2025, to minimize the window between execution and public disclosure. The Company's EDGAR filing agent should be notified and placed on standby in advance of the execution date.
5. Press Release Considerations.
Please advise whether the Company intends to issue a press release in connection with the settlement. If a press release is issued, we recommend coordinating the timing of the press release with the 8-K filing. The press release would be filed as Exhibit 99.1 to the 8-K and furnished under Item 7.01 (Regulation FD Disclosure). We are prepared to assist with the preparation of press release language upon the Company's request.
6. Contact Information.
For questions regarding this draft or the settlement generally, please contact:
Bernard Crawford, Partner Calderwood & Harkness LLP 1301 K Street NW, Suite 1200 Washington, DC 20005 Telephone: (202) 555-0147
Email: bcrawford@calderwoodharkness.com
Renata Vasquez, Partner Calderwood & Harkness LLP 601 South Figueroa Street, Suite 4200 Los Angeles, CA 90017 Telephone: (213) 555-0382
Email: rvasquez@calderwoodharkness.com
James Underwood, Associate Calderwood & Harkness LLP 1301 K Street NW, Suite 1200 Washington, DC 20005 Telephone: (202) 555-0239
Email: junderwood@calderwoodharkness.com
— END OF DRAFT —
TO: | Theresa Yun-Park, General Counsel and Secretary, Cascade Retail Holdings Inc.
FROM: | Bernard Crawford, Partner, Calderwood & Harkness LLP
James Underwood, Associate, Calderwood & Harkness LLP
RE: | Draft Form 8-K Current Report Disclosure Language — Settlement of Cascade Retail Holdings Inc. v. Rathore et al., C.A. No. 2025-0198-MTZ (Del. Ch.)
MATTER NO.: | 1038-00006
Delaware | [___]-[______] | 91-2847351
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification Number)
Title of each class | Trading Symbol(s) | Name of each exchange on which registered
Common Stock, par value $0.001 per share | CRHL | The Nasdaq Stock Market LLC
Exhibit No. | Description
99.1 | Press Release of Cascade Retail Holdings Inc. dated April 14, 2025.*
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document).