1038-00006 · Calderwood & Harkness LLP · Closing/Court Filings

stipulation-of-settlement-consent-order.docx DOCUMENT Finance & Banking

12 / 79 ← → ✕

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

STIPULATION OF SETTLEMENT AND [PROPOSED] CONSENT ORDER

Before Vice Chancellor Margaret T. Zhao

Right-click to update Table of Contents

I. INTRODUCTORY RECITALS

This Stipulation of Settlement and [Proposed] Consent Order (this "Stipulation") is entered into as of April 14, 2025, by and among the following parties:

Plaintiff Cascade Retail Holdings Inc. ("CRH" or "Plaintiff"), a Delaware corporation organized and existing under the laws of the State of Delaware, with its principal headquarters located at 2200 Elliott Avenue West, Suite 3400, Seattle, Washington 98119, and its registered agent for service of process in the State of Delaware being Capitol Registered Agents LLC, located at 1209 Orange Street, Wilmington, Delaware 19801;

Defendant Priya Rathore ("Rathore"), an individual residing at 14 Harbor Ridge Lane, Bellevue, Washington 98004;

Defendant Derek Linden ("Linden"), an individual;

Defendant Sonia Kaczmarek ("Kaczmarek"), an individual;

Defendant Amara Osei ("Osei"), an individual;

Defendant Brent Halvorsen ("Halvorsen"), an individual;

Defendant Lucia Fernandez-Gill ("Fernandez-Gill"), an individual;

Defendant Nathan Tsao ("Tsao"), an individual;

Defendant Kira Johansson ("Johansson"), an individual;

(Rathore, Linden, Kaczmarek, Osei, Halvorsen, Fernandez-Gill, Tsao, and Johansson are collectively referred to herein as the "Individual Defendants" or the "Rathore Group");

Defendant Verdana Commerce Group, Inc. ("Verdana" or "VCG"), a Delaware corporation organized and existing under the laws of the State of Delaware, with its principal headquarters located at 400 Christiana Gateway, Suite 700, Wilmington, Delaware 19801;

(all of the foregoing, collectively, the "Parties," and each, individually, a "Party").

Plaintiff is represented in this action by the law firm of Calderwood & Harkness LLP, with Bernard Crawford serving as the Responsible Partner. The mailing address for Calderwood & Harkness LLP is 1301 K Street NW, Suite 1200, Washington, DC 20005. Telephone: (202) 555-7100. Email: bcrawford@calderwoodharkness.com.

The Individual Defendants are represented in this action by the law firm of Whitfield, Nygaard & Doyle LLP, with Catherine Nygaard serving as Lead Partner. The mailing address for Whitfield, Nygaard & Doyle LLP is 1000 North Market Street, Suite 1500, Wilmington, Delaware 19801. Telephone: (302) 555-2400. Email: cnygaard@wndlaw.com.

Verdana is represented in this action by the law firm of Blackhall & Soren LLP, with Gavin Blackhall serving as Lead Partner. The mailing address for Blackhall & Soren LLP is 300 Delaware Avenue, Suite 900, Wilmington, Delaware 19801. Telephone: (302) 555-8800. Email: gblackhall@blackhallsoren.com.

The Parties, through their respective counsel, hereby stipulate and agree to the terms set forth herein and respectfully request that this Court enter the [Proposed] Consent Order attached hereto as Exhibit 2 in the form presented.

II. RECITALS

A. Background of the Action

WHEREAS, on March 5, 2025, Plaintiff filed a Verified Complaint (the "Complaint") in this action, docketed as Civil Action No. 2025-0198-MTZ, asserting five (5) causes of action against Defendants, as follows:

(1) Count I — Breach of Restrictive Covenant, asserted against all Individual Defendants, alleging that each Individual Defendant violated the non-competition and non-solicitation provisions contained in his or her respective employment agreement with CRH by accepting employment with Verdana, a direct competitor of CRH, during the applicable restricted period;

(2) Count II — Breach of Confidentiality Obligations, asserted against all Individual Defendants, alleging that each Individual Defendant breached the confidentiality, non-disclosure, and intellectual property assignment provisions contained in his or her respective employment agreement with CRH by retaining, disclosing, and/or using CRH's confidential and proprietary information for the benefit of Verdana;

(3) Count III — Misappropriation of Trade Secrets, asserted against all Individual Defendants and Verdana under the Delaware Uniform Trade Secrets Act, 6 Del. C. §§ 2001–2009 ("DUTSA"), alleging that the Individual Defendants misappropriated CRH's trade secrets by downloading, retaining, and disclosing to Verdana proprietary data files, strategic planning materials, vendor negotiation term sheets, private-label cost models, and customer segmentation data, and that Verdana knowingly acquired and used such trade secrets;

(4) Count IV — Tortious Interference with Contractual Relations, asserted against Verdana, alleging that Verdana intentionally and improperly interfered with CRH's contractual relationships with the Individual Defendants by inducing them to breach their respective employment agreements and restrictive covenants; and

(5) Count V — Civil Conspiracy, asserted against all Defendants, alleging that the Individual Defendants and Verdana entered into an agreement and engaged in a coordinated scheme to deprive CRH of its key merchandising personnel, proprietary information, and competitive advantages.

WHEREAS, the Complaint alleges that the Individual Defendants were formerly employed by CRH in senior merchandising positions within CRH's merchandising and product development organization, and that each Individual Defendant signed an employment agreement with CRH containing restrictive covenants, including but not limited to non-competition, non-solicitation of employees, non-solicitation of business relationships, and confidentiality obligations, all of which are governed by the laws of the State of Delaware;

WHEREAS, Defendant Priya Rathore served as Senior Vice President, Merchandising at CRH from June 3, 2019 through February 7, 2025, a period of approximately five years and eight months, and in that capacity was responsible for overseeing CRH's merchandising strategy across its three largest product categories, including home goods, seasonal décor, and private-label apparel, and had access to CRH's most sensitive commercial information, including pricing strategies, vendor terms, margin analyses, and long-range product development plans;

WHEREAS, Defendant Rathore signed an Amended and Restated Employment Agreement with CRH dated March 15, 2021 (the "Rathore Employment Agreement"), which contained, among other provisions, an eighteen (18)-month post-termination non-competition obligation and a twenty-four (24)-month post-termination non-solicitation obligation, each of which was supported by additional consideration in the form of a supplemental restricted stock unit ("RSU") grant and continued access to confidential strategic planning materials;

WHEREAS, the remaining Individual Defendants — Derek Linden, Sonia Kaczmarek, Amara Osei, Brent Halvorsen, Lucia Fernandez-Gill, Nathan Tsao, and Kira Johansson — each held senior merchandising roles at CRH, including positions at the Vice President and Director levels within CRH's merchandising organization, and each signed an employment agreement with CRH containing post-termination non-competition periods ranging from twelve (12) to eighteen (18) months and post-termination non-solicitation periods ranging from eighteen (18) to twenty-four (24) months, each depending on the individual's seniority level and scope of responsibilities;

WHEREAS, the Complaint alleges that all eight Individual Defendants resigned their employment with CRH simultaneously on February 7, 2025, and that within days of their resignations, each Individual Defendant accepted employment with Verdana Commerce Group, Inc., a direct competitor of CRH in the omnichannel retail and ecommerce industry, including in particular the same product categories in which the Individual Defendants had worked at CRH;

WHEREAS, the Complaint further alleges that the Individual Defendants' coordinated departure and simultaneous migration to Verdana were orchestrated in advance and facilitated by Verdana, and that prior to their departures, one or more of the Individual Defendants downloaded or otherwise exfiltrated substantial volumes of CRH's confidential and proprietary data from CRH's Aldermere Systems and Pinnacle Health IT environments;

B. Temporary Restraining Order

WHEREAS, contemporaneously with the filing of the Complaint on March 5, 2025, Plaintiff filed a Motion for Temporary Restraining Order and Preliminary Injunction (the "TRO Motion"), seeking to restrain all Individual Defendants from commencing employment in any merchandising or product-related roles at Verdana or any other competitor of CRH pending a hearing on the preliminary injunction;

WHEREAS, on March 7, 2025, after considering the TRO Motion, the declarations submitted in support thereof, and oral argument by all parties, this Court (Vice Chancellor Zhao presiding) granted the Temporary Restraining Order (the "TRO"), which restrained all Individual Defendants from commencing employment in merchandising roles at Verdana for a period of fourteen (14) days, through and including March 21, 2025, and directed that any preliminary injunction hearing be scheduled on an expedited basis;

WHEREAS, in connection with the entry of the TRO, and pursuant to Court of Chancery Rule 65(c), Plaintiff posted an injunction bond in the amount of Two Million Five Hundred Thousand Dollars ($2,500,000) through Broadview Surety Corp. (Bond No. BSC-2025-TRO-04419), which bond remains in effect as of the date of this Stipulation;

C. Litigation Activity and discovery

WHEREAS, on March 15, 2025, Defendants filed their Memorandum in Opposition to Plaintiff's Motion for Preliminary Injunction, supported by declarations from each of the Individual Defendants and from Verdana's Chief People Officer, asserting, inter alia, that the restrictive covenants at issue were overbroad and unenforceable under Delaware law, that the Individual Defendants had not retained any CRH confidential information, and that CRH could not demonstrate irreparable harm;

WHEREAS, between March 12 and March 18, 2025, the Parties engaged in expedited discovery, including the exchange of relevant documents, the production and review of electronic data, and the completion of depositions of Defendant Rathore and CRH's Vice President of Information Security, Marcus Hendricks, as well as the exchange of interrogatory responses and requests for admission;

WHEREAS, on March 17, 2025, Plaintiff filed its Reply Memorandum in Further Support of Plaintiff's Motion for Preliminary Injunction, supported by the declaration of Sandra Fielding, Managing Director of Aurelian Investigations Group Inc., who opined on the nature, scope, and timing of the data exfiltration from CRH's systems, and the declaration of Dr. Franklin Oberg, Managing Partner of Veltrano Consulting Group LLC, who opined on the competitive harm to CRH resulting from the coordinated departure of its senior merchandising team and the potential misuse of CRH's proprietary data by Verdana;

D. Mediation and Settlement

WHEREAS, on March 18, 2025, at the suggestion of the Court and with the agreement of all counsel, the Parties participated in a full-day mediation session conducted by the Honorable Philip Ashford (Ret.), a former Vice Chancellor of the Court of Chancery, serving through Meridian ADR Services LLC (Reference No. Meridian-2025-0318-CRH), at Meridian's offices in Wilmington, Delaware;

WHEREAS, during the mediation, the Parties exchanged detailed settlement proposals and engaged in extensive arm's-length negotiations, with the assistance and guidance of Judge Ashford, regarding the scope, duration, and geographic limitations of modified restrictive covenants, the data return and destruction obligations, and the monetary terms of a potential settlement;

WHEREAS, on March 20, 2025, following the mediation and two additional days of negotiation among counsel, the Parties reached a framework for settlement, which framework was memorialized in a binding Term Sheet executed by all Parties on that date;

WHEREAS, on March 21, 2025, the Parties jointly presented the settlement framework to the Court, and the Court entered a Consent Interim Order adjourning the preliminary injunction hearing, extending the TRO on a consensual basis, and maintaining the status quo during the settlement documentation period, with a status conference scheduled for April 15, 2025;

WHEREAS, following further negotiation and the exchange of multiple drafts during the period from March 24 through April 11, 2025, the Parties have finalized a comprehensive Standstill and Settlement Agreement dated as of April 14, 2025 (the "Settlement Agreement"), which sets forth the complete terms and conditions of the Parties' settlement, and a true and correct copy of which is attached hereto as Exhibit 1 and incorporated herein by reference;

E. Purpose

WHEREAS, the Parties desire to resolve fully and finally this action and all claims and counterclaims asserted or that could have been asserted herein, on the terms and conditions set forth in the Settlement Agreement and this Stipulation, and wish to have certain obligations — specifically, the modified restrictive covenant terms, the data destruction obligations, and the compliance monitoring requirements — incorporated into a Consent Order of this Court to facilitate the enforceability of those obligations through the Court's contempt power and other available remedies;

WHEREAS, each Party has had the full opportunity to consult with and receive legal advice from experienced counsel of its choice regarding the terms and conditions of this Stipulation and the Settlement Agreement, and each Party has determined, in the exercise of its informed judgment, that this Stipulation and the Settlement Agreement are in its respective best interest;

NOW, THEREFORE, in consideration of the foregoing recitals, the mutual covenants, agreements, and obligations set forth herein and in the Settlement Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, through their respective counsel, hereby stipulate and agree as follows:

III. TERMS OF THE STIPULATION

Section 1. Definitions

1.1. All capitalized terms used but not otherwise defined in this Stipulation shall have the meanings ascribed to them in the Settlement Agreement.

1.2. As used in this Stipulation, the following terms shall have the meanings set forth below:

(a) "Compliance Monitor" means Aldwyn Compliance Solutions LLC, an independent compliance monitoring firm appointed by the Parties pursuant to Section 3.6 of this Stipulation and Section 7 of the Settlement Agreement.

(b) "Consent Order" means the [Proposed] Consent Order Incorporating Modified Restrictive Covenants attached hereto as Exhibit 2, which the Parties jointly request that this Court enter.

(c) "Data Destruction Protocol" means the detailed procedures for the return, deletion, and certified destruction of all CRH data in the possession, custody, or control of the Individual Defendants and Verdana, as set forth in Exhibit B to the Settlement Agreement.

(d) "Effective Date" means the date on which the Consent Order is entered by this Court, or, if earlier, April 14, 2025.

(e) "Modified Restrictive Covenants" means the modified non-competition, non-solicitation of employees, and non-solicitation of vendors obligations agreed to by the Parties as set forth in Sections 3.1 through 3.3 of this Stipulation and Exhibit A to the Settlement Agreement, which obligations supersede and replace in their entirety the original restrictive covenants contained in the Individual Defendants' respective employment agreements with CRH.

(f) "Restricted Categories" means the following three product categories: (i) home goods, (ii) seasonal décor, and (iii) private-label apparel, as those categories are more particularly defined in Exhibit A to the Settlement Agreement.

(g) "Settlement Agreement" means the Standstill and Settlement Agreement dated as of April 14, 2025, among the Parties, together with all exhibits, schedules, and attachments thereto, a true and correct copy of which is attached hereto as Exhibit 1.

(h) "Top 50 Vendor List" means the list of CRH's fifty (50) largest vendors by dollar volume of spend during the twelve (12)-month period ending January 31, 2025, as set forth in Exhibit C to the Settlement Agreement, which Exhibit C is to be filed under seal with this Court.

Section 2. Incorporation of Settlement Agreement

2.1. The Parties hereby stipulate and agree that the Settlement Agreement, attached hereto as Exhibit 1 and incorporated herein by reference in its entirety, sets forth the binding and enforceable terms of the Parties' settlement of this action, and that the Settlement Agreement constitutes a valid and binding agreement among the Parties, enforceable in accordance with its terms.

2.2. The Parties jointly and respectfully request that this Court enter the Consent Order in the form attached hereto as Exhibit 2, which Consent Order incorporates the Modified Restrictive Covenant terms set forth in Sections 3.1 through 3.3 of this Stipulation and the data destruction obligations set forth in Section 3.4 of this Stipulation, and provides for the appointment of a Compliance Monitor, the dissolution of the existing Temporary Restraining Order, the retention of this Court's jurisdiction for enforcement purposes, and such other provisions as are set forth therein.

2.3. In the event of any conflict between the terms of this Stipulation and the terms of the Settlement Agreement, the terms of the Settlement Agreement shall control, except that the terms of the Consent Order (once entered by this Court) shall supersede any inconsistent provision of this Stipulation or the Settlement Agreement with respect to the subject matter addressed by the Consent Order.

Section 3. Summary of Material Settlement Terms

The following is a summary of the material terms of the Settlement Agreement. This summary is provided for the convenience of the Court and the Parties and is qualified in its entirety by reference to the Settlement Agreement itself.

3.1 Modified Non-Competition Obligations

(a) Priya Rathore. Defendant Priya Rathore agrees to a modified non-competition obligation of twelve (12) months, reduced from the original eighteen (18)-month period set forth in the Rathore Employment Agreement. The modified non-competition period shall run from February 7, 2025 through and including February 6, 2026. During the modified non-competition period, Rathore shall not, directly or indirectly, engage in employment, consulting, advisory work, or any other compensated or uncompensated role in which she performs services in or related to the Restricted Categories — namely, home goods, seasonal décor, and private-label apparel — for any competitor of CRH within the United States. For purposes of this Section 3.1(a), a "competitor of CRH" shall have the meaning set forth in Exhibit A to the Settlement Agreement. The modified non-competition obligation replaces and supersedes in its entirety the non-competition provision of the Rathore Employment Agreement.

(b) Remaining Individual Defendants. Defendants Derek Linden, Sonia Kaczmarek, Amara Osei, Brent Halvorsen, Lucia Fernandez-Gill, Nathan Tsao, and Kira Johansson each agree to a modified non-competition obligation of nine (9) months, reduced from the original twelve (12) to eighteen (18)-month periods set forth in their respective employment agreements with CRH. The modified non-competition period for each of these Defendants shall run from February 7, 2025 through and including November 6, 2025. During the modified non-competition period, each of these Defendants shall not, directly or indirectly, engage in employment, consulting, advisory work, or any other compensated or uncompensated role in which he or she performs services in or related to the Restricted Categories — namely, home goods, seasonal décor, and private-label apparel — for any competitor of CRH within the United States. The modified non-competition obligation applicable to each such Defendant replaces and supersedes in its entirety the non-competition provision of his or her respective employment agreement with CRH.

(c) Permitted Employment. For the avoidance of doubt, nothing in the Modified Restrictive Covenants shall prohibit any Individual Defendant from accepting or continuing employment at Verdana or at any other entity, including a competitor of CRH, in roles and product categories that do not fall within the Restricted Categories. The Parties acknowledge that Verdana operates in product categories beyond the Restricted Categories, and that the Individual Defendants are free to work in those non-restricted categories immediately upon execution of the Settlement Agreement, subject to the other terms of this Stipulation and the Settlement Agreement.

3.2 Non-Solicitation of Employees

All eight (8) Individual Defendants agree to a non-solicitation of employees obligation of eighteen (18) months, running from February 7, 2025 through and including August 6, 2026. During this period, no Individual Defendant shall, directly or indirectly, solicit, recruit, entice, hire, or induce (or attempt to solicit, recruit, entice, hire, or induce) any employee of CRH to leave CRH's employ or to accept employment or any other engagement with Verdana, any affiliate of Verdana, or any other person or entity. This non-solicitation obligation applies to all employees of CRH, regardless of the employee's position, department, or level of seniority, and regardless of whether the Individual Defendant had a direct reporting or working relationship with such employee during his or her tenure at CRH. For purposes of this Section 3.2, "employee of CRH" includes any individual who was employed by CRH at any time during the period beginning on the date of this Stipulation and ending on the expiration of the non-solicitation period.

3.3 Non-Solicitation of Vendors

All eight (8) Individual Defendants agree to a non-solicitation of vendors obligation of twelve (12) months, running from February 7, 2025 through and including February 6, 2026. During this period, no Individual Defendant shall, directly or indirectly, solicit, contact for business purposes, divert, or interfere with CRH's business relationships with any of CRH's top fifty (50) vendors, as identified by dollar volume of spend during the twelve (12)-month period ending January 31, 2025, and as listed in Exhibit C to the Settlement Agreement (the "Top 50 Vendor List"). The Top 50 Vendor List is confidential and shall be filed under seal with this Court. The Parties acknowledge that the identities and commercial terms associated with CRH's key vendor relationships constitute trade secrets and confidential business information of CRH. Nothing in this Section 3.3 shall be interpreted to restrict any Individual Defendant from having incidental social contact with representatives of listed vendors, provided that such contact does not involve the solicitation of business or the discussion of CRH's confidential commercial terms.

3.4 Data Return and Destruction

(a) Scope of Data at Issue. The Parties acknowledge that, as alleged in the Complaint and confirmed through the expedited discovery process, certain of the Individual Defendants downloaded, copied, or otherwise exfiltrated from CRH's information systems a total of approximately fourteen thousand three hundred twenty-seven (14,327) files, comprising approximately 2.8 gigabytes of data, from CRH's Aldermere Systems and Pinnacle Health IT environments during the period from January 10 through February 4, 2025. The exfiltrated data includes, without limitation, the following categories of CRH confidential and proprietary information:

(i) Project Ridgeline presentations and associated strategic planning materials;

(ii) Vendor negotiation term sheets and historical pricing data;

(iii) Private-label cost models, including bill-of-materials data, factory-level margin analyses, and supplier capacity allocations;

(iv) Customer segmentation data, including demographic profiles, purchasing behavior analyses, and lifetime value models;

(v) Promotional calendars and markdown optimization models; and

(vi) Internal competitive intelligence reports and market analysis memoranda.

(b) Return and Destruction Obligations. All exfiltrated CRH data in the possession, custody, or control of any Individual Defendant or Verdana shall be returned to CRH or certified destroyed in accordance with the Data Destruction Protocol set forth in Exhibit B to the Settlement Agreement within ten (10) business days of the execution of the Settlement Agreement (i.e., on or before April 28, 2025). Each Individual Defendant and Verdana shall provide CRH with a sworn certification of compliance with the data return and destruction obligations.

(c) Forensic Audit. Verdana shall permit and cooperate fully with an independent forensic audit of its information technology systems, including but not limited to its corporate servers, cloud storage environments, email systems, collaboration platforms, and any personal devices issued by Verdana to any Individual Defendant, to be conducted by Pinnacle Forensics LLC, at Verdana's sole expense. The cost of such forensic audit shall be capped at One Hundred Seventy-Five Thousand Dollars ($175,000). The scope, methodology, and timing of the forensic audit shall be as set forth in Exhibit B to the Settlement Agreement and as may be further specified by the Compliance Monitor. The forensic audit shall be completed within forty-five (45) days of the Effective Date. Pinnacle Forensics LLC shall provide a written report of its findings to all Parties, the Compliance Monitor, and the Court.

3.5 Monetary Terms

(a) Settlement Payment. Verdana shall pay CRH the sum of Eight Million Seven Hundred Fifty Thousand Dollars ($8,750,000) as a lump-sum settlement payment (the "Settlement Payment"). The Settlement Payment shall be made by wire transfer of immediately available funds to an account designated by CRH within thirty (30) days of the execution of the Settlement Agreement (i.e., on or before May 14, 2025). Failure to make the Settlement Payment in full when due shall constitute a material breach of the Settlement Agreement and shall entitle CRH to seek enforcement of the Settlement Agreement and the Consent Order, including interest on the unpaid balance at the rate of one percent (1%) per month.

(b) Litigation Cost Reimbursement. In addition to the Settlement Payment, Verdana shall reimburse CRH the sum of Four Hundred Twenty-Five Thousand Dollars ($425,000) toward CRH's reasonable litigation costs and expenses incurred in connection with this action (the "Litigation Cost Reimbursement"). The Litigation Cost Reimbursement shall be paid by wire transfer of immediately available funds to the account of Calderwood & Harkness LLP within thirty (30) days of the execution of the Settlement Agreement.

(c) Rathore Equity Forfeiture. Defendant Priya Rathore agrees to the forfeiture of one hundred percent (100%) of her unvested CRH restricted stock units ("RSUs"), which have an aggregate value of One Hundred Eighty-One Thousand Two Hundred Fifty Dollars ($181,250) as of February 7, 2025. In addition, Rathore agrees to the clawback of the final vested tranche of RSUs in the amount of One Hundred Eighty-One Thousand Two Hundred Fifty Dollars ($181,250) pursuant to the for-cause clawback provision set forth in Section 8(d) of the Rathore Employment Agreement, which provision was triggered by Rathore's breach of the restrictive covenants contained therein. The total value of Rathore's equity forfeiture and clawback is Three Hundred Sixty-Two Thousand Five Hundred Dollars ($362,500). CRH shall effectuate the cancellation and clawback of such RSUs within fifteen (15) business days of the Effective Date through its equity plan administrator.

(d) Other Individual Defendant Equity Forfeitures. Defendants Derek Linden, Sonia Kaczmarek, Amara Osei, Brent Halvorsen, Lucia Fernandez-Gill, Nathan Tsao, and Kira Johansson each agree to forfeit his or her respective unvested CRH equity on a pro rata basis, in an aggregate amount of Four Hundred Eighty-Seven Thousand Dollars ($487,000). The individual forfeiture amounts are set forth in Section 5(d) of the Settlement Agreement. CRH shall effectuate the cancellation of such equity within fifteen (15) business days of the Effective Date through its equity plan administrator.

(e) Total Economic Recovery. The total economic recovery to CRH under the Settlement Agreement is Ten Million Twenty-Four Thousand Five Hundred Dollars ($10,024,500), comprising the following components:

3.6 Compliance Monitor

(a) Appointment. The Parties agree to the appointment of Aldwyn Compliance Solutions LLC ("Aldwyn"), located at 1700 Market Street, Suite 2800, Philadelphia, Pennsylvania 19103, as the independent compliance monitor (the "Compliance Monitor") for a term of twelve (12) months commencing on the Effective Date and ending on the twelve-month anniversary thereof (the "Monitoring Period").

(b) Scope of Monitoring. The Compliance Monitor shall be responsible for the quarterly verification of compliance by the Individual Defendants and Verdana with the Modified Restrictive Covenants set forth in Sections 3.1 through 3.3 of this Stipulation, the data return and destruction obligations set forth in Section 3.4 of this Stipulation, and the non-disparagement obligations set forth in Section 3.7 of this Stipulation. The Compliance Monitor shall have the authority to request documents, conduct interviews, and perform such other investigative activities as are reasonably necessary to fulfill its monitoring obligations.

(c) Quarterly Reports. The Compliance Monitor shall prepare and deliver quarterly written reports to all Parties and to the Court, setting forth its findings regarding compliance with the terms of the Consent Order and the Settlement Agreement. The first quarterly report shall be due within ninety (90) days of the Effective Date, and subsequent reports shall be due every ninety (90) days thereafter until the expiration of the Monitoring Period. At the conclusion of the Monitoring Period, the Compliance Monitor shall prepare and deliver a final certification of compliance or non-compliance, as applicable.

(d) Cost Allocation. The estimated cost of the Compliance Monitor's engagement is Three Hundred Sixty Thousand Dollars ($360,000) for the twelve-month Monitoring Period. Verdana shall bear sixty percent (60%) of the Compliance Monitor's fees and expenses, in the estimated amount of Two Hundred Sixteen Thousand Dollars ($216,000), and CRH shall bear forty percent (40%) of the Compliance Monitor's fees and expenses, in the estimated amount of One Hundred Forty-Four Thousand Dollars ($144,000). In the event that the actual costs of the Compliance Monitor's engagement exceed the estimated amount, the excess shall be allocated between Verdana and CRH in the same sixty/forty (60/40) ratio.

(e) Engagement Letter. The form of the Compliance Monitor Engagement Letter, which sets forth the detailed terms and conditions of Aldwyn's engagement, including confidentiality obligations, reporting procedures, and dispute resolution mechanisms, is attached as Exhibit D to the Settlement Agreement.

3.7 Mutual Non-Disparagement

The Parties agree to mutual non-disparagement obligations, the terms and conditions of which are set forth in Exhibit E to the Settlement Agreement and incorporated herein by reference. In summary, each Party agrees that it shall not, directly or indirectly, make, publish, or cause to be made or published any false, misleading, or disparaging statement, whether written or oral, about any other Party in any public or private forum, including but not limited to social media platforms, industry conferences, press releases, or communications with business partners, vendors, customers, or prospective employers. The non-disparagement obligations are mutual and shall survive the termination or expiration of the Settlement Agreement. Nothing in the non-disparagement provisions shall restrict any Party from making truthful statements required by law, regulation, legal process, or the rules of any securities exchange, or from providing truthful information in response to a subpoena or governmental inquiry.

3.8 Attorneys' Fees

Except as expressly set forth in Section 3.5(b) above with respect to the Four Hundred Twenty-Five Thousand Dollar ($425,000) Litigation Cost Reimbursement from Verdana to CRH, each Party shall bear its own attorneys' fees, costs, expenses, and disbursements incurred in connection with this action, the negotiation and execution of the Settlement Agreement and this Stipulation, and the performance of its obligations hereunder. No Party shall seek or be entitled to an award of attorneys' fees or costs from any other Party except as expressly provided in the Settlement Agreement or as may be awarded by this Court in connection with an enforcement proceeding relating to the Consent Order.

Section 4. Request for Entry of Consent Order

4.1. The Parties jointly and respectfully request that this Court enter the [Proposed] Consent Order in the form attached hereto as Exhibit 2. The Parties represent and warrant that the terms of the Consent Order have been negotiated and agreed upon by all Parties, through their respective counsel, in an arm's-length transaction and that no Party has been coerced or unduly influenced in agreeing to the terms thereof.

4.2. The Consent Order incorporates the Modified Restrictive Covenant terms set forth in Sections 3.1 through 3.3 of this Stipulation, the data destruction obligations set forth in Section 3.4 of this Stipulation, the compliance monitoring provisions set forth in Section 3.6 of this Stipulation, and such other provisions as are necessary to effectuate the Parties' settlement.

4.3. The Consent Order retains this Court's continuing jurisdiction over the Parties and this action to enforce compliance with the terms of the Consent Order through all available remedies, including but not limited to contempt proceedings, sanctions, injunctive relief, and the award of attorneys' fees and costs incurred in connection with any enforcement proceeding.

Section 5. Dissolution of Temporary Restraining Order

5.1. Upon entry of the Consent Order by this Court, the Temporary Restraining Order entered by this Court on March 7, 2025 shall be automatically dissolved and superseded in its entirety by the terms and conditions of the Consent Order. The Consent Order shall be the sole operative injunctive order in this action.

5.2. Following entry of the Consent Order and dissolution of the Temporary Restraining Order, Plaintiff shall promptly take all steps necessary and appropriate to seek the discharge and cancellation of the injunction bond posted in connection with the TRO (Bond No. BSC-2025-TRO-04419, in the amount of $2,500,000, issued by Broadview Surety Corp.), including the filing of any required motions or applications with this Court and the provision of any required notices to Broadview Surety Corp.

Section 6. Dismissal

6.1. Within thirty (30) days following the expiration of the twelve (12)-month Monitoring Period (i.e., on or about May 14, 2026, but in any event no later than thirty (30) days after the Compliance Monitor delivers its final certification), and provided that the Compliance Monitor has certified full compliance by all Defendants with the terms of the Consent Order and the Settlement Agreement, the Parties shall jointly file with this Court a Stipulation for Dismissal of this action with prejudice, with each Party bearing its own costs and fees except as otherwise provided herein. The Stipulation for Dismissal shall provide for dismissal of all claims and causes of action asserted in the Complaint, and all Parties shall release all claims and counterclaims arising out of or related to the subject matter of this action, as more particularly set forth in the Settlement Agreement.

6.2. In the event that the Compliance Monitor identifies material non-compliance during the Monitoring Period, or in the event that any Party alleges non-compliance with the terms of the Consent Order or the Settlement Agreement, the Party alleging non-compliance may apply to this Court for enforcement of the Consent Order in accordance with Section 7 of this Stipulation and Paragraph 10 of the Consent Order. In such event, the Stipulation for Dismissal shall not be filed until the final resolution of such enforcement application, including any appeals therefrom, and the Monitoring Period shall be tolled during the pendency of such proceedings.

Section 7. Retained Jurisdiction

This Court shall retain continuing jurisdiction over the Parties and this action for all purposes related to the enforcement of the Consent Order and the Settlement Agreement, the resolution of any disputes arising under or in connection with the Settlement Agreement, this Stipulation, or the Consent Order, and the entry of such further orders, decrees, or judgments as this Court may deem necessary, just, and appropriate. The Parties irrevocably consent to the personal jurisdiction of this Court for purposes of this Section 7 and waive any objection to the exercise of such jurisdiction, including any objection based on inconvenience of forum.

Section 8. No Admission of Liability

8.1. This Stipulation, the Settlement Agreement, and the Consent Order do not constitute, and shall not be construed as, an admission of liability, wrongdoing, fault, or the validity or invalidity of any claim or defense by any Party. The Individual Defendants and Verdana expressly deny any liability for the claims asserted in the Complaint, and CRH expressly denies the validity of any defenses or counterclaims asserted or that could have been asserted by Defendants. The Parties have agreed to the terms of this Stipulation and the Settlement Agreement solely to avoid the expense, burden, and uncertainty of continued litigation.

8.2. Neither the Settlement Agreement, this Stipulation, nor the Consent Order, nor any term, provision, or recital contained herein or therein, shall be offered, received, or used as evidence in any action or proceeding, whether civil, criminal, administrative, or otherwise, for any purpose other than proceedings to enforce the Settlement Agreement, this Stipulation, or the Consent Order, or proceedings in which a Party asserts the Settlement Agreement, this Stipulation, or the Consent Order as a defense (including, without limitation, as a defense based on release, res judicata, collateral estoppel, or similar doctrines).

Section 9. Exhibits

The following exhibits are attached hereto and incorporated herein by reference:

Exhibit 1: Standstill and Settlement Agreement dated as of April 14, 2025, together with the following exhibits thereto:

Exhibit A — Modified Restrictive Covenant Terms

Exhibit B — Data Return and Destruction Protocol

Exhibit C — List of Top 50 CRH Vendors (to be filed under seal pursuant to Paragraph 11 of the Consent Order)

Exhibit D — Form of Compliance Monitor Engagement Letter

Exhibit E — Mutual Non-Disparagement Provisions

Exhibit 2: [Proposed] Consent Order Incorporating Modified Restrictive Covenants

Section 10. Authority

10.1. Each Party represents and warrants to the other Parties that it has the full power, authority, and legal capacity to enter into this Stipulation and the Settlement Agreement and to perform all of its obligations hereunder and thereunder.

10.2. CRH represents and warrants that its Board of Directors has duly authorized and approved the execution and delivery of the Settlement Agreement and the filing of this Stipulation, by resolutions duly adopted at a meeting of the Board held on April 12, 2025, and that the officer executing the Settlement Agreement and this Stipulation on behalf of CRH has been duly authorized to do so.

10.3. Verdana represents and warrants that its Board of Directors, acting with the approval of Greystone Capital Partners, LP, in its capacity as majority equity holder of Verdana acting through Greystone Capital Fund VII, LP, has duly authorized and approved the execution and delivery of the Settlement Agreement and the filing of this Stipulation, by resolutions duly adopted at a meeting of the Board held on April 11, 2025, and that the officer executing the Settlement Agreement and this Stipulation on behalf of Verdana has been duly authorized to do so.

10.4. Each Individual Defendant represents and warrants that he or she has the full individual capacity and legal authority to enter into this Stipulation and the Settlement Agreement and to perform all of his or her obligations hereunder and thereunder, and that no consent, approval, or authorization of any third party is required for such Individual Defendant to enter into or perform under this Stipulation and the Settlement Agreement.

Section 11. Governing Law

This Stipulation and the Settlement Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to any choice of law or conflicts-of-law principles that would cause the application of the laws of any other jurisdiction.

Section 12. Counterparts and Execution

12.1. This Stipulation may be executed in one or more counterparts, each of which shall be deemed an original and all of which, when taken together, shall constitute one and the same instrument. The exchange of counterpart signature pages by facsimile transmission or by electronic mail in portable document format (.pdf) shall be sufficient to bind the Parties.

12.2. Facsimile and electronic signatures (including signatures transmitted via DocuSign or other electronic signature platforms) shall be deemed original signatures for all purposes, and this Stipulation shall be binding and enforceable upon the exchange of such electronic signatures by all Parties.

Section 13. Entire Agreement

This Stipulation, together with the Settlement Agreement and all exhibits, schedules, and attachments thereto, constitutes the entire agreement among the Parties with respect to the subject matter hereof and supersedes all prior and contemporaneous negotiations, discussions, representations, warranties, understandings, and agreements, whether written or oral, relating to such subject matter. No amendment, modification, or waiver of any provision of this Stipulation shall be effective unless set forth in a writing signed by all Parties and, to the extent applicable, approved by this Court.

IV. SIGNATURE BLOCKS

IN WITNESS WHEREOF, the Parties have executed this Stipulation of Settlement and [Proposed] Consent Order as of the date first written above.

PLAINTIFF:

CASCADE RETAIL HOLDINGS INC.

By: ________

Name: Theresa Yun-Park

Title: General Counsel

Date: April __, 2025

Of Counsel / Attorneys for Plaintiff:

CALDERWOOD & HARKNESS LLP

By: ________

Bernard Crawford (DE Bar No. 5327) 1301 K Street NW, Suite 1200 Washington, DC 20005 Telephone: (202) 555-7100

Email: bcrawford@calderwoodharkness.com

Attorneys for Plaintiff Cascade Retail Holdings Inc.

INDIVIDUAL DEFENDANTS:

________________________________________

PRIYA RATHORE, individually

Date: April __, 2025

________________________________________

DEREK LINDEN, individually

Date: April __, 2025

________________________________________

SONIA KACZMAREK, individually

Date: April __, 2025

________________________________________

AMARA OSEI, individually

Date: April __, 2025

________________________________________

BRENT HALVORSEN, individually

Date: April __, 2025

________________________________________

LUCIA FERNANDEZ-GILL, individually

Date: April __, 2025

________________________________________

NATHAN TSAO, individually

Date: April __, 2025

________________________________________

KIRA JOHANSSON, individually

Date: April __, 2025

Of Counsel / Attorneys for Individual Defendants:

WHITFIELD, NYGAARD & DOYLE LLP

By: ________

Catherine Nygaard (DE Bar No. 4891) 1000 North Market Street, Suite 1500 Wilmington, DE 19801 Telephone: (302) 555-2400

Email: cnygaard@wndlaw.com

Attorneys for Defendants Priya Rathore, Derek Linden, Sonia Kaczmarek, Amara Osei, Brent Halvorsen, Lucia Fernandez-Gill, Nathan Tsao, and Kira Johansson

VERDANA COMMERCE GROUP, INC.:

VERDANA COMMERCE GROUP, INC.

By: ________

Name: Helen Tsoi

Title: General Counsel

Date: April __, 2025

Of Counsel / Attorneys for Verdana Commerce Group, Inc.:

BLACKHALL & SOREN LLP

By: ________

Gavin Blackhall (DE Bar No. 5612) 300 Delaware Avenue, Suite 900 Wilmington, DE 19801 Telephone: (302) 555-8800

Email: gblackhall@blackhallsoren.com

Attorneys for Defendant Verdana Commerce Group, Inc.

V. EXHIBIT 2: [PROPOSED] CONSENT ORDER INCORPORATING MODIFIED RESTRICTIVE COVENANTS

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
STIPULATION OF SETTLEMENT AND [PROPOSED] CONSENT ORDER
Before Vice Chancellor Margaret T. Zhao
Right-click to update Table of Contents
I. INTRODUCTORY RECITALS
This Stipulation of Settlement and [Proposed] Consent Order (this "Stipulation") is entered into as of April 14, 2025, by and among the following parties:
Plaintiff Cascade Retail Holdings Inc. ("CRH" or "Plaintiff"), a Delaware corporation organized and existing under the laws of the State of Delaware, with its principal headquarters located at 2200 Elliott Avenue West, Suite 3400, Seattle, Washington 98119, and its registered agent for service of process in the State of Delaware being Capitol Registered Agents LLC, located at 1209 Orange Street, Wilmington, Delaware 19801;
Defendant Priya Rathore ("Rathore"), an individual residing at 14 Harbor Ridge Lane, Bellevue, Washington 98004;
Defendant Derek Linden ("Linden"), an individual;
Defendant Sonia Kaczmarek ("Kaczmarek"), an individual;
Defendant Amara Osei ("Osei"), an individual;
Defendant Brent Halvorsen ("Halvorsen"), an individual;
Defendant Lucia Fernandez-Gill ("Fernandez-Gill"), an individual;
Defendant Nathan Tsao ("Tsao"), an individual;
Defendant Kira Johansson ("Johansson"), an individual;
(Rathore, Linden, Kaczmarek, Osei, Halvorsen, Fernandez-Gill, Tsao, and Johansson are collectively referred to herein as the "Individual Defendants" or the "Rathore Group");
Defendant Verdana Commerce Group, Inc. ("Verdana" or "VCG"), a Delaware corporation organized and existing under the laws of the State of Delaware, with its principal headquarters located at 400 Christiana Gateway, Suite 700, Wilmington, Delaware 19801;
(all of the foregoing, collectively, the "Parties," and each, individually, a "Party").
Plaintiff is represented in this action by the law firm of Calderwood & Harkness LLP, with Bernard Crawford serving as the Responsible Partner. The mailing address for Calderwood & Harkness LLP is 1301 K Street NW, Suite 1200, Washington, DC 20005. Telephone: (202) 555-7100. Email: bcrawford@calderwoodharkness.com.
The Individual Defendants are represented in this action by the law firm of Whitfield, Nygaard & Doyle LLP, with Catherine Nygaard serving as Lead Partner. The mailing address for Whitfield, Nygaard & Doyle LLP is 1000 North Market Street, Suite 1500, Wilmington, Delaware 19801. Telephone: (302) 555-2400. Email: cnygaard@wndlaw.com.
Verdana is represented in this action by the law firm of Blackhall & Soren LLP, with Gavin Blackhall serving as Lead Partner. The mailing address for Blackhall & Soren LLP is 300 Delaware Avenue, Suite 900, Wilmington, Delaware 19801. Telephone: (302) 555-8800. Email: gblackhall@blackhallsoren.com.
The Parties, through their respective counsel, hereby stipulate and agree to the terms set forth herein and respectfully request that this Court enter the [Proposed] Consent Order attached hereto as Exhibit 2 in the form presented.
II. RECITALS
A. Background of the Action
WHEREAS, on March 5, 2025, Plaintiff filed a Verified Complaint (the "Complaint") in this action, docketed as Civil Action No. 2025-0198-MTZ, asserting five (5) causes of action against Defendants, as follows:
(1) Count I — Breach of Restrictive Covenant, asserted against all Individual Defendants, alleging that each Individual Defendant violated the non-competition and non-solicitation provisions contained in his or her respective employment agreement with CRH by accepting employment with Verdana, a direct competitor of CRH, during the applicable restricted period;
(2) Count II — Breach of Confidentiality Obligations, asserted against all Individual Defendants, alleging that each Individual Defendant breached the confidentiality, non-disclosure, and intellectual property assignment provisions contained in his or her respective employment agreement with CRH by retaining, disclosing, and/or using CRH's confidential and proprietary information for the benefit of Verdana;
(3) Count III — Misappropriation of Trade Secrets, asserted against all Individual Defendants and Verdana under the Delaware Uniform Trade Secrets Act, 6 Del. C. §§ 2001–2009 ("DUTSA"), alleging that the Individual Defendants misappropriated CRH's trade secrets by downloading, retaining, and disclosing to Verdana proprietary data files, strategic planning materials, vendor negotiation term sheets, private-label cost models, and customer segmentation data, and that Verdana knowingly acquired and used such trade secrets;
(4) Count IV — Tortious Interference with Contractual Relations, asserted against Verdana, alleging that Verdana intentionally and improperly interfered with CRH's contractual relationships with the Individual Defendants by inducing them to breach their respective employment agreements and restrictive covenants; and
(5) Count V — Civil Conspiracy, asserted against all Defendants, alleging that the Individual Defendants and Verdana entered into an agreement and engaged in a coordinated scheme to deprive CRH of its key merchandising personnel, proprietary information, and competitive advantages.
WHEREAS, the Complaint alleges that the Individual Defendants were formerly employed by CRH in senior merchandising positions within CRH's merchandising and product development organization, and that each Individual Defendant signed an employment agreement with CRH containing restrictive covenants, including but not limited to non-competition, non-solicitation of employees, non-solicitation of business relationships, and confidentiality obligations, all of which are governed by the laws of the State of Delaware;
WHEREAS, Defendant Priya Rathore served as Senior Vice President, Merchandising at CRH from June 3, 2019 through February 7, 2025, a period of approximately five years and eight months, and in that capacity was responsible for overseeing CRH's merchandising strategy across its three largest product categories, including home goods, seasonal décor, and private-label apparel, and had access to CRH's most sensitive commercial information, including pricing strategies, vendor terms, margin analyses, and long-range product development plans;
WHEREAS, Defendant Rathore signed an Amended and Restated Employment Agreement with CRH dated March 15, 2021 (the "Rathore Employment Agreement"), which contained, among other provisions, an eighteen (18)-month post-termination non-competition obligation and a twenty-four (24)-month post-termination non-solicitation obligation, each of which was supported by additional consideration in the form of a supplemental restricted stock unit ("RSU") grant and continued access to confidential strategic planning materials;
WHEREAS, the remaining Individual Defendants — Derek Linden, Sonia Kaczmarek, Amara Osei, Brent Halvorsen, Lucia Fernandez-Gill, Nathan Tsao, and Kira Johansson — each held senior merchandising roles at CRH, including positions at the Vice President and Director levels within CRH's merchandising organization, and each signed an employment agreement with CRH containing post-termination non-competition periods ranging from twelve (12) to eighteen (18) months and post-termination non-solicitation periods ranging from eighteen (18) to twenty-four (24) months, each depending on the individual's seniority level and scope of responsibilities;
WHEREAS, the Complaint alleges that all eight Individual Defendants resigned their employment with CRH simultaneously on February 7, 2025, and that within days of their resignations, each Individual Defendant accepted employment with Verdana Commerce Group, Inc., a direct competitor of CRH in the omnichannel retail and ecommerce industry, including in particular the same product categories in which the Individual Defendants had worked at CRH;
WHEREAS, the Complaint further alleges that the Individual Defendants' coordinated departure and simultaneous migration to Verdana were orchestrated in advance and facilitated by Verdana, and that prior to their departures, one or more of the Individual Defendants downloaded or otherwise exfiltrated substantial volumes of CRH's confidential and proprietary data from CRH's Aldermere Systems and Pinnacle Health IT environments;
B. Temporary Restraining Order
WHEREAS, contemporaneously with the filing of the Complaint on March 5, 2025, Plaintiff filed a Motion for Temporary Restraining Order and Preliminary Injunction (the "TRO Motion"), seeking to restrain all Individual Defendants from commencing employment in any merchandising or product-related roles at Verdana or any other competitor of CRH pending a hearing on the preliminary injunction;
WHEREAS, on March 7, 2025, after considering the TRO Motion, the declarations submitted in support thereof, and oral argument by all parties, this Court (Vice Chancellor Zhao presiding) granted the Temporary Restraining Order (the "TRO"), which restrained all Individual Defendants from commencing employment in merchandising roles at Verdana for a period of fourteen (14) days, through and including March 21, 2025, and directed that any preliminary injunction hearing be scheduled on an expedited basis;
WHEREAS, in connection with the entry of the TRO, and pursuant to Court of Chancery Rule 65(c), Plaintiff posted an injunction bond in the amount of Two Million Five Hundred Thousand Dollars ($2,500,000) through Broadview Surety Corp. (Bond No. BSC-2025-TRO-04419), which bond remains in effect as of the date of this Stipulation;
C. Litigation Activity and discovery
WHEREAS, on March 15, 2025, Defendants filed their Memorandum in Opposition to Plaintiff's Motion for Preliminary Injunction, supported by declarations from each of the Individual Defendants and from Verdana's Chief People Officer, asserting, inter alia, that the restrictive covenants at issue were overbroad and unenforceable under Delaware law, that the Individual Defendants had not retained any CRH confidential information, and that CRH could not demonstrate irreparable harm;
WHEREAS, between March 12 and March 18, 2025, the Parties engaged in expedited discovery, including the exchange of relevant documents, the production and review of electronic data, and the completion of depositions of Defendant Rathore and CRH's Vice President of Information Security, Marcus Hendricks, as well as the exchange of interrogatory responses and requests for admission;
WHEREAS, on March 17, 2025, Plaintiff filed its Reply Memorandum in Further Support of Plaintiff's Motion for Preliminary Injunction, supported by the declaration of Sandra Fielding, Managing Director of Aurelian Investigations Group Inc., who opined on the nature, scope, and timing of the data exfiltration from CRH's systems, and the declaration of Dr. Franklin Oberg, Managing Partner of Veltrano Consulting Group LLC, who opined on the competitive harm to CRH resulting from the coordinated departure of its senior merchandising team and the potential misuse of CRH's proprietary data by Verdana;
D. Mediation and Settlement
WHEREAS, on March 18, 2025, at the suggestion of the Court and with the agreement of all counsel, the Parties participated in a full-day mediation session conducted by the Honorable Philip Ashford (Ret.), a former Vice Chancellor of the Court of Chancery, serving through Meridian ADR Services LLC (Reference No. Meridian-2025-0318-CRH), at Meridian's offices in Wilmington, Delaware;
WHEREAS, during the mediation, the Parties exchanged detailed settlement proposals and engaged in extensive arm's-length negotiations, with the assistance and guidance of Judge Ashford, regarding the scope, duration, and geographic limitations of modified restrictive covenants, the data return and destruction obligations, and the monetary terms of a potential settlement;
WHEREAS, on March 20, 2025, following the mediation and two additional days of negotiation among counsel, the Parties reached a framework for settlement, which framework was memorialized in a binding Term Sheet executed by all Parties on that date;
WHEREAS, on March 21, 2025, the Parties jointly presented the settlement framework to the Court, and the Court entered a Consent Interim Order adjourning the preliminary injunction hearing, extending the TRO on a consensual basis, and maintaining the status quo during the settlement documentation period, with a status conference scheduled for April 15, 2025;
WHEREAS, following further negotiation and the exchange of multiple drafts during the period from March 24 through April 11, 2025, the Parties have finalized a comprehensive Standstill and Settlement Agreement dated as of April 14, 2025 (the "Settlement Agreement"), which sets forth the complete terms and conditions of the Parties' settlement, and a true and correct copy of which is attached hereto as Exhibit 1 and incorporated herein by reference;
E. Purpose
WHEREAS, the Parties desire to resolve fully and finally this action and all claims and counterclaims asserted or that could have been asserted herein, on the terms and conditions set forth in the Settlement Agreement and this Stipulation, and wish to have certain obligations — specifically, the modified restrictive covenant terms, the data destruction obligations, and the compliance monitoring requirements — incorporated into a Consent Order of this Court to facilitate the enforceability of those obligations through the Court's contempt power and other available remedies;
WHEREAS, each Party has had the full opportunity to consult with and receive legal advice from experienced counsel of its choice regarding the terms and conditions of this Stipulation and the Settlement Agreement, and each Party has determined, in the exercise of its informed judgment, that this Stipulation and the Settlement Agreement are in its respective best interest;
NOW, THEREFORE, in consideration of the foregoing recitals, the mutual covenants, agreements, and obligations set forth herein and in the Settlement Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, through their respective counsel, hereby stipulate and agree as follows:
III. TERMS OF THE STIPULATION
Section 1. Definitions
1.1. All capitalized terms used but not otherwise defined in this Stipulation shall have the meanings ascribed to them in the Settlement Agreement.
1.2. As used in this Stipulation, the following terms shall have the meanings set forth below:
(a) "Compliance Monitor" means Aldwyn Compliance Solutions LLC, an independent compliance monitoring firm appointed by the Parties pursuant to Section 3.6 of this Stipulation and Section 7 of the Settlement Agreement.
(b) "Consent Order" means the [Proposed] Consent Order Incorporating Modified Restrictive Covenants attached hereto as Exhibit 2, which the Parties jointly request that this Court enter.
(c) "Data Destruction Protocol" means the detailed procedures for the return, deletion, and certified destruction of all CRH data in the possession, custody, or control of the Individual Defendants and Verdana, as set forth in Exhibit B to the Settlement Agreement.
(d) "Effective Date" means the date on which the Consent Order is entered by this Court, or, if earlier, April 14, 2025.
(e) "Modified Restrictive Covenants" means the modified non-competition, non-solicitation of employees, and non-solicitation of vendors obligations agreed to by the Parties as set forth in Sections 3.1 through 3.3 of this Stipulation and Exhibit A to the Settlement Agreement, which obligations supersede and replace in their entirety the original restrictive covenants contained in the Individual Defendants' respective employment agreements with CRH.
(f) "Restricted Categories" means the following three product categories: (i) home goods, (ii) seasonal décor, and (iii) private-label apparel, as those categories are more particularly defined in Exhibit A to the Settlement Agreement.
(g) "Settlement Agreement" means the Standstill and Settlement Agreement dated as of April 14, 2025, among the Parties, together with all exhibits, schedules, and attachments thereto, a true and correct copy of which is attached hereto as Exhibit 1.
(h) "Top 50 Vendor List" means the list of CRH's fifty (50) largest vendors by dollar volume of spend during the twelve (12)-month period ending January 31, 2025, as set forth in Exhibit C to the Settlement Agreement, which Exhibit C is to be filed under seal with this Court.
Section 2. Incorporation of Settlement Agreement
2.1. The Parties hereby stipulate and agree that the Settlement Agreement, attached hereto as Exhibit 1 and incorporated herein by reference in its entirety, sets forth the binding and enforceable terms of the Parties' settlement of this action, and that the Settlement Agreement constitutes a valid and binding agreement among the Parties, enforceable in accordance with its terms.
2.2. The Parties jointly and respectfully request that this Court enter the Consent Order in the form attached hereto as Exhibit 2, which Consent Order incorporates the Modified Restrictive Covenant terms set forth in Sections 3.1 through 3.3 of this Stipulation and the data destruction obligations set forth in Section 3.4 of this Stipulation, and provides for the appointment of a Compliance Monitor, the dissolution of the existing Temporary Restraining Order, the retention of this Court's jurisdiction for enforcement purposes, and such other provisions as are set forth therein.
2.3. In the event of any conflict between the terms of this Stipulation and the terms of the Settlement Agreement, the terms of the Settlement Agreement shall control, except that the terms of the Consent Order (once entered by this Court) shall supersede any inconsistent provision of this Stipulation or the Settlement Agreement with respect to the subject matter addressed by the Consent Order.
Section 3. Summary of Material Settlement Terms
The following is a summary of the material terms of the Settlement Agreement. This summary is provided for the convenience of the Court and the Parties and is qualified in its entirety by reference to the Settlement Agreement itself.
3.1 Modified Non-Competition Obligations
(a) Priya Rathore. Defendant Priya Rathore agrees to a modified non-competition obligation of twelve (12) months, reduced from the original eighteen (18)-month period set forth in the Rathore Employment Agreement. The modified non-competition period shall run from February 7, 2025 through and including February 6, 2026. During the modified non-competition period, Rathore shall not, directly or indirectly, engage in employment, consulting, advisory work, or any other compensated or uncompensated role in which she performs services in or related to the Restricted Categories — namely, home goods, seasonal décor, and private-label apparel — for any competitor of CRH within the United States. For purposes of this Section 3.1(a), a "competitor of CRH" shall have the meaning set forth in Exhibit A to the Settlement Agreement. The modified non-competition obligation replaces and supersedes in its entirety the non-competition provision of the Rathore Employment Agreement.
(b) Remaining Individual Defendants. Defendants Derek Linden, Sonia Kaczmarek, Amara Osei, Brent Halvorsen, Lucia Fernandez-Gill, Nathan Tsao, and Kira Johansson each agree to a modified non-competition obligation of nine (9) months, reduced from the original twelve (12) to eighteen (18)-month periods set forth in their respective employment agreements with CRH. The modified non-competition period for each of these Defendants shall run from February 7, 2025 through and including November 6, 2025. During the modified non-competition period, each of these Defendants shall not, directly or indirectly, engage in employment, consulting, advisory work, or any other compensated or uncompensated role in which he or she performs services in or related to the Restricted Categories — namely, home goods, seasonal décor, and private-label apparel — for any competitor of CRH within the United States. The modified non-competition obligation applicable to each such Defendant replaces and supersedes in its entirety the non-competition provision of his or her respective employment agreement with CRH.
(c) Permitted Employment. For the avoidance of doubt, nothing in the Modified Restrictive Covenants shall prohibit any Individual Defendant from accepting or continuing employment at Verdana or at any other entity, including a competitor of CRH, in roles and product categories that do not fall within the Restricted Categories. The Parties acknowledge that Verdana operates in product categories beyond the Restricted Categories, and that the Individual Defendants are free to work in those non-restricted categories immediately upon execution of the Settlement Agreement, subject to the other terms of this Stipulation and the Settlement Agreement.
3.2 Non-Solicitation of Employees
All eight (8) Individual Defendants agree to a non-solicitation of employees obligation of eighteen (18) months, running from February 7, 2025 through and including August 6, 2026. During this period, no Individual Defendant shall, directly or indirectly, solicit, recruit, entice, hire, or induce (or attempt to solicit, recruit, entice, hire, or induce) any employee of CRH to leave CRH's employ or to accept employment or any other engagement with Verdana, any affiliate of Verdana, or any other person or entity. This non-solicitation obligation applies to all employees of CRH, regardless of the employee's position, department, or level of seniority, and regardless of whether the Individual Defendant had a direct reporting or working relationship with such employee during his or her tenure at CRH. For purposes of this Section 3.2, "employee of CRH" includes any individual who was employed by CRH at any time during the period beginning on the date of this Stipulation and ending on the expiration of the non-solicitation period.
3.3 Non-Solicitation of Vendors
All eight (8) Individual Defendants agree to a non-solicitation of vendors obligation of twelve (12) months, running from February 7, 2025 through and including February 6, 2026. During this period, no Individual Defendant shall, directly or indirectly, solicit, contact for business purposes, divert, or interfere with CRH's business relationships with any of CRH's top fifty (50) vendors, as identified by dollar volume of spend during the twelve (12)-month period ending January 31, 2025, and as listed in Exhibit C to the Settlement Agreement (the "Top 50 Vendor List"). The Top 50 Vendor List is confidential and shall be filed under seal with this Court. The Parties acknowledge that the identities and commercial terms associated with CRH's key vendor relationships constitute trade secrets and confidential business information of CRH. Nothing in this Section 3.3 shall be interpreted to restrict any Individual Defendant from having incidental social contact with representatives of listed vendors, provided that such contact does not involve the solicitation of business or the discussion of CRH's confidential commercial terms.
3.4 Data Return and Destruction
(a) Scope of Data at Issue. The Parties acknowledge that, as alleged in the Complaint and confirmed through the expedited discovery process, certain of the Individual Defendants downloaded, copied, or otherwise exfiltrated from CRH's information systems a total of approximately fourteen thousand three hundred twenty-seven (14,327) files, comprising approximately 2.8 gigabytes of data, from CRH's Aldermere Systems and Pinnacle Health IT environments during the period from January 10 through February 4, 2025. The exfiltrated data includes, without limitation, the following categories of CRH confidential and proprietary information:
(i) Project Ridgeline presentations and associated strategic planning materials;
(ii) Vendor negotiation term sheets and historical pricing data;
(iii) Private-label cost models, including bill-of-materials data, factory-level margin analyses, and supplier capacity allocations;
(iv) Customer segmentation data, including demographic profiles, purchasing behavior analyses, and lifetime value models;
(v) Promotional calendars and markdown optimization models; and
(vi) Internal competitive intelligence reports and market analysis memoranda.
(b) Return and Destruction Obligations. All exfiltrated CRH data in the possession, custody, or control of any Individual Defendant or Verdana shall be returned to CRH or certified destroyed in accordance with the Data Destruction Protocol set forth in Exhibit B to the Settlement Agreement within ten (10) business days of the execution of the Settlement Agreement (i.e., on or before April 28, 2025). Each Individual Defendant and Verdana shall provide CRH with a sworn certification of compliance with the data return and destruction obligations.
(c) Forensic Audit. Verdana shall permit and cooperate fully with an independent forensic audit of its information technology systems, including but not limited to its corporate servers, cloud storage environments, email systems, collaboration platforms, and any personal devices issued by Verdana to any Individual Defendant, to be conducted by Pinnacle Forensics LLC, at Verdana's sole expense. The cost of such forensic audit shall be capped at One Hundred Seventy-Five Thousand Dollars ($175,000). The scope, methodology, and timing of the forensic audit shall be as set forth in Exhibit B to the Settlement Agreement and as may be further specified by the Compliance Monitor. The forensic audit shall be completed within forty-five (45) days of the Effective Date. Pinnacle Forensics LLC shall provide a written report of its findings to all Parties, the Compliance Monitor, and the Court.
3.5 Monetary Terms
(a) Settlement Payment. Verdana shall pay CRH the sum of Eight Million Seven Hundred Fifty Thousand Dollars ($8,750,000) as a lump-sum settlement payment (the "Settlement Payment"). The Settlement Payment shall be made by wire transfer of immediately available funds to an account designated by CRH within thirty (30) days of the execution of the Settlement Agreement (i.e., on or before May 14, 2025). Failure to make the Settlement Payment in full when due shall constitute a material breach of the Settlement Agreement and shall entitle CRH to seek enforcement of the Settlement Agreement and the Consent Order, including interest on the unpaid balance at the rate of one percent (1%) per month.
(b) Litigation Cost Reimbursement. In addition to the Settlement Payment, Verdana shall reimburse CRH the sum of Four Hundred Twenty-Five Thousand Dollars ($425,000) toward CRH's reasonable litigation costs and expenses incurred in connection with this action (the "Litigation Cost Reimbursement"). The Litigation Cost Reimbursement shall be paid by wire transfer of immediately available funds to the account of Calderwood & Harkness LLP within thirty (30) days of the execution of the Settlement Agreement.
(c) Rathore Equity Forfeiture. Defendant Priya Rathore agrees to the forfeiture of one hundred percent (100%) of her unvested CRH restricted stock units ("RSUs"), which have an aggregate value of One Hundred Eighty-One Thousand Two Hundred Fifty Dollars ($181,250) as of February 7, 2025. In addition, Rathore agrees to the clawback of the final vested tranche of RSUs in the amount of One Hundred Eighty-One Thousand Two Hundred Fifty Dollars ($181,250) pursuant to the for-cause clawback provision set forth in Section 8(d) of the Rathore Employment Agreement, which provision was triggered by Rathore's breach of the restrictive covenants contained therein. The total value of Rathore's equity forfeiture and clawback is Three Hundred Sixty-Two Thousand Five Hundred Dollars ($362,500). CRH shall effectuate the cancellation and clawback of such RSUs within fifteen (15) business days of the Effective Date through its equity plan administrator.
(d) Other Individual Defendant Equity Forfeitures. Defendants Derek Linden, Sonia Kaczmarek, Amara Osei, Brent Halvorsen, Lucia Fernandez-Gill, Nathan Tsao, and Kira Johansson each agree to forfeit his or her respective unvested CRH equity on a pro rata basis, in an aggregate amount of Four Hundred Eighty-Seven Thousand Dollars ($487,000). The individual forfeiture amounts are set forth in Section 5(d) of the Settlement Agreement. CRH shall effectuate the cancellation of such equity within fifteen (15) business days of the Effective Date through its equity plan administrator.
(e) Total Economic Recovery. The total economic recovery to CRH under the Settlement Agreement is Ten Million Twenty-Four Thousand Five Hundred Dollars ($10,024,500), comprising the following components:
3.6 Compliance Monitor
(a) Appointment. The Parties agree to the appointment of Aldwyn Compliance Solutions LLC ("Aldwyn"), located at 1700 Market Street, Suite 2800, Philadelphia, Pennsylvania 19103, as the independent compliance monitor (the "Compliance Monitor") for a term of twelve (12) months commencing on the Effective Date and ending on the twelve-month anniversary thereof (the "Monitoring Period").
(b) Scope of Monitoring. The Compliance Monitor shall be responsible for the quarterly verification of compliance by the Individual Defendants and Verdana with the Modified Restrictive Covenants set forth in Sections 3.1 through 3.3 of this Stipulation, the data return and destruction obligations set forth in Section 3.4 of this Stipulation, and the non-disparagement obligations set forth in Section 3.7 of this Stipulation. The Compliance Monitor shall have the authority to request documents, conduct interviews, and perform such other investigative activities as are reasonably necessary to fulfill its monitoring obligations.
(c) Quarterly Reports. The Compliance Monitor shall prepare and deliver quarterly written reports to all Parties and to the Court, setting forth its findings regarding compliance with the terms of the Consent Order and the Settlement Agreement. The first quarterly report shall be due within ninety (90) days of the Effective Date, and subsequent reports shall be due every ninety (90) days thereafter until the expiration of the Monitoring Period. At the conclusion of the Monitoring Period, the Compliance Monitor shall prepare and deliver a final certification of compliance or non-compliance, as applicable.
(d) Cost Allocation. The estimated cost of the Compliance Monitor's engagement is Three Hundred Sixty Thousand Dollars ($360,000) for the twelve-month Monitoring Period. Verdana shall bear sixty percent (60%) of the Compliance Monitor's fees and expenses, in the estimated amount of Two Hundred Sixteen Thousand Dollars ($216,000), and CRH shall bear forty percent (40%) of the Compliance Monitor's fees and expenses, in the estimated amount of One Hundred Forty-Four Thousand Dollars ($144,000). In the event that the actual costs of the Compliance Monitor's engagement exceed the estimated amount, the excess shall be allocated between Verdana and CRH in the same sixty/forty (60/40) ratio.
(e) Engagement Letter. The form of the Compliance Monitor Engagement Letter, which sets forth the detailed terms and conditions of Aldwyn's engagement, including confidentiality obligations, reporting procedures, and dispute resolution mechanisms, is attached as Exhibit D to the Settlement Agreement.
3.7 Mutual Non-Disparagement
The Parties agree to mutual non-disparagement obligations, the terms and conditions of which are set forth in Exhibit E to the Settlement Agreement and incorporated herein by reference. In summary, each Party agrees that it shall not, directly or indirectly, make, publish, or cause to be made or published any false, misleading, or disparaging statement, whether written or oral, about any other Party in any public or private forum, including but not limited to social media platforms, industry conferences, press releases, or communications with business partners, vendors, customers, or prospective employers. The non-disparagement obligations are mutual and shall survive the termination or expiration of the Settlement Agreement. Nothing in the non-disparagement provisions shall restrict any Party from making truthful statements required by law, regulation, legal process, or the rules of any securities exchange, or from providing truthful information in response to a subpoena or governmental inquiry.
3.8 Attorneys' Fees
Except as expressly set forth in Section 3.5(b) above with respect to the Four Hundred Twenty-Five Thousand Dollar ($425,000) Litigation Cost Reimbursement from Verdana to CRH, each Party shall bear its own attorneys' fees, costs, expenses, and disbursements incurred in connection with this action, the negotiation and execution of the Settlement Agreement and this Stipulation, and the performance of its obligations hereunder. No Party shall seek or be entitled to an award of attorneys' fees or costs from any other Party except as expressly provided in the Settlement Agreement or as may be awarded by this Court in connection with an enforcement proceeding relating to the Consent Order.
Section 4. Request for Entry of Consent Order
4.1. The Parties jointly and respectfully request that this Court enter the [Proposed] Consent Order in the form attached hereto as Exhibit 2. The Parties represent and warrant that the terms of the Consent Order have been negotiated and agreed upon by all Parties, through their respective counsel, in an arm's-length transaction and that no Party has been coerced or unduly influenced in agreeing to the terms thereof.
4.2. The Consent Order incorporates the Modified Restrictive Covenant terms set forth in Sections 3.1 through 3.3 of this Stipulation, the data destruction obligations set forth in Section 3.4 of this Stipulation, the compliance monitoring provisions set forth in Section 3.6 of this Stipulation, and such other provisions as are necessary to effectuate the Parties' settlement.
4.3. The Consent Order retains this Court's continuing jurisdiction over the Parties and this action to enforce compliance with the terms of the Consent Order through all available remedies, including but not limited to contempt proceedings, sanctions, injunctive relief, and the award of attorneys' fees and costs incurred in connection with any enforcement proceeding.
Section 5. Dissolution of Temporary Restraining Order
5.1. Upon entry of the Consent Order by this Court, the Temporary Restraining Order entered by this Court on March 7, 2025 shall be automatically dissolved and superseded in its entirety by the terms and conditions of the Consent Order. The Consent Order shall be the sole operative injunctive order in this action.
5.2. Following entry of the Consent Order and dissolution of the Temporary Restraining Order, Plaintiff shall promptly take all steps necessary and appropriate to seek the discharge and cancellation of the injunction bond posted in connection with the TRO (Bond No. BSC-2025-TRO-04419, in the amount of $2,500,000, issued by Broadview Surety Corp.), including the filing of any required motions or applications with this Court and the provision of any required notices to Broadview Surety Corp.
Section 6. Dismissal
6.1. Within thirty (30) days following the expiration of the twelve (12)-month Monitoring Period (i.e., on or about May 14, 2026, but in any event no later than thirty (30) days after the Compliance Monitor delivers its final certification), and provided that the Compliance Monitor has certified full compliance by all Defendants with the terms of the Consent Order and the Settlement Agreement, the Parties shall jointly file with this Court a Stipulation for Dismissal of this action with prejudice, with each Party bearing its own costs and fees except as otherwise provided herein. The Stipulation for Dismissal shall provide for dismissal of all claims and causes of action asserted in the Complaint, and all Parties shall release all claims and counterclaims arising out of or related to the subject matter of this action, as more particularly set forth in the Settlement Agreement.
6.2. In the event that the Compliance Monitor identifies material non-compliance during the Monitoring Period, or in the event that any Party alleges non-compliance with the terms of the Consent Order or the Settlement Agreement, the Party alleging non-compliance may apply to this Court for enforcement of the Consent Order in accordance with Section 7 of this Stipulation and Paragraph 10 of the Consent Order. In such event, the Stipulation for Dismissal shall not be filed until the final resolution of such enforcement application, including any appeals therefrom, and the Monitoring Period shall be tolled during the pendency of such proceedings.
Section 7. Retained Jurisdiction
This Court shall retain continuing jurisdiction over the Parties and this action for all purposes related to the enforcement of the Consent Order and the Settlement Agreement, the resolution of any disputes arising under or in connection with the Settlement Agreement, this Stipulation, or the Consent Order, and the entry of such further orders, decrees, or judgments as this Court may deem necessary, just, and appropriate. The Parties irrevocably consent to the personal jurisdiction of this Court for purposes of this Section 7 and waive any objection to the exercise of such jurisdiction, including any objection based on inconvenience of forum.
Section 8. No Admission of Liability
8.1. This Stipulation, the Settlement Agreement, and the Consent Order do not constitute, and shall not be construed as, an admission of liability, wrongdoing, fault, or the validity or invalidity of any claim or defense by any Party. The Individual Defendants and Verdana expressly deny any liability for the claims asserted in the Complaint, and CRH expressly denies the validity of any defenses or counterclaims asserted or that could have been asserted by Defendants. The Parties have agreed to the terms of this Stipulation and the Settlement Agreement solely to avoid the expense, burden, and uncertainty of continued litigation.
8.2. Neither the Settlement Agreement, this Stipulation, nor the Consent Order, nor any term, provision, or recital contained herein or therein, shall be offered, received, or used as evidence in any action or proceeding, whether civil, criminal, administrative, or otherwise, for any purpose other than proceedings to enforce the Settlement Agreement, this Stipulation, or the Consent Order, or proceedings in which a Party asserts the Settlement Agreement, this Stipulation, or the Consent Order as a defense (including, without limitation, as a defense based on release, res judicata, collateral estoppel, or similar doctrines).
Section 9. Exhibits
The following exhibits are attached hereto and incorporated herein by reference:
Exhibit 1: Standstill and Settlement Agreement dated as of April 14, 2025, together with the following exhibits thereto:
Exhibit A — Modified Restrictive Covenant Terms
Exhibit B — Data Return and Destruction Protocol
Exhibit C — List of Top 50 CRH Vendors (to be filed under seal pursuant to Paragraph 11 of the Consent Order)
Exhibit D — Form of Compliance Monitor Engagement Letter
Exhibit E — Mutual Non-Disparagement Provisions
Exhibit 2: [Proposed] Consent Order Incorporating Modified Restrictive Covenants
Section 10. Authority
10.1. Each Party represents and warrants to the other Parties that it has the full power, authority, and legal capacity to enter into this Stipulation and the Settlement Agreement and to perform all of its obligations hereunder and thereunder.
10.2. CRH represents and warrants that its Board of Directors has duly authorized and approved the execution and delivery of the Settlement Agreement and the filing of this Stipulation, by resolutions duly adopted at a meeting of the Board held on April 12, 2025, and that the officer executing the Settlement Agreement and this Stipulation on behalf of CRH has been duly authorized to do so.
10.3. Verdana represents and warrants that its Board of Directors, acting with the approval of Greystone Capital Partners, LP, in its capacity as majority equity holder of Verdana acting through Greystone Capital Fund VII, LP, has duly authorized and approved the execution and delivery of the Settlement Agreement and the filing of this Stipulation, by resolutions duly adopted at a meeting of the Board held on April 11, 2025, and that the officer executing the Settlement Agreement and this Stipulation on behalf of Verdana has been duly authorized to do so.
10.4. Each Individual Defendant represents and warrants that he or she has the full individual capacity and legal authority to enter into this Stipulation and the Settlement Agreement and to perform all of his or her obligations hereunder and thereunder, and that no consent, approval, or authorization of any third party is required for such Individual Defendant to enter into or perform under this Stipulation and the Settlement Agreement.
Section 11. Governing Law
This Stipulation and the Settlement Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to any choice of law or conflicts-of-law principles that would cause the application of the laws of any other jurisdiction.
Section 12. Counterparts and Execution
12.1. This Stipulation may be executed in one or more counterparts, each of which shall be deemed an original and all of which, when taken together, shall constitute one and the same instrument. The exchange of counterpart signature pages by facsimile transmission or by electronic mail in portable document format (.pdf) shall be sufficient to bind the Parties.
12.2. Facsimile and electronic signatures (including signatures transmitted via DocuSign or other electronic signature platforms) shall be deemed original signatures for all purposes, and this Stipulation shall be binding and enforceable upon the exchange of such electronic signatures by all Parties.
Section 13. Entire Agreement
This Stipulation, together with the Settlement Agreement and all exhibits, schedules, and attachments thereto, constitutes the entire agreement among the Parties with respect to the subject matter hereof and supersedes all prior and contemporaneous negotiations, discussions, representations, warranties, understandings, and agreements, whether written or oral, relating to such subject matter. No amendment, modification, or waiver of any provision of this Stipulation shall be effective unless set forth in a writing signed by all Parties and, to the extent applicable, approved by this Court.
IV. SIGNATURE BLOCKS
IN WITNESS WHEREOF, the Parties have executed this Stipulation of Settlement and [Proposed] Consent Order as of the date first written above.
PLAINTIFF:
CASCADE RETAIL HOLDINGS INC.
By: ________
Name: Theresa Yun-Park
Title: General Counsel
Date: April __, 2025
Of Counsel / Attorneys for Plaintiff:
CALDERWOOD & HARKNESS LLP
By: ________
Bernard Crawford (DE Bar No. 5327) 1301 K Street NW, Suite 1200 Washington, DC 20005 Telephone: (202) 555-7100
Email: bcrawford@calderwoodharkness.com
Attorneys for Plaintiff Cascade Retail Holdings Inc.
INDIVIDUAL DEFENDANTS:
________________________________________
PRIYA RATHORE, individually
Date: April __, 2025
________________________________________
DEREK LINDEN, individually
Date: April __, 2025
________________________________________
SONIA KACZMAREK, individually
Date: April __, 2025
________________________________________
AMARA OSEI, individually
Date: April __, 2025
________________________________________
BRENT HALVORSEN, individually
Date: April __, 2025
________________________________________
LUCIA FERNANDEZ-GILL, individually
Date: April __, 2025
________________________________________
NATHAN TSAO, individually
Date: April __, 2025
________________________________________
KIRA JOHANSSON, individually
Date: April __, 2025
Of Counsel / Attorneys for Individual Defendants:
WHITFIELD, NYGAARD & DOYLE LLP
By: ________
Catherine Nygaard (DE Bar No. 4891) 1000 North Market Street, Suite 1500 Wilmington, DE 19801 Telephone: (302) 555-2400
Email: cnygaard@wndlaw.com
Attorneys for Defendants Priya Rathore, Derek Linden, Sonia Kaczmarek, Amara Osei, Brent Halvorsen, Lucia Fernandez-Gill, Nathan Tsao, and Kira Johansson
VERDANA COMMERCE GROUP, INC.:
VERDANA COMMERCE GROUP, INC.
By: ________
Name: Helen Tsoi
Title: General Counsel
Date: April __, 2025
Of Counsel / Attorneys for Verdana Commerce Group, Inc.:
BLACKHALL & SOREN LLP
By: ________
Gavin Blackhall (DE Bar No. 5612) 300 Delaware Avenue, Suite 900 Wilmington, DE 19801 Telephone: (302) 555-8800
Email: gblackhall@blackhallsoren.com
Attorneys for Defendant Verdana Commerce Group, Inc.
V. EXHIBIT 2: [PROPOSED] CONSENT ORDER INCORPORATING MODIFIED RESTRICTIVE COVENANTS
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
CONSENT ORDER INCORPORATING MODIFIED RESTRICTIVE COVENANTS
Upon consideration of the Stipulation of Settlement and [Proposed] Consent Order filed by the Parties on April 14, 2025, the Settlement Agreement dated as of April 14, 2025 attached thereto as Exhibit 1, all exhibits to the Settlement Agreement, the submissions and representations of counsel for all Parties, the record in this proceeding, and for good cause shown,
IT IS HEREBY ORDERED, ADJUDGED, AND DECREED as follows:
Paragraph 1. Approval of Stipulation.
The Stipulation of Settlement filed by the Parties on April 14, 2025 is hereby approved. The terms and conditions of the Standstill and Settlement Agreement dated as of April 14, 2025 (the "Settlement Agreement"), attached to the Stipulation as Exhibit 1, are incorporated herein by reference as if set forth in full. This Court has reviewed the terms of the Settlement Agreement and finds that they were negotiated at arm's length, are reasonable, and are consistent with public policy. The Parties shall comply with all obligations set forth in the Settlement Agreement, this Consent Order, and the Stipulation.
Paragraph 2. Modified Non-Competition Obligations.
(a) Defendant Priya Rathore is hereby enjoined and restrained from engaging, directly or indirectly, in employment, consulting, advisory work, or any other compensated or uncompensated role in which she performs services in or related to the Restricted Categories (defined as home goods, seasonal décor, and private-label apparel) for any competitor of Plaintiff Cascade Retail Holdings Inc. within the United States, for a period of twelve (12) months from February 7, 2025 through and including February 6, 2026.
(b) Defendants Derek Linden, Sonia Kaczmarek, Amara Osei, Brent Halvorsen, Lucia Fernandez-Gill, Nathan Tsao, and Kira Johansson are each hereby enjoined and restrained from engaging, directly or indirectly, in employment, consulting, advisory work, or any other compensated or uncompensated role in which he or she performs services in or related to the Restricted Categories (defined as home goods, seasonal décor, and private-label apparel) for any competitor of Plaintiff Cascade Retail Holdings Inc. within the United States, for a period of nine (9) months from February 7, 2025 through and including November 6, 2025.
(c) Nothing in this Consent Order shall prohibit any Individual Defendant from employment at Verdana Commerce Group, Inc. or at any other entity, including a competitor of CRH, in roles and product categories that do not fall within the Restricted Categories. The Parties acknowledge that the Restricted Categories represent a narrow subset of the product categories in which Verdana and other entities operate, and the restrictions imposed herein are tailored to protect CRH's legitimate business interests without imposing an undue burden on the Individual Defendants' ability to earn a livelihood.
Paragraph 3. Non-Solicitation of Employees.
All Individual Defendants — Priya Rathore, Derek Linden, Sonia Kaczmarek, Amara Osei, Brent Halvorsen, Lucia Fernandez-Gill, Nathan Tsao, and Kira Johansson — are hereby enjoined and restrained from, directly or indirectly, soliciting, recruiting, enticing, hiring, or inducing (or attempting to solicit, recruit, entice, hire, or induce) any employee of CRH to leave CRH's employ or to accept employment or any other engagement with Verdana, any affiliate of Verdana, or any other person or entity, for a period of eighteen (18) months from February 7, 2025 through and including August 6, 2026. This non-solicitation obligation applies to all employees of CRH, regardless of position, department, or level of seniority.
Paragraph 4. Non-Solicitation of Vendors.
All Individual Defendants — Priya Rathore, Derek Linden, Sonia Kaczmarek, Amara Osei, Brent Halvorsen, Lucia Fernandez-Gill, Nathan Tsao, and Kira Johansson — are hereby enjoined and restrained from, directly or indirectly, soliciting, contacting for business purposes, diverting, or interfering with CRH's business relationships with any of CRH's top fifty (50) vendors (by dollar volume of spend, as identified in Exhibit C to the Settlement Agreement, which Exhibit C is filed under seal with this Court), for a period of twelve (12) months from February 7, 2025 through and including February 6, 2026.
Paragraph 5. Data Return and Destruction.
(a) All Individual Defendants and Verdana Commerce Group, Inc. shall comply with the Data Return and Destruction Protocol set forth in Exhibit B to the Settlement Agreement. All CRH data that was exfiltrated, downloaded, copied, or otherwise removed from CRH's information systems — comprising approximately fourteen thousand three hundred twenty-seven (14,327) files and approximately 2.8 gigabytes of data — shall be returned to CRH or certified destroyed within ten (10) business days of April 14, 2025, i.e., on or before April 28, 2025. Each Individual Defendant and Verdana shall provide CRH and the Compliance Monitor with a sworn certification of compliance with these obligations.
(b) Verdana shall cooperate fully with, and permit, an independent forensic audit of its information technology systems by Pinnacle Forensics LLC, at Verdana's sole expense (capped at One Hundred Seventy-Five Thousand Dollars ($175,000)), to verify full compliance with the data destruction obligations set forth herein and in the Settlement Agreement. The forensic audit shall be completed within forty-five (45) days of the Effective Date. Pinnacle Forensics LLC shall provide a written report of its findings to all Parties, the Compliance Monitor, and this Court.
Paragraph 6. Monetary Obligations.
The monetary terms of the Settlement Agreement are incorporated herein by reference and made enforceable as obligations under this Consent Order, as follows:
(a) Verdana Commerce Group, Inc. shall pay Cascade Retail Holdings Inc. the sum of Eight Million Seven Hundred Fifty Thousand Dollars ($8,750,000) within thirty (30) days of April 14, 2025 (i.e., on or before May 14, 2025).
(b) Verdana Commerce Group, Inc. shall reimburse Cascade Retail Holdings Inc. the sum of Four Hundred Twenty-Five Thousand Dollars ($425,000) in litigation costs within thirty (30) days of April 14, 2025.
(c) Defendant Priya Rathore shall forfeit and submit to the clawback of CRH equity in the total amount of Three Hundred Sixty-Two Thousand Five Hundred Dollars ($362,500), as set forth in Section 5(c) of the Settlement Agreement.
(d) Defendants Derek Linden, Sonia Kaczmarek, Amara Osei, Brent Halvorsen, Lucia Fernandez-Gill, Nathan Tsao, and Kira Johansson shall forfeit CRH equity in the aggregate amount of Four Hundred Eighty-Seven Thousand Dollars ($487,000), as set forth in Section 5(d) of the Settlement Agreement.
Paragraph 7. Compliance Monitor.
(a) Aldwyn Compliance Solutions LLC, 1700 Market Street, Suite 2800, Philadelphia, Pennsylvania 19103, is hereby appointed as the independent compliance monitor (the "Compliance Monitor") for a period of twelve (12) months commencing on April 14, 2025 and ending on April 14, 2026 (the "Monitoring Period").
(b) The Compliance Monitor shall prepare and submit quarterly reports to all Parties and to this Court regarding compliance by the Individual Defendants and Verdana with the terms of this Consent Order. Quarterly reports shall be due within ninety (90) days of the Effective Date and every ninety (90) days thereafter. At the conclusion of the Monitoring Period, the Compliance Monitor shall submit a final certification of compliance or non-compliance, as applicable.
(c) All Parties shall cooperate fully with the Compliance Monitor in the performance of its duties, including by providing timely responses to requests for documents, information, and access to personnel and systems.
(d) The costs of the Compliance Monitor's engagement (estimated at Three Hundred Sixty Thousand Dollars ($360,000)) shall be borne sixty percent (60%) by Verdana (estimated at Two Hundred Sixteen Thousand Dollars ($216,000)) and forty percent (40%) by CRH (estimated at One Hundred Forty-Four Thousand Dollars ($144,000)). Any costs in excess of the estimated amount shall be allocated between Verdana and CRH in the same sixty/forty (60/40) ratio.
Paragraph 8. Dissolution of Temporary Restraining Order.
The Temporary Restraining Order entered by this Court on March 7, 2025 is hereby dissolved and superseded in its entirety by this Consent Order. This Consent Order shall be the sole operative injunctive order governing the conduct of the Individual Defendants and Verdana with respect to the matters addressed herein. Plaintiff Cascade Retail Holdings Inc. is hereby authorized to take all steps necessary and appropriate to seek the discharge and cancellation of the injunction bond posted in connection with the Temporary Restraining Order (Bond No. BSC-2025-TRO-04419, in the amount of $2,500,000, issued by Broadview Surety Corp.).
Paragraph 9. Retained Jurisdiction.
This Court retains continuing jurisdiction over the Parties and this action for all purposes of enforcement of this Consent Order, including but not limited to the authority to hold any Party in contempt of court for violation of the terms hereof, to impose sanctions, to award damages and attorneys' fees, and to enter such further orders, injunctions, decrees, or judgments as this Court may deem necessary, just, and appropriate to effectuate the purposes of this Consent Order and the Settlement Agreement. The Parties irrevocably consent to the continuing personal jurisdiction of this Court for the purposes set forth in this Paragraph 9.
Paragraph 10. Enforcement.
Any Party may seek enforcement of this Consent Order by filing an appropriate motion with this Court upon not less than ten (10) business days' prior written notice to all other Parties and their counsel of record, except that in circumstances of imminent or ongoing harm, the moving Party may seek relief on shorter notice or on an emergency basis in accordance with the rules and practices of this Court. Violations of this Consent Order may be punished by contempt, sanctions, injunctive relief, monetary damages, attorneys' fees and costs incurred in connection with the enforcement proceeding, and such other relief as this Court deems just and appropriate.
Paragraph 11. Confidentiality of Vendor List.
Exhibit C to the Settlement Agreement (List of Top 50 CRH Vendors) shall be and remain filed under seal with this Court. Exhibit C shall not be disclosed to any person or entity other than the Parties, their counsel of record in this action, the Compliance Monitor, and such other persons or entities as this Court may authorize by further order. Any Party seeking to unseal Exhibit C or to disclose its contents to any person or entity not listed above shall file a motion with this Court, on notice to all Parties, seeking leave to do so.
Paragraph 12. No Admission.
This Consent Order does not constitute, and shall not be construed as, an admission of liability, wrongdoing, fault, or the validity or invalidity of any claim or defense by any Party. The Individual Defendants and Verdana expressly deny any liability for the claims asserted in the Complaint. CRH expressly denies the validity of any defenses or counterclaims asserted or that could have been asserted by Defendants. This Consent Order reflects a negotiated resolution entered into by the Parties to avoid the expense, burden, and uncertainty of continued litigation.
Paragraph 13. Dismissal.
Upon expiration of the twelve (12)-month Monitoring Period and the delivery by the Compliance Monitor of a final certification of full compliance with the terms of this Consent Order and the Settlement Agreement by all Defendants, the Parties shall, within thirty (30) days of such certification, jointly file a Stipulation for Dismissal of this action with prejudice, with each Party bearing its own costs except as otherwise provided in the Settlement Agreement. In the event that the Compliance Monitor certifies non-compliance, the Stipulation for Dismissal shall not be filed until the final resolution of any enforcement proceedings and the satisfaction of any obligations arising therefrom.
Paragraph 14. Governing Law.
This Consent Order shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to any choice of law or conflicts-of-law principles that would cause the application of the laws of any other jurisdiction.
SO ORDERED this _ day of _____, 2025.
________________________________________
Vice Chancellor Margaret T. Zhao Court of Chancery of the State of Delaware
VI. CERTIFICATE OF SERVICE
I, Bernard Crawford, hereby certify that on April 14, 2025, a true and correct copy of the foregoing Stipulation of Settlement and [Proposed] Consent Order, together with all exhibits attached thereto (including Exhibit 1 — Standstill and Settlement Agreement and all exhibits thereto, and Exhibit 2 — [Proposed] Consent Order Incorporating Modified Restrictive Covenants), was served upon all counsel of record in this action by electronic mail and by first-class United States mail, postage prepaid, addressed as follows:
Catherine Nygaard, Esquire Whitfield, Nygaard & Doyle LLP 1000 North Market Street, Suite 1500 Wilmington, Delaware 19801
Email: cnygaard@wndlaw.com
Counsel for Defendants Priya Rathore, Derek Linden, Sonia Kaczmarek, Amara Osei, Brent Halvorsen, Lucia Fernandez-Gill, Nathan Tsao, and Kira Johansson
Gavin Blackhall, Esquire Blackhall & Soren LLP 300 Delaware Avenue, Suite 900 Wilmington, Delaware 19801
Email: gblackhall@blackhallsoren.com
Counsel for Defendant Verdana Commerce Group, Inc.
Dated: April 14, 2025
________________________________________
Bernard Crawford (DE Bar No. 5327) CALDERWOOD & HARKNESS LLP 1301 K Street NW, Suite 1200 Washington, DC 20005 Telephone: (202) 555-7100
Email: bcrawford@calderwoodharkness.com
Attorneys for Plaintiff Cascade Retail Holdings Inc.
CASCADE RETAIL HOLDINGS INC., a Delaware corporation,
Plaintiff,
v. | C.A. No. 2025-0198-MTZ
PRIYA RATHORE, an individual; DEREK LINDEN, an individual; SONIA KACZMAREK, an individual; AMARA OSEI, an individual; BRENT HALVORSEN, an individual; LUCIA FERNANDEZ-GILL, an individual; NATHAN TSAO, an individual; KIRA JOHANSSON, an individual; and VERDANA COMMERCE GROUP, INC., a Delaware corporation,
Defendants.
Component | Amount
Settlement Payment from Verdana | $8,750,000
Rathore Equity Forfeiture and Clawback | $362,500
Other Individual Defendant Equity Forfeitures | $487,000
Litigation Cost Reimbursement from Verdana | $425,000
Total | $10,024,500
CASCADE RETAIL HOLDINGS INC., a Delaware corporation,
Plaintiff,
v. | C.A. No. 2025-0198-MTZ
PRIYA RATHORE, an individual; DEREK LINDEN, an individual; SONIA KACZMAREK, an individual; AMARA OSEI, an individual; BRENT HALVORSEN, an individual; LUCIA FERNANDEZ-GILL, an individual; NATHAN TSAO, an individual

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

I. INTRODUCTORY RECITALS

II. RECITALS

III. TERMS OF THE STIPULATION

IV. SIGNATURE BLOCKS

PLAINTIFF:

CASCADE RETAIL HOLDINGS INC.

CALDERWOOD & HARKNESS LLP

INDIVIDUAL DEFENDANTS:

WHITFIELD, NYGAARD & DOYLE LLP

VERDANA COMMERCE GROUP, INC.:

VERDANA COMMERCE GROUP, INC.

BLACKHALL & SOREN LLP

Record

Parties

Dates

Amounts