COMPLIANCE MONITORING PROTOCOL
DETAILED PROCEDURES ANNEX
Annex to the Standstill and Settlement Agreement dated April 14, 2025
C.A. No. 2025-0198-MTZ Delaware Court of Chancery
Prepared by: Calderwood & Harkness LLP 1301 K Street NW, Suite 1200 Washington, DC 20005 Matter No. 1038-00006
April 11, 2025
CONFIDENTIAL
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SECTION 1: PURPOSE AND SCOPE
1.1 Purpose
This Compliance Monitoring Protocol (the "Protocol") sets forth the detailed procedures to be followed by Aldwyn Compliance Solutions LLC ("Monitor" or "Aldwyn"), a Delaware limited liability company with its principal office located at 1700 Market Street, Suite 2800, Philadelphia, PA 19103, in its capacity as independent compliance monitor appointed pursuant to the Standstill and Settlement Agreement (the "Settlement Agreement") entered into among the following parties:
(a) Cascade Retail Holdings Inc. ("CRH"), a Delaware corporation with its principal office located at 2200 Elliott Avenue West, Suite 3400, Seattle, WA 98119;
(b) Priya Rathore, Derek Linden, Sonia Kaczmarek, Amara Osei, Brent Halvorsen, Lucia Fernandez-Gill, Nathan Tsao, and Kira Johansson (collectively, the "Individual Defendants" or the "Rathore Group"); and
(c) Verdana Commerce Group, Inc. ("Verdana" or "VCG"), a Delaware corporation with its principal office located at 400 Christiana Gateway, Suite 700, Wilmington, DE 19801.
The Protocol is adopted in connection with the Consent Order Incorporating Modified Restrictive Covenants (the "Consent Order") entered by Vice Chancellor Margaret T. Zhao of the Delaware Court of Chancery in C.A. No. 2025-0198-MTZ, which Consent Order incorporates the modified restrictive covenant terms negotiated among the Parties as part of the Settlement Agreement. The Protocol is designed to ensure the effective, transparent, and impartial monitoring of the Individual Defendants' and Verdana's compliance with the obligations set forth in the Settlement Agreement and the Consent Order.
This Protocol is an integral part of the Settlement Agreement and is incorporated by reference therein as a component of Exhibit D (Form of Compliance Monitor Engagement Letter). In the event of any conflict between this Protocol and the Settlement Agreement, the terms of the Settlement Agreement shall control, except to the extent that this Protocol provides greater procedural specificity regarding the Monitor's day-to-day operations, in which case the provisions of this Protocol shall supplement the Settlement Agreement. Nothing in this Protocol is intended to limit or modify the jurisdiction of the Court under the Consent Order.
1.2 Scope of Monitoring
The Monitor is tasked with verifying compliance in three principal areas, each of which is described in detail below and corresponds to the obligations set forth in the Settlement Agreement and the Consent Order.
1.2.1 Modified Non-Compete Compliance. The Monitor shall verify that the Individual Defendants are not engaged in restricted competitive activities during their respective non-compete periods, as modified by the Settlement Agreement and incorporated into the Consent Order. Specifically:
(a) Priya Rathore. Ms. Rathore is subject to a twelve (12)-month modified non-compete obligation commencing on February 7, 2025 and expiring on February 6, 2026. During this period, Ms. Rathore shall not, directly or indirectly, engage in, manage, supervise, consult regarding, or otherwise participate in the development, sourcing, merchandising, marketing, or sale of products within the following three product categories (the "Restricted Categories"): (i) home goods, (ii) seasonal décor, and (iii) private-label apparel. This obligation applies to Ms. Rathore's activities at Verdana, at any other entity, or on her own behalf.
(b) Other Seven Individual Defendants. Derek Linden, Sonia Kaczmarek, Amara Osei, Brent Halvorsen, Lucia Fernandez-Gill, Nathan Tsao, and Kira Johansson are each subject to a nine (9)-month modified non-compete obligation commencing on February 7, 2025 and expiring on November 6, 2025. During this period, each of these seven Individual Defendants shall not, directly or indirectly, engage in, manage, supervise, consult regarding, or otherwise participate in the development, sourcing, merchandising, marketing, or sale of products within the same three Restricted Categories: (i) home goods, (ii) seasonal décor, and (iii) private-label apparel. This obligation applies to each Individual Defendant's activities at Verdana, at any other entity, or on his or her own behalf.
The Monitor's verification activities with respect to the modified non-compete obligations shall focus on determining whether any Covered Employee is performing work, providing strategic input, or otherwise participating in activities at Verdana or elsewhere that fall within the scope of the Restricted Categories, taking into account the nature of the products involved, the stage of development, and the role of the Covered Employee in such activities.
1.2.2 Non-Solicitation Compliance. The Monitor shall verify adherence to the non-solicitation obligations set forth in the Settlement Agreement, which include two distinct components:
(a) Employee Non-Solicitation. All eight Individual Defendants are subject to an eighteen (18)-month employee non-solicitation obligation commencing on February 7, 2025 and expiring on August 6, 2026. During this period, no Individual Defendant shall, directly or indirectly, solicit, recruit, induce, encourage, or otherwise attempt to cause any employee of CRH to terminate his or her employment with CRH or to accept employment or an engagement with Verdana, any affiliate of Verdana, or any other person or entity.
(b) Vendor Non-Solicitation. All eight Individual Defendants are subject to a twelve (12)-month vendor non-solicitation obligation commencing on February 7, 2025 and expiring on February 6, 2026. During this period, no Individual Defendant shall, directly or indirectly, solicit, contact, interfere with, or attempt to divert the business of any of CRH's top fifty (50) vendors by spend (the "Protected Vendors"), as identified in Exhibit C to the Settlement Agreement. The vendor non-solicitation obligation encompasses any efforts to persuade, encourage, or assist any Protected Vendor in reducing, terminating, or materially altering its business relationship with CRH or in entering into or expanding a business relationship with Verdana or any affiliate thereof.
1.2.3 Data Return and Destruction Compliance. The Monitor shall verify that all exfiltrated CRH data has been returned to CRH or certifiably destroyed in accordance with the Data Return and Destruction Protocol set forth in Exhibit B to the Settlement Agreement, and that no residual copies exist on any systems controlled by the Individual Defendants or Verdana. The exfiltrated data consists of 14,327 files, approximately 2.8 gigabytes in total, that were downloaded from CRH's Aldermere Systems and Pinnacle Health IT environments by certain of the Individual Defendants between January 10, 2025 and February 4, 2025. These files include, without limitation, Project Ridgeline presentations and strategy documents, vendor negotiation term sheets and playbooks, private-label cost models and sourcing strategies, seasonal buying algorithms, customer segmentation data, and the five-year category expansion roadmap. The Monitor's verification shall encompass both (i) confirmation that the required data destruction certifications have been executed and delivered by all Individual Defendants and Verdana, and (ii) forensic verification, through audits conducted by the Forensic Consultant, that no copies of the exfiltrated data reside on Verdana's systems, the Individual Defendants' personal devices, or any cloud storage or other media accessible to the Individual Defendants or Verdana.
1.3 Monitoring Term
The monitoring term under this Protocol shall be twelve (12) months, commencing on the date of execution of the Settlement Agreement (the target date for such execution being April 14, 2025) and expiring on April 14, 2026 (the "Monitoring Term"). All references in this Protocol to the commencement or expiration of the Monitoring Term shall be adjusted accordingly if the Settlement Agreement is executed on a date other than April 14, 2025.
Upon the expiration of the Monitoring Term and the issuance of the Q4 Report (Final), and contingent on the Monitor's final determination that all Parties are in full compliance with the Consent Order and the Settlement Agreement, the Parties intend to file a Stipulation for Dismissal with Prejudice of C.A. No. 2025-0198-MTZ with the Delaware Court of Chancery. The filing of such Stipulation shall be conditioned on the Monitor's issuance of an overall compliance certification in the Q4 Report. In the event the Monitor identifies unresolved compliance issues in the Q4 Report, the Parties shall confer in good faith regarding the appropriate course of action prior to the filing of any dismissal stipulation, and Vice Chancellor Zhao shall retain jurisdiction under the Consent Order until such issues are resolved to the satisfaction of the Court.
1.4 Monitor Independence
Aldwyn Compliance Solutions LLC serves as an independent compliance monitor in this engagement and is not an agent, representative, fiduciary, advocate, or legal advisor of any Party. The Monitor owes no fiduciary duty to CRH, to Verdana, or to any Individual Defendant. The Monitor shall exercise its professional judgment independently in all matters arising under this Protocol, including in the evaluation of evidence, the determination of compliance or non-compliance, and the preparation of reports and recommendations.
The Monitor shall report simultaneously to both CRH and Verdana, through their respective counsel, as set forth in Section 3.3 below. In addition, the Monitor shall report to the Delaware Court of Chancery upon the request of Vice Chancellor Margaret T. Zhao, or as otherwise required by this Protocol, the Settlement Agreement, or the Consent Order. The Monitor's reporting to the Court shall be consistent with the confidentiality protections set forth in this Protocol and the Information-Sharing and Access Letter Agreement.
No Party shall attempt to direct, influence, or interfere with the Monitor's exercise of its independent judgment. Any attempt by a Party to do so shall be reported by the Monitor to all other Parties and, if appropriate, to the Court.
SECTION 2: DEFINITIONS
As used in this Protocol, the following terms shall have the meanings set forth below. Capitalized terms used but not defined in this Protocol shall have the meanings ascribed to them in the Settlement Agreement.
"Compliance Period" means the applicable period during which a particular compliance obligation is in effect, as follows: (a) for the modified non-compete obligation applicable to Priya Rathore, the period from February 7, 2025 through February 6, 2026; (b) for the modified non-compete obligation applicable to Derek Linden, Sonia Kaczmarek, Amara Osei, Brent Halvorsen, Lucia Fernandez-Gill, Nathan Tsao, and Kira Johansson, the period from February 7, 2025 through November 6, 2025; (c) for the employee non-solicitation obligation applicable to all eight Covered Employees, the period from February 7, 2025 through August 6, 2026; and (d) for the vendor non-solicitation obligation applicable to all eight Covered Employees, the period from February 7, 2025 through February 6, 2026.
"Consent Order" means the Consent Order Incorporating Modified Restrictive Covenants entered by Vice Chancellor Margaret T. Zhao in C.A. No. 2025-0198-MTZ, Delaware Court of Chancery.
"Court" means the Delaware Court of Chancery.
"Covered Employees" means the eight Individual Defendants: Priya Rathore, Derek Linden, Sonia Kaczmarek, Amara Osei, Brent Halvorsen, Lucia Fernandez-Gill, Nathan Tsao, and Kira Johansson.
"CRH Confidential Information" means confidential, proprietary, and trade secret information of CRH, as defined in the Settlement Agreement and in the underlying Employment Agreements between CRH and each of the Individual Defendants, including without limitation: (a) Project Ridgeline materials, including all presentations, strategic plans, financial models, and analyses prepared in connection with that initiative; (b) vendor negotiation playbooks and term sheets; (c) seasonal buying algorithms and forecasting models; (d) private-label sourcing strategies and cost models; (e) the five-year category expansion roadmap; (f) customer segmentation data; (g) pricing models and margin analyses; (h) supply chain logistics data; and (i) any other information designated as confidential or proprietary under the Employment Agreements or that would constitute a trade secret under the Delaware Uniform Trade Secrets Act, 6 Del. C. § 2001 et seq.
"CRH Counsel" means Calderwood & Harkness LLP, 1301 K Street NW, Suite 1200, Washington, DC 20005 (Bernard Crawford, Responsible Partner).
"Forensic Consultant" means Pinnacle Forensics LLC, 8700 Georgia Avenue, Suite 300, Silver Spring, MD 20910 (Dr. Rajiv Anand, Engagement Lead), retained to conduct forensic audits of systems and devices as provided in this Protocol.
"Individual Defendants' Counsel" means Whitfield, Nygaard & Doyle LLP, 1000 North Market Street, Suite 1500, Wilmington, DE 19801 (Catherine Nygaard, Lead Partner).
"Monitoring Term" has the meaning set forth in Section 1.3.
"Parties" means CRH, the Individual Defendants, and Verdana.
"Protected Vendors" means CRH's top fifty (50) vendors by spend, as identified and listed in Exhibit C to the Settlement Agreement.
"Protocol" means this Compliance Monitoring Protocol — Detailed Procedures Annex.
"Restricted Categories" means the following three product categories: (i) home goods, (ii) seasonal décor, and (iii) private-label apparel.
"Settlement Agreement" means the Standstill and Settlement Agreement dated April 14, 2025, among CRH, the Individual Defendants, and Verdana.
"Verdana Counsel" means Blackhall & Soren LLP, 300 Delaware Avenue, Suite 900, Wilmington, DE 19801 (Gavin Blackhall, Lead Partner).
Any reference in this Protocol to a "Section" refers to a section of this Protocol unless otherwise specified. Any reference to an "Exhibit" refers to an exhibit to the Settlement Agreement unless otherwise specified. The terms "include," "includes," and "including" shall be deemed to be followed by the phrase "without limitation." References to "days" mean calendar days unless "business days" is specified.
SECTION 3: MONITORING STRUCTURE AND PERSONNEL
3.1 Aldwyn Compliance Solutions LLC — Designated Team
Aldwyn shall designate a lead monitor (the "Lead Monitor") who shall serve as the primary point of contact for all Parties and their respective counsel throughout the Monitoring Term. The Lead Monitor shall have primary responsibility for directing the Monitor's activities under this Protocol, including the coordination of document reviews, the scheduling and conduct of interviews, the oversight of forensic audits, the preparation of Quarterly Compliance Reports, and the management of any escalation procedures under Section 8.
In addition to the Lead Monitor, Aldwyn shall designate at least one additional compliance analyst (the "Compliance Analyst") to assist the Lead Monitor in the performance of the Monitor's duties. Aldwyn may supplement its team with additional personnel as reasonably necessary, provided that all personnel assigned to this engagement meet the independence and conflict-of-interest requirements set forth below.
All Aldwyn personnel assigned to this engagement, including the Lead Monitor and any Compliance Analysts, must be free from conflicts of interest with CRH, Verdana, Greystone Capital Partners LP (a significant investor in Verdana), and each of the Individual Defendants. Prior to commencing work under this Protocol, each Aldwyn team member shall complete a conflict-of-interest check and provide a written certification of independence to all Parties and their counsel. If any conflict of interest arises during the Monitoring Term, Aldwyn shall promptly disclose the conflict to all Parties and counsel and shall take appropriate remedial action, which may include the substitution of personnel.
3.2 Use of Subcontractors
Aldwyn is authorized to engage Pinnacle Forensics LLC (Dr. Rajiv Anand, Engagement Lead) as a subcontractor for the purpose of conducting the initial forensic audit described in Section 7.1, as well as any follow-up forensic audits authorized under Section 7.2. The cost of the initial Pinnacle Forensics audit shall be borne entirely by Verdana, subject to the cost cap of $175,000 as set forth in the Settlement Agreement.
Except for Pinnacle Forensics LLC, Aldwyn shall not engage any additional subcontractors to perform work under this Protocol without the prior written consent of both CRH and Verdana (such consent not to be unreasonably withheld). Any request to engage an additional subcontractor shall be submitted in writing to all counsel of record and shall include a description of the proposed subcontractor, the scope of work, the estimated cost, and a conflict-of-interest certification.
All subcontractors engaged by Aldwyn under this Protocol, including Pinnacle Forensics LLC, shall execute confidentiality agreements in the form appended to the Information-Sharing and Access Letter Agreement among CRH, Verdana, and Aldwyn (the "Letter Agreement"). All subcontractors shall be bound by the same confidentiality, independence, and information security obligations that apply to Aldwyn under this Protocol and the Letter Agreement.
3.3 Communication Protocols
All formal communications from the Monitor, including Quarterly Compliance Reports, Special Compliance Reports, document requests, interview scheduling notices, and escalation notices, shall be directed simultaneously to the following individuals:
(a) CRH: Theresa Yun-Park, General Counsel, Cascade Retail Holdings Inc., 2200 Elliott Avenue West, Suite 3400, Seattle, WA 98119;
(b) CRH Counsel: Bernard Crawford, Calderwood & Harkness LLP, 1301 K Street NW, Suite 1200, Washington, DC 20005;
(c) Verdana: Helen Tsoi, General Counsel, Verdana Commerce Group, Inc., 400 Christiana Gateway, Suite 700, Wilmington, DE 19801;
(d) Verdana Counsel: Gavin Blackhall, Blackhall & Soren LLP, 300 Delaware Avenue, Suite 900, Wilmington, DE 19801; and
(e) Individual Defendants' Counsel: Catherine Nygaard, Whitfield, Nygaard & Doyle LLP, 1000 North Market Street, Suite 1500, Wilmington, DE 19801.
Formal communications shall be transmitted by email (with read receipt requested) and, where the communication constitutes a report, determination, or escalation notice, by overnight courier to the physical addresses listed above.
Informal communications, including routine scheduling inquiries, logistical coordination, and preliminary questions regarding document production, may be directed to specific counsel as appropriate in the Monitor's judgment, provided that the Monitor shall provide prompt notice to all other Parties and counsel of any substantive information exchanged during such informal communications. The Monitor shall maintain a log of all formal and informal communications with the Parties and counsel, which log shall be available for inspection by any Party's counsel upon reasonable request.
SECTION 4: QUARTERLY REPORTING
4.1 Report Schedule
The Monitor shall prepare and issue four Quarterly Compliance Reports during the twelve (12)-month Monitoring Term, in accordance with the following schedule:
(a) Q1 Report: The Q1 Report shall cover the period from April 14, 2025 through July 13, 2025 and shall be due on or before July 28, 2025. The Q1 Report shall include the results of the initial forensic audit conducted by Pinnacle Forensics LLC (see Section 7.1), as well as the Monitor's initial assessment of non-compete and non-solicitation compliance based on the Monitor's first quarterly cycle of document reviews and interviews.
(b) Q2 Report: The Q2 Report shall cover the period from July 14, 2025 through October 13, 2025 and shall be due on or before October 28, 2025. The Q2 Report shall specifically address the expiration, on November 6, 2025, of the modified nine (9)-month non-compete obligations applicable to the seven Individual Defendants other than Priya Rathore (Derek Linden, Sonia Kaczmarek, Amara Osei, Brent Halvorsen, Lucia Fernandez-Gill, Nathan Tsao, and Kira Johansson). The Q2 Report shall confirm whether each of these seven Covered Employees remained in compliance with his or her non-compete obligation throughout the entire Compliance Period, and shall provide a summary assessment of compliance status as of the date of the report with a particular focus on any transitional issues arising as the seven Individual Defendants become eligible to engage in activities within the Restricted Categories.
(c) Q3 Report: The Q3 Report shall cover the period from October 14, 2025 through January 13, 2026 and shall be due on or before January 28, 2026. The Q3 Report shall specifically address the expiration, on February 6, 2026, of Priya Rathore's modified twelve (12)-month non-compete obligation, as well as the expiration, on the same date, of the twelve (12)-month vendor non-solicitation obligation applicable to all eight Covered Employees. The Q3 Report shall confirm whether Ms. Rathore remained in compliance with her non-compete obligation through the date of the report, and shall provide a comprehensive assessment of the vendor non-solicitation compliance of all eight Covered Employees as the vendor non-solicitation period approaches its conclusion.
(d) Q4 Report (Final): The Q4 Report shall cover the period from January 14, 2026 through April 13, 2026 and shall be due on or before April 28, 2026. The Q4 Report shall serve as the Monitor's final compliance certification and shall include: (i) a comprehensive, retrospective assessment of compliance across all three principal monitoring areas (non-compete, non-solicitation, and data return/destruction) over the entire Monitoring Term; (ii) confirmation that all non-compete obligations and vendor non-solicitation obligations have expired and that, to the Monitor's knowledge, all Covered Employees were in compliance through the expiration of those obligations; (iii) a status assessment of the ongoing employee non-solicitation obligations, which extend through August 6, 2026 — noting that the Monitoring Term concludes before the employee non-solicitation obligation expires, and providing the Monitor's final assessment of compliance as of the conclusion of the Monitoring Term, together with any recommendations for post-monitoring compliance measures; and (iv) an overall compliance determination for the Monitoring Term as a whole.
In the event that the Monitor is unable to complete a Quarterly Compliance Report by its scheduled due date due to circumstances beyond the Monitor's reasonable control, including delays in document production, scheduling difficulties, or the pendency of an investigation under Section 8, the Monitor shall notify all counsel of record in writing as promptly as practicable and shall provide a revised estimated delivery date. The Monitor shall use commercially reasonable efforts to deliver all reports within ten (10) business days of the original due date.
4.2 Report Contents
Each Quarterly Compliance Report shall include the following sections, in the order set forth below, and shall be prepared with sufficient detail to enable the Parties and the Court to assess the Monitor's activities and conclusions:
1. Executive Summary. A concise overview of the monitoring activities conducted during the quarter, including a narrative summary of the Monitor's principal observations and a summary compliance determination for each of the three monitoring areas (non-compete, non-solicitation, and data return/destruction). The compliance determination shall be stated as one of the following: "Compliant," "Non-Compliant," or "Unable to Determine." If the determination is "Non-Compliant" or "Unable to Determine," the Executive Summary shall briefly describe the basis for that determination, with cross-references to the applicable sections of the report containing detailed findings.
2. Non-Compete Monitoring. A detailed description of the activities reviewed, interviews conducted, and documents analyzed during the quarter relating to each Covered Employee's current work responsibilities and project assignments at Verdana, with particular focus on whether any Covered Employee has engaged in activities within the Restricted Categories (home goods, seasonal décor, and private-label apparel). This section shall separately address each Covered Employee whose non-compete obligation remains in effect during the reporting period and shall include factual findings regarding the nature of each Covered Employee's day-to-day responsibilities, the product categories to which the Covered Employee is assigned, and any interactions or overlaps with the Restricted Categories.
3. Employee Non-Solicitation Monitoring. An assessment of whether any Covered Employee has solicited, recruited, induced, encouraged, or otherwise attempted to cause any CRH employee to leave CRH's employ or to accept employment or an engagement with Verdana or any other entity during the reporting period. This section shall describe the Monitor's methodology for evaluating employee non-solicitation compliance, including any review of CRH attrition data, Verdana hiring records, and communications between Covered Employees and current CRH employees.
4. Vendor Non-Solicitation Monitoring. An assessment of whether any Covered Employee has solicited, contacted, interfered with, or attempted to divert the business of any of the Protected Vendors listed in Exhibit C during the reporting period. This section shall describe the Monitor's review of vendor interaction records, meeting logs, and other relevant materials, and shall identify any contacts between Covered Employees and Protected Vendors, together with the Monitor's assessment of whether any such contacts constitute a violation of the vendor non-solicitation obligation.
5. Data Compliance. A status report on data return and destruction certifications submitted by the Individual Defendants and Verdana, together with the results of any forensic audits conducted by Pinnacle Forensics LLC during the reporting period. This section shall confirm whether, to the Monitor's knowledge, any CRH Confidential Information, including Project Ridgeline materials, resides on or is accessible through any systems controlled by Verdana or the Individual Defendants, and shall identify any open issues or areas of concern relating to data compliance.
6. Interview Summaries. Summaries of all interviews conducted by the Monitor during the quarter, including the name and title of each interviewee, the date and location (or mode) of the interview, the principal topics discussed, and any significant information obtained. Interview summaries shall include such identifying information as is necessary for the Parties and the Court to assess the Monitor's findings, consistent with the confidentiality protections set forth in this Protocol and the Letter Agreement.
7. Document Review Summary. A description of the categories and volume of documents reviewed during the quarter, including the date ranges of document requests, the date on which documents were produced, and any issues identified during the review. This section shall note any instances in which document production was incomplete, delayed, or otherwise problematic, and shall describe any privilege or redaction logs received from the producing Party.
8. Findings and Recommendations. A detailed statement of the Monitor's specific factual findings for the quarter, together with any recommended corrective actions. This section shall separately address each of the three principal monitoring areas and shall identify any areas requiring additional investigation in subsequent quarters. If the Monitor recommends corrective action, the recommendation shall include a description of the proposed action, the timeline for implementation, and the Party responsible for implementation.
9. Escalation Report (if applicable). If any matters were escalated under Section 8 during the quarter, this section shall describe the nature of the suspected violation, the steps taken by the Monitor during the escalation process, the current status of the matter, and any resolution reached. If no matters were escalated during the quarter, this section shall so state.
4.3 Report Distribution and Confidentiality
Each Quarterly Compliance Report shall be distributed simultaneously to all counsel of record, as identified in Section 3.3, by email and overnight courier on or before the applicable due date. In addition, a copy of each report shall be transmitted to CRH's General Counsel (Theresa Yun-Park) and Verdana's General Counsel (Helen Tsoi) at the addresses set forth in Section 3.3.
All Quarterly Compliance Reports are confidential and subject to the terms and conditions of the Information-Sharing and Access Letter Agreement among CRH, Verdana, and Aldwyn. No Party shall disclose the contents of any Quarterly Compliance Report to any third party without the prior written consent of all other Parties, except (a) as required by applicable law or regulation, (b) as necessary to enforce the Settlement Agreement or the Consent Order, or (c) as directed by the Court.
Any Quarterly Compliance Report or Special Compliance Report filed with the Court shall be filed under seal in accordance with Court of Chancery Rule 5.1 and any applicable confidentiality order. The Monitor shall coordinate with all counsel of record regarding the form and substance of any filing with the Court to ensure compliance with applicable rules and confidentiality protections.
SECTION 5: DOCUMENT REVIEW PROCEDURES
5.1 Categories of Documents Subject to Review
The Monitor shall have the right to request and review the following categories of documents from Verdana and the Individual Defendants throughout the Monitoring Term. The categories listed below are intended to be illustrative and not exhaustive; the Monitor may request additional categories of documents to the extent reasonably necessary to fulfill its obligations under this Protocol, subject to the dispute resolution procedures set forth in Section 5.2.
1. Organizational Charts and Role Descriptions. Current and updated organizational charts reflecting the positions, titles, and reporting lines of all Covered Employees within Verdana's organizational structure, together with written job descriptions, statements of responsibilities, and any amendments or updates to such descriptions during the Monitoring Term. To the extent any Covered Employee's role, title, or reporting line changes during the Monitoring Term, Verdana shall promptly provide updated organizational charts and role descriptions to the Monitor.
2. Project Assignments. Descriptions of all projects, initiatives, workstreams, and business activities to which any Covered Employee is assigned or in which any Covered Employee participates, including the specific product categories, vendor relationships, geographic markets, or business units involved. Such descriptions shall be sufficient to enable the Monitor to assess whether any Covered Employee's project assignments involve or relate to any of the Restricted Categories (home goods, seasonal décor, or private-label apparel).
3. Meeting Calendars and Communications. Business calendars, meeting agendas, meeting notes, and selected electronic communications (including emails, instant messages, and collaboration platform messages) of Covered Employees that are relevant to assessing compliance with the modified non-compete and non-solicitation obligations, subject to the privilege and confidentiality protections set forth in Section 5.3 below. The Monitor shall exercise reasonable judgment in the scope and volume of communications requested and shall endeavor to minimize disruption to Verdana's business operations.
4. Vendor Interaction Records. Any records of communications, negotiations, meetings, calls, or other interactions between any Covered Employee and any of the Protected Vendors listed in Exhibit C, including without limitation emails, meeting notes, proposals, agreements, purchase orders, and any other documentation reflecting the nature and substance of the interaction.
5. Recruiting and HR Records. Records reflecting any involvement by any Covered Employee in recruiting, soliciting, interviewing, or evaluating current employees of CRH for potential employment or engagement with Verdana or any affiliate thereof, including job postings, candidate lists, interview notes, offer letters, and related correspondence. This category also encompasses any communications between Covered Employees and current CRH employees that relate to employment opportunities at Verdana.
6. IT Access Logs. System access logs, login records, and audit trails reflecting Covered Employees' access to Verdana's information technology systems, including servers, cloud environments, email systems, file-sharing platforms, and storage devices. These records shall be used by the Monitor to verify that no CRH Confidential Information resides on or is accessible through Verdana's systems and to identify any anomalous access patterns that may warrant further investigation.
7. Certifications. All data destruction certifications submitted by the Individual Defendants and Verdana pursuant to the Data Return and Destruction Protocol set forth in Exhibit B to the Settlement Agreement, including the individual certifications of each Covered Employee and the corporate certification of Verdana's Chief Information Officer or other designated officer.
5.2 Document Request Procedures
The Monitor shall submit all document requests in writing to Verdana Counsel (Blackhall & Soren LLP, attention: Gavin Blackhall) and Individual Defendants' Counsel (Whitfield, Nygaard & Doyle LLP, attention: Catherine Nygaard), with simultaneous copies to CRH Counsel (Calderwood & Harkness LLP, attention: Bernard Crawford). Each document request shall specify the categories of documents sought, the relevant time period, and the Covered Employees to whom the request pertains.
The responding Party shall produce responsive documents within ten (10) business days of receipt of the document request, unless an extension of time is agreed upon in writing by the Monitor. Requests for extensions shall be made promptly and shall specify the reasons for the requested extension and the proposed revised production date. The Monitor shall not unreasonably withhold consent to reasonable extension requests.
If a dispute arises regarding the scope, relevance, or burden of a document request, the Parties and the Monitor shall first attempt to resolve the dispute through good-faith negotiation. If the dispute is not resolved within five (5) business days of the initiation of negotiations, any Party or the Monitor may seek guidance from the Court pursuant to the Consent Order. The filing of a dispute with the Court shall not stay the responding Party's obligation to produce non-disputed documents within the applicable timeframe.
5.3 Privilege and Confidentiality Protections
Communications that are subject to the attorney-client privilege, the work-product doctrine, or any other applicable legal privilege are not subject to review by the Monitor. To the extent a responding Party withholds documents on the basis of privilege, the responding Party shall furnish a privilege log to the Monitor identifying each withheld document by date, author, recipient(s), subject matter, and the specific privilege asserted. The Monitor shall not challenge assertions of privilege but may raise concerns with counsel of record if the Monitor believes that the volume or nature of withheld documents materially impairs the Monitor's ability to assess compliance.
Trade secrets and competitively sensitive business information of Verdana that are unrelated to the Monitor's compliance verification responsibilities may be withheld from production or redacted from produced documents, provided that Verdana furnishes a redaction log to the Monitor describing the nature of the withheld or redacted information and the basis for withholding or redacting it. The Monitor may challenge the appropriateness of a redaction if the Monitor has reason to believe the redacted information is relevant to compliance verification, and any such challenge shall be resolved in accordance with the dispute resolution procedures set forth in Section 5.2.
The Monitor shall maintain all documents received in the course of its review in a secure environment, utilizing encryption, access controls, and other information security measures consistent with industry standards for the handling of trade secrets and commercially sensitive information. The Monitor shall not disclose any documents or information obtained from any Party to any other Party, except as reflected in the Quarterly Compliance Reports, the Special Compliance Reports, or as required by the Court. Upon the expiration of the Monitoring Term, the Monitor shall return or destroy all documents and information received from the Parties in accordance with Section 10.3.
SECTION 6: EMPLOYEE INTERVIEW PROTOCOLS
6.1 Interviews of Covered Employees
The Monitor shall have the right to conduct in-person or videoconference interviews with any or all of the eight Covered Employees during each quarterly cycle of the Monitoring Term. The purpose of such interviews is to assess each Covered Employee's current responsibilities, activities, and interactions as they relate to the modified non-compete and non-solicitation obligations set forth in the Settlement Agreement and the Consent Order.
At a minimum, each Covered Employee shall be interviewed by the Monitor at least once during the twelve (12)-month Monitoring Term. The Monitor may request additional interviews of any Covered Employee if, in the Monitor's professional judgment, additional interviews are warranted based on information obtained during document review, forensic audits, prior interviews, or other monitoring activities. The Monitor shall exercise reasonable judgment in scheduling additional interviews and shall endeavor to minimize disruption to the Covered Employees' professional responsibilities.
Individual Defendants' Counsel (Whitfield, Nygaard & Doyle LLP, Catherine Nygaard or Travis Beaumont) shall be entitled to attend and participate in all interviews of the Covered Employees conducted by the Monitor. Counsel's participation may include advising the interviewee regarding the scope of the interview, asserting applicable privileges, and making objections on the record, provided that counsel shall not coach the interviewee or otherwise interfere with the Monitor's ability to conduct a fair and thorough interview.
Interviews shall be scheduled with at least ten (10) business days' advance written notice to Individual Defendants' Counsel and the interviewee, and shall be conducted during regular business hours (9:00 a.m. to 5:00 p.m. Eastern Time, Monday through Friday, excluding federal holidays). Interviews may be conducted at Verdana's offices (400 Christiana Gateway, Suite 700, Wilmington, DE 19801) or by videoconference, at the Monitor's discretion. If an interview is to be conducted in person, the Monitor shall provide notice of the intended date, time, and location at the time of scheduling.
6.2 Interviews of Verdana Personnel
In addition to interviews of the Covered Employees, the Monitor may interview Verdana management and other Verdana employees beyond the Covered Employees if reasonably necessary to assess compliance with the obligations monitored under this Protocol. The Monitor's right to interview Verdana personnel extends to the following individuals and their respective designees:
(a) Warren Dietrich, Chief Executive Officer of Verdana, or his designee;
(b) Helen Tsoi, General Counsel of Verdana, or her designee;
(c) Verdana human resources personnel who have been involved in the onboarding, integration, role assignment, or supervision of any Covered Employee; and
(d) Verdana merchandising division personnel who interact with, supervise, or report to any of the Covered Employees, to the extent the Monitor determines that interviews of such personnel are necessary to verify compliance with the non-compete obligations relating to the Restricted Categories.
Verdana Counsel (Blackhall & Soren LLP, Gavin Blackhall or his designee) shall be entitled to attend and participate in all interviews of Verdana personnel conducted by the Monitor. The scheduling and procedural requirements applicable to interviews of Covered Employees, as set forth in Section 6.1, shall apply equally to interviews of Verdana personnel.
6.3 Interviews of CRH Personnel
The Monitor may interview CRH personnel to verify compliance with the non-solicitation obligations, including the employee non-solicitation and vendor non-solicitation obligations. The Monitor's right to interview CRH personnel extends to the following individuals:
(a) Martin Cho, Vice President of Merchandising (Interim Senior Vice President), who is positioned to provide information regarding any solicitation of CRH merchandising employees by the Covered Employees;
(b) Roland Ashby, Chief People Officer, who is positioned to provide information regarding CRH employee attrition, recruiting inquiries from Verdana, and any reports of solicitation received by CRH's human resources department; and
(c) Other CRH merchandising division employees as the Monitor may reasonably determine are necessary to verify compliance with the non-solicitation obligations.
CRH Counsel (Calderwood & Harkness LLP, Bernard Crawford or his designee) shall be entitled to attend and participate in all interviews of CRH personnel conducted by the Monitor. Interviews of CRH personnel shall be scheduled with at least ten (10) business days' advance written notice to CRH Counsel and the interviewee.
6.4 Interview Procedures
The following procedures shall apply to all interviews conducted by the Monitor under this Section 6:
(a) Recording. All interviews shall be recorded by the Monitor through contemporaneous written notes prepared by the Monitor or a designated member of the Monitor's team. Audio recording of interviews shall be permitted only with the prior consent of the interviewee and his or her counsel. In the event an interviewee declines to consent to audio recording, the Monitor's written notes shall constitute the official record of the interview.
(b) Topics. Interview topics shall include, as applicable: (i) the interviewee's current job responsibilities, title, and reporting relationships; (ii) the product categories, projects, and initiatives to which the interviewee is assigned; (iii) any interactions between the interviewee and CRH's Protected Vendors; (iv) the interviewee's awareness of any solicitation, recruiting, or hiring of current CRH employees by Verdana or the Covered Employees; (v) the interviewee's awareness of any CRH Confidential Information, including Project Ridgeline materials, residing on or accessible through Verdana's systems; (vi) any other matters relevant to the modified restrictive covenants and the data return and destruction obligations; and (vii) any follow-up questions arising from prior interviews, document reviews, or forensic audits.
(c) Summaries. The Monitor shall prepare a written summary of each interview, which summary shall be included in the applicable Quarterly Compliance Report. Interview summaries shall include the date, time, and location (or mode) of the interview, the names and roles of all participants, a description of the principal topics discussed, and a summary of the interviewee's responses and any significant information obtained.
(d) Non-Retaliation. No interviewee may be penalized, disciplined, terminated, or otherwise subject to adverse action by any Party for cooperating with the Monitor in connection with interviews conducted under this Protocol. Any allegation of retaliation shall be promptly reported by the Monitor to all counsel of record and, if appropriate, to the Court.
SECTION 7: FORENSIC TECHNOLOGY AUDITS
7.1 Initial Forensic Audit
Within thirty (30) days of the execution date of the Settlement Agreement (i.e., by no later than May 14, 2025, assuming a Settlement Agreement execution date of April 14, 2025), Pinnacle Forensics LLC (Dr. Rajiv Anand, Engagement Lead) shall conduct an independent forensic audit of Verdana's information technology systems and the personal devices of the Covered Employees. The scope of the initial forensic audit shall include, at a minimum, the following:
(a) Verdana Corporate Systems. Pinnacle shall examine Verdana's corporate servers, cloud-based storage environments (including Crestline Systems, Ridgeway Industries, and any other cloud platforms utilized by Verdana), enterprise email systems, collaboration platforms (including Northgate Data Systems, Meridian Solutions, and any file-sharing systems), network-attached storage, and any other corporate information technology infrastructure accessible to the Covered Employees.
(b) Personal Devices. To the extent authorized under the Settlement Agreement and the Consent Order, Pinnacle shall examine personal devices (including laptops, desktop computers, tablets, smartphones, and external storage media such as USB drives and portable hard drives) owned or used by the Covered Employees, to verify the absence of CRH Confidential Information on such devices.
The purpose of the initial forensic audit is to verify that all exfiltrated CRH data — consisting of 14,327 files, approximately 2.8 gigabytes in aggregate, downloaded from CRH's Aldermere Systems and Pinnacle Health IT environments by certain of the Individual Defendants between January 10, 2025 and February 4, 2025 — has been returned to CRH or certifiably destroyed in accordance with the Data Return and Destruction Protocol set forth in Exhibit B. The exfiltrated data includes, without limitation, Project Ridgeline presentations and strategic planning documents, vendor negotiation term sheets, private-label cost models, seasonal buying algorithms and forecasting tools, customer segmentation data and analytics, and the five-year category expansion roadmap. The audit shall also verify that no copies of such data reside on any systems or devices accessible to Verdana or the Individual Defendants.
The cost of the initial forensic audit shall be borne entirely by Verdana, subject to the cost cap of One Hundred Seventy-Five Thousand Dollars ($175,000) as set forth in the Settlement Agreement. Pinnacle shall report its findings to the Monitor in accordance with Section 7.3 below, and the Monitor shall incorporate the results of the initial forensic audit in the Q1 Quarterly Compliance Report.
7.2 Follow-Up Forensic Audits
The Monitor may request one or more additional forensic audits during the Monitoring Term under any of the following circumstances:
(a) The initial forensic audit reveals incomplete data destruction, evidence of retained CRH Confidential Information, or other findings that warrant further investigation;
(b) During the course of document review, interviews, or other monitoring activities, the Monitor identifies credible evidence suggesting that CRH Confidential Information has been retained, accessed, or used by the Individual Defendants or Verdana in violation of the Settlement Agreement;
(c) A Party, in good faith, requests the Monitor to conduct an additional forensic audit and provides a reasonable written justification for the request, including a description of the specific concerns to be addressed.
The costs of follow-up forensic audits shall be allocated as follows:
(i) If the follow-up audit is triggered by evidence of non-compliance by the Individual Defendants or Verdana (whether identified by the Monitor or by CRH), the costs of the audit shall be borne by Verdana.
(ii) If the follow-up audit is triggered by a CRH request and does not result in a finding of non-compliance, the costs of the audit shall be borne by CRH.
(iii) If the allocation of costs for a particular follow-up audit is disputed among the Parties, the dispute shall be submitted to Vice Chancellor Margaret T. Zhao for resolution.
Any follow-up forensic audit costs that would cause the aggregate forensic audit expenditures to exceed the initial $175,000 cap shall require the agreement of all Parties or, in the absence of agreement, a Court order authorizing such additional expenditures.
7.3 Forensic Audit Procedures
All forensic audits conducted by Pinnacle Forensics LLC under this Protocol shall adhere to the following procedures:
(a) Industry-Standard Protocols. Pinnacle shall follow industry-standard digital forensics methodologies, including those established by the National Institute of Standards and Technology (NIST) and the Scientific Working Group on Digital Evidence (SWGDE), and shall maintain rigorous chain-of-custody documentation for all evidence acquired, examined, and analyzed.
(b) Written Report. Pinnacle shall provide a detailed written report to the Monitor within fifteen (15) business days of completing each forensic audit. Each report shall include: (i) a description of the methodology employed; (ii) an inventory of all systems and devices examined; (iii) the search terms, file hash values, metadata parameters, and other search criteria used; (iv) detailed findings regarding the presence or absence of CRH data on the examined systems and devices; (v) any observations regarding data deletion, alteration, or concealment; and (vi) Pinnacle's professional conclusions and any recommendations for further investigation.
(c) Cooperation. Verdana and the Individual Defendants shall cooperate fully with Pinnacle Forensics LLC and the Monitor in connection with all forensic audits conducted under this Protocol. Such cooperation shall include providing timely access to all requested systems, devices, accounts, and storage media; furnishing administrator-level credentials and access rights as necessary; making IT personnel available for consultation; and refraining from any action that would impede, delay, or obstruct the audit process. Any failure to cooperate shall be promptly reported by the Monitor to all counsel of record and to the Court.
SECTION 8: ESCALATION PROCEDURES FOR SUSPECTED VIOLATIONS
8.1 Identification of Potential Violations
The Monitor shall promptly investigate any information, whether obtained through document review, interviews, forensic audits, tips from Parties or third parties, or any other means, that suggests a potential violation of any of the following obligations:
(a) The modified non-compete obligations (Priya Rathore through February 6, 2026; the other seven Individual Defendants through November 6, 2025; all limited to the Restricted Categories of home goods, seasonal décor, and private-label apparel);
(b) The employee non-solicitation obligations (all eight Covered Employees through August 6, 2026);
(c) The vendor non-solicitation obligations (all eight Covered Employees through February 6, 2026, applicable to the Protected Vendors listed in Exhibit C); and
(d) The data return and destruction obligations set forth in the Settlement Agreement and the Data Return and Destruction Protocol (Exhibit B).
The Monitor shall apply a standard of reasonable professional judgment in evaluating whether information received constitutes a credible basis for investigation. The Monitor is not required to investigate allegations that are facially implausible, unsupported by any evidence, or plainly outside the scope of the obligations monitored under this Protocol.
8.2 Preliminary Assessment
Upon identifying a potential violation warranting investigation, the Monitor shall take the following steps:
1. Documentation. The Monitor shall document the nature of the suspected violation, the evidence supporting the suspicion, and the identity of the Covered Employee(s) or Party(ies) involved. Such documentation shall be maintained in the Monitor's confidential files and shall be included in the applicable Quarterly Compliance Report or Special Compliance Report.
2. Written Notice. The Monitor shall provide written notice of the suspected violation simultaneously to all counsel of record (as identified in Section 3.3) within five (5) business days of the identification of the potential violation. The notice shall describe the nature of the suspected violation, the evidence supporting the suspicion, and the Monitor's preliminary assessment of the matter.
3. Response Period. The allegedly non-compliant Party (or Parties) shall be afforded ten (10) business days from receipt of the written notice to provide a written response to the Monitor, together with any supporting documentation, explanations, or evidence the Party wishes to submit. The response shall be provided simultaneously to all counsel of record.
8.3 Investigation and Determination
Following receipt of the allegedly non-compliant Party's written response, or upon the expiration of the ten (10)-business-day response period without a response, the Monitor shall conduct such additional investigation as it deems appropriate in its professional judgment. Additional investigation may include, without limitation, supplemental document requests, follow-up interviews with the relevant Covered Employee(s), interviews with other Verdana or CRH personnel, and additional forensic audits.
Upon completing its investigation, the Monitor shall prepare a written Compliance Determination within fifteen (15) business days. The Compliance Determination shall set forth:
(a) Factual Findings. A detailed recitation of the relevant facts as determined by the Monitor, including the evidence reviewed, the interviews conducted, and the documents analyzed.
(b) Violation Determination. The Monitor's determination as to whether a violation has occurred, stated as one of the following: "Confirmed Violation," "No Violation," or "Inconclusive."
(c) Severity Assessment. If the Monitor determines that a violation has occurred, an assessment of the severity of the violation, classified as either "Material" or "Non-Material." In making this determination, the Monitor shall consider factors including the nature and scope of the violation, whether the violation was intentional or inadvertent, the duration of the violation, the extent of any harm or potential harm to CRH, and whether the violation has been promptly corrected.
(d) Recommended Remedial Actions. The Monitor's recommendations for corrective or remedial actions, if any, including the timeline for implementation and the Party responsible for implementation.
The Compliance Determination shall be distributed simultaneously to all counsel of record.
8.4 Escalation to Parties and Court
The escalation procedures following a Compliance Determination shall depend on the severity of the violation, as set forth below:
Non-Material Violations. If the Monitor determines that a non-material violation has occurred — for example, an inadvertent, isolated contact with a Protected Vendor that is promptly corrected upon discovery — the Monitor shall include the factual findings and Compliance Determination in the next Quarterly Compliance Report, together with any recommended corrective measures. The Monitor may recommend that the Covered Employee or Verdana implement specific corrective actions (such as enhanced internal controls, additional training, or revised role assignments) but shall not refer the matter to the Court unless the non-material violation is repeated, escalates in severity, or is not corrected within a reasonable timeframe.
Material Violations. If the Monitor determines that a material violation has occurred, the Monitor shall take the following steps:
1. Special Compliance Report. Within five (5) business days of issuing the Compliance Determination, the Monitor shall issue a Special Compliance Report to all counsel of record and directly to CRH's General Counsel (Theresa Yun-Park) and Verdana's General Counsel (Helen Tsoi). The Special Compliance Report shall include the Compliance Determination, the factual findings supporting the determination, and the Monitor's recommended remedial actions.
2. Cure Period. The non-compliant Party shall have ten (10) business days from receipt of the Special Compliance Report to cure the material violation and to provide evidence of such cure to the Monitor. The Monitor shall assess the adequacy of the cure and shall notify all counsel of record of its assessment.
3. Court Filing. If the material violation is not cured within the ten (10)-business-day cure period, or if the cure is inadequate in the Monitor's professional judgment, the Monitor shall file the Special Compliance Report under seal with the Delaware Court of Chancery, directed to the attention of Vice Chancellor Margaret T. Zhao, who retains jurisdiction for enforcement under the Consent Order. The filing shall be accompanied by a cover letter from the Monitor explaining the basis for the Court filing and requesting such further action as the Court deems appropriate.
4. Enforcement Remedies. Following the Monitor's filing with the Court, the aggrieved Party (CRH) may seek contempt, injunctive relief, monetary sanctions, or other enforcement remedies from the Court, in accordance with the retained jurisdiction provisions of the Consent Order and applicable Court of Chancery Rules.
Emergency Escalation. Notwithstanding the foregoing procedures, if the Monitor identifies evidence of an imminent or ongoing material violation — including, without limitation, active use of Project Ridgeline materials, active solicitation of Protected Vendors on a systematic basis, or active recruitment of CRH employees in violation of the non-solicitation obligations — the Monitor may bypass the ten (10)-business-day cure period and file an emergency notification with the Court immediately, with simultaneous notice to all counsel of record. The emergency notification shall describe the nature and urgency of the violation and shall request expedited consideration by the Court.
8.5 Cooperation Obligations
All Parties, counsel of record, and the Covered Employees are obligated to cooperate fully and in good faith with the Monitor's investigation of any suspected violation under this Section 8. Cooperation shall include, without limitation, providing timely responses to document requests and interview requests, furnishing access to systems and records, and refraining from any action that would impede, delay, or obstruct the Monitor's investigation.
Failure by any Party to cooperate with the Monitor's investigation may be reported by the Monitor to all other Parties and counsel and, if appropriate, to the Court as an independent compliance failure. The Court may consider a Party's failure to cooperate as a basis for adverse inferences, sanctions, or other relief.
Verdana's cooperation obligations under this Section are reinforced by, and shall be interpreted consistently with, the Information-Sharing and Access Letter Agreement among CRH, Verdana, and Aldwyn, which sets forth additional detail regarding the obligations of Verdana and its personnel to facilitate the Monitor's access to information and systems.
SECTION 9: BUDGET AND COST ALLOCATION
9.1 Total Estimated Monitor Cost
The total estimated cost of the twelve (12)-month compliance monitoring engagement