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PRIVILEGED AND CONFIDENTIAL ATTORNEY WORK PRODUCT

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

INTERNAL MEMORANDUM

April 5, 2025

TO: Bernard Crawford, Responsible Partner, Labor & Employment

FROM: James Underwood, Lead Associate, Labor & Employment

RE: Evaluation of Proposed Compliance Monitor — Aldwyn Compliance Solutions LLC

MATTER: Cascade Retail Holdings Inc. v. Rathore et al., C.A. No. 2025-0198-MTZ (Del. Ch.)

MATTER NO.: 1038-00006

This memorandum is protected by the attorney-client privilege and the work product doctrine. It is intended solely for the internal use of Calderwood & Harkness LLP attorneys and staff working on the above-referenced matter. Do not distribute, copy, or disclose to any person outside the firm without prior authorization from the Responsible Partner.

I. Purpose and Executive Summary

This memorandum evaluates Aldwyn Compliance Solutions LLC ("Aldwyn") as the proposed independent compliance monitor under the Standstill and Settlement Agreement (the "Settlement Agreement") currently being finalized among Cascade Retail Holdings Inc. ("CRH"), the eight departing merchandising employees led by Priya Rathore (collectively, the "Rathore Group"), and Verdana Commerce Group, Inc. ("Verdana"). The purpose of this memorandum is to provide an assessment of Aldwyn's qualifications, independence, proposed engagement terms, and overall suitability for the monitor role, and to identify any areas that require further clarification or protective provisions before the engagement is formalized.

The settlement framework reached on March 20, 2025 calls for the appointment of an independent compliance monitor for a twelve-month period to verify adherence by the Rathore Group and Verdana to the modified restrictive covenant obligations, employee and vendor non-solicitation provisions, and data return and destruction requirements that form the core of the negotiated resolution. The monitor's role is critical to the enforceability and practical effectiveness of the settlement. Without adequate independent oversight, CRH would be left to rely entirely on self-reporting by the Rathore Group and Verdana — entities whose prior conduct, as alleged in the Verified Complaint, has already demonstrated a willingness to act in disregard of contractual obligations.

Aldwyn was proposed jointly by the parties during the March 18, 2025 mediation session before the Honorable Philip Ashford (Ret.) through Meridian ADR Services LLC. The joint proposal is significant because it eliminated what could have been a protracted and costly dispute over the selection of an independent monitor, and it reflects at least a baseline level of confidence in Aldwyn by all three sides of the litigation.

Summary Recommendation. Based on the analysis set forth below, Aldwyn is qualified to serve as the independent compliance monitor and the proposed engagement terms are reasonable. I recommend that we proceed with the engagement, subject to the clarifications and protective provisions discussed in Sections V.B and VI of this memorandum. In particular, the engagement letter must include precise definitions of the three restricted product categories, clear protocols governing the interface between Aldwyn's ongoing monitoring and Pinnacle Forensics LLC's initial forensic audit, robust privilege and confidentiality protections for CRH's proprietary information, and appropriate termination and replacement mechanisms.

Estimated Total Monitor Cost. The estimated total cost of the monitoring engagement is $360,000 over the twelve-month term, allocated 60% to Verdana ($216,000) and 40% to CRH ($144,000) per the agreed settlement framework. CRH's share is modest relative to both the overall litigation spend and the total economic recovery obtained through the settlement, as discussed further below.

II. Background and Context of the Compliance Monitor Requirement

A. Settlement Framework Overview

The compliance monitor requirement arose out of the settlement of a rapidly-escalating trade secrets and restrictive covenant dispute involving the departure of eight senior merchandising employees from CRH to Verdana, a direct competitor in the retail and consumer products space.

Filing and Initial Proceedings. On March 5, 2025, CRH filed a Verified Complaint in the Delaware Court of Chancery asserting claims for: (1) breach of restrictive covenant agreements against each member of the Rathore Group; (2) breach of confidentiality obligations against each member of the Rathore Group; (3) misappropriation of trade secrets under the Delaware Uniform Trade Secrets Act, 6 Del. C. § 2001 et seq. ("DUTSA"), against the Rathore Group and Verdana; (4) tortious interference with contractual relations against Verdana; and (5) civil conspiracy against the Rathore Group and Verdana. The Verified Complaint was supported by detailed factual allegations, including the January 6, 2025 dinner meeting orchestrated by Elliot Westbrook of Greystone Capital Partners, LP ("Greystone"), Verdana's majority private equity sponsor, and the forensic evidence developed by Pinnacle Forensics LLC demonstrating the exfiltration of approximately 14,327 files comprising roughly 2.8 gigabytes of proprietary CRH data.

Temporary Restraining Order. CRH moved ex parte for a temporary restraining order on March 6, 2025, and on March 7, 2025, Vice Chancellor Margaret T. Zhao granted the TRO, enjoining the Rathore Group from commencing employment with Verdana in any merchandising capacity pending a preliminary injunction hearing and ordering the preservation of all electronic data and devices in the possession of the Rathore Group and Verdana. CRH posted a $2,500,000 injunction bond through Broadview Surety Corp. (Bond No. BSC-2025-TRO-04419) as required by the Court.

Mediation and Settlement Framework. At the March 12, 2025 scheduling conference, the parties agreed to participate in expedited mediation before Judge Ashford through Meridian ADR Services LLC. A full-day mediation session took place on March 18, 2025, during which the parties reached an agreement in principle on the material terms of a settlement. The parties continued negotiations through their respective counsel, and a revised term sheet reflecting the complete settlement framework was executed on March 20, 2025. On March 21, 2025, the parties submitted a stipulation adjourning the preliminary injunction hearing that had been scheduled for March 24, 2025, and Vice Chancellor Zhao entered a Consent Interim Order maintaining the status quo during the documentation period.

Key Settlement Provisions Requiring Monitoring. The settlement framework contains several operative provisions that necessitate ongoing compliance monitoring. These include:

Modified Non-Compete Obligations. The restrictive covenant obligations applicable to the Rathore Group have been modified from the original contractual terms. With respect to Priya Rathore, the modified non-compete period is twelve months (through February 6, 2026), limited to three specific product categories: home goods, seasonal décor, and private-label apparel. These three categories correspond to the business lines in which Rathore had primary responsibility during her tenure at CRH and in which CRH has the greatest competitive interest in protection. With respect to the remaining seven members of the Rathore Group, the modified non-compete period is nine months (through November 6, 2025), limited to the same three product categories.

Employee Non-Solicitation. All eight members of the Rathore Group are subject to an eighteen-month employee non-solicitation restriction (through August 6, 2026), prohibiting the solicitation or inducement of any CRH employee to leave CRH's employ. This provision is broader in duration than the non-compete restriction and reflects CRH's significant concern — supported by the evidence developed to date — that the Rathore Group's departure was part of a coordinated recruitment effort that could extend to additional CRH personnel.

Vendor Non-Solicitation. All eight members of the Rathore Group are subject to a twelve-month vendor non-solicitation restriction (through February 6, 2026) covering CRH's top 50 vendors by annual spend. The list of covered vendors is set forth in a confidential schedule to the Settlement Agreement. This provision addresses CRH's concern that the Rathore Group, having had extensive vendor relationships in their merchandising roles, could leverage those relationships to divert vendor partnerships and favorable terms to Verdana.

Data Return and Destruction. All exfiltrated data — identified by Pinnacle Forensics as comprising 14,327 files totaling approximately 2.8 gigabytes — is to be returned to CRH or certified destroyed within ten business days of the execution of the Settlement Agreement. In addition, Verdana has agreed to submit to an independent forensic audit of its systems by Pinnacle Forensics LLC, at Verdana's sole expense (capped at $175,000), to verify that no copies of exfiltrated CRH data are retained on Verdana's servers, devices, cloud storage, or backup systems.

B. Role and Scope of the Compliance Monitor

The compliance monitor is the principal enforcement mechanism underpinning the settlement. While the Consent Order retains the Court of Chancery's jurisdiction for enforcement purposes, the parties recognized during the mediation that the practical effectiveness of the settlement depends on a neutral third party with the authority, expertise, and operational capacity to verify compliance on an ongoing basis.

Term. The monitor will operate for a twelve-month term commencing on the date of execution of the Settlement Agreement, which is currently targeted for April 14, 2025. Accordingly, the monitoring engagement would expire on or about April 14, 2026.

Monitoring Activities. The monitor's core responsibilities include quarterly verification of compliance with the modified non-compete restrictions, both the employee and vendor non-solicitation provisions, and the data return and destruction obligations. Each quarterly review will involve a combination of document review, personnel interviews, and, where appropriate, coordination with Pinnacle Forensics for data-related compliance verification.

Authority. The monitor has the authority to review relevant documents, conduct interviews of the Rathore Group members and designated Verdana personnel, and access certain Verdana systems, subject to the terms of an information-sharing letter agreement to be executed among CRH, Verdana, and Aldwyn. The scope of the monitor's access rights is one of the areas requiring further clarification, as discussed in Section V.B below.

Reporting. The monitor will report to counsel for all parties: Calderwood & Harkness LLP for CRH; Whitfield, Nygaard & Doyle LLP ("WND") for the Rathore Group; and Blackhall & Soren LLP for Verdana. In the event of unresolved compliance concerns, the monitor has the authority — and the obligation — to report directly to the Delaware Court of Chancery under the Consent Order's retained jurisdiction for enforcement.

Independence. The settlement framework requires that the monitor be truly independent, with no prior relationship with any party, any party's counsel, or Greystone Capital Partners, LP, in its capacity as Verdana's majority private equity sponsor. This independence requirement is essential to the credibility and effectiveness of the monitoring arrangement and to the Court's willingness to rely on the monitor's reports for enforcement purposes.

III. Aldwyn Compliance Solutions LLC — Firm Profile

A. General Information

Aldwyn Compliance Solutions LLC ("Aldwyn") is a Delaware limited liability company with its principal office located at 1700 Market Street, Suite 2800, Philadelphia, Pennsylvania 19103. Aldwyn is an established compliance consulting firm with extensive experience in court-appointed and settlement-mandated monitoring engagements across a range of litigation and regulatory contexts. The firm was founded to provide specialized compliance monitoring, remediation oversight, and integrity assessment services, and it has built a reputation as a capable and independent monitor in complex commercial and employment disputes.

Aldwyn's practice areas include regulatory and litigation compliance monitoring, corporate integrity agreements and consent decree monitoring, restrictive covenant compliance oversight, trade secret remediation and data governance monitoring, and related consulting services. The firm's multidisciplinary approach draws on professionals with backgrounds in corporate compliance, employment law, data governance and information security, and forensic accounting.

B. Relevant Experience and Qualifications

Aldwyn's qualifications for the proposed engagement are strong and directly relevant to the monitoring requirements under the Settlement Agreement. The key areas of relevant experience include:

Court-Appointed and Party-Appointed Monitoring. Aldwyn has served as a court-appointed or party-appointed compliance monitor in multiple prior engagements involving employment-related disputes, including restrictive covenant enforcement matters. These engagements have involved the monitoring of non-compete, non-solicitation, and confidentiality obligations in the context of senior-level employee departures and team moves, which is directly analogous to the fact pattern in the present matter.

Delaware Court of Chancery Proceedings. Aldwyn has demonstrated familiarity with the procedural and substantive requirements of the Delaware Court of Chancery, including the mechanics of consent orders, retained jurisdiction provisions, and the potential for contempt or enforcement proceedings. This familiarity is particularly valuable in the present matter, where the Consent Order retaining jurisdiction provides the ultimate enforcement backstop for the monitoring arrangement.

Forensic Data Monitoring. Aldwyn has demonstrated capability in forensic data monitoring and has experience coordinating with forensic technology vendors in connection with data return, destruction, and ongoing compliance verification. This experience is directly relevant to the present engagement given Pinnacle Forensics LLC's role in conducting the initial independent forensic audit of Verdana's systems and the monitor's obligation to verify ongoing data-destruction compliance after the initial audit is completed.

Non-Solicitation Compliance. Aldwyn has specific experience monitoring non-solicitation compliance in both the employee and customer/vendor contexts, including in the retail and consumer products industry. This industry-specific experience is valuable because the practical indicators of non-solicitation compliance — and the methods by which violations may be detected — vary by industry and require a monitor who understands the relevant business dynamics.

Team Composition. Aldwyn's proposed engagement team includes professionals with backgrounds in corporate compliance, employment law, data governance, and forensic accounting. This multidisciplinary composition is well-suited to the breadth of monitoring responsibilities contemplated by the Settlement Agreement, which span restrictive covenant compliance, data-related obligations, and financial tracking of vendor relationships.

C. Independence Assessment

Independence is the threshold qualification for the compliance monitor role. The settlement framework requires that the monitor have no prior relationship with any party, counsel, or related entity, and that no financial conflicts of interest exist that could compromise the monitor's objectivity.

Based on the information available to date, Aldwyn satisfies the independence requirements:

No prior engagements or material relationships. Aldwyn has confirmed that it has no prior engagement by, and no material business, financial, or personal relationship with, any of the following: CRH; Verdana; Greystone Capital Partners, LP; any individual member of the Rathore Group; or any counsel of record in this matter (Calderwood & Harkness LLP, Whitfield, Nygaard & Doyle LLP, or Blackhall & Soren LLP).

No financial interests. Aldwyn has confirmed that neither the firm nor any of its principals, professionals, or staff members holds any financial interest in CRH (Nasdaq: CRHL), Verdana, Greystone Capital Partners, or any Greystone portfolio company.

Internal conflicts clearance. Aldwyn has completed its internal conflicts clearance process and has identified no conflicts with any party or counsel. However, as discussed in the Recommendations section below, we should request a formal written independence certification from Aldwyn that expressly covers a broader list of related entities and service providers, including Greystone Capital Fund VII, Keypoint National Bank, Hargrove & Tillett CPA, and Northland Trust Company.

Acceptance by all parties. Significantly, all three sides of the litigation have confirmed their acceptance of Aldwyn as the independent compliance monitor. Theresa Yun-Park, General Counsel of CRH, confirmed CRH's acceptance during a telephone conference on March 25, 2025. Helen Tsoi, General Counsel of Verdana, confirmed Verdana's acceptance through Blackhall & Soren on March 26, 2025. Catherine Nygaard of WND confirmed the Rathore Group's consent to Aldwyn's appointment on March 27, 2025. This unanimous acceptance is noteworthy and eliminates what could otherwise have been a contentious and time-consuming selection process.

IV. Proposed Engagement Terms

A. Term and Duration

The proposed engagement term is twelve months, commencing on the date of execution of the Settlement Agreement. The current target execution date is April 14, 2025, which would result in a monitoring term expiring on or about April 14, 2026.

The twelve-month term is calibrated to align with the longest individual modified non-compete period under the Settlement Agreement, which is Priya Rathore's twelve-month non-compete restriction expiring on February 6, 2026. The monitoring term also encompasses the entirety of the nine-month non-compete period applicable to the other seven members of the Rathore Group (expiring November 6, 2025) and the twelve-month vendor non-solicitation period applicable to all eight members (also expiring February 6, 2026).

It is important to note, however, that the monitor term expires before the eighteen-month employee non-solicitation period, which runs through August 6, 2026. This creates a gap of approximately four months (from mid-April 2026 through early August 2026) during which the employee non-solicitation obligations will remain in effect but no independent compliance monitor will be in place. This gap warrants discussion with CRH's business leadership and a determination as to whether residual monitoring arrangements are needed for the final months of the non-solicitation period or whether the parties are comfortable relying on self-reporting mechanisms, supplemented by CRH's retained right to seek enforcement through the Court of Chancery under the Consent Order's retained jurisdiction. One potential solution would be to include a provision in the engagement letter permitting CRH to extend the monitoring term for an additional six months at its sole expense, subject to Aldwyn's availability and the agreement of the parties on scope.

There is no automatic renewal of the engagement. Any extension beyond the initial twelve-month term requires the joint written agreement of all parties or, absent agreement, an order of the Court.

B. Scope of Monitoring Activities

The monitoring framework contemplates four quarterly compliance reviews over the twelve-month term, each addressing the full range of settlement obligations. The specific monitoring activities include:

Quarterly Compliance Reviews. Each quarterly review will encompass the following:

Modified Non-Compete Compliance. The monitor will review employment records, role descriptions, and job responsibilities for each member of the Rathore Group at Verdana to confirm compliance with the modified non-compete category restrictions. Specifically, the monitor will assess whether any Rathore Group member is engaged in work involving or substantially related to the three restricted categories: home goods, seasonal décor, and private-label apparel. In addition, the monitor will review Verdana organizational charts, business development records, project assignments, and product/category roadmaps to identify any evidence of potential non-compete violations, including indirect involvement in restricted categories through advisory, supervisory, or strategic planning roles.

Employee Non-Solicitation Compliance. The monitor will review outbound communications (where relevant and accessible under the information-sharing letter agreement) and conduct interviews to assess compliance with the employee non-solicitation restriction. This includes reviewing whether any Rathore Group member has engaged in solicitation or inducement of CRH employees, whether directly or through intermediaries, and whether Verdana's hiring activities during the monitoring period include any former CRH employees who may have been recruited in violation of the non-solicitation provision.

Vendor Non-Solicitation Compliance. The monitor will review business development records, vendor correspondence, procurement activity, and related documentation to assess whether any Rathore Group member has solicited or engaged with any vendor on CRH's confidential top-50 vendor list. This review will also encompass any new vendor relationships established by Verdana during the monitoring period to determine whether any such relationships involve vendors on the restricted list.

Data Return and Destruction Verification. The monitor will verify that the data destruction certifications executed at the outset of the settlement remain valid and that no retained copies of exfiltrated CRH data exist on Verdana systems, devices, cloud storage, or backup media. For the initial quarter, the monitor will coordinate closely with Pinnacle Forensics LLC, which will conduct the independent forensic audit of Verdana's systems. For subsequent quarters, the monitor will perform its own verification procedures, potentially including sampling-based reviews of Verdana's systems and periodic recertifications from Verdana's IT personnel.

Interview Rights. The monitor has the right to interview each member of the Rathore Group and designated Verdana management personnel during each quarterly review. The proposed engagement terms contemplate an agreed maximum number of interviews per quarter, to be specified in the Compliance Monitoring Protocol. Interviews will be conducted in the presence of the interviewee's counsel (i.e., WND for the Rathore Group members and Blackhall & Soren for Verdana management), unless the interviewee waives that right.

Document Production. Verdana is required to produce responsive documents within reasonable time frames as specified in the information-sharing letter agreement. The scope of responsive documents will be defined by reference to the specific monitoring categories, and the information-sharing letter agreement must be sufficiently detailed to prevent protracted disputes over the relevance and scope of document requests, while also protecting Verdana's legitimate interests in limiting access to competitively sensitive information that is unrelated to the settlement obligations.

Escalation Protocol. If the monitor identifies potential non-compliance during any quarterly review, the proposed engagement terms establish a sequential escalation process:

(1) The monitor provides written notice to counsel for all parties identifying the nature and scope of the potential non-compliance.

(2) The party or parties allegedly in non-compliance are afforded a fifteen-business-day cure period during which they may take corrective action and provide documentation of compliance to the monitor's satisfaction.

(3) If the potential non-compliance remains unresolved following the cure period, the monitor prepares a formal report and submits it to the Delaware Court of Chancery under the retained jurisdiction provisions of the Consent Order, with copies to all parties' counsel, to enable the Court to consider appropriate enforcement action, including, if warranted, a motion for contempt.

This escalation protocol strikes a reasonable balance between providing the parties with a meaningful opportunity to address compliance issues without immediate judicial intervention and ensuring that persistent or material non-compliance is promptly brought to the attention of the Court.

C. Fee Structure and Cost Allocation

The estimated total fees for the twelve-month monitoring engagement are $360,000. This estimate is based on a blended hourly rate for the Aldwyn engagement team, applied to the anticipated scope and frequency of the quarterly monitoring activities, including document review, interviews, site visits, report preparation, and coordination with counsel and Pinnacle Forensics.

Costs are allocated pursuant to the settlement framework as follows: Verdana bears 60% of the total fees ($216,000), and CRH bears 40% ($144,000). This allocation reflects the parties' negotiated assessment that Verdana, as the entity that orchestrated the recruitment and accepted the exfiltrated data, should bear the larger share of the monitoring costs, while CRH, as the party whose interests the monitor principally protects, should bear a meaningful but smaller portion.

Fees will be invoiced on a quarterly basis, coinciding with the delivery of the quarterly compliance reports. All expenses — including travel to Wilmington for on-site reviews and court appearances, if any — are included in the $360,000 estimate. Any out-of-scope costs, such as additional monitoring activities necessitated by identified compliance issues or litigation-related work, require pre-approval by both CRH and Verdana.

It is important to note that the $360,000 monitoring estimate is separate from, and in addition to, the $175,000 cap on Pinnacle Forensics LLC's fees for the independent forensic audit of Verdana's systems. The forensic audit is a discrete, one-time engagement borne entirely by Verdana, while the compliance monitoring is an ongoing twelve-month engagement with shared costs. The combined cost of compliance oversight (monitoring plus forensic audit) is therefore $535,000, of which CRH's share is $144,000 (approximately 27% of the combined total).

D. Reporting Obligations

The monitor's reporting obligations are structured to provide timely and transparent information to all parties and, where necessary, to the Court:

Quarterly Written Reports. The monitor will prepare and deliver quarterly written compliance reports to counsel for all parties within twenty business days following the end of each quarterly review period. Each report will address the monitor's findings with respect to each category of settlement obligation (non-compete, employee non-solicitation, vendor non-solicitation, and data destruction), identify any areas of concern or potential non-compliance, and describe any corrective actions taken during the quarter.

Interim Reports. In the event that the monitor identifies material compliance issues during or between quarterly reviews, the monitor will prepare and deliver interim reports on an expedited basis. Material compliance issues include, without limitation, evidence of employment in a restricted product category, evidence of solicitation of CRH employees or covered vendors, and evidence that exfiltrated data has been retained or accessed on Verdana systems.

Annual Summary Report. At the conclusion of the twelve-month term, the monitor will prepare a comprehensive annual summary report suitable for filing with the Court in connection with the contemplated Stipulation for Dismissal with Prejudice. This report will provide a complete overview of the monitor's activities and findings over the full monitoring period and will confirm whether, in the monitor's assessment, the Rathore Group and Verdana have complied with the settlement obligations throughout the term.

V. Evaluation and Analysis

A. Strengths of Aldwyn's Candidacy

Several factors support the selection of Aldwyn as the independent compliance monitor in this engagement:

Relevant Industry and Monitoring Experience. Aldwyn's prior experience in employment restrictive covenant compliance monitoring directly addresses the core requirements of this engagement. The firm's familiarity with the practical challenges of monitoring non-compete and non-solicitation compliance — including the nuances of defining restricted categories, assessing indirect involvement in prohibited activities, and detecting solicitation through informal or intermediary channels — is valuable and reduces the learning curve that a less experienced monitor might face.

Geographic Proximity. Aldwyn's Philadelphia office is geographically proximate to both the Delaware Court of Chancery in Wilmington and Verdana's headquarters at 400 Christiana Gateway, Wilmington, Delaware 19801. This proximity facilitates on-site document reviews, in-person interviews with the Rathore Group and Verdana personnel, and court appearances if the monitor is called upon to present findings or testify in connection with enforcement proceedings. The reduced travel time and cost also contribute to the reasonableness of the $360,000 fee estimate.

No Conflicts. Aldwyn's confirmed absence of conflicts with any party, counsel, or related entity is a threshold qualification that Aldwyn satisfies. As noted above, we should obtain a formal written independence certification covering an expanded list of related entities, but there is no indication at this stage of any disqualifying conflict.

Unanimous Acceptance by All Parties. Perhaps the most practically significant factor is that Aldwyn has been accepted by all three sides of the litigation. The compliance monitor must operate with the cooperation of both CRH and Verdana, and a monitor who lacks the confidence of one or more parties would face operational obstacles that could undermine the effectiveness of the monitoring arrangement. Aldwyn's unanimous acceptance eliminates this risk and positions the monitor for a productive working relationship with all stakeholders.

Reasonable Cost. The estimated total cost of $360,000 for a twelve-month monitoring engagement of this complexity is within the market range based on comparable engagements and is reasonable in the context of this matter's economics. The $360,000 figure represents approximately 3.6% of the total economic recovery to CRH ($10,024,500, comprising the $7,500,000 cash payment, the $2,024,500 value of the modified restrictive covenants and data remediation, and the ongoing competitive protections). CRH's 40% share of $144,000 is modest relative to the firm's overall litigation spend in this matter (approximately $1,850,000 in Calderwood & Harkness fees through the settlement execution date) and relative to the value of the ongoing compliance protections that the monitor provides.

B. Areas Requiring Clarification or Strengthening

Notwithstanding the strengths identified above, there are several areas that require clarification or additional protective provisions before the engagement is finalized:

1. Scope Definition for "Merchandising Role" and the Three Restricted Categories. The effectiveness of the monitor's non-compete compliance reviews depends entirely on the precision with which the three restricted product categories — "home goods," "seasonal décor," and "private-label apparel" — are defined. These terms are defined in Exhibit A to the Settlement Agreement (Modified Restrictive Covenant Terms), and the engagement letter must incorporate those definitions by reference, verbatim, to ensure that the monitor applies consistent standards and that there is no ambiguity in the monitor's assessment of whether a particular job function or business activity falls within a restricted category. Similarly, the engagement letter should clearly define what constitutes a "merchandising role" or "merchandising capacity" for purposes of the non-compete analysis, as the modified restrictions are category-specific and do not prohibit all employment at Verdana.

2. Coordination with Pinnacle Forensics. The interface between Aldwyn's ongoing data-destruction monitoring and Pinnacle Forensics LLC's initial forensic audit requires careful delineation. Pinnacle Forensics will conduct a one-time, comprehensive forensic audit of Verdana's systems during the initial phase of the settlement (within the first 30 to 45 days), while Aldwyn's data-destruction monitoring will be ongoing over the full twelve-month term. The engagement letter and the Compliance Monitoring Protocol should clearly delineate the respective responsibilities of Aldwyn and Pinnacle to avoid duplication of effort and to ensure seamless transition of data-monitoring responsibilities from Pinnacle to Aldwyn after the initial audit is completed. Specifically, Aldwyn should receive a complete copy of Pinnacle's forensic audit report, including all findings and any areas of concern, to serve as the baseline for ongoing monitoring.

3. Access Limitations at Verdana. Verdana, through its counsel at Blackhall & Soren (Gavin Blackhall and Meredith Lau), has indicated a willingness to cooperate with the monitoring process but has requested that the monitor's access be limited to materials directly relevant to the settlement obligations. While this position is facially reasonable, it creates the potential for disputes over the scope of the monitor's access rights, particularly in situations where the relevance of a particular document, system, or data set is not immediately apparent or where the monitor needs to review contextual information to assess compliance. The information-sharing letter agreement must be drafted with sufficient specificity to define the categories of documents and systems to which the monitor has access, the procedures for requesting access to additional materials, and a dispute resolution mechanism (preferably a streamlined referral to the Court) for cases where the parties cannot agree on the scope of access.

4. Greystone Capital Partners, LP. Greystone's role in this matter extends beyond that of a passive investor. The evidence developed to date, including the January 6, 2025 dinner meeting orchestrated by Elliot Westbrook, suggests that Greystone was actively involved in the recruitment of the Rathore Group and may have facilitated the broader scheme to acquire CRH's merchandising talent and proprietary data. While the Settlement Agreement addresses the Rathore Group's and Verdana's obligations, it does not impose direct obligations on Greystone. Nevertheless, the monitor's mandate should address the question of whether interactions between the Rathore Group and Greystone personnel fall within the scope of the monitoring review. At a minimum, the monitor should have the authority to inquire about communications between Rathore Group members and Greystone personnel (including Westbrook and other Greystone team members) to determine whether any such communications relate to restricted activities or categories.

5. Privilege and Confidentiality Protections. The monitoring process will necessarily involve the exchange of sensitive information among the parties, the monitor, and Pinnacle Forensics. The engagement letter must contain robust provisions protecting CRH's privileged and confidential information from being disclosed to Verdana through the monitoring process, and vice versa. Of particular concern is the potential disclosure of CRH's Project Ridgeline materials (a strategic planning initiative referenced in the Verified Complaint) and other proprietary business information. Similarly, Verdana has a legitimate interest in preventing unnecessary disclosure of its competitively sensitive information to CRH. The engagement letter should establish clear information barriers and specify that the monitor's quarterly reports will be drafted at a level of generality sufficient to assess compliance without revealing competitively sensitive details of either party's business operations.

6. Termination and Replacement Provisions. The engagement letter should include a mechanism for the removal and replacement of the monitor for cause, including but not limited to the discovery of a previously undisclosed conflict of interest, a material failure to perform monitoring obligations, or a loss of independence. Any termination or replacement should require the approval of both CRH and Verdana, or, absent agreement, an order of the Court. The engagement letter should also address the transition procedures in the event of a monitor replacement, including the transfer of work product and reports from the outgoing monitor to the successor.

C. Comparison to Alternatives

During the mediation process, the parties and their respective counsel considered multiple compliance monitoring firms before Aldwyn emerged as the consensus candidate. While I will not detail the qualifications of each alternative firm in this memorandum, it is worth noting that Aldwyn's candidacy was evaluated against several other established compliance monitoring firms and was selected on the basis of its combination of geographic proximity to the Delaware Court of Chancery and Verdana's headquarters, directly relevant experience in employment restrictive covenant compliance, confirmed independence from all parties and counsel, and unanimous acceptance by CRH, the Rathore Group, and Verdana.

The cost estimate of $360,000 for a twelve-month monitoring engagement is within the market range for engagements of comparable scope and complexity. Competing proposals ranged from approximately $300,000 to $425,000, and Aldwyn's estimate falls comfortably within that band. Considering the scope of the monitoring activities, the quarterly reporting cadence, the interview requirements, and the forensic data oversight component, the proposed fee is reasonable.

VI. Engagement Letter and Documentation Requirements

The formalization of the Aldwyn engagement will require three primary documents, each of which must be finalized in advance of the Settlement Agreement execution date:

Engagement Letter (Exhibit D to the Settlement Agreement). The form of Aldwyn's engagement letter will be attached as Exhibit D to the Settlement Agreement. This is the foundational document governing the monitor's appointment, authority, and obligations. Key provisions to be included in the engagement letter are as follows:

(a) Precise scope of quarterly monitoring activities, incorporating the definitions of the three restricted product categories from Exhibit A to the Settlement Agreement and specifying the types of documents, records, and systems subject to the monitor's review;

(b) Fee structure, billing mechanics, and cost allocation, reflecting the 60/40 Verdana/CRH split and quarterly invoicing;

(c) Reporting obligations and timelines, including the twenty-business-day deadline for quarterly reports and the procedures for interim and annual reports;

(d) Access rights and information-sharing protocols, cross-referencing the separate Letter Agreement Among CRH, Verdana, and Aldwyn re: Information-Sharing and Access for Monitor;

(e) Independence and conflict representations, including an affirmative obligation to disclose any changes in circumstances that could affect the monitor's independence during the engagement;

(f) Confidentiality and privilege protections, including information barriers, non-disclosure obligations, and restrictions on the use of information obtained through the monitoring process;

(g) Indemnification provisions, specifying the circumstances under which the monitor is entitled to indemnification by the parties and the allocation of indemnification obligations between CRH and Verdana;

(h) Governing law (Delaware, consistent with the Settlement Agreement and the Consent Order);

(i) Termination and replacement provisions, including the grounds for removal, the approval requirements, and the transition procedures.

Letter Agreement Among CRH, Verdana, and Aldwyn re: Information-Sharing and Access for Monitor. This separate letter agreement will establish the operational framework for the monitoring process, including the specific categories of documents to be produced, the procedures for submitting and responding to document requests, the schedule and logistics for interviews, the protocols for system access, and the dispute resolution mechanism for resolving scope-of-access disputes. This agreement is particularly important in light of Verdana's stated position that access should be limited to materials directly relevant to the settlement obligations.

Compliance Monitoring Protocol (Detailed Procedures Annex). This document will set forth the step-by-step monitoring procedures to be followed during each quarterly review, including detailed checklists for each compliance category, templates for quarterly compliance reports, interview protocols (including topics to be covered and procedures for documenting interview responses), escalation mechanics (including timeframes, notice requirements, and referral procedures), and coordination procedures with Pinnacle Forensics for the data-related component. The Protocol should be drafted as a detailed, operationally-oriented document that provides clear guidance to the Aldwyn engagement team and establishes transparent expectations for all parties.

VII. Recommendations

Based on the foregoing analysis, I make the following recommendations:

1. Recommend engagement of Aldwyn Compliance Solutions LLC as the independent compliance monitor under the Settlement Agreement, subject to the finalization of the engagement letter (Exhibit D), the information-sharing letter agreement, and the Compliance Monitoring Protocol. As discussed in Section V above, Aldwyn possesses the qualifications, experience, independence, and party acceptance necessary to serve effectively in this role, and the proposed engagement terms are reasonable.

2. Circulate draft engagement letter (Exhibit D to the Settlement Agreement) to counsel for the Rathore Group at Whitfield, Nygaard & Doyle LLP (Catherine Nygaard and Travis Beaumont) and counsel for Verdana at Blackhall & Soren LLP (Gavin Blackhall and Meredith Lau) for comment, targeting finalization of all comments by April 11, 2025 for execution on the target date of April 14, 2025. Given the number of substantive issues to be addressed in the engagement letter, it would be advisable to circulate the draft no later than April 7, 2025 to allow sufficient time for review and negotiation.

3. Request that Aldwyn provide a formal independence certification confirming the absence of conflicts with any party, counsel, or related entity. The certification should expressly cover the following entities, in addition to the parties and counsel already cleared: Greystone Capital Partners, LP; Greystone Capital Fund VII; Keypoint National Bank (CRH's primary lender); Hargrove & Tillett CPA (CRH's external auditor); Northland Trust Company (trustee for CRH's employee benefit plans); and any other CRH or Verdana service providers identified by the respective general counsels.

4. Confirm CRH client approval. Coordinate with Theresa Yun-Park, General Counsel of CRH, and Roland Ashby, Chief People Officer of CRH, to confirm CRH management's approval of the monitor engagement terms and CRH's $144,000 cost share. This approval should be obtained in writing, ideally through a countersigned internal authorization memorandum, before the engagement letter is finalized.

5. Coordinate with Devon Archer on preparation of the Compliance Monitoring Protocol (Detailed Procedures Annex) and the Letter Agreement Among CRH, Verdana, and Aldwyn re: Information-Sharing and Access for Monitor. Both documents should be drafted in parallel with the engagement letter and targeted for finalization on the same April 11, 2025 timeline. Devon's experience with comparable monitoring protocols in the Harmon Industries and CorePath Technologies matters will be particularly useful in developing a detailed and operationally sound Protocol for this engagement.

I am available to discuss this memorandum and the recommended next steps at your convenience. If you concur with the recommendations, I will begin drafting the engagement letter and coordinating with Devon Archer on the Protocol and information-sharing letter agreement immediately.

VIII. Attachments / Referenced Documents

The following documents are attached to or referenced in this memorandum:

Attachment 1: Aldwyn Compliance Solutions LLC — Firm Profile and Representative Engagement List (to be obtained from Aldwyn and circulated upon receipt)

Attachment 2: Draft Exhibit D — Form of Compliance Monitor Engagement Letter (to be prepared by J. Underwood in coordination with D. Archer; target circulation date: April 7, 2025)

Attachment 3: Relevant Excerpts from the Revised Term Sheet dated March 20, 2025 (Section 6: Compliance Monitor) (attached)

Attachment 4: Exhibit A to Settlement Agreement — Modified Restrictive Covenant Terms (current draft dated March 28, 2025) (attached)

Attachment 5: Exhibit B to Settlement Agreement — Data Return and Destruction Protocol (current draft dated March 30, 2025) (attached)

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT This memorandum was prepared by James Underwood, Lead Associate, Labor & Employment, Calderwood & Harkness LLP, in connection with Matter No. 1038-00006. Distribution is restricted to authorized Calderwood & Harkness personnel working on this matter. Any unauthorized disclosure, copying, or distribution is strictly prohibited.

PRIVILEGED AND CONFIDENTIAL ATTORNEY WORK PRODUCT
CALDERWOOD & HARKNESS LLP 1301 K Street NW, Suite 1200 Washington, DC 20005
INTERNAL MEMORANDUM
April 5, 2025
TO: Bernard Crawford, Responsible Partner, Labor & Employment
FROM: James Underwood, Lead Associate, Labor & Employment
RE: Evaluation of Proposed Compliance Monitor — Aldwyn Compliance Solutions LLC
MATTER: Cascade Retail Holdings Inc. v. Rathore et al., C.A. No. 2025-0198-MTZ (Del. Ch.)
MATTER NO.: 1038-00006
This memorandum is protected by the attorney-client privilege and the work product doctrine. It is intended solely for the internal use of Calderwood & Harkness LLP attorneys and staff working on the above-referenced matter. Do not distribute, copy, or disclose to any person outside the firm without prior authorization from the Responsible Partner.
I. Purpose and Executive Summary
This memorandum evaluates Aldwyn Compliance Solutions LLC ("Aldwyn") as the proposed independent compliance monitor under the Standstill and Settlement Agreement (the "Settlement Agreement") currently being finalized among Cascade Retail Holdings Inc. ("CRH"), the eight departing merchandising employees led by Priya Rathore (collectively, the "Rathore Group"), and Verdana Commerce Group, Inc. ("Verdana"). The purpose of this memorandum is to provide an assessment of Aldwyn's qualifications, independence, proposed engagement terms, and overall suitability for the monitor role, and to identify any areas that require further clarification or protective provisions before the engagement is formalized.
The settlement framework reached on March 20, 2025 calls for the appointment of an independent compliance monitor for a twelve-month period to verify adherence by the Rathore Group and Verdana to the modified restrictive covenant obligations, employee and vendor non-solicitation provisions, and data return and destruction requirements that form the core of the negotiated resolution. The monitor's role is critical to the enforceability and practical effectiveness of the settlement. Without adequate independent oversight, CRH would be left to rely entirely on self-reporting by the Rathore Group and Verdana — entities whose prior conduct, as alleged in the Verified Complaint, has already demonstrated a willingness to act in disregard of contractual obligations.
Aldwyn was proposed jointly by the parties during the March 18, 2025 mediation session before the Honorable Philip Ashford (Ret.) through Meridian ADR Services LLC. The joint proposal is significant because it eliminated what could have been a protracted and costly dispute over the selection of an independent monitor, and it reflects at least a baseline level of confidence in Aldwyn by all three sides of the litigation.
Summary Recommendation. Based on the analysis set forth below, Aldwyn is qualified to serve as the independent compliance monitor and the proposed engagement terms are reasonable. I recommend that we proceed with the engagement, subject to the clarifications and protective provisions discussed in Sections V.B and VI of this memorandum. In particular, the engagement letter must include precise definitions of the three restricted product categories, clear protocols governing the interface between Aldwyn's ongoing monitoring and Pinnacle Forensics LLC's initial forensic audit, robust privilege and confidentiality protections for CRH's proprietary information, and appropriate termination and replacement mechanisms.
Estimated Total Monitor Cost. The estimated total cost of the monitoring engagement is $360,000 over the twelve-month term, allocated 60% to Verdana ($216,000) and 40% to CRH ($144,000) per the agreed settlement framework. CRH's share is modest relative to both the overall litigation spend and the total economic recovery obtained through the settlement, as discussed further below.
II. Background and Context of the Compliance Monitor Requirement
A. Settlement Framework Overview
The compliance monitor requirement arose out of the settlement of a rapidly-escalating trade secrets and restrictive covenant dispute involving the departure of eight senior merchandising employees from CRH to Verdana, a direct competitor in the retail and consumer products space.
Filing and Initial Proceedings. On March 5, 2025, CRH filed a Verified Complaint in the Delaware Court of Chancery asserting claims for: (1) breach of restrictive covenant agreements against each member of the Rathore Group; (2) breach of confidentiality obligations against each member of the Rathore Group; (3) misappropriation of trade secrets under the Delaware Uniform Trade Secrets Act, 6 Del. C. § 2001 et seq. ("DUTSA"), against the Rathore Group and Verdana; (4) tortious interference with contractual relations against Verdana; and (5) civil conspiracy against the Rathore Group and Verdana. The Verified Complaint was supported by detailed factual allegations, including the January 6, 2025 dinner meeting orchestrated by Elliot Westbrook of Greystone Capital Partners, LP ("Greystone"), Verdana's majority private equity sponsor, and the forensic evidence developed by Pinnacle Forensics LLC demonstrating the exfiltration of approximately 14,327 files comprising roughly 2.8 gigabytes of proprietary CRH data.
Temporary Restraining Order. CRH moved ex parte for a temporary restraining order on March 6, 2025, and on March 7, 2025, Vice Chancellor Margaret T. Zhao granted the TRO, enjoining the Rathore Group from commencing employment with Verdana in any merchandising capacity pending a preliminary injunction hearing and ordering the preservation of all electronic data and devices in the possession of the Rathore Group and Verdana. CRH posted a $2,500,000 injunction bond through Broadview Surety Corp. (Bond No. BSC-2025-TRO-04419) as required by the Court.
Mediation and Settlement Framework. At the March 12, 2025 scheduling conference, the parties agreed to participate in expedited mediation before Judge Ashford through Meridian ADR Services LLC. A full-day mediation session took place on March 18, 2025, during which the parties reached an agreement in principle on the material terms of a settlement. The parties continued negotiations through their respective counsel, and a revised term sheet reflecting the complete settlement framework was executed on March 20, 2025. On March 21, 2025, the parties submitted a stipulation adjourning the preliminary injunction hearing that had been scheduled for March 24, 2025, and Vice Chancellor Zhao entered a Consent Interim Order maintaining the status quo during the documentation period.
Key Settlement Provisions Requiring Monitoring. The settlement framework contains several operative provisions that necessitate ongoing compliance monitoring. These include:
Modified Non-Compete Obligations. The restrictive covenant obligations applicable to the Rathore Group have been modified from the original contractual terms. With respect to Priya Rathore, the modified non-compete period is twelve months (through February 6, 2026), limited to three specific product categories: home goods, seasonal décor, and private-label apparel. These three categories correspond to the business lines in which Rathore had primary responsibility during her tenure at CRH and in which CRH has the greatest competitive interest in protection. With respect to the remaining seven members of the Rathore Group, the modified non-compete period is nine months (through November 6, 2025), limited to the same three product categories.
Employee Non-Solicitation. All eight members of the Rathore Group are subject to an eighteen-month employee non-solicitation restriction (through August 6, 2026), prohibiting the solicitation or inducement of any CRH employee to leave CRH's employ. This provision is broader in duration than the non-compete restriction and reflects CRH's significant concern — supported by the evidence developed to date — that the Rathore Group's departure was part of a coordinated recruitment effort that could extend to additional CRH personnel.
Vendor Non-Solicitation. All eight members of the Rathore Group are subject to a twelve-month vendor non-solicitation restriction (through February 6, 2026) covering CRH's top 50 vendors by annual spend. The list of covered vendors is set forth in a confidential schedule to the Settlement Agreement. This provision addresses CRH's concern that the Rathore Group, having had extensive vendor relationships in their merchandising roles, could leverage those relationships to divert vendor partnerships and favorable terms to Verdana.
Data Return and Destruction. All exfiltrated data — identified by Pinnacle Forensics as comprising 14,327 files totaling approximately 2.8 gigabytes — is to be returned to CRH or certified destroyed within ten business days of the execution of the Settlement Agreement. In addition, Verdana has agreed to submit to an independent forensic audit of its systems by Pinnacle Forensics LLC, at Verdana's sole expense (capped at $175,000), to verify that no copies of exfiltrated CRH data are retained on Verdana's servers, devices, cloud storage, or backup systems.
B. Role and Scope of the Compliance Monitor
The compliance monitor is the principal enforcement mechanism underpinning the settlement. While the Consent Order retains the Court of Chancery's jurisdiction for enforcement purposes, the parties recognized during the mediation that the practical effectiveness of the settlement depends on a neutral third party with the authority, expertise, and operational capacity to verify compliance on an ongoing basis.
Term. The monitor will operate for a twelve-month term commencing on the date of execution of the Settlement Agreement, which is currently targeted for April 14, 2025. Accordingly, the monitoring engagement would expire on or about April 14, 2026.
Monitoring Activities. The monitor's core responsibilities include quarterly verification of compliance with the modified non-compete restrictions, both the employee and vendor non-solicitation provisions, and the data return and destruction obligations. Each quarterly review will involve a combination of document review, personnel interviews, and, where appropriate, coordination with Pinnacle Forensics for data-related compliance verification.
Authority. The monitor has the authority to review relevant documents, conduct interviews of the Rathore Group members and designated Verdana personnel, and access certain Verdana systems, subject to the terms of an information-sharing letter agreement to be executed among CRH, Verdana, and Aldwyn. The scope of the monitor's access rights is one of the areas requiring further clarification, as discussed in Section V.B below.
Reporting. The monitor will report to counsel for all parties: Calderwood & Harkness LLP for CRH; Whitfield, Nygaard & Doyle LLP ("WND") for the Rathore Group; and Blackhall & Soren LLP for Verdana. In the event of unresolved compliance concerns, the monitor has the authority — and the obligation — to report directly to the Delaware Court of Chancery under the Consent Order's retained jurisdiction for enforcement.
Independence. The settlement framework requires that the monitor be truly independent, with no prior relationship with any party, any party's counsel, or Greystone Capital Partners, LP, in its capacity as Verdana's majority private equity sponsor. This independence requirement is essential to the credibility and effectiveness of the monitoring arrangement and to the Court's willingness to rely on the monitor's reports for enforcement purposes.
III. Aldwyn Compliance Solutions LLC — Firm Profile
A. General Information
Aldwyn Compliance Solutions LLC ("Aldwyn") is a Delaware limited liability company with its principal office located at 1700 Market Street, Suite 2800, Philadelphia, Pennsylvania 19103. Aldwyn is an established compliance consulting firm with extensive experience in court-appointed and settlement-mandated monitoring engagements across a range of litigation and regulatory contexts. The firm was founded to provide specialized compliance monitoring, remediation oversight, and integrity assessment services, and it has built a reputation as a capable and independent monitor in complex commercial and employment disputes.
Aldwyn's practice areas include regulatory and litigation compliance monitoring, corporate integrity agreements and consent decree monitoring, restrictive covenant compliance oversight, trade secret remediation and data governance monitoring, and related consulting services. The firm's multidisciplinary approach draws on professionals with backgrounds in corporate compliance, employment law, data governance and information security, and forensic accounting.
B. Relevant Experience and Qualifications
Aldwyn's qualifications for the proposed engagement are strong and directly relevant to the monitoring requirements under the Settlement Agreement. The key areas of relevant experience include:
Court-Appointed and Party-Appointed Monitoring. Aldwyn has served as a court-appointed or party-appointed compliance monitor in multiple prior engagements involving employment-related disputes, including restrictive covenant enforcement matters. These engagements have involved the monitoring of non-compete, non-solicitation, and confidentiality obligations in the context of senior-level employee departures and team moves, which is directly analogous to the fact pattern in the present matter.
Delaware Court of Chancery Proceedings. Aldwyn has demonstrated familiarity with the procedural and substantive requirements of the Delaware Court of Chancery, including the mechanics of consent orders, retained jurisdiction provisions, and the potential for contempt or enforcement proceedings. This familiarity is particularly valuable in the present matter, where the Consent Order retaining jurisdiction provides the ultimate enforcement backstop for the monitoring arrangement.
Forensic Data Monitoring. Aldwyn has demonstrated capability in forensic data monitoring and has experience coordinating with forensic technology vendors in connection with data return, destruction, and ongoing compliance verification. This experience is directly relevant to the present engagement given Pinnacle Forensics LLC's role in conducting the initial independent forensic audit of Verdana's systems and the monitor's obligation to verify ongoing data-destruction compliance after the initial audit is completed.
Non-Solicitation Compliance. Aldwyn has specific experience monitoring non-solicitation compliance in both the employee and customer/vendor contexts, including in the retail and consumer products industry. This industry-specific experience is valuable because the practical indicators of non-solicitation compliance — and the methods by which violations may be detected — vary by industry and require a monitor who understands the relevant business dynamics.
Team Composition. Aldwyn's proposed engagement team includes professionals with backgrounds in corporate compliance, employment law, data governance, and forensic accounting. This multidisciplinary composition is well-suited to the breadth of monitoring responsibilities contemplated by the Settlement Agreement, which span restrictive covenant compliance, data-related obligations, and financial tracking of vendor relationships.
C. Independence Assessment
Independence is the threshold qualification for the compliance monitor role. The settlement framework requires that the monitor have no prior relationship with any party, counsel, or related entity, and that no financial conflicts of interest exist that could compromise the monitor's objectivity.
Based on the information available to date, Aldwyn satisfies the independence requirements:
No prior engagements or material relationships. Aldwyn has confirmed that it has no prior engagement by, and no material business, financial, or personal relationship with, any of the following: CRH; Verdana; Greystone Capital Partners, LP; any individual member of the Rathore Group; or any counsel of record in this matter (Calderwood & Harkness LLP, Whitfield, Nygaard & Doyle LLP, or Blackhall & Soren LLP).
No financial interests. Aldwyn has confirmed that neither the firm nor any of its principals, professionals, or staff members holds any financial interest in CRH (Nasdaq: CRHL), Verdana, Greystone Capital Partners, or any Greystone portfolio company.
Internal conflicts clearance. Aldwyn has completed its internal conflicts clearance process and has identified no conflicts with any party or counsel. However, as discussed in the Recommendations section below, we should request a formal written independence certification from Aldwyn that expressly covers a broader list of related entities and service providers, including Greystone Capital Fund VII, Keypoint National Bank, Hargrove & Tillett CPA, and Northland Trust Company.
Acceptance by all parties. Significantly, all three sides of the litigation have confirmed their acceptance of Aldwyn as the independent compliance monitor. Theresa Yun-Park, General Counsel of CRH, confirmed CRH's acceptance during a telephone conference on March 25, 2025. Helen Tsoi, General Counsel of Verdana, confirmed Verdana's acceptance through Blackhall & Soren on March 26, 2025. Catherine Nygaard of WND confirmed the Rathore Group's consent to Aldwyn's appointment on March 27, 2025. This unanimous acceptance is noteworthy and eliminates what could otherwise have been a contentious and time-consuming selection process.
IV. Proposed Engagement Terms
A. Term and Duration
The proposed engagement term is twelve months, commencing on the date of execution of the Settlement Agreement. The current target execution date is April 14, 2025, which would result in a monitoring term expiring on or about April 14, 2026.
The twelve-month term is calibrated to align with the longest individual modified non-compete period under the Settlement Agreement, which is Priya Rathore's twelve-month non-compete restriction expiring on February 6, 2026. The monitoring term also encompasses the entirety of the nine-month non-compete period applicable to the other seven members of the Rathore Group (expiring November 6, 2025) and the twelve-month vendor non-solicitation period applicable to all eight members (also expiring February 6, 2026).
It is important to note, however, that the monitor term expires before the eighteen-month employee non-solicitation period, which runs through August 6, 2026. This creates a gap of approximately four months (from mid-April 2026 through early August 2026) during which the employee non-solicitation obligations will remain in effect but no independent compliance monitor will be in place. This gap warrants discussion with CRH's business leadership and a determination as to whether residual monitoring arrangements are needed for the final months of the non-solicitation period or whether the parties are comfortable relying on self-reporting mechanisms, supplemented by CRH's retained right to seek enforcement through the Court of Chancery under the Consent Order's retained jurisdiction. One potential solution would be to include a provision in the engagement letter permitting CRH to extend the monitoring term for an additional six months at its sole expense, subject to Aldwyn's availability and the agreement of the parties on scope.
There is no automatic renewal of the engagement. Any extension beyond the initial twelve-month term requires the joint written agreement of all parties or, absent agreement, an order of the Court.
B. Scope of Monitoring Activities
The monitoring framework contemplates four quarterly compliance reviews over the twelve-month term, each addressing the full range of settlement obligations. The specific monitoring activities include:
Quarterly Compliance Reviews. Each quarterly review will encompass the following:
Modified Non-Compete Compliance. The monitor will review employment records, role descriptions, and job responsibilities for each member of the Rathore Group at Verdana to confirm compliance with the modified non-compete category restrictions. Specifically, the monitor will assess whether any Rathore Group member is engaged in work involving or substantially related to the three restricted categories: home goods, seasonal décor, and private-label apparel. In addition, the monitor will review Verdana organizational charts, business development records, project assignments, and product/category roadmaps to identify any evidence of potential non-compete violations, including indirect involvement in restricted categories through advisory, supervisory, or strategic planning roles.
Employee Non-Solicitation Compliance. The monitor will review outbound communications (where relevant and accessible under the information-sharing letter agreement) and conduct interviews to assess compliance with the employee non-solicitation restriction. This includes reviewing whether any Rathore Group member has engaged in solicitation or inducement of CRH employees, whether directly or through intermediaries, and whether Verdana's hiring activities during the monitoring period include any former CRH employees who may have been recruited in violation of the non-solicitation provision.
Vendor Non-Solicitation Compliance. The monitor will review business development records, vendor correspondence, procurement activity, and related documentation to assess whether any Rathore Group member has solicited or engaged with any vendor on CRH's confidential top-50 vendor list. This review will also encompass any new vendor relationships established by Verdana during the monitoring period to determine whether any such relationships involve vendors on the restricted list.
Data Return and Destruction Verification. The monitor will verify that the data destruction certifications executed at the outset of the settlement remain valid and that no retained copies of exfiltrated CRH data exist on Verdana systems, devices, cloud storage, or backup media. For the initial quarter, the monitor will coordinate closely with Pinnacle Forensics LLC, which will conduct the independent forensic audit of Verdana's systems. For subsequent quarters, the monitor will perform its own verification procedures, potentially including sampling-based reviews of Verdana's systems and periodic recertifications from Verdana's IT personnel.
Interview Rights. The monitor has the right to interview each member of the Rathore Group and designated Verdana management personnel during each quarterly review. The proposed engagement terms contemplate an agreed maximum number of interviews per quarter, to be specified in the Compliance Monitoring Protocol. Interviews will be conducted in the presence of the interviewee's counsel (i.e., WND for the Rathore Group members and Blackhall & Soren for Verdana management), unless the interviewee waives that right.
Document Production. Verdana is required to produce responsive documents within reasonable time frames as specified in the information-sharing letter agreement. The scope of responsive documents will be defined by reference to the specific monitoring categories, and the information-sharing letter agreement must be sufficiently detailed to prevent protracted disputes over the relevance and scope of document requests, while also protecting Verdana's legitimate interests in limiting access to competitively sensitive information that is unrelated to the settlement obligations.
Escalation Protocol. If the monitor identifies potential non-compliance during any quarterly review, the proposed engagement terms establish a sequential escalation process:
(1) The monitor provides written notice to counsel for all parties identifying the nature and scope of the potential non-compliance.
(2) The party or parties allegedly in non-compliance are afforded a fifteen-business-day cure period during which they may take corrective action and provide documentation of compliance to the monitor's satisfaction.
(3) If the potential non-compliance remains unresolved following the cure period, the monitor prepares a formal report and submits it to the Delaware Court of Chancery under the retained jurisdiction provisions of the Consent Order, with copies to all parties' counsel, to enable the Court to consider appropriate enforcement action, including, if warranted, a motion for contempt.
This escalation protocol strikes a reasonable balance between providing the parties with a meaningful opportunity to address compliance issues without immediate judicial intervention and ensuring that persistent or material non-compliance is promptly brought to the attention of the Court.
C. Fee Structure and Cost Allocation
The estimated total fees for the twelve-month monitoring engagement are $360,000. This estimate is based on a blended hourly rate for the Aldwyn engagement team, applied to the anticipated scope and frequency of the quarterly monitoring activities, including document review, interviews, site visits, report preparation, and coordination with counsel and Pinnacle Forensics.
Costs are allocated pursuant to the settlement framework as follows: Verdana bears 60% of the total fees ($216,000), and CRH bears 40% ($144,000). This allocation reflects the parties' negotiated assessment that Verdana, as the entity that orchestrated the recruitment and accepted the exfiltrated data, should bear the larger share of the monitoring costs, while CRH, as the party whose interests the monitor principally protects, should bear a meaningful but smaller portion.
Fees will be invoiced on a quarterly basis, coinciding with the delivery of the quarterly compliance reports. All expenses — including travel to Wilmington for on-site reviews and court appearances, if any — are included in the $360,000 estimate. Any out-of-scope costs, such as additional monitoring activities necessitated by identified compliance issues or litigation-related work, require pre-approval by both CRH and Verdana.
It is important to note that the $360,000 monitoring estimate is separate from, and in addition to, the $175,000 cap on Pinnacle Forensics LLC's fees for the independent forensic audit of Verdana's systems. The forensic audit is a discrete, one-time engagement borne entirely by Verdana, while the compliance monitoring is an ongoing twelve-month engagement with shared costs. The combined cost of compliance oversight (monitoring plus forensic audit) is therefore $535,000, of which CRH's share is $144,000 (approximately 27% of the combined total).
D. Reporting Obligations
The monitor's reporting obligations are structured to provide timely and transparent information to all parties and, where necessary, to the Court:
Quarterly Written Reports. The monitor will prepare and deliver quarterly written compliance reports to counsel for all parties within twenty business days following the end of each quarterly review period. Each report will address the monitor's findings with respect to each category of settlement obligation (non-compete, employee non-solicitation, vendor non-solicitation, and data destruction), identify any areas of concern or potential non-compliance, and describe any corrective actions taken during the quarter.
Interim Reports. In the event that the monitor identifies material compliance issues during or between quarterly reviews, the monitor will prepare and deliver interim reports on an expedited basis. Material compliance issues include, without limitation, evidence of employment in a restricted product category, evidence of solicitation of CRH employees or covered vendors, and evidence that exfiltrated data has been retained or accessed on Verdana systems.
Annual Summary Report. At the conclusion of the twelve-month term, the monitor will prepare a comprehensive annual summary report suitable for filing with the Court in connection with the contemplated Stipulation for Dismissal with Prejudice. This report will provide a complete overview of the monitor's activities and findings over the full monitoring period and will confirm whether, in the monitor's assessment, the Rathore Group and Verdana have complied with the settlement obligations throughout the term.
V. Evaluation and Analysis
A. Strengths of Aldwyn's Candidacy
Several factors support the selection of Aldwyn as the independent compliance monitor in this engagement:
Relevant Industry and Monitoring Experience. Aldwyn's prior experience in employment restrictive covenant compliance monitoring directly addresses the core requirements of this engagement. The firm's familiarity with the practical challenges of monitoring non-compete and non-solicitation compliance — including the nuances of defining restricted categories, assessing indirect involvement in prohibited activities, and detecting solicitation through informal or intermediary channels — is valuable and reduces the learning curve that a less experienced monitor might face.
Geographic Proximity. Aldwyn's Philadelphia office is geographically proximate to both the Delaware Court of Chancery in Wilmington and Verdana's headquarters at 400 Christiana Gateway, Wilmington, Delaware 19801. This proximity facilitates on-site document reviews, in-person interviews with the Rathore Group and Verdana personnel, and court appearances if the monitor is called upon to present findings or testify in connection with enforcement proceedings. The reduced travel time and cost also contribute to the reasonableness of the $360,000 fee estimate.
No Conflicts. Aldwyn's confirmed absence of conflicts with any party, counsel, or related entity is a threshold qualification that Aldwyn satisfies. As noted above, we should obtain a formal written independence certification covering an expanded list of related entities, but there is no indication at this stage of any disqualifying conflict.
Unanimous Acceptance by All Parties. Perhaps the most practically significant factor is that Aldwyn has been accepted by all three sides of the litigation. The compliance monitor must operate with the cooperation of both CRH and Verdana, and a monitor who lacks the confidence of one or more parties would face operational obstacles that could undermine the effectiveness of the monitoring arrangement. Aldwyn's unanimous acceptance eliminates this risk and positions the monitor for a productive working relationship with all stakeholders.
Reasonable Cost. The estimated total cost of $360,000 for a twelve-month monitoring engagement of this complexity is within the market range based on comparable engagements and is reasonable in the context of this matter's economics. The $360,000 figure represents approximately 3.6% of the total economic recovery to CRH ($10,024,500, comprising the $7,500,000 cash payment, the $2,024,500 value of the modified restrictive covenants and data remediation, and the ongoing competitive protections). CRH's 40% share of $144,000 is modest relative to the firm's overall litigation spend in this matter (approximately $1,850,000 in Calderwood & Harkness fees through the settlement execution date) and relative to the value of the ongoing compliance protections that the monitor provides.
B. Areas Requiring Clarification or Strengthening
Notwithstanding the strengths identified above, there are several areas that require clarification or additional protective provisions before the engagement is finalized:
1. Scope Definition for "Merchandising Role" and the Three Restricted Categories. The effectiveness of the monitor's non-compete compliance reviews depends entirely on the precision with which the three restricted product categories — "home goods," "seasonal décor," and "private-label apparel" — are defined. These terms are defined in Exhibit A to the Settlement Agreement (Modified Restrictive Covenant Terms), and the engagement letter must incorporate those definitions by reference, verbatim, to ensure that the monitor applies consistent standards and that there is no ambiguity in the monitor's assessment of whether a particular job function or business activity falls within a restricted category. Similarly, the engagement letter should clearly define what constitutes a "merchandising role" or "merchandising capacity" for purposes of the non-compete analysis, as the modified restrictions are category-specific and do not prohibit all employment at Verdana.
2. Coordination with Pinnacle Forensics. The interface between Aldwyn's ongoing data-destruction monitoring and Pinnacle Forensics LLC's initial forensic audit requires careful delineation. Pinnacle Forensics will conduct a one-time, comprehensive forensic audit of Verdana's systems during the initial phase of the settlement (within the first 30 to 45 days), while Aldwyn's data-destruction monitoring will be ongoing over the full twelve-month term. The engagement letter and the Compliance Monitoring Protocol should clearly delineate the respective responsibilities of Aldwyn and Pinnacle to avoid duplication of effort and to ensure seamless transition of data-monitoring responsibilities from Pinnacle to Aldwyn after the initial audit is completed. Specifically, Aldwyn should receive a complete copy of Pinnacle's forensic audit report, including all findings and any areas of concern, to serve as the baseline for ongoing monitoring.
3. Access Limitations at Verdana. Verdana, through its counsel at Blackhall & Soren (Gavin Blackhall and Meredith Lau), has indicated a willingness to cooperate with the monitoring process but has requested that the monitor's access be limited to materials directly relevant to the settlement obligations. While this position is facially reasonable, it creates the potential for disputes over the scope of the monitor's access rights, particularly in situations where the relevance of a particular document, system, or data set is not immediately apparent or where the monitor needs to review contextual information to assess compliance. The information-sharing letter agreement must be drafted with sufficient specificity to define the categories of documents and systems to which the monitor has access, the procedures for requesting access to additional materials, and a dispute resolution mechanism (preferably a streamlined referral to the Court) for cases where the parties cannot agree on the scope of access.
4. Greystone Capital Partners, LP. Greystone's role in this matter extends beyond that of a passive investor. The evidence developed to date, including the January 6, 2025 dinner meeting orchestrated by Elliot Westbrook, suggests that Greystone was actively involved in the recruitment of the Rathore Group and may have facilitated the broader scheme to acquire CRH's merchandising talent and proprietary data. While the Settlement Agreement addresses the Rathore Group's and Verdana's obligations, it does not impose direct obligations on Greystone. Nevertheless, the monitor's mandate should address the question of whether interactions between the Rathore Group and Greystone personnel fall within the scope of the monitoring review. At a minimum, the monitor should have the authority to inquire about communications between Rathore Group members and Greystone personnel (including Westbrook and other Greystone team members) to determine whether any such communications relate to restricted activities or categories.
5. Privilege and Confidentiality Protections. The monitoring process will necessarily involve the exchange of sensitive information among the parties, the monitor, and Pinnacle Forensics. The engagement letter must contain robust provisions protecting CRH's privileged and confidential information from being disclosed to Verdana through the monitoring process, and vice versa. Of particular concern is the potential disclosure of CRH's Project Ridgeline materials (a strategic planning initiative referenced in the Verified Complaint) and other proprietary business information. Similarly, Verdana has a legitimate interest in preventing unnecessary disclosure of its competitively sensitive information to CRH. The engagement letter should establish clear information barriers and specify that the monitor's quarterly reports will be drafted at a level of generality sufficient to assess compliance without revealing competitively sensitive details of either party's business operations.
6. Termination and Replacement Provisions. The engagement letter should include a mechanism for the removal and replacement of the monitor for cause, including but not limited to the discovery of a previously undisclosed conflict of interest, a material failure to perform monitoring obligations, or a loss of independence. Any termination or replacement should require the approval of both CRH and Verdana, or, absent agreement, an order of the Court. The engagement letter should also address the transition procedures in the event of a monitor replacement, including the transfer of work product and reports from the outgoing monitor to the successor.
C. Comparison to Alternatives
During the mediation process, the parties and their respective counsel considered multiple compliance monitoring firms before Aldwyn emerged as the consensus candidate. While I will not detail the qualifications of each alternative firm in this memorandum, it is worth noting that Aldwyn's candidacy was evaluated against several other established compliance monitoring firms and was selected on the basis of its combination of geographic proximity to the Delaware Court of Chancery and Verdana's headquarters, directly relevant experience in employment restrictive covenant compliance, confirmed independence from all parties and counsel, and unanimous acceptance by CRH, the Rathore Group, and Verdana.
The cost estimate of $360,000 for a twelve-month monitoring engagement is within the market range for engagements of comparable scope and complexity. Competing proposals ranged from approximately $300,000 to $425,000, and Aldwyn's estimate falls comfortably within that band. Considering the scope of the monitoring activities, the quarterly reporting cadence, the interview requirements, and the forensic data oversight component, the proposed fee is reasonable.
VI. Engagement Letter and Documentation Requirements
The formalization of the Aldwyn engagement will require three primary documents, each of which must be finalized in advance of the Settlement Agreement execution date:
Engagement Letter (Exhibit D to the Settlement Agreement). The form of Aldwyn's engagement letter will be attached as Exhibit D to the Settlement Agreement. This is the foundational document governing the monitor's appointment, authority, and obligations. Key provisions to be included in the engagement letter are as follows:
(a) Precise scope of quarterly monitoring activities, incorporating the definitions of the three restricted product categories from Exhibit A to the Settlement Agreement and specifying the types of documents, records, and systems subject to the monitor's review;
(b) Fee structure, billing mechanics, and cost allocation, reflecting the 60/40 Verdana/CRH split and quarterly invoicing;
(c) Reporting obligations and timelines, including the twenty-business-day deadline for quarterly reports and the procedures for interim and annual reports;
(d) Access rights and information-sharing protocols, cross-referencing the separate Letter Agreement Among CRH, Verdana, and Aldwyn re: Information-Sharing and Access for Monitor;
(e) Independence and conflict representations, including an affirmative obligation to disclose any changes in circumstances that could affect the monitor's independence during the engagement;
(f) Confidentiality and privilege protections, including information barriers, non-disclosure obligations, and restrictions on the use of information obtained through the monitoring process;
(g) Indemnification provisions, specifying the circumstances under which the monitor is entitled to indemnification by the parties and the allocation of indemnification obligations between CRH and Verdana;
(h) Governing law (Delaware, consistent with the Settlement Agreement and the Consent Order);
(i) Termination and replacement provisions, including the grounds for removal, the approval requirements, and the transition procedures.
Letter Agreement Among CRH, Verdana, and Aldwyn re: Information-Sharing and Access for Monitor. This separate letter agreement will establish the operational framework for the monitoring process, including the specific categories of documents to be produced, the procedures for submitting and responding to document requests, the schedule and logistics for interviews, the protocols for system access, and the dispute resolution mechanism for resolving scope-of-access disputes. This agreement is particularly important in light of Verdana's stated position that access should be limited to materials directly relevant to the settlement obligations.
Compliance Monitoring Protocol (Detailed Procedures Annex). This document will set forth the step-by-step monitoring procedures to be followed during each quarterly review, including detailed checklists for each compliance category, templates for quarterly compliance reports, interview protocols (including topics to be covered and procedures for documenting interview responses), escalation mechanics (including timeframes, notice requirements, and referral procedures), and coordination procedures with Pinnacle Forensics for the data-related component. The Protocol should be drafted as a detailed, operationally-oriented document that provides clear guidance to the Aldwyn engagement team and establishes transparent expectations for all parties.
VII. Recommendations
Based on the foregoing analysis, I make the following recommendations:
1. Recommend engagement of Aldwyn Compliance Solutions LLC as the independent compliance monitor under the Settlement Agreement, subject to the finalization of the engagement letter (Exhibit D), the information-sharing letter agreement, and the Compliance Monitoring Protocol. As discussed in Section V above, Aldwyn possesses the qualifications, experience, independence, and party acceptance necessary to serve effectively in this role, and the proposed engagement terms are reasonable.
2. Circulate draft engagement letter (Exhibit D to the Settlement Agreement) to counsel for the Rathore Group at Whitfield, Nygaard & Doyle LLP (Catherine Nygaard and Travis Beaumont) and counsel for Verdana at Blackhall & Soren LLP (Gavin Blackhall and Meredith Lau) for comment, targeting finalization of all comments by April 11, 2025 for execution on the target date of April 14, 2025. Given the number of substantive issues to be addressed in the engagement letter, it would be advisable to circulate the draft no later than April 7, 2025 to allow sufficient time for review and negotiation.
3. Request that Aldwyn provide a formal independence certification confirming the absence of conflicts with any party, counsel, or related entity. The certification should expressly cover the following entities, in addition to the parties and counsel already cleared: Greystone Capital Partners, LP; Greystone Capital Fund VII; Keypoint National Bank (CRH's primary lender); Hargrove & Tillett CPA (CRH's external auditor); Northland Trust Company (trustee for CRH's employee benefit plans); and any other CRH or Verdana service providers identified by the respective general counsels.
4. Confirm CRH client approval. Coordinate with Theresa Yun-Park, General Counsel of CRH, and Roland Ashby, Chief People Officer of CRH, to confirm CRH management's approval of the monitor engagement terms and CRH's $144,000 cost share. This approval should be obtained in writing, ideally through a countersigned internal authorization memorandum, before the engagement letter is finalized.
5. Coordinate with Devon Archer on preparation of the Compliance Monitoring Protocol (Detailed Procedures Annex) and the Letter Agreement Among CRH, Verdana, and Aldwyn re: Information-Sharing and Access for Monitor. Both documents should be drafted in parallel with the engagement letter and targeted for finalization on the same April 11, 2025 timeline. Devon's experience with comparable monitoring protocols in the Harmon Industries and CorePath Technologies matters will be particularly useful in developing a detailed and operationally sound Protocol for this engagement.
I am available to discuss this memorandum and the recommended next steps at your convenience. If you concur with the recommendations, I will begin drafting the engagement letter and coordinating with Devon Archer on the Protocol and information-sharing letter agreement immediately.
VIII. Attachments / Referenced Documents
The following documents are attached to or referenced in this memorandum:
Attachment 1: Aldwyn Compliance Solutions LLC — Firm Profile and Representative Engagement List (to be obtained from Aldwyn and circulated upon receipt)
Attachment 2: Draft Exhibit D — Form of Compliance Monitor Engagement Letter (to be prepared by J. Underwood in coordination with D. Archer; target circulation date: April 7, 2025)
Attachment 3: Relevant Excerpts from the Revised Term Sheet dated March 20, 2025 (Section 6: Compliance Monitor) (attached)
Attachment 4: Exhibit A to Settlement Agreement — Modified Restrictive Covenant Terms (current draft dated March 28, 2025) (attached)
Attachment 5: Exhibit B to Settlement Agreement — Data Return and Destruction Protocol (current draft dated March 30, 2025) (attached)
PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT This memorandum was prepared by James Underwood, Lead Associate, Labor & Employment, Calderwood & Harkness LLP, in connection with Matter No. 1038-00006. Distribution is restricted to authorized Calderwood & Harkness personnel working on this matter. Any unauthorized disclosure, copying, or distribution is strictly prohibited.

PRIVILEGED AND CONFIDENTIAL ATTORNEY WORK PRODUCT

INTERNAL MEMORANDUM

MATTER NO.: 1038-00006

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