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

Bernard Crawford Partner — Labor & Employment Tel: (202) 555-4100

Fax: (202) 555-4101

bcrawford@calderwoodharkness.com

March 28, 2025

VIA FILE & SERVEXPRESS

The Honorable Vice Chancellor Margaret T. Zhao Delaware Court of Chancery Leonard L. Williams Justice Center 500 North King Street Wilmington, Delaware 19801

Re: *Cascade Retail Holdings Inc. v. Priya Rathore, et al.*, C.A. No. 2025-0198-MTZ — Status of Settlement Negotiations

Dear Vice Chancellor Zhao:

I write on behalf of plaintiff Cascade Retail Holdings Inc. ("CRH") in the above-captioned matter, C.A. No. 2025-0198-MTZ. The purpose of this letter is to provide the Court with a status update on the progress of the settlement documentation process following the framework agreement reached by the parties on March 20, 2025, and the Consent Interim Order entered by the Court on March 21, 2025 (the "Consent Interim Order"), which adjourned the previously scheduled preliminary injunction hearing and required all parties to maintain the status quo pending completion of definitive settlement documentation. This letter is submitted with the knowledge and consent of counsel for all parties — specifically, Catherine Nygaard of Whitfield, Nygaard & Doyle LLP, counsel to defendant Priya Rathore and the seven other individual defendants (collectively, the "Rathore Group"), and Gavin Blackhall of Blackhall & Soren LLP, counsel to defendant Verdana Commerce Group, Inc. ("Verdana").

Background and Procedural Posture

By way of brief background, CRH filed its Verified Complaint and Motion for Temporary Restraining Order and Preliminary Injunction on March 5, 2025. The Verified Complaint asserts claims for (i) breach of restrictive covenant, (ii) breach of confidentiality obligations, (iii) misappropriation of trade secrets under the Delaware Uniform Trade Secrets Act, 6 Del. C. §§ 2001–2009, (iv) tortious interference with contractual relations, and (v) civil conspiracy. These claims are brought against eight former CRH employees — led by Priya Rathore, CRH's former Senior Vice President of Merchandising — and against Verdana Commerce Group, Inc., the competing retailer that recruited and hired the departing employees in rapid succession in February 2025.

On March 7, 2025, after a telephonic hearing, the Court granted CRH's application for a Temporary Restraining Order. In connection with that order, CRH posted an injunction bond in the amount of $2,500,000 through Broadview Surety Corp., Bond No. BSC-2025-TRO-04419. A preliminary injunction hearing was originally scheduled for March 21, 2025.

On March 18, 2025, at the Court's encouragement and by agreement of all parties, the parties participated in a full-day mediation session before the Honorable Philip Ashford (Ret.) through Meridian ADR Services LLC, Ref. No. Meridian-2025-0318-CRH. The mediation session was productive, and, following additional negotiations between counsel over the ensuing two days, the parties reached a settlement framework on March 20, 2025, which was memorialized in a signed term sheet. On March 21, 2025 — the date originally set for the preliminary injunction hearing — all parties filed a joint Stipulation advising the Court of the framework agreement, and the Court entered the Consent Interim Order adjourning the preliminary injunction hearing sine die and directing the parties to maintain the status quo in all respects during the settlement documentation period.

Settlement Documentation Progress

Since March 24, 2025, Calderwood & Harkness has been engaged in intensive drafting and negotiation of the definitive Standstill and Settlement Agreement (the "Settlement Agreement") with counsel for the Rathore Group and Verdana. Calderwood & Harkness circulated a first draft of the Settlement Agreement to Whitfield, Nygaard & Doyle LLP and Blackhall & Soren LLP on March 24, 2025. Both firms provided substantive comments and a joint markup of the draft on March 26, 2025. The parties are currently working through a second draft of the Settlement Agreement that reflects and addresses those comments. While a number of provisions have been agreed upon, certain terms remain under active negotiation, as described further below.

For the Court's convenience, the following is a summary of the key terms under documentation:

Modified Restrictive Covenant Provisions. The Settlement Agreement will provide for modified non-competition restrictions applicable to all eight individual defendants. Ms. Rathore will be subject to a non-competition period of twelve (12) months from the date of execution of the Settlement Agreement. The remaining seven individual defendants will be subject to a non-competition period of nine (9) months from the date of execution. In each case, the scope of the non-competition restriction will be limited to three specific product categories in which CRH maintains proprietary sourcing relationships and trade secret pricing data: (a) home goods, (b) seasonal décor, and (c) private-label apparel. The modified covenants represent a negotiated reduction from the original twenty-four (24) month, industry-wide restrictions contained in the individual defendants' employment agreements, which CRH agreed to narrow as part of the overall settlement framework.

Non-Solicitation Obligations. The individual defendants will be subject to an eighteen (18) month employee non-solicitation provision, prohibiting the solicitation or hiring of any CRH employee with whom they worked or over whom they exercised supervisory authority during the final two years of their employment. In addition, the individual defendants and Verdana will be subject to a twelve (12) month vendor non-solicitation provision covering CRH's top fifty (50) vendors by annual spend, as identified in a confidential schedule to be attached to the Settlement Agreement.

Monetary Settlement Payment. Verdana will pay CRH a lump-sum monetary settlement payment of Eight Million Seven Hundred Fifty Thousand Dollars ($8,750,000), payable within fifteen (15) business days of execution of the Settlement Agreement. In addition, Verdana will reimburse CRH Four Hundred Twenty-Five Thousand Dollars ($425,000) for litigation costs incurred through the date of execution, payable on the same schedule.

Data Return and Destruction Protocol. All exfiltrated CRH data in the possession, custody, or control of any defendant will be returned to CRH or certified as permanently destroyed within ten (10) business days of execution of the Settlement Agreement. To verify compliance, Verdana will retain, at its sole expense, Pinnacle Forensics LLC to conduct an independent forensic audit of Verdana's information systems, with the cost of such audit capped at One Hundred Seventy-Five Thousand Dollars ($175,000). Pinnacle Forensics will deliver a written certification of its findings to CRH and to the compliance monitor described below.

Appointment of Independent Compliance Monitor. The Settlement Agreement will provide for the appointment of Aldwyn Compliance Solutions LLC, based in Philadelphia, Pennsylvania, as an independent compliance monitor for a twelve (12) month term commencing on the date of execution. The compliance monitor will oversee adherence to the modified restrictive covenants, non-solicitation obligations, and data-destruction requirements. Costs of the compliance monitor engagement are estimated at approximately Three Hundred Sixty Thousand Dollars ($360,000) and will be shared sixty percent (60%) by Verdana and forty percent (40%) by CRH.

Equity Forfeiture and Clawback Provisions. Ms. Rathore and each of the other seven individual defendants will forfeit all unvested restricted stock units ("RSUs") previously granted under CRH's equity compensation plans. In addition, certain vested equity held by the individual defendants will be subject to clawback in accordance with the terms of the applicable equity plan agreements, as modified by the Settlement Agreement.

Mutual Non-Disparagement. The Settlement Agreement will include mutual non-disparagement provisions applicable to all parties and their respective affiliates, officers, and directors.

Consent Order and Retained Jurisdiction. The parties intend to file a Stipulation of Settlement and Proposed Consent Order with this Court incorporating the modified restrictive covenants and data-destruction obligations as enforceable court-ordered provisions. The Proposed Consent Order will provide for retained jurisdiction of this Court for the purpose of enforcement of its terms through the expiration of the monitoring period.

Remaining Open Points

While the parties have made substantial progress, several issues remain under negotiation:

First, the parties continue to negotiate certain definitional provisions concerning the precise scope of the three restricted product categories — home goods, seasonal décor, and private-label apparel. Specifically, the parties have not yet reached agreement on the treatment of crossover product lines and sub-categories that may fall within the penumbra of more than one of the three defined categories. CRH's position is that the definitions should be drawn broadly enough to protect CRH's proprietary sourcing and pricing information; the Rathore Group and Verdana seek narrower definitions that would preserve the individual defendants' ability to work in adjacent, non-overlapping product areas.

Second, the data destruction certification mechanics and the precise scope of the independent forensic audit to be conducted by Pinnacle Forensics LLC remain under discussion. The parties are working to define the universe of systems, devices, and cloud-based repositories that will be subject to Pinnacle Forensics' examination, including personal devices used by the individual defendants during their employment at CRH.

Third, the compliance monitor's access rights and information-sharing protocols require finalization of a separate engagement letter agreement among CRH, Verdana, and Aldwyn Compliance Solutions LLC. Counsel for CRH and Verdana have each been in preliminary discussions with Aldwyn Compliance Solutions regarding the terms of that engagement, and a draft engagement letter is expected to be circulated during the week of March 31, 2025.

Notwithstanding these remaining open points, the discussions have been productive and have been conducted in good faith by all parties at all times. Counsel for all parties are confident that agreement can be reached on all remaining terms within a reasonable period.

Request for Additional Time

The Consent Interim Order entered on March 21, 2025 did not specify a deadline for completion of the settlement documentation process. In light of the complexity of the settlement instruments — which will include the Standstill and Settlement Agreement with five exhibits, the Stipulation of Settlement and Proposed Consent Order, the Aldwyn Compliance Solutions engagement letter, and related ancillary documents — the parties respectfully request that the Court allow the settlement documentation period to continue through Monday, April 14, 2025, which date the parties have identified as their target execution date after consultation among all three firms.

The parties confirm that the Consent Interim Order and the status quo it preserves remain in full force and effect during this period, and that all parties continue to abide by its terms. No party has raised any concerns regarding compliance with the Consent Interim Order since its entry on March 21, 2025, and CRH is not aware of any violation of the Temporary Restraining Order or the Consent Interim Order by any defendant.

Assurances to the Court

CRH remains fully committed to finalizing the settlement on the terms of the agreed framework, and counsel for the Rathore Group and Verdana have confirmed their clients' continued commitment as well. All parties expect to file the Stipulation of Settlement and Proposed Consent Order, together with a Motion to Dissolve the Temporary Restraining Order and to release the injunction bond posted by CRH through Broadview Surety Corp., on or before April 14, 2025.

Should the parties encounter any material impediment to the consummation of the settlement, or should additional time beyond April 14, 2025 prove necessary, counsel will promptly notify the Court by supplemental letter. In the interim, counsel for all parties are prepared to appear before the Court at any time should the Court wish to conduct a status conference or require additional information regarding the progress of the documentation process.

We thank the Court for its patience and attention to this matter throughout these proceedings. Should the Court or Chambers have any questions or require any additional information, I am available at the telephone number and email address listed above and would be pleased to respond promptly.

Respectfully submitted,

________________________________________

Bernard Crawford Calderwood & Harkness LLP 1301 K Street NW, Suite 1200 Washington, DC 20005 Tel: (202) 555-4100 bcrawford@calderwoodharkness.com

Counsel for Plaintiff Cascade Retail Holdings Inc.

cc:

Catherine Nygaard, Esq. Whitfield, Nygaard & Doyle LLP 1000 North Market Street, Suite 1500 Wilmington, DE 19801 Counsel for Individual Defendants (the "Rathore Group")

Gavin Blackhall, Esq. Blackhall & Soren LLP 300 Delaware Avenue, Suite 900 Wilmington, DE 19801 Counsel for Defendant Verdana Commerce Group, Inc.

CALDERWOOD & HARKNESS LLP 1301 K Street NW, Suite 1200 Washington, DC 20005
Bernard Crawford Partner — Labor & Employment Tel: (202) 555-4100
Fax: (202) 555-4101
bcrawford@calderwoodharkness.com
March 28, 2025
VIA FILE & SERVEXPRESS
The Honorable Vice Chancellor Margaret T. Zhao Delaware Court of Chancery Leonard L. Williams Justice Center 500 North King Street Wilmington, Delaware 19801
Re: *Cascade Retail Holdings Inc. v. Priya Rathore, et al.*, C.A. No. 2025-0198-MTZ — Status of Settlement Negotiations
Dear Vice Chancellor Zhao:
I write on behalf of plaintiff Cascade Retail Holdings Inc. ("CRH") in the above-captioned matter, C.A. No. 2025-0198-MTZ. The purpose of this letter is to provide the Court with a status update on the progress of the settlement documentation process following the framework agreement reached by the parties on March 20, 2025, and the Consent Interim Order entered by the Court on March 21, 2025 (the "Consent Interim Order"), which adjourned the previously scheduled preliminary injunction hearing and required all parties to maintain the status quo pending completion of definitive settlement documentation. This letter is submitted with the knowledge and consent of counsel for all parties — specifically, Catherine Nygaard of Whitfield, Nygaard & Doyle LLP, counsel to defendant Priya Rathore and the seven other individual defendants (collectively, the "Rathore Group"), and Gavin Blackhall of Blackhall & Soren LLP, counsel to defendant Verdana Commerce Group, Inc. ("Verdana").
Background and Procedural Posture
By way of brief background, CRH filed its Verified Complaint and Motion for Temporary Restraining Order and Preliminary Injunction on March 5, 2025. The Verified Complaint asserts claims for (i) breach of restrictive covenant, (ii) breach of confidentiality obligations, (iii) misappropriation of trade secrets under the Delaware Uniform Trade Secrets Act, 6 Del. C. §§ 2001–2009, (iv) tortious interference with contractual relations, and (v) civil conspiracy. These claims are brought against eight former CRH employees — led by Priya Rathore, CRH's former Senior Vice President of Merchandising — and against Verdana Commerce Group, Inc., the competing retailer that recruited and hired the departing employees in rapid succession in February 2025.
On March 7, 2025, after a telephonic hearing, the Court granted CRH's application for a Temporary Restraining Order. In connection with that order, CRH posted an injunction bond in the amount of $2,500,000 through Broadview Surety Corp., Bond No. BSC-2025-TRO-04419. A preliminary injunction hearing was originally scheduled for March 21, 2025.
On March 18, 2025, at the Court's encouragement and by agreement of all parties, the parties participated in a full-day mediation session before the Honorable Philip Ashford (Ret.) through Meridian ADR Services LLC, Ref. No. Meridian-2025-0318-CRH. The mediation session was productive, and, following additional negotiations between counsel over the ensuing two days, the parties reached a settlement framework on March 20, 2025, which was memorialized in a signed term sheet. On March 21, 2025 — the date originally set for the preliminary injunction hearing — all parties filed a joint Stipulation advising the Court of the framework agreement, and the Court entered the Consent Interim Order adjourning the preliminary injunction hearing sine die and directing the parties to maintain the status quo in all respects during the settlement documentation period.
Settlement Documentation Progress
Since March 24, 2025, Calderwood & Harkness has been engaged in intensive drafting and negotiation of the definitive Standstill and Settlement Agreement (the "Settlement Agreement") with counsel for the Rathore Group and Verdana. Calderwood & Harkness circulated a first draft of the Settlement Agreement to Whitfield, Nygaard & Doyle LLP and Blackhall & Soren LLP on March 24, 2025. Both firms provided substantive comments and a joint markup of the draft on March 26, 2025. The parties are currently working through a second draft of the Settlement Agreement that reflects and addresses those comments. While a number of provisions have been agreed upon, certain terms remain under active negotiation, as described further below.
For the Court's convenience, the following is a summary of the key terms under documentation:
Modified Restrictive Covenant Provisions. The Settlement Agreement will provide for modified non-competition restrictions applicable to all eight individual defendants. Ms. Rathore will be subject to a non-competition period of twelve (12) months from the date of execution of the Settlement Agreement. The remaining seven individual defendants will be subject to a non-competition period of nine (9) months from the date of execution. In each case, the scope of the non-competition restriction will be limited to three specific product categories in which CRH maintains proprietary sourcing relationships and trade secret pricing data: (a) home goods, (b) seasonal décor, and (c) private-label apparel. The modified covenants represent a negotiated reduction from the original twenty-four (24) month, industry-wide restrictions contained in the individual defendants' employment agreements, which CRH agreed to narrow as part of the overall settlement framework.
Non-Solicitation Obligations. The individual defendants will be subject to an eighteen (18) month employee non-solicitation provision, prohibiting the solicitation or hiring of any CRH employee with whom they worked or over whom they exercised supervisory authority during the final two years of their employment. In addition, the individual defendants and Verdana will be subject to a twelve (12) month vendor non-solicitation provision covering CRH's top fifty (50) vendors by annual spend, as identified in a confidential schedule to be attached to the Settlement Agreement.
Monetary Settlement Payment. Verdana will pay CRH a lump-sum monetary settlement payment of Eight Million Seven Hundred Fifty Thousand Dollars ($8,750,000), payable within fifteen (15) business days of execution of the Settlement Agreement. In addition, Verdana will reimburse CRH Four Hundred Twenty-Five Thousand Dollars ($425,000) for litigation costs incurred through the date of execution, payable on the same schedule.
Data Return and Destruction Protocol. All exfiltrated CRH data in the possession, custody, or control of any defendant will be returned to CRH or certified as permanently destroyed within ten (10) business days of execution of the Settlement Agreement. To verify compliance, Verdana will retain, at its sole expense, Pinnacle Forensics LLC to conduct an independent forensic audit of Verdana's information systems, with the cost of such audit capped at One Hundred Seventy-Five Thousand Dollars ($175,000). Pinnacle Forensics will deliver a written certification of its findings to CRH and to the compliance monitor described below.
Appointment of Independent Compliance Monitor. The Settlement Agreement will provide for the appointment of Aldwyn Compliance Solutions LLC, based in Philadelphia, Pennsylvania, as an independent compliance monitor for a twelve (12) month term commencing on the date of execution. The compliance monitor will oversee adherence to the modified restrictive covenants, non-solicitation obligations, and data-destruction requirements. Costs of the compliance monitor engagement are estimated at approximately Three Hundred Sixty Thousand Dollars ($360,000) and will be shared sixty percent (60%) by Verdana and forty percent (40%) by CRH.
Equity Forfeiture and Clawback Provisions. Ms. Rathore and each of the other seven individual defendants will forfeit all unvested restricted stock units ("RSUs") previously granted under CRH's equity compensation plans. In addition, certain vested equity held by the individual defendants will be subject to clawback in accordance with the terms of the applicable equity plan agreements, as modified by the Settlement Agreement.
Mutual Non-Disparagement. The Settlement Agreement will include mutual non-disparagement provisions applicable to all parties and their respective affiliates, officers, and directors.
Consent Order and Retained Jurisdiction. The parties intend to file a Stipulation of Settlement and Proposed Consent Order with this Court incorporating the modified restrictive covenants and data-destruction obligations as enforceable court-ordered provisions. The Proposed Consent Order will provide for retained jurisdiction of this Court for the purpose of enforcement of its terms through the expiration of the monitoring period.
Remaining Open Points
While the parties have made substantial progress, several issues remain under negotiation:
First, the parties continue to negotiate certain definitional provisions concerning the precise scope of the three restricted product categories — home goods, seasonal décor, and private-label apparel. Specifically, the parties have not yet reached agreement on the treatment of crossover product lines and sub-categories that may fall within the penumbra of more than one of the three defined categories. CRH's position is that the definitions should be drawn broadly enough to protect CRH's proprietary sourcing and pricing information; the Rathore Group and Verdana seek narrower definitions that would preserve the individual defendants' ability to work in adjacent, non-overlapping product areas.
Second, the data destruction certification mechanics and the precise scope of the independent forensic audit to be conducted by Pinnacle Forensics LLC remain under discussion. The parties are working to define the universe of systems, devices, and cloud-based repositories that will be subject to Pinnacle Forensics' examination, including personal devices used by the individual defendants during their employment at CRH.
Third, the compliance monitor's access rights and information-sharing protocols require finalization of a separate engagement letter agreement among CRH, Verdana, and Aldwyn Compliance Solutions LLC. Counsel for CRH and Verdana have each been in preliminary discussions with Aldwyn Compliance Solutions regarding the terms of that engagement, and a draft engagement letter is expected to be circulated during the week of March 31, 2025.
Notwithstanding these remaining open points, the discussions have been productive and have been conducted in good faith by all parties at all times. Counsel for all parties are confident that agreement can be reached on all remaining terms within a reasonable period.
Request for Additional Time
The Consent Interim Order entered on March 21, 2025 did not specify a deadline for completion of the settlement documentation process. In light of the complexity of the settlement instruments — which will include the Standstill and Settlement Agreement with five exhibits, the Stipulation of Settlement and Proposed Consent Order, the Aldwyn Compliance Solutions engagement letter, and related ancillary documents — the parties respectfully request that the Court allow the settlement documentation period to continue through Monday, April 14, 2025, which date the parties have identified as their target execution date after consultation among all three firms.
The parties confirm that the Consent Interim Order and the status quo it preserves remain in full force and effect during this period, and that all parties continue to abide by its terms. No party has raised any concerns regarding compliance with the Consent Interim Order since its entry on March 21, 2025, and CRH is not aware of any violation of the Temporary Restraining Order or the Consent Interim Order by any defendant.
Assurances to the Court
CRH remains fully committed to finalizing the settlement on the terms of the agreed framework, and counsel for the Rathore Group and Verdana have confirmed their clients' continued commitment as well. All parties expect to file the Stipulation of Settlement and Proposed Consent Order, together with a Motion to Dissolve the Temporary Restraining Order and to release the injunction bond posted by CRH through Broadview Surety Corp., on or before April 14, 2025.
Should the parties encounter any material impediment to the consummation of the settlement, or should additional time beyond April 14, 2025 prove necessary, counsel will promptly notify the Court by supplemental letter. In the interim, counsel for all parties are prepared to appear before the Court at any time should the Court wish to conduct a status conference or require additional information regarding the progress of the documentation process.
We thank the Court for its patience and attention to this matter throughout these proceedings. Should the Court or Chambers have any questions or require any additional information, I am available at the telephone number and email address listed above and would be pleased to respond promptly.
Respectfully submitted,
________________________________________
Bernard Crawford Calderwood & Harkness LLP 1301 K Street NW, Suite 1200 Washington, DC 20005 Tel: (202) 555-4100 bcrawford@calderwoodharkness.com
Counsel for Plaintiff Cascade Retail Holdings Inc.
cc:
Catherine Nygaard, Esq. Whitfield, Nygaard & Doyle LLP 1000 North Market Street, Suite 1500 Wilmington, DE 19801 Counsel for Individual Defendants (the "Rathore Group")
Gavin Blackhall, Esq. Blackhall & Soren LLP 300 Delaware Avenue, Suite 900 Wilmington, DE 19801 Counsel for Defendant Verdana Commerce Group, Inc.

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

VIA FILE & SERVEXPRESS

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