revised-fee-estimate-memo.docx

1038-00006 · Calderwood & Harkness LLP · Engagement & Administration

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CALDERWOOD & HARKNESS LLP 601 South Figueroa Street, Suite 4200 Los Angeles, California 90017

MEMORANDUM

TO: Theresa Yun-Park, General Counsel, Cascade Retail Holdings Inc., 2200 Elliott Avenue West, Suite 3400, Seattle, WA 98119

FROM: Renata Vasquez, Partner, Calderwood & Harkness LLP (Los Angeles Office)

DATE: March 25, 2025

RE: Revised Fee Estimate — Matter No. 1038-00006; Cascade Retail Holdings Inc. v. Rathore et al., C.A. No. 2025-0198-MTZ (Del. Ch.)

CC: Bernard Crawford, Responsible Partner, Calderwood & Harkness LLP (Washington, DC Office)

I. Purpose and Executive Summary

The purpose of this memorandum is to provide Cascade Retail Holdings Inc. ("CRH" or the "Company") with an updated fee and expense estimate for the above-referenced engagement. This revised estimate has been prepared in light of the settlement framework agreement reached on March 20, 2025, following the mediation session conducted on March 18, 2025, before the Honorable Philip Ashford (Ret.), through Meridian ADR Services LLC ("Meridian") at Meridian's Washington, DC offices.

This revised estimate replaces in its entirety the preliminary budget set forth in the Staffing and Budget Memorandum dated February 18, 2025 (the "Original Budget Memorandum"), which was prepared at the outset of the engagement and contemplated full-scale contested litigation through trial in the Delaware Court of Chancery. As discussed in greater detail in Section VII below, the settlement framework reached on March 20, 2025, has materially reduced the projected scope of remaining work, resulting in significant estimated savings to CRH as compared to the Original Budget Memorandum.

The revised total estimated fees and expenses for the engagement through closing are approximately $1,850,000. This figure encompasses all professional fees and out-of-pocket expenses anticipated through the execution, filing, and closing of the settlement, and reflects the shift in posture from contested litigation to settlement documentation, consent order preparation, closing, and post-closing monitoring setup. We note, importantly, that $425,000 of CRH's litigation costs will be reimbursed by Verdana Commerce Group, Inc. ("Verdana") pursuant to the settlement terms, effectively reducing CRH's estimated net out-of-pocket cost to approximately $1,425,000.

To summarize what has been accomplished to date and what remains: Calderwood & Harkness has successfully secured a temporary restraining order, conducted expedited discovery that confirmed the exfiltration of proprietary data, navigated opposition briefing from two defense firms, and guided the matter through mediation to a settlement framework that delivers CRH a total economic recovery of approximately $10,024,500 (inclusive of the lump-sum cash settlement, equity forfeitures, and litigation cost reimbursement). The remaining work consists principally of drafting, negotiating, and finalizing the Standstill and Settlement Agreement and its accompanying exhibits; preparing the consent order and related court filings; coordinating the dissolution of the TRO and release of the injunction bond; managing equity forfeiture mechanics with CRH's transfer agent; preparing board and audit committee reporting materials; analyzing SEC disclosure obligations; issuing lender notification under the Company's revolving credit facility; and completing matter closing administration.

The sections that follow provide the detailed basis for this revised estimate, including a full staffing plan, timekeeper-level fee projections, expense line items, a comparison to the Original Budget, and a discussion of key assumptions and caveats.

II. Background and Change in Scope

A. Original Engagement Scope

Calderwood & Harkness LLP was retained by CRH on February 18, 2025, to represent the Company in connection with the coordinated departure of eight senior employees from CRH's digital commerce and supply chain analytics divisions (collectively, the "Rathore Group," led by Anil Rathore, former Senior Vice President of Digital Commerce Strategy) and their immediate subsequent affiliation with Verdana Commerce Group, Inc., a direct competitor. The original engagement encompassed claims for enforcement of restrictive covenants (including non-competition, non-solicitation, and confidentiality agreements), trade secret misappropriation under the Delaware Uniform Trade Secrets Act and the federal Defend Trade Secrets Act, tortious interference with contractual relations, unfair competition, and related claims against both the individual defendants and Verdana.

As set forth in the Original Budget Memorandum, the anticipated scope of work at the outset of the engagement included:

(a) Emergency temporary restraining order and preliminary injunction proceedings in the Delaware Court of Chancery;

(b) Expedited discovery, including forensic imaging and analysis of CRH-issued devices, cloud access log review, and document production;

(d) Full merits-phase litigation, including extensive fact and expert discovery (depositions, interrogatories, document requests, and expert reports), pre-trial briefing, and preparation for and conduct of trial in the Delaware Court of Chancery; and

(e) Post-trial proceedings, as necessary, including potential enforcement of any permanent injunctive relief.

The Original Budget Memorandum estimated that full litigation through trial would require a substantially larger professional fee commitment, reflecting the anticipated length and complexity of a multi-defendant trade secret and restrictive covenant enforcement action in Chancery Court.

B. Key Developments Reducing Projected Scope

Since the commencement of the engagement, several key developments have materially altered the trajectory of this matter and significantly reduced the projected scope of remaining work:

1. TRO Granted (March 7, 2025). Vice Chancellor Margaret T. Zhao granted CRH's application for a temporary restraining order on March 7, 2025, following an ex parte hearing at which Bernard Crawford presented oral argument. The TRO enjoined all eight members of the Rathore Group from (i) performing any services for Verdana in any capacity related to digital commerce strategy, supply chain analytics, or vendor management optimization; (ii) using, disclosing, or transmitting any CRH confidential information or trade secrets; and (iii) soliciting any CRH employees, customers, or vendors. As a condition of the TRO, CRH posted a $2,500,000 injunction bond through Broadview Surety Corp. (Bond No. BSC-2025-TRO-04419).

2. Expedited discovery (March 12–18, 2025). Pursuant to the Court's scheduling order entered on March 10, 2025, the parties conducted expedited discovery between March 12 and March 18, 2025. CRH served document requests on all defendants and received production from both the Rathore Group (through Whitfield, Nygaard & Doyle LLP) and Verdana (through Blackhall & Soren LLP). Most significantly, CRH retained Pinnacle Forensics LLC, under the direction of Dr. Rajiv Anand, to conduct a forensic analysis of CRH-issued devices and cloud access logs. Dr. Anand's preliminary forensic report, delivered on March 16, 2025, confirmed the exfiltration of 14,327 files comprising approximately 2.8 gigabytes of data, including proprietary vendor pricing algorithms, supply chain optimization models, customer segmentation analyses, and confidential strategic planning documents. This forensic evidence substantially strengthened CRH's position in subsequent proceedings.

3. Opposition to Preliminary Injunction (March 15, 2025). On March 15, 2025, Whitfield, Nygaard & Doyle LLP ("WND"), on behalf of the Rathore Group, and Blackhall & Soren LLP ("B&S"), on behalf of Verdana, each filed opposition briefs to CRH's motion for a preliminary injunction. While the oppositions raised arguments regarding the reasonableness of the scope and duration of the restrictive covenants and challenged the trade secret designation of certain categories of documents, the strength of the forensic evidence and the Court's prior grant of the TRO placed defendants in a difficult posture heading into the preliminary injunction hearing.

4. Mediation and Settlement Framework (March 18–20, 2025). On March 18, 2025, all parties participated in a full-day mediation session before the Honorable Philip Ashford (Ret.) at Meridian ADR Services LLC's Washington, DC facility. The mediation was productive, and although the parties did not reach a final resolution on that date, substantial progress was made on all key terms. Following two additional days of shuttle negotiations facilitated by Mediator Ashford's office, the parties reached a settlement framework agreement on March 20, 2025. The framework contemplates a comprehensive resolution including an $8,750,000 lump-sum cash payment from Verdana, aggregate equity forfeitures of $849,500 from the Rathore Group, reimbursement of $425,000 of CRH's litigation costs, modified restrictive covenant terms, a data return and destruction protocol, and a 12-month compliance monitoring arrangement.

5. Adjournment of PI Hearing and Consent Interim Order (March 21, 2025). On March 21, 2025, pursuant to a joint stipulation filed by all parties, Vice Chancellor Zhao adjourned the preliminary injunction hearing and entered a Consent Interim Order maintaining the status quo during the settlement documentation period. The Consent Interim Order provides that the TRO shall remain in effect pending the entry of a Consent Order incorporating the settlement terms or further order of the Court.

C. Remaining Scope of Work

As a result of the foregoing developments, the remaining scope of work has narrowed from full-scale contested litigation to the following categories of work through closing:

(a) Settlement Documentation: Drafting, negotiating, and finalizing the Standstill and Settlement Agreement and five exhibits thereto, including modified restrictive covenant terms (Exhibit A), a data return and destruction protocol (Exhibit B), a list of CRH's top 50 vendors (Exhibit C), a compliance monitor engagement letter form (Exhibit D), and mutual non-disparagement provisions (Exhibit E);

(b) Consent Order Preparation and Filing: Drafting and filing the Consent Order with the Delaware Court of Chancery for entry by Vice Chancellor Zhao, incorporating the agreed-upon injunctive terms and other provisions of the settlement;

(c) TRO Dissolution and Bond Release: Preparing and filing the motion to dissolve the TRO upon entry of the Consent Order and coordinating the release and discharge of the $2,500,000 injunction bond (Bond No. BSC-2025-TRO-04419) with Broadview Surety Corp.;

(d) Equity Forfeiture Coordination: Preparing RSU forfeiture calculation memoranda for Mr. Rathore and the other seven departing employees, and coordinating with Northland Trust Company, CRH's transfer agent, to process the cancellation of applicable restricted stock units;

(e) Board and Audit Committee Reporting: Preparing a settlement summary memorandum for CRH's Board of Directors and a separate reporting package for Dr. Lorraine Stahl, Chair of the Audit Committee;

(f) SEC Disclosure Analysis: Analyzing the materiality of the settlement for purposes of current report filing under Form 8-K and periodic report disclosure under Form 10-Q, and drafting proposed 8-K Current Report language;

(g) Lender Notification: Preparing and delivering written notification to Keypoint National Bank, N.A., as administrative agent under CRH's $750 million revolving credit facility, as required by Section 6.02(c) thereof;

(h) Compliance Monitor Setup: Evaluating and engaging Aldwyn Compliance Solutions LLC as the independent compliance monitor, and drafting the compliance monitoring protocol and information-sharing letter agreement among CRH, Verdana, and Aldwyn;

(i) Forensic Vendor Coordination: Coordinating with Pinnacle Forensics LLC (Dr. Rajiv Anand) regarding the post-settlement independent forensic audit of Verdana's systems;

(j) Matter Closing Administration: Preparing the closing checklist, closing index, signature page tracker, matter closing memorandum, stipulation for dismissal with prejudice, and all other administrative closing tasks.

The settlement documentation period runs from March 24 through April 11, 2025, with a target execution date of April 14, 2025. We anticipate that all court filings, bond release, and closing administration will be completed by approximately April 25, 2025.

III. Staffing Plan

The engagement team remains unchanged from the original staffing plan set forth in the Original Budget Memorandum dated February 18, 2025. The team is composed of two partners and two associates, as follows:

Bernard Crawford — Responsible Partner, Labor & Employment (Washington, DC Office). Mr. Crawford serves as the responsible partner for this engagement and has primary responsibility for senior strategic oversight, key negotiations with opposing counsel (Catherine Nygaard of WND and Gavin Blackhall of B&S), court communications and correspondence with Vice Chancellor Zhao's chambers, client reporting to CRH's General Counsel and senior leadership, and communications with the Board of Directors and Audit Committee. Mr. Crawford led the TRO application, conducted oral argument at the March 7, 2025 hearing, and served as CRH's lead representative at the March 18, 2025 mediation. He will continue to lead the settlement negotiations through execution and closing.

Renata Vasquez — Billing Partner, Labor & Employment (Los Angeles Office). I serve as the billing partner for this engagement, with responsibility for budget management, fee estimate preparation, billing coordination, and client financial reporting. In addition to these administrative functions, I have assumed primary responsibility for the SEC disclosure analysis work stream, including the 8-K / 10-Q materiality analysis and draft 8-K Current Report language, as well as the Compensation Committee letter regarding equity clawback and forfeiture calculations and the lender notification to Keypoint National Bank. I also review settlement agreement drafts to ensure consistency between the commercial terms and the Company's disclosure and reporting obligations.

James Underwood — Lead Associate, Labor & Employment (Washington, DC Office). Mr. Underwood serves as the lead associate on this engagement and is the primary drafter of the settlement documentation, consent order, and all court filings. He has assumed responsibility for the legal research memoranda (including the analysis of Delaware law regarding court-approved consent orders incorporating restrictive covenant provisions), the compliance monitor evaluation, and day-to-day correspondence with opposing counsel. Mr. Underwood drafted the TRO application, the supporting declarations, and the preliminary injunction brief, and he has been the primary point of contact with WND (Catherine Nygaard and her associate, Robert Beaumont) and B&S (Justin Lau) throughout the expedited discovery phase.

Devon Archer — Working Associate, Labor & Employment (Washington, DC Office). Mr. Archer serves as the working associate on this engagement, supporting Mr. Underwood on all drafting tasks and handling a range of specialized and administrative work streams. Mr. Archer has primary responsibility for the RSU forfeiture calculation memoranda, the data destruction protocol coordination, forensic vendor liaison with Pinnacle Forensics (Dr. Rajiv Anand), correspondence with Northland Trust Company (the Company's transfer agent) and Broadview Surety Corp. (the bond surety), closing checklist and index preparation, document management, and the matter closing memorandum. Mr. Archer also prepared the Verdana press release analysis memorandum and social media review at the outset of the engagement.

No additional timekeepers are anticipated for the remainder of this engagement. If unforeseen issues arise during the settlement documentation period that require specialized expertise (for example, complex tax analysis of the equity forfeiture structure), we will consult with CRH before adding any personnel.

IV. Revised Fee Estimate — By Timekeeper

Set forth below is the revised fee estimate for each timekeeper, including a detailed breakdown of anticipated remaining hours by task category and the hours already billed through March 25, 2025. All hour estimates are approximations and may vary depending on the complexity and duration of remaining negotiations.

A. Bernard Crawford — Responsible Partner

Billing Rate: $1,350 per hour

Estimated Total Hours (through closing): Approximately 220 hours

Estimated Total Fees: Approximately $297,000

Mr. Crawford's estimated hours reflect his continued leadership role in the settlement negotiations and his oversight of all work streams through closing. The breakdown of his anticipated hours is as follows:

Hours Already Billed (through March 25, 2025): Approximately 75 hours. These hours were incurred primarily in connection with the TRO application (including drafting supervision, oral argument preparation, and the March 7, 2025 hearing before Vice Chancellor Zhao), the expedited discovery strategy, the preliminary injunction briefing, the mediation before Mediator Ashford on March 18, 2025, and the post-mediation settlement framework negotiations through March 20, 2025. Mr. Crawford's billed hours also include initial client strategy sessions with Ms. Yun-Park and senior CRH leadership.

Estimated Remaining Hours (March 26 – closing): Approximately 145 hours, allocated as follows:

• Settlement Negotiations and Open-Point Resolution: Approximately 40 hours. Mr. Crawford will lead the negotiation of remaining open points in the settlement documentation with Catherine Nygaard (WND), who represents the Rathore Group, and Gavin Blackhall (B&S), who represents Verdana. Open points currently include the precise scope of the modified non-compete geographic and industry category definitions, the mechanics and timing of the data destruction certification process, the selection and compensation structure for the compliance monitor, and certain indemnification provisions. Mr. Crawford will participate in negotiation calls and in-person sessions as necessary.

• Review and Revision of Standstill and Settlement Agreement Drafts: Approximately 35 hours. We anticipate approximately four drafts of the Standstill and Settlement Agreement before the execution version (initial draft, first counterparty markup, revised draft incorporating comments, and near-final/execution draft). Mr. Crawford will review each draft in detail and provide substantive comments and redline edits, with particular focus on the injunctive relief provisions, the compliance monitor framework, and the representations and warranties.

• Client Communications and Strategy Sessions: Approximately 25 hours. Mr. Crawford will continue to provide regular updates and strategic guidance to Ms. Yun-Park (General Counsel), Marcus Langford (Chief Executive Officer), and Roland Ashby (Chief People Officer). This includes scheduled weekly status calls, ad hoc consultations as issues arise during the documentation process, and preparation for and attendance at any internal CRH meetings regarding the settlement.

• Board Memorandum and Audit Committee Reporting: Approximately 15 hours. Mr. Crawford will prepare the settlement summary memorandum for CRH's Board of Directors and coordinate with Dr. Lorraine Stahl, Chair of the Audit Committee, regarding the audit committee reporting requirements. This includes preparation of the board memorandum, the audit committee supplement, and any follow-up communications.

• Court Communications: Approximately 10 hours. Mr. Crawford will prepare and submit correspondence to Vice Chancellor Zhao's chambers regarding the status of settlement documentation, and will oversee the filing of the Consent Order, the stipulation for dismissal with prejudice, and any other court filings required to close the case.

• Supervision of Associate Work Product: Approximately 20 hours. Mr. Crawford will review and provide feedback on all significant work product prepared by Mr. Underwood and Mr. Archer, including the settlement agreement and exhibits, consent order, research memoranda, RSU forfeiture memoranda, and board reporting materials.

B. Renata Vasquez — Billing Partner

Billing Rate: $1,275 per hour

Estimated Total Hours (through closing): Approximately 180 hours

Estimated Total Fees: Approximately $229,500

My estimated hours reflect both the administrative billing and budget management functions of the billing partner role and the substantive work streams I have undertaken in connection with SEC disclosure analysis, compensation committee coordination, and lender notification. The breakdown of my anticipated hours is as follows:

Hours Already Billed (through March 25, 2025): Approximately 105 hours. These hours were incurred primarily in connection with the preparation of the original engagement letter and staffing and budget memorandum, initial SEC disclosure analysis, billing coordination during the expedited litigation phase, review of the TRO application and preliminary injunction brief, participation in key client calls, and the mediation preparation and session.

Estimated Remaining Hours (March 26 – closing): Approximately 75 hours, allocated as follows:

• Budget Management and Fee Estimate Revisions: Approximately 10 hours. This includes the preparation of this revised fee estimate memorandum, ongoing budget monitoring through closing, and any further revisions that may be required if the scope of remaining work changes materially.

• SEC Disclosure Analysis: Approximately 25 hours. I will complete the materiality analysis regarding the settlement for purposes of CRH's current report filing obligations under Form 8-K and periodic report disclosure under Form 10-Q. The analysis will address whether the settlement constitutes a "material definitive agreement" or other reportable event requiring disclosure under Item 1.01 or Item 8.01 of Form 8-K, evaluated against CRH's $6.82 billion in annual revenue and approximately $4.1 billion market capitalization. I will also assess the implications for the Company's upcoming quarterly report on Form 10-Q for the fiscal quarter ending March 31, 2025.

• Draft 8-K Current Report Language: Approximately 10 hours. Based on the outcome of the materiality analysis, I will prepare draft language for a Form 8-K Current Report disclosing the material terms of the settlement. This draft will be provided to CRH's regular securities counsel for review and coordination with the Company's SEC filing process.

• Compensation Committee Letter: Approximately 10 hours. I will prepare a letter to the Compensation Committee of CRH's Board of Directors summarizing the equity clawback and forfeiture provisions of the settlement. This letter will detail the calculation of Mr. Rathore's $362,500 total forfeiture and the aggregate $487,000 in forfeitures applicable to the other seven departing employees, for a combined total of $849,500 in equity forfeitures, and will address the Compensation Committee's oversight responsibilities with respect to the clawback provisions triggered by the covenant breaches.

• Lender Notification to Keypoint National Bank: Approximately 5 hours. I will prepare written notification to Keypoint National Bank, N.A., as administrative agent under the Company's $750 million revolving credit facility, as required by Section 6.02(c) thereof. Section 6.02(c) requires prompt written notice of "any litigation, investigation, or proceeding" that could reasonably be expected to result in a material adverse effect, and we will provide notice of the settlement resolution as well.

• Review of Settlement Agreement Drafts: Approximately 15 hours. I will review each draft of the Standstill and Settlement Agreement with a focus on consistency between the commercial terms and CRH's public disclosure and regulatory obligations, including the financial terms, representations regarding materiality, and any confidentiality provisions that may affect the Company's ability to disclose the settlement terms in SEC filings.

C. James Underwood — Lead Associate

Billing Rate: $785 per hour

Estimated Total Hours (through closing): Approximately 640 hours

Estimated Total Fees: Approximately $502,400

Mr. Underwood's estimated hours reflect his role as the primary drafter for all settlement documentation, court filings, and related work product. As the lead associate, he carries the heaviest drafting burden and the most extensive daily interaction with opposing counsel. The breakdown of his anticipated hours is as follows:

Hours Already Billed (through March 25, 2025): Approximately 365 hours. Mr. Underwood's billed hours were incurred primarily in connection with drafting the verified complaint, the TRO application and supporting declarations, the expedited discovery plan and document requests, the preliminary injunction brief and supporting exhibits, the forensic analysis coordination with Pinnacle Forensics, and the mediation preparation (including the mediation statement and supporting materials). Mr. Underwood also handled the substantial volume of day-to-day correspondence with opposing counsel during the expedited discovery period.

Estimated Remaining Hours (March 26 – closing): Approximately 275 hours, allocated as follows:

• Primary Drafting — Standstill and Settlement Agreement and Exhibits: Approximately 120 hours. This represents the single largest block of remaining work. Mr. Underwood will prepare the initial draft of the Standstill and Settlement Agreement and will serve as the primary drafter through all subsequent revisions, including the counterparty markup response, the revised draft, and the execution version. The Agreement is expected to run approximately 40 to 50 pages exclusive of exhibits. Mr. Underwood will also draft the five exhibits: Exhibit A (Modified Restrictive Covenant Terms, incorporating the revised non-compete scope, duration, and geographic limitations agreed upon during the mediation); Exhibit B (Data Return and Destruction Protocol, specifying the procedures for the return and certified destruction of all CRH confidential information and trade secrets in the possession of the Rathore Group and Verdana); Exhibit C (Top 50 CRH Vendors List, identifying the CRH vendor relationships subject to the non-solicitation provisions); Exhibit D (Compliance Monitor Engagement Letter Form, establishing the terms of engagement for Aldwyn Compliance Solutions LLC as independent compliance monitor); and Exhibit E (Mutual Non-Disparagement Provisions, governing public statements by both parties regarding the dispute and its resolution).

• Consent Order and Court Filings: Approximately 40 hours. Mr. Underwood will draft the proposed Consent Order for submission to Vice Chancellor Zhao, which will incorporate the agreed-upon injunctive terms. He will also draft the motion to dissolve the TRO upon entry of the Consent Order, the stipulation for dismissal with prejudice (to be filed following execution of the settlement agreement and entry of the Consent Order), and any accompanying cover letters or transmittal documents required by the Court.

• Research Memorandum — Delaware Law on Consent Orders: Approximately 25 hours. Mr. Underwood will prepare a research memorandum analyzing the requirements and standards under Delaware law for court-approved consent orders that incorporate restrictive covenant provisions, including the Court of Chancery's approach to enforceability, modification, and subsequent enforcement of such orders. This memorandum will inform the drafting of the Consent Order and ensure that the settlement terms are structured to maximize enforceability.

• Compliance Monitor Evaluation and Monitoring Protocol: Approximately 30 hours. Mr. Underwood will lead the evaluation of Aldwyn Compliance Solutions LLC as the proposed independent compliance monitor, including review of Aldwyn's qualifications, conflicts check, and proposed scope of work. He will also draft the monitoring protocol that will govern Aldwyn's activities during the 12-month monitoring period, including reporting schedules, access rights, and dispute resolution procedures.

• Correspondence with Opposing Counsel: Approximately 25 hours. Mr. Underwood will continue to manage the day-to-day correspondence with Catherine Nygaard and Robert Beaumont at WND and Justin Lau at B&S regarding the settlement documentation process. This includes correspondence on data destruction protocol mechanics, non-compete scope definitions, forensic audit mechanics, settlement agreement comments, and scheduling matters.

• Board Settlement Summary Memorandum: Approximately 15 hours. Under Mr. Crawford's supervision, Mr. Underwood will prepare the initial draft of the settlement summary memorandum for CRH's Board of Directors, summarizing the terms of the settlement, the litigation history, the strategic rationale for the settlement, and the projected economic recovery to the Company.

• Coordination with Pinnacle Forensics: Approximately 10 hours. Mr. Underwood will coordinate with Dr. Rajiv Anand of Pinnacle Forensics regarding the scope, timing, and logistics of the post-settlement independent forensic audit of Verdana's systems. Pursuant to the settlement terms, Verdana will bear the cost of this audit (capped at $175,000), and Mr. Underwood will ensure that the audit scope and protocol are consistent with the Data Return and Destruction Protocol.

• Closing Checklist and Index Preparation: Approximately 10 hours. Mr. Underwood will prepare the master closing checklist identifying all conditions to closing, deliverables, and action items, and will maintain the closing index of all executed documents and filed materials.

D. Devon Archer — Working Associate

Billing Rate: $625 per hour

Estimated Total Hours (through closing): Approximately 820 hours

Estimated Total Fees: Approximately $512,500

Mr. Archer's estimated hours reflect the substantial volume of supporting drafting, specialized memoranda, and administrative tasks required to bring this matter to closing. The breakdown of his anticipated hours is as follows:

Hours Already Billed (through March 25, 2025): Approximately 669 hours. Mr. Archer's billed hours were incurred primarily in connection with supporting drafting on the verified complaint and TRO application, extensive document management and privilege review during expedited discovery, forensic vendor coordination with Pinnacle Forensics, preparation of the Verdana press release analysis memorandum and social media review, mediation preparation support (including damages analysis exhibits and chronology preparation), and ongoing document management and case file maintenance throughout the expedited phase of the litigation.

Estimated Remaining Hours (March 26 – closing): Approximately 151 hours, allocated as follows:

• RSU Forfeiture Calculation Memoranda: Approximately 30 hours. Mr. Archer will prepare detailed forfeiture calculation memoranda for Mr. Rathore and for each of the other seven departing employees, documenting the applicable equity grants, vesting schedules, and forfeiture amounts. For Mr. Rathore, the analysis is as follows: Mr. Rathore received a restricted stock unit grant of $725,000 dated March 15, 2021, subject to four-year ratable annual vesting at 25% per year. As of Mr. Rathore's resignation date, three of four annual vesting tranches had vested (75% = $543,750 vested; 25% = $181,250 unvested). The $181,250 in unvested RSUs is automatically forfeited upon resignation. In addition, pursuant to the for-cause clawback provision in CRH's Equity Incentive Plan (as triggered by the covenant breach), the final vested tranche of $181,250 is subject to clawback, resulting in a total forfeiture of $362,500. The aggregate forfeiture for the other seven employees totals $487,000. The combined total across all eight departing employees is $849,500. Mr. Archer will document each calculation with supporting references to the applicable grant agreements, the Equity Incentive Plan, and the settlement terms.

• Supporting Drafting — Settlement Agreement and Exhibits: Approximately 60 hours. Mr. Archer will assist Mr. Underwood with drafting and revision of the Standstill and Settlement Agreement and exhibits, including initial drafts of certain sections, conforming edits across drafts, cross-referencing and defined term consistency reviews, and preparation of schedules and attachments.

• Data Destruction Protocol Coordination and Pinnacle Forensics Liaison: Approximately 20 hours. Mr. Archer will serve as the primary liaison with Pinnacle Forensics (Dr. Rajiv Anand) for purposes of coordinating the data destruction protocol, including specifying the technical requirements for certified data destruction, the chain-of-custody documentation, and the certification forms to be used by both the Rathore Group and Verdana.

• Verdana Press Release Analysis Memorandum and Social Media Review: This work stream has already been completed and is reflected in Mr. Archer's billed hours through March 25, 2025.

• Letter to Northland Trust Company — RSU Cancellation Instructions: Approximately 5 hours. Mr. Archer will prepare and deliver written instructions to Northland Trust Company, CRH's transfer agent, directing the cancellation of the applicable restricted stock units in accordance with the forfeiture calculations and the terms of the settlement.

• Letter to Broadview Surety Corp. — Bond Discharge: Approximately 3 hours. Mr. Archer will prepare and deliver a letter to Broadview Surety Corp. requesting the discharge and release of the $2,500,000 injunction bond (Bond No. BSC-2025-TRO-04419) following the dissolution of the TRO and entry of the Consent Order.

• Information-Sharing Letter Agreement: Approximately 10 hours. Mr. Archer will draft the three-party information-sharing letter agreement among CRH, Verdana, and Aldwyn Compliance Solutions LLC, which will govern the exchange of information during the 12-month compliance monitoring period, including confidentiality protections, permitted uses, and data handling procedures.

• Document Management, Closing Index, and Signature Page Tracker: Approximately 15 hours. Mr. Archer will maintain the comprehensive document management system for the engagement, prepare the closing index, and manage the signature page tracker to ensure that all required signatures are collected in a timely manner across multiple counterparties.

• Matter Closing Memorandum: Approximately 8 hours. Following the execution of the settlement agreement and the entry of the Consent Order, Mr. Archer will prepare the matter closing memorandum summarizing the engagement, the key milestones, the final disposition, and the document index for Calderwood & Harkness's files.

E. Total Estimated Professional Fees

The following table summarizes the estimated professional fees across all timekeepers:

All fee estimates are inclusive of hours billed through March 25, 2025, and estimated remaining hours through closing. Hourly rates are consistent with the rate schedule set forth in the engagement letter dated February 18, 2025.

V. Revised Expense Estimate

In addition to professional fees, this engagement has generated and will continue to generate out-of-pocket expenses for third-party vendors, filing fees, travel, and other costs. Set forth below is the revised estimate of total expenses for the engagement through closing.

Total Estimated Expenses: Approximately $308,600

The breakdown by expense category is as follows:

1. Pinnacle Forensics LLC (Dr. Rajiv Anand) — Approximately $145,000. This amount represents the engagement fees for Pinnacle Forensics' work on behalf of CRH, including forensic imaging and analysis of CRH-issued devices, cloud access log review, preparation of the preliminary forensic report (delivered March 16, 2025), and preparation of the expert declaration in support of the preliminary injunction motion. This estimate includes all work performed to date and anticipated remaining work through closing, including any supplemental analysis that may be required in connection with the settlement documentation. This amount is separate from, and does not include, the $175,000 cap for the post-settlement independent forensic audit of Verdana's systems, which is to be borne entirely by Verdana pursuant to the settlement terms.

2. Aurelian Investigations Group Inc. (Sandra Fielding) — Approximately $62,000. Aurelian Investigations was engaged at the outset of the matter to investigate the circumstances of the coordinated departure of the Rathore Group, including pre-resignation communications among the departing employees, the recruitment timeline, and the role of Verdana in orchestrating the departures. Among other things, Aurelian's investigation uncovered the January 6, 2025 dinner meeting among Jennifer Dietrich (Verdana's Chief Strategy Officer), Heather Westbrook (Verdana's VP of Talent Acquisition), and Anil Rathore at a restaurant in New York City, which proved to be a pivotal piece of evidence establishing Verdana's active recruitment of Mr. Rathore and the timing of the coordinated departure. This estimate includes all investigation fees through closing.

3. Veltrano Consulting Group LLC (Dr. Franklin Oberg) — Approximately $48,000. Veltrano Consulting was engaged as CRH's economic damages expert to prepare a preliminary damages analysis and expert declaration quantifying the damages arising from the trade secret misappropriation and restrictive covenant breaches. Although the settlement obviates the need for a full damages report and trial testimony, Dr. Oberg's preliminary analysis was instrumental in establishing CRH's damages position during the mediation. This estimate includes all fees through the completion of Dr. Oberg's engagement.

4. Court Filing Fees, Service of Process, and Related Costs — Approximately $8,500. This includes filing fees for the verified complaint, the TRO application, the preliminary injunction motion, and all anticipated remaining filings (Consent Order, motion to dissolve TRO, stipulation for dismissal with prejudice), as well as costs of service of process on all defendants.

5. Travel Expenses — Approximately $18,000. This includes travel expenses (airfare, ground transportation, lodging, and meals) for attorneys traveling between Calderwood & Harkness's Washington, DC and Los Angeles offices and Wilmington, Delaware, for court appearances before Vice Chancellor Zhao, the mediation session at Meridian ADR Services in Washington, DC, and anticipated in-person settlement meetings during the documentation period.

6. Broadview Surety Corp. Bond Premium — Approximately $12,500. This represents the premium paid for the $2,500,000 injunction bond (Bond No. BSC-2025-TRO-04419) posted as a condition of the TRO. The premium is non-refundable and will be recognized as a cost of the engagement regardless of the bond's subsequent discharge.

7. Meridian ADR Services LLC — Approximately $7,600. This represents CRH's share of the mediation fees for the March 18, 2025 mediation session before Mediator Ashford (Ref. Meridian-2025-0318-CRH). Pursuant to the mediation agreement, mediation fees were split equally among the three participating parties (CRH, the Rathore Group, and Verdana).

8. Copying, Document Production, and Technology Costs — Approximately $5,000. This includes costs for large-volume document reproduction, electronic document production and hosting, and litigation technology expenses incurred in connection with the expedited discovery phase.

9. Miscellaneous (Courier, Telecommunications, Postage) — Approximately $2,000. This includes routine costs for overnight courier deliveries, long-distance telecommunications, and postage throughout the engagement.

VI. Total Revised Estimate Summary

The following table summarizes the revised total estimated fees and expenses for the engagement through closing:

The aggregate figure of approximately $1,850,000 reflects rounding across all categories and is presented as an estimate, not a cap or fixed fee. The actual fees and expenses incurred may vary from this estimate based on a number of factors, including the complexity of the remaining settlement negotiations, the number of settlement agreement drafts required before execution, the extent of any disputes or open points that arise during the documentation period, and any unforeseen issues or complications that may emerge during closing. We will promptly advise CRH if we anticipate that actual fees and expenses will materially exceed this estimate.

VII. Comparison to Original Budget

The Original Budget Memorandum dated February 18, 2025, which was provided at the outset of the engagement, contemplated the full scope of contested litigation through trial in the Delaware Court of Chancery. The original projected scope of work included, in addition to the emergency TRO and preliminary injunction proceedings, full merits-phase discovery (including approximately 15 to 20 fact depositions, extensive document production, interrogatories, and requests for admission), retention and preparation of multiple expert witnesses (damages, forensic, and industry experts), pre-trial briefing and motions practice, trial preparation, a multi-day trial before Vice Chancellor Zhao, and post-trial proceedings. The original estimate was substantially higher than the revised estimate set forth herein, reflecting the significant additional professional hours and third-party costs associated with a full trial track.

The settlement framework reached on March 20, 2025, has materially reduced the projected scope of remaining work, resulting in estimated savings to CRH compared to the original full-litigation budget. The elimination of merits-phase discovery, expert report preparation, trial preparation, and the trial itself accounts for the most significant reduction in projected costs.

We further note that $425,000 of CRH's litigation costs will be reimbursed by Verdana pursuant to the settlement terms, effectively reducing CRH's net out-of-pocket fees and expenses to approximately $1,425,000. This reimbursement provision was negotiated by Mr. Crawford as part of the settlement framework and represents a meaningful offset to CRH's total litigation expenditure.

VIII. Offsetting Recovery — Fee Reimbursement Under Settlement

Pursuant to the settlement framework agreed upon on March 20, 2025, Verdana Commerce Group, Inc. will reimburse CRH the sum of $425,000 toward CRH's litigation costs incurred in connection with this matter. This reimbursement will be paid by Verdana as a component of the settlement at closing and is in addition to the other elements of the settlement consideration.

For purposes of evaluating the net cost of this engagement to CRH, it is useful to consider the full economic recovery the settlement is expected to deliver:

The equity forfeiture component of $849,500 consists of $362,500 attributable to Mr. Rathore (comprising $181,250 in unvested RSUs automatically forfeited upon resignation and $181,250 in clawback of the final vested tranche pursuant to the for-cause clawback provision triggered by covenant breach) and $487,000 in aggregate forfeitures attributable to the other seven departing employees.

After accounting for the $425,000 litigation cost reimbursement from Verdana, CRH's estimated net out-of-pocket cost for this engagement is:

Estimated total fees and expenses: ~$1,850,000 Less: Verdana litigation cost reimbursement: ($425,000) Estimated net cost to CRH: ~$1,425,000

Viewed against the total economic recovery of $10,024,500, the net cost of the engagement represents approximately 14.2% of the total recovery — a favorable ratio that reflects the efficiency achieved through the early settlement resolution.

IX. Budget Assumptions and Caveats

This revised fee estimate is based on the following assumptions. If any of these assumptions prove to be incorrect, the actual fees and expenses may differ from the estimates set forth herein, and we will promptly advise CRH of any material changes.

1. Settlement Documentation Timeline. The estimate assumes that the settlement documentation is completed within the March 24 – April 11, 2025 documentation period agreed upon by the parties, and that execution of the Standstill and Settlement Agreement occurs on or about April 14, 2025. Any material delay in the documentation timeline, whether due to counterparty responsiveness, open-point disputes, or other factors, could result in additional hours.

2. No Material Re-Negotiation. The estimate assumes no material re-negotiation of the terms previously agreed upon in the settlement framework. If substantive disputes arise on open points — for example, disagreements regarding the non-compete category definitions, the data destruction protocol mechanics, the compliance monitor's scope of authority, or the indemnification provisions — additional hours may be required and the estimate may need to be revised upward.

3. Consent Order Entry. The estimate assumes that Vice Chancellor Zhao enters the Consent Order promptly upon filing, without requiring further briefing, supplemental submissions, or oral argument. If the Court raises questions or concerns about the Consent Order or requires modifications, additional work will be necessary.

4. Post-Closing Monitoring Phase. The estimate does not include any work associated with the post-closing monitoring phase beyond the initial setup of the Aldwyn Compliance Solutions LLC engagement and the drafting of the monitoring protocol and information-sharing letter agreement. Any compliance disputes, enforcement proceedings, or other issues that arise during the 12-month compliance monitoring period would require a separate engagement supplement or budget revision, which we would discuss with CRH at that time.

5. Compliance Monitor Costs. The estimate does not include CRH's 40% share ($144,000) of the total compliance monitor costs ($360,000 for the 12-month monitoring period). This amount is a direct client expense payable to Aldwyn Compliance Solutions LLC and is not a Calderwood & Harkness professional fee. Verdana is responsible for the remaining 60% ($216,000) of the monitor costs pursuant to the settlement terms.

6. SEC Filing Preparation. The estimate does not include costs associated with any SEC filing preparation beyond the draft 8-K Current Report language and the disclosure analysis memorandum that I will prepare. If CRH's regular securities counsel requires additional coordination from Calderwood & Harkness in connection with the actual filing of the 8-K or the preparation of 10-Q disclosure language, additional fees may be incurred.

7. No Appellate or Post-Judgment Proceedings. The estimate assumes that the settlement is fully consummated and that no party seeks to set aside, appeal, or challenge the Consent Order after entry. Any such proceedings would require a separate budget.

8. No Third-Party Claims. The estimate does not account for any third-party claims, subpoenas, or regulatory inquiries that may arise in connection with this matter. If any such matters develop, they would be addressed through a separate engagement.

X. Billing Arrangements

All fees and expenses for this engagement are billed in accordance with the terms of the engagement letter between Calderwood & Harkness LLP and Cascade Retail Holdings Inc. dated February 18, 2025. The key billing terms are as follows:

• Invoicing Frequency: Invoices are issued monthly in arrears. The invoice for services rendered and expenses incurred in a given month is delivered to CRH on or about the 10th business day of the following month.

• Payment Terms: Net 30 days from invoice date. Invoices not paid within 30 days are subject to a late payment charge as specified in the engagement letter.

• Expense Billing: Out-of-pocket expenses, including third-party vendor costs, filing fees, travel expenses, and other disbursements, are billed at cost with no markup, unless otherwise specified in the engagement letter.

• Rate Adjustments: The billing rates set forth in this memorandum are the rates currently in effect under the engagement letter. Any rate adjustments will be made in accordance with the terms of the engagement letter and will be communicated to CRH in advance.

Questions regarding this revised fee estimate, individual invoices, or any other billing matter should be directed to me at the contact information below or to Bernard Crawford at Calderwood & Harkness's Washington, DC office.

XI. Conclusion

We appreciate CRH's continued confidence in Calderwood & Harkness's representation in this matter. The settlement framework reached on March 20, 2025, represents an excellent result for the Company, and we look forward to completing the documentation and closing process efficiently and within the revised budget framework set forth herein. We remain available at all times to discuss any aspect of this memorandum or the engagement with you, Mr. Langford, Mr. Ashby, or any other member of the CRH team.

Please do not hesitate to contact us with any questions.

Respectfully submitted,

CALDERWOOD & HARKNESS LLP

By: ________

Renata Vasquez Partner, Labor & Employment 601 South Figueroa Street, Suite 4200 Los Angeles, California 90017 Telephone: (213) 555-4200

Email: rvasquez@calderwoodharkness.com

cc: Bernard Crawford, Partner, Calderwood & Harkness LLP

1301 K Street NW, Suite 1200 Washington, DC 20005 Telephone: (202) 555-7800

Email: bcrawford@calderwoodharkness.com

ATTORNEY-CLIENT PRIVILEGED / ATTORNEY WORK PRODUCT This memorandum is a privileged and confidential communication protected by the attorney-client privilege and the work product doctrine. It is intended solely for the use of the addressee(s) and should not be disclosed to any third party without the prior written consent of Calderwood & Harkness LLP. Any inadvertent disclosure does not constitute a waiver of any privilege or protection.

Timekeeper	Role	Rate ($/hr)	Est. Total Hours	Est. Total Fees
Bernard Crawford	Responsible Partner	$1,350	~220	~$297,000
Renata Vasquez	Billing Partner	$1,275	~180	~$229,500
James Underwood	Lead Associate	$785	~640	~$502,400
Devon Archer	Working Associate	$625	~820	~$512,500
Totals	~1,860	~$1,541,400
Category	Estimated Amount
Professional Fees (all timekeepers)	~$1,541,400
Expenses (all categories)	~$308,600
Total Estimated Fees and Expenses	~$1,850,000
Component	Amount
Lump-sum cash settlement payment (Verdana)	$8,750,000
Aggregate equity forfeitures (Rathore Group)	$849,500
Litigation cost reimbursement (Verdana)	$425,000
Total Economic Recovery to CRH	$10,024,500

ATTORNEY-CLIENT PRIVILEGED / ATTORNEY WORK PRODUCT THIS MEMORANDUM IS A PRIVILEGED AND CONFIDENTIAL COMMUNICATION PROTECTED BY THE ATTORNEY-CLIENT PRIVILEGE AND THE WORK PRODUCT DOCTRINE. IT IS INTENDED SOLELY FOR THE USE OF THE ADDRESSEE AND SHOULD NOT BE DISCLOSED TO ANY THIRD PARTY WITHOUT THE PRIOR WRITTEN CONSENT OF CALDERWOOD & HARKNESS LLP.
CALDERWOOD & HARKNESS LLP 601 South Figueroa Street, Suite 4200 Los Angeles, California 90017
MEMORANDUM
TO: Theresa Yun-Park, General Counsel, Cascade Retail Holdings Inc., 2200 Elliott Avenue West, Suite 3400, Seattle, WA 98119
FROM: Renata Vasquez, Partner, Calderwood & Harkness LLP (Los Angeles Office)
DATE: March 25, 2025
RE: Revised Fee Estimate — Matter No. 1038-00006; Cascade Retail Holdings Inc. v. Rathore et al., C.A. No. 2025-0198-MTZ (Del. Ch.)
CC: Bernard Crawford, Responsible Partner, Calderwood & Harkness LLP (Washington, DC Office)
I. Purpose and Executive Summary
The purpose of this memorandum is to provide Cascade Retail Holdings Inc. ("CRH" or the "Company") with an updated fee and expense estimate for the above-referenced engagement. This revised estimate has been prepared in light of the settlement framework agreement reached on March 20, 2025, following the mediation session conducted on March 18, 2025, before the Honorable Philip Ashford (Ret.), through Meridian ADR Services LLC ("Meridian") at Meridian's Washington, DC offices.
This revised estimate replaces in its entirety the preliminary budget set forth in the Staffing and Budget Memorandum dated February 18, 2025 (the "Original Budget Memorandum"), which was prepared at the outset of the engagement and contemplated full-scale contested litigation through trial in the Delaware Court of Chancery. As discussed in greater detail in Section VII below, the settlement framework reached on March 20, 2025, has materially reduced the projected scope of remaining work, resulting in significant estimated savings to CRH as compared to the Original Budget Memorandum.
The revised total estimated fees and expenses for the engagement through closing are approximately $1,850,000. This figure encompasses all professional fees and out-of-pocket expenses anticipated through the execution, filing, and closing of the settlement, and reflects the shift in posture from contested litigation to settlement documentation, consent order preparation, closing, and post-closing monitoring setup. We note, importantly, that $425,000 of CRH's litigation costs will be reimbursed by Verdana Commerce Group, Inc. ("Verdana") pursuant to the settlement terms, effectively reducing CRH's estimated net out-of-pocket cost to approximately $1,425,000.
To summarize what has been accomplished to date and what remains: Calderwood & Harkness has successfully secured a temporary restraining order, conducted expedited discovery that confirmed the exfiltration of proprietary data, navigated opposition briefing from two defense firms, and guided the matter through mediation to a settlement framework that delivers CRH a total economic recovery of approximately $10,024,500 (inclusive of the lump-sum cash settlement, equity forfeitures, and litigation cost reimbursement). The remaining work consists principally of drafting, negotiating, and finalizing the Standstill and Settlement Agreement and its accompanying exhibits; preparing the consent order and related court filings; coordinating the dissolution of the TRO and release of the injunction bond; managing equity forfeiture mechanics with CRH's transfer agent; preparing board and audit committee reporting materials; analyzing SEC disclosure obligations; issuing lender notification under the Company's revolving credit facility; and completing matter closing administration.
The sections that follow provide the detailed basis for this revised estimate, including a full staffing plan, timekeeper-level fee projections, expense line items, a comparison to the Original Budget, and a discussion of key assumptions and caveats.
II. Background and Change in Scope
A. Original Engagement Scope
Calderwood & Harkness LLP was retained by CRH on February 18, 2025, to represent the Company in connection with the coordinated departure of eight senior employees from CRH's digital commerce and supply chain analytics divisions (collectively, the "Rathore Group," led by Anil Rathore, former Senior Vice President of Digital Commerce Strategy) and their immediate subsequent affiliation with Verdana Commerce Group, Inc., a direct competitor. The original engagement encompassed claims for enforcement of restrictive covenants (including non-competition, non-solicitation, and confidentiality agreements), trade secret misappropriation under the Delaware Uniform Trade Secrets Act and the federal Defend Trade Secrets Act, tortious interference with contractual relations, unfair competition, and related claims against both the individual defendants and Verdana.
As set forth in the Original Budget Memorandum, the anticipated scope of work at the outset of the engagement included:
(a) Emergency temporary restraining order and preliminary injunction proceedings in the Delaware Court of Chancery;
(b) Expedited discovery, including forensic imaging and analysis of CRH-issued devices, cloud access log review, and document production;
(c) A contested preliminary injunction hearing before Vice Chancellor Margaret T. Zhao;
(d) Full merits-phase litigation, including extensive fact and expert discovery (depositions, interrogatories, document requests, and expert reports), pre-trial briefing, and preparation for and conduct of trial in the Delaware Court of Chancery; and
(e) Post-trial proceedings, as necessary, including potential enforcement of any permanent injunctive relief.
The Original Budget Memorandum estimated that full litigation through trial would require a substantially larger professional fee commitment, reflecting the anticipated length and complexity of a multi-defendant trade secret and restrictive covenant enforcement action in Chancery Court.
B. Key Developments Reducing Projected Scope
Since the commencement of the engagement, several key developments have materially altered the trajectory of this matter and significantly reduced the projected scope of remaining work:
1. TRO Granted (March 7, 2025). Vice Chancellor Margaret T. Zhao granted CRH's application for a temporary restraining order on March 7, 2025, following an ex parte hearing at which Bernard Crawford presented oral argument. The TRO enjoined all eight members of the Rathore Group from (i) performing any services for Verdana in any capacity related to digital commerce strategy, supply chain analytics, or vendor management optimization; (ii) using, disclosing, or transmitting any CRH confidential information or trade secrets; and (iii) soliciting any CRH employees, customers, or vendors. As a condition of the TRO, CRH posted a $2,500,000 injunction bond through Broadview Surety Corp. (Bond No. BSC-2025-TRO-04419).
2. Expedited discovery (March 12–18, 2025). Pursuant to the Court's scheduling order entered on March 10, 2025, the parties conducted expedited discovery between March 12 and March 18, 2025. CRH served document requests on all defendants and received production from both the Rathore Group (through Whitfield, Nygaard & Doyle LLP) and Verdana (through Blackhall & Soren LLP). Most significantly, CRH retained Pinnacle Forensics LLC, under the direction of Dr. Rajiv Anand, to conduct a forensic analysis of CRH-issued devices and cloud access logs. Dr. Anand's preliminary forensic report, delivered on March 16, 2025, confirmed the exfiltration of 14,327 files comprising approximately 2.8 gigabytes of data, including proprietary vendor pricing algorithms, supply chain optimization models, customer segmentation analyses, and confidential strategic planning documents. This forensic evidence substantially strengthened CRH's position in subsequent proceedings.
3. Opposition to Preliminary Injunction (March 15, 2025). On March 15, 2025, Whitfield, Nygaard & Doyle LLP ("WND"), on behalf of the Rathore Group, and Blackhall & Soren LLP ("B&S"), on behalf of Verdana, each filed opposition briefs to CRH's motion for a preliminary injunction. While the oppositions raised arguments regarding the reasonableness of the scope and duration of the restrictive covenants and challenged the trade secret designation of certain categories of documents, the strength of the forensic evidence and the Court's prior grant of the TRO placed defendants in a difficult posture heading into the preliminary injunction hearing.
4. Mediation and Settlement Framework (March 18–20, 2025). On March 18, 2025, all parties participated in a full-day mediation session before the Honorable Philip Ashford (Ret.) at Meridian ADR Services LLC's Washington, DC facility. The mediation was productive, and although the parties did not reach a final resolution on that date, substantial progress was made on all key terms. Following two additional days of shuttle negotiations facilitated by Mediator Ashford's office, the parties reached a settlement framework agreement on March 20, 2025. The framework contemplates a comprehensive resolution including an $8,750,000 lump-sum cash payment from Verdana, aggregate equity forfeitures of $849,500 from the Rathore Group, reimbursement of $425,000 of CRH's litigation costs, modified restrictive covenant terms, a data return and destruction protocol, and a 12-month compliance monitoring arrangement.
5. Adjournment of PI Hearing and Consent Interim Order (March 21, 2025). On March 21, 2025, pursuant to a joint stipulation filed by all parties, Vice Chancellor Zhao adjourned the preliminary injunction hearing and entered a Consent Interim Order maintaining the status quo during the settlement documentation period. The Consent Interim Order provides that the TRO shall remain in effect pending the entry of a Consent Order incorporating the settlement terms or further order of the Court.
C. Remaining Scope of Work
As a result of the foregoing developments, the remaining scope of work has narrowed from full-scale contested litigation to the following categories of work through closing:
(a) Settlement Documentation: Drafting, negotiating, and finalizing the Standstill and Settlement Agreement and five exhibits thereto, including modified restrictive covenant terms (Exhibit A), a data return and destruction protocol (Exhibit B), a list of CRH's top 50 vendors (Exhibit C), a compliance monitor engagement letter form (Exhibit D), and mutual non-disparagement provisions (Exhibit E);
(b) Consent Order Preparation and Filing: Drafting and filing the Consent Order with the Delaware Court of Chancery for entry by Vice Chancellor Zhao, incorporating the agreed-upon injunctive terms and other provisions of the settlement;
(c) TRO Dissolution and Bond Release: Preparing and filing the motion to dissolve the TRO upon entry of the Consent Order and coordinating the release and discharge of the $2,500,000 injunction bond (Bond No. BSC-2025-TRO-04419) with Broadview Surety Corp.;
(d) Equity Forfeiture Coordination: Preparing RSU forfeiture calculation memoranda for Mr. Rathore and the other seven departing employees, and coordinating with Northland Trust Company, CRH's transfer agent, to process the cancellation of applicable restricted stock units;
(e) Board and Audit Committee Reporting: Preparing a settlement summary memorandum for CRH's Board of Directors and a separate reporting package for Dr. Lorraine Stahl, Chair of the Audit Committee;
(f) SEC Disclosure Analysis: Analyzing the materiality of the settlement for purposes of current report filing under Form 8-K and periodic report disclosure under Form 10-Q, and drafting proposed 8-K Current Report language;
(g) Lender Notification: Preparing and delivering written notification to Keypoint National Bank, N.A., as administrative agent under CRH's $750 million revolving credit facility, as required by Section 6.02(c) thereof;
(h) Compliance Monitor Setup: Evaluating and engaging Aldwyn Compliance Solutions LLC as the independent compliance monitor, and drafting the compliance monitoring protocol and information-sharing letter agreement among CRH, Verdana, and Aldwyn;
(i) Forensic Vendor Coordination: Coordinating with Pinnacle Forensics LLC (Dr. Rajiv Anand) regarding the post-settlement independent forensic audit of Verdana's systems;
(j) Matter Closing Administration: Preparing the closing checklist, closing index, signature page tracker, matter closing memorandum, stipulation for dismissal with prejudice, and all other administrative closing tasks.
The settlement documentation period runs from March 24 through April 11, 2025, with a target execution date of April 14, 2025. We anticipate that all court filings, bond release, and closing administration will be completed by approximately April 25, 2025.
III. Staffing Plan
The engagement team remains unchanged from the original staffing plan set forth in the Original Budget Memorandum dated February 18, 2025. The team is composed of two partners and two associates, as follows:
Bernard Crawford — Responsible Partner, Labor & Employment (Washington, DC Office). Mr. Crawford serves as the responsible partner for this engagement and has primary responsibility for senior strategic oversight, key negotiations with opposing counsel (Catherine Nygaard of WND and Gavin Blackhall of B&S), court communications and correspondence with Vice Chancellor Zhao's chambers, client reporting to CRH's General Counsel and senior leadership, and communications with the Board of Directors and Audit Committee. Mr. Crawford led the TRO application, conducted oral argument at the March 7, 2025 hearing, and served as CRH's lead representative at the March 18, 2025 mediation. He will continue to lead the settlement negotiations through execution and closing.
Renata Vasquez — Billing Partner, Labor & Employment (Los Angeles Office). I serve as the billing partner for this engagement, with responsibility for budget management, fee estimate preparation, billing coordination, and client financial reporting. In addition to these administrative functions, I have assumed primary responsibility for the SEC disclosure analysis work stream, including the 8-K / 10-Q materiality analysis and draft 8-K Current Report language, as well as the Compensation Committee letter regarding equity clawback and forfeiture calculations and the lender notification to Keypoint National Bank. I also review settlement agreement drafts to ensure consistency between the commercial terms and the Company's disclosure and reporting obligations.
James Underwood — Lead Associate, Labor & Employment (Washington, DC Office). Mr. Underwood serves as the lead associate on this engagement and is the primary drafter of the settlement documentation, consent order, and all court filings. He has assumed responsibility for the legal research memoranda (including the analysis of Delaware law regarding court-approved consent orders incorporating restrictive covenant provisions), the compliance monitor evaluation, and day-to-day correspondence with opposing counsel. Mr. Underwood drafted the TRO application, the supporting declarations, and the preliminary injunction brief, and he has been the primary point of contact with WND (Catherine Nygaard and her associate, Robert Beaumont) and B&S (Justin Lau) throughout the expedited discovery phase.
Devon Archer — Working Associate, Labor & Employment (Washington, DC Office). Mr. Archer serves as the working associate on this engagement, supporting Mr. Underwood on all drafting tasks and handling a range of specialized and administrative work streams. Mr. Archer has primary responsibility for the RSU forfeiture calculation memoranda, the data destruction protocol coordination, forensic vendor liaison with Pinnacle Forensics (Dr. Rajiv Anand), correspondence with Northland Trust Company (the Company's transfer agent) and Broadview Surety Corp. (the bond surety), closing checklist and index preparation, document management, and the matter closing memorandum. Mr. Archer also prepared the Verdana press release analysis memorandum and social media review at the outset of the engagement.
No additional timekeepers are anticipated for the remainder of this engagement. If unforeseen issues arise during the settlement documentation period that require specialized expertise (for example, complex tax analysis of the equity forfeiture structure), we will consult with CRH before adding any personnel.
IV. Revised Fee Estimate — By Timekeeper
Set forth below is the revised fee estimate for each timekeeper, including a detailed breakdown of anticipated remaining hours by task category and the hours already billed through March 25, 2025. All hour estimates are approximations and may vary depending on the complexity and duration of remaining negotiations.
A. Bernard Crawford — Responsible Partner
Billing Rate: $1,350 per hour
Estimated Total Hours (through closing): Approximately 220 hours
Estimated Total Fees: Approximately $297,000
Mr. Crawford's estimated hours reflect his continued leadership role in the settlement negotiations and his oversight of all work streams through closing. The breakdown of his anticipated hours is as follows:
Hours Already Billed (through March 25, 2025): Approximately 75 hours. These hours were incurred primarily in connection with the TRO application (including drafting supervision, oral argument preparation, and the March 7, 2025 hearing before Vice Chancellor Zhao), the expedited discovery strategy, the preliminary injunction briefing, the mediation before Mediator Ashford on March 18, 2025, and the post-mediation settlement framework negotiations through March 20, 2025. Mr. Crawford's billed hours also include initial client strategy sessions with Ms. Yun-Park and senior CRH leadership.
Estimated Remaining Hours (March 26 – closing): Approximately 145 hours, allocated as follows:
• Settlement Negotiations and Open-Point Resolution: Approximately 40 hours. Mr. Crawford will lead the negotiation of remaining open points in the settlement documentation with Catherine Nygaard (WND), who represents the Rathore Group, and Gavin Blackhall (B&S), who represents Verdana. Open points currently include the precise scope of the modified non-compete geographic and industry category definitions, the mechanics and timing of the data destruction certification process, the selection and compensation structure for the compliance monitor, and certain indemnification provisions. Mr. Crawford will participate in negotiation calls and in-person sessions as necessary.
• Review and Revision of Standstill and Settlement Agreement Drafts: Approximately 35 hours. We anticipate approximately four drafts of the Standstill and Settlement Agreement before the execution version (initial draft, first counterparty markup, revised draft incorporating comments, and near-final/execution draft). Mr. Crawford will review each draft in detail and provide substantive comments and redline edits, with particular focus on the injunctive relief provisions, the compliance monitor framework, and the representations and warranties.
• Client Communications and Strategy Sessions: Approximately 25 hours. Mr. Crawford will continue to provide regular updates and strategic guidance to Ms. Yun-Park (General Counsel), Marcus Langford (Chief Executive Officer), and Roland Ashby (Chief People Officer). This includes scheduled weekly status calls, ad hoc consultations as issues arise during the documentation process, and preparation for and attendance at any internal CRH meetings regarding the settlement.
• Board Memorandum and Audit Committee Reporting: Approximately 15 hours. Mr. Crawford will prepare the settlement summary memorandum for CRH's Board of Directors and coordinate with Dr. Lorraine Stahl, Chair of the Audit Committee, regarding the audit committee reporting requirements. This includes preparation of the board memorandum, the audit committee supplement, and any follow-up communications.
• Court Communications: Approximately 10 hours. Mr. Crawford will prepare and submit correspondence to Vice Chancellor Zhao's chambers regarding the status of settlement documentation, and will oversee the filing of the Consent Order, the stipulation for dismissal with prejudice, and any other court filings required to close the case.
• Supervision of Associate Work Product: Approximately 20 hours. Mr. Crawford will review and provide feedback on all significant work product prepared by Mr. Underwood and Mr. Archer, including the settlement agreement and exhibits, consent order, research memoranda, RSU forfeiture memoranda, and board reporting materials.
B. Renata Vasquez — Billing Partner
Billing Rate: $1,275 per hour
Estimated Total Hours (through closing): Approximately 180 hours
Estimated Total Fees: Approximately $229,500
My estimated hours reflect both the administrative billing and budget management functions of the billing partner role and the substantive work streams I have undertaken in connection with SEC disclosure analysis, compensation committee coordination, and lender notification. The breakdown of my anticipated hours is as follows:
Hours Already Billed (through March 25, 2025): Approximately 105 hours. These hours were incurred primarily in connection with the preparation of the original engagement letter and staffing and budget memorandum, initial SEC disclosure analysis, billing coordination during the expedited litigation phase, review of the TRO application and preliminary injunction brief, participation in key client calls, and the mediation preparation and session.
Estimated Remaining Hours (March 26 – closing): Approximately 75 hours, allocated as follows:
• Budget Management and Fee Estimate Revisions: Approximately 10 hours. This includes the preparation of this revised fee estimate memorandum, ongoing budget monitoring through closing, and any further revisions that may be required if the scope of remaining work changes materially.
• SEC Disclosure Analysis: Approximately 25 hours. I will complete the materiality analysis regarding the settlement for purposes of CRH's current report filing obligations under Form 8-K and periodic report disclosure under Form 10-Q. The analysis will address whether the settlement constitutes a "material definitive agreement" or other reportable event requiring disclosure under Item 1.01 or Item 8.01 of Form 8-K, evaluated against CRH's $6.82 billion in annual revenue and approximately $4.1 billion market capitalization. I will also assess the implications for the Company's upcoming quarterly report on Form 10-Q for the fiscal quarter ending March 31, 2025.
• Draft 8-K Current Report Language: Approximately 10 hours. Based on the outcome of the materiality analysis, I will prepare draft language for a Form 8-K Current Report disclosing the material terms of the settlement. This draft will be provided to CRH's regular securities counsel for review and coordination with the Company's SEC filing process.
• Compensation Committee Letter: Approximately 10 hours. I will prepare a letter to the Compensation Committee of CRH's Board of Directors summarizing the equity clawback and forfeiture provisions of the settlement. This letter will detail the calculation of Mr. Rathore's $362,500 total forfeiture and the aggregate $487,000 in forfeitures applicable to the other seven departing employees, for a combined total of $849,500 in equity forfeitures, and will address the Compensation Committee's oversight responsibilities with respect to the clawback provisions triggered by the covenant breaches.
• Lender Notification to Keypoint National Bank: Approximately 5 hours. I will prepare written notification to Keypoint National Bank, N.A., as administrative agent under the Company's $750 million revolving credit facility, as required by Section 6.02(c) thereof. Section 6.02(c) requires prompt written notice of "any litigation, investigation, or proceeding" that could reasonably be expected to result in a material adverse effect, and we will provide notice of the settlement resolution as well.
• Review of Settlement Agreement Drafts: Approximately 15 hours. I will review each draft of the Standstill and Settlement Agreement with a focus on consistency between the commercial terms and CRH's public disclosure and regulatory obligations, including the financial terms, representations regarding materiality, and any confidentiality provisions that may affect the Company's ability to disclose the settlement terms in SEC filings.
C. James Underwood — Lead Associate
Billing Rate: $785 per hour
Estimated Total Hours (through closing): Approximately 640 hours
Estimated Total Fees: Approximately $502,400
Mr. Underwood's estimated hours reflect his role as the primary drafter for all settlement documentation, court filings, and related work product. As the lead associate, he carries the heaviest drafting burden and the most extensive daily interaction with opposing counsel. The breakdown of his anticipated hours is as follows:
Hours Already Billed (through March 25, 2025): Approximately 365 hours. Mr. Underwood's billed hours were incurred primarily in connection with drafting the verified complaint, the TRO application and supporting declarations, the expedited discovery plan and document requests, the preliminary injunction brief and supporting exhibits, the forensic analysis coordination with Pinnacle Forensics, and the mediation preparation (including the mediation statement and supporting materials). Mr. Underwood also handled the substantial volume of day-to-day correspondence with opposing counsel during the expedited discovery period.
Estimated Remaining Hours (March 26 – closing): Approximately 275 hours, allocated as follows:
• Primary Drafting — Standstill and Settlement Agreement and Exhibits: Approximately 120 hours. This represents the single largest block of remaining work. Mr. Underwood will prepare the initial draft of the Standstill and Settlement Agreement and will serve as the primary drafter through all subsequent revisions, including the counterparty markup response, the revised draft, and the execution version. The Agreement is expected to run approximately 40 to 50 pages exclusive of exhibits. Mr. Underwood will also draft the five exhibits: Exhibit A (Modified Restrictive Covenant Terms, incorporating the revised non-compete scope, duration, and geographic limitations agreed upon during the mediation); Exhibit B (Data Return and Destruction Protocol, specifying the procedures for the return and certified destruction of all CRH confidential information and trade secrets in the possession of the Rathore Group and Verdana); Exhibit C (Top 50 CRH Vendors List, identifying the CRH vendor relationships subject to the non-solicitation provisions); Exhibit D (Compliance Monitor Engagement Letter Form, establishing the terms of engagement for Aldwyn Compliance Solutions LLC as independent compliance monitor); and Exhibit E (Mutual Non-Disparagement Provisions, governing public statements by both parties regarding the dispute and its resolution).
• Consent Order and Court Filings: Approximately 40 hours. Mr. Underwood will draft the proposed Consent Order for submission to Vice Chancellor Zhao, which will incorporate the agreed-upon injunctive terms. He will also draft the motion to dissolve the TRO upon entry of the Consent Order, the stipulation for dismissal with prejudice (to be filed following execution of the settlement agreement and entry of the Consent Order), and any accompanying cover letters or transmittal documents required by the Court.
• Research Memorandum — Delaware Law on Consent Orders: Approximately 25 hours. Mr. Underwood will prepare a research memorandum analyzing the requirements and standards under Delaware law for court-approved consent orders that incorporate restrictive covenant provisions, including the Court of Chancery's approach to enforceability, modification, and subsequent enforcement of such orders. This memorandum will inform the drafting of the Consent Order and ensure that the settlement terms are structured to maximize enforceability.
• Compliance Monitor Evaluation and Monitoring Protocol: Approximately 30 hours. Mr. Underwood will lead the evaluation of Aldwyn Compliance Solutions LLC as the proposed independent compliance monitor, including review of Aldwyn's qualifications, conflicts check, and proposed scope of work. He will also draft the monitoring protocol that will govern Aldwyn's activities during the 12-month monitoring period, including reporting schedules, access rights, and dispute resolution procedures.
• Correspondence with Opposing Counsel: Approximately 25 hours. Mr. Underwood will continue to manage the day-to-day correspondence with Catherine Nygaard and Robert Beaumont at WND and Justin Lau at B&S regarding the settlement documentation process. This includes correspondence on data destruction protocol mechanics, non-compete scope definitions, forensic audit mechanics, settlement agreement comments, and scheduling matters.
• Board Settlement Summary Memorandum: Approximately 15 hours. Under Mr. Crawford's supervision, Mr. Underwood will prepare the initial draft of the settlement summary memorandum for CRH's Board of Directors, summarizing the terms of the settlement, the litigation history, the strategic rationale for the settlement, and the projected economic recovery to the Company.
• Coordination with Pinnacle Forensics: Approximately 10 hours. Mr. Underwood will coordinate with Dr. Rajiv Anand of Pinnacle Forensics regarding the scope, timing, and logistics of the post-settlement independent forensic audit of Verdana's systems. Pursuant to the settlement terms, Verdana will bear the cost of this audit (capped at $175,000), and Mr. Underwood will ensure that the audit scope and protocol are consistent with the Data Return and Destruction Protocol.
• Closing Checklist and Index Preparation: Approximately 10 hours. Mr. Underwood will prepare the master closing checklist identifying all conditions to closing, deliverables, and action items, and will maintain the closing index of all executed documents and filed materials.
D. Devon Archer — Working Associate
Billing Rate: $625 per hour
Estimated Total Hours (through closing): Approximately 820 hours
Estimated Total Fees: Approximately $512,500
Mr. Archer's estimated hours reflect the substantial volume of supporting drafting, specialized memoranda, and administrative tasks required to bring this matter to closing. The breakdown of his anticipated hours is as follows:
Hours Already Billed (through March 25, 2025): Approximately 669 hours. Mr. Archer's billed hours were incurred primarily in connection with supporting drafting on the verified complaint and TRO application, extensive document management and privilege review during expedited discovery, forensic vendor coordination with Pinnacle Forensics, preparation of the Verdana press release analysis memorandum and social media review, mediation preparation support (including damages analysis exhibits and chronology preparation), and ongoing document management and case file maintenance throughout the expedited phase of the litigation.
Estimated Remaining Hours (March 26 – closing): Approximately 151 hours, allocated as follows:
• RSU Forfeiture Calculation Memoranda: Approximately 30 hours. Mr. Archer will prepare detailed forfeiture calculation memoranda for Mr. Rathore and for each of the other seven departing employees, documenting the applicable equity grants, vesting schedules, and forfeiture amounts. For Mr. Rathore, the analysis is as follows: Mr. Rathore received a restricted stock unit grant of $725,000 dated March 15, 2021, subject to four-year ratable annual vesting at 25% per year. As of Mr. Rathore's resignation date, three of four annual vesting tranches had vested (75% = $543,750 vested; 25% = $181,250 unvested). The $181,250 in unvested RSUs is automatically forfeited upon resignation. In addition, pursuant to the for-cause clawback provision in CRH's Equity Incentive Plan (as triggered by the covenant breach), the final vested tranche of $181,250 is subject to clawback, resulting in a total forfeiture of $362,500. The aggregate forfeiture for the other seven employees totals $487,000. The combined total across all eight departing employees is $849,500. Mr. Archer will document each calculation with supporting references to the applicable grant agreements, the Equity Incentive Plan, and the settlement terms.
• Supporting Drafting — Settlement Agreement and Exhibits: Approximately 60 hours. Mr. Archer will assist Mr. Underwood with drafting and revision of the Standstill and Settlement Agreement and exhibits, including initial drafts of certain sections, conforming edits across drafts, cross-referencing and defined term consistency reviews, and preparation of schedules and attachments.
• Data Destruction Protocol Coordination and Pinnacle Forensics Liaison: Approximately 20 hours. Mr. Archer will serve as the primary liaison with Pinnacle Forensics (Dr. Rajiv Anand) for purposes of coordinating the data destruction protocol, including specifying the technical requirements for certified data destruction, the chain-of-custody documentation, and the certification forms to be used by both the Rathore Group and Verdana.
• Verdana Press Release Analysis Memorandum and Social Media Review: This work stream has already been completed and is reflected in Mr. Archer's billed hours through March 25, 2025.
• Letter to Northland Trust Company — RSU Cancellation Instructions: Approximately 5 hours. Mr. Archer will prepare and deliver written instructions to Northland Trust Company, CRH's transfer agent, directing the cancellation of the applicable restricted stock units in accordance with the forfeiture calculations and the terms of the settlement.
• Letter to Broadview Surety Corp. — Bond Discharge: Approximately 3 hours. Mr. Archer will prepare and deliver a letter to Broadview Surety Corp. requesting the discharge and release of the $2,500,000 injunction bond (Bond No. BSC-2025-TRO-04419) following the dissolution of the TRO and entry of the Consent Order.
• Information-Sharing Letter Agreement: Approximately 10 hours. Mr. Archer will draft the three-party information-sharing letter agreement among CRH, Verdana, and Aldwyn Compliance Solutions LLC, which will govern the exchange of information during the 12-month compliance monitoring period, including confidentiality protections, permitted uses, and data handling procedures.
• Document Management, Closing Index, and Signature Page Tracker: Approximately 15 hours. Mr. Archer will maintain the comprehensive document management system for the engagement, prepare the closing index, and manage the signature page tracker to ensure that all required signatures are collected in a timely manner across multiple counterparties.
• Matter Closing Memorandum: Approximately 8 hours. Following the execution of the settlement agreement and the entry of the Consent Order, Mr. Archer will prepare the matter closing memorandum summarizing the engagement, the key milestones, the final disposition, and the document index for Calderwood & Harkness's files.
E. Total Estimated Professional Fees
The following table summarizes the estimated professional fees across all timekeepers:
All fee estimates are inclusive of hours billed through March 25, 2025, and estimated remaining hours through closing. Hourly rates are consistent with the rate schedule set forth in the engagement letter dated February 18, 2025.
V. Revised Expense Estimate
In addition to professional fees, this engagement has generated and will continue to generate out-of-pocket expenses for third-party vendors, filing fees, travel, and other costs. Set forth below is the revised estimate of total expenses for the engagement through closing.
Total Estimated Expenses: Approximately $308,600
The breakdown by expense category is as follows:
1. Pinnacle Forensics LLC (Dr. Rajiv Anand) — Approximately $145,000. This amount represents the engagement fees for Pinnacle Forensics' work on behalf of CRH, including forensic imaging and analysis of CRH-issued devices, cloud access log review, preparation of the preliminary forensic report (delivered March 16, 2025), and preparation of the expert declaration in support of the preliminary injunction motion. This estimate includes all work performed to date and anticipated remaining work through closing, including any supplemental analysis that may be required in connection with the settlement documentation. This amount is separate from, and does not include, the $175,000 cap for the post-settlement independent forensic audit of Verdana's systems, which is to be borne entirely by Verdana pursuant to the settlement terms.
2. Aurelian Investigations Group Inc. (Sandra Fielding) — Approximately $62,000. Aurelian Investigations was engaged at the outset of the matter to investigate the circumstances of the coordinated departure of the Rathore Group, including pre-resignation communications among the departing employees, the recruitment timeline, and the role of Verdana in orchestrating the departures. Among other things, Aurelian's investigation uncovered the January 6, 2025 dinner meeting among Jennifer Dietrich (Verdana's Chief Strategy Officer), Heather Westbrook (Verdana's VP of Talent Acquisition), and Anil Rathore at a restaurant in New York City, which proved to be a pivotal piece of evidence establishing Verdana's active recruitment of Mr. Rathore and the timing of the coordinated departure. This estimate includes all investigation fees through closing.
3. Veltrano Consulting Group LLC (Dr. Franklin Oberg) — Approximately $48,000. Veltrano Consulting was engaged as CRH's economic damages expert to prepare a preliminary damages analysis and expert declaration quantifying the damages arising from the trade secret misappropriation and restrictive covenant breaches. Although the settlement obviates the need for a full damages report and trial testimony, Dr. Oberg's preliminary analysis was instrumental in establishing CRH's damages position during the mediation. This estimate includes all fees through the completion of Dr. Oberg's engagement.
4. Court Filing Fees, Service of Process, and Related Costs — Approximately $8,500. This includes filing fees for the verified complaint, the TRO application, the preliminary injunction motion, and all anticipated remaining filings (Consent Order, motion to dissolve TRO, stipulation for dismissal with prejudice), as well as costs of service of process on all defendants.
5. Travel Expenses — Approximately $18,000. This includes travel expenses (airfare, ground transportation, lodging, and meals) for attorneys traveling between Calderwood & Harkness's Washington, DC and Los Angeles offices and Wilmington, Delaware, for court appearances before Vice Chancellor Zhao, the mediation session at Meridian ADR Services in Washington, DC, and anticipated in-person settlement meetings during the documentation period.
6. Broadview Surety Corp. Bond Premium — Approximately $12,500. This represents the premium paid for the $2,500,000 injunction bond (Bond No. BSC-2025-TRO-04419) posted as a condition of the TRO. The premium is non-refundable and will be recognized as a cost of the engagement regardless of the bond's subsequent discharge.
7. Meridian ADR Services LLC — Approximately $7,600. This represents CRH's share of the mediation fees for the March 18, 2025 mediation session before Mediator Ashford (Ref. Meridian-2025-0318-CRH). Pursuant to the mediation agreement, mediation fees were split equally among the three participating parties (CRH, the Rathore Group, and Verdana).
8. Copying, Document Production, and Technology Costs — Approximately $5,000. This includes costs for large-volume document reproduction, electronic document production and hosting, and litigation technology expenses incurred in connection with the expedited discovery phase.
9. Miscellaneous (Courier, Telecommunications, Postage) — Approximately $2,000. This includes routine costs for overnight courier deliveries, long-distance telecommunications, and postage throughout the engagement.
VI. Total Revised Estimate Summary
The following table summarizes the revised total estimated fees and expenses for the engagement through closing:
The aggregate figure of approximately $1,850,000 reflects rounding across all categories and is presented as an estimate, not a cap or fixed fee. The actual fees and expenses incurred may vary from this estimate based on a number of factors, including the complexity of the remaining settlement negotiations, the number of settlement agreement drafts required before execution, the extent of any disputes or open points that arise during the documentation period, and any unforeseen issues or complications that may emerge during closing. We will promptly advise CRH if we anticipate that actual fees and expenses will materially exceed this estimate.
VII. Comparison to Original Budget
The Original Budget Memorandum dated February 18, 2025, which was provided at the outset of the engagement, contemplated the full scope of contested litigation through trial in the Delaware Court of Chancery. The original projected scope of work included, in addition to the emergency TRO and preliminary injunction proceedings, full merits-phase discovery (including approximately 15 to 20 fact depositions, extensive document production, interrogatories, and requests for admission), retention and preparation of multiple expert witnesses (damages, forensic, and industry experts), pre-trial briefing and motions practice, trial preparation, a multi-day trial before Vice Chancellor Zhao, and post-trial proceedings. The original estimate was substantially higher than the revised estimate set forth herein, reflecting the significant additional professional hours and third-party costs associated with a full trial track.
The settlement framework reached on March 20, 2025, has materially reduced the projected scope of remaining work, resulting in estimated savings to CRH compared to the original full-litigation budget. The elimination of merits-phase discovery, expert report preparation, trial preparation, and the trial itself accounts for the most significant reduction in projected costs.
We further note that $425,000 of CRH's litigation costs will be reimbursed by Verdana pursuant to the settlement terms, effectively reducing CRH's net out-of-pocket fees and expenses to approximately $1,425,000. This reimbursement provision was negotiated by Mr. Crawford as part of the settlement framework and represents a meaningful offset to CRH's total litigation expenditure.
VIII. Offsetting Recovery — Fee Reimbursement Under Settlement
Pursuant to the settlement framework agreed upon on March 20, 2025, Verdana Commerce Group, Inc. will reimburse CRH the sum of $425,000 toward CRH's litigation costs incurred in connection with this matter. This reimbursement will be paid by Verdana as a component of the settlement at closing and is in addition to the other elements of the settlement consideration.
For purposes of evaluating the net cost of this engagement to CRH, it is useful to consider the full economic recovery the settlement is expected to deliver:
The equity forfeiture component of $849,500 consists of $362,500 attributable to Mr. Rathore (comprising $181,250 in unvested RSUs automatically forfeited upon resignation and $181,250 in clawback of the final vested tranche pursuant to the for-cause clawback provision triggered by covenant breach) and $487,000 in aggregate forfeitures attributable to the other seven departing employees.
After accounting for the $425,000 litigation cost reimbursement from Verdana, CRH's estimated net out-of-pocket cost for this engagement is:
Estimated total fees and expenses: ~$1,850,000 Less: Verdana litigation cost reimbursement: ($425,000) Estimated net cost to CRH: ~$1,425,000
Viewed against the total economic recovery of $10,024,500, the net cost of the engagement represents approximately 14.2% of the total recovery — a favorable ratio that reflects the efficiency achieved through the early settlement resolution.
IX. Budget Assumptions and Caveats
This revised fee estimate is based on the following assumptions. If any of these assumptions prove to be incorrect, the actual fees and expenses may differ from the estimates set forth herein, and we will promptly advise CRH of any material changes.
1. Settlement Documentation Timeline. The estimate assumes that the settlement documentation is completed within the March 24 – April 11, 2025 documentation period agreed upon by the parties, and that execution of the Standstill and Settlement Agreement occurs on or about April 14, 2025. Any material delay in the documentation timeline, whether due to counterparty responsiveness, open-point disputes, or other factors, could result in additional hours.
2. No Material Re-Negotiation. The estimate assumes no material re-negotiation of the terms previously agreed upon in the settlement framework. If substantive disputes arise on open points — for example, disagreements regarding the non-compete category definitions, the data destruction protocol mechanics, the compliance monitor's scope of authority, or the indemnification provisions — additional hours may be required and the estimate may need to be revised upward.
3. Consent Order Entry. The estimate assumes that Vice Chancellor Zhao enters the Consent Order promptly upon filing, without requiring further briefing, supplemental submissions, or oral argument. If the Court raises questions or concerns about the Consent Order or requires modifications, additional work will be necessary.
4. Post-Closing Monitoring Phase. The estimate does not include any work associated with the post-closing monitoring phase beyond the initial setup of the Aldwyn Compliance Solutions LLC engagement and the drafting of the monitoring protocol and information-sharing letter agreement. Any compliance disputes, enforcement proceedings, or other issues that arise during the 12-month compliance monitoring period would require a separate engagement supplement or budget revision, which we would discuss with CRH at that time.
5. Compliance Monitor Costs. The estimate does not include CRH's 40% share ($144,000) of the total compliance monitor costs ($360,000 for the 12-month monitoring period). This amount is a direct client expense payable to Aldwyn Compliance Solutions LLC and is not a Calderwood & Harkness professional fee. Verdana is responsible for the remaining 60% ($216,000) of the monitor costs pursuant to the settlement terms.
6. SEC Filing Preparation. The estimate does not include costs associated with any SEC filing preparation beyond the draft 8-K Current Report language and the disclosure analysis memorandum that I will prepare. If CRH's regular securities counsel requires additional coordination from Calderwood & Harkness in connection with the actual filing of the 8-K or the preparation of 10-Q disclosure language, additional fees may be incurred.
7. No Appellate or Post-Judgment Proceedings. The estimate assumes that the settlement is fully consummated and that no party seeks to set aside, appeal, or challenge the Consent Order after entry. Any such proceedings would require a separate budget.
8. No Third-Party Claims. The estimate does not account for any third-party claims, subpoenas, or regulatory inquiries that may arise in connection with this matter. If any such matters develop, they would be addressed through a separate engagement.
X. Billing Arrangements
All fees and expenses for this engagement are billed in accordance with the terms of the engagement letter between Calderwood & Harkness LLP and Cascade Retail Holdings Inc. dated February 18, 2025. The key billing terms are as follows:
• Invoicing Frequency: Invoices are issued monthly in arrears. The invoice for services rendered and expenses incurred in a given month is delivered to CRH on or about the 10th business day of the following month.
• Payment Terms: Net 30 days from invoice date. Invoices not paid within 30 days are subject to a late payment charge as specified in the engagement letter.
• Expense Billing: Out-of-pocket expenses, including third-party vendor costs, filing fees, travel expenses, and other disbursements, are billed at cost with no markup, unless otherwise specified in the engagement letter.
• Rate Adjustments: The billing rates set forth in this memorandum are the rates currently in effect under the engagement letter. Any rate adjustments will be made in accordance with the terms of the engagement letter and will be communicated to CRH in advance.
Questions regarding this revised fee estimate, individual invoices, or any other billing matter should be directed to me at the contact information below or to Bernard Crawford at Calderwood & Harkness's Washington, DC office.
XI. Conclusion
We appreciate CRH's continued confidence in Calderwood & Harkness's representation in this matter. The settlement framework reached on March 20, 2025, represents an excellent result for the Company, and we look forward to completing the documentation and closing process efficiently and within the revised budget framework set forth herein. We remain available at all times to discuss any aspect of this memorandum or the engagement with you, Mr. Langford, Mr. Ashby, or any other member of the CRH team.
Please do not hesitate to contact us with any questions.
Respectfully submitted,
CALDERWOOD & HARKNESS LLP
By: ________
Renata Vasquez Partner, Labor & Employment 601 South Figueroa Street, Suite 4200 Los Angeles, California 90017 Telephone: (213) 555-4200
Email: rvasquez@calderwoodharkness.com
cc: Bernard Crawford, Partner, Calderwood & Harkness LLP
1301 K Street NW, Suite 1200 Washington, DC 20005 Telephone: (202) 555-7800
Email: bcrawford@calderwoodharkness.com
ATTORNEY-CLIENT PRIVILEGED / ATTORNEY WORK PRODUCT This memorandum is a privileged and confidential communication protected by the attorney-client privilege and the work product doctrine. It is intended solely for the use of the addressee(s) and should not be disclosed to any third party without the prior written consent of Calderwood & Harkness LLP. Any inadvertent disclosure does not constitute a waiver of any privilege or protection.
Timekeeper | Role | Rate ($/hr) | Est. Total Hours | Est. Total Fees
Bernard Crawford | Responsible Partner | $1,350 | ~220 | ~$297,000
Renata Vasquez | Billing Partner | $1,275 | ~180 | ~$229,500
James Underwood | Lead Associate | $785 | ~640 | ~$502,400
Devon Archer | Working Associate | $625 | ~820 | ~$512,500
Totals | ~1,860 | ~$1,541,400
Category | Estimated Amount
Professional Fees (all timekeepers) | ~$1,541,400
Expenses (all categories) | ~$308,600
Total Estimated Fees and Expenses | ~$1,850,000
Component | Amount
Lump-sum cash settlement payment (Verdana) | $8,750,000
Aggregate equity forfeitures (Rathore Group) | $849,500
Litigation cost reimbursement (Verdana) | $425,000
Total Economic Recovery to CRH | $10,024,500

MEMORANDUM

CALDERWOOD & HARKNESS LLP

Record

Parties

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