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

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MEMORANDUM

Privileged & Confidential — Attorney Work Product

TO: Renata Vasquez, Billing Partner, Labor & Employment (Los Angeles Office)

FROM: Bernard Crawford, Responsible Partner, Labor & Employment (Washington, DC Office)

DATE: February 18, 2025

RE: Staffing Plan and Preliminary Budget — Cascade Retail Holdings Inc. v. Rathore et al.; Restrictive Covenant Enforcement, Trade Secret Misappropriation, and Related Claims

MATTER NO.: 1038-00006

COPIES: File

I. Engagement Overview

This memorandum sets forth the proposed staffing plan, preliminary budget estimate, and immediate action items for the above-referenced matter. The purpose of this memorandum is to provide you, as billing partner, with a comprehensive overview of anticipated resource requirements, professional fee estimates, and projected expenses so that we may establish appropriate billing protocols, communicate a credible budget framework to the client, and ensure that our staffing is aligned with the complexity and urgency of the engagement.

Calderwood & Harkness LLP was formally engaged today, February 18, 2025, by Cascade Retail Holdings Inc. ("CRH"), a Delaware corporation publicly traded on the Nasdaq Stock Market (ticker symbol: CRHL), with its principal executive offices located at 2200 Elliott Avenue West, Suite 3400, Seattle, Washington 98119. The engagement letter was reviewed and executed by Theresa Yun-Park, General Counsel of CRH, following preliminary discussions between Ms. Yun-Park and me over the preceding several days.

The scope of our representation encompasses the enforcement of restrictive covenant provisions — specifically, non-competition, non-solicitation, and confidentiality obligations — against eight former senior merchandising employees who resigned from CRH in what appears to have been a coordinated departure on February 7, 2025. All eight individuals have joined, or are in the process of joining, Verdana Commerce Group, Inc. ("VCG" or "Verdana"), a direct competitor of CRH in the retail merchandising and e-commerce sector. Verdana is headquartered in Wilmington, Delaware. Our representation also encompasses potential claims for trade secret misappropriation under the Delaware Uniform Trade Secrets Act, 6 Del. C. § 2001 et seq. ("DUTSA"), as well as tortious interference with contractual relations and civil conspiracy claims against Verdana and, potentially, its private equity sponsor.

The eight departing employees — collectively referred to herein as the "Rathore Group" — are led by Priya Rathore, who served as CRH's Senior Vice President of Merchandising. The remaining seven members of the Rathore Group are: Derek Linden (Vice President, Category Strategy), Sonia Kaczmarek (Vice President, Vendor Relations), Amara Osei (Director, Private Label Development), Brent Halvorsen (Director, Seasonal Buying), Lucia Fernandez-Gill (Director, Pricing Analytics), Nathan Tsao (Senior Manager, Sourcing Operations), and Kira Johansson (Senior Manager, Customer Segmentation). Each of these individuals held senior merchandising roles with direct access to CRH's most competitively sensitive strategic planning materials, vendor relationships, pricing data, and proprietary algorithms.

Verdana Commerce Group is a private equity-backed enterprise. A majority ownership stake in Verdana is held by Greystone Capital Partners, LP, which acquired the company in the third quarter of 2023 at an enterprise value of approximately $2.4 billion. The acquisition was effected through Greystone Capital Fund VII, LP. The involvement of a well-capitalized private equity sponsor is significant from both a litigation posture standpoint and a settlement leverage perspective, as Greystone has the financial resources to fund an aggressive defense and may itself have directed or facilitated the coordinated recruitment of the Rathore Group.

The stakes for CRH in this matter are material by any measure. CRH's merchandising division — the business unit most directly impacted by the Rathore Group's departure — accounted for approximately $2.3 billion in gross merchandise value in fiscal year 2024. CRH's total annual revenue for FY2024 was $6.82 billion, and its current market capitalization is approximately $4.1 billion. The loss of an entire senior merchandising leadership team, combined with the potential compromise of CRH's proprietary strategic planning and vendor relationship data, poses a significant threat to CRH's competitive position and shareholder value.

All eight employment agreements are governed by Delaware law pursuant to their respective choice-of-law provisions. The non-competition periods contained in the agreements range from twelve (12) to eighteen (18) months following termination of employment, and the non-solicitation periods range from eighteen (18) to twenty-four (24) months. Each agreement also contains a perpetual confidentiality obligation with respect to trade secrets and proprietary information, with a five-year tail on other categories of confidential information.

Based on preliminary analysis, we anticipate filing the action in the Delaware Court of Chancery, seeking emergency injunctive relief in the form of a temporary restraining order ("TRO") and preliminary injunction. The Court of Chancery is the appropriate forum given the equitable nature of the relief sought and Delaware's well-developed body of restrictive covenant jurisprudence. We will also seek to add Verdana as a defendant on tortious interference and conspiracy theories, which may present jurisdictional advantages given Verdana's Delaware domicile.

Our primary in-house contacts for this engagement are as follows: Theresa Yun-Park, General Counsel (primary legal contact and engagement signatory); Roland Ashby, Chief People Officer (factual background, employment records, and HR-related matters); and Martin Cho, Vice President of Merchandising, who is serving as acting interim Senior Vice President of Merchandising following Ms. Rathore's departure (subject matter expertise regarding the proprietary materials and competitive dynamics at issue).

II. Matter Complexity and Anticipated Phases

This matter presents substantial complexity across multiple dimensions: the number of individual defendants, the coordinated nature of their departure, the potential involvement of a well-financed private equity sponsor, the volume of proprietary information at risk, and the need for emergency equitable relief in a highly fact-intensive setting. To structure our staffing and budget analysis, I have organized the anticipated work into four phases that correspond to the likely progression of the matter. These phases are described in detail below.

A. Phase 1: Investigation and Factual Development (Weeks 1–2, approximately February 18 – March 3, 2025)

The first phase will focus on assembling the factual foundation necessary to support emergency litigation. This phase is critical because the strength of our TRO and preliminary injunction application will depend entirely on the quality and specificity of the factual record we develop during this period.

The principal workstreams during Phase 1 are as follows:

Employment Agreement Review and Analysis. We will obtain and review all eight employment agreements, together with any amendments, addenda, equity award agreements, and ancillary restrictive covenant agreements (e.g., invention assignment or intellectual property agreements) applicable to the Rathore Group members. Each agreement will be analyzed to determine the precise scope, duration, geographic reach, and enforceability of the applicable non-competition, non-solicitation, and confidentiality provisions. We will prepare a detailed covenant summary memorandum and a comparative chart identifying the specific obligations of each departing employee, the commencement and expiration dates of each restricted period, and any material variations among the agreements that could affect enforceability or litigation strategy.

Forensic Technology Engagement. We intend to engage Pinnacle Forensics LLC, based in Silver Spring, Maryland, to perform forensic imaging of all CRH-issued devices (laptops, mobile phones, and tablets) previously assigned to the Rathore Group members, as well as a comprehensive analysis of cloud access logs, email activity, file download and transfer records, and removable media usage during the period preceding the coordinated resignation. The engagement lead at Pinnacle will be Dr. Rajiv Anand, who has extensive experience in trade secret misappropriation forensics and has testified as an expert in the Court of Chancery on prior occasions. Our target engagement date for Pinnacle is February 20, 2025, and we will seek to have preliminary forensic findings available no later than the end of Phase 1 to inform the content of our TRO application.

Private Investigator Engagement. We also intend to engage Aurelian Investigations Group Inc., based in Seattle, Washington, to investigate the circumstances surrounding the coordinated departure. The lead investigator will be Sandra Fielding, who specializes in corporate departures and competitive intelligence matters. The investigation will focus on identifying the timeline and nature of pre-resignation communications between the Rathore Group members and Verdana or its agents, the identity of any Verdana recruiters or intermediaries involved, the existence of any pre-resignation planning or coordination among the departing employees, and any evidence of solicitation of remaining CRH employees. Our target engagement date for Aurelian is February 21, 2025.

Proprietary Materials Risk Assessment. Working with Martin Cho and CRH's internal teams, we will catalog and analyze the proprietary materials to which the Rathore Group had access, with a particular focus on materials that may qualify as trade secrets under DUTSA. Based on preliminary discussions with Ms. Yun-Park, the most sensitive materials at risk include: (i) Project Ridgeline, which is CRH's five-year category expansion roadmap encompassing planned entry into new product verticals and market segments; (ii) CRH's vendor negotiation playbooks, which contain proprietary strategies, pricing floors, margin targets, and negotiation protocols for relationships with over 300 key suppliers; (iii) seasonal buying algorithms developed by CRH's data science team that drive purchasing decisions across all product categories; (iv) private-label sourcing strategies, including supplier identities, cost structures, and exclusivity arrangements for CRH's proprietary brand portfolio; and (v) customer segmentation data derived from CRH's loyalty program and digital commerce platforms. Each of these categories will be assessed against the DUTSA definition of "trade secret" to determine whether CRH took reasonable measures to maintain secrecy and whether the information derives independent economic value from not being generally known.

Trade Secret Classification Analysis. In connection with the proprietary materials assessment, we will prepare a formal trade secret classification analysis under DUTSA. This analysis will evaluate each category of information against the statutory requirements, document the reasonable measures CRH has taken to protect its trade secrets (including access controls, classification protocols, encryption, and contractual protections), and identify any weaknesses in CRH's trade secret protection program that opposing counsel might exploit.

Cease-and-Desist Letters. We will prepare and send cease-and-desist letters to each of the eight departing employees individually, to Verdana Commerce Group, Inc. (addressed to its general counsel or registered agent), and to Greystone Capital Partners, LP. The letters will place all recipients on notice of CRH's contractual rights, demand immediate compliance with the applicable restrictive covenants, demand preservation and return of all CRH proprietary materials, and advise that CRH intends to pursue all available legal remedies.

B. Phase 2: Emergency Litigation — TRO/PI (Weeks 2–5, approximately March 1 – March 21, 2025)

Phase 2 is the most resource-intensive phase of the engagement and encompasses the preparation and prosecution of CRH's application for emergency injunctive relief in the Delaware Court of Chancery.

Verified Complaint. We will draft and file a Verified Complaint asserting claims for breach of contract (restrictive covenant violations) against each of the eight individual defendants, trade secret misappropriation under DUTSA against the individual defendants and Verdana, tortious interference with contractual relations against Verdana and potentially Greystone, and civil conspiracy against all defendants. The Verified Complaint will need to be supported by sworn verification from an authorized CRH representative, most likely Ms. Yun-Park or Mr. Ashby.

TRO and Preliminary Injunction Motion. Contemporaneously with the filing of the Verified Complaint, we will file a Motion for Temporary Restraining Order and Preliminary Injunction, supported by a comprehensive memorandum of law. The memorandum will address the four-factor test for preliminary injunctive relief under Delaware law: (1) reasonable probability of success on the merits, (2) irreparable harm absent injunctive relief, (3) balance of hardships favoring the movant, and (4) consistency with the public interest. Given the nature of the claims, particular emphasis will be placed on demonstrating the enforceability of the restrictive covenants under Delaware's reasonableness standard and establishing the inevitable disclosure doctrine or actual misappropriation as a basis for the trade secret claims.

Supporting Declarations. We will prepare declarations from multiple witnesses and experts to support the TRO/PI application, including: (i) a declaration from Theresa Yun-Park addressing CRH's business, the employment relationships, the restrictive covenant provisions, and the circumstances of the Rathore Group's coordinated departure; (ii) a declaration from Roland Ashby addressing the employment history, compensation, and access levels of each departing employee; (iii) a declaration from the forensic expert (Dr. Anand) addressing any evidence of data exfiltration, unauthorized downloads, or suspicious access activity; (iv) a declaration from the investigator (Ms. Fielding) addressing evidence of pre-departure coordination and Verdana recruitment activity; and (v) a declaration from the economic damages expert (Dr. Oberg) providing a preliminary quantification of the competitive harm to CRH.

Damages Expert Engagement. We intend to engage Veltrano Consulting Group LLC, based in Chicago, Illinois, to provide economic damages analysis. The lead expert will be Dr. Franklin Oberg, who specializes in quantifying competitive harm in trade secret and restrictive covenant matters. Our target engagement date is early March 2025, timed to allow Dr. Oberg to provide preliminary findings for inclusion in the TRO/PI application. Dr. Oberg's preliminary analysis will address the value of the proprietary information at risk, the competitive advantage conferred on Verdana, and the projected revenue and margin impact on CRH's merchandising division.

Injunction Bond. Delaware Court of Chancery Rule 65(c) requires the posting of a bond or other security as a condition of injunctive relief. Based on the scope of the injunction sought and the potential for wrongful injunction damages, we anticipate the Court will require a bond in the range of $2 million to $3 million. We have identified Broadview Surety Corp., based in New York, New York, as the anticipated surety provider. The premium on such a bond is typically 1% to 1.5% of the face amount, which translates to an estimated cost of $15,000 to $25,000 as reflected in the expense budget below.

Expedited discovery. If the Court schedules a preliminary injunction hearing (as opposed to ruling on the TRO papers alone), we will need to manage expedited discovery, which may include written discovery requests, document production, and potentially limited depositions of one or more members of the Rathore Group and Verdana's Chief Executive Officer or Chief People Officer. Expedited discovery in the Court of Chancery is typically compressed into a one-to-two-week period, and we must be prepared to handle the associated workload on an accelerated timeline.

Reply Briefing and Hearing Preparation. Following the filing of any opposition by defendants, we will prepare a reply memorandum and any necessary supplemental declarations. We will also prepare for and attend the TRO hearing and, if separate, the preliminary injunction hearing before the assigned Vice Chancellor. I will serve as lead counsel at all hearings.

C. Phase 3: Settlement / Resolution (Weeks 4–8, approximately March 15 – April 14, 2025)

Based on my experience with coordinated departure and trade secret matters of this type, I anticipate that the matter is most likely to resolve through negotiated settlement, particularly if we are successful in obtaining a TRO or demonstrating a strong likelihood of success on the merits at the preliminary injunction stage. The issuance of even a limited TRO typically creates significant pressure on both the individual defendants and the corporate competitor to negotiate, as the injunction constrains the competitive activity that motivated the coordinated departure in the first instance.

Phase 3 will encompass the following workstreams:

Settlement Strategy and BATNA Analysis. We will develop a comprehensive settlement strategy, including a detailed best alternative to negotiated agreement ("BATNA") analysis. This analysis will assess CRH's litigation position, the likely range of outcomes at trial, the costs and risks of continued litigation, the reputational considerations for both sides, and the economic value of various settlement components (including the duration and scope of enforceable restrictions, data return and destruction obligations, financial consideration, and equity forfeiture). The BATNA analysis will be prepared in coordination with CRH's in-house team and will inform the negotiation parameters presented to the Board of Directors.

Mediation Preparation and Attendance. If settlement discussions materialize — whether through informal channels or a court-directed or party-initiated mediation — we will prepare a comprehensive mediation statement and attend the mediation session. I anticipate that a retired Vice Chancellor or experienced commercial mediator, potentially through Meridian ADR Services LLC or a comparable provider, would serve as mediator. Our share of mediation fees is estimated at $10,000 to $20,000, depending on the mediator selected and the number of sessions required.

Settlement Documentation. Settlement of a matter of this complexity will require the preparation and negotiation of multiple interrelated documents. At a minimum, we anticipate the following: (i) a standstill agreement establishing interim obligations during the pendency of settlement negotiations; (ii) a consent order to be entered by the Court of Chancery memorializing the injunctive terms of the settlement; (iii) a comprehensive data destruction protocol governing the identification, return, and certified destruction of all CRH proprietary materials in the possession of the Rathore Group members and Verdana; (iv) a compliance monitor framework establishing the terms of engagement, scope of authority, and reporting obligations of an independent compliance monitor to oversee adherence to the settlement terms; and (v) equity forfeiture documentation addressing the forfeiture of unvested restricted stock units ("RSUs") and other equity awards held by the departing employees, as well as potential clawback of previously vested equity to the extent permitted under CRH's equity plan and the individual award agreements.

Corporate Governance Deliverables. The materiality of this matter to CRH's business and financial position will require several corporate governance deliverables, including: (i) memoranda to CRH's Board of Directors providing status updates and seeking authority for settlement within approved parameters; (ii) board resolutions authorizing settlement; (iii) notification to the Audit Committee, given the potential financial impact and the involvement of senior officers; (iv) analysis of CRH's disclosure obligations under SEC regulations (including Item 1.05 of Form 8-K for material cybersecurity incidents, if applicable, and potential disclosure in quarterly filings under Item 103 of Regulation S-K for legal proceedings); and (v) notification to Keypoint National Bank, CRH's administrative agent under its revolving credit facility, to the extent required by the reporting covenants of the credit agreement.

Closing Mechanics. Upon execution of settlement documentation, we will manage all closing mechanics, including filing the consent order with the Court, confirming execution and delivery of all settlement documents, verifying compliance with any initial settlement obligations, and effectuating the dismissal of any remaining claims.

D. Phase 4: Post-Settlement Compliance Monitoring (Months 2–14)

If the settlement includes the appointment of an independent compliance monitor — which we anticipate recommending — Phase 4 will involve reduced-intensity but ongoing oversight of the compliance monitoring process. This will include periodic review of monitor reports, preparation and filing of periodic court status letters (if required by the consent order), consultation with the client on any compliance issues identified by the monitor, and general matter administration through the conclusion of the restricted periods and formal closing of the matter. The costs of the compliance monitor itself are anticipated to be shared with the counterparty pursuant to the settlement terms, but our own professional fees for oversight during this phase will constitute a modest ongoing expense.

III. Proposed Staffing Plan

The staffing plan set forth below is designed to provide the depth of coverage necessary for a complex, multi-phase engagement while maintaining cost efficiency. Given the emergency timeline for Phase 2 and the volume of work required across all phases, I propose a core team of four timekeepers: two partners and two associates. If additional resources become necessary — for example, if expedited discovery requires contract attorney support for document review — I will seek your approval before adding headcount. The proposed team members, their roles, and estimated hours are as follows.

A. Bernard Crawford — Responsible Partner

Office: 1301 K Street NW, Suite 1200, Washington, DC 20005

Billing Rate (2025): $1,350 per hour

Role: I will serve as the responsible partner on this engagement with overall responsibility for matter strategy, key client communications, and all court appearances. Specifically, my role will include: direct communication with Theresa Yun-Park and CRH senior leadership (including CEO Marcus Langford, as needed, given the materiality of this matter and the potential for board-level involvement); development and execution of overall litigation and settlement strategy; lead role on all settlement negotiations and mediations; lead counsel at all court appearances, including the TRO and preliminary injunction hearings before the Court of Chancery; final review and approval of all court filings and major work product; and engagement management, including vendor oversight and coordination with the forensic, investigative, and damages expert teams.

Estimated Hours: Approximately 220 hours across all four phases, distributed roughly as follows: Phase 1 — 30 hours; Phase 2 — 100 hours; Phase 3 — 70 hours; Phase 4 — 20 hours.

Estimated Fees (Crawford): 220 hours × $1,350/hour = $297,000.

B. Renata Vasquez — Billing Partner

Office: 601 South Figueroa Street, Suite 4200, Los Angeles, CA 90017

Billing Rate (2025): $1,275 per hour

Role: As billing partner, you will co-supervise litigation strategy and provide partner-level review of all court filings and settlement documents. You will also be responsible for budget oversight and client billing administration, serving as the secondary client contact, and contributing to settlement strategy development and the BATNA analysis. Given your experience with SEC disclosure matters and corporate governance issues in the employment context, I am also asking that you take the lead on the SEC disclosure analysis and support the preparation of corporate governance deliverables (board memoranda, audit committee notification, and credit agreement notification).

Estimated Hours: Approximately 180 hours across all four phases, distributed roughly as follows: Phase 1 — 20 hours; Phase 2 — 75 hours; Phase 3 — 70 hours; Phase 4 — 15 hours.

Estimated Fees (Vasquez): 180 hours × $1,275/hour = $229,500.

C. James Underwood — Lead Associate

Office: 1301 K Street NW, Suite 1200, Washington, DC 20005

Billing Rate (2025): $785 per hour

Role: James will serve as the lead associate on the matter and will be the primary drafter of all court filings and substantive legal work product. His responsibilities will include: drafting the Verified Complaint, the TRO and preliminary injunction motion, all memoranda of law, and the reply brief; leading legal research on Delaware restrictive covenant enforceability standards, DUTSA trade secret analysis, inevitable disclosure doctrine, consent order practice in the Court of Chancery, and related issues; serving as the primary drafter of settlement documentation (standstill agreement, consent order, data destruction protocol, compliance monitor framework, and equity forfeiture documentation); managing the day-to-day relationships with our forensic, investigative, and damages expert vendors (Pinnacle Forensics, Aurelian Investigations, and Veltrano Consulting); preparing and coordinating witness declarations; drafting the mediation statement; preparing corporate governance memoranda and SEC disclosure analysis under your supervision; and managing the day-to-day workflow of the case.

Estimated Hours: Approximately 640 hours across all four phases, distributed roughly as follows: Phase 1 — 100 hours; Phase 2 — 280 hours; Phase 3 — 200 hours; Phase 4 — 60 hours.

Estimated Fees (Underwood): 640 hours × $785/hour = $502,400.

D. Devon Archer — Working Associate

Office: 1301 K Street NW, Suite 1200, Washington, DC 20005

Billing Rate (2025): $625 per hour

Role: Devon will serve as the working associate and will support James across all phases of the engagement. Devon's responsibilities will include: conducting supporting legal research and drafting; reviewing all eight employment agreements and preparing the covenant comparison chart; reviewing and analyzing forensic data produced by Pinnacle, including evidence of potential data exfiltration; preparing supporting memoranda on discrete topics (data exfiltration findings, Verdana press release and public communications analysis, RSU forfeiture calculations, compliance monitor evaluation and recommendation); redlining and revising settlement documents based on negotiation changes; preparing exhibits and appendices for court filings; monitoring social media and public statements by the Rathore Group members and Verdana for evidence relevant to the litigation (particularly any statements regarding their new roles or competitive plans); managing the closing checklist, signature tracking, and matter administration logistics; and supporting mediation preparation.

Estimated Hours: Approximately 820 hours across all four phases, distributed roughly as follows: Phase 1 — 140 hours; Phase 2 — 350 hours; Phase 3 — 260 hours; Phase 4 — 70 hours.

Estimated Fees (Archer): 820 hours × $625/hour = $512,500.

E. Staffing Summary Table

Note: All hour estimates are preliminary and will be refined as the matter progresses and the scope of required work becomes clearer. The estimates above reflect what I believe is a realistic assessment of the resource requirements given the complexity and urgency of the engagement, the number of defendants, the volume of proprietary materials at issue, and the anticipated litigation and settlement workstreams.

IV. Estimated Expenses and Disbursements

In addition to professional fees, the engagement will generate significant out-of-pocket expenses and third-party vendor costs. All expenses will be billed to the client at cost in accordance with the engagement letter and the firm's standard billing practices. The principal categories of anticipated expenses and their estimated ranges are set forth below.

A. Forensic Technology and eDiscovery

Pinnacle Forensics LLC will be engaged to perform forensic imaging of all CRH-issued devices previously assigned to the Rathore Group members, comprehensive analysis of cloud access logs (including Ashgrove Software, Aldermere Systems, Cobalt Ridge Systems, and any other enterprise platforms to which the departing employees had access), analysis of email activity and file transfer patterns, review of USB and removable media usage logs, and preparation of a detailed forensic report suitable for use in the TRO/PI application. Based on preliminary scoping discussions with Dr. Anand, the estimated cost of the Pinnacle engagement is $100,000 to $140,000, depending on the volume of data involved and the complexity of the analysis.

Additionally, if the settlement includes a provision requiring a forensic audit of Verdana's systems to verify compliance with data destruction obligations, the costs of such an audit would be allocated to the counterparty pursuant to the settlement terms and would not be borne by CRH (except to the extent a negotiated cost-sharing arrangement provides otherwise).

B. Private Investigations

Aurelian Investigations Group Inc. will be engaged to investigate the circumstances of the coordinated departure, including the timeline and nature of pre-resignation communications between the Rathore Group members and Verdana or its agents, the identity of any recruiters, headhunters, or intermediaries involved in the recruitment process, evidence of pre-departure planning or coordination among the departing employees, and any evidence of solicitation of remaining CRH employees. The estimated cost of the Aurelian engagement is $50,000 to $75,000, depending on the scope and duration of the investigation.

C. Damages Expert

Veltrano Consulting Group LLC (Dr. Franklin Oberg) will be engaged to provide economic damages analysis. The engagement will encompass a preliminary damages quantification for use in the TRO/PI application (estimating the competitive harm to CRH from the Rathore Group's departure and potential trade secret misappropriation) and, if necessary, a more comprehensive damages analysis for settlement valuation purposes or trial preparation. The estimated cost of the Veltrano engagement is $60,000 to $90,000, depending on the scope of the analysis and whether a full damages report is required.

D. Injunction Bond Premium

As noted above, we anticipate that the Court of Chancery will require the posting of an injunction bond in the range of $2 million to $3 million as a condition of any TRO or preliminary injunction. The premium charged by the surety (Broadview Surety Corp.) is estimated at $15,000 to $25,000, based on a premium rate of approximately 1% to 1.5% of the bond face amount. The bond premium is a non-recoverable client expense.

E. Court Costs, Filing Fees, and Service

Delaware Court of Chancery filing fees, costs of service of process on all defendants (including personal service on eight individual defendants and service on two corporate entities), and pro hac vice admission fees for Washington, DC-based attorneys (Crawford, Underwood, and Archer) who are not members of the Delaware Bar are estimated at $5,000 to $10,000 in the aggregate.

F. Travel and Related

This engagement will require travel for the Washington, DC-based team members (Crawford, Underwood, and Archer) to Wilmington, Delaware for court hearings, mediation sessions, and settlement meetings. Additionally, travel for you (Vasquez) from Los Angeles to Wilmington or Washington, DC may be required for certain key events. We may also need to travel to Seattle for client meetings and witness preparation. Estimated travel expenses (airfare, ground transportation, lodging, and meals) across all phases are $15,000 to $25,000.

G. Mediation Fees

If the matter proceeds to mediation — whether through voluntary agreement or court suggestion — CRH's share of the mediator's fees is estimated at $10,000 to $20,000. This estimate assumes a single mediation session of one to two days with a retired judicial officer or experienced commercial mediator, potentially through Meridian ADR Services LLC or a comparable provider. If multiple sessions are required, costs could exceed this range, and a revised estimate would be provided.

H. Other (Copying, Couriers, Research Databases, etc.)

Miscellaneous expenses, including high-volume copying and printing for court submissions, overnight courier charges, online legal research database charges (Westmark Data Systems, Sundial Solutions), specialized database searches, and other incidental costs, are estimated at $10,000 to $15,000 across all phases.

I. Expenses Summary Table

Midpoint estimate: approximately $308,600 (calculated as the simple average of the low and high estimates for each category, summed across all categories, and rounded for convenience).

V. Total Preliminary Budget Estimate

Combining the professional fee estimates set forth in Section III with the expense estimates set forth in Section IV, the total preliminary budget for the engagement is as follows:

Several important qualifications apply to this estimate:

First, the estimate assumes that the matter proceeds through the emergency TRO/preliminary injunction litigation phase and resolves through negotiated settlement — a trajectory that, based on my initial assessment and my experience with matters of this type, represents the most likely scenario. If the matter does not settle following the preliminary injunction stage and proceeds to full trial on the merits, the budget would increase significantly, potentially by an additional $1 million to $2 million or more depending on the scope of discovery, the number of depositions, and the length of trial. A supplemental budget estimate would be prepared and circulated to the client promptly if the litigation trajectory shifts in that direction.

Second, the estimate does not include potential post-settlement compliance monitoring costs during Phase 4. While our own professional fees for oversight during that phase are included in the hour estimates above, the costs of the independent compliance monitor itself (which could range from $100,000 to $300,000 over a 12-month period depending on the scope of the monitor's mandate) are anticipated to be shared with or allocated entirely to the counterparty pursuant to the settlement terms.

Third, as with any litigation matter, unexpected developments — including aggressive opposition tactics, motion practice not currently anticipated, discovery disputes, or changes in the factual landscape — could affect both the professional fee and expense components of this budget. We will monitor actual costs against the budget on an ongoing basis and will promptly notify the client of any material variance.

VI. Billing and Administrative Notes

The following billing and administrative protocols will apply to this engagement:

• Matter Number: 1038-00006. All timekeepers should use this matter number for all time entries and expense charges related to this engagement.

• Billing Partner of Record: Renata Vasquez (Los Angeles office). All invoices will be issued under your name as billing partner, and you will have primary responsibility for invoice review, billing adjustments, and collections follow-up.

• Responsible Partner: Bernard Crawford (Washington, DC office). I retain overall responsibility for the substantive management of the matter, client relationship management, and staffing decisions.

• Invoicing Schedule: Monthly invoicing, in accordance with the terms of the engagement letter. Invoices are to be sent to Theresa Yun-Park, General Counsel, Cascade Retail Holdings Inc., 2200 Elliott Avenue West, Suite 3400, Seattle, WA 98119. The engagement letter specifies net-30 payment terms.

• Budget Updates to Client: Budget updates will be provided to the client at each phase transition (i.e., upon completion of Phase 1, upon conclusion of the TRO/PI hearing, and upon initiation and completion of settlement negotiations) and upon any material change in the scope of the engagement or a significant variance from the approved budget.

• Internal Budget Monitoring: You, as billing partner, will monitor actual time charges against the preliminary budget estimates on a biweekly basis. Any significant variances — defined for these purposes as actual charges exceeding the phase-specific estimate by more than 15% — should be flagged to me and to Ms. Yun-Park promptly so that we can assess whether the variance reflects a scope change requiring a budget revision or an efficiency issue requiring a staffing adjustment.

VII. Anticipated Opposing Counsel

As of the date of this memorandum, opposing counsel has not been identified for any of the defendants.

• Individual Defendants (Rathore Group): Counsel for the eight individual defendants has not yet been identified. Based on the nature and seniority of the departing employees, we expect the individual defendants to retain experienced Delaware-based litigation or employment counsel, potentially through a single firm representing all eight individuals (if no conflicts of interest preclude joint representation) or through multiple firms if individual interests diverge. Given the involvement of Greystone Capital Partners, it is also possible that Verdana or Greystone will fund or arrange defense counsel for the individual defendants as a condition of their employment with Verdana.

• Verdana Commerce Group, Inc.: Counsel for Verdana has not yet been identified. Given Verdana's Delaware domicile and the involvement of Greystone Capital Partners, we expect Verdana to retain a prominent Delaware-based litigation firm with Court of Chancery experience.

• Conflicts Supplemental Check: Once opposing counsel enters an appearance for any defendant, we will promptly run a supplemental conflicts check to confirm that no new conflicts have arisen as a result of the opposing counsel identification.

VIII. Immediate Next Steps and Action Items

The following action items require immediate attention and should be commenced without delay:

1. Crawford: Conduct initial strategy call with Theresa Yun-Park and Roland Ashby to confirm the factual background, obtain copies of all eight employment agreements and related documents, and discuss CRH's litigation objectives and settlement parameters. This call is scheduled for February 19, 2025.

2. Underwood / Archer: Upon receipt of the employment agreements, begin a comprehensive review of all eight agreements. Prepare the covenant summary memorandum and comparative chart identifying the scope, duration, geographic reach, and enforceability of each restrictive covenant provision. Target completion: February 22, 2025.

3. Crawford: Finalize the engagement of Pinnacle Forensics LLC (Dr. Rajiv Anand) for forensic imaging and cloud log analysis. Target: February 20, 2025. Finalize the engagement of Aurelian Investigations Group Inc. (Sandra Fielding) for investigation of the coordinated departure. Target: February 21, 2025.

4. Crawford (with Underwood): Prepare and issue a litigation hold notice for distribution to all relevant CRH custodians (including Ms. Yun-Park, Mr. Ashby, Mr. Cho, IT personnel, and any other employees with potentially relevant documents or communications). The litigation hold must be issued promptly to preserve CRH's obligations and to establish CRH's good faith in connection with any discovery disputes. Target: February 19, 2025.

5. Underwood / Archer: Draft cease-and-desist letters to all eight departing employees (individually addressed), to Verdana Commerce Group, Inc., and to Greystone Capital Partners, LP. The letters should be reviewed by Crawford prior to issuance. Target for partner review: February 24, 2025. Target for issuance: February 25, 2025.

6. Underwood: Begin legal research on Delaware restrictive covenant enforceability standards, including the current state of the law on reasonableness of scope, duration, and geographic restrictions; the blue-pencil doctrine; the inevitable disclosure doctrine under Delaware law; and DUTSA trade secret requirements (including the definition of "trade secret," the "reasonable measures" prong, and available remedies). This research will form the foundation of our memorandum of law in support of the TRO/PI motion.

7. Crawford: Coordinate with CRH (through Ms. Yun-Park or her designee) regarding injunction bond sourcing. Confirm that CRH has identified Broadview Surety Corp. as the preferred surety provider, and initiate the application process so that the bond can be posted promptly upon the filing of the TRO motion.

8. Vasquez: Establish all billing codes, complete matter setup in the firm's practice management system, and implement the budget tracking protocols described in Section VI above. Confirm that the billing rates reflected in this memorandum are accurate and consistent with the rates set forth in the engagement letter.

Closing

Renata, I would appreciate your confirmation of the staffing plan set forth above, including verification that the billing rates are accurately stated and any suggested adjustments to the projected hours or budget allocations for each team member. If you have concerns about the overall budget range or believe that additional resources should be added to the team at the outset, please let me know at your earliest convenience so that we can discuss before the initial client call tomorrow.

As noted throughout this memorandum, the estimates provided herein are preliminary in nature and are subject to refinement as the facts develop — particularly once the forensic and investigative findings from Pinnacle and Aurelian become available and the litigation trajectory becomes clearer following the filing of our TRO application. I will prepare and circulate a revised fee estimate to the client following any material change in case posture, including the emergence of settlement discussions, the identification of opposing counsel, or the determination that trial preparation is necessary.

Thank you for your attention to these matters. I look forward to working with you on this engagement.

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

Timekeeper	Role	Rate	Est. Hours	Est. Fees
Bernard Crawford	Responsible Partner	$1,350/hr	~220	$297,000
Renata Vasquez	Billing Partner	$1,275/hr	~180	$229,500
James Underwood	Lead Associate	$785/hr	~640	$502,400
Devon Archer	Working Associate	$625/hr	~820	$512,500
Total Professional Fees	~1,860	$1,541,400
Category	Low Estimate	High Estimate
Forensic Technology (Pinnacle Forensics)	$100,000	$140,000
Private Investigations (Aurelian Investigations)	$50,000	$75,000
Damages Expert (Veltrano Consulting)	$60,000	$90,000
Injunction Bond Premium (Broadview Surety)	$15,000	$25,000
Court Costs / Filing Fees / Service	$5,000	$10,000
Travel and Related	$15,000	$25,000
Mediation Fees	$10,000	$20,000
Miscellaneous	$10,000	$15,000
Total Estimated Expenses	$265,000	$400,000
Component	Estimate
Professional Fees	~$1,541,400
Expenses and Disbursements	~$308,600
Total Estimated Budget	~$1,850,000

MEMORANDUM
Privileged & Confidential — Attorney Work Product
TO: Renata Vasquez, Billing Partner, Labor & Employment (Los Angeles Office)
FROM: Bernard Crawford, Responsible Partner, Labor & Employment (Washington, DC Office)
DATE: February 18, 2025
RE: Staffing Plan and Preliminary Budget — Cascade Retail Holdings Inc. v. Rathore et al.; Restrictive Covenant Enforcement, Trade Secret Misappropriation, and Related Claims
MATTER NO.: 1038-00006
COPIES: File
I. Engagement Overview
This memorandum sets forth the proposed staffing plan, preliminary budget estimate, and immediate action items for the above-referenced matter. The purpose of this memorandum is to provide you, as billing partner, with a comprehensive overview of anticipated resource requirements, professional fee estimates, and projected expenses so that we may establish appropriate billing protocols, communicate a credible budget framework to the client, and ensure that our staffing is aligned with the complexity and urgency of the engagement.
Calderwood & Harkness LLP was formally engaged today, February 18, 2025, by Cascade Retail Holdings Inc. ("CRH"), a Delaware corporation publicly traded on the Nasdaq Stock Market (ticker symbol: CRHL), with its principal executive offices located at 2200 Elliott Avenue West, Suite 3400, Seattle, Washington 98119. The engagement letter was reviewed and executed by Theresa Yun-Park, General Counsel of CRH, following preliminary discussions between Ms. Yun-Park and me over the preceding several days.
The scope of our representation encompasses the enforcement of restrictive covenant provisions — specifically, non-competition, non-solicitation, and confidentiality obligations — against eight former senior merchandising employees who resigned from CRH in what appears to have been a coordinated departure on February 7, 2025. All eight individuals have joined, or are in the process of joining, Verdana Commerce Group, Inc. ("VCG" or "Verdana"), a direct competitor of CRH in the retail merchandising and e-commerce sector. Verdana is headquartered in Wilmington, Delaware. Our representation also encompasses potential claims for trade secret misappropriation under the Delaware Uniform Trade Secrets Act, 6 Del. C. § 2001 et seq. ("DUTSA"), as well as tortious interference with contractual relations and civil conspiracy claims against Verdana and, potentially, its private equity sponsor.
The eight departing employees — collectively referred to herein as the "Rathore Group" — are led by Priya Rathore, who served as CRH's Senior Vice President of Merchandising. The remaining seven members of the Rathore Group are: Derek Linden (Vice President, Category Strategy), Sonia Kaczmarek (Vice President, Vendor Relations), Amara Osei (Director, Private Label Development), Brent Halvorsen (Director, Seasonal Buying), Lucia Fernandez-Gill (Director, Pricing Analytics), Nathan Tsao (Senior Manager, Sourcing Operations), and Kira Johansson (Senior Manager, Customer Segmentation). Each of these individuals held senior merchandising roles with direct access to CRH's most competitively sensitive strategic planning materials, vendor relationships, pricing data, and proprietary algorithms.
Verdana Commerce Group is a private equity-backed enterprise. A majority ownership stake in Verdana is held by Greystone Capital Partners, LP, which acquired the company in the third quarter of 2023 at an enterprise value of approximately $2.4 billion. The acquisition was effected through Greystone Capital Fund VII, LP. The involvement of a well-capitalized private equity sponsor is significant from both a litigation posture standpoint and a settlement leverage perspective, as Greystone has the financial resources to fund an aggressive defense and may itself have directed or facilitated the coordinated recruitment of the Rathore Group.
The stakes for CRH in this matter are material by any measure. CRH's merchandising division — the business unit most directly impacted by the Rathore Group's departure — accounted for approximately $2.3 billion in gross merchandise value in fiscal year 2024. CRH's total annual revenue for FY2024 was $6.82 billion, and its current market capitalization is approximately $4.1 billion. The loss of an entire senior merchandising leadership team, combined with the potential compromise of CRH's proprietary strategic planning and vendor relationship data, poses a significant threat to CRH's competitive position and shareholder value.
All eight employment agreements are governed by Delaware law pursuant to their respective choice-of-law provisions. The non-competition periods contained in the agreements range from twelve (12) to eighteen (18) months following termination of employment, and the non-solicitation periods range from eighteen (18) to twenty-four (24) months. Each agreement also contains a perpetual confidentiality obligation with respect to trade secrets and proprietary information, with a five-year tail on other categories of confidential information.
Based on preliminary analysis, we anticipate filing the action in the Delaware Court of Chancery, seeking emergency injunctive relief in the form of a temporary restraining order ("TRO") and preliminary injunction. The Court of Chancery is the appropriate forum given the equitable nature of the relief sought and Delaware's well-developed body of restrictive covenant jurisprudence. We will also seek to add Verdana as a defendant on tortious interference and conspiracy theories, which may present jurisdictional advantages given Verdana's Delaware domicile.
Our primary in-house contacts for this engagement are as follows: Theresa Yun-Park, General Counsel (primary legal contact and engagement signatory); Roland Ashby, Chief People Officer (factual background, employment records, and HR-related matters); and Martin Cho, Vice President of Merchandising, who is serving as acting interim Senior Vice President of Merchandising following Ms. Rathore's departure (subject matter expertise regarding the proprietary materials and competitive dynamics at issue).
II. Matter Complexity and Anticipated Phases
This matter presents substantial complexity across multiple dimensions: the number of individual defendants, the coordinated nature of their departure, the potential involvement of a well-financed private equity sponsor, the volume of proprietary information at risk, and the need for emergency equitable relief in a highly fact-intensive setting. To structure our staffing and budget analysis, I have organized the anticipated work into four phases that correspond to the likely progression of the matter. These phases are described in detail below.
A. Phase 1: Investigation and Factual Development (Weeks 1–2, approximately February 18 – March 3, 2025)
The first phase will focus on assembling the factual foundation necessary to support emergency litigation. This phase is critical because the strength of our TRO and preliminary injunction application will depend entirely on the quality and specificity of the factual record we develop during this period.
The principal workstreams during Phase 1 are as follows:
Employment Agreement Review and Analysis. We will obtain and review all eight employment agreements, together with any amendments, addenda, equity award agreements, and ancillary restrictive covenant agreements (e.g., invention assignment or intellectual property agreements) applicable to the Rathore Group members. Each agreement will be analyzed to determine the precise scope, duration, geographic reach, and enforceability of the applicable non-competition, non-solicitation, and confidentiality provisions. We will prepare a detailed covenant summary memorandum and a comparative chart identifying the specific obligations of each departing employee, the commencement and expiration dates of each restricted period, and any material variations among the agreements that could affect enforceability or litigation strategy.
Forensic Technology Engagement. We intend to engage Pinnacle Forensics LLC, based in Silver Spring, Maryland, to perform forensic imaging of all CRH-issued devices (laptops, mobile phones, and tablets) previously assigned to the Rathore Group members, as well as a comprehensive analysis of cloud access logs, email activity, file download and transfer records, and removable media usage during the period preceding the coordinated resignation. The engagement lead at Pinnacle will be Dr. Rajiv Anand, who has extensive experience in trade secret misappropriation forensics and has testified as an expert in the Court of Chancery on prior occasions. Our target engagement date for Pinnacle is February 20, 2025, and we will seek to have preliminary forensic findings available no later than the end of Phase 1 to inform the content of our TRO application.
Private Investigator Engagement. We also intend to engage Aurelian Investigations Group Inc., based in Seattle, Washington, to investigate the circumstances surrounding the coordinated departure. The lead investigator will be Sandra Fielding, who specializes in corporate departures and competitive intelligence matters. The investigation will focus on identifying the timeline and nature of pre-resignation communications between the Rathore Group members and Verdana or its agents, the identity of any Verdana recruiters or intermediaries involved, the existence of any pre-resignation planning or coordination among the departing employees, and any evidence of solicitation of remaining CRH employees. Our target engagement date for Aurelian is February 21, 2025.
Proprietary Materials Risk Assessment. Working with Martin Cho and CRH's internal teams, we will catalog and analyze the proprietary materials to which the Rathore Group had access, with a particular focus on materials that may qualify as trade secrets under DUTSA. Based on preliminary discussions with Ms. Yun-Park, the most sensitive materials at risk include: (i) Project Ridgeline, which is CRH's five-year category expansion roadmap encompassing planned entry into new product verticals and market segments; (ii) CRH's vendor negotiation playbooks, which contain proprietary strategies, pricing floors, margin targets, and negotiation protocols for relationships with over 300 key suppliers; (iii) seasonal buying algorithms developed by CRH's data science team that drive purchasing decisions across all product categories; (iv) private-label sourcing strategies, including supplier identities, cost structures, and exclusivity arrangements for CRH's proprietary brand portfolio; and (v) customer segmentation data derived from CRH's loyalty program and digital commerce platforms. Each of these categories will be assessed against the DUTSA definition of "trade secret" to determine whether CRH took reasonable measures to maintain secrecy and whether the information derives independent economic value from not being generally known.
Trade Secret Classification Analysis. In connection with the proprietary materials assessment, we will prepare a formal trade secret classification analysis under DUTSA. This analysis will evaluate each category of information against the statutory requirements, document the reasonable measures CRH has taken to protect its trade secrets (including access controls, classification protocols, encryption, and contractual protections), and identify any weaknesses in CRH's trade secret protection program that opposing counsel might exploit.
Cease-and-Desist Letters. We will prepare and send cease-and-desist letters to each of the eight departing employees individually, to Verdana Commerce Group, Inc. (addressed to its general counsel or registered agent), and to Greystone Capital Partners, LP. The letters will place all recipients on notice of CRH's contractual rights, demand immediate compliance with the applicable restrictive covenants, demand preservation and return of all CRH proprietary materials, and advise that CRH intends to pursue all available legal remedies.
B. Phase 2: Emergency Litigation — TRO/PI (Weeks 2–5, approximately March 1 – March 21, 2025)
Phase 2 is the most resource-intensive phase of the engagement and encompasses the preparation and prosecution of CRH's application for emergency injunctive relief in the Delaware Court of Chancery.
Verified Complaint. We will draft and file a Verified Complaint asserting claims for breach of contract (restrictive covenant violations) against each of the eight individual defendants, trade secret misappropriation under DUTSA against the individual defendants and Verdana, tortious interference with contractual relations against Verdana and potentially Greystone, and civil conspiracy against all defendants. The Verified Complaint will need to be supported by sworn verification from an authorized CRH representative, most likely Ms. Yun-Park or Mr. Ashby.
TRO and Preliminary Injunction Motion. Contemporaneously with the filing of the Verified Complaint, we will file a Motion for Temporary Restraining Order and Preliminary Injunction, supported by a comprehensive memorandum of law. The memorandum will address the four-factor test for preliminary injunctive relief under Delaware law: (1) reasonable probability of success on the merits, (2) irreparable harm absent injunctive relief, (3) balance of hardships favoring the movant, and (4) consistency with the public interest. Given the nature of the claims, particular emphasis will be placed on demonstrating the enforceability of the restrictive covenants under Delaware's reasonableness standard and establishing the inevitable disclosure doctrine or actual misappropriation as a basis for the trade secret claims.
Supporting Declarations. We will prepare declarations from multiple witnesses and experts to support the TRO/PI application, including: (i) a declaration from Theresa Yun-Park addressing CRH's business, the employment relationships, the restrictive covenant provisions, and the circumstances of the Rathore Group's coordinated departure; (ii) a declaration from Roland Ashby addressing the employment history, compensation, and access levels of each departing employee; (iii) a declaration from the forensic expert (Dr. Anand) addressing any evidence of data exfiltration, unauthorized downloads, or suspicious access activity; (iv) a declaration from the investigator (Ms. Fielding) addressing evidence of pre-departure coordination and Verdana recruitment activity; and (v) a declaration from the economic damages expert (Dr. Oberg) providing a preliminary quantification of the competitive harm to CRH.
Damages Expert Engagement. We intend to engage Veltrano Consulting Group LLC, based in Chicago, Illinois, to provide economic damages analysis. The lead expert will be Dr. Franklin Oberg, who specializes in quantifying competitive harm in trade secret and restrictive covenant matters. Our target engagement date is early March 2025, timed to allow Dr. Oberg to provide preliminary findings for inclusion in the TRO/PI application. Dr. Oberg's preliminary analysis will address the value of the proprietary information at risk, the competitive advantage conferred on Verdana, and the projected revenue and margin impact on CRH's merchandising division.
Injunction Bond. Delaware Court of Chancery Rule 65(c) requires the posting of a bond or other security as a condition of injunctive relief. Based on the scope of the injunction sought and the potential for wrongful injunction damages, we anticipate the Court will require a bond in the range of $2 million to $3 million. We have identified Broadview Surety Corp., based in New York, New York, as the anticipated surety provider. The premium on such a bond is typically 1% to 1.5% of the face amount, which translates to an estimated cost of $15,000 to $25,000 as reflected in the expense budget below.
Expedited discovery. If the Court schedules a preliminary injunction hearing (as opposed to ruling on the TRO papers alone), we will need to manage expedited discovery, which may include written discovery requests, document production, and potentially limited depositions of one or more members of the Rathore Group and Verdana's Chief Executive Officer or Chief People Officer. Expedited discovery in the Court of Chancery is typically compressed into a one-to-two-week period, and we must be prepared to handle the associated workload on an accelerated timeline.
Reply Briefing and Hearing Preparation. Following the filing of any opposition by defendants, we will prepare a reply memorandum and any necessary supplemental declarations. We will also prepare for and attend the TRO hearing and, if separate, the preliminary injunction hearing before the assigned Vice Chancellor. I will serve as lead counsel at all hearings.
C. Phase 3: Settlement / Resolution (Weeks 4–8, approximately March 15 – April 14, 2025)
Based on my experience with coordinated departure and trade secret matters of this type, I anticipate that the matter is most likely to resolve through negotiated settlement, particularly if we are successful in obtaining a TRO or demonstrating a strong likelihood of success on the merits at the preliminary injunction stage. The issuance of even a limited TRO typically creates significant pressure on both the individual defendants and the corporate competitor to negotiate, as the injunction constrains the competitive activity that motivated the coordinated departure in the first instance.
Phase 3 will encompass the following workstreams:
Settlement Strategy and BATNA Analysis. We will develop a comprehensive settlement strategy, including a detailed best alternative to negotiated agreement ("BATNA") analysis. This analysis will assess CRH's litigation position, the likely range of outcomes at trial, the costs and risks of continued litigation, the reputational considerations for both sides, and the economic value of various settlement components (including the duration and scope of enforceable restrictions, data return and destruction obligations, financial consideration, and equity forfeiture). The BATNA analysis will be prepared in coordination with CRH's in-house team and will inform the negotiation parameters presented to the Board of Directors.
Mediation Preparation and Attendance. If settlement discussions materialize — whether through informal channels or a court-directed or party-initiated mediation — we will prepare a comprehensive mediation statement and attend the mediation session. I anticipate that a retired Vice Chancellor or experienced commercial mediator, potentially through Meridian ADR Services LLC or a comparable provider, would serve as mediator. Our share of mediation fees is estimated at $10,000 to $20,000, depending on the mediator selected and the number of sessions required.
Settlement Documentation. Settlement of a matter of this complexity will require the preparation and negotiation of multiple interrelated documents. At a minimum, we anticipate the following: (i) a standstill agreement establishing interim obligations during the pendency of settlement negotiations; (ii) a consent order to be entered by the Court of Chancery memorializing the injunctive terms of the settlement; (iii) a comprehensive data destruction protocol governing the identification, return, and certified destruction of all CRH proprietary materials in the possession of the Rathore Group members and Verdana; (iv) a compliance monitor framework establishing the terms of engagement, scope of authority, and reporting obligations of an independent compliance monitor to oversee adherence to the settlement terms; and (v) equity forfeiture documentation addressing the forfeiture of unvested restricted stock units ("RSUs") and other equity awards held by the departing employees, as well as potential clawback of previously vested equity to the extent permitted under CRH's equity plan and the individual award agreements.
Corporate Governance Deliverables. The materiality of this matter to CRH's business and financial position will require several corporate governance deliverables, including: (i) memoranda to CRH's Board of Directors providing status updates and seeking authority for settlement within approved parameters; (ii) board resolutions authorizing settlement; (iii) notification to the Audit Committee, given the potential financial impact and the involvement of senior officers; (iv) analysis of CRH's disclosure obligations under SEC regulations (including Item 1.05 of Form 8-K for material cybersecurity incidents, if applicable, and potential disclosure in quarterly filings under Item 103 of Regulation S-K for legal proceedings); and (v) notification to Keypoint National Bank, CRH's administrative agent under its revolving credit facility, to the extent required by the reporting covenants of the credit agreement.
Closing Mechanics. Upon execution of settlement documentation, we will manage all closing mechanics, including filing the consent order with the Court, confirming execution and delivery of all settlement documents, verifying compliance with any initial settlement obligations, and effectuating the dismissal of any remaining claims.
D. Phase 4: Post-Settlement Compliance Monitoring (Months 2–14)
If the settlement includes the appointment of an independent compliance monitor — which we anticipate recommending — Phase 4 will involve reduced-intensity but ongoing oversight of the compliance monitoring process. This will include periodic review of monitor reports, preparation and filing of periodic court status letters (if required by the consent order), consultation with the client on any compliance issues identified by the monitor, and general matter administration through the conclusion of the restricted periods and formal closing of the matter. The costs of the compliance monitor itself are anticipated to be shared with the counterparty pursuant to the settlement terms, but our own professional fees for oversight during this phase will constitute a modest ongoing expense.
III. Proposed Staffing Plan
The staffing plan set forth below is designed to provide the depth of coverage necessary for a complex, multi-phase engagement while maintaining cost efficiency. Given the emergency timeline for Phase 2 and the volume of work required across all phases, I propose a core team of four timekeepers: two partners and two associates. If additional resources become necessary — for example, if expedited discovery requires contract attorney support for document review — I will seek your approval before adding headcount. The proposed team members, their roles, and estimated hours are as follows.
A. Bernard Crawford — Responsible Partner
Office: 1301 K Street NW, Suite 1200, Washington, DC 20005
Billing Rate (2025): $1,350 per hour
Role: I will serve as the responsible partner on this engagement with overall responsibility for matter strategy, key client communications, and all court appearances. Specifically, my role will include: direct communication with Theresa Yun-Park and CRH senior leadership (including CEO Marcus Langford, as needed, given the materiality of this matter and the potential for board-level involvement); development and execution of overall litigation and settlement strategy; lead role on all settlement negotiations and mediations; lead counsel at all court appearances, including the TRO and preliminary injunction hearings before the Court of Chancery; final review and approval of all court filings and major work product; and engagement management, including vendor oversight and coordination with the forensic, investigative, and damages expert teams.
Estimated Hours: Approximately 220 hours across all four phases, distributed roughly as follows: Phase 1 — 30 hours; Phase 2 — 100 hours; Phase 3 — 70 hours; Phase 4 — 20 hours.
Estimated Fees (Crawford): 220 hours × $1,350/hour = $297,000.
B. Renata Vasquez — Billing Partner
Office: 601 South Figueroa Street, Suite 4200, Los Angeles, CA 90017
Billing Rate (2025): $1,275 per hour
Role: As billing partner, you will co-supervise litigation strategy and provide partner-level review of all court filings and settlement documents. You will also be responsible for budget oversight and client billing administration, serving as the secondary client contact, and contributing to settlement strategy development and the BATNA analysis. Given your experience with SEC disclosure matters and corporate governance issues in the employment context, I am also asking that you take the lead on the SEC disclosure analysis and support the preparation of corporate governance deliverables (board memoranda, audit committee notification, and credit agreement notification).
Estimated Hours: Approximately 180 hours across all four phases, distributed roughly as follows: Phase 1 — 20 hours; Phase 2 — 75 hours; Phase 3 — 70 hours; Phase 4 — 15 hours.
Estimated Fees (Vasquez): 180 hours × $1,275/hour = $229,500.
C. James Underwood — Lead Associate
Office: 1301 K Street NW, Suite 1200, Washington, DC 20005
Billing Rate (2025): $785 per hour
Role: James will serve as the lead associate on the matter and will be the primary drafter of all court filings and substantive legal work product. His responsibilities will include: drafting the Verified Complaint, the TRO and preliminary injunction motion, all memoranda of law, and the reply brief; leading legal research on Delaware restrictive covenant enforceability standards, DUTSA trade secret analysis, inevitable disclosure doctrine, consent order practice in the Court of Chancery, and related issues; serving as the primary drafter of settlement documentation (standstill agreement, consent order, data destruction protocol, compliance monitor framework, and equity forfeiture documentation); managing the day-to-day relationships with our forensic, investigative, and damages expert vendors (Pinnacle Forensics, Aurelian Investigations, and Veltrano Consulting); preparing and coordinating witness declarations; drafting the mediation statement; preparing corporate governance memoranda and SEC disclosure analysis under your supervision; and managing the day-to-day workflow of the case.
Estimated Hours: Approximately 640 hours across all four phases, distributed roughly as follows: Phase 1 — 100 hours; Phase 2 — 280 hours; Phase 3 — 200 hours; Phase 4 — 60 hours.
Estimated Fees (Underwood): 640 hours × $785/hour = $502,400.
D. Devon Archer — Working Associate
Office: 1301 K Street NW, Suite 1200, Washington, DC 20005
Billing Rate (2025): $625 per hour
Role: Devon will serve as the working associate and will support James across all phases of the engagement. Devon's responsibilities will include: conducting supporting legal research and drafting; reviewing all eight employment agreements and preparing the covenant comparison chart; reviewing and analyzing forensic data produced by Pinnacle, including evidence of potential data exfiltration; preparing supporting memoranda on discrete topics (data exfiltration findings, Verdana press release and public communications analysis, RSU forfeiture calculations, compliance monitor evaluation and recommendation); redlining and revising settlement documents based on negotiation changes; preparing exhibits and appendices for court filings; monitoring social media and public statements by the Rathore Group members and Verdana for evidence relevant to the litigation (particularly any statements regarding their new roles or competitive plans); managing the closing checklist, signature tracking, and matter administration logistics; and supporting mediation preparation.
Estimated Hours: Approximately 820 hours across all four phases, distributed roughly as follows: Phase 1 — 140 hours; Phase 2 — 350 hours; Phase 3 — 260 hours; Phase 4 — 70 hours.
Estimated Fees (Archer): 820 hours × $625/hour = $512,500.
E. Staffing Summary Table
Note: All hour estimates are preliminary and will be refined as the matter progresses and the scope of required work becomes clearer. The estimates above reflect what I believe is a realistic assessment of the resource requirements given the complexity and urgency of the engagement, the number of defendants, the volume of proprietary materials at issue, and the anticipated litigation and settlement workstreams.
IV. Estimated Expenses and Disbursements
In addition to professional fees, the engagement will generate significant out-of-pocket expenses and third-party vendor costs. All expenses will be billed to the client at cost in accordance with the engagement letter and the firm's standard billing practices. The principal categories of anticipated expenses and their estimated ranges are set forth below.
A. Forensic Technology and eDiscovery
Pinnacle Forensics LLC will be engaged to perform forensic imaging of all CRH-issued devices previously assigned to the Rathore Group members, comprehensive analysis of cloud access logs (including Ashgrove Software, Aldermere Systems, Cobalt Ridge Systems, and any other enterprise platforms to which the departing employees had access), analysis of email activity and file transfer patterns, review of USB and removable media usage logs, and preparation of a detailed forensic report suitable for use in the TRO/PI application. Based on preliminary scoping discussions with Dr. Anand, the estimated cost of the Pinnacle engagement is $100,000 to $140,000, depending on the volume of data involved and the complexity of the analysis.
Additionally, if the settlement includes a provision requiring a forensic audit of Verdana's systems to verify compliance with data destruction obligations, the costs of such an audit would be allocated to the counterparty pursuant to the settlement terms and would not be borne by CRH (except to the extent a negotiated cost-sharing arrangement provides otherwise).
B. Private Investigations
Aurelian Investigations Group Inc. will be engaged to investigate the circumstances of the coordinated departure, including the timeline and nature of pre-resignation communications between the Rathore Group members and Verdana or its agents, the identity of any recruiters, headhunters, or intermediaries involved in the recruitment process, evidence of pre-departure planning or coordination among the departing employees, and any evidence of solicitation of remaining CRH employees. The estimated cost of the Aurelian engagement is $50,000 to $75,000, depending on the scope and duration of the investigation.
C. Damages Expert
Veltrano Consulting Group LLC (Dr. Franklin Oberg) will be engaged to provide economic damages analysis. The engagement will encompass a preliminary damages quantification for use in the TRO/PI application (estimating the competitive harm to CRH from the Rathore Group's departure and potential trade secret misappropriation) and, if necessary, a more comprehensive damages analysis for settlement valuation purposes or trial preparation. The estimated cost of the Veltrano engagement is $60,000 to $90,000, depending on the scope of the analysis and whether a full damages report is required.
D. Injunction Bond Premium
As noted above, we anticipate that the Court of Chancery will require the posting of an injunction bond in the range of $2 million to $3 million as a condition of any TRO or preliminary injunction. The premium charged by the surety (Broadview Surety Corp.) is estimated at $15,000 to $25,000, based on a premium rate of approximately 1% to 1.5% of the bond face amount. The bond premium is a non-recoverable client expense.
E. Court Costs, Filing Fees, and Service
Delaware Court of Chancery filing fees, costs of service of process on all defendants (including personal service on eight individual defendants and service on two corporate entities), and pro hac vice admission fees for Washington, DC-based attorneys (Crawford, Underwood, and Archer) who are not members of the Delaware Bar are estimated at $5,000 to $10,000 in the aggregate.
F. Travel and Related
This engagement will require travel for the Washington, DC-based team members (Crawford, Underwood, and Archer) to Wilmington, Delaware for court hearings, mediation sessions, and settlement meetings. Additionally, travel for you (Vasquez) from Los Angeles to Wilmington or Washington, DC may be required for certain key events. We may also need to travel to Seattle for client meetings and witness preparation. Estimated travel expenses (airfare, ground transportation, lodging, and meals) across all phases are $15,000 to $25,000.
G. Mediation Fees
If the matter proceeds to mediation — whether through voluntary agreement or court suggestion — CRH's share of the mediator's fees is estimated at $10,000 to $20,000. This estimate assumes a single mediation session of one to two days with a retired judicial officer or experienced commercial mediator, potentially through Meridian ADR Services LLC or a comparable provider. If multiple sessions are required, costs could exceed this range, and a revised estimate would be provided.
H. Other (Copying, Couriers, Research Databases, etc.)
Miscellaneous expenses, including high-volume copying and printing for court submissions, overnight courier charges, online legal research database charges (Westmark Data Systems, Sundial Solutions), specialized database searches, and other incidental costs, are estimated at $10,000 to $15,000 across all phases.
I. Expenses Summary Table
Midpoint estimate: approximately $308,600 (calculated as the simple average of the low and high estimates for each category, summed across all categories, and rounded for convenience).
V. Total Preliminary Budget Estimate
Combining the professional fee estimates set forth in Section III with the expense estimates set forth in Section IV, the total preliminary budget for the engagement is as follows:
Several important qualifications apply to this estimate:
First, the estimate assumes that the matter proceeds through the emergency TRO/preliminary injunction litigation phase and resolves through negotiated settlement — a trajectory that, based on my initial assessment and my experience with matters of this type, represents the most likely scenario. If the matter does not settle following the preliminary injunction stage and proceeds to full trial on the merits, the budget would increase significantly, potentially by an additional $1 million to $2 million or more depending on the scope of discovery, the number of depositions, and the length of trial. A supplemental budget estimate would be prepared and circulated to the client promptly if the litigation trajectory shifts in that direction.
Second, the estimate does not include potential post-settlement compliance monitoring costs during Phase 4. While our own professional fees for oversight during that phase are included in the hour estimates above, the costs of the independent compliance monitor itself (which could range from $100,000 to $300,000 over a 12-month period depending on the scope of the monitor's mandate) are anticipated to be shared with or allocated entirely to the counterparty pursuant to the settlement terms.
Third, as with any litigation matter, unexpected developments — including aggressive opposition tactics, motion practice not currently anticipated, discovery disputes, or changes in the factual landscape — could affect both the professional fee and expense components of this budget. We will monitor actual costs against the budget on an ongoing basis and will promptly notify the client of any material variance.
VI. Billing and Administrative Notes
The following billing and administrative protocols will apply to this engagement:
• Matter Number: 1038-00006. All timekeepers should use this matter number for all time entries and expense charges related to this engagement.
• Billing Partner of Record: Renata Vasquez (Los Angeles office). All invoices will be issued under your name as billing partner, and you will have primary responsibility for invoice review, billing adjustments, and collections follow-up.
• Responsible Partner: Bernard Crawford (Washington, DC office). I retain overall responsibility for the substantive management of the matter, client relationship management, and staffing decisions.
• Invoicing Schedule: Monthly invoicing, in accordance with the terms of the engagement letter. Invoices are to be sent to Theresa Yun-Park, General Counsel, Cascade Retail Holdings Inc., 2200 Elliott Avenue West, Suite 3400, Seattle, WA 98119. The engagement letter specifies net-30 payment terms.
• Budget Updates to Client: Budget updates will be provided to the client at each phase transition (i.e., upon completion of Phase 1, upon conclusion of the TRO/PI hearing, and upon initiation and completion of settlement negotiations) and upon any material change in the scope of the engagement or a significant variance from the approved budget.
• Internal Budget Monitoring: You, as billing partner, will monitor actual time charges against the preliminary budget estimates on a biweekly basis. Any significant variances — defined for these purposes as actual charges exceeding the phase-specific estimate by more than 15% — should be flagged to me and to Ms. Yun-Park promptly so that we can assess whether the variance reflects a scope change requiring a budget revision or an efficiency issue requiring a staffing adjustment.
VII. Anticipated Opposing Counsel
As of the date of this memorandum, opposing counsel has not been identified for any of the defendants.
• Individual Defendants (Rathore Group): Counsel for the eight individual defendants has not yet been identified. Based on the nature and seniority of the departing employees, we expect the individual defendants to retain experienced Delaware-based litigation or employment counsel, potentially through a single firm representing all eight individuals (if no conflicts of interest preclude joint representation) or through multiple firms if individual interests diverge. Given the involvement of Greystone Capital Partners, it is also possible that Verdana or Greystone will fund or arrange defense counsel for the individual defendants as a condition of their employment with Verdana.
• Verdana Commerce Group, Inc.: Counsel for Verdana has not yet been identified. Given Verdana's Delaware domicile and the involvement of Greystone Capital Partners, we expect Verdana to retain a prominent Delaware-based litigation firm with Court of Chancery experience.
• Conflicts Supplemental Check: Once opposing counsel enters an appearance for any defendant, we will promptly run a supplemental conflicts check to confirm that no new conflicts have arisen as a result of the opposing counsel identification.
VIII. Immediate Next Steps and Action Items
The following action items require immediate attention and should be commenced without delay:
1. Crawford: Conduct initial strategy call with Theresa Yun-Park and Roland Ashby to confirm the factual background, obtain copies of all eight employment agreements and related documents, and discuss CRH's litigation objectives and settlement parameters. This call is scheduled for February 19, 2025.
2. Underwood / Archer: Upon receipt of the employment agreements, begin a comprehensive review of all eight agreements. Prepare the covenant summary memorandum and comparative chart identifying the scope, duration, geographic reach, and enforceability of each restrictive covenant provision. Target completion: February 22, 2025.
3. Crawford: Finalize the engagement of Pinnacle Forensics LLC (Dr. Rajiv Anand) for forensic imaging and cloud log analysis. Target: February 20, 2025. Finalize the engagement of Aurelian Investigations Group Inc. (Sandra Fielding) for investigation of the coordinated departure. Target: February 21, 2025.
4. Crawford (with Underwood): Prepare and issue a litigation hold notice for distribution to all relevant CRH custodians (including Ms. Yun-Park, Mr. Ashby, Mr. Cho, IT personnel, and any other employees with potentially relevant documents or communications). The litigation hold must be issued promptly to preserve CRH's obligations and to establish CRH's good faith in connection with any discovery disputes. Target: February 19, 2025.
5. Underwood / Archer: Draft cease-and-desist letters to all eight departing employees (individually addressed), to Verdana Commerce Group, Inc., and to Greystone Capital Partners, LP. The letters should be reviewed by Crawford prior to issuance. Target for partner review: February 24, 2025. Target for issuance: February 25, 2025.
6. Underwood: Begin legal research on Delaware restrictive covenant enforceability standards, including the current state of the law on reasonableness of scope, duration, and geographic restrictions; the blue-pencil doctrine; the inevitable disclosure doctrine under Delaware law; and DUTSA trade secret requirements (including the definition of "trade secret," the "reasonable measures" prong, and available remedies). This research will form the foundation of our memorandum of law in support of the TRO/PI motion.
7. Crawford: Coordinate with CRH (through Ms. Yun-Park or her designee) regarding injunction bond sourcing. Confirm that CRH has identified Broadview Surety Corp. as the preferred surety provider, and initiate the application process so that the bond can be posted promptly upon the filing of the TRO motion.
8. Vasquez: Establish all billing codes, complete matter setup in the firm's practice management system, and implement the budget tracking protocols described in Section VI above. Confirm that the billing rates reflected in this memorandum are accurate and consistent with the rates set forth in the engagement letter.
Closing
Renata, I would appreciate your confirmation of the staffing plan set forth above, including verification that the billing rates are accurately stated and any suggested adjustments to the projected hours or budget allocations for each team member. If you have concerns about the overall budget range or believe that additional resources should be added to the team at the outset, please let me know at your earliest convenience so that we can discuss before the initial client call tomorrow.
As noted throughout this memorandum, the estimates provided herein are preliminary in nature and are subject to refinement as the facts develop — particularly once the forensic and investigative findings from Pinnacle and Aurelian become available and the litigation trajectory becomes clearer following the filing of our TRO application. I will prepare and circulate a revised fee estimate to the client following any material change in case posture, including the emergence of settlement discussions, the identification of opposing counsel, or the determination that trial preparation is necessary.
Thank you for your attention to these matters. I look forward to working with you on this engagement.
Bernard Crawford Responsible Partner, Labor & Employment Calderwood & Harkness LLP 1301 K Street NW, Suite 1200 Washington, DC 20005 Direct: (202) 555-4100 bcrawford@calderwoodharkness.com
Timekeeper | Role | Rate | Est. Hours | Est. Fees
Bernard Crawford | Responsible Partner | $1,350/hr | ~220 | $297,000
Renata Vasquez | Billing Partner | $1,275/hr | ~180 | $229,500
James Underwood | Lead Associate | $785/hr | ~640 | $502,400
Devon Archer | Working Associate | $625/hr | ~820 | $512,500
Total Professional Fees | ~1,860 | $1,541,400
Category | Low Estimate | High Estimate
Forensic Technology (Pinnacle Forensics) | $100,000 | $140,000
Private Investigations (Aurelian Investigations) | $50,000 | $75,000
Damages Expert (Veltrano Consulting) | $60,000 | $90,000
Injunction Bond Premium (Broadview Surety) | $15,000 | $25,000
Court Costs / Filing Fees / Service | $5,000 | $10,000
Travel and Related | $15,000 | $25,000
Mediation Fees | $10,000 | $20,000
Miscellaneous | $10,000 | $15,000
Total Estimated Expenses | $265,000 | $400,000
Component | Estimate
Professional Fees | ~$1,541,400
Expenses and Disbursements | ~$308,600
Total Estimated Budget | ~$1,850,000

MEMORANDUM

MATTER NO.: 1038-00006

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