PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION
CALDERWOOD & HARKNESS LLP Attorneys at Law 1301 K Street NW, Suite 1200 Washington, DC 20005 Tel: (202) 555-7800
Fax: (202) 555-7801
www.calderwoodharkness.com
April 10, 2025
Matter No. 1038-00006
VIA ELECTRONIC MAIL AND HAND DELIVERY
Members of the Compensation Committee Board of Directors Cascade Retail Holdings Inc. 2200 Elliott Avenue West, Suite 3400 Seattle, WA 98119
Re: Equity Clawback and Forfeiture Summary — Settlement of *Cascade Retail Holdings Inc. v. Rathore et al.*, C.A. No. 2025-0198-MTZ (Del. Ch.)
Dear Members of the Compensation Committee:
I. Introduction and Purpose
Calderwood & Harkness LLP represents Cascade Retail Holdings Inc. ("CRH" or the "Company") in the above-referenced covenant-enforcement and trade-secret litigation currently pending before Vice Chancellor Margaret T. Zhao in the Delaware Court of Chancery. We appreciate the Committee's continued engagement on this matter, and we write to provide a detailed summary of one critical dimension of the forthcoming settlement resolution.
The purpose of this letter is to provide the Compensation Committee with a comprehensive summary of the equity clawback and forfeiture provisions contained in the Standstill and Settlement Agreement (the "Settlement Agreement") that is currently in near-final form. The Fourth Draft of the Settlement Agreement, dated April 8, 2025, reflects the product of extensive negotiation between the parties and their respective counsel, and execution of the Settlement Agreement is targeted for April 14, 2025, subject to the Committee's and the Board's required authorizations as described below.
We are submitting this letter to the Compensation Committee specifically in connection with any required committee-level authorization or ratification of the equity forfeiture and clawback actions described herein. The equity-related components of the settlement implicate the Company's equity incentive plan, the individual equity award agreements of the departing employees, and the operational mechanics of the Company's transfer agent, Northland Trust Company. Accordingly, coordination among the Compensation Committee, the Company's management team, and outside advisors will be essential to ensure orderly implementation upon execution.
For the Committee's reference, a separate memorandum addressed to the full Board of Directors summarizing all settlement terms — including the $8,750,000 cash settlement payment, the $425,000 litigation cost reimbursement, the modified restrictive covenant terms, and the compliance monitoring arrangement — is being circulated concurrently under the same date. This letter is intended to supplement that memorandum with the granular detail necessary for the Committee's discharge of its equity plan administration responsibilities.
II. Background Summary
A. The Departing Employees
On February 7, 2025, at approximately 4:47 PM PST, eight senior employees within CRH's Merchandising division (the "Rathore Group") submitted simultaneous resignations to the Company. The coordinated nature and timing of these resignations — delivered in the late afternoon on a Friday — were plainly orchestrated to maximize disruption and minimize the Company's ability to take immediate protective action. Within days, all eight individuals commenced employment with Verdana Commerce Group, Inc. ("Verdana"), a direct competitor of CRH in the mass-market retail space.
The departing employees, led by Priya Rathore, the former Senior Vice President of Merchandising who served as the most senior merchandising executive at CRH, are as follows:
1. Priya Rathore — Former Senior Vice President, Merchandising. Employment dates: June 3, 2019 through February 7, 2025 (approximately five years and eight months). Ms. Rathore reported directly to CRH's Chief Commercial Officer and oversaw the entirety of CRH's merchandising operations across all product categories, channels, and geographies.
2. Derek Linden — Former Vice President, Hardlines Merchandising. Mr. Linden served CRH for approximately seven years and was responsible for all hardlines category strategy, vendor management, and margin optimization across CRH's brick-and-mortar and digital channels.
3. Sonia Kaczmarek — Former Vice President, Softlines Merchandising. Ms. Kaczmarek served CRH for approximately five years and managed CRH's softlines portfolio, including private-label apparel programs that represented a significant and growing share of CRH's gross margin.
4. Amara Osei — Former Director, Private Label Strategy. Ms. Osei served CRH for approximately four years and was instrumental in developing CRH's proprietary private-label brand architecture, including sourcing relationships, cost modeling, and go-to-market strategies.
5. Brent Halvorsen — Former Director, Seasonal Planning & Analytics. Mr. Halvorsen served CRH for approximately six years and led the development of CRH's proprietary seasonal demand-forecasting models and assortment optimization tools.
6. Lucia Fernandez-Gill — Former Director, Vendor Relations (Domestic). Ms. Fernandez-Gill served CRH for approximately five years and managed relationships with CRH's domestic vendor base, including negotiation of volume discounts, promotional allowances, and exclusive distribution arrangements.
7. Nathan Tsao — Former Senior Manager, eCommerce Merchandising. Mr. Tsao served CRH for approximately three years and was responsible for digital merchandising execution, including product taxonomy, search optimization, and personalization algorithms for CRH's e-commerce platform.
8. Kira Johansson — Former Senior Manager, Category Analytics. Ms. Johansson served CRH for approximately four years and led the Category Analytics team, which produced the category-level performance dashboards, competitive benchmarking analyses, and price-elasticity models relied upon by CRH's senior merchandising leadership.
Collectively, the Rathore Group represented the core leadership tier of CRH's Merchandising function, and their simultaneous departure to a direct competitor constituted a significant competitive threat to the Company.
B. Litigation Posture
In response to the coordinated departures and the evidence of pre-resignation data exfiltration, CRH filed a Verified Complaint in the Delaware Court of Chancery on March 5, 2025, bearing Case No. 2025-0198-MTZ and assigned to Vice Chancellor Margaret T. Zhao. The Verified Complaint asserted claims for (i) breach of restrictive covenant agreements (non-competition and non-solicitation), (ii) breach of confidentiality and non-disclosure obligations, (iii) misappropriation of trade secrets under the Delaware Uniform Trade Secrets Act, 6 Del. C. §§ 2001–2009, (iv) tortious interference with contractual relations (asserted against Verdana), and (v) civil conspiracy (asserted against all defendants jointly).
On March 7, 2025, just two days after filing, CRH obtained a Temporary Restraining Order from Vice Chancellor Zhao, which enjoined the Rathore Group from utilizing or further disseminating CRH's confidential information and trade secrets and temporarily restrained several of the defendants from performing certain competitive functions at Verdana pending further proceedings. In connection with the TRO, CRH posted an injunction bond in the amount of $2,500,000 through Broadview Surety Corp., Bond No. BSC-2025-TRO-04419.
Following expedited discovery and the exchange of initial document productions, the parties participated in a mediation on March 18, 2025, before the Honorable Philip Ashford (Ret.), conducted through Meridian ADR Services LLC. After a full day of mediation and follow-up sessions over the ensuing two days, the parties reached a settlement framework on March 20, 2025. Since that date, the parties and their respective counsel have been engaged in the negotiation and drafting of the definitive Settlement Agreement, which is now in its Fourth Draft, dated April 8, 2025. The Settlement Agreement is expected to be executed on April 14, 2025, accompanied by a stipulated Consent Order to be entered by Vice Chancellor Zhao dismissing the action with prejudice.
C. Relevance of Equity Awards
Each of the eight departing employees held equity awards in the form of Restricted Stock Units ("RSUs") granted pursuant to the CRH 2018 Omnibus Equity Incentive Plan, as amended (the "Equity Plan"). These RSU awards were subject to time-based vesting schedules, generally providing for ratable annual vesting over three- or four-year periods from the applicable grant date. Critically, each employee's equity award agreement and, in the case of the more senior employees, their individual employment agreements, contained clawback and forfeiture provisions triggered by certain events, including but not limited to breach of restrictive covenant obligations, breach of confidentiality obligations, and termination for cause.
The interplay between these equity plan provisions, the individual award agreements, and the settlement terms is the subject of this letter. As discussed in detail below, the Settlement Agreement operationalizes these forfeiture and clawback rights in a manner that is consistent with the terms of the Equity Plan and the individual agreements, while also securing the departing employees' express consent to the forfeiture and clawback actions, thereby minimizing the risk of any subsequent challenge.
III. Equity Forfeiture and Clawback Provisions of the Settlement Agreement
A. Overview. The Settlement Agreement provides for equity forfeitures by all eight departing employees in the aggregate amount of $849,500, comprising the following:
• $362,500 attributable to Priya Rathore, the former Senior Vice President of Merchandising and the principal defendant in this action; and
• $487,000 attributable to the remaining seven departing employees in the aggregate.
These equity forfeitures constitute a discrete and meaningful component of CRH's total economic recovery under the Settlement Agreement, which aggregates to $10,024,500 when combined with the $8,750,000 cash settlement payment to be made by Verdana, the $849,500 in equity forfeitures described herein, and the $425,000 litigation cost reimbursement to be made by Verdana. The equity forfeiture component is particularly significant because it directly addresses the departing employees' personal accountability for their conduct and ensures that they do not retain the benefit of equity compensation granted in reliance upon their continued loyalty and compliance with their restrictive covenant obligations.
Each forfeiture is calculated based on the specific terms of the employee's RSU grant, including the grant date, grant face value, vesting schedule, and the extent to which the award had vested or remained unvested as of the February 7, 2025 resignation date. Where applicable, the forfeiture encompasses both (i) the automatic cancellation of unvested RSUs upon termination of employment and (ii) the contractual clawback of previously vested equity pursuant to the for-cause clawback provisions contained in the employees' employment agreements. We address Ms. Rathore's forfeiture calculation in detail below, followed by a summary of the aggregate forfeiture attributable to the remaining seven employees.
B. Priya Rathore — Detailed Forfeiture Calculation ($362,500)
As the most senior departing employee and the acknowledged leader of the coordinated departure, Ms. Rathore's equity forfeiture is the largest individual component of the aggregate forfeiture. The following sets forth the detailed calculation.
RSU Grant Details:
• Grant Date: March 15, 2021. This grant was made in connection with Ms. Rathore's promotion to the position of Senior Vice President, Merchandising and was documented in the Amended and Restated Employment Agreement between CRH and Ms. Rathore dated March 15, 2021 (the "Rathore Employment Agreement").
• Grant Face Value: $725,000, representing a one-time promotional equity grant intended to reflect the enhanced scope of Ms. Rathore's responsibilities and to serve as a long-term retention and alignment tool.
• Vesting Schedule: Four-year ratable annual vesting, with 25% of the grant vesting on each anniversary of the grant date, subject to Ms. Rathore's continued employment with CRH through the applicable vesting date.
• Vesting Tranches:
• Tranche 1: 25% ($181,250) — vested on March 15, 2022
• Tranche 2: 25% ($181,250) — vested on March 15, 2023
• Tranche 3: 25% ($181,250) — vested on March 15, 2024
• Tranche 4: 25% ($181,250) — scheduled to vest on March 15, 2025; unvested as of the February 7, 2025 resignation date (approximately 36 days prior to the scheduled vesting date)
• Vested at Resignation: 75% of the total grant, representing $543,750 (Tranches 1, 2, and 3).
• Unvested at Resignation: 25% of the total grant, representing $181,250 (Tranche 4).
Forfeiture Components:
The total forfeiture attributable to Ms. Rathore under the Settlement Agreement is $362,500, comprising two distinct components:
Component 1 — Automatic Forfeiture of Unvested RSUs: $181,250
Tranche 4 of Ms. Rathore's RSU grant ($181,250) had not yet vested as of her February 7, 2025 resignation date. The scheduled vesting date for this tranche was March 15, 2025, and continued employment through that date was a condition to vesting. Because Ms. Rathore voluntarily resigned prior to the vesting date, Tranche 4 was automatically forfeited upon termination of employment in accordance with the terms of the Equity Plan and the RSU Award Agreement. This forfeiture occurred by operation of the plan terms and does not require any affirmative clawback action; however, it is reflected in the Settlement Agreement to ensure clarity and to confirm Ms. Rathore's acknowledgment and consent.
Component 2 — Clawback of Final Vested Tranche: $181,250
Tranche 3 of Ms. Rathore's RSU grant ($181,250), which vested on March 15, 2024, is being clawed back pursuant to the for-cause clawback provision contained in Section 7.4(b) of the Rathore Employment Agreement. That provision provides, in relevant part, that CRH may recoup equity compensation that has vested within the twenty-four (24) months preceding a determination that the employee has breached her restrictive covenant obligations under Section 5 of the Employment Agreement. Ms. Rathore's conduct — as acknowledged in the Settlement Agreement — constitutes a breach of these restrictive covenant obligations, thereby triggering the Company's clawback rights under Section 7.4(b).
Total Rathore Forfeiture: $181,250 (unvested forfeiture) + $181,250 (vested clawback) = $362,500
Basis for Clawback Trigger:
The Settlement Agreement contains an express acknowledgment by Ms. Rathore that her conduct constitutes a breach of the restrictive covenant obligations set forth in her Amended and Restated Employment Agreement dated March 15, 2021, sufficient to trigger the for-cause clawback provision described above. Specifically, the Settlement Agreement references the following conduct:
• Ms. Rathore's orchestration of the coordinated departure of eight CRH merchandising employees to Verdana Commerce Group, Inc., a direct competitor of CRH, in violation of the eighteen-month non-competition covenant contained in Section 5.1(a) of the Rathore Employment Agreement;
• The exfiltration of approximately 14,327 files (approximately 2.8 gigabytes of data) constituting CRH confidential information and trade secrets — including vendor pricing matrices, private-label cost-of-goods models, seasonal assortment plans, and category performance analytics — from CRH systems between January 10, 2025 and February 4, 2025, a period during which Ms. Rathore was still employed by CRH but was actively preparing for her departure to Verdana; and
• The transfer of certain of these materials to personal devices and cloud storage accounts not authorized by CRH's information security policies.
Ms. Rathore's acknowledgment of these facts in the Settlement Agreement provides a clear and documented basis for the for-cause clawback and substantially mitigates the risk of any future challenge to the Company's exercise of its clawback rights.
Note on Rathore's Compensation at CRH: For the Committee's contextual reference, Ms. Rathore's compensation during her final fiscal year at CRH (FY2024) consisted of a base salary of $485,000, a target annual incentive bonus of $290,000 (representing 60% of base salary), and the RSU grant of $725,000 as described above. The forfeiture of $362,500 in equity compensation represents a meaningful financial consequence to Ms. Rathore personally, in addition to the restrictions on her competitive activities imposed by the modified non-compete terms of the Settlement Agreement.
C. Remaining Seven Employees — Aggregate Forfeiture ($487,000)
The remaining seven departing employees collectively forfeit equity valued at $487,000 in the aggregate under the Settlement Agreement. Each employee's forfeiture amount has been individually calculated based on the specific terms of their respective RSU grants, including grant date, grant value, vesting schedule, and the extent to which the award had vested or remained unvested as of the common resignation date of February 7, 2025.
As with Ms. Rathore, the forfeitures for each of the seven remaining employees comprise a combination of (i) automatic cancellation of unvested RSUs upon termination of employment, in accordance with the terms of the Equity Plan and the individual RSU Award Agreements, and (ii) where applicable, clawback of previously vested tranches pursuant to the for-cause clawback provisions contained in the employees' respective employment agreements or equity award agreements, each governed by Delaware law.
Detailed individual breakdowns for each employee are set forth in the settlement equity worksheet prepared and maintained by the Calderwood & Harkness deal team, in coordination with CRH's internal equity plan administration group. These individual computations have been reviewed for accuracy against Northland Trust Company's records and are available for the Committee's inspection upon request.
The following summary identifies each employee, their most recent position, base salary, and applicable non-compete duration:
• Derek Linden — Vice President, Hardlines Merchandising; base salary $340,000; subject to an eighteen-month non-competition covenant.
• Sonia Kaczmarek — Vice President, Softlines Merchandising; base salary $325,000; subject to an eighteen-month non-competition covenant.
• Amara Osei — Director, Private Label Strategy; base salary $265,000; subject to a twelve-month non-competition covenant.
• Brent Halvorsen — Director, Seasonal Planning & Analytics; base salary $258,000; subject to a twelve-month non-competition covenant.
• Lucia Fernandez-Gill — Director, Vendor Relations (Domestic); base salary $248,000; subject to a twelve-month non-competition covenant.
• Nathan Tsao — Senior Manager, eCommerce Merchandising; base salary $195,000; subject to a twelve-month non-competition covenant.
• Kira Johansson — Senior Manager, Category Analytics; base salary $192,000; subject to a twelve-month non-competition covenant.
Each of these employees has agreed, through the Settlement Agreement, to consent to the forfeiture and clawback of equity in the amounts specified in the settlement equity worksheet, and to waive any claims to the forfeited equity. The clawback triggers for each employee parallel those described above with respect to Ms. Rathore, namely the breach of restrictive covenant obligations arising from the coordinated departure to Verdana and, in several instances, participation in the exfiltration of CRH confidential information and trade secret materials.
IV. Mechanics of Implementation
A. Cancellation Instructions to Transfer Agent
Upon execution of the Settlement Agreement (target date: April 14, 2025), Calderwood & Harkness will transmit formal written instructions to Northland Trust Company, CRH's transfer agent, at its offices at 55 Water Street, New York, NY 10041, directing the following actions:
(a) Cancellation of all unvested RSU awards held by each of the eight departing employees as of the February 7, 2025 resignation date, confirming the automatic forfeiture that occurred by operation of the Equity Plan terms upon termination of employment;
(b) Effectuation of the clawback of applicable previously vested RSU tranches for each departing employee in accordance with the amounts specified in the Settlement Agreement and the settlement equity worksheet, including the cancellation of any shares held in trust or in book-entry form by Northland Trust Company on behalf of the departing employees attributable to the clawed-back tranches; and
(c) Updating of all shareholder records and equity plan registers maintained by Northland Trust Company to reflect the forfeitures and clawbacks described herein.
A draft of the Northland Trust Company instruction letter is being finalized concurrently with this letter and will be provided to the Committee for review prior to transmission. The instruction letter will reference the Settlement Agreement and the Consent Order entered by Vice Chancellor Zhao as the authorizing instruments for the cancellation and clawback actions.
B. Settlement Agreement Provisions
The equity forfeiture and clawback obligations are set forth in Section 4 of the execution version of the Standstill and Settlement Agreement, which contains detailed provisions addressing the following:
(a) Identification of each departing employee's forfeited and clawed-back equity, cross-referenced to the applicable RSU Award Agreement and, where applicable, the employee's individual employment agreement;
(b) Each departing employee's express consent to the forfeiture and clawback, including a representation that the employee has had the opportunity to consult with independent counsel regarding the equity consequences of the Settlement Agreement;
(c) A general release by each departing employee of any claims against CRH, the Equity Plan, and Northland Trust Company relating to the forfeited and clawed-back equity; and
(d) CRH's covenant to process the forfeitures and clawbacks in accordance with the terms of the Equity Plan and applicable law.
As noted, the Settlement Agreement is a multi-party instrument among CRH, all eight individual departing employees (Priya Rathore, Derek Linden, Sonia Kaczmarek, Amara Osei, Brent Halvorsen, Lucia Fernandez-Gill, Nathan Tsao, and Kira Johansson), and Verdana Commerce Group, Inc. Each individual employee will execute the Settlement Agreement in their individual capacity, thereby binding themselves to the forfeiture, clawback, and waiver provisions described herein.
C. Tax and Accounting Considerations
The clawback of previously vested equity raises certain tax and accounting considerations that will require coordination among CRH's external auditors, internal tax counsel, and the Company's equity plan administration function. Specifically, the Company should coordinate with Hargrove & Tillett CPA, PLLC (Denise Wheatley, Lead Audit Partner) and CRH's internal tax counsel regarding the following matters:
(a) Accounting Treatment: The reversal or adjustment of previously recognized stock-based compensation expense under ASC 718 (Compensation — Stock Compensation) attributable to the clawed-back vested equity tranches, including determination of the appropriate period in which to recognize such adjustment;
(b) Tax Reporting: Any required corrections or adjustments to Forms W-2 previously issued to the departing employees reflecting the income recognized upon vesting of the clawed-back RSU tranches, and any corresponding adjustments to the Company's payroll tax obligations and filings;
(c) Section 409A Compliance: Confirmation that the forfeiture and clawback actions do not give rise to any adverse consequences under Section 409A of the Internal Revenue Code, including potential constructive receipt or deferred compensation issues; and
(d) Litigation Contingency Accrual: The pre-settlement litigation contingency accrual of $3,500,000 recorded by the Company in Q1 2025 will need to be updated and adjusted in connection with the settlement resolution, reflecting the actual settlement terms and the economic recovery to the Company.
We understand that Hargrove & Tillett has been advised of the settlement framework at a general level, and we recommend that the Company provide them with the specific equity forfeiture details set forth in this letter promptly following the Committee's review, so that the appropriate accounting treatment can be determined in advance of the Company's next quarterly reporting deadline.
V. Context Within Overall Settlement Recovery
For the Committee's reference, the total economic recovery to CRH under the Settlement Agreement is summarized in the table below. The equity forfeiture and clawback amounts described in this letter represent approximately 8.5% of the Company's total economic recovery.
The cash settlement payment of $8,750,000 is payable by Verdana to CRH as a lump sum within thirty (30) calendar days following execution of the Settlement Agreement (i.e., by May 14, 2025, assuming an April 14, 2025 execution date). The litigation cost reimbursement of $425,000 is payable on the same schedule.
In addition to the economic recovery components set forth above, the Settlement Agreement provides for the following non-monetary terms, which are summarized here for the Committee's contextual awareness:
• Modified Restrictive Covenant Terms: Ms. Rathore will be subject to a twelve-month non-competition covenant running through February 6, 2026, limited in scope to three product categories: home goods, seasonal décor, and private-label apparel. The remaining seven employees will be subject to nine-month non-competition covenants running through November 6, 2025, similarly limited to the same three product categories. These modified terms represent a reduction from the original contractual non-compete periods (eighteen months for Rathore, Linden, and Kaczmarek; twelve months for the remaining five employees) and a narrowing of the competitive scope to specified categories, reflecting the negotiated compromise reached during the mediation process.
• Employee Non-Solicitation: All eight departing employees will be subject to an eighteen-month employee non-solicitation covenant through August 6, 2026, prohibiting them from directly or indirectly soliciting, recruiting, or hiring any CRH employee.
• Vendor Non-Solicitation: All eight departing employees will be subject to a twelve-month vendor non-solicitation covenant through February 6, 2026, prohibiting them from soliciting, diverting, or interfering with CRH's relationships with CRH's top fifty (50) vendors by annual purchase volume, as identified in a schedule to the Settlement Agreement.
• Independent Compliance Monitor: Aldwyn Compliance Solutions LLC, based in Philadelphia, Pennsylvania, has been appointed as an independent compliance monitor for a period of twelve (12) months following execution of the Settlement Agreement. The compliance monitor will have authority to audit the departing employees' and Verdana's compliance with the modified restrictive covenant terms, including access to certain employment records and electronic communications as specified in the Settlement Agreement. The estimated cost of the compliance monitoring engagement is $360,000, to be borne 60% by Verdana ($216,000) and 40% by CRH ($144,000).
The separate Board memorandum dated April 10, 2025 provides a more detailed discussion of all settlement terms, including the non-monetary provisions summarized above.
VI. Requested Committee Actions
In light of the foregoing, we respectfully request that the Compensation Committee consider and take the following actions at or before its next meeting, ideally in advance of the April 14, 2025 target execution date:
1. Review and consider the equity clawback and forfeiture provisions described in this letter, including the detailed forfeiture calculation for Priya Rathore and the aggregate forfeiture amount for the remaining seven departing employees.
2. Authorize (or ratify, as applicable under the Committee's charter and the terms of the Equity Plan) the forfeiture of unvested RSUs and the clawback of previously vested equity totaling $849,500 in the aggregate across all eight departing employees, consistent with the terms of the Settlement Agreement, the CRH 2018 Omnibus Equity Incentive Plan, and the individual RSU Award Agreements and employment agreements of the departing employees.
3. Authorize CRH management and outside counsel (Calderwood & Harkness LLP) to prepare and transmit formal cancellation and clawback instructions to Northland Trust Company, CRH's transfer agent, upon execution of the Settlement Agreement.
4. Direct that CRH management coordinate with Hargrove & Tillett CPA, PLLC (Denise Wheatley, Lead Audit Partner) and internal tax counsel regarding the appropriate accounting treatment, financial statement adjustments, and any required tax reporting corrections or modifications associated with the clawback of previously vested equity.
5. Note that a Draft Board Resolution ratifying the equity forfeiture actions and the overall settlement terms is being prepared separately by Calderwood & Harkness for the full Board's consideration at the anticipated April 14, 2025 Board meeting, and that the Committee's authorization of the equity-specific actions described herein will be referenced in such resolution.
We are available to discuss these requested actions with the Committee at its convenience, including by telephone or video conference in advance of any formal meeting, should the Committee desire additional background or clarification before acting.
VII. Closing
We trust that this letter provides the Compensation Committee with a thorough and actionable summary of the equity clawback and forfeiture provisions of the Settlement Agreement. We are, of course, available to provide any additional information, analysis, or supporting documentation that the Committee may require in connection with its review and deliberations.
For the Committee's reference, the following materials are available upon request and can be transmitted to any Committee member on a privileged and confidential basis:
• Detailed individual equity forfeiture worksheets for each of the eight departing employees, including grant-level vesting calculations and cross-references to the applicable plan and agreement provisions;
• Copies of the relevant employment agreement provisions (including the for-cause clawback clauses) for each departing employee;
• The near-final Settlement Agreement (Fourth Draft, dated April 8, 2025); and
• The draft Northland Trust Company instruction letter.
Please do not hesitate to contact the undersigned or my colleague Renata Vasquez with any questions or requests for additional information. Our contact details are as follows:
Bernard Crawford Partner, Labor & Employment Calderwood & Harkness LLP 1301 K Street NW, Suite 1200 Washington, DC 20005 Tel: (202) 555-7812
Email: bcrawford@calderwoodharkness.com
Renata Vasquez Counsel, Labor & Employment Calderwood & Harkness LLP 601 South Figueroa Street, Suite 4200 Los Angeles, CA 90017 Tel: (213) 555-4430
Email: rvasquez@calderwoodharkness.com
We appreciate the Committee's attention to this matter and look forward to bringing this litigation to a successful resolution.
Respectfully submitted,
CALDERWOOD & HARKNESS LLP
By: ________
Bernard Crawford Partner, Labor & Employment
Date: April 10, 2025
cc: (via electronic mail)
Theresa Yun-Park, General Counsel, Cascade Retail Holdings Inc. Roland Ashby, Chief People Officer, Cascade Retail Holdings Inc. Dr. Lorraine Stahl, Chair, Audit Committee, Board of Directors, Cascade Retail Holdings Inc. Renata Vasquez, Counsel, Calderwood & Harkness LLP
PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION This letter and any attachments hereto are protected by the attorney-client privilege, the work product doctrine, and/or other applicable privileges. This communication is intended solely for the use of the addressees identified above and the individuals copied hereon. Any unauthorized review, use, disclosure, or distribution of this communication is strictly prohibited. If you have received this communication in error, please notify Calderwood & Harkness LLP immediately at (202) 555-7800 and destroy all copies.
| Component | Amount |
| Cash Settlement Payment (Verdana → CRH) | $8,750,000 |
| Equity Forfeiture — Priya Rathore | $362,500 |
| Equity Forfeiture — Remaining Seven Employees (aggregate) | $487,000 |
| Litigation Cost Reimbursement (Verdana → CRH) | $425,000 |
| Total Economic Recovery | $10,024,500 |