CONFIDENTIAL — SUBJECT TO ATTORNEY-CLIENT PRIVILEGE
CALDERWOOD & HARKNESS LLP Attorneys at Law
1301 K Street NW, Suite 1200 Washington, DC 20005
Telephone: (202) 555-7800 Facsimile: (202) 555-7801 www.calderwoodharkness.com
Bernard Crawford Partner Direct Dial: (202) 555-7824
Email: bcrawford@calderwoodharkness.com
April 14, 2025
VIA EMAIL AND OVERNIGHT COURIER
Northland Trust Company
Attention: Corporate Actions — Equity Plan Administration
55 Water Street New York, NY 10041
Re: Cancellation of Unvested Restricted Stock Unit Awards — Cascade Retail Holdings Inc. (Nasdaq: CRHL); Former Employees Listed Herein
C&H Matter No.: 1038-00006
Dear Sir or Madam:
I. Introduction and Identification of Client
This firm, Calderwood & Harkness LLP, represents Cascade Retail Holdings Inc. ("CRH" or the "Company"), a corporation duly organized and existing under the laws of the State of Delaware and publicly traded on the Nasdaq Global Select Market under the ticker symbol "CRHL" (Employer Identification Number 91-2847351), with its principal executive offices located at 2200 Elliott Avenue West, Suite 3400, Seattle, Washington 98119. We write to you in your capacity as the transfer agent for CRH's common stock, par value $0.001 per share (the "Common Stock"), and as administrator of CRH's equity incentive plans, including, without limitation, the processing, issuance, and cancellation of restricted stock unit ("RSU") awards issued to CRH employees and former employees under CRH's 2019 Omnibus Equity Incentive Plan, as amended and restated (the "Plan").
This letter constitutes a formal direction from CRH, issued through its duly authorized outside counsel, regarding the immediate cancellation and forfeiture of all unvested RSU awards, and the clawback of certain vested RSU tranches, with respect to eight (8) former CRH employees, each of whom is identified by name and former title herein and in the attached schedules. The cancellations, forfeitures, and clawback described in this letter are to be processed effective as of the date hereof and in strict accordance with the terms and conditions set forth below, the governing provisions of the Plan, and the settlement agreement described in Section II of this letter.
II. Background and Authorization
A. Authorization from CRH
CRH's General Counsel, Theresa Yun-Park, has expressly authorized Calderwood & Harkness LLP to issue this direction to Northland Trust Company on CRH's behalf. A copy of Ms. Yun-Park's written authorization, executed on CRH letterhead and dated April 14, 2025, is enclosed herewith as Exhibit 3. We respectfully direct Northland Trust Company to review Exhibit 3 and to confirm, for its records, that Calderwood & Harkness LLP is authorized to act on the Company's behalf with respect to the matters addressed in this letter.
B. The Standstill and Settlement Agreement
The cancellations and forfeitures described herein are made pursuant to the terms of that certain Standstill and Settlement Agreement (the "Settlement Agreement") executed on April 14, 2025, by and among (i) Cascade Retail Holdings Inc., (ii) each of the eight former CRH employees identified below (collectively, the "Former Employees"), and (iii) Verdana Commerce Group, Inc. ("Verdana"), a Delaware corporation and direct competitor of CRH. A fully executed copy of the Settlement Agreement, with the material forfeiture and clawback provisions highlighted for ease of reference, is enclosed as Exhibit 1.
C. Underlying Litigation
The Settlement Agreement resolves all claims, counterclaims, and affirmative defenses asserted in the matter styled Cascade Retail Holdings Inc. v. Rathore et al., C.A. No. 2025-0198-MTZ, currently pending before Vice Chancellor Margaret T. Zhao in the Court of Chancery of the State of Delaware (the "Litigation"). A Consent Order incorporating the material terms of the Settlement Agreement has been submitted to the Court for entry contemporaneously with the issuance of this letter, and the parties anticipate that the Court will enter the Consent Order promptly upon review.
D. Board Ratification
On April 14, 2025, the Board of Directors of CRH adopted resolutions ratifying the equity forfeitures and clawback actions contemplated by the Settlement Agreement and authorizing the Company's officers and outside counsel to take all actions necessary or appropriate to effectuate the same. A certified copy of the relevant board resolution is enclosed as Exhibit 2.
III. Factual Context — Summary of Departures and Litigation
On February 7, 2025, eight senior merchandising employees of CRH submitted simultaneous letters of resignation, each effective immediately and without advance notice. The departing employees — each of whom held a senior role within CRH's merchandising division and had access to confidential and proprietary business information, including trade secrets, supplier pricing data, category strategy plans, and customer analytics — subsequently accepted employment with Verdana Commerce Group, Inc., a direct competitor of CRH operating in substantially overlapping product categories and geographic markets.
In response to these coordinated departures, CRH initiated the Litigation in the Delaware Court of Chancery on February 14, 2025, asserting claims for, among other things: (a) breach of restrictive covenant obligations, including non-competition and non-solicitation covenants; (b) breach of confidentiality and non-disclosure obligations; (c) misappropriation of trade secrets under the Delaware Uniform Trade Secrets Act, 6 Del. C. § 2001 et seq.; (d) tortious interference with business relationships and prospective economic advantage; and (e) civil conspiracy. CRH simultaneously moved for a temporary restraining order and preliminary injunction, which motion was briefed and argued before Vice Chancellor Zhao on February 28, 2025.
The parties engaged in expedited mediation before the Honorable Joseph A. Greenaway, Jr. (ret.) on March 15–16, 2025, and reached a settlement framework on March 20, 2025. Following the exchange of drafts and negotiation of definitive documentation, the Settlement Agreement was fully executed on April 14, 2025.
Among the material terms of the Settlement Agreement, each of the Former Employees agreed to forfeit all unvested RSU awards and other unvested equity compensation held as of the date of his or her resignation, and, in the case of Priya Rathore, to submit to a clawback of her final vested RSU tranche. The forfeiture and clawback provisions are set forth in Sections 4.1 through 4.3 of the Settlement Agreement.
IV. Direction to Cancel — Priya Rathore
We address the forfeitures applicable to Priya Rathore separately because, in addition to the forfeiture of unvested RSU awards applicable to all Former Employees, Ms. Rathore's settlement obligations include a clawback of a previously vested RSU tranche, as described below.
A. Employee Information
Former Employee: Priya Rathore
Former Title: Senior Vice President, Merchandising
Employment Dates at CRH: June 3, 2019 – February 7, 2025
Governing Employment Agreement: Amended and Restated Employment Agreement by and between Cascade Retail Holdings Inc. and Priya Rathore, dated March 15, 2021 (the "Rathore Employment Agreement")
B. RSU Grant Details
Pursuant to the Rathore Employment Agreement and the Plan, Ms. Rathore was granted RSUs with a grant-date value of $725,000.00, effective March 15, 2021, subject to a four-year ratable annual vesting schedule under which twenty-five percent (25%) of the RSU award vests on each anniversary of the grant date, as follows:
As of the date of Ms. Rathore's resignation on February 7, 2025, Tranches 1, 2, and 3 had vested in full, representing an aggregate vested value of $543,750.00 (on a grant-date basis). Tranche 4, with a scheduled vesting date of March 15, 2025, remained unvested and was therefore subject to automatic forfeiture upon termination of employment in accordance with the terms of the Plan and the applicable award agreement.
C. Forfeiture and Clawback Under the Settlement Agreement
Under the terms of the Settlement Agreement, Ms. Rathore has agreed to the following forfeitures and clawback:
(1) Forfeiture of Unvested RSUs — Tranche 4. Ms. Rathore's unvested RSU award (Tranche 4), with a grant-date value of $181,250.00, is to be cancelled and forfeited in its entirety. This forfeiture is consistent with the automatic forfeiture provisions of the Plan and the applicable award agreement upon termination of employment prior to the applicable vesting date.
(2) Clawback of Final Vested Tranche — Tranche 3. In addition to the forfeiture described in paragraph (1) above, Ms. Rathore has agreed to submit to a clawback of the shares or share equivalents representing Tranche 3 (vested March 15, 2024), with a grant-date value of $181,250.00. This clawback is triggered by Ms. Rathore's breach of the restrictive covenant obligations set forth in Section 7 of the Rathore Employment Agreement, as determined under and pursuant to Section 4.2(b) of the Settlement Agreement. The Rathore Employment Agreement contains a for-cause clawback provision (Section 7.4) that permits CRH to recover previously vested equity compensation in the event of a material breach of the restrictive covenant, confidentiality, or non-solicitation provisions thereof. Ms. Rathore has acknowledged, in Section 4.2(c) of the Settlement Agreement, that the conditions triggering the clawback have been satisfied and has consented to the recovery of Tranche 3 as described herein.
D. Total Forfeiture — Priya Rathore
E. Direction. Northland Trust Company is hereby directed to:
(i) cancel all unvested RSU awards (Tranche 4) associated with Priya Rathore, effective as of the date of this letter, so that no shares of Common Stock or share equivalents are issued or delivered in respect of such awards; and
(ii) process the clawback of the shares or share equivalents representing Tranche 3 of Ms. Rathore's RSU award, including, as applicable, the cancellation of any unsold shares held in Ms. Rathore's account with Northland Trust Company, or, if such shares have been previously sold or transferred, the notation of a receivable or obligation in CRH's records, in each case in accordance with the terms of the Plan, the Rathore Employment Agreement, and the Settlement Agreement.
To the extent Northland Trust Company requires additional documentation or authorization to process the Tranche 3 clawback — including, without limitation, instructions regarding the treatment of shares that may have been sold, transferred to a brokerage account, or otherwise disposed of by Ms. Rathore subsequent to vesting — please contact the undersigned immediately so that we may provide supplemental instructions.
V. Direction to Cancel — Remaining Seven Former Employees
In addition to the forfeitures applicable to Priya Rathore described in Section IV above, the following seven former CRH employees are subject to forfeiture of all unvested RSU and equity awards under the Settlement Agreement. The aggregate forfeiture for these seven individuals totals $487,000.00, calculated on an individual basis in accordance with each employee's equity grant schedule, vesting dates, and employment termination date, as set forth in the Settlement Agreement and detailed in the attached Schedule A.
A. Individual Employee Identification
The seven former employees subject to this direction are as follows:
The detailed individual equity schedules and forfeiture calculations for each of the seven employees listed above — including grant dates, grant-date values, vesting schedules, tranches vested and unvested as of each employee's resignation date, and the specific dollar amount and number of shares or share equivalents to be forfeited — are set forth in the attached Schedule A (Equity Forfeiture Worksheet), which is incorporated herein by reference and made a part of this letter for all purposes.
B. Total Aggregate Forfeiture — Seven Employees
The total aggregate forfeiture applicable to the seven employees listed above is $487,000.00.
C. Direction. Northland Trust Company is hereby directed to cancel all unvested RSU and equity awards for each of the seven employees listed above, in each case in the amounts and with respect to the specific tranches specified in Schedule A, effective as of the date of this letter. No shares of Common Stock or share equivalents shall be issued, released, transferred, or otherwise made available to any of the seven individuals identified above in respect of any awards subject to forfeiture hereunder.
VI. Aggregate Forfeiture Summary — All Eight Former Employees
For ease of reference, the total forfeitures directed by this letter are summarized in the table below:
VII. Processing Instructions
We respectfully request that Northland Trust Company process the cancellations, forfeitures, and clawback described in this letter in accordance with the following instructions:
1. Timing. The cancellations and forfeitures should be processed promptly upon receipt of this letter and, in any event, no later than five (5) business days from the date hereof. To the extent Northland Trust Company requires additional time to process the Tranche 3 clawback for Priya Rathore due to the nature of the clawback mechanics, please notify the undersigned immediately with an estimated processing timeline.
2. Restriction on Release. No shares of Common Stock or share equivalents that are subject to forfeiture or clawback under this letter shall be released, transferred, sold, pledged, hypothecated, or otherwise made available to any of the eight Former Employees listed herein, or to any agent, nominee, or transferee of any such individual, pending or following the processing of the cancellations described herein.
3. Confirmation of Processing. Northland Trust Company is requested to confirm in writing, by email or letter, to both (a) the undersigned at Calderwood & Harkness LLP, at the address and email set forth in the letterhead of this letter, and (b) Theresa Yun-Park, General Counsel, Cascade Retail Holdings Inc., at 2200 Elliott Avenue West, Suite 3400, Seattle, WA 98119 (email: tyunpark@cascaderetail.com), once all cancellations, forfeitures, and clawback actions have been fully processed. Such confirmation should include, at a minimum, (i) the number of shares or share equivalents cancelled for each individual, (ii) the effective date of each cancellation, and (iii) confirmation that the affected accounts have been updated to reflect the cancellations.
4. Questions and Further Instructions. Any questions regarding the administration of these cancellations, the interpretation of the Plan or any applicable award agreement, or the mechanics of the Tranche 3 clawback for Priya Rathore should be directed to Bernard Crawford at Calderwood & Harkness LLP (telephone: (202) 555-7824; email: bcrawford@calderwoodharkness.com) or to Theresa Yun-Park at CRH (telephone: (206) 555-3100; email: tyunpark@cascaderetail.com).
VIII. Enclosures and Attachments
The following documents are enclosed with this letter for Northland Trust Company's reference and records:
Schedule A: Equity Forfeiture Worksheet — Individual breakdowns for all eight Former Employees, including detailed grant dates, grant-date values, vesting schedules, vesting and unvested status as of each employee's resignation date, and forfeiture calculations.
Exhibit 1: Fully executed copy of the Standstill and Settlement Agreement, dated April 14, 2025, by and among Cascade Retail Holdings Inc., the eight Former Employees, and Verdana Commerce Group, Inc. (relevant forfeiture and clawback provisions highlighted for ease of reference).
Exhibit 2: Certified copy of the CRH Board Resolution adopted April 14, 2025, ratifying the equity forfeitures and settlement terms described herein and authorizing the Company's officers and outside counsel to take all actions necessary to effectuate the same.
Exhibit 3: Authorization letter from Theresa Yun-Park, General Counsel, Cascade Retail Holdings Inc., dated April 14, 2025, confirming Calderwood & Harkness LLP's authority to issue this direction to Northland Trust Company on CRH's behalf.
IX. Confidentiality
This letter and its enclosures contain confidential, proprietary, and legally privileged information relating to pending litigation, a court-supervised settlement, and the internal compensation arrangements of Cascade Retail Holdings Inc. and its current and former employees. The information contained herein is provided to Northland Trust Company solely for the purpose of effectuating the cancellations, forfeitures, and clawback actions described above and should be treated as strictly confidential.
We respectfully request that Northland Trust Company limit the internal distribution of this letter and its enclosures to those personnel directly responsible for processing the cancellations described herein and to such compliance, legal, or supervisory personnel as may be necessary under Northland's internal policies and applicable regulatory requirements. No portion of this letter or its enclosures should be disclosed, distributed, or made available to any of the eight Former Employees, to Verdana Commerce Group, Inc., or to any third party, except as may be required by applicable law or regulation, in which case we request advance notice to the undersigned before any such disclosure is made.
X. Closing
We respectfully request prompt acknowledgment of receipt of this letter and its enclosures, together with confirmation of Northland Trust Company's anticipated processing timeline for the cancellations, forfeitures, and clawback actions described herein. For your information, CRH's Compensation Committee of the Board of Directors has been separately notified of these forfeitures by letter from the undersigned dated April 10, 2025, and has approved the actions described herein.
We appreciate Northland Trust Company's prompt attention to this matter. Please do not hesitate to contact the undersigned at (202) 555-7824 or bcrawford@calderwoodharkness.com with any questions or if additional documentation is required.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Bernard Crawford Partner Calderwood & Harkness LLP 1301 K Street NW, Suite 1200 Washington, DC 20005 Telephone: (202) 555-7824 Facsimile: (202) 555-7801
Email: bcrawford@calderwoodharkness.com
Enclosures:
Schedule A — Equity Forfeiture Worksheet (All Eight Former Employees)
Exhibit 1 — Standstill and Settlement Agreement (executed April 14, 2025)
Exhibit 2 — CRH Board Resolution (adopted April 14, 2025)
Exhibit 3 — Authorization Letter from Theresa Yun-Park, General Counsel, CRH (dated April 14, 2025)
cc: (via email)
Theresa Yun-Park, General Counsel, Cascade Retail Holdings Inc.
Roland Ashby, Chief People Officer, Cascade Retail Holdings Inc.
Renata Vasquez, Partner, Calderwood & Harkness LLP
James Underwood, Associate, Calderwood & Harkness LLP
CONFIDENTIAL — This letter and its enclosures are intended solely for the addressee and contain information that is privileged, confidential, and exempt from disclosure under applicable law. If you are not the intended recipient, any dissemination, distribution, or copying of this communication is strictly prohibited. If you have received this communication in error, please notify the sender immediately and destroy all copies.
| Tranche | Vesting Date | Percentage | Grant-Date Value | Status as of Resignation (Feb. 7, 2025) |
| Tranche 1 | March 15, 2022 | 25% | $181,250.00 | Vested |
| Tranche 2 | March 15, 2023 | 25% | $181,250.00 | Vested |
| Tranche 3 | March 15, 2024 | 25% | $181,250.00 | Vested |
| Tranche 4 | March 15, 2025 | 25% | $181,250.00 | Unvested |
| Total | 100% | $725,000.00 | 75% Vested / 25% Unvested | |
| Component | Grant-Date Value | |||
| Unvested RSU forfeiture (Tranche 4) | $181,250.00 | |||
| Clawback of vested tranche (Tranche 3) | $181,250.00 | |||
| Total Forfeiture — Priya Rathore | $362,500.00 | |||
| No. | Name | Former Title | RSU/Equity Grant Details | Unvested Amount Forfeited |
| 1 | Derek Linden | Vice President, Hardlines Merchandising | Per individual equity schedule (Schedule A) | Per individual calculation (Schedule A) |
| 2 | Sonia Kaczmarek | Vice President, Softlines Merchandising | Per individual equity schedule (Schedule A) | Per individual calculation (Schedule A) |
| 3 | Amara Osei | Director, Private Label Strategy | Per individual equity schedule (Schedule A) | Per individual calculation (Schedule A) |
| 4 | Brent Halvorsen | Director, Seasonal Planning & Analytics | Per individual equity schedule (Schedule A) | Per individual calculation (Schedule A) |
| 5 | Lucia Fernandez-Gill | Director, Vendor Relations (Domestic) | Per individual equity schedule (Schedule A) | Per individual calculation (Schedule A) |
| 6 | Nathan Tsao | Senior Manager, eCommerce Merchandising | Per individual equity schedule (Schedule A) | Per individual calculation (Schedule A) |
| 7 | Kira Johansson | Senior Manager, Category Analytics | Per individual equity schedule (Schedule A) | Per individual calculation (Schedule A) |
| Category | Amount | |||
| Priya Rathore — Unvested RSU forfeiture (Tranche 4) | $181,250.00 | |||
| Priya Rathore — Clawback of vested tranche (Tranche 3) | $181,250.00 | |||
| Priya Rathore — Subtotal | $362,500.00 | |||
| Derek Linden, Sonia Kaczmarek, Amara Osei, Brent Halvorsen, Lucia Fernandez-Gill, Nathan Tsao, Kira Johansson — Aggregate unvested equity forfeiture | $487,000.00 | |||
| Total Forfeiture (All Eight Former Employees) | $849,500.00 |