1038-00006 · Calderwood & Harkness LLP · Equity & Compensation

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PRIVILEGED AND CONFIDENTIAL ATTORNEY WORK PRODUCT

MEMORANDUM

CALDERWOOD & HARKNESS LLP

I. Purpose and Executive Summary

The purpose of this memorandum is to detail the calculation of restricted stock unit ("RSU") forfeitures applicable to Priya Rathore under the terms of her Amended and Restated Employment Agreement dated March 15, 2021 (the "A&R Employment Agreement"), in connection with the negotiated Standstill and Settlement Agreement currently being documented by the parties. This memorandum is intended to support the settlement documentation and to serve as a reference point in the preparation of the closing deliverables, including the letter to Northland Trust Company (CRH's transfer agent) directing cancellation of forfeited and clawed-back RSU awards, as well as the summary letter to CRH's Compensation Committee.

Based on the analysis set forth below, the total RSU forfeiture applicable to Rathore is $362,500, comprised of two distinct components:

1. $181,250 in unvested RSUs — representing the fourth and final annual tranche of Rathore's March 15, 2021 RSU grant, which was automatically forfeited upon her resignation effective February 7, 2025, because the vesting date for that tranche (March 15, 2025) had not yet occurred as of the termination date; and

2. $181,250 in clawback of the most recently vested annual tranche — representing the third annual tranche of the same RSU grant, which vested on March 15, 2024 and falls within the 12-month look-back window of the for-cause clawback provision in Section 8(d) of the A&R Employment Agreement. The clawback is triggered by Rathore's breach of her restrictive covenant obligations, specifically the 18-month non-compete and perpetual confidentiality covenants, arising from her acceptance of a senior role at Verdana Commerce Group, Inc. and the associated evidence of data exfiltration identified in Pinnacle Forensics LLC's preliminary report.

The combined $362,500 figure is consistent with the revised settlement term sheet dated March 20, 2025, and will be incorporated into the execution version of the Standstill and Settlement Agreement. This memorandum should be read in conjunction with the separate memorandum of even date addressing the aggregate equity forfeiture calculations for the remaining seven departing employees.

II. Background on Rathore's Employment and Equity Awards

A. Employment History

Priya Rathore joined Cascade Retail Holdings Inc. ("CRH" or the "Company") on June 3, 2019, in the role of Vice President, Merchandising Strategy. Upon commencement of her employment, Rathore executed an Employment Agreement dated June 3, 2019 (the "Original Employment Agreement"), which contained customary restrictive covenant provisions, including an 18-month post-termination non-competition covenant, a 24-month post-termination non-solicitation covenant applicable to both employees and vendors of the Company, and a perpetual confidentiality covenant. The Original Employment Agreement was governed by Delaware law, consistent with CRH's state of incorporation and the choice-of-law provisions applicable to its executive employment agreements generally.

On March 15, 2021, Rathore was promoted to the position of Senior Vice President, Merchandising. In connection with that promotion, Rathore executed the Amended and Restated Employment Agreement dated March 15, 2021 — the A&R Employment Agreement that is the operative agreement for purposes of this analysis. The A&R Employment Agreement contained restrictive covenant provisions that were substantively identical to those in the Original Employment Agreement, including the same 18-month non-compete, 24-month non-solicitation, and perpetual confidentiality obligations. As additional consideration for the restrictive covenants and in connection with the promotion, Rathore received a $150,000 promotion bonus and an enhanced RSU grant with a grant-date value of $725,000, the terms of which are discussed in detail in Section II.C below.

Rathore resigned from CRH effective February 7, 2025. Her resignation was submitted at 4:47 PM PST on that date. The resignation occurred as part of a coordinated departure of eight senior merchandising employees, all of whom left CRH within a narrow window of time — a pattern that forms a central element of the Company's claims in the underlying litigation. Following her departure, Rathore accepted the role of President, Merchandising & Strategy at Verdana Commerce Group, Inc. ("Verdana" or "VCG"), a direct competitor of CRH in the retail sector.

B. FY2024 Compensation Summary

For context, Rathore's compensation arrangements at CRH and the competing offer from Verdana are summarized as follows:

CRH FY2024 Compensation:

• Base salary: $485,000

• Target bonus: $290,000 (representing 60% of base salary)

• RSU grant: $725,000 (granted March 15, 2021, with a 4-year ratable annual vesting schedule, as described in Section II.C below)

VCG Offer Letter (signed by Rathore on January 27, 2025):

• Base salary: $650,000

• Sign-on bonus: $1,500,000

• Target bonus: $520,000 (representing 80% of base salary)

• Equity: 1.5% of fully diluted VCG equity

The substantial economic uplift reflected in the VCG offer letter is relevant to the broader litigation narrative, though it is not directly material to the RSU forfeiture calculation addressed in this memorandum. It is noted here for completeness and because the VCG offer letter has been produced in discovery and is referenced in the Company's verified complaint.

C. RSU Grant Terms

The RSU grant at issue in this memorandum was made on March 15, 2021, concurrent with the execution of the A&R Employment Agreement and Rathore's promotion to Senior Vice President. The material terms of the grant are as follows:

• Grant date: March 15, 2021 (the date of the A&R Employment Agreement)

• Total grant value: $725,000 (as measured on the grant date)

• Vesting schedule: 4-year ratable annual vesting, with 25% of the total grant vesting on each annual anniversary of the grant date

• Vesting dates: March 15, 2022; March 15, 2023; March 15, 2024; and March 15, 2025

• Vesting condition: Continued employment with CRH through each applicable vesting date

• Governing documents: The CRH 2020 Equity Incentive Plan (the "Equity Plan") and the individual RSU Award Agreement dated March 15, 2021 (the "RSU Award Agreement")

• Transfer agent: Northland Trust Company, 55 Water Street, New York, NY 10041

The RSU Award Agreement contains standard provisions regarding forfeiture upon termination of employment, acceleration events, and tax withholding, as well as an incorporation by reference of the terms and conditions of the Equity Plan. The A&R Employment Agreement contains the separate for-cause clawback provision (Section 8(d)) that is addressed in Section IV of this memorandum.

III. Vesting Analysis as of Resignation Date

A. Tranche-by-Tranche Vesting Schedule

Rathore's $725,000 RSU grant was structured to vest in four equal annual tranches, each representing 25% of the total grant value. The vesting schedule is as follows:

Each tranche vests in full on the applicable anniversary date, subject to the continued employment condition. There is no pro-rata or partial vesting between anniversary dates; each tranche operates on an annual cliff basis.

B. Vested vs. Unvested at Resignation (February 7, 2025)

As of Rathore's resignation date of February 7, 2025, the vesting status of her RSU grant was as follows:

Vested tranches: Tranches 1 through 3 had vested on their respective anniversary dates (March 15, 2022; March 15, 2023; and March 15, 2024). The aggregate value of vested tranches was $543,750, representing 75% of the total $725,000 grant.

Unvested tranche: Tranche 4 had not yet vested as of the resignation date. The vesting date for Tranche 4 was March 15, 2025 — approximately 36 days after Rathore's February 7, 2025 resignation. Accordingly, the unvested amount as of the resignation date was $181,250, representing the remaining 25% of the total grant.

It is worth noting that, as of the resignation date, approximately 3 years and 10.75 months of the 4-year vesting period had elapsed (i.e., approximately 3.9 years out of a 4-year period, or roughly 97% of the total vesting timeline). However, because vesting under both the RSU Award Agreement and the Equity Plan occurs on an annual cliff basis — meaning that each tranche vests only on the specified anniversary date and not on a daily or monthly pro-rata basis — the fourth tranche remained entirely unvested notwithstanding the passage of nearly all of the time between the third and fourth vesting dates. There is no provision in the RSU Award Agreement or the Equity Plan for acceleration of vesting upon a voluntary resignation, nor is there any pro-rata vesting mechanism that would entitle Rathore to a portion of Tranche 4 based on time served between March 15, 2024 and February 7, 2025.

C. Automatic Forfeiture of Unvested RSUs

Under Section 4(c) of the RSU Award Agreement, all unvested RSUs are automatically and immediately forfeited upon termination of the participant's employment with the Company for any reason, whether voluntary or involuntary. This provision is reinforced by Section 7.2 of the CRH 2020 Equity Incentive Plan, which provides that "[u]pon a participant's termination of service for any reason, all unvested Awards held by such participant shall be immediately forfeited and cancelled for no consideration, except as otherwise expressly provided in the applicable Award Agreement or as determined by the Committee in its sole discretion." Neither the RSU Award Agreement nor any action by the Compensation Committee provides for any exception to automatic forfeiture in the case of a voluntary resignation such as Rathore's.

Because Rathore's resignation was effective February 7, 2025, prior to the March 15, 2025 vesting date for Tranche 4, the fourth tranche — valued at $181,250 — was automatically forfeited by operation of these provisions. No affirmative action by CRH is required to effectuate this forfeiture beyond instructing Northland Trust Company to cancel the unvested units in Rathore's account and to update its records accordingly.

This component of the total forfeiture is straightforward and not expected to be contested by Rathore or her counsel in the settlement context, as it arises from the unambiguous operation of the standard forfeiture-upon-termination provisions.

IV. For-Cause Clawback Analysis — Third Vested Tranche

A. Clawback Provision in the A&R Employment Agreement

In addition to the automatic forfeiture of unvested RSUs discussed above, the A&R Employment Agreement contains a separate for-cause clawback provision applicable to equity awards that have already vested. Specifically, Section 8(d) of the A&R Employment Agreement provides, in relevant part:

"In the event that the Company determines, in good faith, that the Employee has breached any of the restrictive covenant obligations set forth in Section 6 of this Agreement (including, without limitation, the non-competition, non-solicitation, or confidentiality provisions thereof), the Company shall be entitled to recover, and the Employee shall be obligated to repay or forfeit, the value of any equity awards (including, without limitation, restricted stock units, stock options, and restricted stock) that vested during the twelve (12)-month period immediately preceding the earlier of (i) the date of the breach or (ii) the date of termination of the Employee's employment with the Company. For purposes of this Section 8(d), the recoverable amount shall be the fair market value of the vested shares as of the applicable vesting date. The rights and obligations under this Section 8(d) shall survive the termination of the Employee's employment with the Company for any reason."

Several aspects of this provision are noteworthy for purposes of the present analysis. First, the clawback is triggered by a determination that the employee has breached "any" restrictive covenant obligation under Section 6 — the provision is not limited to the non-compete alone but extends to the non-solicitation and confidentiality covenants as well. Second, the look-back window is defined as the 12-month period immediately preceding the earlier of the date of breach or the date of termination, creating a fixed temporal scope for the clawback. Third, the recoverable amount is pegged to "the fair market value of the vested shares as of the applicable vesting date," which, as discussed below, the parties have agreed to calculate using the grant-date value for settlement purposes. Fourth, the provision expressly survives termination of employment, ensuring that CRH's clawback right is not extinguished by Rathore's departure.

B. Application to Rathore's Circumstances

The for-cause clawback provision in Section 8(d) is triggered in Rathore's case on multiple independent grounds.

Temporal Analysis — 12-Month Look-Back Window. Rathore's resignation was effective February 7, 2025. The 12-month look-back window therefore runs from February 7, 2024 through February 7, 2025. The most recently vested tranche was Tranche 3, which vested on March 15, 2024. Because March 15, 2024 falls squarely within the 12-month look-back window (i.e., after February 7, 2024 and before February 7, 2025), Tranche 3 is the tranche subject to the clawback analysis. Tranche 2, which vested on March 15, 2023, falls outside the look-back window and is therefore not subject to clawback. Tranche 1, which vested on March 15, 2022, similarly falls outside the look-back window.

Breach of the Non-Competition Covenant. Rathore's acceptance of the role of President, Merchandising & Strategy at Verdana Commerce Group, Inc. constitutes a breach of the 18-month post-termination non-competition provision set forth in Section 6(a) of the A&R Employment Agreement. Section 6(a) prohibits Rathore from, directly or indirectly, engaging in, being employed by, or providing services to any business that competes with CRH in the United States for a period of 18 months following the termination of her employment. Verdana is a direct competitor of CRH, operating in 28 overlapping product categories across substantially the same geographic footprint. Rathore signed the VCG offer letter on January 27, 2025 — prior to her resignation from CRH — and accepted a senior executive position with direct oversight of merchandising functions that are competitive with her former responsibilities at CRH. This constitutes a clear and material breach of the non-competition covenant.

Breach of the Confidentiality Covenant. In addition to the non-compete breach, the evidence of data exfiltration identified by Pinnacle Forensics LLC in its preliminary forensic report further supports the activation of the clawback provision. According to Pinnacle's preliminary findings, Rathore downloaded 14,327 files, totaling approximately 2.8 gigabytes of data, from CRH's Aldermere Systems and Pinnacle Health IT environments during the period between January 10 and February 4, 2025. This activity constitutes a breach of the perpetual confidentiality obligation set forth in Section 6(c) of the A&R Employment Agreement, which prohibits the disclosure, use, or removal of confidential and proprietary information of the Company at any time during or after employment.

Because the for-cause clawback provision is triggered by a breach of "any" restrictive covenant obligation, and because Rathore's conduct constitutes breaches of both the non-competition and confidentiality covenants, CRH is entitled to invoke the clawback with respect to the equity that vested during the applicable 12-month look-back window — specifically, Tranche 3.

C. Clawback Amount Calculation

The clawback amount is calculated as follows:

• Applicable tranche: Tranche 3 (vested March 15, 2024)

• Value: 25% × $725,000 = $181,250

A note on valuation methodology is warranted. Section 8(d) of the A&R Employment Agreement defines the recoverable amount as "the fair market value of the vested shares as of the applicable vesting date." Strictly speaking, this would require determining the market price of CRH common stock (Nasdaq: CRHL) on March 15, 2024 and multiplying by the number of shares underlying Tranche 3. However, for purposes of the settlement documentation, the parties have agreed to use the grant-date value of $181,250 as the clawback amount. This approach was adopted for simplicity and certainty, and because the grant-date value provides a reasonable proxy for the recoverable amount given the relatively modest fluctuations in CRHL's stock price over the relevant period. If market-price-adjusted valuation were used, the figure could differ — either higher or lower depending on CRH's stock price on March 15, 2024 relative to the grant-date price — but the parties' agreement to use the grant-date figure eliminates any potential dispute over the precise clawback amount.

For completeness, Tranche 2 (vested March 15, 2023) falls outside the 12-month look-back window and is therefore not subject to clawback under the contractual provision. Similarly, Tranche 1 (vested March 15, 2022) falls well outside the look-back window. Neither tranche is implicated in the forfeiture calculation.

V. Total Forfeiture Calculation Summary

A. Summary Table

The total RSU forfeiture applicable to Priya Rathore is summarized in the following table:

B. Reconciliation with Settlement Terms

The $362,500 total RSU forfeiture for Rathore is consistent with the agreed settlement framework reflected in the revised term sheet dated March 20, 2025. The equity forfeiture figures for all eight departing employees have been reviewed and confirmed in principle by the respective parties' counsel as part of the broader settlement negotiations.

For context, the total economic recovery for CRH under the proposed settlement is comprised of the following components:

The combined equity forfeitures across the Rathore Group (i.e., all eight departing employees) total $849,500 ($362,500 for Rathore plus $487,000 for the remaining seven employees). The separate memorandum of even date provides the detailed calculations supporting the $487,000 aggregate figure for the other seven employees.

VI. Implementation Steps and Closing Deliverables

A. Equity Cancellation

The implementation of the RSU forfeiture for Rathore requires two distinct actions corresponding to the two components of the forfeiture:

Cancellation of Unvested RSUs (Tranche 4 — $181,250). A letter is to be prepared and sent to Northland Trust Company, CRH's transfer agent, directing the cancellation of Rathore's unvested RSU awards corresponding to Tranche 4. This letter should be sent on or promptly after April 14, 2025, which is the target date for execution of the Standstill and Settlement Agreement. The cancellation of unvested units is a ministerial action, as the forfeiture occurred automatically upon Rathore's resignation by operation of Section 4(c) of the RSU Award Agreement and Section 7.2 of the Equity Plan. The letter to Northland Trust Company will serve as formal instruction to update its records and to ensure that the unvested units are no longer reflected in Rathore's account.

Clawback of Vested RSUs (Tranche 3 — $181,250). The clawback of Tranche 3 is to be effectuated in accordance with the mechanism specified in Section 8(d) of the A&R Employment Agreement. Under that provision, the clawback may be satisfied either through the return of shares (if Tranche 3 was previously settled in CRH common stock and the shares are still held by Rathore) or through a cash payment obligation by Rathore to CRH. Under the settlement terms as currently negotiated, Rathore's clawback obligation will be satisfied by her acknowledgment and consent in the Standstill and Settlement Agreement, coupled with Northland Trust Company's cancellation of any shares held in Rathore's account corresponding to Tranche 3. If Rathore has previously sold or transferred the shares underlying Tranche 3, the settlement agreement will provide for a cash repayment mechanism, although this contingency is addressed in the open questions discussed in Section VII below.

B. Coordination with Other Workstreams

The RSU forfeiture calculations for Rathore are part of a broader set of interrelated workstreams in connection with the settlement. The following coordination steps should be noted:

1. Separate Memorandum — Other Departing Employees. A separate memorandum dated March 22, 2025 has been prepared detailing the equity forfeiture calculations for the remaining seven departing employees, with an aggregate forfeiture amount of $487,000. That memorandum should be reviewed in conjunction with this one.

2. Letter to CRH Compensation Committee. A summary letter to CRH's Compensation Committee is targeted for delivery on or around April 10, 2025. The letter will summarize the equity clawback and forfeiture provisions applicable across all eight departing employees and will seek any required Compensation Committee acknowledgment or ratification of the clawback actions.

3. Draft Board Resolution. A draft board resolution, targeted for April 14, 2025 (concurrent with settlement execution), will include ratification of all equity forfeitures as part of the overall settlement terms. The resolution should be drafted to confirm the Board's approval of the settlement in its entirety, including the equity components.

4. SEC Disclosure and Financial Reporting. The equity forfeiture figures will be incorporated into the financial reporting analysis for SEC disclosure considerations. Depending on the materiality assessment and the timing of the settlement, disclosure may be required in a Current Report on Form 8-K and/or in CRH's Quarterly Report on Form 10-Q for the quarter ending March 31, 2025. The financial reporting team should coordinate with CRH's in-house counsel and auditors on the appropriate treatment.

5. Credit Facility Notification. The material litigation reporting covenant under CRH's $750 million revolving credit facility with Keypoint National Bank requires notification of the settlement and related equity forfeiture amounts. A draft notification letter should be prepared for review by CRH's treasury department.

C. Hargrove & Tillett Coordination

CRH's outside auditors, Hargrove & Tillett CPA, PLLC (lead audit partner: Denise Wheatley), should be notified of the forfeiture and clawback amounts applicable to Rathore and the other seven departing employees. This notification is necessary for proper accounting treatment in connection with CRH's Q1 2025 financial statements, including the reversal of stock-based compensation expense associated with forfeited unvested awards, any adjustments to the recorded value of previously vested awards subject to clawback, and the adjustment of the $3,500,000 litigation contingency accrual that was established in CRH's Q4 2024 financial statements. The timing and amount of the adjustment to the contingency accrual should be discussed with Hargrove & Tillett in the context of the broader settlement accounting.

VII. Open Questions and Caveats

The following questions remain open and should be resolved prior to or in connection with the execution of the settlement documentation:

1. Form of Tranche 3 Settlement. We should confirm with CRH's in-house team, specifically Theresa Yun-Park, whether the shares underlying Tranche 3 were previously settled in CRH common stock (Nasdaq: CRHL) and whether Rathore still holds those shares in her Northland Trust Company account, or whether Tranche 3 was settled in cash. This determination affects the mechanics of the clawback execution. If the shares were settled in stock and are still held, cancellation through Northland Trust Company is the most straightforward approach. If the shares have been sold or transferred, a cash repayment mechanism will need to be documented in the settlement agreement.

2. Share Count Verification. We should confirm with Northland Trust Company the precise number of shares underlying Tranche 3. The dollar amount of $181,250 is based on the grant-date value of the RSU award, but the number of shares actually issued upon vesting would have been determined by the closing price of CRHL on the grant date (or by an alternative pricing formula specified in the RSU Award Agreement, such as a multi-day averaging period). The share count is relevant for the cancellation instructions to Northland Trust Company and for any tax reporting implications.

3. Compensation Committee Procedural Requirements. We should verify whether the CRH 2020 Equity Incentive Plan contains any limitation or procedural prerequisite — such as a formal Compensation Committee determination or vote — that must be satisfied before the for-cause clawback is effectuated. While Section 8(d) of the A&R Employment Agreement appears to grant the Company a self-executing clawback right upon a determination of breach, the Equity Plan may impose additional requirements that should be satisfied to avoid any procedural challenge.

4. Precedent Considerations. It is our understanding that the for-cause clawback provision in Section 8(d) of the A&R Employment Agreement has not previously been invoked by CRH with respect to any employee. While this does not affect the legal analysis, there may be precedential or reputational considerations associated with the first exercise of this provision. We should coordinate with Bernard Crawford on any such considerations before the settlement is finalized and the clawback is publicly or internally communicated.

VIII. Conclusion

Based on the foregoing analysis, the total RSU forfeiture applicable to Priya Rathore is $362,500, comprised of:

• $181,250 in automatic forfeiture of unvested Tranche 4, arising from Rathore's resignation on February 7, 2025, prior to the March 15, 2025 vesting date, pursuant to Section 4(c) of the RSU Award Agreement and Section 7.2 of the CRH 2020 Equity Incentive Plan; and

• $181,250 in clawback of vested Tranche 3, arising from Rathore's breach of the non-competition and confidentiality covenants in Sections 6(a) and 6(c) of the A&R Employment Agreement, triggering the for-cause clawback provision in Section 8(d) thereof.

This total forfeiture amount of $362,500 is reflected in the revised settlement term sheet dated March 20, 2025 and will be incorporated into the execution version of the Standstill and Settlement Agreement. We recommend proceeding with the implementation steps outlined in Section VI above upon execution of the settlement, including the preparation of the Northland Trust Company cancellation letter, the Compensation Committee summary letter, and the coordination with Hargrove & Tillett on accounting treatment.

Please let me know if you have any questions or if any of the open items identified in Section VII require further analysis prior to the settlement execution date.

Distribution:

Bernard Crawford, Responsible Partner File copy (Matter No. 1038-00006)

Enclosures Referenced:

1. Amended and Restated Employment Agreement — Priya Rathore (March 15, 2021)

2. RSU Award Agreement — Priya Rathore (March 15, 2021)

3. CRH 2020 Equity Incentive Plan

4. Revised Term Sheet (March 20, 2025)

TO:	James Underwood, Lead Associate, Labor & Employment
FROM:	Devon Archer, Working Associate, Labor & Employment
DATE:	March 22, 2025
RE:	RSU Forfeiture Calculations — Priya Rathore
MATTER NO.:	1038-00006
CLIENT:	Cascade Retail Holdings Inc.
CASE:	Cascade Retail Holdings Inc. v. Rathore et al., C.A. No. 2025-0198-MTZ (Del. Ch.)
Tranche	Vesting Date	Percentage	Dollar Value
Tranche 1	March 15, 2022	25%	$181,250
Tranche 2	March 15, 2023	25%	$181,250
Tranche 3	March 15, 2024	25%	$181,250
Tranche 4	March 15, 2025	25%	$181,250
Total	100%	$725,000
Component	Contractual Basis	Amount
Unvested RSUs (Tranche 4)	Automatic forfeiture upon resignation per Section 4(c) of RSU Award Agreement and Section 7.2 of the CRH 2020 Equity Incentive Plan	$181,250
Clawback of Vested RSUs (Tranche 3)	For-cause clawback under Section 8(d) of A&R Employment Agreement, triggered by breach of non-competition covenant (Section 6(a)) and confidentiality covenant (Section 6(c))	$181,250
Total Forfeiture	$362,500
Settlement Component	Amount
Cash settlement payment from Verdana Commerce Group, Inc.	$8,750,000
Rathore equity forfeiture (as detailed in this memorandum)	$362,500
Other seven employees' aggregate equity forfeitures	$487,000
Litigation cost reimbursement from Verdana	$425,000
Total Economic Recovery	$10,024,500

PRIVILEGED AND CONFIDENTIAL ATTORNEY WORK PRODUCT
MEMORANDUM
CALDERWOOD & HARKNESS LLP
I. Purpose and Executive Summary
The purpose of this memorandum is to detail the calculation of restricted stock unit ("RSU") forfeitures applicable to Priya Rathore under the terms of her Amended and Restated Employment Agreement dated March 15, 2021 (the "A&R Employment Agreement"), in connection with the negotiated Standstill and Settlement Agreement currently being documented by the parties. This memorandum is intended to support the settlement documentation and to serve as a reference point in the preparation of the closing deliverables, including the letter to Northland Trust Company (CRH's transfer agent) directing cancellation of forfeited and clawed-back RSU awards, as well as the summary letter to CRH's Compensation Committee.
Based on the analysis set forth below, the total RSU forfeiture applicable to Rathore is $362,500, comprised of two distinct components:
1. $181,250 in unvested RSUs — representing the fourth and final annual tranche of Rathore's March 15, 2021 RSU grant, which was automatically forfeited upon her resignation effective February 7, 2025, because the vesting date for that tranche (March 15, 2025) had not yet occurred as of the termination date; and
2. $181,250 in clawback of the most recently vested annual tranche — representing the third annual tranche of the same RSU grant, which vested on March 15, 2024 and falls within the 12-month look-back window of the for-cause clawback provision in Section 8(d) of the A&R Employment Agreement. The clawback is triggered by Rathore's breach of her restrictive covenant obligations, specifically the 18-month non-compete and perpetual confidentiality covenants, arising from her acceptance of a senior role at Verdana Commerce Group, Inc. and the associated evidence of data exfiltration identified in Pinnacle Forensics LLC's preliminary report.
The combined $362,500 figure is consistent with the revised settlement term sheet dated March 20, 2025, and will be incorporated into the execution version of the Standstill and Settlement Agreement. This memorandum should be read in conjunction with the separate memorandum of even date addressing the aggregate equity forfeiture calculations for the remaining seven departing employees.
II. Background on Rathore's Employment and Equity Awards
A. Employment History
Priya Rathore joined Cascade Retail Holdings Inc. ("CRH" or the "Company") on June 3, 2019, in the role of Vice President, Merchandising Strategy. Upon commencement of her employment, Rathore executed an Employment Agreement dated June 3, 2019 (the "Original Employment Agreement"), which contained customary restrictive covenant provisions, including an 18-month post-termination non-competition covenant, a 24-month post-termination non-solicitation covenant applicable to both employees and vendors of the Company, and a perpetual confidentiality covenant. The Original Employment Agreement was governed by Delaware law, consistent with CRH's state of incorporation and the choice-of-law provisions applicable to its executive employment agreements generally.
On March 15, 2021, Rathore was promoted to the position of Senior Vice President, Merchandising. In connection with that promotion, Rathore executed the Amended and Restated Employment Agreement dated March 15, 2021 — the A&R Employment Agreement that is the operative agreement for purposes of this analysis. The A&R Employment Agreement contained restrictive covenant provisions that were substantively identical to those in the Original Employment Agreement, including the same 18-month non-compete, 24-month non-solicitation, and perpetual confidentiality obligations. As additional consideration for the restrictive covenants and in connection with the promotion, Rathore received a $150,000 promotion bonus and an enhanced RSU grant with a grant-date value of $725,000, the terms of which are discussed in detail in Section II.C below.
Rathore resigned from CRH effective February 7, 2025. Her resignation was submitted at 4:47 PM PST on that date. The resignation occurred as part of a coordinated departure of eight senior merchandising employees, all of whom left CRH within a narrow window of time — a pattern that forms a central element of the Company's claims in the underlying litigation. Following her departure, Rathore accepted the role of President, Merchandising & Strategy at Verdana Commerce Group, Inc. ("Verdana" or "VCG"), a direct competitor of CRH in the retail sector.
B. FY2024 Compensation Summary
For context, Rathore's compensation arrangements at CRH and the competing offer from Verdana are summarized as follows:
CRH FY2024 Compensation:
• Base salary: $485,000
• Target bonus: $290,000 (representing 60% of base salary)
• RSU grant: $725,000 (granted March 15, 2021, with a 4-year ratable annual vesting schedule, as described in Section II.C below)
VCG Offer Letter (signed by Rathore on January 27, 2025):
• Base salary: $650,000
• Sign-on bonus: $1,500,000
• Target bonus: $520,000 (representing 80% of base salary)
• Equity: 1.5% of fully diluted VCG equity
The substantial economic uplift reflected in the VCG offer letter is relevant to the broader litigation narrative, though it is not directly material to the RSU forfeiture calculation addressed in this memorandum. It is noted here for completeness and because the VCG offer letter has been produced in discovery and is referenced in the Company's verified complaint.
C. RSU Grant Terms
The RSU grant at issue in this memorandum was made on March 15, 2021, concurrent with the execution of the A&R Employment Agreement and Rathore's promotion to Senior Vice President. The material terms of the grant are as follows:
• Grant date: March 15, 2021 (the date of the A&R Employment Agreement)
• Total grant value: $725,000 (as measured on the grant date)
• Vesting schedule: 4-year ratable annual vesting, with 25% of the total grant vesting on each annual anniversary of the grant date
• Vesting dates: March 15, 2022; March 15, 2023; March 15, 2024; and March 15, 2025
• Vesting condition: Continued employment with CRH through each applicable vesting date
• Governing documents: The CRH 2020 Equity Incentive Plan (the "Equity Plan") and the individual RSU Award Agreement dated March 15, 2021 (the "RSU Award Agreement")
• Transfer agent: Northland Trust Company, 55 Water Street, New York, NY 10041
The RSU Award Agreement contains standard provisions regarding forfeiture upon termination of employment, acceleration events, and tax withholding, as well as an incorporation by reference of the terms and conditions of the Equity Plan. The A&R Employment Agreement contains the separate for-cause clawback provision (Section 8(d)) that is addressed in Section IV of this memorandum.
III. Vesting Analysis as of Resignation Date
A. Tranche-by-Tranche Vesting Schedule
Rathore's $725,000 RSU grant was structured to vest in four equal annual tranches, each representing 25% of the total grant value. The vesting schedule is as follows:
Each tranche vests in full on the applicable anniversary date, subject to the continued employment condition. There is no pro-rata or partial vesting between anniversary dates; each tranche operates on an annual cliff basis.
B. Vested vs. Unvested at Resignation (February 7, 2025)
As of Rathore's resignation date of February 7, 2025, the vesting status of her RSU grant was as follows:
Vested tranches: Tranches 1 through 3 had vested on their respective anniversary dates (March 15, 2022; March 15, 2023; and March 15, 2024). The aggregate value of vested tranches was $543,750, representing 75% of the total $725,000 grant.
Unvested tranche: Tranche 4 had not yet vested as of the resignation date. The vesting date for Tranche 4 was March 15, 2025 — approximately 36 days after Rathore's February 7, 2025 resignation. Accordingly, the unvested amount as of the resignation date was $181,250, representing the remaining 25% of the total grant.
It is worth noting that, as of the resignation date, approximately 3 years and 10.75 months of the 4-year vesting period had elapsed (i.e., approximately 3.9 years out of a 4-year period, or roughly 97% of the total vesting timeline). However, because vesting under both the RSU Award Agreement and the Equity Plan occurs on an annual cliff basis — meaning that each tranche vests only on the specified anniversary date and not on a daily or monthly pro-rata basis — the fourth tranche remained entirely unvested notwithstanding the passage of nearly all of the time between the third and fourth vesting dates. There is no provision in the RSU Award Agreement or the Equity Plan for acceleration of vesting upon a voluntary resignation, nor is there any pro-rata vesting mechanism that would entitle Rathore to a portion of Tranche 4 based on time served between March 15, 2024 and February 7, 2025.
C. Automatic Forfeiture of Unvested RSUs
Under Section 4(c) of the RSU Award Agreement, all unvested RSUs are automatically and immediately forfeited upon termination of the participant's employment with the Company for any reason, whether voluntary or involuntary. This provision is reinforced by Section 7.2 of the CRH 2020 Equity Incentive Plan, which provides that "[u]pon a participant's termination of service for any reason, all unvested Awards held by such participant shall be immediately forfeited and cancelled for no consideration, except as otherwise expressly provided in the applicable Award Agreement or as determined by the Committee in its sole discretion." Neither the RSU Award Agreement nor any action by the Compensation Committee provides for any exception to automatic forfeiture in the case of a voluntary resignation such as Rathore's.
Because Rathore's resignation was effective February 7, 2025, prior to the March 15, 2025 vesting date for Tranche 4, the fourth tranche — valued at $181,250 — was automatically forfeited by operation of these provisions. No affirmative action by CRH is required to effectuate this forfeiture beyond instructing Northland Trust Company to cancel the unvested units in Rathore's account and to update its records accordingly.
This component of the total forfeiture is straightforward and not expected to be contested by Rathore or her counsel in the settlement context, as it arises from the unambiguous operation of the standard forfeiture-upon-termination provisions.
IV. For-Cause Clawback Analysis — Third Vested Tranche
A. Clawback Provision in the A&R Employment Agreement
In addition to the automatic forfeiture of unvested RSUs discussed above, the A&R Employment Agreement contains a separate for-cause clawback provision applicable to equity awards that have already vested. Specifically, Section 8(d) of the A&R Employment Agreement provides, in relevant part:
"In the event that the Company determines, in good faith, that the Employee has breached any of the restrictive covenant obligations set forth in Section 6 of this Agreement (including, without limitation, the non-competition, non-solicitation, or confidentiality provisions thereof), the Company shall be entitled to recover, and the Employee shall be obligated to repay or forfeit, the value of any equity awards (including, without limitation, restricted stock units, stock options, and restricted stock) that vested during the twelve (12)-month period immediately preceding the earlier of (i) the date of the breach or (ii) the date of termination of the Employee's employment with the Company. For purposes of this Section 8(d), the recoverable amount shall be the fair market value of the vested shares as of the applicable vesting date. The rights and obligations under this Section 8(d) shall survive the termination of the Employee's employment with the Company for any reason."
Several aspects of this provision are noteworthy for purposes of the present analysis. First, the clawback is triggered by a determination that the employee has breached "any" restrictive covenant obligation under Section 6 — the provision is not limited to the non-compete alone but extends to the non-solicitation and confidentiality covenants as well. Second, the look-back window is defined as the 12-month period immediately preceding the earlier of the date of breach or the date of termination, creating a fixed temporal scope for the clawback. Third, the recoverable amount is pegged to "the fair market value of the vested shares as of the applicable vesting date," which, as discussed below, the parties have agreed to calculate using the grant-date value for settlement purposes. Fourth, the provision expressly survives termination of employment, ensuring that CRH's clawback right is not extinguished by Rathore's departure.
B. Application to Rathore's Circumstances
The for-cause clawback provision in Section 8(d) is triggered in Rathore's case on multiple independent grounds.
Temporal Analysis — 12-Month Look-Back Window. Rathore's resignation was effective February 7, 2025. The 12-month look-back window therefore runs from February 7, 2024 through February 7, 2025. The most recently vested tranche was Tranche 3, which vested on March 15, 2024. Because March 15, 2024 falls squarely within the 12-month look-back window (i.e., after February 7, 2024 and before February 7, 2025), Tranche 3 is the tranche subject to the clawback analysis. Tranche 2, which vested on March 15, 2023, falls outside the look-back window and is therefore not subject to clawback. Tranche 1, which vested on March 15, 2022, similarly falls outside the look-back window.
Breach of the Non-Competition Covenant. Rathore's acceptance of the role of President, Merchandising & Strategy at Verdana Commerce Group, Inc. constitutes a breach of the 18-month post-termination non-competition provision set forth in Section 6(a) of the A&R Employment Agreement. Section 6(a) prohibits Rathore from, directly or indirectly, engaging in, being employed by, or providing services to any business that competes with CRH in the United States for a period of 18 months following the termination of her employment. Verdana is a direct competitor of CRH, operating in 28 overlapping product categories across substantially the same geographic footprint. Rathore signed the VCG offer letter on January 27, 2025 — prior to her resignation from CRH — and accepted a senior executive position with direct oversight of merchandising functions that are competitive with her former responsibilities at CRH. This constitutes a clear and material breach of the non-competition covenant.
Breach of the Confidentiality Covenant. In addition to the non-compete breach, the evidence of data exfiltration identified by Pinnacle Forensics LLC in its preliminary forensic report further supports the activation of the clawback provision. According to Pinnacle's preliminary findings, Rathore downloaded 14,327 files, totaling approximately 2.8 gigabytes of data, from CRH's Aldermere Systems and Pinnacle Health IT environments during the period between January 10 and February 4, 2025. This activity constitutes a breach of the perpetual confidentiality obligation set forth in Section 6(c) of the A&R Employment Agreement, which prohibits the disclosure, use, or removal of confidential and proprietary information of the Company at any time during or after employment.
Because the for-cause clawback provision is triggered by a breach of "any" restrictive covenant obligation, and because Rathore's conduct constitutes breaches of both the non-competition and confidentiality covenants, CRH is entitled to invoke the clawback with respect to the equity that vested during the applicable 12-month look-back window — specifically, Tranche 3.
C. Clawback Amount Calculation
The clawback amount is calculated as follows:
• Applicable tranche: Tranche 3 (vested March 15, 2024)
• Value: 25% × $725,000 = $181,250
A note on valuation methodology is warranted. Section 8(d) of the A&R Employment Agreement defines the recoverable amount as "the fair market value of the vested shares as of the applicable vesting date." Strictly speaking, this would require determining the market price of CRH common stock (Nasdaq: CRHL) on March 15, 2024 and multiplying by the number of shares underlying Tranche 3. However, for purposes of the settlement documentation, the parties have agreed to use the grant-date value of $181,250 as the clawback amount. This approach was adopted for simplicity and certainty, and because the grant-date value provides a reasonable proxy for the recoverable amount given the relatively modest fluctuations in CRHL's stock price over the relevant period. If market-price-adjusted valuation were used, the figure could differ — either higher or lower depending on CRH's stock price on March 15, 2024 relative to the grant-date price — but the parties' agreement to use the grant-date figure eliminates any potential dispute over the precise clawback amount.
For completeness, Tranche 2 (vested March 15, 2023) falls outside the 12-month look-back window and is therefore not subject to clawback under the contractual provision. Similarly, Tranche 1 (vested March 15, 2022) falls well outside the look-back window. Neither tranche is implicated in the forfeiture calculation.
V. Total Forfeiture Calculation Summary
A. Summary Table
The total RSU forfeiture applicable to Priya Rathore is summarized in the following table:
B. Reconciliation with Settlement Terms
The $362,500 total RSU forfeiture for Rathore is consistent with the agreed settlement framework reflected in the revised term sheet dated March 20, 2025. The equity forfeiture figures for all eight departing employees have been reviewed and confirmed in principle by the respective parties' counsel as part of the broader settlement negotiations.
For context, the total economic recovery for CRH under the proposed settlement is comprised of the following components:
The combined equity forfeitures across the Rathore Group (i.e., all eight departing employees) total $849,500 ($362,500 for Rathore plus $487,000 for the remaining seven employees). The separate memorandum of even date provides the detailed calculations supporting the $487,000 aggregate figure for the other seven employees.
VI. Implementation Steps and Closing Deliverables
A. Equity Cancellation
The implementation of the RSU forfeiture for Rathore requires two distinct actions corresponding to the two components of the forfeiture:
Cancellation of Unvested RSUs (Tranche 4 — $181,250). A letter is to be prepared and sent to Northland Trust Company, CRH's transfer agent, directing the cancellation of Rathore's unvested RSU awards corresponding to Tranche 4. This letter should be sent on or promptly after April 14, 2025, which is the target date for execution of the Standstill and Settlement Agreement. The cancellation of unvested units is a ministerial action, as the forfeiture occurred automatically upon Rathore's resignation by operation of Section 4(c) of the RSU Award Agreement and Section 7.2 of the Equity Plan. The letter to Northland Trust Company will serve as formal instruction to update its records and to ensure that the unvested units are no longer reflected in Rathore's account.
Clawback of Vested RSUs (Tranche 3 — $181,250). The clawback of Tranche 3 is to be effectuated in accordance with the mechanism specified in Section 8(d) of the A&R Employment Agreement. Under that provision, the clawback may be satisfied either through the return of shares (if Tranche 3 was previously settled in CRH common stock and the shares are still held by Rathore) or through a cash payment obligation by Rathore to CRH. Under the settlement terms as currently negotiated, Rathore's clawback obligation will be satisfied by her acknowledgment and consent in the Standstill and Settlement Agreement, coupled with Northland Trust Company's cancellation of any shares held in Rathore's account corresponding to Tranche 3. If Rathore has previously sold or transferred the shares underlying Tranche 3, the settlement agreement will provide for a cash repayment mechanism, although this contingency is addressed in the open questions discussed in Section VII below.
B. Coordination with Other Workstreams
The RSU forfeiture calculations for Rathore are part of a broader set of interrelated workstreams in connection with the settlement. The following coordination steps should be noted:
1. Separate Memorandum — Other Departing Employees. A separate memorandum dated March 22, 2025 has been prepared detailing the equity forfeiture calculations for the remaining seven departing employees, with an aggregate forfeiture amount of $487,000. That memorandum should be reviewed in conjunction with this one.
2. Letter to CRH Compensation Committee. A summary letter to CRH's Compensation Committee is targeted for delivery on or around April 10, 2025. The letter will summarize the equity clawback and forfeiture provisions applicable across all eight departing employees and will seek any required Compensation Committee acknowledgment or ratification of the clawback actions.
3. Draft Board Resolution. A draft board resolution, targeted for April 14, 2025 (concurrent with settlement execution), will include ratification of all equity forfeitures as part of the overall settlement terms. The resolution should be drafted to confirm the Board's approval of the settlement in its entirety, including the equity components.
4. SEC Disclosure and Financial Reporting. The equity forfeiture figures will be incorporated into the financial reporting analysis for SEC disclosure considerations. Depending on the materiality assessment and the timing of the settlement, disclosure may be required in a Current Report on Form 8-K and/or in CRH's Quarterly Report on Form 10-Q for the quarter ending March 31, 2025. The financial reporting team should coordinate with CRH's in-house counsel and auditors on the appropriate treatment.
5. Credit Facility Notification. The material litigation reporting covenant under CRH's $750 million revolving credit facility with Keypoint National Bank requires notification of the settlement and related equity forfeiture amounts. A draft notification letter should be prepared for review by CRH's treasury department.
C. Hargrove & Tillett Coordination
CRH's outside auditors, Hargrove & Tillett CPA, PLLC (lead audit partner: Denise Wheatley), should be notified of the forfeiture and clawback amounts applicable to Rathore and the other seven departing employees. This notification is necessary for proper accounting treatment in connection with CRH's Q1 2025 financial statements, including the reversal of stock-based compensation expense associated with forfeited unvested awards, any adjustments to the recorded value of previously vested awards subject to clawback, and the adjustment of the $3,500,000 litigation contingency accrual that was established in CRH's Q4 2024 financial statements. The timing and amount of the adjustment to the contingency accrual should be discussed with Hargrove & Tillett in the context of the broader settlement accounting.
VII. Open Questions and Caveats
The following questions remain open and should be resolved prior to or in connection with the execution of the settlement documentation:
1. Form of Tranche 3 Settlement. We should confirm with CRH's in-house team, specifically Theresa Yun-Park, whether the shares underlying Tranche 3 were previously settled in CRH common stock (Nasdaq: CRHL) and whether Rathore still holds those shares in her Northland Trust Company account, or whether Tranche 3 was settled in cash. This determination affects the mechanics of the clawback execution. If the shares were settled in stock and are still held, cancellation through Northland Trust Company is the most straightforward approach. If the shares have been sold or transferred, a cash repayment mechanism will need to be documented in the settlement agreement.
2. Share Count Verification. We should confirm with Northland Trust Company the precise number of shares underlying Tranche 3. The dollar amount of $181,250 is based on the grant-date value of the RSU award, but the number of shares actually issued upon vesting would have been determined by the closing price of CRHL on the grant date (or by an alternative pricing formula specified in the RSU Award Agreement, such as a multi-day averaging period). The share count is relevant for the cancellation instructions to Northland Trust Company and for any tax reporting implications.
3. Compensation Committee Procedural Requirements. We should verify whether the CRH 2020 Equity Incentive Plan contains any limitation or procedural prerequisite — such as a formal Compensation Committee determination or vote — that must be satisfied before the for-cause clawback is effectuated. While Section 8(d) of the A&R Employment Agreement appears to grant the Company a self-executing clawback right upon a determination of breach, the Equity Plan may impose additional requirements that should be satisfied to avoid any procedural challenge.
4. Precedent Considerations. It is our understanding that the for-cause clawback provision in Section 8(d) of the A&R Employment Agreement has not previously been invoked by CRH with respect to any employee. While this does not affect the legal analysis, there may be precedential or reputational considerations associated with the first exercise of this provision. We should coordinate with Bernard Crawford on any such considerations before the settlement is finalized and the clawback is publicly or internally communicated.
VIII. Conclusion
Based on the foregoing analysis, the total RSU forfeiture applicable to Priya Rathore is $362,500, comprised of:
• $181,250 in automatic forfeiture of unvested Tranche 4, arising from Rathore's resignation on February 7, 2025, prior to the March 15, 2025 vesting date, pursuant to Section 4(c) of the RSU Award Agreement and Section 7.2 of the CRH 2020 Equity Incentive Plan; and
• $181,250 in clawback of vested Tranche 3, arising from Rathore's breach of the non-competition and confidentiality covenants in Sections 6(a) and 6(c) of the A&R Employment Agreement, triggering the for-cause clawback provision in Section 8(d) thereof.
This total forfeiture amount of $362,500 is reflected in the revised settlement term sheet dated March 20, 2025 and will be incorporated into the execution version of the Standstill and Settlement Agreement. We recommend proceeding with the implementation steps outlined in Section VI above upon execution of the settlement, including the preparation of the Northland Trust Company cancellation letter, the Compensation Committee summary letter, and the coordination with Hargrove & Tillett on accounting treatment.
Please let me know if you have any questions or if any of the open items identified in Section VII require further analysis prior to the settlement execution date.
Distribution:
Bernard Crawford, Responsible Partner File copy (Matter No. 1038-00006)
Enclosures Referenced:
1. Amended and Restated Employment Agreement — Priya Rathore (March 15, 2021)
2. RSU Award Agreement — Priya Rathore (March 15, 2021)
3. CRH 2020 Equity Incentive Plan
4. Revised Term Sheet (March 20, 2025)
TO: | James Underwood, Lead Associate, Labor & Employment
FROM: | Devon Archer, Working Associate, Labor & Employment
DATE: | March 22, 2025
RE: | RSU Forfeiture Calculations — Priya Rathore
MATTER NO.: | 1038-00006
CLIENT: | Cascade Retail Holdings Inc.
CASE: | Cascade Retail Holdings Inc. v. Rathore et al., C.A. No. 2025-0198-MTZ (Del. Ch.)
Tranche | Vesting Date | Percentage | Dollar Value
Tranche 1 | March 15, 2022 | 25% | $181,250
Tranche 2 | March 15, 2023 | 25% | $181,250
Tranche 3 | March 15, 2024 | 25% | $181,250
Tranche 4 | March 15, 2025 | 25% | $181,250
Total | 100% | $725,000
Component | Contractual Basis | Amount
Unvested RSUs (Tranche 4) | Automatic forfeiture upon resignation per Section 4(c) of RSU Award Agreement and Section 7.2 of the CRH 2020 Equity Incentive Plan | $181,250
Clawback of Vested RSUs (Tranche 3) | For-cause clawback under Section 8(d) of A&R Employment Agreement, triggered by breach of non-competition covenant (Section 6(a)) and confidentiality covenant (Section 6(c)) | $181,250
Total Forfeiture | $362,500
Settlement Component | Amount
Cash settlement payment from Verdana Commerce Group, Inc. | $8,750,000
Rathore equity forfeiture (as detailed in this memorandum) | $362,500
Other seven employees' aggregate equity forfeitures | $487,000
Litigation cost reimbursement from Verdana | $425,000
Total Economic Recovery | $10,024,500

PRIVILEGED AND CONFIDENTIAL ATTORNEY WORK PRODUCT

MEMORANDUM

CALDERWOOD & HARKNESS LLP

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