1038-00006 · Calderwood & Harkness LLP · Pre-Litigation Correspondence

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CALDERWOOD & HARKNESS LLP Attorneys at Law

1301 K Street NW, Suite 1200 Washington, DC 20005 Telephone: (202) 654-8800 Facsimile: (202) 654-8801 www.calderwoodharkness.com

February 25, 2025

VIA Severin Partners LLC OVERNIGHT AND EMAIL

CONFIDENTIAL

Ms. Priya Rathore 14 Harbor Ridge Lane Bellevue, WA 98004

Re: Breach of Amended and Restated Employment Agreement dated March 15, 2021; Restrictive Covenant Violations; Misappropriation of Confidential Information and Trade Secrets

Matter No.: 1038-00006

Dear Ms. Rathore:

This firm represents Cascade Retail Holdings Inc. ("CRH" or the "Company"), a Delaware corporation publicly traded on the Nasdaq Stock Market (ticker: CRHL), with its principal executive offices located at 2200 Elliott Avenue West, Suite 3400, Seattle, Washington 98119. We write to you on behalf of CRH to make formal demand that you immediately cease and desist from all activities that constitute a breach of your obligations under the Amended and Restated Employment Agreement dated March 15, 2021 (the "Employment Agreement"), by and between you and CRH. This letter further constitutes a formal demand for the immediate return of all CRH confidential information and trade secrets currently in your possession, custody, or control, regardless of the form or medium in which such information is maintained. CRH expressly reserves all rights and remedies available to it at law and in equity, including without limitation the right to seek emergency injunctive relief in the Delaware Court of Chancery or any other court of competent jurisdiction, without further notice to you.

The facts underlying this demand are set forth in detail below.

I. BACKGROUND AND EMPLOYMENT RELATIONSHIP

You commenced employment with CRH on June 3, 2019, in the position of Vice President, Merchandising Strategy. In connection with the commencement of your employment, you executed an Employment Agreement dated June 3, 2019 (the "Original Employment Agreement"), which contained, among other provisions, restrictive covenant obligations governed by the laws of the State of Delaware.

On March 15, 2021, in recognition of your expanded responsibilities within the organization, CRH promoted you to the position of Senior Vice President, Merchandising. In connection with that promotion, you executed the Amended and Restated Employment Agreement, which superseded and replaced the Original Employment Agreement in its entirety. The Employment Agreement contains robust restrictive covenant provisions, including non-competition, non-solicitation, and confidentiality obligations, all of which are described in greater detail in Section IV below.

As further consideration for the execution of the Employment Agreement and your agreement to be bound by its restrictive covenant provisions, you received, in connection with your promotion, a one-time promotion bonus in the amount of One Hundred Fifty Thousand Dollars ($150,000) and an enhanced restricted stock unit ("RSU") grant valued at Seven Hundred Twenty-Five Thousand Dollars ($725,000), subject to a four-year vesting schedule commencing on the date of your promotion. These benefits were in addition to your ongoing compensation package, which for fiscal year 2024 ("FY2024") included a base salary of Four Hundred Eighty-Five Thousand Dollars ($485,000), a target annual performance bonus of Two Hundred Ninety Thousand Dollars ($290,000) (representing sixty percent (60%) of your base salary), and the continuing vesting of your RSU grant referenced above. The significant consideration provided to you in connection with the execution of the Employment Agreement underscores both the enforceability of the restrictive covenants contained therein and the seriousness with which CRH regards your obligations.

Your employment with CRH continued from June 3, 2019 through February 7, 2025—a period of approximately five years and eight months—during which time you held positions of increasing responsibility and authority within the organization and were entrusted with access to CRH's most sensitive and competitively valuable confidential information.

II. MS. RATHORE'S POSITION AND ACCESS TO CONFIDENTIAL INFORMATION

As Senior Vice President, Merchandising, you served as the senior-most executive responsible for CRH's entire merchandising division. This division is of critical strategic and financial importance to the Company, having generated approximately $2.3 billion in gross merchandise value in FY2024, representing a substantial share of CRH's total revenue of $6.82 billion for the same fiscal year.

By virtue of your role and seniority within the organization, you had direct and unrestricted access to CRH's most sensitive confidential information and trade secrets. This access included, but was in no way limited to, the following categories of proprietary information:

• Proprietary Vendor Negotiation Playbooks. Detailed strategic frameworks, pricing models, and negotiation strategies developed by CRH over many years and at significant expense, governing the Company's relationships with hundreds of vendors and suppliers across multiple product categories.

• Seasonal Buying Algorithms. Proprietary quantitative models and algorithmic tools used by CRH to optimize seasonal purchasing decisions, inventory allocation, and demand forecasting across its retail and eCommerce channels.

• Private-Label Sourcing Strategies. Confidential strategies, cost structures, supplier agreements, margin targets, and product development roadmaps pertaining to CRH's private-label brands, which represent a high-margin, strategically critical segment of the Company's business.

• Customer Segmentation Data. Granular, proprietary customer data and analytics, including demographic profiles, purchasing behavior analyses, lifetime value models, and targeted marketing segmentation frameworks.

• eCommerce Assortment and Merchandising Analytics. Confidential data, algorithms, and analytical tools used to optimize CRH's online product assortment, pricing, and merchandising strategies across the Company's digital commerce platforms.

• Project Ridgeline. A confidential five-year category expansion roadmap, known internally as "Project Ridgeline," which was completed in October 2024. You and your team had full and unrestricted access to the entirety of the Project Ridgeline materials throughout the planning and finalization process.

Project Ridgeline is of particular significance. It encompasses proprietary vendor terms, private-label margin targets, and eCommerce assortment algorithms that constitute core competitive assets of CRH. The roadmap reflects years of strategic analysis, competitive intelligence, and financial modeling undertaken by CRH at great expense, and its disclosure to a competitor would cause severe and irreparable harm to CRH's competitive position in the marketplace.

Your access to each and all of the foregoing categories of confidential information and trade secrets was granted solely in connection with, and in furtherance of, your duties and responsibilities as an officer of CRH. At no time were you authorized to use, retain, copy, or disclose any such information for any purpose other than the performance of your duties on behalf of the Company.

III. COORDINATED RESIGNATION AND ACCEPTANCE OF COMPETING EMPLOYMENT

On February 7, 2025, at approximately 4:47 PM Pacific Standard Time, you submitted a resignation letter to CRH via email. Your resignation was stated to be effective immediately, without advance notice and without any prior discussion with your superiors or the Company's human resources department regarding a transition period.

The manner and timing of your resignation were not coincidental. CRH has determined that your resignation was part of a coordinated departure in which seven additional senior employees of CRH's merchandising division submitted identical or substantially similar resignation letters at or around the same time. The following individuals participated in this coordinated departure:

1. Derek Linden, Vice President, Hardlines Merchandising;

2. Sonia Kaczmarek, Vice President, Softlines Merchandising;

3. Amara Osei, Director, Private Label Strategy;

4. Brent Halvorsen, Director, Seasonal Planning & Analytics;

5. Lucia Fernandez-Gill, Director, Vendor Relations;

6. Nathan Tsao, Senior Manager, eCommerce Merchandising; and

7. Kira Johansson, Senior Manager, Category Analytics.

On February 14, 2025—one week after the coordinated departure—Verdana Commerce Group, Inc. ("Verdana"), a Delaware corporation headquartered at 400 Christiana Gateway, Suite 700, Wilmington, Delaware 19801, issued a press release titled "Verdana Commerce Welcomes Industry-Leading Merchandising Team to Accelerate Growth." This press release publicly confirmed that Verdana had hired you and all seven of the other departing CRH employees referenced above.

Based on the information available to CRH, including the content of Verdana's public announcement and other sources, CRH is informed and believes that you have accepted the position of President, Merchandising & Strategy at Verdana. This position represents a senior leadership role at a company that is a direct and material competitor of CRH in the omnichannel retail and eCommerce industry.

Verdana competes directly with CRH across no fewer than twenty-eight (28) overlapping product categories, including, among others, home goods, apparel, and seasonal décor—categories that are among CRH's highest-revenue and most strategically important business lines. Verdana is a portfolio company of Greystone Capital Partners, LP ("Greystone"), a Delaware limited partnership with principal offices at 680 Park Avenue, 22nd Floor, New York, New York 10065. Greystone acquired a majority ownership stake in Verdana in the third quarter of 2023, in a transaction valued at approximately $2.4 billion in enterprise value, through Greystone Capital Fund VII, LP. The acquisition was widely reported in the trade press, and Greystone has since been actively involved in directing Verdana's strategic growth trajectory.

In January 2025—shortly before your coordinated departure from CRH—Verdana publicly announced a "transformational growth initiative" targeting $4 billion in revenue by 2028. The announcement specifically cited expansion into categories that are among CRH's strongest competitive positions, including private-label home goods and seasonal décor. The timing and substance of this announcement, in conjunction with the subsequent hiring of you and your entire senior merchandising team, is deeply troubling and suggests a deliberate and calculated effort by Verdana—and by you—to leverage CRH's confidential information, trade secrets, and institutional knowledge for the direct benefit of a competitor.

The coordinated nature of the departure, the simultaneous hiring of an entire functional team by a direct competitor, the direct competitive overlap between CRH and Verdana in precisely the product categories encompassed by your responsibilities and by Project Ridgeline, and your assumption of a senior strategy role at Verdana collectively demonstrate a calculated and deliberate effort to misappropriate CRH's confidential information and trade secrets for the benefit of a direct competitor. CRH will not permit this conduct to go unchallenged.

IV. RESTRICTIVE COVENANT OBLIGATIONS

The Employment Agreement contains the following restrictive covenant provisions, each of which is governed by the laws of the State of Delaware and each of which you are currently violating or are at imminent risk of violating.

A. Non-Competition Covenant

Pursuant to the Employment Agreement, you agreed to a non-competition period of eighteen (18) months following the termination of your employment with CRH, regardless of the reason for such termination (whether voluntary resignation, termination for cause, or otherwise). The geographic scope of the non-competition covenant is the United States. The non-competition covenant prohibits you from, directly or indirectly, engaging in, being employed by, consulting for, providing services to, or otherwise participating in any capacity in any business that competes with CRH in the retail and eCommerce industry.

Your resignation became effective on February 7, 2025. Accordingly, the eighteen-month restricted period runs from February 7, 2025 through and including August 6, 2026.

Verdana Commerce Group, Inc. is unquestionably a direct competitor of CRH within the meaning of the Employment Agreement. Verdana operates in the same omnichannel retail and eCommerce industry, competes with CRH across twenty-eight overlapping product categories, and has publicly announced strategic initiatives targeting the very categories in which CRH holds its strongest competitive positions. Your acceptance of the position of President, Merchandising & Strategy at Verdana constitutes a clear, flagrant, and unambiguous violation of the non-competition covenant contained in the Employment Agreement.

B. Non-Solicitation of Employees

Pursuant to the Employment Agreement, you agreed to a non-solicitation period of twenty-four (24) months following the termination of your employment, during which you are prohibited from directly or indirectly soliciting, recruiting, encouraging, or inducing any employee of CRH to leave CRH's employ, or to accept employment with or provide services to any other person, firm, corporation, or entity.

The twenty-four-month restricted period runs from February 7, 2025 through and including February 6, 2027.

The coordinated departure of seven additional senior employees of CRH's merchandising division—all of whom reported to you or worked closely with you, and all of whom submitted their resignations simultaneously with you and were subsequently hired by the same direct competitor—constitutes strong and compelling evidence of active solicitation and recruitment in violation of this covenant. The simultaneity and uniformity of the departures are inconsistent with any plausible innocent explanation and instead indicate a coordinated, pre-planned campaign of solicitation orchestrated by you in breach of your contractual obligations to CRH.

C. Non-Solicitation of Vendors

Pursuant to the Employment Agreement, you further agreed that, for a period following the termination of your employment, you would not directly or indirectly solicit, divert, or take away, or attempt to solicit, divert, or take away, any vendor, supplier, or business relationship of CRH for the benefit of any competing business.

Given your role as the senior executive overseeing CRH's vendor and supplier relationships across the Company's entire merchandising division, and given your extensive access to proprietary vendor negotiation playbooks, supplier agreements, and sourcing terms, any use of those relationships or that knowledge on behalf of Verdana—whether or not such use has already occurred—would constitute a material violation of this covenant. CRH demands that you refrain from any such activity.

D. Confidentiality Obligations

Pursuant to the Employment Agreement, you are bound by perpetual confidentiality obligations with respect to CRH's trade secrets, proprietary information, and confidential business information. These obligations expressly survive the termination of your employment and are not limited in duration. The confidentiality obligations encompass all non-public information to which you had access during the course of your employment with CRH, including, but expressly not limited to, all Project Ridgeline materials, vendor negotiation strategies and terms, private-label sourcing terms and cost models, customer data and segmentation analytics, eCommerce assortment and merchandising analytics, financial projections, strategic plans, and any other information that derives independent economic value from not being generally known to, or readily ascertainable by, the public or CRH's competitors.

These confidentiality obligations prohibit you from using or disclosing any such information for any purpose, and you are required to safeguard all such information from unauthorized access, use, or disclosure. Any transmission, discussion, or sharing of CRH confidential information with Verdana, Greystone, or any person affiliated with either entity would constitute a direct and material breach of these obligations.

V. EVIDENCE OF DATA EXFILTRATION

The gravity of CRH's concerns is further compounded by evidence that confidential Company data was systematically exfiltrated from CRH's information systems in the weeks preceding your departure.

CRH conducted an information technology security audit commencing on February 12, 2025, in the days following your coordinated resignation. That audit revealed that substantial volumes of CRH confidential information were downloaded from the Company's Aldermere Systems and Pinnacle Health IT environments to personal cloud storage accounts during the period between January 10, 2025 and February 4, 2025—a timeframe that immediately preceded your resignation and that is consistent with deliberate pre-departure data collection.

The scope of this exfiltration is alarming. CRH's preliminary analysis indicates that approximately 14,327 files, totaling approximately 2.8 gigabytes of data, were transferred to personal cloud storage accounts during this period. The exfiltrated materials include, among other things, Project Ridgeline presentations and supporting analyses, vendor negotiation term sheets, private-label cost models and margin analyses, and customer segmentation data and analytics. These materials are among the most competitively sensitive and valuable proprietary assets of the Company.

CRH has retained Pinnacle Forensics LLC, a nationally recognized forensic technology firm, to conduct a comprehensive forensic analysis of all CRH-issued devices returned by you and the other departing employees, as well as cloud access logs, email records, data transfer records, and data exfiltration patterns. This forensic analysis is ongoing, and CRH expects that it will yield additional evidence relevant to the nature, scope, and recipients of the exfiltrated data.

The unauthorized downloading and retention of this information constitutes a clear breach of your confidentiality obligations under the Employment Agreement. Moreover, CRH believes that this conduct likely constitutes misappropriation of trade secrets in violation of the Delaware Uniform Trade Secrets Act, 6 Del. C. § 2001 et seq., as well as potentially other state and federal statutes, including the federal Defend Trade Secrets Act of 2016, 18 U.S.C. § 1836 et seq.

VI. SPECIFIC DEMANDS

In light of the foregoing, CRH hereby demands that you immediately take each of the following actions:

1. Cease Competing Employment. You must immediately cease all employment, consulting, advisory, or other engagement with Verdana Commerce Group, Inc. or any of its affiliates, subsidiaries, parent entities, or related parties (including, without limitation, Greystone Capital Partners, LP and its affiliated funds and portfolio companies) in any merchandising, sourcing, strategy, eCommerce, vendor management, or related capacity, and you must refrain from engaging in any such activities for the full duration of the eighteen-month non-competition period, through and including August 6, 2026. This includes any direct or indirect involvement in Verdana's announced "transformational growth initiative" or any similar strategic effort that would involve the application of knowledge, skills, or information derived from your employment at CRH.

2. Cease Solicitation of CRH Employees. You must immediately cease and refrain from any direct or indirect solicitation, recruitment, encouragement, or inducement of any current CRH employee to leave CRH's employ or to join Verdana, Greystone, or any other competitor or third party. This obligation extends for the full duration of the twenty-four-month non-solicitation period, through and including February 6, 2027. To the extent that any further solicitation activity has been planned or is ongoing, it must stop immediately.

3. Cease Solicitation of CRH Vendors. You must immediately cease and refrain from any direct or indirect solicitation, diversion, or interference with any of CRH's vendor, supplier, or business relationships. You may not contact, communicate with, or attempt to influence any CRH vendor or supplier for the purpose of redirecting, diverting, or otherwise interfering with CRH's existing or prospective business relationships.

4. Return of Confidential Information. Within five (5) business days of the date of this letter (i.e., no later than March 4, 2025), you must return to CRH all confidential information, trade secrets, and proprietary materials of CRH currently in your possession, custody, or control, in any format whatsoever. This includes, without limitation, all digital copies, electronic files, printouts, handwritten notes, memoranda, summaries, and any and all information stored on personal devices (including but not limited to personal laptops, desktop computers, tablets, smartphones, and external storage media), cloud storage accounts (including but not limited to Hollowell Health IT, Larkspur Technologies, Meridian Systems, Cobalt Ridge Systems, and any similar services), personal email accounts, messaging applications, and any other medium or platform on which CRH confidential information may reside.

5. Destruction Certification. Within five (5) business days of the date of this letter (i.e., no later than March 4, 2025), you must provide CRH, through this firm, with a sworn written certification, executed under penalty of perjury, confirming that: (a) all copies of CRH confidential information, trade secrets, and proprietary materials have been returned to CRH or permanently destroyed; (b) no copies of any such materials have been retained in any form or format; and (c) no copies of any such materials have been transmitted, disclosed, or made accessible to any third party, including without limitation Verdana Commerce Group, Inc., Greystone Capital Partners, LP, or any person or entity affiliated with either of them.

6. Preservation of Evidence. Notwithstanding the foregoing demands for the return and destruction of CRH confidential information, you are hereby placed on notice of your legal obligation to preserve all documents, communications, and electronically stored information that may be relevant to CRH's claims against you, including but not limited to all emails, text messages, instant messages, voice messages, notes, memoranda, and any other records relating to your departure from CRH, your communications with Verdana or Greystone or any representative thereof, your communications with any of the other departing CRH employees regarding their departures, and any access to or use of CRH confidential information. You must take all steps necessary to ensure the preservation of such evidence, including the suspension of any automated deletion processes and the safeguarding of all relevant devices and storage media. Spoliation of evidence may result in severe adverse consequences in any subsequent litigation.

7. Confirm Compliance. Within five (5) business days of the date of this letter (i.e., no later than March 4, 2025), you must confirm in writing, either through counsel or directly, your compliance with each of the foregoing demands and your intention to comply fully with all restrictive covenant obligations contained in the Employment Agreement for their full respective durations.

VII. CONSEQUENCES OF CONTINUED NON-COMPLIANCE

CRH's position on these matters is unequivocal. Should you fail to comply with the demands set forth in this letter, CRH is prepared to take immediate and decisive legal action.

Specifically, CRH will promptly seek emergency injunctive relief in the Delaware Court of Chancery, including the entry of a temporary restraining order and a preliminary injunction, to enforce the restrictive covenant provisions of the Employment Agreement. CRH will seek an order enjoining you from continuing your employment at Verdana Commerce Group, Inc. in any capacity, from any further solicitation of CRH employees or vendors, and from any further use, disclosure, or dissemination of CRH confidential information and trade secrets.

In addition to injunctive relief, CRH will pursue all available legal remedies against you, including but not limited to the following claims: (a) breach of the non-competition covenant; (b) breach of the non-solicitation covenants; (c) breach of the confidentiality obligations; (d) misappropriation of trade secrets under the Delaware Uniform Trade Secrets Act, 6 Del. C. § 2001 et seq.; (e) misappropriation of trade secrets under the federal Defend Trade Secrets Act, 18 U.S.C. § 1836 et seq.; (f) breach of the duty of loyalty; (g) unjust enrichment; (h) conversion; and (i) any other claims that the facts may warrant.

CRH will also pursue claims against Verdana Commerce Group, Inc., Greystone Capital Partners, LP, and any other parties who aided, abetted, facilitated, or induced your breach of contractual obligations, including claims for tortious interference with contractual relations, tortious interference with prospective business advantage, civil conspiracy, and unfair competition. CRH will not hesitate to name all responsible parties as defendants.

In connection with such litigation, CRH will seek the full measure of relief available under applicable law, including: full compensatory damages; consequential damages; disgorgement of any and all profits earned by you or by Verdana as a result of the misuse of CRH's confidential information and trade secrets; exemplary or punitive damages where permitted by law; and an award of attorneys' fees, costs, and expenses incurred in connection with the enforcement of CRH's rights. CRH will also seek an extension of the applicable restrictive periods by any period of time during which you were in violation thereof, as permitted by the Employment Agreement and by applicable law.

CRH's merchandising division represents a significant and strategically vital portion of CRH's overall business, and the Company takes any threat to its competitive position with the utmost seriousness. CRH will deploy all available resources to protect its rights, its confidential information, and its competitive position.

VIII. EQUITY AND COMPENSATION IMPLICATIONS

CRH hereby reserves all rights with respect to the forfeiture and clawback of equity awards and other compensation under the terms of the Employment Agreement and applicable equity plan documents. Specifically, the RSU grant valued at $725,000, which was awarded to you in connection with your promotion on March 15, 2021 and which is subject to a four-year vesting schedule, contains express provisions for the forfeiture of unvested awards and the clawback of previously vested awards in the event of a breach of the restrictive covenant obligations contained in the Employment Agreement. CRH fully intends to exercise all rights available to it under these provisions and under any other applicable forfeiture, clawback, or recoupment provisions.

IX. RESERVATION OF RIGHTS

This letter is not intended to be, and shall not be construed as, a waiver or relinquishment of any of CRH's rights or remedies, whether arising under the Employment Agreement, at common law, in equity, or under any applicable statute. All such rights and remedies are expressly reserved.

CRH's decision to provide you with this letter and an opportunity to comply with your contractual obligations prior to initiating formal legal proceedings does not in any way limit, restrict, or waive CRH's right to seek emergency judicial relief, including a temporary restraining order, preliminary injunction, or any other form of relief, at any time and without further notice to you. CRH may pursue such relief concurrently with, or independently of, the demands set forth herein.

Nothing in this letter constitutes an exhaustive or exclusive recitation of your obligations under the Employment Agreement or under applicable law. CRH expressly reserves the right to assert additional claims, seek additional remedies, and identify additional bases for relief as the facts and circumstances warrant, including as additional information is revealed through the ongoing forensic investigation being conducted by Pinnacle Forensics LLC.

X. DIRECTION REGARDING COUNSEL

If you have retained legal counsel in connection with this matter, CRH respectfully requests that you immediately provide the name, firm affiliation, address, telephone number, and email address of such counsel so that all further communications may be directed appropriately and in accordance with applicable professional responsibility rules.

As of the date of this letter, CRH is not aware that you have retained counsel with respect to the matters described herein. Accordingly, this letter is directed to you personally at the address set forth above and by email at the personal email address on file with CRH. If and when you retain counsel, please direct your attorney to contact the undersigned immediately.

We trust that the seriousness of this matter is clear. CRH demands your immediate compliance with the terms set forth in this letter and your full compliance with all obligations arising under the Employment Agreement. Your written response is required within five (5) business days of the date of this letter, no later than March 4, 2025.

CRH sincerely hopes that this matter can be resolved without resort to litigation; however, the Company will not hesitate to take all necessary legal action to protect its rights and competitive interests if you fail to act promptly and in good faith.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Bernard Crawford, Partner

1301 K Street NW, Suite 1200 Washington, DC 20005 Telephone: (202) 654-8842

Email: bcrawford@calderwoodharkness.com

On behalf of Cascade Retail Holdings Inc.

cc:

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

Enclosures: None

CALDERWOOD & HARKNESS LLP Attorneys at Law
1301 K Street NW, Suite 1200 Washington, DC 20005 Telephone: (202) 654-8800 Facsimile: (202) 654-8801 www.calderwoodharkness.com
February 25, 2025
VIA Severin Partners LLC OVERNIGHT AND EMAIL
CONFIDENTIAL
Ms. Priya Rathore 14 Harbor Ridge Lane Bellevue, WA 98004
Re: Breach of Amended and Restated Employment Agreement dated March 15, 2021; Restrictive Covenant Violations; Misappropriation of Confidential Information and Trade Secrets
Matter No.: 1038-00006
Dear Ms. Rathore:
This firm represents Cascade Retail Holdings Inc. ("CRH" or the "Company"), a Delaware corporation publicly traded on the Nasdaq Stock Market (ticker: CRHL), with its principal executive offices located at 2200 Elliott Avenue West, Suite 3400, Seattle, Washington 98119. We write to you on behalf of CRH to make formal demand that you immediately cease and desist from all activities that constitute a breach of your obligations under the Amended and Restated Employment Agreement dated March 15, 2021 (the "Employment Agreement"), by and between you and CRH. This letter further constitutes a formal demand for the immediate return of all CRH confidential information and trade secrets currently in your possession, custody, or control, regardless of the form or medium in which such information is maintained. CRH expressly reserves all rights and remedies available to it at law and in equity, including without limitation the right to seek emergency injunctive relief in the Delaware Court of Chancery or any other court of competent jurisdiction, without further notice to you.
The facts underlying this demand are set forth in detail below.
I. BACKGROUND AND EMPLOYMENT RELATIONSHIP
You commenced employment with CRH on June 3, 2019, in the position of Vice President, Merchandising Strategy. In connection with the commencement of your employment, you executed an Employment Agreement dated June 3, 2019 (the "Original Employment Agreement"), which contained, among other provisions, restrictive covenant obligations governed by the laws of the State of Delaware.
On March 15, 2021, in recognition of your expanded responsibilities within the organization, CRH promoted you to the position of Senior Vice President, Merchandising. In connection with that promotion, you executed the Amended and Restated Employment Agreement, which superseded and replaced the Original Employment Agreement in its entirety. The Employment Agreement contains robust restrictive covenant provisions, including non-competition, non-solicitation, and confidentiality obligations, all of which are described in greater detail in Section IV below.
As further consideration for the execution of the Employment Agreement and your agreement to be bound by its restrictive covenant provisions, you received, in connection with your promotion, a one-time promotion bonus in the amount of One Hundred Fifty Thousand Dollars ($150,000) and an enhanced restricted stock unit ("RSU") grant valued at Seven Hundred Twenty-Five Thousand Dollars ($725,000), subject to a four-year vesting schedule commencing on the date of your promotion. These benefits were in addition to your ongoing compensation package, which for fiscal year 2024 ("FY2024") included a base salary of Four Hundred Eighty-Five Thousand Dollars ($485,000), a target annual performance bonus of Two Hundred Ninety Thousand Dollars ($290,000) (representing sixty percent (60%) of your base salary), and the continuing vesting of your RSU grant referenced above. The significant consideration provided to you in connection with the execution of the Employment Agreement underscores both the enforceability of the restrictive covenants contained therein and the seriousness with which CRH regards your obligations.
Your employment with CRH continued from June 3, 2019 through February 7, 2025—a period of approximately five years and eight months—during which time you held positions of increasing responsibility and authority within the organization and were entrusted with access to CRH's most sensitive and competitively valuable confidential information.
II. MS. RATHORE'S POSITION AND ACCESS TO CONFIDENTIAL INFORMATION
As Senior Vice President, Merchandising, you served as the senior-most executive responsible for CRH's entire merchandising division. This division is of critical strategic and financial importance to the Company, having generated approximately $2.3 billion in gross merchandise value in FY2024, representing a substantial share of CRH's total revenue of $6.82 billion for the same fiscal year.
By virtue of your role and seniority within the organization, you had direct and unrestricted access to CRH's most sensitive confidential information and trade secrets. This access included, but was in no way limited to, the following categories of proprietary information:
• Proprietary Vendor Negotiation Playbooks. Detailed strategic frameworks, pricing models, and negotiation strategies developed by CRH over many years and at significant expense, governing the Company's relationships with hundreds of vendors and suppliers across multiple product categories.
• Seasonal Buying Algorithms. Proprietary quantitative models and algorithmic tools used by CRH to optimize seasonal purchasing decisions, inventory allocation, and demand forecasting across its retail and eCommerce channels.
• Private-Label Sourcing Strategies. Confidential strategies, cost structures, supplier agreements, margin targets, and product development roadmaps pertaining to CRH's private-label brands, which represent a high-margin, strategically critical segment of the Company's business.
• Customer Segmentation Data. Granular, proprietary customer data and analytics, including demographic profiles, purchasing behavior analyses, lifetime value models, and targeted marketing segmentation frameworks.
• eCommerce Assortment and Merchandising Analytics. Confidential data, algorithms, and analytical tools used to optimize CRH's online product assortment, pricing, and merchandising strategies across the Company's digital commerce platforms.
• Project Ridgeline. A confidential five-year category expansion roadmap, known internally as "Project Ridgeline," which was completed in October 2024. You and your team had full and unrestricted access to the entirety of the Project Ridgeline materials throughout the planning and finalization process.
Project Ridgeline is of particular significance. It encompasses proprietary vendor terms, private-label margin targets, and eCommerce assortment algorithms that constitute core competitive assets of CRH. The roadmap reflects years of strategic analysis, competitive intelligence, and financial modeling undertaken by CRH at great expense, and its disclosure to a competitor would cause severe and irreparable harm to CRH's competitive position in the marketplace.
Your access to each and all of the foregoing categories of confidential information and trade secrets was granted solely in connection with, and in furtherance of, your duties and responsibilities as an officer of CRH. At no time were you authorized to use, retain, copy, or disclose any such information for any purpose other than the performance of your duties on behalf of the Company.
III. COORDINATED RESIGNATION AND ACCEPTANCE OF COMPETING EMPLOYMENT
On February 7, 2025, at approximately 4:47 PM Pacific Standard Time, you submitted a resignation letter to CRH via email. Your resignation was stated to be effective immediately, without advance notice and without any prior discussion with your superiors or the Company's human resources department regarding a transition period.
The manner and timing of your resignation were not coincidental. CRH has determined that your resignation was part of a coordinated departure in which seven additional senior employees of CRH's merchandising division submitted identical or substantially similar resignation letters at or around the same time. The following individuals participated in this coordinated departure:
1. Derek Linden, Vice President, Hardlines Merchandising;
2. Sonia Kaczmarek, Vice President, Softlines Merchandising;
3. Amara Osei, Director, Private Label Strategy;
4. Brent Halvorsen, Director, Seasonal Planning & Analytics;
5. Lucia Fernandez-Gill, Director, Vendor Relations;
6. Nathan Tsao, Senior Manager, eCommerce Merchandising; and
7. Kira Johansson, Senior Manager, Category Analytics.
On February 14, 2025—one week after the coordinated departure—Verdana Commerce Group, Inc. ("Verdana"), a Delaware corporation headquartered at 400 Christiana Gateway, Suite 700, Wilmington, Delaware 19801, issued a press release titled "Verdana Commerce Welcomes Industry-Leading Merchandising Team to Accelerate Growth." This press release publicly confirmed that Verdana had hired you and all seven of the other departing CRH employees referenced above.
Based on the information available to CRH, including the content of Verdana's public announcement and other sources, CRH is informed and believes that you have accepted the position of President, Merchandising & Strategy at Verdana. This position represents a senior leadership role at a company that is a direct and material competitor of CRH in the omnichannel retail and eCommerce industry.
Verdana competes directly with CRH across no fewer than twenty-eight (28) overlapping product categories, including, among others, home goods, apparel, and seasonal décor—categories that are among CRH's highest-revenue and most strategically important business lines. Verdana is a portfolio company of Greystone Capital Partners, LP ("Greystone"), a Delaware limited partnership with principal offices at 680 Park Avenue, 22nd Floor, New York, New York 10065. Greystone acquired a majority ownership stake in Verdana in the third quarter of 2023, in a transaction valued at approximately $2.4 billion in enterprise value, through Greystone Capital Fund VII, LP. The acquisition was widely reported in the trade press, and Greystone has since been actively involved in directing Verdana's strategic growth trajectory.
In January 2025—shortly before your coordinated departure from CRH—Verdana publicly announced a "transformational growth initiative" targeting $4 billion in revenue by 2028. The announcement specifically cited expansion into categories that are among CRH's strongest competitive positions, including private-label home goods and seasonal décor. The timing and substance of this announcement, in conjunction with the subsequent hiring of you and your entire senior merchandising team, is deeply troubling and suggests a deliberate and calculated effort by Verdana—and by you—to leverage CRH's confidential information, trade secrets, and institutional knowledge for the direct benefit of a competitor.
The coordinated nature of the departure, the simultaneous hiring of an entire functional team by a direct competitor, the direct competitive overlap between CRH and Verdana in precisely the product categories encompassed by your responsibilities and by Project Ridgeline, and your assumption of a senior strategy role at Verdana collectively demonstrate a calculated and deliberate effort to misappropriate CRH's confidential information and trade secrets for the benefit of a direct competitor. CRH will not permit this conduct to go unchallenged.
IV. RESTRICTIVE COVENANT OBLIGATIONS
The Employment Agreement contains the following restrictive covenant provisions, each of which is governed by the laws of the State of Delaware and each of which you are currently violating or are at imminent risk of violating.
A. Non-Competition Covenant
Pursuant to the Employment Agreement, you agreed to a non-competition period of eighteen (18) months following the termination of your employment with CRH, regardless of the reason for such termination (whether voluntary resignation, termination for cause, or otherwise). The geographic scope of the non-competition covenant is the United States. The non-competition covenant prohibits you from, directly or indirectly, engaging in, being employed by, consulting for, providing services to, or otherwise participating in any capacity in any business that competes with CRH in the retail and eCommerce industry.
Your resignation became effective on February 7, 2025. Accordingly, the eighteen-month restricted period runs from February 7, 2025 through and including August 6, 2026.
Verdana Commerce Group, Inc. is unquestionably a direct competitor of CRH within the meaning of the Employment Agreement. Verdana operates in the same omnichannel retail and eCommerce industry, competes with CRH across twenty-eight overlapping product categories, and has publicly announced strategic initiatives targeting the very categories in which CRH holds its strongest competitive positions. Your acceptance of the position of President, Merchandising & Strategy at Verdana constitutes a clear, flagrant, and unambiguous violation of the non-competition covenant contained in the Employment Agreement.
B. Non-Solicitation of Employees
Pursuant to the Employment Agreement, you agreed to a non-solicitation period of twenty-four (24) months following the termination of your employment, during which you are prohibited from directly or indirectly soliciting, recruiting, encouraging, or inducing any employee of CRH to leave CRH's employ, or to accept employment with or provide services to any other person, firm, corporation, or entity.
The twenty-four-month restricted period runs from February 7, 2025 through and including February 6, 2027.
The coordinated departure of seven additional senior employees of CRH's merchandising division—all of whom reported to you or worked closely with you, and all of whom submitted their resignations simultaneously with you and were subsequently hired by the same direct competitor—constitutes strong and compelling evidence of active solicitation and recruitment in violation of this covenant. The simultaneity and uniformity of the departures are inconsistent with any plausible innocent explanation and instead indicate a coordinated, pre-planned campaign of solicitation orchestrated by you in breach of your contractual obligations to CRH.
C. Non-Solicitation of Vendors
Pursuant to the Employment Agreement, you further agreed that, for a period following the termination of your employment, you would not directly or indirectly solicit, divert, or take away, or attempt to solicit, divert, or take away, any vendor, supplier, or business relationship of CRH for the benefit of any competing business.
Given your role as the senior executive overseeing CRH's vendor and supplier relationships across the Company's entire merchandising division, and given your extensive access to proprietary vendor negotiation playbooks, supplier agreements, and sourcing terms, any use of those relationships or that knowledge on behalf of Verdana—whether or not such use has already occurred—would constitute a material violation of this covenant. CRH demands that you refrain from any such activity.
D. Confidentiality Obligations
Pursuant to the Employment Agreement, you are bound by perpetual confidentiality obligations with respect to CRH's trade secrets, proprietary information, and confidential business information. These obligations expressly survive the termination of your employment and are not limited in duration. The confidentiality obligations encompass all non-public information to which you had access during the course of your employment with CRH, including, but expressly not limited to, all Project Ridgeline materials, vendor negotiation strategies and terms, private-label sourcing terms and cost models, customer data and segmentation analytics, eCommerce assortment and merchandising analytics, financial projections, strategic plans, and any other information that derives independent economic value from not being generally known to, or readily ascertainable by, the public or CRH's competitors.
These confidentiality obligations prohibit you from using or disclosing any such information for any purpose, and you are required to safeguard all such information from unauthorized access, use, or disclosure. Any transmission, discussion, or sharing of CRH confidential information with Verdana, Greystone, or any person affiliated with either entity would constitute a direct and material breach of these obligations.
V. EVIDENCE OF DATA EXFILTRATION
The gravity of CRH's concerns is further compounded by evidence that confidential Company data was systematically exfiltrated from CRH's information systems in the weeks preceding your departure.
CRH conducted an information technology security audit commencing on February 12, 2025, in the days following your coordinated resignation. That audit revealed that substantial volumes of CRH confidential information were downloaded from the Company's Aldermere Systems and Pinnacle Health IT environments to personal cloud storage accounts during the period between January 10, 2025 and February 4, 2025—a timeframe that immediately preceded your resignation and that is consistent with deliberate pre-departure data collection.
The scope of this exfiltration is alarming. CRH's preliminary analysis indicates that approximately 14,327 files, totaling approximately 2.8 gigabytes of data, were transferred to personal cloud storage accounts during this period. The exfiltrated materials include, among other things, Project Ridgeline presentations and supporting analyses, vendor negotiation term sheets, private-label cost models and margin analyses, and customer segmentation data and analytics. These materials are among the most competitively sensitive and valuable proprietary assets of the Company.
CRH has retained Pinnacle Forensics LLC, a nationally recognized forensic technology firm, to conduct a comprehensive forensic analysis of all CRH-issued devices returned by you and the other departing employees, as well as cloud access logs, email records, data transfer records, and data exfiltration patterns. This forensic analysis is ongoing, and CRH expects that it will yield additional evidence relevant to the nature, scope, and recipients of the exfiltrated data.
The unauthorized downloading and retention of this information constitutes a clear breach of your confidentiality obligations under the Employment Agreement. Moreover, CRH believes that this conduct likely constitutes misappropriation of trade secrets in violation of the Delaware Uniform Trade Secrets Act, 6 Del. C. § 2001 et seq., as well as potentially other state and federal statutes, including the federal Defend Trade Secrets Act of 2016, 18 U.S.C. § 1836 et seq.
VI. SPECIFIC DEMANDS
In light of the foregoing, CRH hereby demands that you immediately take each of the following actions:
1. Cease Competing Employment. You must immediately cease all employment, consulting, advisory, or other engagement with Verdana Commerce Group, Inc. or any of its affiliates, subsidiaries, parent entities, or related parties (including, without limitation, Greystone Capital Partners, LP and its affiliated funds and portfolio companies) in any merchandising, sourcing, strategy, eCommerce, vendor management, or related capacity, and you must refrain from engaging in any such activities for the full duration of the eighteen-month non-competition period, through and including August 6, 2026. This includes any direct or indirect involvement in Verdana's announced "transformational growth initiative" or any similar strategic effort that would involve the application of knowledge, skills, or information derived from your employment at CRH.
2. Cease Solicitation of CRH Employees. You must immediately cease and refrain from any direct or indirect solicitation, recruitment, encouragement, or inducement of any current CRH employee to leave CRH's employ or to join Verdana, Greystone, or any other competitor or third party. This obligation extends for the full duration of the twenty-four-month non-solicitation period, through and including February 6, 2027. To the extent that any further solicitation activity has been planned or is ongoing, it must stop immediately.
3. Cease Solicitation of CRH Vendors. You must immediately cease and refrain from any direct or indirect solicitation, diversion, or interference with any of CRH's vendor, supplier, or business relationships. You may not contact, communicate with, or attempt to influence any CRH vendor or supplier for the purpose of redirecting, diverting, or otherwise interfering with CRH's existing or prospective business relationships.
4. Return of Confidential Information. Within five (5) business days of the date of this letter (i.e., no later than March 4, 2025), you must return to CRH all confidential information, trade secrets, and proprietary materials of CRH currently in your possession, custody, or control, in any format whatsoever. This includes, without limitation, all digital copies, electronic files, printouts, handwritten notes, memoranda, summaries, and any and all information stored on personal devices (including but not limited to personal laptops, desktop computers, tablets, smartphones, and external storage media), cloud storage accounts (including but not limited to Hollowell Health IT, Larkspur Technologies, Meridian Systems, Cobalt Ridge Systems, and any similar services), personal email accounts, messaging applications, and any other medium or platform on which CRH confidential information may reside.
5. Destruction Certification. Within five (5) business days of the date of this letter (i.e., no later than March 4, 2025), you must provide CRH, through this firm, with a sworn written certification, executed under penalty of perjury, confirming that: (a) all copies of CRH confidential information, trade secrets, and proprietary materials have been returned to CRH or permanently destroyed; (b) no copies of any such materials have been retained in any form or format; and (c) no copies of any such materials have been transmitted, disclosed, or made accessible to any third party, including without limitation Verdana Commerce Group, Inc., Greystone Capital Partners, LP, or any person or entity affiliated with either of them.
6. Preservation of Evidence. Notwithstanding the foregoing demands for the return and destruction of CRH confidential information, you are hereby placed on notice of your legal obligation to preserve all documents, communications, and electronically stored information that may be relevant to CRH's claims against you, including but not limited to all emails, text messages, instant messages, voice messages, notes, memoranda, and any other records relating to your departure from CRH, your communications with Verdana or Greystone or any representative thereof, your communications with any of the other departing CRH employees regarding their departures, and any access to or use of CRH confidential information. You must take all steps necessary to ensure the preservation of such evidence, including the suspension of any automated deletion processes and the safeguarding of all relevant devices and storage media. Spoliation of evidence may result in severe adverse consequences in any subsequent litigation.
7. Confirm Compliance. Within five (5) business days of the date of this letter (i.e., no later than March 4, 2025), you must confirm in writing, either through counsel or directly, your compliance with each of the foregoing demands and your intention to comply fully with all restrictive covenant obligations contained in the Employment Agreement for their full respective durations.
VII. CONSEQUENCES OF CONTINUED NON-COMPLIANCE
CRH's position on these matters is unequivocal. Should you fail to comply with the demands set forth in this letter, CRH is prepared to take immediate and decisive legal action.
Specifically, CRH will promptly seek emergency injunctive relief in the Delaware Court of Chancery, including the entry of a temporary restraining order and a preliminary injunction, to enforce the restrictive covenant provisions of the Employment Agreement. CRH will seek an order enjoining you from continuing your employment at Verdana Commerce Group, Inc. in any capacity, from any further solicitation of CRH employees or vendors, and from any further use, disclosure, or dissemination of CRH confidential information and trade secrets.
In addition to injunctive relief, CRH will pursue all available legal remedies against you, including but not limited to the following claims: (a) breach of the non-competition covenant; (b) breach of the non-solicitation covenants; (c) breach of the confidentiality obligations; (d) misappropriation of trade secrets under the Delaware Uniform Trade Secrets Act, 6 Del. C. § 2001 et seq.; (e) misappropriation of trade secrets under the federal Defend Trade Secrets Act, 18 U.S.C. § 1836 et seq.; (f) breach of the duty of loyalty; (g) unjust enrichment; (h) conversion; and (i) any other claims that the facts may warrant.
CRH will also pursue claims against Verdana Commerce Group, Inc., Greystone Capital Partners, LP, and any other parties who aided, abetted, facilitated, or induced your breach of contractual obligations, including claims for tortious interference with contractual relations, tortious interference with prospective business advantage, civil conspiracy, and unfair competition. CRH will not hesitate to name all responsible parties as defendants.
In connection with such litigation, CRH will seek the full measure of relief available under applicable law, including: full compensatory damages; consequential damages; disgorgement of any and all profits earned by you or by Verdana as a result of the misuse of CRH's confidential information and trade secrets; exemplary or punitive damages where permitted by law; and an award of attorneys' fees, costs, and expenses incurred in connection with the enforcement of CRH's rights. CRH will also seek an extension of the applicable restrictive periods by any period of time during which you were in violation thereof, as permitted by the Employment Agreement and by applicable law.
CRH's merchandising division represents a significant and strategically vital portion of CRH's overall business, and the Company takes any threat to its competitive position with the utmost seriousness. CRH will deploy all available resources to protect its rights, its confidential information, and its competitive position.
VIII. EQUITY AND COMPENSATION IMPLICATIONS
CRH hereby reserves all rights with respect to the forfeiture and clawback of equity awards and other compensation under the terms of the Employment Agreement and applicable equity plan documents. Specifically, the RSU grant valued at $725,000, which was awarded to you in connection with your promotion on March 15, 2021 and which is subject to a four-year vesting schedule, contains express provisions for the forfeiture of unvested awards and the clawback of previously vested awards in the event of a breach of the restrictive covenant obligations contained in the Employment Agreement. CRH fully intends to exercise all rights available to it under these provisions and under any other applicable forfeiture, clawback, or recoupment provisions.
IX. RESERVATION OF RIGHTS
This letter is not intended to be, and shall not be construed as, a waiver or relinquishment of any of CRH's rights or remedies, whether arising under the Employment Agreement, at common law, in equity, or under any applicable statute. All such rights and remedies are expressly reserved.
CRH's decision to provide you with this letter and an opportunity to comply with your contractual obligations prior to initiating formal legal proceedings does not in any way limit, restrict, or waive CRH's right to seek emergency judicial relief, including a temporary restraining order, preliminary injunction, or any other form of relief, at any time and without further notice to you. CRH may pursue such relief concurrently with, or independently of, the demands set forth herein.
Nothing in this letter constitutes an exhaustive or exclusive recitation of your obligations under the Employment Agreement or under applicable law. CRH expressly reserves the right to assert additional claims, seek additional remedies, and identify additional bases for relief as the facts and circumstances warrant, including as additional information is revealed through the ongoing forensic investigation being conducted by Pinnacle Forensics LLC.
X. DIRECTION REGARDING COUNSEL
If you have retained legal counsel in connection with this matter, CRH respectfully requests that you immediately provide the name, firm affiliation, address, telephone number, and email address of such counsel so that all further communications may be directed appropriately and in accordance with applicable professional responsibility rules.
As of the date of this letter, CRH is not aware that you have retained counsel with respect to the matters described herein. Accordingly, this letter is directed to you personally at the address set forth above and by email at the personal email address on file with CRH. If and when you retain counsel, please direct your attorney to contact the undersigned immediately.
We trust that the seriousness of this matter is clear. CRH demands your immediate compliance with the terms set forth in this letter and your full compliance with all obligations arising under the Employment Agreement. Your written response is required within five (5) business days of the date of this letter, no later than March 4, 2025.
CRH sincerely hopes that this matter can be resolved without resort to litigation; however, the Company will not hesitate to take all necessary legal action to protect its rights and competitive interests if you fail to act promptly and in good faith.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Bernard Crawford, Partner
1301 K Street NW, Suite 1200 Washington, DC 20005 Telephone: (202) 654-8842
Email: bcrawford@calderwoodharkness.com
On behalf of Cascade Retail Holdings Inc.
cc:
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
Enclosures: None