STANDSTILL AND SETTLEMENT AGREEMENT
FIRST DRAFT – March 24, 2025
Prepared by:
Calderwood & Harkness LLP 1301 K Street NW, Suite 1200 Washington, DC 20005
Circulated to Whitfield, Nygaard & Doyle LLP and Blackhall & Soren LLP for review and comment
DRAFT – FOR DISCUSSION PURPOSES ONLY – PRIVILEGED AND CONFIDENTIAL – SUBJECT TO FEDERAL RULE OF EVIDENCE 408
In re Cascade Retail Holdings Inc. v. Rathore et al., C.A. No. 2025-0198-MTZ Delaware Court of Chancery
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STANDSTILL AND SETTLEMENT AGREEMENT
This Standstill and Settlement Agreement (this "Agreement") is entered into as of [●], 2025 (the "Effective Date"), by and among:
CASCADE RETAIL HOLDINGS INC., a Delaware corporation, with its principal place of business at 2200 Elliott Avenue West, Suite 3400, Seattle, WA 98119 ("CRH" or "Cascade");
PRIYA RATHORE, an individual residing at 14 Harbor Ridge Lane, Bellevue, WA 98004 ("Rathore");
DEREK LINDEN, an individual ("Linden");
SONIA KACZMAREK, an individual ("Kaczmarek");
AMARA OSEI, an individual ("Osei");
BRENT HALVORSEN, an individual ("Halvorsen");
LUCIA FERNANDEZ-GILL, an individual ("Fernandez-Gill");
NATHAN TSAO, an individual ("Tsao");
KIRA JOHANSSON, an individual ("Johansson");
(Rathore, Linden, Kaczmarek, Osei, Halvorsen, Fernandez-Gill, Tsao, and Johansson, collectively, the "Individual Defendants" or the "Rathore Group"); and
VERDANA COMMERCE GROUP, INC., a Delaware corporation, with its principal place of business at 400 Christiana Gateway, Suite 700, Wilmington, DE 19801 ("Verdana" or "VCG").
CRH, the Individual Defendants, and Verdana are each referred to herein as a "Party" and collectively as the "Parties."
RECITALS
WHEREAS:
A. CRH is a publicly traded omnichannel retail company whose shares of common stock are listed on the Nasdaq Stock Market LLC under the ticker symbol CRHL. CRH operates 387 brick-and-mortar retail locations across 34 states and maintains a direct-to-consumer ecommerce platform. For the fiscal year ended January 31, 2025 ("FY2024"), CRH reported consolidated revenue of approximately $6.82 billion. CRH's merchandising division is a critical driver of CRH's business, having generated approximately $2.3 billion in gross merchandise value during FY2024 across home goods, apparel, seasonal décor, and related product categories;
B. Each Individual Defendant was formerly employed by CRH in a senior merchandising capacity. Rathore was employed as Senior Vice President, Merchandising, from June 3, 2019 through February 7, 2025, pursuant to an Employment Agreement dated June 3, 2019, as amended and restated on March 15, 2021 (the "Rathore Employment Agreement"). Each of Linden, Kaczmarek, Osei, Halvorsen, Fernandez-Gill, Tsao, and Johansson was employed by CRH in various merchandising roles, each pursuant to an individual employment agreement containing restrictive covenant provisions (the "Individual Employment Agreements," and collectively with the Rathore Employment Agreement, the "Employment Agreements"). Each Employment Agreement contains non-competition, non-solicitation (of employees and vendors), and confidentiality obligations, all governed by the laws of the State of Delaware. The Rathore Employment Agreement provides for an 18-month non-competition period and a 24-month non-solicitation period, each running from the date of termination of employment. The Individual Employment Agreements of Linden and Kaczmarek each provide for 18-month non-competition and 24-month non-solicitation periods. The Individual Employment Agreements of Osei, Halvorsen, Fernandez-Gill, Tsao, and Johansson each provide for 12-month non-competition and 18-month non-solicitation periods;
C. On February 7, 2025, all eight Individual Defendants submitted simultaneous resignations from CRH, effective immediately (the "Resignation Date"). CRH subsequently discovered, through an investigation conducted with the assistance of its forensic technology consultants, that between January 10, 2025 and February 4, 2025, approximately 14,327 files (approximately 2.8 gigabytes) were downloaded from CRH's proprietary systems — including its Aldermere Systems document management environment and Pinnacle Health IT customer relationship management platform — to personal cloud storage accounts maintained by members of the Rathore Group. Such files included, without limitation, materials related to CRH's confidential five-year category expansion strategic plan known internally as "Project Ridgeline," completed in October 2024, as well as vendor negotiation term sheets, private-label cost models, seasonal buying algorithms, and customer segmentation data (collectively, such downloaded files, the "Exfiltrated Data");
D. Verdana Commerce Group, Inc. is a Delaware corporation and a direct competitor of CRH in the omnichannel retail and ecommerce space, specifically in the product categories of home goods, apparel, and seasonal décor, with estimated FY2024 revenue of approximately $1.9 billion. Verdana is majority-owned by Greystone Capital Partners, LP, through Greystone Capital Fund VII, LP. On or about February 14, 2025, Verdana publicly announced the hiring of all eight members of the Rathore Group, with Rathore accepting the position of President, Merchandising & Strategy at Verdana;
E. On March 5, 2025, CRH filed a Verified Complaint and Motion for Temporary Restraining Order and Preliminary Injunction in the Delaware Court of Chancery, captioned Cascade Retail Holdings Inc. v. Rathore et al., C.A. No. 2025-0198-MTZ (the "Litigation"), before Vice Chancellor Margaret T. Zhao, asserting claims for: (1) breach of restrictive covenant; (2) breach of confidentiality obligations; (3) misappropriation of trade secrets under the Delaware Uniform Trade Secrets Act, 6 Del. C. § 2001 et seq. ("DUTSA"); (4) tortious interference with contractual relations (against Verdana); and (5) civil conspiracy. On March 7, 2025, the Court granted CRH's application for a temporary restraining order (the "TRO"), requiring CRH to post an injunction bond in the amount of $2,500,000 through Broadview Surety Corp. (Bond No. BSC-2025-TRO-04419). On March 21, 2025, by stipulation of all Parties, the preliminary injunction hearing was adjourned and the Court entered a Consent Interim Order maintaining the status quo during the settlement documentation period;
F. On March 18, 2025, the Parties participated in a mediation session before the Honorable Philip Ashford (Ret.), through Meridian ADR Services LLC (Ref. Meridian-2025-0318-CRH). On March 20, 2025, the Parties reached agreement on a framework for resolution of the Litigation, as memorialized in the Revised Term Sheet dated March 20, 2025 (the "Revised Term Sheet"). The Parties now desire to memorialize the terms of their agreement in this Agreement, to be incorporated into a Consent Order to be entered by the Court of Chancery; and
G. The Parties desire to fully and finally resolve all claims and disputes arising from or related to the Litigation, without further litigation and without any admission of liability, wrongdoing, or fault by any Party, on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants, agreements, releases, representations, and warranties set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Defined Terms.
As used in this Agreement, the following terms shall have the meanings set forth below. Capitalized terms used but not otherwise defined in this Article I shall have the meanings ascribed to them elsewhere in this Agreement.
"Affiliate" means, with respect to any Person, any other Person that, directly or indirectly, controls, is controlled by, or is under common control with such Person. For purposes of this definition, "control" (including the terms "controlled by" and "under common control with") means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract, or otherwise.
"Agreement" means this Standstill and Settlement Agreement, including all Exhibits and Schedules attached hereto, as it may be amended, modified, or supplemented from time to time in accordance with Section 13.4.
"Clawback Provisions" means the for-cause clawback provisions contained in the Employment Agreements that are triggered upon a breach of the restrictive covenant obligations set forth therein, entitling CRH to recover or cancel previously vested equity awards.
"Competing Business" has the meaning set forth in Section 3.1(c).
"Compliance Monitor" means Aldwyn Compliance Solutions LLC, a Delaware limited liability company, with offices at 1700 Market Street, Suite 2800, Philadelphia, PA 19103, in its capacity as the independent compliance monitor appointed pursuant to Article VII of this Agreement.
"Confidential Information" means all information defined as "Confidential Information," "Proprietary Information," or words of similar import in each Individual Defendant's Employment Agreement, including, without limitation, Project Ridgeline materials, vendor negotiation playbooks, seasonal buying algorithms, private-label sourcing strategies, customer segmentation data, the five-year category expansion roadmap, supplier cost structures, margin analyses, promotional calendars, merchandising assortment plans, and any other information that derives independent economic value from not being generally known to or readily ascertainable by competitors of CRH.
"Consent Order" means the consent order to be entered by the Court of Chancery incorporating the terms of this Agreement, substantially in the form attached hereto as Exhibit F.
"Cost Reimbursement" has the meaning set forth in Section 4.2.
"Court" means the Court of Chancery of the State of Delaware.
"CRH Equity Awards" means the restricted stock unit ("RSU") awards, stock option grants, and any other equity-based compensation granted to the Individual Defendants pursuant to their respective Employment Agreements and CRH's 2019 Omnibus Equity Incentive Plan, as amended.
"Cure Period" has the meaning set forth in Section 11.2.
"Data Destruction Protocol" means the protocol for the return or certified destruction of Exfiltrated Data and other Confidential Information of CRH in the possession, custody, or control of the Individual Defendants or Verdana, as set forth in detail in Exhibit B.
"Effective Date" has the meaning set forth in the Preamble.
"Employment Agreements" means, collectively, the Rathore Employment Agreement and the Individual Employment Agreements, as described in Recital B.
"Exfiltrated Data" means the approximately 14,327 files (approximately 2.8 gigabytes) that were downloaded from CRH's proprietary information systems to personal cloud storage accounts maintained by members of the Rathore Group between January 10, 2025 and February 4, 2025, as identified and catalogued in the forensic report prepared by the Forensic Auditor and delivered to CRH on or about March 3, 2025.
"Forensic Audit Cap" has the meaning set forth in Section 5.3.
"Forensic Auditor" means Pinnacle Forensics LLC, with offices at 8700 Georgia Avenue, Suite 300, Silver Spring, MD 20910, and specifically its engagement lead, Dr. Rajiv Anand.
"Individual Defendants" or "Rathore Group" means, collectively, Priya Rathore, Derek Linden, Sonia Kaczmarek, Amara Osei, Brent Halvorsen, Lucia Fernandez-Gill, Nathan Tsao, and Kira Johansson.
"Individual Employment Agreements" means the employment agreements entered into between CRH and each of Linden, Kaczmarek, Osei, Halvorsen, Fernandez-Gill, Tsao, and Johansson, respectively, each as identified and described in Recital B.
"Litigation" means the action captioned Cascade Retail Holdings Inc. v. Rathore et al., C.A. No. 2025-0198-MTZ, pending before Vice Chancellor Margaret T. Zhao in the Court of Chancery of the State of Delaware.
"Modified Non-Compete Obligations" means the modified non-competition obligations applicable to the Individual Defendants as set forth in Section 3.1 of this Agreement and Exhibit A.
"Modified Non-Solicitation Obligations" means the modified non-solicitation obligations applicable to the Individual Defendants as set forth in Sections 3.2 and 3.3 of this Agreement and Exhibit A, encompassing both employee non-solicitation and vendor non-solicitation restrictions.
"Modified Restrictive Covenant Obligations" means, collectively, the Modified Non-Compete Obligations, the Modified Non-Solicitation Obligations, and the continuing confidentiality obligations as described in Section 3.4.
"Monitor Engagement Letter" means the engagement letter for the Compliance Monitor, substantially in the form attached hereto as Exhibit D.
"Monitor Period" means the twelve (12)-month period commencing on the Effective Date and ending on the first anniversary of the Effective Date.
"Party" and "Parties" have the meanings set forth in the Preamble.
"Person" means any individual, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization, governmental authority, or other entity.
"Project Ridgeline" means CRH's confidential five-year category expansion strategic plan, completed in October 2024, which encompasses, among other things, CRH's planned expansion into new product categories, vendor diversification strategies, private-label development initiatives, and related financial projections.
"Rathore Employment Agreement" means the Amended and Restated Employment Agreement dated March 15, 2021 between CRH and Priya Rathore, which amended and restated in its entirety the original Employment Agreement dated June 3, 2019 between CRH and Rathore.
"Resignation Date" means February 7, 2025, the date on which all eight Individual Defendants submitted their resignations from CRH, effective immediately.
"Restricted Categories" means home goods, seasonal décor, and private-label apparel, as such categories are defined and described in greater detail in Exhibit A.
"Revised Term Sheet" means the Revised Term Sheet dated March 20, 2025, agreed to by the Parties following mediation, which set forth the framework for resolution of the Litigation.
"Settlement Payment" has the meaning set forth in Section 4.1.
"Top 50 Vendors" means the fifty (50) vendors of CRH identified on the list attached hereto as Exhibit C, ranked by aggregate spend during FY2024, who are subject to the vendor non-solicitation restrictions set forth in Section 3.3.
"TRO" means the Temporary Restraining Order entered by the Court on March 7, 2025 in the Litigation.
"Verdana Forensic Audit" means the independent forensic audit of Verdana's information systems, devices, and storage media to be conducted by the Forensic Auditor pursuant to Section 5.3 of this Agreement.
Section 1.2 Rules of Construction.
Unless the context otherwise requires, the following rules of construction shall apply to this Agreement:
(a) The headings of the Articles, Sections, and subsections of this Agreement are for convenience of reference only and shall not affect the interpretation or construction of this Agreement.
(b) The words "include," "includes," and "including" shall be deemed to be followed by the phrase "without limitation."
(c) The words "hereof," "herein," "hereby," "hereunder," and similar terms refer to this Agreement as a whole and not to any particular provision of this Agreement.
(d) Words in the singular shall include the plural and vice versa, and words in one gender shall include the other genders, in each case as the context requires.
(e) References to any statute, rule, or regulation shall include any amendment, modification, successor, or replacement thereof.
(f) References to "days" mean calendar days unless "business days" is expressly specified.
(g) References to "$" or "dollars" mean United States dollars.
(h) The Exhibits and Schedules attached hereto are incorporated herein by reference and shall be deemed a part of this Agreement.
(i) The terms "shall" and "will" are used interchangeably and have the same meaning.
(j) Each Party and its counsel have participated in the negotiation and drafting of this Agreement, and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any provision of this Agreement.
ARTICLE II
STANDSTILL AND CESSATION OF HOSTILITIES
Section 2.1 Standstill Obligations.
From and after the Effective Date through the later of: (a) the date on which all Modified Restrictive Covenant Obligations have expired in accordance with their terms, or (b) the expiration of the Monitor Period, the Parties agree to maintain the standstill as set forth herein and shall refrain from initiating, prosecuting, or maintaining any new proceedings, actions, claims, counterclaims, cross-claims, or motions arising from or related to the subject matter of the Litigation in any court, administrative agency, arbitral tribunal, or other forum. Nothing in this Section 2.1 shall prohibit any Party from seeking enforcement of this Agreement or the Consent Order as expressly provided herein.
Section 2.2 Withdrawal and Dismissal of Claims.
Within five (5) business days of entry of the Consent Order by the Court, CRH shall file a Stipulation for Dismissal with Prejudice of all claims asserted in the Litigation; provided, however, that such dismissal shall be contingent upon full compliance by the Individual Defendants and Verdana with the terms and conditions of this Agreement and the Consent Order during the Monitor Period. The Stipulation for Dismissal shall be held in escrow by the Clerk of the Court or by counsel for CRH, as the Parties may agree, until the expiration of the Monitor Period. If, at the conclusion of the Monitor Period, the Compliance Monitor has confirmed compliance by the Individual Defendants and Verdana with all material obligations under this Agreement and no unresolved compliance violation remains outstanding, CRH shall promptly submit the Stipulation for Dismissal to the Court and the dismissal shall become final. In the event that a material breach has been identified and remains unresolved at the expiration of the Monitor Period, CRH shall retain the right to withdraw the Stipulation for Dismissal and pursue enforcement of this Agreement and the Consent Order as provided in Article XI.
Section 2.3 Dissolution of TRO.
Concurrently with the filing of the Consent Order pursuant to Article X, CRH shall file a motion with the Court to dissolve the TRO entered on March 7, 2025. Upon entry of the Consent Order, the Modified Restrictive Covenant Obligations incorporated therein shall supersede and replace the injunctive provisions of the TRO. The Parties shall cooperate in the preparation and filing of any papers necessary to effect the dissolution of the TRO.
Section 2.4 Release of Injunction Bond.
Upon entry of the Consent Order and dissolution of the TRO, CRH shall promptly file all papers and take all steps necessary to request the discharge and exoneration of the injunction bond posted in connection with the TRO (Bond No. BSC-2025-TRO-04419, in the principal amount of $2,500,000, issued by Broadview Surety Corp.), including the filing of any motion or application with the Court required to effect such discharge. CRH shall use reasonable efforts to cause the discharge of such bond within thirty (30) calendar days of entry of the Consent Order.
Section 2.5 Retained Jurisdiction.
The Parties hereby consent to the Court of Chancery retaining jurisdiction over the Parties and the subject matter of this Agreement for purposes of enforcing the terms of the Consent Order, including, without limitation, the Modified Restrictive Covenant Obligations, the Data Destruction Protocol, the Compliance Monitor framework set forth in Article VII, and any other obligations set forth in this Agreement that are incorporated into the Consent Order. Such retained jurisdiction shall continue for the period specified in Section 10.2 of this Agreement.
ARTICLE III
MODIFIED RESTRICTIVE COVENANT OBLIGATIONS
Section 3.1 Modified Non-Competition Obligations.
(a) Rathore Non-Compete. Rathore acknowledges and agrees that she shall be subject to a non-competition restriction commencing on the Resignation Date (February 7, 2025) and expiring at 11:59 p.m. Eastern Time on February 6, 2026 (the "Rathore Non-Compete Period"), a period of twelve (12) months. During the Rathore Non-Compete Period, Rathore shall not, directly or indirectly, whether as an employee, officer, director, consultant, advisor, independent contractor, agent, partner, member, equityholder (other than as a passive holder of not more than two percent (2%) of the outstanding equity securities of a publicly traded company), or in any other capacity, engage in, contribute to, participate in, manage, supervise, advise, or assist any Competing Business in any activities related to the Restricted Categories within the United States. The scope of Rathore's non-competition restriction is limited to the Restricted Categories (home goods, seasonal décor, and private-label apparel) and does not extend to product categories outside the Restricted Categories. The Parties acknowledge that this Modified Non-Compete Obligation represents a modification of the original 18-month unrestricted non-competition covenant contained in the Rathore Employment Agreement, which has been narrowed in both duration (from 18 months to 12 months) and scope (from all competitive activities to activities solely within the Restricted Categories). Notwithstanding the foregoing, Rathore may continue employment with Verdana during the Rathore Non-Compete Period; provided, however, that during such period, Rathore shall not perform any services for Verdana, provide any guidance or advice to Verdana, make any decisions on behalf of Verdana, or have any involvement whatsoever in Verdana's operations, strategies, vendor relationships, merchandising plans, product development, pricing, marketing, or any other business activity within or related to the Restricted Categories.
(b) Other Individual Defendants Non-Compete. Each of Linden, Kaczmarek, Osei, Halvorsen, Fernandez-Gill, Tsao, and Johansson acknowledges and agrees that he or she shall be subject to a non-competition restriction commencing on the Resignation Date (February 7, 2025) and expiring at 11:59 p.m. Eastern Time on November 6, 2025, a period of nine (9) months (the "Other Defendants Non-Compete Period"). During the Other Defendants Non-Compete Period, each such Individual Defendant shall not, directly or indirectly, whether as an employee, officer, director, consultant, advisor, independent contractor, agent, partner, member, equityholder (other than as a passive holder of not more than two percent (2%) of the outstanding equity securities of a publicly traded company), or in any other capacity, engage in, contribute to, participate in, manage, supervise, advise, or assist any Competing Business in any activities related to the Restricted Categories within the United States. The same category and geographic limitations applicable to Rathore under Section 3.1(a) shall apply to each such Individual Defendant. The Parties acknowledge that this Modified Non-Compete Obligation represents a modification of the original non-competition covenants contained in the Individual Employment Agreements of Linden and Kaczmarek (reduced from 18 months to 9 months) and of Osei, Halvorsen, Fernandez-Gill, Tsao, and Johansson (reduced from 12 months to 9 months), in each case narrowed from unrestricted competitive activity to activity within the Restricted Categories. Each such Individual Defendant may continue employment with Verdana during the Other Defendants Non-Compete Period subject to the same restrictions on involvement with Restricted Categories as are applicable to Rathore under Section 3.1(a).
(c) Definition of Competing Business. For purposes of this Article III, "Competing Business" means any business, enterprise, division, unit, or entity (whether or not incorporated) that competes with CRH in any of the Restricted Categories within the United States, including, without limitation, Verdana Commerce Group, Inc. and any of its Affiliates. For the avoidance of doubt, a business shall be deemed to "compete with CRH" in a Restricted Category if it derives, or reasonably expects to derive, revenue from the sale of goods or services within such Restricted Category to consumers in the United States, whether through brick-and-mortar retail locations, ecommerce platforms, wholesale channels, or any other distribution method.
(d) Permitted Activities. Notwithstanding the restrictions set forth in Sections 3.1(a) and 3.1(b), each Individual Defendant may be employed by Verdana in capacities that do not involve the Restricted Categories during the applicable restricted period, subject to the compliance monitoring and verification procedures set forth in Article VII. The determination of whether an Individual Defendant's activities at Verdana involve the Restricted Categories shall be subject to review and verification by the Compliance Monitor. Nothing in this Section 3.1(d) shall relieve any Individual Defendant from the obligation to comply with the Modified Non-Solicitation Obligations or the continuing confidentiality obligations set forth in this Agreement.
Section 3.2 Modified Non-Solicitation Obligations (Employees).
Each Individual Defendant acknowledges and agrees that, for a period of eighteen (18) months commencing on the Resignation Date (February 7, 2025) and expiring at 11:59 p.m. Eastern Time on August 6, 2026, he or she shall not, directly or indirectly, solicit, recruit, encourage, induce, or attempt to solicit, recruit, encourage, or induce any employee of CRH or any of CRH's subsidiaries or Affiliates to terminate, modify, or otherwise alter his or her employment with CRH or any such subsidiary or Affiliate, or to accept employment or engagement with any other Person. This non-solicitation restriction applies to all employees of CRH, regardless of role, department, or level of seniority, and is not limited to employees of CRH's merchandising division. For the avoidance of doubt, the foregoing prohibition includes, without limitation: (i) making direct contact with any CRH employee for the purpose of discussing potential employment opportunities with Verdana or any other entity; (ii) directing any third party, including but not limited to executive search firms and recruitment agencies, to contact any CRH employee for such purpose; and (iii) providing to any third party the names, contact information, or other identifying information of CRH employees for recruitment purposes. Nothing in this Section 3.2 shall prohibit an Individual Defendant from responding to a general solicitation or advertisement for employment that is not specifically directed at CRH employees, provided that such Individual Defendant did not participate in the design or targeting of such solicitation or advertisement.
Section 3.3 Modified Non-Solicitation Obligations (Vendors).
Each Individual Defendant acknowledges and agrees that, for a period of twelve (12) months commencing on the Resignation Date (February 7, 2025) and expiring at 11:59 p.m. Eastern Time on February 6, 2026, he or she shall not, directly or indirectly, solicit, induce, encourage, or attempt to solicit, induce, or encourage any of CRH's Top 50 Vendors (as identified in the list attached hereto as Exhibit C) to alter, terminate, reduce, or materially modify its commercial relationship with CRH, or to divert any supply, production capacity, or allocation from CRH in favor of Verdana or any other Competing Business. The foregoing prohibition includes, without limitation, negotiating with any Top 50 Vendor for the purpose of obtaining preferential terms, pricing, or allocation that would diminish such vendor's commitment to CRH. Each Individual Defendant may interact with Top 50 Vendors in the ordinary course of his or her employment with Verdana solely with respect to product categories that are outside the Restricted Categories; provided, however, that any interaction by an Individual Defendant with any Top 50 Vendor within or related to the Restricted Categories during the restricted period is strictly prohibited. Any such interaction with Top 50 Vendors outside the Restricted Categories shall be subject to monitoring and verification by the Compliance Monitor, and Verdana shall maintain records of all such interactions for inspection by the Compliance Monitor.
Section 3.4 Continuing Confidentiality Obligations.
The perpetual confidentiality obligations contained in each Individual Defendant's Employment Agreement shall remain in full force and effect and are not modified, limited, or otherwise affected by this Agreement. Each Individual Defendant hereby reaffirms and acknowledges his or her continuing obligations under such confidentiality provisions, including, without limitation, the obligation to maintain in strict confidence and not to disclose, use, publish, or otherwise disseminate any Confidential Information of CRH, whether or not such information constitutes Exfiltrated Data. Each Individual Defendant further acknowledges and agrees that the Confidential Information, including, without limitation, the Project Ridgeline materials, vendor negotiation playbooks, seasonal buying algorithms, private-label sourcing strategies, and customer segmentation data, constitutes trade secrets of CRH within the meaning of the Delaware Uniform Trade Secrets Act, 6 Del. C. § 2001 et seq., and that the unauthorized disclosure, use, or dissemination of such Confidential Information would cause irreparable harm to CRH for which monetary damages would be an inadequate remedy.
Section 3.5 Verdana Acknowledgment and Compliance.
Verdana acknowledges the Modified Restrictive Covenant Obligations applicable to each Individual Defendant as set forth in this Article III and agrees to take all reasonable steps to ensure compliance by each Individual Defendant during his or her employment with Verdana, including, without limitation:
(a) implementing and maintaining organizational separation measures (commonly referred to as "firewalls" or "ethical walls") to ensure that each Individual Defendant is fully separated from Verdana's operations, strategy development, vendor negotiations, product development, merchandising decisions, and all other activities within the Restricted Categories during the applicable restricted period;
(b) designating a senior compliance officer at Verdana who shall be responsible for overseeing compliance with the organizational separation measures and who shall serve as the primary point of contact for the Compliance Monitor with respect to Verdana's compliance obligations;
(c) maintaining written policies and procedures governing the organizational separation of the Individual Defendants from Restricted Category operations, including access controls on information systems, meeting attendance restrictions, and reporting protocols; and
(d) promptly reporting to the Compliance Monitor any actual or suspected breach of the organizational separation measures or the Modified Restrictive Covenant Obligations.
Section 3.6 Detailed Terms.
The detailed terms of the Modified Restrictive Covenant Obligations, including specific definitions of the Restricted Categories, the geographic scope, the applicable time periods, and the activities that are permitted and prohibited during the restricted periods, are set forth in Exhibit A attached hereto and incorporated herein by reference. In the event of any inconsistency between the provisions of this Article III and the provisions of Exhibit A, the provisions of Exhibit A shall control.
ARTICLE IV
MONETARY TERMS
Section 4.1 Settlement Payment.
Verdana shall pay to CRH the sum of Eight Million Seven Hundred Fifty Thousand Dollars ($8,750,000) (the "Settlement Payment") in immediately available funds, by wire transfer to a bank account designated by CRH in accordance with Section 4.7, within thirty (30) calendar days of the Effective Date. The Settlement Payment represents a negotiated lump-sum payment in full and final resolution of all monetary claims asserted or that could have been asserted by CRH against Verdana in the Litigation, including, without limitation, CRH's claims for tortious interference with contractual relations and civil conspiracy. The Settlement Payment shall not be deemed an admission of liability by Verdana.
Section 4.2 Litigation Cost Reimbursement.
In addition to the Settlement Payment, Verdana shall reimburse CRH in the amount of Four Hundred Twenty-Five Thousand Dollars ($425,000) toward CRH's litigation costs and expenses incurred in connection with the Litigation (the "Cost Reimbursement"), payable within thirty (30) calendar days of the Effective Date by wire transfer to the same account designated by CRH under Section 4.7. The Cost Reimbursement represents a negotiated contribution toward CRH's out-of-pocket costs and does not represent a full accounting of all costs and expenses incurred by CRH in the Litigation.
Section 4.3 Equity Forfeitures — Rathore.
(a) Rathore agrees to forfeit, effective as of the Effective Date, one hundred percent (100%) of her unvested CRH RSU awards, valued at approximately One Hundred Eighty-One Thousand Two Hundred Fifty Dollars ($181,250). Such unvested RSUs represent twenty-five percent (25%) of the aggregate RSU grant of Seven Hundred Twenty-Five Thousand Dollars ($725,000) made to Rathore on March 15, 2021 pursuant to the Rathore Employment Agreement and CRH's 2019 Omnibus Equity Incentive Plan, which RSU grant was scheduled to vest in four equal annual tranches on March 15 of each year, with the first three tranches having vested on March 15, 2022, March 15, 2023, and March 15, 2024, respectively, and the fourth and final tranche remaining unvested as of the Resignation Date.
(b) In addition to the forfeiture of unvested RSUs described in Section 4.3(a), and pursuant to the for-cause clawback provision set forth in Section 8(e) of the Rathore Employment Agreement, which is triggered upon a breach of restrictive covenant obligations, Rathore agrees to forfeit the most recently vested tranche of RSUs (the tranche that vested on March 15, 2024), valued at approximately One Hundred Eighty-One Thousand Two Hundred Fifty Dollars ($181,250).
(c) The total equity forfeiture by Rathore under this Agreement shall be approximately Three Hundred Sixty-Two Thousand Five Hundred Dollars ($362,500), representing the sum of the unvested RSU forfeiture and the clawback forfeiture described in Sections 4.3(a) and 4.3(b).
(d) Rathore shall, within ten (10) business days of the Effective Date, execute all documents reasonably necessary to effectuate the forfeiture and cancellation of such RSUs, including any stock transfer forms, cancellation agreements, and direction letters required by CRH's transfer agent, Northland Trust Company. Rathore shall cooperate fully with CRH and Northland Trust Company in cancelling the applicable shares and shall not take any action that would impede or delay such cancellation.
Section 4.4 Equity Forfeitures — Other Individual Defendants.
(a) Each of Linden, Kaczmarek, Osei, Halvorsen, Fernandez-Gill, Tsao, and Johansson agrees to forfeit, effective as of the Effective Date, unvested CRH Equity Awards on a pro rata basis, with the aggregate forfeitures of all seven Individual Defendants totaling approximately Four Hundred Eighty-Seven Thousand Dollars ($487,000). The individual forfeiture amounts for each such Individual Defendant shall be calculated in accordance with each employee's respective equity grant schedules, vesting dates, and unvested balances, as set forth in the settlement worksheet attached hereto as Schedule 4.4.
(b) Each such Individual Defendant shall, within ten (10) business days of the Effective Date, execute all documents reasonably necessary to effectuate the forfeiture and cancellation of his or her forfeited equity awards with Northland Trust Company. Each such Individual Defendant shall cooperate fully with CRH and Northland Trust Company in cancelling the applicable shares and shall not take any action that would impede or delay such cancellation.
Section 4.5 Total Economic Value.
The Parties acknowledge that the total economic recovery to CRH under this Agreement is Ten Million Twenty-Four Thousand Five Hundred Dollars ($10,024,500), comprising the following components:
Section 4.6 No Additional Fees or Costs.
Except as expressly provided in Section 4.2 (Cost Reimbursement), Article VII (regarding Compliance Monitor costs), and Article V (regarding the Verdana Forensic Audit), each Party shall bear its own attorneys' fees, costs, and expenses incurred in connection with the Litigation, the mediation before the Honorable Philip Ashford (Ret.), the negotiation, preparation, and execution of this Agreement, and all related matters.
Section 4.7 Wire Transfer Instructions.
CRH shall provide Verdana with complete and accurate wire transfer instructions for the designated receiving account within five (5) business days of the Effective Date. Verdana shall have no obligation to make any payment under this Article IV until it has received such wire transfer instructions in writing from CRH or its counsel, Calderwood & Harkness LLP.
Section 4.8 Late Payment.
Any amount due under this Article IV that is not paid when due shall accrue interest from the due date until paid in full at a rate per annum equal to the prime rate as published in The Wall Street Journal on the date such payment was due, plus two percent (2%), calculated on the basis of a 365-day year and the actual number of days elapsed. The accrual of interest under this Section 4.8 shall be in addition to, and not in lieu of, any other remedies available to the non-breaching Party under this Agreement or applicable law.
ARTICLE V
DATA RETURN, DESTRUCTION, AND FORENSIC AUDIT
Section 5.1 Data Return and Destruction Obligation.
Within ten (10) business days of the Effective Date, each Individual Defendant shall return to CRH, or certify in writing the complete and permanent destruction of, all Exfiltrated Data and any other Confidential Information of CRH in such Individual Defendant's possession, custody, or control, whether in physical or electronic form, wherever located. Without limiting the generality of the foregoing, this obligation extends to Exfiltrated Data and Confidential Information stored on or in:
(a) personal computers (including desktops, laptops, and tablets);
(b) personal mobile devices (including smartphones);
(c) personal cloud storage accounts (including but not limited to Hollowell Health IT, Larkspur Technologies, Meridian Systems, Cobalt Ridge Systems, and Ridgeway Industries S3 buckets);
(d) personal email accounts (including but not limited to Northgate Software, Cascade Health IT, Ridgeline Technologies, and any other personal email service);
(e) removable media (including USB flash drives, external hard drives, SD cards, and optical media);
(f) paper copies, printouts, handwritten notes, and any other physical embodiment of Exfiltrated Data or Confidential Information; and
(g) any other storage medium, device, platform, or location, whether physical or electronic.
Each Individual Defendant shall exercise diligent and thorough efforts to identify and locate all Exfiltrated Data and Confidential Information subject to this obligation and shall not exclude any device, account, or location from the scope of the search and destruction process.
Section 5.2 Certification of Destruction.
Within the same ten (10)-business-day period specified in Section 5.1, each Individual Defendant shall deliver to CRH a sworn certification, executed under penalty of perjury, substantially in the form set forth in Exhibit B, attesting that: (i) all Exfiltrated Data and Confidential Information of CRH in such Individual Defendant's possession, custody, or control has been returned to CRH or permanently destroyed in accordance with the Data Destruction Protocol; (ii) no copies, extracts, summaries, reproductions, or derivatives of such Exfiltrated Data or Confidential Information have been retained by such Individual Defendant in any form or medium; and (iii) such Individual Defendant has not disclosed, transmitted, or made available any Exfiltrated Data or Confidential Information to any Person other than Verdana and counsel for the Individual Defendants. Each such sworn certification shall be notarized and shall be delivered to both CRH's counsel (Calderwood & Harkness LLP) and the Compliance Monitor.
Section 5.3 Verdana Forensic Audit.
(a) Verdana shall permit the Forensic Auditor, Pinnacle Forensics LLC (engagement lead: Dr. Rajiv Anand), to conduct an independent forensic audit of Verdana's information systems, network infrastructure, endpoint devices, cloud storage environments, email systems, collaboration platforms, and any other storage media to confirm that no Exfiltrated Data or CRH Confidential Information resides on, has been incorporated into, or is otherwise accessible through Verdana's systems (the "Verdana Forensic Audit").
(b) The Verdana Forensic Audit shall commence within fifteen (15) business days of the Effective Date and shall be completed within thirty (30) business days of commencement. The Forensic Auditor shall establish the scope, methodology, and work plan for the Verdana Forensic Audit in consultation with counsel for all Parties, consistent with generally accepted digital forensic practices and standards.
(c) Verdana shall bear all costs and expenses of the Verdana Forensic Audit, including the fees and expenses of the Forensic Auditor and any subcontractors engaged by the Forensic Auditor; provided, however, that such costs shall not exceed One Hundred Seventy-Five Thousand Dollars ($175,000) (the "Forensic Audit Cap") without the prior written consent of Verdana. In the event that the Forensic Auditor determines that the costs of the Verdana Forensic Audit are likely to exceed the Forensic Audit Cap, the Forensic Auditor shall promptly notify all Parties, and the Parties shall confer in good faith regarding the scope of any additional work and the allocation of costs in excess of the Forensic Audit Cap.
(d) Verdana shall cooperate fully with the Forensic Auditor and shall provide reasonable access to its systems, premises, network environments, and personnel for purposes of the Verdana Forensic Audit. Such cooperation shall include, without limitation, providing the Forensic Auditor with: (i) administrative access to relevant information systems and databases; (ii) access to endpoint devices, servers, and network infrastructure as reasonably requested; (iii) cooperation of Verdana's information technology personnel; and (iv) access to physical premises as reasonably necessary for on-site examination.
(e) The Forensic Auditor shall prepare a written report of its findings from the Verdana Forensic Audit and shall deliver such report to counsel for all Parties and to the Compliance Monitor within fifteen (15) business days of completion of the audit. The report shall include a description of the methodology employed, the systems and devices examined, the results of the examination, and the Forensic Auditor's conclusions regarding the presence or absence of Exfiltrated Data or CRH Confidential Information on Verdana's systems.
Section 5.4 Verdana's Independent Obligation.
Verdana represents and warrants that, as of the Effective Date, it has not knowingly used, distributed, incorporated, or relied upon any Exfiltrated Data or CRH Confidential Information in its operations, strategic planning, vendor negotiations, product development, merchandising decisions, or any other business activities or decisions. From and after the Effective Date, Verdana shall take all reasonable steps to ensure that no Exfiltrated Data or CRH Confidential Information is used, referenced, or relied upon in any manner by Verdana, its officers, directors, employees, or agents. If, at any time following the Effective Date, Verdana discovers or becomes aware that any Exfiltrated Data or CRH Confidential Information is present on its systems or has been used in its business, Verdana shall promptly notify CRH and the Compliance Monitor and shall take immediate steps to quarantine, isolate, and destroy such data.
Section 5.5 Consequences of Non-Compliance.
Failure by any Individual Defendant or Verdana to comply with the data return and destruction obligations set forth in this Article V shall constitute a material breach of this Agreement. Upon any such breach, CRH shall be entitled, without prejudice to any other remedies available at law or in equity, to seek enforcement of the data return and destruction obligations through the Court, including proceedings for contempt of the Consent Order, injunctive relief, specific performance, and monetary damages. The Individual Defendants and Verdana acknowledge and agree that a breach of the data return and destruction obligations would cause irreparable harm to CRH for which monetary damages alone would be an inadequate remedy, and that CRH shall be entitled to seek injunctive relief without the necessity of proving actual damages or posting a bond or other security.
Section 5.6 Detailed Protocol.
The detailed Data Destruction Protocol, including the step-by-step procedures for the return or certified destruction of Exfiltrated Data and Confidential Information, the form of the sworn certification of destruction, the verification procedures to be conducted by the Forensic Auditor, and the mechanics of the Verdana Forensic Audit, is set forth in Exhibit B attached hereto and incorporated herein by reference.
ARTICLE VI
RELEASES
Section 6.1 CRH Release of Individual Defendants.
Effective upon the satisfaction of all of the following conditions: (a) receipt by CRH of the Settlement Payment and Cost Reimbursement in full; (b) effectuation of all equity forfeitures described in Sections 4.3 and 4.4, including execution of all necessary documentation and cooperation with Northland Trust Company; (c) completion of the Data Destruction Protocol, including delivery of all sworn certifications required under Section 5.2; and (d) entry of the Consent Order by the Court (collectively, the "Release Conditions"), CRH, on behalf of itself and its Affiliates, subsidiaries, officers, directors, employees, agents, successors, assigns, and representatives, hereby releases, acquits, and forever discharges each Individual Defendant, and his or her respective heirs, executors, administrators, legal representatives, successors, and assigns, from any and all claims, demands, actions, causes of action, suits, debts, dues, sums of money, accounts, reckonings, bonds, bills, covenants, contracts, controversies, agreements, promises, damages, judgments, executions, liabilities, obligations, and demands of every kind and nature whatsoever, in law or in equity, whether known or unknown, suspected or unsuspected, fixed or contingent, asserted or unasserted, matured or unmatured, that CRH ever had, now has, or may hereafter have against any Individual Defendant, arising out of, based upon, or related to the facts, acts, omissions, circumstances, transactions, or events alleged in the Litigation or that could have been alleged in the Litigation; provided, however, that this release shall not extend to, and CRH expressly reserves, any and all claims, rights, and remedies arising from: (i) a breach of this Agreement or the Consent Order; (ii) a breach of the Modified Restrictive Covenant Obligations; or (iii) a breach of the continuing confidentiality obligations described in Section 3.4.
Section 6.2 CRH Release of Verdana.
Effective upon the satisfaction of the Release Conditions, CRH, on behalf of itself and its Affiliates, subsidiaries, officers, directors, employees, agents, successors, assigns, and representatives, hereby releases, acquits, and forever discharges Verdana and its Affiliates, subsidiaries, officers, directors, employees, agents, successors, assigns, and representatives from any and all claims, demands, actions, causes of action, suits, debts, dues, sums of money, accounts, reckonings, bonds, bills, covenants, contracts, controversies, agreements, promises, damages, judgments, executions, liabilities, obligations, and demands of every kind and nature whatsoever, in law or in equity, whether known or unknown, suspected or unsuspected, fixed or contingent, asserted or unasserted, matured or unmatured, that CRH ever had, now has, or may hereafter have against Verdana, arising out of, based upon, or related to the Litigation, including, without limitation, CRH's claims for tortious interference with contractual relations and civil conspiracy; provided, however, that this release shall not extend to, and CRH expressly reserves, any and all claims, rights, and remedies arising from: (i) a breach of this Agreement or the Consent Order; or (ii) a breach of Verdana's obligations under Article V (Data Return, Destruction, and Forensic Audit) or Article VII (Compliance Monitor).
Section 6.3 Individual Defendants' Release of CRH.
Effective upon the satisfaction of the Release Conditions, each Individual Defendant, on behalf of himself or herself and his or her respective heirs, executors, administrators, legal representatives, successors, and assigns, hereby releases, acquits, and forever discharges CRH and its Affiliates, subsidiaries, officers, directors, employees, agents, successors, assigns, and representatives from any and all claims, demands, actions, causes of action, suits, debts, dues, sums of money, accounts, reckonings, bonds, bills, covenants, contracts, controversies, agreements, promises, damages, judgments, executions, liabilities, obligations, and demands of every kind and nature whatsoever, in law or in equity, whether known or unknown, suspected or unsuspected, fixed or contingent, asserted or unasserted, matured or unmatured, that such Individual Defendant ever had, now has, or may hereafter have against CRH, arising out of, based upon, or related to the Litigation, including, without limitation, any claims related to the TRO, the injunction bond, or the Employment Agreements; provided, however, that this release shall not extend to, and each Individual Defendant expressly reserves: (i) any claims for accrued and vested compensation or employee benefits (other than the forfeited equity awards described in Sections 4.3 and 4.4) earned by such Individual Defendant prior to the Resignation Date, including, without limitation, accrued and unpaid base salary, earned but unpaid bonuses for completed performance periods, accrued vacation pay, and vested benefits under CRH's employee benefit plans; and (ii) any claims, rights, and remedies arising from a breach of this Agreement or the Consent Order by CRH.
Section 6.4 Verdana Release of CRH.
Effective upon the satisfaction of the Release Conditions, Verdana, on behalf of itself and its Affiliates, subsidiaries, officers, directors, employees, agents, successors, assigns, and representatives, hereby releases, acquits, and forever discharges CRH and its Affiliates, subsidiaries, officers, directors, employees, agents, successors, assigns, and representatives from any and all claims, demands, actions, causes of action, suits, debts, dues, sums of money, accounts, reckonings, bonds, bills, covenants, contracts, controversies, agreements, promises, damages, judgments, executions, liabilities, obligations, and demands of every kind and nature whatsoever, in law or in equity, whether known or unknown, suspected or unsuspected, fixed or contingent, asserted or unasserted, matured or unmatured, that Verdana ever had, now has, or may hereafter have against CRH, arising out of, based upon, or related to the Litigation, including, without limitation, any claims for damages arising from the entry or enforcement of the TRO; provided, however, that this release shall not extend to, and Verdana expressly reserves, any claims, rights, and remedies arising from a breach of this Agreement or the Consent Order by CRH.
Section 6.5 Reservation of Rights.
Notwithstanding the releases set forth in Sections 6.1 through 6.4, each Party expressly reserves all rights, remedies, and causes of action arising from or related to the enforcement of this Agreement, the Consent Order, and the Modified Restrictive Covenant Obligations. Nothing in this Article VI shall be construed to limit, impair, or waive any Party's right to seek enforcement of this Agreement or the Consent Order through the Court or any other forum of competent jurisdiction, including through proceedings for contempt, specific performance, injunctive relief, or monetary damages.
Section 6.6 No Release of Greystone.
For the avoidance of doubt, this Agreement does not release or affect any claims that CRH may have, or may in the future assert, against Greystone Capital Partners, LP or Greystone Capital Fund VII, LP, whether arising from the facts alleged in the Litigation or otherwise; provided, however, that CRH agrees and covenants that it shall not initiate, pursue, or maintain any claim, action, or proceeding against Greystone Capital Partners, LP or Greystone Capital Fund VII, LP arising from or based upon the facts, acts, omissions, circumstances, transactions, or events alleged in the Litigation, so long as Verdana and each of the Individual Defendants remain in material compliance with all of their respective obligations under this Agreement and the Consent Order. If Verdana or any Individual Defendant commits a material breach of this Agreement or the Consent Order, CRH's covenant not to sue Greystone Capital Partners, LP and Greystone Capital Fund VII, LP shall automatically terminate and be of no further force or effect.
ARTICLE VII
COMPLIANCE MONITOR
Section 7.1 Appointment of Compliance Monitor.
The Parties agree to the appointment of Aldwyn Compliance Solutions LLC, a Delaware limited liability company, with offices at 1700 Market Street, Suite 2800, Philadelphia, PA 19103, as the independent compliance monitor for the duration of the Monitor Period (twelve (12) months commencing on the Effective Date and ending on the first anniversary of the Effective Date). The Compliance Monitor shall be engaged pursuant to the Monitor Engagement Letter, substantially in the form attached hereto as Exhibit D. The Parties shall cooperate to finalize and execute the Monitor Engagement Letter within five (5) business days of the Effective Date.
Section 7.2 Scope of Monitoring.
The Compliance Monitor shall be responsible for verifying adherence by the Individual Defendants and Verdana to the following obligations:
(a) the Modified Non-Compete Obligations set forth in Section 3.1, including verification that each Individual Defendant is not performing services, providing guidance, or having involvement in the Restricted Categories during the applicable restricted period;
(b) the Modified Non-Solicitation Obligations (employees) set forth in Section 3.2, including monitoring for any direct or indirect solicitation of CRH employees by the Individual Defendants;
(c) the Modified Non-Solicitation Obligations (vendors) set forth in Section 3.3, including monitoring interactions between the Individual Defendants and the Top 50 Vendors and verifying that any such interactions are limited to product categories outside the Restricted Categories;
(d) the data return and destruction obligations set forth in Article V, including verification that the Data Destruction Protocol has been completed and that the sworn certifications have been delivered; and
(e) Verdana's organizational separation (firewall) obligations set forth in Section 3.5, including verification that the Individual Defendants are effectively separated from Restricted Category operations during the applicable restricted periods.
The Compliance Monitor shall prepare and deliver quarterly verification reports to counsel for each Party, as described in Section 7.5. The first quarterly report shall cover the period from the Effective Date through the date that is three (3) months after the Effective Date and shall be delivered within fifteen (15) business days of the end of such period. Subsequent quarterly reports shall follow the same schedule.
Section 7.3 Access and Cooperation.
(a) Each Individual Defendant and Verdana shall cooperate fully with the Compliance Monitor in connection with its monitoring activities, including, without limitation, providing: (i) access to organizational charts, reporting structures, and job descriptions for the Individual Defendants; (ii) access to internal communications, meeting schedules, and project assignments of the Individual Defendants to the extent reasonably related to the scope of the monitoring; (iii) access to Verdana's information technology systems, access logs, and security protocols to the extent necessary to verify organizational separation measures; (iv) interviews with Verdana personnel as reasonably requested by the Compliance Monitor; and (v) such other records, documents, and information as the Compliance Monitor may reasonably request in order to fulfill its monitoring obligations.
(b) CRH shall cooperate with the Compliance Monitor as reasonably requested, including providing information necessary to verify compliance with the vendor non-solicitation obligations set forth in Section 3.3, such as confirmation of the status of CRH's relationships with the Top 50 Vendors and notification of any changes in such relationships that may be indicative of non-compliance.
(c) The information-sharing and access framework governing the Compliance Monitor's activities, including the protocols for requesting and providing access to information, the handling and protection of confidential business information shared with the Compliance Monitor, and the procedures for resolving disputes regarding access requests, shall be as set forth in the Letter Agreement among CRH, Verdana, and Aldwyn Compliance Solutions LLC, attached hereto as Exhibit G and incorporated herein by reference.
Section 7.4 Costs.
The estimated total cost of the Compliance Monitor for the twelve (12)-month Monitor Period is Three Hundred Sixty Thousand Dollars ($360,000). Such costs shall be allocated as follows: Verdana shall bear sixty percent (60%) of the total costs, in the amount of Two Hundred Sixteen Thousand Dollars ($216,000), and CRH shall bear forty percent (40%) of the total costs, in the amount of One Hundred Forty-Four Thousand Dollars ($144,000). The Compliance Monitor shall submit invoices on a quarterly basis, and each Party shall pay its allocated share of each quarterly invoice within thirty (30) days of receipt. If the actual costs of the Compliance Monitor exceed the estimated total of $360,000, the Parties shall bear such excess costs in the same proportions (Verdana 60%, CRH 40%), unless otherwise agreed in writing.
Section 7.5 Reports and Findings.
(a) The Compliance Monitor shall deliver quarterly written reports to counsel for each Party: Calderwood & Harkness LLP (on behalf of CRH); Whitfield, Nygaard & Doyle LLP (on behalf of the Individual Defendants); and Blackhall & Soren LLP (on behalf of Verdana). Each quarterly report shall summarize the Compliance Monitor's monitoring activities during the applicable period, its findings regarding compliance or non-compliance with the obligations enumerated in Section 7.2, and any recommendations fo