CONFIDENTIAL – SETTLEMENT DISCUSSION PURPOSES ONLY – SUBJECT TO FRE 408

CONFIDENTIAL – SETTLEMENT DISCUSSION PURPOSES ONLY – SUBJECT TO FRE 408
TERM SHEET – SETTLEMENT FRAMEWORK
Initial Proposal of Cascade Retail Holdings Inc.
March 19, 2025
Calderwood & Harkness LLP Matter No. 1038-00006 Cascade Retail Holdings Inc. v. Rathore et al., C.A. No. 2025-0198-MTZ (Del. Ch.) Prepared by Calderwood & Harkness LLP, 1301 K Street NW, Suite 1200, Washington, DC 20005, on behalf of Cascade Retail Holdings Inc.
NOTICE: This term sheet is presented for discussion purposes only in connection with the mediation before the Honorable Philip Ashford (Ret.) through Meridian ADR Services LLC (Ref. Meridian-2025-0318-CRH). It does not constitute a binding agreement and is subject to negotiation, definitive documentation, and approval by all parties. All statements, proposals, and offers contained herein are made pursuant to Federal Rule of Evidence 408 and Delaware Rule of Evidence 408 and are inadmissible in any proceeding for any purpose, except to enforce the terms of a definitive settlement agreement executed by all parties. Nothing in this term sheet constitutes an admission of liability, wrongdoing, or the validity or invalidity of any claim or defense by any party.
1. PARTIES
1.1 Plaintiff / Claimant.
Cascade Retail Holdings Inc. ("CRH"), a corporation organized and existing under the laws of the State of Delaware, whose shares of common stock are listed on the Nasdaq Global Select Market under the ticker symbol "CRHL," with its principal executive offices located at 2200 Elliott Avenue West, Suite 3400, Seattle, Washington 98119. CRH is represented in this matter by Calderwood & Harkness LLP, 1301 K Street NW, Suite 1200, Washington, DC 20005 (Bernard Crawford, Responsible Partner; direct telephone: (202) 555-4100; email: bcrawford@calderwoodharkness.com).
1.2 Individual Defendants (the "Rathore Group").
The following eight former employees of CRH are collectively referred to in this term sheet as the "Rathore Group" or the "Individual Defendants":
(1) Priya Rathore — Former Senior Vice President, Merchandising. Ms. Rathore was employed by CRH from June 3, 2019 through February 7, 2025, serving as the most senior merchandising executive within the organization and reporting directly to CRH's Chief Commercial Officer, Julia Cheng.
(2) Derek Linden — Former Vice President, Hardlines Merchandising. Mr. Linden was employed by CRH for approximately seven (7) years, most recently serving as the head of CRH's hardlines merchandising division, with responsibility for all non-apparel product categories including home goods, hardware, outdoor living, and seasonal décor.
(3) Sonia Kaczmarek — Former Vice President, Softlines Merchandising. Ms. Kaczmarek was employed by CRH for approximately five (5) years, most recently serving as the head of CRH's softlines merchandising division, with responsibility for all apparel, accessories, and private-label softgoods categories.
(4) Amara Osei — Former Director, Private Label Strategy. Ms. Osei was employed by CRH for approximately four (4) years, responsible for leading CRH's private-label brand development initiatives, including product sourcing, margin analysis, vendor identification, and brand positioning across all CRH private-label lines.
(5) Brent Halvorsen — Former Director, Seasonal Planning & Analytics. Mr. Halvorsen was employed by CRH for approximately six (6) years, responsible for managing CRH's seasonal buying calendars, demand forecasting models, and the analytical frameworks underlying CRH's seasonal merchandising strategy.
(6) Lucia Fernandez-Gill — Former Director, Vendor Relations (Domestic). Ms. Fernandez-Gill was employed by CRH for approximately five (5) years, responsible for maintaining and developing relationships with CRH's domestic vendor base, negotiating supply agreements, managing vendor performance scorecards, and overseeing annual vendor review processes.
(7) Nathan Tsao — Former Senior Manager, eCommerce Merchandising. Mr. Tsao was employed by CRH for approximately three (3) years, responsible for digital assortment planning, online category management, ecommerce-specific pricing strategies, and the integration of merchandising operations across CRH's digital sales channels.
(8) Kira Johansson — Former Senior Manager, Category Analytics. Ms. Johansson was employed by CRH for approximately four (4) years, responsible for advanced analytics supporting category management decisions, including price elasticity modeling, competitive benchmarking, and customer segmentation analytics.
All eight Individual Defendants are represented in this matter by Whitfield, Nygaard & Doyle LLP, 1000 North Market Street, Suite 1500, Wilmington, Delaware 19801 (Catherine Nygaard, Lead Partner; direct telephone: (302) 555-7200; email: cnygaard@wndlaw.com).
1.3 Corporate Defendant.
Verdana Commerce Group, Inc. ("Verdana" or "VCG"), a corporation organized and existing under the laws of the State of Delaware, with its principal executive offices located at 400 Christiana Gateway, Suite 700, Wilmington, Delaware 19801. Verdana is a multi-channel retail and ecommerce company and a direct competitor of CRH in multiple product categories, including home goods, seasonal décor, private-label apparel, and ecommerce retail. Verdana is represented in this matter by Blackhall & Soren LLP, 300 Delaware Avenue, Suite 900, Wilmington, Delaware 19801 (Gavin Blackhall, Lead Partner; direct telephone: (302) 555-3900; email: gblackhall@blackhallsoren.com).
2. RECITALS / BACKGROUND
2.1 On March 5, 2025, CRH filed a Verified Complaint in the Delaware Court of Chancery, captioned Cascade Retail Holdings Inc. v. Rathore et al., C.A. No. 2025-0198-MTZ, asserting the following claims against the defendants:
(a) Count I — Breach of Restrictive Covenant Agreements (against all eight Individual Defendants), arising from the Individual Defendants' acceptance of employment with Verdana in violation of their respective post-employment non-competition and non-solicitation agreements with CRH;
(b) Count II — Breach of Confidentiality Obligations (against all eight Individual Defendants), arising from the unauthorized removal, retention, and/or disclosure of CRH's confidential and proprietary information in violation of the confidentiality provisions of their respective employment agreements;
(c) Count III — Misappropriation of Trade Secrets under the Delaware Uniform Trade Secrets Act, 6 Del. C. §§ 2001–2009 ("DUTSA") (against all eight Individual Defendants and Verdana), arising from the acquisition, use, and/or disclosure of CRH's trade secrets by improper means, including the exfiltration of proprietary files from CRH's systems and the anticipated use of such trade secrets in the defendants' roles at Verdana;
(d) Count IV — Tortious Interference with Contractual Relations (against Verdana), arising from Verdana's knowing inducement of the Individual Defendants to breach their restrictive covenant and confidentiality obligations to CRH;
(e) Count V — Civil Conspiracy (against all eight Individual Defendants and Verdana), arising from the coordinated and concerted action among the defendants to recruit, solicit, and employ CRH's senior merchandising team in violation of their contractual obligations and to misappropriate CRH's trade secrets for Verdana's competitive benefit.
2.2 On March 7, 2025, Vice Chancellor Margaret T. Zhao entered a Temporary Restraining Order (the "TRO") restraining all eight Individual Defendants from commencing employment in any merchandising-related role at Verdana or any Verdana affiliate for a period of fourteen (14) days. In connection with the TRO, CRH posted an injunction bond in the amount of Two Million Five Hundred Thousand Dollars ($2,500,000.00) through Broadview Surety Corporation (Bond No. BSC-2025-TRO-04419).
2.3 The circumstances giving rise to this litigation are as follows: On February 7, 2025, at approximately 4:47 PM Pacific Standard Time, all eight Individual Defendants simultaneously submitted letters of resignation to CRH's Chief Human Resources Officer, Martin Kessler. The resignations were effective immediately. Within hours, Verdana issued internal communications confirming the hiring of all eight individuals into senior merchandising roles within Verdana's organization. On February 14, 2025, Verdana publicly announced the hirings in a press release entitled "Verdana Commerce Welcomes Industry-Leading Merchandising Team to Accelerate Growth."
2.4 Following the mass resignation, CRH engaged Pinnacle Forensics LLC (Dr. Rajiv Anand, Managing Director) to conduct a forensic investigation of the Individual Defendants' use of CRH's information technology systems in the weeks preceding their departure. Pinnacle Forensics confirmed that between January 10, 2025 and February 4, 2025, the Individual Defendants collectively exfiltrated approximately 14,327 files comprising approximately 2.8 gigabytes of data from CRH's systems. The exfiltrated materials included, among other things:
(i) materials related to Project Ridgeline, CRH's confidential strategic initiative to expand into four new product categories during fiscal years 2025 and 2026;
(ii) vendor negotiation term sheets and playbooks reflecting CRH's proprietary negotiation strategies, target pricing, and volume commitments with key domestic and international suppliers;
(iii) private-label cost models, including supplier cost structures, margin targets, and sourcing alternatives for CRH's portfolio of private-label brands;
(iv) customer segmentation data and predictive analytics models used by CRH to target high-value customer cohorts across its retail and ecommerce channels; and
(v) seasonal buying algorithms and demand forecasting models proprietary to CRH.
2.5 A hearing on CRH's motion for a preliminary injunction is currently scheduled for March 21, 2025, before Vice Chancellor Zhao. If the parties are unable to reach a settlement, CRH intends to proceed with the preliminary injunction motion and to seek a preliminary injunction of extended duration pending trial on the merits.
2.6 On March 18, 2025, the parties participated in a mediation session before the Honorable Philip Ashford (Ret.), through Meridian ADR Services LLC (Reference No. Meridian-2025-0318-CRH). While the mediation did not result in a resolution, the parties agreed to continue settlement discussions. This term sheet constitutes CRH's initial settlement proposal, presented following the mediation session, for the purpose of framing further negotiations.
3. MODIFIED NON-COMPETITION OBLIGATIONS
CRH proposes the following modified non-competition terms, which would replace and supersede the non-competition provisions contained in the Individual Defendants' respective employment agreements with CRH. CRH's proposal reflects a meaningful concession from the terms originally negotiated and agreed to by each Individual Defendant, and is offered in the spirit of reaching a resolution that protects CRH's legitimate business interests while permitting the Individual Defendants to resume their careers within a reasonable timeframe.
3.1 Priya Rathore (Former SVP, Merchandising).
(a) Original Contractual Non-Compete. Pursuant to Section 7(a) of the Amended and Restated Employment Agreement dated March 15, 2021 between CRH and Ms. Rathore (the "Rathore Employment Agreement"), Ms. Rathore agreed to a post-employment non-competition period of eighteen (18) months following the termination of her employment for any reason, applicable throughout the United States, covering all retail merchandising activities.
(b) CRH's Proposed Modified Term. CRH proposes a modified non-competition period of fifteen (15) months, commencing on February 7, 2025 (the date of Ms. Rathore's resignation) and expiring on May 6, 2026.
(c) Geographic Scope. The geographic scope shall remain the United States, consistent with the original contractual provision.
(d) Scope of Restriction. CRH proposes narrowing the substantive scope of the non-competition restriction from "all retail merchandising" (as set forth in the Rathore Employment Agreement) to four specific product categories in which CRH maintains the most significant competitive interests and in which Ms. Rathore had the deepest exposure to CRH's confidential strategies and trade secrets:
(i) home goods (including home décor, kitchenware, bath and bedding, and home organization products);
(ii) seasonal décor (including holiday, patio and garden, and weather-driven seasonal product lines);
(iii) private-label apparel (including all proprietary and owned-brand apparel lines); and
(iv) ecommerce merchandising strategy (including digital assortment planning, online pricing strategy, and omnichannel merchandising integration).
(e) Rationale. CRH's proposal represents a reduction of three (3) months from the original contractual term and a material narrowing of the scope of restricted activities. CRH believes this proposal appropriately balances the need to protect CRH's trade secrets and competitive position—particularly in light of Ms. Rathore's role as the most senior merchandising executive to depart and her access to the full breadth of CRH's merchandising strategy—against Ms. Rathore's interest in pursuing future employment opportunities.
3.2 Derek Linden and Sonia Kaczmarek (VP-Level Employees).
(a) Original Contractual Non-Competes. Pursuant to their respective employment agreements with CRH, Mr. Linden and Ms. Kaczmarek each agreed to post-employment non-competition periods of eighteen (18) months following the termination of their employment for any reason, applicable throughout the United States.
(b) CRH's Proposed Modified Term. CRH proposes a modified non-competition period of twelve (12) months for both Mr. Linden and Ms. Kaczmarek, commencing on February 7, 2025 (the date of their respective resignations) and expiring on February 6, 2026.
(c) Geographic Scope. The geographic scope shall remain the United States, consistent with the original contractual provisions.
(d) Scope of Restriction. The same four product categories identified in Section 3.1(d) above: (i) home goods, (ii) seasonal décor, (iii) private-label apparel, and (iv) ecommerce merchandising strategy.
(e) Rationale. CRH's proposal reflects a reduction of six (6) months from the original contractual terms for both Mr. Linden and Ms. Kaczmarek, and a material narrowing of the scope of restricted activities. CRH recognizes that, as VP-level employees, Mr. Linden and Ms. Kaczmarek had somewhat more limited access to enterprise-wide strategic initiatives than Ms. Rathore, while still maintaining significant exposure to CRH's confidential merchandising strategies and vendor relationships within their respective divisions.
3.3 Amara Osei, Brent Halvorsen, Lucia Fernandez-Gill, Nathan Tsao, and Kira Johansson (Director / Senior Manager-Level Employees).
(a) Original Contractual Non-Competes. Pursuant to their respective employment agreements with CRH, each of Ms. Osei, Mr. Halvorsen, Ms. Fernandez-Gill, Mr. Tsao, and Ms. Johansson agreed to post-employment non-competition periods of twelve (12) months following the termination of their employment for any reason, applicable throughout the United States.
(b) CRH's Proposed Modified Term. CRH proposes that the non-competition period for these five individuals remain at twelve (12) months, commencing on February 7, 2025 (the date of their respective resignations) and expiring on February 6, 2026. CRH does not propose any reduction in the non-competition term for this tier of employees in this initial proposal.
(c) Geographic Scope. The geographic scope shall remain the United States, consistent with the original contractual provisions.
(d) Scope of Restriction. The same four product categories identified in Section 3.1(d) above: (i) home goods, (ii) seasonal décor, (iii) private-label apparel, and (iv) ecommerce merchandising strategy.
(e) Rationale. CRH's proposal maintains the originally negotiated twelve-month non-competition period for director and senior manager-level employees, reflecting the fact that each of these individuals had significant access to CRH's trade secrets and confidential information within their respective areas of responsibility, and that each was a knowing and willing participant in the coordinated departure from CRH and the exfiltration of CRH's proprietary data. CRH notes, however, that the scope of restricted activities is materially narrowed from the original contractual terms, which represents a meaningful concession.
3.4 Definition of Restricted Activities.
For purposes of this term sheet and the definitive settlement agreement, the following activities shall constitute "Restricted Activities" during the applicable non-competition period:
(a) Employment by, or the provision of consulting, advisory, or independent contractor services to, Verdana Commerce Group, Inc. or any Verdana affiliate—including, without limitation, any portfolio company of Greystone Capital Partners, LP (or any fund managed by or affiliated with Greystone Capital Partners, LP) that operates in any of the four restricted product categories—in any role involving merchandising, buying, sourcing, category management, vendor relations, ecommerce assortment planning, private-label strategy, seasonal planning, demand forecasting, customer segmentation analytics, or any other function substantially similar to the functions performed by the relevant Individual Defendant during his or her employment with CRH.
(b) Carve-Out for Unrelated Roles. Notwithstanding the foregoing, the non-competition restrictions shall not prohibit any Individual Defendant from accepting or performing a role at Verdana or a Verdana affiliate that is entirely unrelated to any of the four restricted product categories, provided that (i) such role is purely financial, legal, human resources, information technology infrastructure, or administrative in nature, (ii) the Individual Defendant provides written notice to CRH (through counsel) at least ten (10) business days prior to commencing such role, and (iii) CRH does not object to the proposed role within five (5) business days of receipt of such notice. If CRH objects, the parties shall submit the dispute to the compliance monitor (as described in Section 7) for resolution within ten (10) business days.
4. NON-SOLICITATION OBLIGATIONS
4.1 Employee Non-Solicitation.
(a) All eight Individual Defendants shall be subject to a non-solicitation restriction prohibiting the direct or indirect solicitation, recruitment, hiring, or inducement of any employee of CRH (or any CRH subsidiary or affiliate) to terminate his or her employment with CRH, or to accept employment or an engagement with Verdana, any Verdana affiliate, or any other entity.
(b) The employee non-solicitation period shall run for twenty-four (24) months, commencing on February 7, 2025 and expiring on February 6, 2027.
(c) The term "solicitation" shall be broadly construed and shall include, without limitation, direct personal contact, indirect contact through intermediaries or recruiters, social media outreach, and any other form of communication intended to or reasonably likely to result in the departure of a CRH employee.
(d) This restriction shall apply regardless of whether the CRH employee was previously known to the Individual Defendant and regardless of whether the CRH employee initiates the contact.
4.2 Vendor Non-Solicitation.
(a) All eight Individual Defendants shall be subject to a non-solicitation restriction prohibiting the direct or indirect solicitation of CRH's top seventy-five (75) vendors, as ranked by annual spend per CRH's internal vendor ranking as of December 31, 2024, to divert business away from CRH, terminate existing supply arrangements with CRH, or materially modify the commercial terms of any supply arrangement with CRH in a manner adverse to CRH.
(b) The vendor non-solicitation period shall run for eighteen (18) months, commencing on February 7, 2025 and expiring on August 6, 2026.
(c) The list of CRH's top seventy-five (75) vendors shall be set forth in a confidential exhibit to the definitive settlement agreement and shall be filed under seal with the Delaware Court of Chancery.
(d) For the avoidance of doubt, this restriction shall not prohibit any Individual Defendant from engaging in legitimate business dealings with any vendor in a capacity unrelated to the four restricted product categories, provided that such dealings do not involve the use of CRH's confidential information, including without limitation CRH's vendor pricing, volume commitments, rebate structures, or performance scorecards.
4.3 Customer Non-Solicitation.
(a) CRH proposes that all eight Individual Defendants be subject to a non-solicitation restriction prohibiting the direct or indirect solicitation of CRH's enterprise and wholesale customers and key ecommerce platform partners to divert business from CRH, terminate existing commercial relationships with CRH, or materially modify the commercial terms of any existing arrangement with CRH in a manner adverse to CRH.
(b) The customer non-solicitation period shall run for twelve (12) months, commencing on February 7, 2025 and expiring on February 6, 2026.
(c) The scope of covered customers and ecommerce platform partners shall be defined with specificity in the definitive settlement agreement, and CRH shall provide a proposed list in connection with the negotiation of definitive documentation.
5. CONFIDENTIALITY AND TRADE SECRET PROTECTIONS
5.1 Ongoing Confidentiality Obligations.
(a) All eight Individual Defendants shall remain bound by the perpetual confidentiality obligations set forth in their respective employment agreements with CRH, which survive the termination of employment for any reason and without limitation as to time.
(b) Each Individual Defendant shall specifically acknowledge, in the definitive settlement agreement, that the materials related to Project Ridgeline constitute trade secrets within the meaning of the Delaware Uniform Trade Secrets Act, 6 Del. C. §§ 2001–2009, and that the unauthorized acquisition, use, or disclosure of such materials would cause CRH irreparable harm.
(c) For purposes of the settlement, the definition of "Confidential Information" shall be expanded to include, without limitation, the following categories of information to the extent not already covered by the confidentiality provisions of the Individual Defendants' respective employment agreements:
(i) vendor negotiation playbooks, including CRH's standard and customized negotiation frameworks, target pricing models, volume commitment strategies, and vendor relationship management protocols;
(ii) seasonal buying algorithms and demand forecasting models, including the proprietary algorithms developed by CRH's analytics team under the supervision of Mr. Halvorsen and Ms. Johansson;
(iii) private-label sourcing strategies, including supplier identification methodologies, cost engineering models, and competitive positioning frameworks for CRH's portfolio of private-label brands;
(iv) customer segmentation data, including CRH's proprietary customer persona models, lifetime value analyses, and targeted merchandising strategies for high-value customer cohorts; and
(v) category expansion plans, including all strategic planning documents, market analyses, competitive assessments, and financial projections related to CRH's planned entry into new product categories during fiscal years 2025 and 2026.
5.2 Data Return and Destruction.
(a) Within seven (7) business days of the execution of the definitive settlement agreement, each Individual Defendant shall return to CRH, or certify the complete destruction of, all CRH confidential information and trade secrets in his or her possession, custody, or control, including without limitation the 14,327 files (approximately 2.8 gigabytes) identified by Pinnacle Forensics LLC in its preliminary forensic report.
(b) Each Individual Defendant shall provide a sworn declaration, under penalty of perjury pursuant to 28 U.S.C. § 1746, certifying (i) the complete return or destruction of all CRH confidential information and trade secrets, (ii) that no copies, excerpts, summaries, or derivative works of any CRH confidential information have been retained, and (iii) that no CRH confidential information has been shared with, disclosed to, or made accessible to any person other than such Individual Defendant's counsel of record (Whitfield, Nygaard & Doyle LLP) and Verdana's General Counsel (Helen Tsoi), solely for purposes of legal advice in connection with this dispute.
(c) Verdana shall provide a corporate certification, executed by an authorized officer of Verdana, certifying that (i) no CRH confidential information has been integrated into Verdana's systems, databases, or repositories, (ii) no CRH confidential information has been shared with or disclosed to any Verdana employee other than the eight Individual Defendants and Verdana's General Counsel (Helen Tsoi), (iii) no CRH confidential information has been used in any business planning, vendor negotiation, strategic initiative, product development, or competitive intelligence activity by Verdana, and (iv) Verdana has implemented procedures to prevent any inadvertent use or disclosure of CRH confidential information.
5.3 Independent Forensic Audit of Verdana Systems.
(a) CRH proposes that Pinnacle Forensics LLC (Dr. Rajiv Anand, Managing Director) conduct an independent forensic audit of Verdana's information technology systems for the purpose of verifying the complete deletion, return, and non-use of CRH's confidential information and trade secrets.
(b) The scope of the forensic audit shall include, without limitation, Verdana's servers (both on-premises and co-located), cloud environments (including Ridgeway Industries, Crestline Systems, and Aldermere Technologies instances), email systems (including Ashgrove Software and any archived email repositories), collaboration platforms (including Meridian Solutions, Northgate Data Systems, and Aldermere Systems), and the personal devices (laptops, mobile phones, tablets, and external storage media) of each of the eight Individual Defendants.
(c) The forensic audit shall be commenced within twenty (20) business days of the execution of the definitive settlement agreement and shall be completed within a reasonable period thereafter, as determined by Pinnacle Forensics LLC in its professional judgment.
(d) The full cost of the forensic audit, including all fees, expenses, and out-of-pocket costs of Pinnacle Forensics LLC, shall be borne entirely by Verdana, with no cap on the amount of such costs.
(e) Verdana and the Individual Defendants shall cooperate fully with Pinnacle Forensics LLC in connection with the forensic audit, including by providing timely access to all systems, devices, and personnel reasonably requested by the forensic team. Any failure to cooperate shall be deemed a material breach of the settlement agreement.
5.4 Ongoing Access Restrictions.
(a) Verdana shall implement, within five (5) business days of the execution of the definitive settlement agreement, an information barrier (commonly referred to as an "ethical wall") designed to prevent the Individual Defendants from accessing, receiving, or being exposed to any CRH confidential information that may have been retained, inadvertently or otherwise, on any Verdana system.
(b) The information barrier shall be documented in writing and shall include, at a minimum, (i) technical access controls preventing the Individual Defendants from accessing any data stores or systems that may contain CRH confidential information, (ii) written instructions to all Verdana employees who may have had access to CRH confidential information prohibiting the sharing of such information with the Individual Defendants, and (iii) a designated compliance officer within Verdana responsible for monitoring and enforcing the information barrier.
(c) The existence and effectiveness of the information barrier shall be subject to verification by the compliance monitor appointed pursuant to Section 7 of this term sheet.
6. MONETARY TERMS
6.1 Settlement Payment.
Verdana shall pay to CRH a lump-sum cash settlement payment of Twelve Million Five Hundred Thousand Dollars ($12,500,000.00), payable within thirty (30) calendar days of the execution of the definitive settlement agreement, by wire transfer of immediately available funds to a bank account designated by CRH in writing. Time shall be of the essence with respect to payment. In the event that Verdana fails to make the settlement payment within the specified period, interest shall accrue at the rate of twelve percent (12%) per annum from the due date until the date of payment, and CRH shall have the right to enforce the payment obligation through the Consent Order described in Section 8.
6.2 Equity Forfeitures.
(a) Priya Rathore. Ms. Rathore received a grant of restricted stock units ("RSUs") with a total grant date value of Seven Hundred Twenty-Five Thousand Dollars ($725,000.00), pursuant to the CRH 2020 Long-Term Incentive Plan and the RSU Award Agreement dated March 15, 2021, entered into in connection with the Amended and Restated Employment Agreement of the same date. The RSUs vest ratably over four (4) years at a rate of twenty-five percent (25%) per year, with vesting dates of March 15, 2022, March 15, 2023, March 15, 2024, and March 15, 2025. As of the date of Ms. Rathore's resignation (February 7, 2025), three (3) of the four (4) tranches had vested (representing 75% of the total grant, with an aggregate grant date value of $543,750.00), and the fourth tranche (representing 25% of the total grant, with a grant date value of $181,250.00) remained unvested. CRH proposes the following forfeitures:
(i) Forfeiture of Unvested RSUs. Ms. Rathore shall forfeit 100% of her unvested RSUs, with a grant date value of $181,250.00, which would otherwise have vested on March 15, 2025.
(ii) Clawback of Final Vested Tranche. Pursuant to the for-cause clawback provision set forth in Section 9(c) of the Amended and Restated Employment Agreement and Section 12(b) of the RSU Award Agreement, which provides for clawback of vested equity in the event of a material breach of the restrictive covenant provisions of the employment agreement, CRH shall exercise its clawback right with respect to the most recently vested tranche of RSUs (vested March 15, 2024), with a grant date value of $181,250.00.
(iii) Total Forfeiture — Rathore. The aggregate equity forfeiture for Ms. Rathore shall be Three Hundred Sixty-Two Thousand Five Hundred Dollars ($362,500.00).
(b) Other Seven Individual Defendants. Each of Mr. Linden, Ms. Kaczmarek, Ms. Osei, Mr. Halvorsen, Ms. Fernandez-Gill, Mr. Tsao, and Ms. Johansson shall forfeit all unvested equity awards granted by CRH, including unvested RSUs, performance share units ("PSUs"), and stock options, in accordance with the terms of their respective equity award agreements and the CRH 2020 Long-Term Incentive Plan. Based on CRH's preliminary calculations, the aggregate estimated value of unvested equity to be forfeited by these seven individuals is Four Hundred Eighty-Seven Thousand Dollars ($487,000.00), subject to final confirmation based on individual equity grant schedules.
(c) Total Equity Forfeitures. The aggregate equity forfeiture across all eight Individual Defendants shall be Eight Hundred Forty-Nine Thousand Five Hundred Dollars ($849,500.00) (comprising $362,500.00 from Ms. Rathore and $487,000.00 from the other seven individuals).
(d) Cancellation of Awards. Upon execution of the definitive settlement agreement, CRH shall instruct Northland Trust Company, as CRH's transfer agent and equity plan administrator, to cancel all unvested RSU, PSU, and stock option awards held by each of the eight Individual Defendants and to make the corresponding entries on CRH's equity records.
6.3 Litigation Cost Reimbursement.
Verdana shall reimburse CRH Seven Hundred Fifty Thousand Dollars ($750,000.00) toward CRH's litigation costs and attorneys' fees incurred in connection with this matter, including but not limited to fees of Calderwood & Harkness LLP, fees and costs of Pinnacle Forensics LLC, injunction bond premiums paid to Broadview Surety Corporation, and filing fees and court costs. Such reimbursement shall be payable contemporaneously with the settlement payment described in Section 6.1.
6.4 Total Economic Recovery (CRH's Initial Proposal).
CRH's initial proposal contemplates the following aggregate economic recovery:
6.5 Sign-On Bonus Disgorgement.
CRH reserves the right to seek, as part of the settlement negotiations or in subsequent litigation, the disgorgement of all or any portion of the aggregate Six Million Two Hundred Thousand Dollars ($6,200,000.00) in sign-on bonuses paid by Verdana to the Rathore Group in connection with their hiring. Based on information currently available to CRH, the sign-on bonuses were allocated as follows: One Million Five Hundred Thousand Dollars ($1,500,000.00) to Priya Rathore; and an aggregate of Four Million Seven Hundred Thousand Dollars ($4,700,000.00) to the other seven Individual Defendants. CRH reserves this right as an alternative or supplement to the lump-sum cash settlement payment described in Section 6.1, to the extent the parties are unable to agree on the monetary terms of the settlement. CRH contends that the sign-on bonuses were paid as inducement for the Individual Defendants to breach their contractual obligations to CRH and that disgorgement is an appropriate equitable remedy.
7. COMPLIANCE MONITOR
7.1 Appointment.  
(a) CRH proposes the appointment of an independent compliance monitor (the "Monitor") to oversee and verify the defendants' compliance with the terms of the definitive settlement agreement and the Consent Order for a period of eighteen (18) months following the execution of the definitive settlement agreement.
(b) CRH proposes that the Monitor be Aldwyn Compliance Solutions LLC, located at 1700 Market Street, Suite 2800, Philadelphia, Pennsylvania 19103. Aldwyn Compliance Solutions LLC is an independent compliance consulting firm with extensive experience in trade secret, restrictive covenant, and corporate compliance monitoring. CRH is prepared to discuss alternative monitor candidates if the defendants have objections to Aldwyn, provided that any alternative candidate is mutually acceptable to all parties.
(c) The Monitor shall be engaged pursuant to a written engagement letter, the form of which shall be attached as an exhibit to the definitive settlement agreement. The Monitor shall owe duties of impartiality to all parties and shall not serve as an advocate for any party.
7.2 Scope of Monitoring.
The Monitor shall have the following responsibilities and authority:
(a) Quarterly Compliance Verification. The Monitor shall conduct quarterly reviews to verify that each of the eight Individual Defendants is in compliance with the modified non-competition, non-solicitation, and confidentiality obligations set forth in the settlement agreement and the Consent Order, and that Verdana is in compliance with its obligations regarding data destruction, information barriers, and cooperation.
(b) Access to Verdana Records. The Monitor shall have reasonable access to Verdana's human resources records, organizational charts, and job descriptions for each of the eight Individual Defendants, for the purpose of confirming that the Individual Defendants are not engaged in Restricted Activities (as defined in Section 3.4) within the restricted product categories.
(c) Interviews. The Monitor shall have the right to conduct periodic interviews, on reasonable notice, of each of the eight Individual Defendants and of such other Verdana personnel as the Monitor reasonably determines to be relevant to the compliance review. All interviews shall be conducted in the presence of the interviewee's counsel, if requested.
(d) Vendor and Customer Engagement Review. The Monitor shall have the right to review Verdana's vendor engagement records and customer engagement records to the extent such records relate to the restricted product categories, for the purpose of verifying compliance with the vendor non-solicitation and customer non-solicitation obligations set forth in Section 4.
(e) Employee Departure Analysis. The Monitor shall periodically review CRH's employee departure data to detect patterns that may indicate violations of the employee non-solicitation obligations set forth in Section 4.1. CRH shall cooperate with the Monitor by providing timely access to relevant departure data.
7.3 Cost Allocation.
(a) CRH proposes that one hundred percent (100%) of the costs and expenses of the Monitor, including all professional fees, travel expenses, and out-of-pocket costs, be borne by Verdana.
(b) Based on preliminary discussions with Aldwyn Compliance Solutions LLC, CRH estimates that the total cost of the eighteen-month monitoring engagement will be approximately Three Hundred Sixty Thousand Dollars ($360,000.00). This estimate is subject to adjustment based on the final scope of the engagement and the level of cooperation provided by the defendants.
7.4 Reporting.  
(a) The Monitor shall provide quarterly written reports to counsel for all parties, summarizing the Monitor's findings and conclusions with respect to compliance and identifying any areas of concern or potential violation.
(b) In the event the Monitor identifies a suspected material violation of the settlement agreement or the Consent Order, the Monitor shall have the authority to report such suspected violation directly to the Delaware Court of Chancery, with contemporaneous notice to counsel for all parties. The Court shall have the authority to take such action as it deems appropriate, including the issuance of orders to show cause, the imposition of sanctions, and the reinstatement of CRH's claims.
8. CONSENT ORDER AND COURT JURISDICTION
8.1 Consent Order.
The parties shall jointly prepare and file with the Delaware Court of Chancery (C.A. No. 2025-0198-MTZ, Vice Chancellor Margaret T. Zhao presiding) a stipulated consent order (the "Consent Order") incorporating the following terms of the settlement:
(a) the modified non-competition obligations set forth in Section 3;
(b) the non-solicitation obligations set forth in Section 4;
(c) the confidentiality and trade secret protections set forth in Section 5;
(d) the data return and destruction obligations set forth in Section 5.2;
(e) the forensic audit provisions set forth in Section 5.3;
(f) the information barrier requirements set forth in Section 5.4; and
(g) the compliance monitor appointment and authority set forth in Section 7.
The Consent Order shall have the full force and effect of an order of the Delaware Court of Chancery and shall be enforceable by contempt proceedings, including the imposition of civil contempt sanctions, fines, and such other remedies as the Court may deem appropriate.
8.2 Retained Jurisdiction.
The Delaware Court of Chancery shall retain jurisdiction over this matter and the parties for the purpose of enforcing the Consent Order throughout the compliance monitoring period and thereafter as to any unresolved claims or disputes arising under the settlement agreement or the Consent Order.
8.3 Dissolution of TRO.
Upon the entry of the Consent Order by the Court, the existing Temporary Restraining Order entered on March 7, 2025 shall be dissolved and superseded in its entirety by the terms of the Consent Order. Contemporaneously with the dissolution of the TRO, the injunction bond posted by CRH through Broadview Surety Corporation (Bond No. BSC-2025-TRO-04419) in the amount of Two Million Five Hundred Thousand Dollars ($2,500,000.00) shall be released and discharged.
8.4 Conditional Dismissal.
The action shall be dismissed with prejudice upon the conclusion of the compliance monitoring period established pursuant to Section 7, contingent upon the full and complete compliance by all defendants with all terms and conditions of the settlement agreement and the Consent Order. In the event that any material breach of the settlement agreement or the Consent Order occurs during the monitoring period, CRH shall retain the right to reinstate all claims asserted in the Verified Complaint, and the conditional dismissal shall be of no force or effect as to the breaching party or parties. For purposes of this Section 8.4, a "material breach" shall be determined by the Court upon application by CRH, after notice and an opportunity to be heard.
9. MUTUAL NON-DISPARAGEMENT
9.1 Each party to the settlement agreement—CRH, each of the eight Individual Defendants, and Verdana—shall refrain from making, directly or indirectly, any public statement, social media post, press release, communication to vendors, customers, employees, industry analysts, or members of the press, or any other communication, that disparages, defames, or casts in a negative light any other party to the settlement, or any of such party's officers, directors, employees, agents, products, services, or business practices.
9.2 The non-disparagement obligations set forth in this Section 9 shall be subject to the following carve-outs:
(i) truthful testimony compelled by valid legal process, including subpoenas, court orders, or regulatory inquiries;
(ii) confidential communications with each party's legal counsel in connection with the provision of legal advice;
(iii) disclosures required by applicable law, regulation, or the rules of any securities exchange, including without limitation CRH's obligations under the Securities Exchange Act of 1934 and the rules of the Nasdaq Stock Market with respect to material events and agreements; and
(iv) internal business communications made on a need-to-know basis to employees, officers, directors, and advisors of the respective parties, to the extent reasonably necessary for the conduct of such party's business operations.
9.3 The non-disparagement obligations shall survive the execution of the definitive settlement agreement and shall remain in effect for a period of three (3) years following the conclusion of the compliance monitoring period, unless otherwise agreed by the parties.
10. PUBLIC STATEMENTS AND PRESS RELEASES
10.1 The parties shall use good-faith efforts to agree upon the text of a joint statement or mutually acceptable separate statements regarding the resolution of the dispute. Such statements shall be factual, non-inflammatory, and consistent with the terms of the settlement agreement.
10.2 No party shall issue any press release, public filing, or other public communication regarding the settlement or the terms thereof without the prior written consent of all other parties, except as required by applicable law or the rules of any securities exchange. In the event that CRH determines that disclosure of the settlement is required or advisable in connection with its obligations under the Securities Exchange Act of 1934, CRH shall provide the other parties with reasonable advance notice (not less than two (2) business days) and an opportunity to review and comment on the proposed disclosure before it is made.
10.3 Verdana shall, within five (5) business days of the execution of the definitive settlement agreement, remove or archive the press release dated February 14, 2025, entitled "Verdana Commerce Welcomes Industry-Leading Merchandising Team to Accelerate Growth," from Verdana's website, social media channels, and any other publicly accessible platforms controlled by Verdana. Verdana shall replace such press release with a statement that is consistent with the jointly agreed statement referenced in Section 10.1 or with a neutral statement approved in writing by CRH.
11. REPRESENTATIONS AND WARRANTIES
11.1 Each Individual Defendant shall represent and warrant, in the definitive settlement agreement, that:
(a) such Individual Defendant has not, at any time since February 7, 2025, disclosed, shared, transmitted, or otherwise made available any CRH confidential information or trade secrets to any person or entity other than his or her counsel of record (Whitfield, Nygaard & Doyle LLP) and Verdana's General Counsel (Helen Tsoi), in each case solely for the purpose of receiving or providing legal advice in connection with this dispute;
(b) such Individual Defendant has not used any CRH confidential information or trade secrets for any purpose since February 7, 2025; and
(c) such Individual Defendant has the legal capacity and authority to enter into the settlement agreement and to be bound by its terms.
11.2 Verdana shall represent and warrant, in the definitive settlement agreement, that:
(a) no CRH confidential information or trade secrets have been disseminated, distributed, or made available within Verdana's organization to any person other than Verdana's General Counsel (Helen Tsoi) and Verdana's outside counsel (Blackhall & Soren LLP);
(b) no CRH confidential information or trade secrets have been used in any Verdana business planning, strategy development, vendor negotiation, product development, or competitive intelligence activity;
(c) Verdana has the corporate authority to enter into the settlement agreement and to be bound by its terms, and that the execution and delivery of the settlement agreement has been duly authorized by Verdana's Board of Directors; and
(d) the person executing the settlement agreement on behalf of Verdana is duly authorized to do so.
11.3 CRH shall represent and warrant, in the definitive settlement agreement, that:
(a) CRH has the corporate authority to enter into the settlement agreement and to be bound by its terms;
(b) the terms of the settlement have been approved (or will be approved prior to execution of the definitive settlement agreement) by the CRH Board of Directors or a duly authorized committee thereof; and
(c) the person executing the settlement agreement on behalf of CRH is duly authorized to do so.
12. GOVERNING LAW AND DISPUTE RESOLUTION
12.1 Governing Law. The definitive settlement agreement and all rights and obligations of the parties thereunder shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to principles of conflicts of law that would result in the application of the laws of any other jurisdiction.
12.2 Forum. Any dispute arising under or in connection with the settlement agreement or the Consent Order shall be submitted exclusively to the Delaware Court of Chancery, or, if the Court of Chancery declines jurisdiction, to the Superior Court of the State of Delaware, in each case sitting in New Castle County, Delaware.
12.3 Consent to Jurisdiction. Each party to the settlement agreement irrevocably consents to the personal jurisdiction of the Delaware Court of Chancery (and, if applicable, the Superior Court of the State of Delaware) for all purposes relating to the enforcement, interpretation, and construction of the settlement agreement and the Consent Order, and irrevocably waives any objection to venue in such courts.
13. DEFINITIVE DOCUMENTATION
13.1 This term sheet is non-binding and is for discussion purposes only. Neither this term sheet nor any negotiations or discussions conducted in connection herewith shall create any legally binding obligation on the part of any party. A binding agreement shall exist only upon the execution and delivery of definitive settlement documentation by all parties.
13.2 The definitive settlement documentation shall include the following:
(a) Standstill and Settlement Agreement (the principal agreement among all parties), together with the following exhibits:
(i) Exhibit A — Modified Restrictive Covenant Terms (setting forth in detail the modified non-competition and non-solicitation obligations applicable to each Individual Defendant);
(ii) Exhibit B — Data Return and Destruction Protocol (setting forth the procedures and timelines for the return or certified destruction of CRH confidential information);
(iii) Exhibit C — List of Top 75 CRH Vendors (by annual spend as of December 31, 2024), to be filed under seal with the Court;
(iv) Exhibit D — Form of Compliance Monitor Engagement Letter (setting forth the terms of the Monitor's engagement, including scope, authority, fee schedule, and reporting obligations);
(v) Exhibit E — Mutual Non-Disparagement Provisions;
(b) Stipulation of Settlement and Proposed Consent Order (for filing with the Delaware Court of Chancery);
(c) Motion to Dissolve TRO (to be filed contemporaneously with the Stipulation of Settlement);
(d) Individual Sworn Declarations of Data Destruction from each of the eight Individual Defendants (to be delivered within seven (7) business days of execution of the Standstill and Settlement Agreement); and
(e) Corporate Certification of Verdana regarding non-use and non-dissemination of CRH confidential information.
13.3 The parties shall negotiate in good faith to finalize the definitive settlement documentation as expeditiously as practicable. The target execution date for the definitive settlement documentation shall be established by agreement of the parties in connection with continued negotiations.
14. GREYSTONE CAPITAL PARTNERS, LP
14.1 CRH notes that Greystone Capital Partners, LP ("Greystone"), acting through Greystone Capital Fund VII, LP, is the majority equity holder of Verdana Commerce Group, Inc. Greystone Capital Fund VII, LP holds approximately seventy-two percent (72%) of the outstanding equity of Verdana. The Managing Partner of Greystone is Elliot Westbrook, with offices located at 680 Park Avenue, 22nd Floor, New York, New York 10065.
14.2 CRH has reason to believe, based on evidence obtained through its forensic investigation and through discovery conducted in connection with the TRO proceedings, that Greystone was a knowing participant in the recruitment of the Rathore Group from CRH. In particular, CRH has evidence of a dinner meeting on January 6, 2025 among Verdana CEO Thomas Dietrich, Greystone Managing Partner Elliot Westbrook, and Priya Rathore, at which the terms of Ms. Rathore's employment with Verdana were discussed, including the sign-on bonus and the structure of the team departure.
14.3 CRH reserves all claims against Greystone Capital Partners, LP, Greystone Capital Fund VII, LP, and their respective affiliates, general partners, managing partners, officers, directors, employees, and agents, unless and until Greystone provides a written acknowledgment of the settlement terms set forth in this term sheet (or the definitive settlement agreement) and agrees to use commercially reasonable efforts to cause Verdana to comply with all obligations under the settlement agreement and the Consent Order.
14.4 As a condition of settlement, CRH proposes that Verdana's settlement payment obligations set forth in Section 6 be guaranteed by Greystone Capital Partners, LP or Greystone Capital Fund VII, LP, pursuant to a written guaranty agreement. Alternatively, if Greystone declines to provide a guaranty, Verdana shall provide CRH with satisfactory evidence of its financial capacity to satisfy the settlement payment obligations, including audited financial statements demonstrating sufficient liquidity. CRH notes, for reference, that Verdana's fiscal year 2024 revenue is estimated at approximately $1.9 billion, and that Greystone Capital Fund VII, LP has committed capital of approximately $8.5 billion.
15. MISCELLANEOUS
15.1 Entire Agreement. The definitive settlement agreement shall contain a standard entire agreement and integration clause, providing that the definitive settlement agreement and its exhibits constitute the entire agreement among the parties with respect to the subject matter thereof and supersede all prior negotiations, discussions, representations, and agreements, whether written or oral, relating to such subject matter, including this term sheet.
15.2 No Admission of Liability. Nothing in this term sheet, the definitive settlement agreement, or the Consent Order shall constitute an admission of liability, wrongdoing, or fault by any party. The settlement is a compromise of disputed claims and is made solely for the purpose of avoiding the time, expense, and uncertainty of continued litigation.
15.3 Attorneys' Fees and Costs. Except as specifically provided in Section 6.3 (litigation cost reimbursement), each party shall bear its own attorneys' fees, costs, and expenses incurred in connection with this matter and the negotiation, preparation, and execution of the settlement documentation.
15.4 Counterparts and Electronic Signatures. The definitive settlement agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. Execution and delivery of the settlement agreement by electronic signature (including DocuSign, Ashford Health IT, or similar platforms) or by facsimile shall be valid and binding to the same extent as execution and delivery of an original ink signature.
15.5 Notices. All notices, requests, demands, and other communications required or permitted under the settlement agreement shall be in writing and shall be delivered to counsel of record for the respective parties at their offices of record, as follows:
If to CRH: Bernard Crawford Calderwood & Harkness LLP 1301 K Street NW, Suite 1200 Washington, DC 20005
If to the Rathore Group (Individual Defendants): Catherine Nygaard Whitfield, Nygaard & Doyle LLP 1000 North Market Street, Suite 1500 Wilmington, DE 19801
If to Verdana: Gavin Blackhall Blackhall & Soren LLP 300 Delaware Avenue, Suite 900 Wilmington, DE 19801
15.6 Severability. If any provision of the definitive settlement agreement is held to be invalid, illegal, or unenforceable by a court of competent jurisdiction, such provision shall be modified to the minimum extent necessary to make it valid, legal, and enforceable, and the remaining provisions shall continue in full force and effect.
15.7 Waiver. No waiver of any provision of the definitive settlement agreement shall be effective unless set forth in a written instrument signed by the party against whom such waiver is sought to be enforced. No failure or delay by any party in exercising any right, power, or privilege under the settlement agreement shall operate as a waiver thereof.
15.8 Successors and Assigns. The definitive settlement agreement shall be binding upon and inure to the benefit of the parties and their respective successors, assigns, heirs, executors, administrators, and legal representatives. No party may assign its rights or delegate its obligations under the settlement agreement without the prior written consent of the other parties.
16. EXPIRATION OF THIS TERM SHEET
16.1 This term sheet shall expire automatically at 11:59 PM Eastern Time on March 21, 2025 — the date of the scheduled preliminary injunction hearing before Vice Chancellor Margaret T. Zhao — unless, prior to such time, this term sheet has been accepted in writing by the defendants or is being used as the basis for continued good-faith negotiations among the parties, as confirmed in writing by counsel for all parties.
16.2 Upon expiration of this term sheet, CRH reserves all rights to proceed with the preliminary injunction motion currently pending before the Court, to pursue all claims asserted in the Verified Complaint, and to seek all available remedies at law and in equity, including but not limited to permanent injunctive relief, compensatory damages, punitive damages (to the extent available), disgorgement of profits, and attorneys' fees and costs.
16.3 Nothing in this term sheet shall be construed as a waiver of any right, claim, or defense of any party.
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ACKNOWLEDGMENT AND SUBMISSION
This term sheet is submitted on behalf of Cascade Retail Holdings Inc. by its counsel of record, Calderwood & Harkness LLP, as CRH's initial settlement proposal for purposes of continued mediation and negotiation. This term sheet does not constitute a binding agreement and is subject in all respects to the negotiation and execution of definitive settlement documentation.
CALDERWOOD & HARKNESS LLP On behalf of Cascade Retail Holdings Inc.
By: ________
Name: Bernard Crawford
Title: Partner
Calderwood & Harkness LLP 1301 K Street NW, Suite 1200 Washington, DC 20005 Telephone: (202) 555-4100
Email: bcrawford@calderwoodharkness.com
Date: March 19, 2025
CONFIDENTIAL — SETTLEMENT DISCUSSION PURPOSES ONLY — SUBJECT TO FRE 408 This document and all information contained herein are confidential and are protected under Federal Rule of Evidence 408 and Delaware Rule of Evidence 408. This term sheet may not be disclosed to any person other than the parties, their counsel, and the mediator without the prior written consent of all parties.
Component | Amount
Cash settlement payment (Section 6.1) | $12,500,000.00
Equity forfeitures (Section 6.2) | $849,500.00
Litigation cost reimbursement (Section 6.3) | $750,000.00
Total | $14,099,500.00