Contract analysis

I. Executive Summary Calderwood & Harkness LLP ("C&H" or "we") has reviewed the draft engagement letter dated April 18, 2024 (the "Proposed Letter") submitted by Stonebridge Crane & Co. ("Stonebridge"), 383 Madison Avenue, New York, New York 10179, to Aurelius Global Media Group PLC ("AGMG" or the "Company"), pursuant to which Stonebridge proposes to serve as financial advisor to the Board of Directors (the "Board")

II. Scope of Services A. Summary of Proposed Scope The Proposed Letter describes the scope of Stonebridge's engagement in broad terms. Specifically, Stonebridge proposes to advise the Board on "evaluating strategic alternatives available to the Company, including but not limited to potential mergers, acquisitions, divestitures, joint ventures, recapitalizations, and other extraordinary transactions." The Proposed Let

1. Limitation to Board Direction. C&H recommends adding express language to the Proposed Letter providing that Stonebridge will act solely at the direction of, and report exclusively to, the Board (or a duly authorized committee thereof, including the Special Committee chaired by Tobias Kessler), and not to management independently. While the Proposed Letter generally contemplates that Stonebridge's client is the Boa

2. Coordination with CEO Search. The Proposed Letter does not address the intersection between the strategic alternatives review and the ongoing CEO succession process. As the Board is aware, the search for a permanent successor to Jonathan Hale, who departed the Company on February 14, 2024, is being conducted by the Nominating and Governance Committee with the assistance of Penrose Advisors. There is an inherent ri

3. Interaction with Standing Outside Counsel. The Proposed Letter does not address the relationship between Stonebridge's engagement and AGMG's existing advisory relationships. In particular, Ashworth Velmoran LLP, led by Martin Cho, Head of Public Company Advisory, currently serves as the Company's standing outside counsel on general corporate matters and has been involved in responding to the Corvus Peak proxy cont

4. No Authority to Bind the Company. The Proposed Letter does not contain an explicit statement that Stonebridge has no authority to bind AGMG to any transaction or to negotiate on behalf of the Company without prior Board authorization. While this limitation is generally implied in an advisory engagement, C&H strongly recommends making it explicit. We propose the following insertion: "For the avoidance of doubt, Sto

5. AGMG Company Profile for Scoping Purposes. For context in evaluating the appropriateness of the Proposed Letter's financial terms, we note the following profile of AGMG. The Company is incorporated in the State of Delaware, headquartered in the United Kingdom, and listed on the New York Stock Exchange under the ticker symbol "AGMG," with a secondary listing on the London Stock Exchange Main Market under the ticker

III. Fee Structure A. Monthly Retainer Proposed Term. The Proposed Letter provides for a monthly retainer of $250,000, payable in advance on the first business day of each calendar month, commencing upon execution of the engagement letter. The retainer is described as non-refundable and non-creditable against any transaction fee that may become payable under the engagement. C&H Commentary. The proposed monthly retain

1. Transaction Fee Quantum. At the Company's current enterprise value of approximately $8.65 billion (based on the market capitalization of $8.65 billion as of March 1, 2024, plus net debt), a 0.25% transaction fee would yield a fee of approximately $21.6 million. This is a significant sum by any measure. Based on C&H's review of comparable transactions, advisory fees for independent financial advisors in change-of-c

2. Enterprise Value Definition — Earn-Outs. C&H recommends narrowing the definition of "enterprise value" with respect to earn-out consideration. The Proposed Letter values earn-outs at their "maximum achievable value," which could substantially overstate the actual consideration received by the Company's stockholders and result in a fee that is disproportionate to the value of the transaction. C&H recommends that ea

3. Change of Control Transaction Definition. C&H recommends several modifications to the definition of "Change of Control Transaction": (a) Consummation Requirement. The definition should be tightened to require that the transaction be actually consummated—i.e., the closing must have occurred—before the transaction fee becomes payable. The Proposed Letter's language is somewhat ambiguous on this point and could be re

4. Minimum Fee. The Proposed Letter includes a minimum transaction fee of $5 million. C&H views this as reasonable given the scope of work contemplated and the intensity of the advisory services that would be required in connection with any change-of-control transaction. We do not recommend seeking to reduce or eliminate the minimum fee.

5. Fee Cap. The Proposed Letter does not include a cap on the transaction fee. Given the significant quantum of the fee at current enterprise value levels—approximately $21.6 million—and the possibility that enterprise value could increase in the context of a competitive bidding process or a premium acquisition, C&H recommends negotiating a cap on the transaction fee. We propose a cap of $25 million, which would repr

6. Partial Transactions. The Proposed Letter does not address the scenario in which AGMG divests a single business segment rather than consummating a whole-company sale. This is a significant gap given the Company's multi-segment structure. It is entirely possible that the strategic alternatives review could result in the Board's determination that the optimal course of action is a divestiture of one or more business

1. Tail Period Duration. The 12-month tail period is market standard for financial advisory engagements of this type. C&H does not recommend attempting to negotiate a shorter tail period (e.g., 6 or 9 months), as Stonebridge is unlikely to agree to such a reduction and it would consume negotiating capital that is better directed at other provisions. We note, however, that certain recent engagement letters have provid

2. Tail Party List. This is a critical issue. The Proposed Letter's tail fee provisions are triggered by a transaction with any party "contacted by Stonebridge" or "with whom Stonebridge had substantive discussions." This language is vague and could be interpreted broadly. C&H strongly recommends requiring Stonebridge to deliver, within 10 business days of termination, a written list identifying all parties contacted

3. Board Exposure Considerations. C&H wishes to draw the Board's particular attention to the financial exposure created by the tail fee provisions in light of the current circumstances. The Board's engagement of Stonebridge is partly a defensive measure in response to the Corvus Peak proxy contest. If Corvus Peak's nominees are elected at the June 7, 2024 Annual General Meeting and the reconstituted Board decides to

4. Fiduciary-Out Interaction. The tail fee provisions must be structured so that they do not, as a practical matter, constrain the Board's ability to exercise its fiduciary duties post-termination. This issue is discussed further in Section V below, but C&H notes here that the tail fee provisions, combined with the absence of a fiduciary-out, could create an argument that the Board is effectively locked into a financ

IV. Indemnification Provisions A. Summary of Proposed Indemnification The Proposed Letter contains a standard broad-form indemnification provision in favor of Stonebridge and its affiliates, directors, officers, employees, agents, and controlling persons (collectively, the "Indemnified Parties"). Under the proposed indemnification, AGMG would agree to indemnify and hold harmless the Indemnified Parties against all lo

1. Gross Negligence / Willful Misconduct Carve-Out Standard. The Proposed Letter conditions the carve-out from the indemnification obligation on a "final, non-appealable judgment" by a court of competent jurisdiction finding that the relevant Indemnified Party engaged in gross negligence or willful misconduct. The "non-appealable" standard is extremely favorable to Stonebridge, as it means that AGMG would remain obli

2. Bad Faith Carve-Out. The Proposed Letter limits the carve-out from indemnification to gross negligence and willful misconduct. C&H recommends adding "bad faith" as a third basis for the carve-out. Bad faith conduct—such as deliberate fraud, intentional misrepresentation, or knowing violations of law by Stonebridge personnel—should not be covered by the Company's indemnification obligation, even if such conduct doe

3. Cap on Advance of Expenses. The Proposed Letter requires AGMG to advance legal fees and expenses to Indemnified Parties as incurred, without any cap or limitation. C&H recommends including an aggregate cap of $2 million on advances that may be made without further Board approval. If Stonebridge anticipates that its defense costs will exceed $2 million, it should be required to seek Board approval for additional ad

4. Contribution Provision. The Proposed Letter's contribution provision is somewhat open-ended in its formulation. C&H recommends that the Company's contribution obligation be expressly limited to a proportion that reflects the relative benefits received by the Company in connection with the engagement as compared to the benefits received by Stonebridge. The Company's contribution should not exceed the aggregate fees

5. Company Consent to Settlement. The Proposed Letter does not contain a provision requiring Stonebridge to obtain the Company's consent before settling any claim for which indemnification is sought. This is a significant gap. C&H recommends adding a provision requiring the Company's prior written consent (not to be unreasonably withheld, conditioned, or delayed) before any Indemnified Party settles any claim, action

6. Notice Requirement. C&H recommends adding a provision requiring Stonebridge to provide prompt written notice to the Company of any claim, action, or proceeding for which indemnification may be sought. The notice should be delivered within 10 business days of the date on which the Indemnified Party first becomes aware of the claim. The Company's indemnification obligation should be reduced to the extent that the Co

V. Fiduciary-Out Provisions A. Summary of Proposed Terms The Proposed Letter does not include an express fiduciary-out provision permitting the Board to terminate the engagement or decline to follow Stonebridge's advice if doing so would conflict with the Board's fiduciary duties under applicable law. B. C&H Commentary and Recommendation This is a material omission that must be addressed before the engagement letter

VI. Term and Termination A. Summary of Proposed Terms The Proposed Letter contains the following provisions regarding term and termination: (a) Initial Term. The engagement will have an initial term of 12 months from the date of execution. (b) Automatic Renewal. The engagement will renew automatically for successive 6-month periods unless either party provides 30 days' written notice of non-renewal prior to the expir

1. Termination Notice Period. The 60-day notice period for termination for convenience is longer than C&H considers appropriate or necessary. In the fast-moving environment of a proxy contest and strategic alternatives review, 60 days is an eternity. If the Board determines that the Stonebridge engagement should be terminated—whether because the strategic alternatives review is completed, the process is shelved follo

2. Automatic Renewal. C&H recommends deleting the automatic renewal provision entirely. The engagement should terminate at the end of the initial 12-month term unless affirmatively renewed by the Board through a written agreement. Automatic renewal provisions can result in the engagement continuing beyond the point at which it is useful or desired by the Board, and they require the Board to take affirmative action (b

3. Termination Fee. C&H notes that the Proposed Letter does not include a separate termination or break fee payable to Stonebridge upon early termination of the engagement. This is appropriate, and C&H recommends that the Board resist any attempt by Stonebridge to introduce such a fee during negotiations. The tail fee provisions already provide Stonebridge with protection in the event that a transaction is consummate

4. Work Product on Termination. The Proposed Letter does not address the disposition of work product upon termination. This is a significant omission. C&H recommends adding a provision requiring Stonebridge, within 10 business days of the effective date of termination, to deliver to the Company all work product, analyses, financial models, presentations, memoranda, and other materials prepared by Stonebridge in conne

5. Tail Party List Delivery. As discussed in Section III.C above, C&H recommends requiring Stonebridge to deliver the Tail Party List within 10 business days of termination. This should be specified as a condition to the enforceability of the tail fee provisions.

VII. Exclusivity A. Summary of Proposed Terms The Proposed Letter contains two related exclusivity provisions: (a) Right of First Refusal. Stonebridge is granted a "right of first refusal" to serve as lead financial advisor on any Change of Control Transaction arising during the engagement period or the 12-month tail period following termination. (b) Restriction on Additional Advisors. AGMG agrees not to retain any a

VIII. Confidentiality A. Summary of Proposed Terms The Proposed Letter contains mutual confidentiality obligations. Stonebridge agrees not to disclose confidential information relating to the Company or the engagement except: (i) to its employees and advisors on a need-to-know basis; (ii) as required by applicable law or regulation; and (iii) in connection with any legal proceeding relating to the engagement. The con

1. Dual-Listing Securities Law Compliance. AGMG's secondary listing on the London Stock Exchange Main Market subjects the Company and its advisors to UK securities law obligations, including the requirements of the Financial Conduct Authority's Disclosure Guidance and Transparency Rules (DTR), particularly DTR 5 (Vote Holder and Issuer Notification Rules) and the Market Abuse Regulation (UK MAR). In addition, AGMG's

2. Information Barrier Protocols (Wall Procedures). As discussed in Section II.B above, the parallel conduct of the strategic alternatives review and the CEO succession process creates a risk of inadvertent information leakage between the two workstreams. C&H recommends that the confidentiality provisions of the Proposed Letter be amended to incorporate by reference the information barrier protocols that C&H is prepa

3. Return or Destruction of Confidential Information. The Proposed Letter does not address the disposition of confidential information upon termination of the engagement. C&H recommends adding a provision requiring Stonebridge, upon termination, to return or destroy all confidential information received from the Company, including all copies, notes, analyses, and derivative works, and to provide the Company with a wr

4. Duration of Confidentiality Obligations. C&H recommends clarifying that the confidentiality obligations survive termination of the engagement for a period of not less than three years, which is consistent with market practice for advisory engagements involving access to sensitive financial and strategic information.

IX. Governing Law, Dispute Resolution, and Forum A. Summary of Proposed Terms The Proposed Letter contains the following provisions regarding governing law and dispute resolution: (a) Governing Law. The engagement letter is governed by the laws of the State of New York, without giving effect to any conflict of laws principles that would result in the application of the laws of another jurisdiction. (b) Dispute Resolu

1. Governing Law. The choice of New York law as the governing law of the engagement letter is standard and appropriate for an advisory engagement of this nature, where both the advisory firm and the principal negotiating counterpart are based in New York. C&H does not recommend any modification to this provision.

2. Arbitration. Binding arbitration before a single arbitrator under the rules of the American Arbitration Association is a typical dispute resolution mechanism for financial advisory engagement letters. Arbitration offers certain advantages in this context, including confidentiality of proceedings (which is particularly important given the sensitive nature of the strategic alternatives review), speed relative to cou

3. Forum Selection Clause Interaction. C&H notes for the Board's reference that AGMG's Amended and Restated Bylaws (Section 11.1, as adopted effective March 22, 2022) designate the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, any other court of the State of Delaware or the United States District Court for the District of Delaware) as the exclusive forum for cert

X. Representations and Warranties A. Summary of Proposed Terms The Proposed Letter contains the following representations and warranties: (a) Company Information Representation. AGMG represents that all information furnished to Stonebridge in connection with the engagement will be accurate and complete in all material respects. (b) Reliance Acknowledgment. AGMG acknowledges that Stonebridge will rely on information f

1. Company's Information Warranty. The Company's representation regarding the accuracy and completeness of information furnished to Stonebridge is standard in financial advisory engagement letters and reflects the practical reality that Stonebridge will rely on information provided by the Company (and its management and other advisors) in performing its financial analyses. However, the representation as drafted—that

2. Stonebridge Conflict Representation — Expansion. The Stonebridge conflict representation as drafted is generic and does not address the specific circumstances of the current engagement. Given the contested nature of the current situation—including the active Corvus Peak proxy contest, the involvement of identified individuals and entities on both sides, and the heightened scrutiny to which the Board's actions will

3. Ongoing Conflicts Disclosure. The Proposed Letter's conflict representation speaks only as of the date of the engagement letter. C&H recommends adding an ongoing disclosure obligation, requiring Stonebridge to promptly notify the Board of any conflict of interest that arises or becomes known to Stonebridge during the course of the engagement. This obligation should cover not only conflicts involving the parties id