Contract analysis

From: Nathaniel Bower <nbower@calderwoodharkness.com> To: Dame Elspeth Greenvale <e.greenvale@greenvale-private.co.uk> Cc: Colette Whitman <cwhitman@calderwoodharkness.com> Date: Fri, 17 May 2024 05:47:00 -0000 Subject: PRIVILEGED & CONFIDENTIAL — ISS Recommendation: Immediate Assessment and Recommended Next Steps

**ATTORNEY-CLIENT PRIVILEGED AND CONFIDENTIAL**

This communication is protected by the attorney-client privilege and constitutes confidential legal advice prepared in connection with Calderwood & Harkness LLP's engagement as independent governance counsel to the Board of Directors of Aurelius Global Media Group PLC ("AGMG" or the "Company"). This email and any attachments are intended solely for the addressee and authorized recipients. This communication should no

I am writing to you immediately following today's release of the Cobalt Ridge Solutions ("ISS") proxy advisory recommendation concerning the Company's contested election of directors at the Annual General Meeting scheduled for June 7, 2024. Given the significance of the recommendation, I wanted to provide you with a rapid-response assessment this evening. My team and I are preparing a more detailed written memorandum

In short, the ISS recommendation represents a significant adverse development for the Board's position in the proxy contest. When coupled with the Windermere Pension Trust announcement also made public today, the trajectory of this contest has shifted materially against the incumbent slate. I believe the Board still has a window to achieve a negotiated outcome that preserves meaningful control over the Company's gove

ISS has recommended that AGMG shareholders elect **two of the three** director nominees put forward by Corvus Peak Capital Partners LP ("Corvus Peak"):

- **Malcolm Trask** — Recommended **FOR**. Mr. Trask, age 58, is the former Chief Executive Officer of Archway Digital Holdings Inc. and brings extensive operational experience in digital media transformation. - **Dr. Raymond Chu** — Recommended **FOR**. Dr. Chu, age 61, is the former President of Helix Media Networks Inc. and has deep expertise in content distribution and platform strategy. - **Vanessa Loring** — **

ISS's rationale, as I read it, centers on the following themes: (i) board refreshment is warranted given the Board's handling of the CEO succession process, which ISS characterized as lacking transparency and urgency; (ii) the pace of the Company's strategic transformation has been insufficient relative to peer companies and the evolving media landscape; (iii) the Board has not been sufficiently responsive to shareho

ISS applied the plurality voting standard applicable in contested elections under the Company's Amended and Restated Bylaws (effective March 22, 2022), which is the correct standard. Under plurality voting, the nominees receiving the most votes cast will be elected, with no majority threshold required — a dynamic that, in a contested election with high institutional participation, tends to favor well-organized dissid

**II. Windermere Pension Trust Public Support**

Compounding the ISS recommendation, **Windermere Pension Trust** publicly announced today that it will support the **full Corvus Peak slate** — all three nominees, including Ms. Loring. Windermere holds approximately 4.4% of AGMG's outstanding common shares, representing approximately 18,154,400 shares out of 412,600,000 total shares outstanding.

Windermere's Chief Investment Officer, Bernard Napier, issued a statement citing dissatisfaction with the Board's handling of CEO succession and expressing specific concerns about the interim leadership arrangement. Mr. Napier's statement was notably pointed in its criticism and suggests a depth of frustration that goes beyond typical institutional investor positioning in a proxy contest.

This development is particularly significant for two reasons. First, Windermere's support extends beyond the ISS recommendation by endorsing all three Corvus Peak nominees, not merely the two that ISS recommends. This signals a level of shareholder discontent that exceeds what even ISS was prepared to validate. Second, when combined with Corvus Peak's own 8.7% stake (approximately 35,896,200 shares), the activist now

**III. Revised Vote Outlook and Shareholder Base Analysis**

You will recall our May 1, 2024 shareholder base analysis and vote projection memorandum, which identified the ISS and Tarrant Partners LLC recommendations as critical swing factors in the contest. That analysis noted that a favorable ISS recommendation for even one Corvus Peak nominee would significantly complicate the Board's defense. A recommendation in favor of two nominees fundamentally alters the landscape.

Based on today's developments and our ongoing monitoring of the shareholder base, the following is my updated assessment of the key institutional holders and their likely voting positions:

| **Holder** | **Shares (Approx.)** | **% Outstanding** | **Likely Position** | |---|---|---|---| | Corvus Peak Capital Partners LP | 35,896,200 | 8.7% | Full Corvus slate | | Windermere Pension Trust | 18,154,400 | 4.4% | Full Corvus slate (publicly committed) | | Thorne Capital Management LP | 25,993,800 | 6.3% | Likely to support at least two Corvus nominees (Trask, Chu); Thorne is a passive long-only fund based i

As you know, the total shares actually voted at the AGM will depend on turnout, but contested elections at dual-listed companies of AGMG's profile (NYSE: AGMG; LSE: AGMG.L) typically generate high participation rates among institutional holders. I would expect turnout well in excess of 75% of outstanding shares.

**My assessment is that it is now more likely than not that at least two Corvus Peak nominees — Malcolm Trask and Dr. Raymond Chu — will be elected at the June 7 AGM.** There is also a meaningful risk that all three nominees could prevail, particularly if Tarrant Partners LLC issues a recommendation supportive of the full slate. We understand the Tarrant Partners LLC report is expected imminently, and the analytical

If all three Corvus Peak nominees are elected under the plurality standard, three incumbent directors would not be re-elected. The Board would be substantially reconstituted in a single meeting, with significant implications for governance, strategic direction, and the ongoing CEO succession process.

The incumbent directors standing for re-election in the contested seats — **Tobias Kessler**, **Hugh Pemberton**, and **Sofia Delgado-Ríos** — face a realistic prospect of not being re-elected. Each would need to receive more votes than the corresponding Corvus Peak nominee in their respective seat under the plurality standard, and the ISS recommendation makes that materially more difficult for at least two of those

I would also note the following practical constraint: the definitive proxy statements have already been filed — the Company's on May 3, 2024 and Corvus Peak's on May 6, 2024. While supplemental proxy materials remain an option, our ability to alter the Company's core public messaging at this stage is limited. Any supplemental filing would need to be carefully calibrated to avoid appearing reactive or desperate while

The ISS recommendation fundamentally shifts the balance of this proxy contest. I want to highlight several intersecting considerations that the Board should weigh:

*CEO Succession Process.* As you know, the Special Committee overseeing the CEO succession process is chaired by Tobias Kessler, with Patricia Farrow-Grant and David Llewellyn as members. If Mr. Kessler is not re-elected at the AGM, the Special Committee's composition would be directly and immediately affected. The continuity of the CEO search — which is at a critical stage — could be disrupted. This is not merely a

*The May 10 Settlement Proposal.* On May 10, Corvus Peak proposed a settlement under which two Corvus nominees (Trask and Chu) would be seated on the Board immediately, and the CEO search would be paused pending reconstitution of the search committee with Corvus representation. The Board declined that proposal, a decision that was reasonable at the time based on the information and positioning available to us. In lig

*Corvus Peak's Negotiating Leverage.* Dominic Sayer at Blackthorn Howell & Crane LLP, counsel to Corvus Peak, will undoubtedly view the ISS endorsement as substantially strengthening his client's negotiating position. Any settlement discussions going forward will take place against a significantly different backdrop than existed ten days ago.

*Strategic Alternatives Review.* Stonebridge Crane & Co. was retained on April 22 to advise the Board on its strategic alternatives review. Any settlement with Corvus Peak could affect the scope, timeline, and governance framework for that process, and Anil Kapoor-Mehta's team should be consulted as we develop settlement parameters.

**VI. Recommendation: Accelerated Settlement Discussions**

Dame Elspeth, having considered the totality of these developments and the trajectory of the proxy contest, **my primary recommendation is that the Board should immediately and seriously explore reopening settlement negotiations with Corvus Peak.**

I say this with full awareness of the Board's strongly held views regarding the Company's strategic direction and the independence of the CEO succession process. Those views are legitimate and important. However, the settlement terms available to the Board today are likely to be more favorable than what will be achievable after the AGM if the proxy fight is lost outright. A negotiated resolution allows the Board to r

A possible settlement framework, which we would develop more fully in the detailed settlement analysis memorandum I am commissioning, could include the following elements:

1. **Board seats:** The Company would agree to seat Malcolm Trask and Dr. Raymond Chu on the Board — the two ISS-endorsed candidates — either prior to the AGM or by written consent, with appropriate committee assignments to be determined.

2. **Withdrawal of third nominee:** In exchange, Corvus Peak would withdraw Vanessa Loring's candidacy and publicly endorse the reconstituted Board.

3. **Mutual standstill:** The parties would enter into a standstill agreement under which Corvus Peak would be limited to a specified ownership cap (e.g., 12% of outstanding shares) and would be precluded from initiating or supporting any further proxy contest, consent solicitation, or extraordinary transaction proposal for a defined period (e.g., 18 months from settlement).

4. **CEO search governance:** The parties would agree on a framework for the ongoing CEO succession process, potentially including Corvus Peak representation (through one of its independent nominees) on a reconstituted search committee, with appropriate confidentiality protections.

This framework would preserve the Board's ability to control overall composition — seating two new directors rather than losing three incumbents — and would provide stability during a critical period for the Company.

If the Board declines to pursue settlement, it should prepare in earnest for the realistic outcome that the Board emerging from the June 7 AGM will have a materially different composition and, in all likelihood, materially different governance priorities. We should discuss what advance planning would be appropriate in that scenario.

I have discussed the vote trajectory with Sandra Eriksson at Citrine Advisory Group, our management proxy solicitor, and her assessment is consistent with the analysis above.

I recommend the following steps be taken promptly:

1. **Board or Special Committee meeting.** Convene a special telephonic meeting of the full Board or, at minimum, the Special Committee within the next 24 to 48 hours to discuss the ISS recommendation, the Windermere announcement, the revised vote outlook, and the settlement option. I am available to present to the Board at any time this weekend.

2. **Confidential outreach to Corvus Peak.** Authorize you, Dame Elspeth, or the Special Committee, to make a confidential outreach to Corvus Peak — either directly to their principals or through counsel — to gauge willingness to resume settlement discussions on a framework along the lines described above.

3. **Tarrant Partners LLC monitoring.** Continue monitoring for the Tarrant Partners LLC recommendation, which is expected imminently and which could further shift the dynamic — in either direction, though more likely toward additional Corvus support.

4. **Settlement analysis memorandum.** Calderwood & Harkness will prepare a detailed settlement analysis memorandum with specific term recommendations, anticipated Corvus Peak counterpositions, and an assessment of the legal mechanics for implementing any pre-AGM settlement. I anticipate delivering that memorandum by May 30 at the latest, but we will accelerate the timeline if negotiations progress more rapidly.

5. **Supplemental proxy materials / shareholder engagement.** Consider whether supplemental proxy materials or an enhanced direct shareholder engagement effort could meaningfully influence the outcome in the remaining three weeks before the AGM. I am cautious about the marginal value of supplemental filings at this stage, as discussed above, but it remains a lever available to the Board and should not be foreclosed w

I will coordinate with the following advisors over the coming days, consistent with the coordination protocol established on March 19, 2024:

- **Martin Cho, Ashworth Velmoran LLP** — as AGMG's standing outside counsel, Martin's team should be involved in any settlement discussions and in evaluating the procedural aspects of any pre-AGM board reconstitution. - **Anil Kapoor-Mehta, Stonebridge Crane & Co.** — as the Board's financial advisor for the strategic alternatives review, Anil should be consulted on how any settlement framework interacts with that w

Dame Elspeth, I want to be direct: the window for a negotiated resolution that preserves the Board's core governance objectives is narrowing with each day closer to the June 7 AGM. Today's developments have materially changed the calculus, and I believe prompt action offers the Board the best path to an outcome that serves the Company's and its shareholders' long-term interests.

I am available by phone this evening and throughout the weekend to discuss any aspect of the foregoing. Please do not hesitate to reach me on my direct line or mobile at any hour.

Colette Whitman and Audrey Zhou are copied on this message and will be fully available to support any immediate Board or Special Committee meeting preparation, including the assembly of materials, logistics, and coordination with the Company's other advisors.

Finally, I would reiterate that this communication is privileged and confidential and should not be shared beyond the Board of Directors and Nadine Khalil, General Counsel & Corporate Secretary, without further discussion with me or my team.

**Nathaniel Bower** Partner Calderwood & Harkness LLP 787 Seventh Avenue New York, NY 10019 Tel: +1 (212) 558-4000 (Main) Direct: +1 (212) 558-4187 Email: nbower@calderwoodharkness.com

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