Contract analysis

From: Renata Vasquez <rvasquez@calderwoodharkness.com> To: Gregory Tanaka <gtanaka@aureliusmedia.com> Cc: Bernard Crawford <bcrawford@calderwoodharkness.com> Date: Sat, 09 Dec 2023 05:55:00 -0000 Subject: Aldrich Mediation Report-Back — December 8, 2023

I wanted to provide a detailed report-back on yesterday's standalone mediation session in the Aldrich matter, held at Westpark Dispute Resolution Inc. before Hon. Patricia Okoro (Ret.). As you will recall, this was the third mediation session overall. The combined class/Aldrich session on September 8, 2023 successfully resolved the class claims but did not produce a resolution of Aldrich's individual claims; Judge Ok

*AMA:* - Gregory Tanaka, VP, Legal & Compliance - Renata Vasquez, Calderwood & Harkness LLP - Devon Archer, Calderwood & Harkness LLP

*Aldrich:* - Gavin Aldrich - Cameron Whitfield, Whitfield & Associates - Julia Nazarian, Whitfield & Associates

*Mediator:* - Hon. Patricia Okoro (Ret.), Westpark Dispute Resolution Inc.

The session ran approximately seven hours. Below is the bracketing progression on the two principal economic terms — the cash lump sum and RSU acceleration:

| | **Aldrich** | **AMA** | |---|---|---| | **Opening** | $3,800,000 + full RSU acceleration (15,300) | $1,750,000 + 8,000 RSU acceleration | | **Move 1** | $3,200,000 + full RSU acceleration | $2,000,000 + 8,000 RSU acceleration | | **Move 2** | $2,900,000 + 12,000 RSU acceleration | $2,150,000 + 10,200 RSU acceleration | | **Move 3** | $2,600,000 + 10,500 RSU acceleration | $2,350,000 + 10,200 RSU acceleration | |

At close of session, the remaining gap was $250,000 on the cash component and 300 RSUs. Judge Okoro caucused separately with each side multiple times throughout the day and indicated in our final caucus that she believes the case will settle in the $2.35–$2.5M range with approximately 10,200 RSUs accelerated.

This was the area of greatest movement. Aldrich came down from full acceleration of all 15,300 unvested RSUs to 10,500 — a significant concession. AMA is very close to agreement at 10,200. The remaining delta of 300 RSUs, at approximately $24/share, amounts to roughly $7,200 — an immaterial difference. For context, Aldrich held 42,500 total AGMG RSUs at the time of his termination on October 14, 2022, of which 15,300

**2. Restrictive Covenant Framework — Agreed**

The parties reached agreement on the post-separation restrictive covenant framework, which is consistent with AMA's target outcome and the enforceability analysis we provided in prior memoranda:

- **§ 9.1 (Non-Competition, 18 months):** Voided by mutual agreement, consistent with Cal. Bus. & Prof. Code § 16600. As we previously concluded, this provision was almost certainly unenforceable under California law, and releasing it costs AMA nothing. - **§ 9.2 (Non-Solicitation of Employees):** Reduced from 24 months to 12 months post-settlement. - **§ 9.3 (Non-Solicitation of Business Relationships):** Reduced fr

Retention of § 9.4 in full was a priority, given that the confidential information transmission ground is the strongest basis for AMA's "for cause" termination determination and, more practically, provides ongoing protection for AMA's proprietary content and business information.

Aldrich accepted a mutual non-disparagement provision with a 3-year term. This had been a sticking point at the September 8 combined mediation, where Aldrich insisted on unlimited duration. The 3-year term is reasonable and resolves the issue cleanly.

The parties also discussed and reached general agreement on the following terms, which will be formalized in settlement drafting:

- Mutual general release, including cross-claims - Neutral reference agreement - Return and/or deletion of all AMA proprietary materials, including show format bibles for "Apex Endurance," "The Remix," and "Untamed West," the Summit Challenge revenue model, and other materials transmitted by Aldrich to his personal email and to Halcyon Creek Productions LLC - Confidentiality of settlement terms - Cal. Civ. Code § 154

The following items were identified but deferred to settlement agreement drafting:

- **Tax allocation:** Wage vs. non-wage split of the cash settlement payment — to be negotiated during agreement drafting. - **RSU vesting timing:** Whether accelerated vesting occurs upon execution of the settlement agreement or upon filing of the dismissal — this has tax and practical implications for both sides. - **Workers' compensation claim exclusion:** Whitfield raised the potential need for a carve-out but co

The central remaining issue is the cash component. Based on the caucus dynamics and Whitfield's positioning, Aldrich's bottom line appears to be $2.5M. AMA's authorized settlement ceiling per the November 28, 2023 authority memo is $2.5M, but our last offer was $2.35M.

To put the numbers in perspective, Aldrich's original aggregate demand totaled $4,150,000, broken down as follows: severance ($970,000), pro-rata bonus ($168,750), RSU acceleration (~$332,200), emotional distress ($500,000), lost future compensation ($1,200,000), attorneys' fees ($750,000), expense reimbursement ($28,400), and a punitive damages placeholder ($200,000). A settlement at $2.35M cash plus 10,200 RSUs wou

The $150,000 gap between our current position and Aldrich's apparent floor may require a modest increase to close the deal. However, as outlined below, I believe there is value in testing $2.35M as a final offer before moving higher.

I recommend that AMA authorize a final offer of **$2,350,000** as a cash lump sum, plus acceleration of **10,200 RSUs** (of the 15,300 unvested at termination), with forfeiture of the remaining 5,100 RSUs. This should be presented to Whitfield as a final, firm offer.

My assessment is that Whitfield will accept this if it is credibly communicated as AMA's last number. Whitfield is an experienced settlement negotiator, and his client has significant exposure on the § 9.4 breach and the proprietary materials issue. I believe there is a realistic path to closing at $2.35M without going to $2.5M, and I intend to follow up with Whitfield early next week to test that.

The alternative — continued litigation — would cost AMA an estimated $200,000–$350,000 in additional defense costs through trial, with uncertain outcomes. AMA's "for cause" termination determination carries approximately a 60/40 probability of being upheld, weighted toward the confidential information transmission ground (§ 9.4 violation and company policy violation) rather than the insubordination ground, which has

Finally, I want to note the broader strategic picture. The class settlement of $14,750,000 received Preliminary Approval from Judge Escobedo on October 18, 2023 (Dept. 34), with class notice mailed November 3 and the opt-out/objection deadline approaching on January 2, 2024. The Final Approval hearing is scheduled for February 2, 2024. Resolving the Aldrich matter before that hearing would allow AMA to close both mat

Please let me know if you would like to discuss before I re-engage with Whitfield. I am available over the weekend and can set up a call at your convenience.

**Renata Vasquez** | Partner Calderwood & Harkness LLP 777 South Flower Street, Suite 4200 | Los Angeles, CA 90017 T: (213) 555-7200 | rvasquez@calderwoodharkness.com