Contract analysis

I. Opening and Identification This firm writes as coverage counsel for Pemberton Mutual Assurance Co. ("Pemberton") in connection with the above-referenced claim. We are in receipt of your firm's letter dated August 20, 2023, which provided updated claim information and identified the range of the pending settlement demand, as well as your subsequent letter dated September 10, 2023, in which you transmitted AMA's for

II. Background and Claim Status As an initial matter, Pemberton acknowledges its December 22, 2022 letter to AMA and its counsel, in which Pemberton confirmed acknowledgment of coverage for the Fuentes v. Aurelius Media Americas Inc. class action and Private Attorneys General Act ("PAGA") representative claims, subject to a full reservation of rights as set forth therein. The terms of that reservation of rights lette

III. Settlement Terms Reviewed Pemberton has conducted a thorough review of the Settlement Agreement and notes the following material terms for purposes of this authorization: Gross Settlement Amount. The Gross Settlement Amount ("GSA") is Fourteen Million Seven Hundred Fifty Thousand Dollars ($14,750,000), structured as a non-reversionary common fund. Pursuant to the terms of the Settlement Agreement, the entire GSA

IV. Consent to Settlement Having reviewed the Settlement Agreement, the litigation record, and the relevant coverage considerations, Pemberton hereby consents to the proposed class settlement on the terms set forth in the Settlement Agreement as executed on September 15, 2023. Pemberton has evaluated the reasonableness of the settlement amount in light of the totality of the circumstances and has concluded that the G

V. Authorization of Policy Contribution Pursuant to the foregoing, Pemberton hereby authorizes a contribution of Nine Million Two Hundred Fifty Thousand Dollars ($9,250,000) toward the Gross Settlement Amount of $14,750,000. This contribution represents Pemberton's share of the settlement above the $5,000,000 self-insured retention. Pemberton notes that AMA has incurred approximately Three Million One Hundred Thousan

VI. PAGA Allocation Pemberton acknowledges that the Settlement Agreement allocates Seven Hundred Fifty Thousand Dollars ($750,000) of the GSA to the resolution of the PAGA representative claims, representing approximately 5.1% of the total settlement amount. As set forth in Pemberton's December 22, 2022 reservation of rights letter, Pemberton expressly reserved its right to deny coverage for PAGA penalties on the gro

VII. Conditions of Contribution Pemberton's authorized contribution of Nine Million Two Hundred Fifty Thousand Dollars ($9,250,000) is expressly conditioned upon the satisfaction of each of the following conditions:

1. Final Approval Order. The Superior Court of the State of California, County of Los Angeles, shall enter a Final Approval Order and Judgment approving the settlement with prejudice and releasing all class and PAGA claims asserted against AMA in the Fuentes litigation. The Final Approval Order must be entered on terms that are substantively consistent with the Settlement Agreement as executed on September 15, 2023,

2. Binding Release. The Final Approval Order must include, or incorporate by reference, a release that is binding on all class members who do not timely and validly opt out of the settlement, encompassing all claims within the scope of the release provisions set forth in the Settlement Agreement, including without limitation the PAGA representative claims and all non-certified class claims. The release must be suffic

3. No Material Modification. The material terms of the Settlement Agreement—including without limitation the Gross Settlement Amount, the class definition, the class period, the scope of the release, and the PAGA allocation—shall not be materially modified, amended, or supplemented without Pemberton's prior written consent. For the avoidance of doubt, adjustments to the allocation of attorneys' fees, service awards,

4. Opt-Out Threshold. In the event that the number of valid and timely opt-outs from the settlement class exceeds five percent (5%) of the estimated class size (approximately ninety-three (93) individuals based on the estimated class of 1,850 members), and AMA exercises its right to void the settlement pursuant to the "blow" provision or walk-away right set forth in the Settlement Agreement, Pemberton's authorization

5. Funding Timeline. Pemberton will fund its $9,250,000 contribution within fourteen (14) calendar days following the entry of the Final Approval Order by the Court. Payment will be made by wire transfer to the qualified settlement fund escrow account designated by the claims administrator, Meridian Settlement Services LLC, located at 1600 E. Fourth Street, Suite 240, Santa Ana, California 92701, or to such other acc

VIII. Reservation of Rights — Willful Violations Pemberton notes that its December 22, 2022 reservation of rights letter also expressly reserved Pemberton's rights regarding coverage for damages attributable to "willful" violations of the California Labor Code, pursuant to the Policy's Intentional Acts Exclusion set forth at Section IV.A of the Policy. The Intentional Acts Exclusion provides that the Policy does not

IX. Aldrich Executive Dispute — Coverage Denial Reaffirmed Pemberton takes this opportunity to reaffirm its December 22, 2022 denial of coverage for the separate matter styled Aldrich v. Aurelius Media Americas Inc., Los Angeles Superior Court Case No. 22STCV41087 (the "Aldrich Matter"). This settlement contribution authorization pertains solely and exclusively to the Fuentes class action and the associated PAGA clai

X. Reporting and Cooperation In connection with the ongoing administration of this claim and Pemberton's authorized contribution, Pemberton respectfully requests that Calderwood & Harkness LLP provide Pemberton with copies of the following documents as they become available in the ordinary course of the Fuentes settlement approval process: • The Preliminary Approval Order, if not already provided to Pemberton or its

XI. No Waiver Nothing in this letter shall be construed as a waiver, estoppel, or relinquishment of any of Pemberton's rights, defenses, or remedies under the Policy or at law or in equity, including but not limited to Pemberton's rights under the Penalty Exclusion (§ IV.F), the Intentional Acts Exclusion (§ IV.A), the Insured v. Insured Exclusion (§ IV.C), and all other terms, conditions, limitations, and exclusions

XII. Closing Pemberton appreciates the professional and diligent handling of this matter by Calderwood & Harkness LLP and by AMA's in-house legal team. The complexity of this litigation and the skill with which the defense and settlement negotiations were conducted have contributed to a resolution that Pemberton believes serves the interests of all parties. Pemberton looks forward to the successful completion of the