Contract analysis

I. INTRODUCTION Aurelius Media Americas Inc. ("AMA"), a wholly owned United States subsidiary of Aurelius Global Media Group PLC ("AGMG"), respectfully submits this confidential mediation brief in advance of the standalone mediation session scheduled for December 8, 2023, before the Honorable Patricia Okoro (Ret.) of Westpark Dispute Resolution Inc. This brief is submitted solely for use in the mediation and is prote

II. BACKGROUND — PARTIES AND RELATIONSHIPS A. Aurelius Media Americas Inc. Aurelius Media Americas Inc. is a Delaware corporation (Delaware File No. 5284731) qualified to do business in the State of California, with its principal office located at 8500 Sunset Boulevard, Suite 1400, West Hollywood, California 90069. AMA is a wholly owned subsidiary of Aurelius Global Media Group PLC, a public limited company organized

III. PROCEDURAL HISTORY The procedural history of this matter reflects a case that has matured through the discovery phase and is now ripe for resolution. The principal events are as follows: October 14, 2022: AMA terminated Mr. Aldrich's employment for cause, pursuant to Section 7.2(b) of the Employment Agreement, based on unauthorized transmission of confidential information and proprietary materials to third parti

IV. SUMMARY OF CLAIMS AND CROSS-CLAIMS A. Aldrich's Claims Against AMA Mr. Aldrich's Complaint asserts five causes of action against AMA, which are summarized as follows:

1. Wrongful Termination in Violation of Public Policy (First Cause of Action) Mr. Aldrich alleges that his termination was retaliatory, motivated not by the ostensible grounds stated in his termination letter, but by his objections to a directive issued by AMA President Jonathan Mercer in early October 2022 relating to a proposed restructuring of certain production teams. Mr. Aldrich characterizes the Mercer directiv

2. Breach of Contract (Second Cause of Action) Mr. Aldrich contests the designation of his termination as "for cause" under Section 7.2(b) of the Employment Agreement. He contends that the factual circumstances underlying the termination do not satisfy any of the enumerated grounds for cause under the Agreement, and that the termination was, in substance, a without cause termination, entitling him to the full severan

3. Breach of Implied Covenant of Good Faith and Fair Dealing (Third Cause of Action) Mr. Aldrich alleges that AMA acted in bad faith by manufacturing the for cause designation in order to avoid paying the severance benefits to which he was contractually entitled and to trigger the forfeiture of his unvested RSUs under the equity compensation plan. He contends that AMA's true motivation for the termination was the res

4. Declaratory Relief — Restrictive Covenants (Fourth Cause of Action) Mr. Aldrich seeks a judicial declaration that three of the four post-employment restrictive covenants in his Employment Agreement are void or unenforceable under California law. Specifically, he contends: (a) That Section 9.1 — an eighteen-month post-termination non-competition clause prohibiting Mr. Aldrich from working for any "Competing Enterpr

5. Violation of California Labor Code Section 2802 (Fifth Cause of Action) Mr. Aldrich alleges that AMA failed to reimburse him for approximately $28,400 in business expenses incurred during fiscal year 2022, including travel expenses, client entertainment costs, and cell phone charges, all of which Mr. Aldrich contends were necessary expenditures incurred in the direct discharge of his duties as SVP of Original Cont

1. Breach of Employment Agreement — Sections 9.2, 9.3, and 9.4 (First Cause of Action) AMA alleges that Mr. Aldrich breached his contractual confidentiality obligations under Section 9.4 of the Employment Agreement by engaging in the unauthorized transmission of approximately 340 emails containing proprietary information from his AMA-issued corporate email account to his personal email account (galdrich.private@North

Section 9.4 of the Employment Agreement provides, in pertinent part, that Mr. Aldrich shall not, during or after his employment, directly or indirectly disclose, publish, or otherwise transmit any Confidential Information (as defined therein) to any person or entity other than in furtherance of his duties to AMA. AMA contends that the transmissions to Mr. Aldrich's personal email account and to Halcyon Creek Producti

2. Misappropriation of Trade Secrets — CUTSA (Second Cause of Action) AMA alleges that the materials transmitted by Mr. Aldrich — including the show format bibles, the Summit Challenge revenue model, audience analytics data, and talent deal terms — constitute "trade secrets" within the meaning of California Civil Code section 3426.1(d). These materials derive independent economic value from not being generally known

3. Breach of Fiduciary Duty (Third Cause of Action) As Senior Vice President and an officer of AMA, Mr. Aldrich owed fiduciary duties of loyalty and care to the company. AMA alleges that Mr. Aldrich's unauthorized disclosure of proprietary information and trade secrets to Halcyon Creek Productions — an entity owned by his former business associate, Nina Castellanos — constitutes a breach of Mr. Aldrich's fiduciary du

4. Conversion (Fourth Cause of Action) AMA alleges that Mr. Aldrich's unauthorized appropriation and transmission of AMA's proprietary digital files — including show format bibles, sizzle reels, and the Summit Challenge revenue model — constitutes conversion. Mr. Aldrich exercised dominion and control over AMA's property in a manner inconsistent with AMA's ownership rights, by forwarding these materials to his person

V. AMA'S POSITION ON THE MERITS This section sets forth AMA's candid assessment of the strengths and vulnerabilities of both parties' positions. AMA provides this assessment to the mediator in the interest of facilitating a productive and well-informed settlement discussion. A. The For Cause Termination Is Defensible AMA terminated Mr. Aldrich's employment for cause under Section 7.2(b) of the Employment Agreement, r

1. Cure-Period Deficiency. As discussed above, the fifteen-business-day cure period required by Section 7.2(b)(iv) of the Employment Agreement was not provided with respect to the insubordination ground. AMA provided only three calendar days (one business day) between the written warning and the termination. Mr. Aldrich will highlight this procedural failure as evidence that the termination was hasty and pretextual,

2. Timeline Issue. The DLP audit findings were initially reported to Gregory Tanaka on September 6, 2022, but AMA did not act on those findings until after the October 10-14 insubordination conflict. AMA's explanation — that the forensic review of Mr. Aldrich's laptop was not completed until October 3, 2022, and that additional time was required for internal consultation with counsel before any adverse employment act

3. Mercer's Deposition Testimony. President Mercer's deposition testimony was less than ideal on the timeline issue. Mr. Mercer acknowledged that he did not personally review the DLP audit findings in detail until October 13, 2022 — three days after the confrontation with Mr. Aldrich over the restructuring directive and one day before the termination. This testimony supports Mr. Aldrich's narrative that the terminati

4. Non-Competition Clause (§ 9.1) Is Void. AMA has conceded, correctly, that Section 9.1 of the Employment Agreement is unenforceable under California Business and Professions Code section 16600. The California Supreme Court's decision in Edwards v. Kraft Quill CPAs LLP (2008) 44 Cal.4th 937 is dispositive. The New York choice-of-law clause in Section 14.3 of the Employment Agreement does not save the non-competition

5. Non-Solicitation of Business Relationships (§ 9.3) Is Vulnerable. Section 9.3 is broadly drafted, covering "any network, platform, or advertiser client" with whom Mr. Aldrich had "material contact" during the twenty-four months preceding his termination. Given Mr. Aldrich's senior role and extensive client relationships, this provision effectively prevents him from engaging in business development in the unscripte

6. AMA's Actual Damages from Cross-Claims Are Difficult to Quantify. While AMA's cross-claims provide substantial leverage value, the company faces a meaningful challenge in quantifying its actual damages. AMA's investigation has not confirmed that Halcyon Creek Productions has produced, sold, or commercially exploited any programming based on the transmitted materials. Without evidence of commercial exploitation, AM

1. Deposition Performance. Mr. Aldrich was a poor witness at his May 22 deposition, particularly on the critical issue of the Halcyon Creek transmissions. His "co-production opportunity" explanation was vague, inconsistent, and wholly uncorroborated by any contemporaneous documentation. He appeared evasive when pressed on the specifics of the alleged co-production arrangement and was unable to identify any AMA execut

2. Key Admissions. Mr. Aldrich acknowledged under oath that the materials he transmitted were "proprietary" and that the Summit Challenge revenue model was "confidential financial information." He also acknowledged that he did not seek or obtain authorization from any AMA executive before transmitting the materials to Halcyon Creek. These admissions undermine his position on both AMA's cross-claims and the for cause

3. Signed Policy Acknowledgment. Mr. Aldrich cannot credibly claim ignorance of AMA's Acceptable Use and Confidentiality Policy. He signed and acknowledged the policy on April 12, 2021, approximately eighteen months before the bulk of the transmissions occurred. The policy is clear, unambiguous, and specifically addresses the unauthorized transmission of proprietary materials to personal email accounts or to third pa

4. Wrongful Termination Claim Is Weak. Mr. Aldrich's Tameny claim requires him to establish that his termination violated a fundamental public policy of the State of California. He characterizes the Mercer restructuring directive as an effort to misclassify employees — converting full-time positions to independent contractor relationships — and contends that his opposition to this misclassification constituted protec

5. Emotional Distress Claim. To the extent Mr. Aldrich seeks emotional distress damages, he has no evidence of physical injury, and his supporting evidence of emotional suffering is limited. Any recovery on this component would be modest at best.

VI. DAMAGES ANALYSIS A. Aldrich's Claims — AMA's Exposure The following table compares Mr. Aldrich's initial demand with AMA's risk-adjusted assessment of exposure on each component of his claimed damages: Note Regarding RSU Valuation: At the time of Mr. Aldrich's termination in October 2022, his 15,300 unvested RSUs were valued at approximately $332,200, based on the then-current AGMG share price of approximately £1

VII. INSURANCE — SELF-FUNDED MATTER AMA's employment practices liability insurance carrier, Pemberton Mutual Assurance Co. (Policy No. PMA-EPL-2022-00837), denied coverage for the Aldrich dispute in a Reservation of Rights letter dated December 22, 2022. Pemberton identified three principal grounds for the coverage denial: (1) The Insured v. Insured Exclusion set forth in Section IV.C of the Policy, on the basis that

VIII. MEDIATION HISTORY AND CURRENT POSTURE A. September 8, 2023 — Combined Mediation Session The Aldrich dispute was addressed during the combined class action/individual mediation session held on September 8, 2023, before the Honorable Patricia Okoro (Ret.). That session was the second formal mediation of the Aldrich claims, the first having been an informal pre-litigation demand exchange that did not involve a neu

1. RSU Treatment: Mr. Aldrich insisted on full acceleration of all 15,300 unvested RSUs, arguing that the for cause termination was wrongful and that he would have vested fully had his employment continued. AMA offered acceleration of 8,000 RSUs, representing a compromise between full acceleration and total forfeiture, reflecting the genuine uncertainty regarding the for cause determination.

2. Restrictive Covenant Release: Mr. Aldrich demanded a complete release of all post-employment restrictive covenant obligations, including his confidentiality obligations under Section 9.4. AMA was and remains unwilling to release Mr. Aldrich from his confidentiality obligations, particularly given that the core of the dispute involves his unauthorized disclosure of precisely the types of information that Section 9.

3. Non-Disparagement Duration: Mr. Aldrich sought a non-disparagement clause of unlimited duration. AMA proposed a three-year term, which AMA believes is reasonable and consistent with market practice for executive separations in the entertainment industry. B. Developments Since September Several developments since the September mediation session have improved the prospects for resolution: Resolution of Class Action.

IX. PROPOSED RESOLUTION AMA proposes a comprehensive, global settlement of all claims and cross-claims on the following terms. AMA presents these terms not as a final, take-it-or-leave-it offer, but as a framework for productive negotiation at the December 8 session. A. Monetary Terms Total Lump Sum Payment to Aldrich: AMA proposes a total cash payment to Mr. Aldrich in the range of $2,000,000 to $2,500,000, inclusiv