Contract analysis

I. Purpose This memorandum summarizes the material terms of the proposed Class Action Settlement Agreement and Release (the "Settlement Agreement") negotiated at Mediation Session #2 on September 8, 2023, before the Honorable Patricia Okoro (Ret.) of Westpark Dispute Resolution Inc. The purpose of this memorandum is to facilitate client review and approval of the Settlement Agreement's material terms prior to executi

II. Material Terms The material terms of the proposed Settlement Agreement are set forth below. Unless otherwise noted, all terms are subject to Court approval. A. Gross Settlement Amount The Gross Settlement Amount ("GSA") is $14,750,000.00 (Fourteen Million Seven Hundred Fifty Thousand Dollars). The GSA is non-reversionary, meaning that no portion of the fund reverts to AMA in the event that any class member fails

I. Net Settlement Fund After deducting the amounts described above from the GSA, the Net Settlement Fund ("NSF") — the amount available for distribution to Settlement Class members — is calculated as follows: The NSF represents approximately 55.9% of the GSA. This ratio is consistent with the typical range observed in California wage-and-hour class settlements, where attorneys' fees and costs commonly consume 35–45%

III. Funding The $14,750,000.00 GSA will be funded from the following sources: EPL Coverage. Pemberton Mutual Assurance Co. ("Pemberton") acknowledged coverage under AMA's Employment Practices Liability ("EPL") insurance policy (Policy No. PMA-EPL-2022-00837) on December 22, 2022, subject to a reservation of rights. Pemberton's reservation of rights specifically reserved its position with respect to PAGA penalties (w

IV. Settlement Approval Timeline The anticipated timeline for the settlement approval process is as follows: This timeline is consistent with the procedural framework established by California Rules of Court, Rule 3.769, and is subject to adjustment based on the Court's scheduling preferences and docket availability in Department 34. Funding Coordination. AMA must be prepared to deposit its $5,500,000.00 self-funded

V. Comparison to Claimed Exposure and Defense Valuation The following table compares the GSA to the parties' respective damages estimates as presented in competing expert reports: The GSA of $14,750,000.00 falls within the range that California courts have consistently recognized as appropriate for class action settlements of this nature. Empirical studies of California wage-and-hour class action settlements indicate

VI. Key Strategic Advantages of the Settlement Based on our assessment of the litigation posture, the proposed settlement offers the following strategic advantages to AMA:

1. Broad Release Extinguishes All Claims. The release provisions of the Settlement Agreement are unusually comprehensive. The release covers not only the three certified claims (first meal period auto-deduction, wage statement, and UCL) but also the five categories of non-certified claims (rest period, off-the-clock/overtime, minimum wage, second meal period, and waiting time penalties), as well as all PAGA represent

2. EPL Carrier Participation Reduces AMA's Out-of-Pocket Cost. Pemberton's $9,250,000.00 contribution covers 62.7% of the GSA, reducing AMA's self-funded class settlement cost to $5,500,000.00. Notably, AMA's self-funded settlement contribution of $5,500,000.00 is below the defense expert's aggregate damages estimate of $5,800,000.00. In other words, through the carrier's participation, AMA is resolving the entire ac

3. Avoids Significant Trial Costs and Attendant Risk. Proceeding to trial on the certified claims would have required an estimated $1,200,000 to $1,800,000 in additional attorneys' fees and litigation expenses, including trial preparation, expert witness testimony, jury consultant fees, and post-trial briefing. Trial on the meal period auto-deduction claim presented meaningful risk: the Court's certification order ex

4. Certainty and Finality. The settlement provides AMA and AGMG with a definitive resolution of the Fuentes litigation that can be factored into AGMG's financial planning, quarterly and annual financial reporting, and public company disclosures. A settlement of this magnitude will likely require disclosure in AGMG's SEC filings. The certainty of a negotiated settlement — as opposed to the unpredictable range of outco

5. No Injunctive or Prospective Relief. The settlement does not require AMA to implement any court-mandated changes to its employment policies, practices, or timekeeping systems. This is a significant advantage, as court-ordered injunctive relief in employment class actions frequently involves ongoing judicial monitoring, compliance reporting obligations, and the risk of contempt proceedings for alleged non-complianc

6. No Admission of Liability. AMA admits no liability under the Settlement Agreement. This preserves AMA's position in any future unrelated employment litigation, prevents the use of the settlement as evidence of wrongdoing in other proceedings, and avoids any reputational harm that could result from a formal admission or adverse verdict.

VII. Recommendation Based on our analysis of the litigation risks, the terms of the proposed settlement, the comparison to the parties' respective damages estimates, and the strategic advantages outlined above, we recommend that AMA execute the Settlement Agreement. The GSA of $14,750,000.00 is within the range of settlement authority previously authorized by the following memoranda: • Settlement Authority Memorandum

1. Prepare the final execution version of the Settlement Agreement for signature by all parties by September 15, 2023;

2. Coordinate with class counsel at Castellano Byrne & Salas LLP and Veltrano Employment Law Group PC to finalize any remaining drafting issues;

3. Submit the Settlement Agreement and the required PAGA settlement notice to the LWDA;

4. Prepare and file the Preliminary Approval Motion, including all supporting declarations and exhibits, by September 22, 2023; and

5. Coordinate with Meridian Settlement Services to commence the class notice preparation process. We respectfully request that Gregory Tanaka confirm client approval at his earliest convenience and coordinate with AMA's finance team regarding the funding timeline described in Sections III and IV above. We further recommend that Gregory Tanaka engage Graystone & Parr LLP, AGMG's external auditors, regarding the approp