Contract analysis

I. INTRODUCTION Defendant Aurelius Media Americas Inc. ("AMA" or "Defendant"), a Delaware corporation, by and through its attorneys of record, Calderwood & Harkness LLP, hereby answers the Complaint of Plaintiff Gavin Aldrich ("Plaintiff" or "Aldrich"), filed on December 9, 2022, in the above-captioned action. AMA responds to each and every allegation in the Complaint as set forth below. To the extent that any allega

II. GENERAL DENIAL Pursuant to California Code of Civil Procedure Section 431.30(d), Defendant generally denies each and every allegation contained in the Complaint and denies that Plaintiff has been damaged in any amount whatsoever, or is entitled to any relief of any kind, whether compensatory, consequential, special, general, punitive, or otherwise. Without waiving or limiting the foregoing general denial, and in

III. SPECIFIC RESPONSES TO KEY ALLEGATIONS A. Paragraphs 1 Through 10 (Background and Employment)

1. Responding to Paragraphs 1 through 10 of the Complaint, AMA admits that Plaintiff Gavin Aldrich was employed by AMA from approximately September 5, 2017 through October 14, 2022.

2. AMA admits that, at the time of his termination, Aldrich held the title of Senior Vice President of Original Content & Executive Producer within AMA's Unscripted Programming Division.

3. AMA admits that the parties entered into a written Employment Agreement dated September 5, 2017 (the "Employment Agreement"), and that the Employment Agreement was subsequently amended by the First Amendment to Employment Agreement dated August 1, 2020 (the "First Amendment"). AMA avers that the Employment Agreement and the First Amendment speak for themselves and are the best evidence of their terms, and AMA deni

4. AMA admits that Aldrich's annual base salary at the time of his termination was Four Hundred Eighty-Five Thousand Dollars ($485,000) per year, as set forth in the First Amendment.

5. AMA admits that Aldrich received a discretionary annual bonus for fiscal year 2021 in the amount of Two Hundred Twenty-Five Thousand Dollars ($225,000). AMA avers that such bonus was discretionary in nature, as expressly provided in Section 4.2 of the Employment Agreement, and that the payment of any bonus in a prior fiscal year did not create any entitlement to a bonus in any subsequent fiscal year.

6. AMA admits that, pursuant to the terms of a Restricted Stock Unit Award Agreement between Aldrich and Aurelius Global Media Group, Inc. ("AGMG"), AMA's parent corporation, Aldrich was granted 42,500 AGMG restricted stock units ("RSUs"), subject to the vesting schedule and other terms and conditions set forth in the RSU Award Agreement and the AGMG 2016 Omnibus Equity Incentive Plan (the "Plan"). AMA further admits

7. Except as expressly admitted herein, AMA denies each and every remaining allegation in Paragraphs 1 through 10 of the Complaint to the extent such allegations are inconsistent with the terms of the Employment Agreement dated September 5, 2017, as amended by the First Amendment dated August 1, 2020, or are otherwise inaccurate, misleading, or incomplete. AMA avers that the Employment Agreement and First Amendment a

8. Responding to Paragraphs 11 through 18 of the Complaint, AMA admits that it terminated Aldrich's employment on October 14, 2022.

9. AMA admits that the termination was designated as a termination "for cause" under Section 7.2(b) of the Employment Agreement. AMA avers that Section 7.2(b) sets forth the definition of "Cause" as that term is used in the Employment Agreement, and that the Employment Agreement speaks for itself with respect to the grounds constituting "Cause."

10. AMA denies that the "for cause" designation was pretextual, retaliatory, or otherwise improper. AMA denies that the termination was motivated by any unlawful purpose, discriminatory animus, or retaliatory intent. AMA denies that the termination was designed to deprive Aldrich of any compensation, benefits, or contractual entitlements to which he would otherwise have been entitled.

11. AMA affirmatively alleges that the termination of Aldrich's employment "for cause" was based on two independent grounds, each of which independently constitutes "Cause" within the meaning of Section 7.2(b) of the Employment Agreement: (i) Violation of AMA's Acceptable Use and Confidentiality Policy and Breach of Section 9.4 of the Employment Agreement (Confidentiality). Between approximately July 2021 and Septemb

12. AMA specifically denies Aldrich's allegation that the restructuring directive issued by President Jonathan Mercer was an effort to misclassify employees or to reduce overtime costs through improper or unlawful means. The restructuring was a legitimate cost-efficiency measure necessitated by declining advertising revenues affecting AMA and the broader media industry, and was consistent with AMA's authority to mana

13. AMA denies Aldrich's characterization of the circumstances of his termination as set forth in Paragraphs 11 through 18 of the Complaint. AMA denies all allegations of wrongful motive, pretext, retaliation, or bad faith in connection with the termination. C. Paragraphs 19 Through 26 (Restrictive Covenant Provisions)

14. Responding to Paragraphs 19 through 26 of the Complaint, AMA admits that Section 9 of the Employment Agreement contains restrictive covenant provisions, including the following: (a) Section 9.1 — Non-Competition. Section 9.1 provides that, for a period of eighteen (18) months following the termination of Aldrich's employment (for any reason), Aldrich shall not, directly or indirectly, engage in, be employed by, p

15. AMA denies Aldrich's allegations that any of the restrictive covenant provisions set forth in Section 9 of the Employment Agreement are void, unenforceable, unconscionable, or otherwise invalid.

16. AMA affirmatively alleges that the restrictive covenant provisions contained in Section 9 of the Employment Agreement are reasonable in scope, duration, and geographic reach, are narrowly tailored to protect AMA's legitimate business interests — including its trade secrets, confidential information, client and talent relationships, and competitive position — and are supported by adequate consideration, including

17. AMA affirmatively alleges that the Employment Agreement is governed by New York law pursuant to the choice-of-law clause set forth in Section 14.3 of the Employment Agreement, which provides in relevant part: "This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to its conflict of laws principles." AMA avers that this choice-of-law provision was ne

18. AMA denies Aldrich's contention that California Business and Professions Code Section 16600 renders all restrictive covenant provisions in the Employment Agreement void or unenforceable. AMA contends that the contractual choice of New York law is valid and enforceable, and that under New York law, the restrictive covenant provisions are reasonable and enforceable. AMA further contends that, even if California law

19. Responding to Paragraphs 27 through 32 of the Complaint, AMA admits that Section 7.3 of the Employment Agreement provides for certain severance benefits in the event of a termination "without cause," including: (a) severance pay equal to twenty-four (24) months of base salary (i.e., Nine Hundred Seventy Thousand Dollars ($970,000)); (b) a pro-rata bonus for the fiscal year in which the termination occurs, based o

20. AMA denies that Aldrich is entitled to any severance compensation, pro-rata bonus, COBRA subsidy, or any other benefits under Section 7.3 of the Employment Agreement, because Aldrich was terminated "for cause" under Section 7.2(b) of the Employment Agreement. Section 7.2(b) expressly provides that, upon a termination for Cause, the Employee shall be entitled only to accrued and unpaid base salary through the date

21. AMA denies that the approximately 15,300 unvested RSUs held by Aldrich at the time of his termination are subject to accelerated vesting. Under the express terms of the RSU Award Agreement dated September 5, 2017 (as modified by the grant adjustment memorandum dated August 1, 2020) and the AGMG 2016 Omnibus Equity Incentive Plan, all unvested RSUs are immediately and automatically forfeited upon a termination of

22. Responding to Paragraphs 33 through 38 of the Complaint, AMA is without sufficient information or belief to admit or deny Aldrich's allegation that AMA failed to reimburse him for approximately Twenty-Eight Thousand Four Hundred Dollars ($28,400) in business expenses allegedly incurred in connection with his duties at AMA. AMA avers that it has not yet had the opportunity to conduct a full review of Aldrich's exp

23. AMA denies that any failure to reimburse business expenses, if such failure is established, was willful, knowing, or intentional, or that any such failure constituted a violation of California Labor Code Section 2802 or any other applicable statute. AMA further denies that any failure to reimburse, if established, entitles Aldrich to penalties, interest, or attorneys' fees under any provision of the California La

24. Responding to Paragraphs 39 through 45 of the Complaint, AMA denies that Aldrich has suffered any damages as a result of his termination or as a result of any act or omission by AMA.

25. AMA denies that Aldrich is entitled to any relief whatsoever, whether compensatory, consequential, incidental, special, general, emotional distress, punitive, exemplary, or otherwise.

26. AMA specifically denies that Aldrich is entitled to his claimed aggregate demand of Four Million One Hundred Fifty Thousand Dollars ($4,150,000), or any portion thereof. AMA avers that Aldrich's damages claims are speculative, unsupported, and excessive, and that Aldrich has failed to establish any cognizable basis for the relief he seeks.

IV. AFFIRMATIVE DEFENSES Without assuming the burden of proof on any issue as to which Defendant would not otherwise bear such burden under applicable law, and without waiving any objections, defenses, or rights that Defendant may have or may hereafter assert, Defendant Aurelius Media Americas Inc. asserts the following affirmative defenses to the Complaint: FIRST AFFIRMATIVE DEFENSE (Failure to State a Claim) The Co

V. PRAYER FOR RELIEF WHEREFORE, Defendant Aurelius Media Americas Inc. prays for judgment as follows:

1. That Plaintiff Gavin Aldrich take nothing by his Complaint, and that each and every cause of action alleged therein be denied in its entirety;

2. That each and every cause of action in the Complaint be dismissed with prejudice;

3. That Defendant Aurelius Media Americas Inc. recover its costs of suit incurred herein, including but not limited to filing fees, service costs, deposition costs, and all other costs recoverable under California Code of Civil Procedure Section 1032 and applicable law;

4. That Defendant Aurelius Media Americas Inc. recover its reasonable attorneys' fees incurred in the defense of this action, to the extent permitted by applicable law, contract, or statute, including but not limited to the attorneys' fees provision set forth in Section 14.7 of the Employment Agreement;

5. For such other and further relief as the Court deems just and proper.

VI. CROSS-REFERENCE TO CROSS-COMPLAINT AMA has filed a separate Cross-Complaint against Gavin Aldrich concurrently with this Answer, asserting the following causes of action arising from Aldrich's wrongful conduct during and after his employment with AMA:

1. First Cause of Action: Breach of Employment Agreement (Sections 9.1, 9.2, 9.3, and 9.4 of the Employment Agreement dated September 5, 2017, as amended August 1, 2020);

2. Second Cause of Action: Misappropriation of Trade Secrets (California Uniform Trade Secrets Act, Cal. Civ. Code § 3426 et seq.);

3. Third Cause of Action: Breach of Fiduciary Duty; and

4. Fourth Cause of Action: Conversion (of proprietary digital files, including show format bibles, pilot sizzle reels, and the "Summit Challenge" revenue model). AMA's Cross-Complaint seeks compensatory damages, injunctive relief, exemplary damages (where permitted by law), attorneys' fees, costs, and such other relief as the Court deems just and proper. The Cross-Complaint is incorporated herein by reference for all

VII. SIGNATURE Dated: January 20, 2023 CALDERWOOD & HARKNESS LLP By: /s/ Renata Vasquez ________________________________________ RENATA VASQUEZ (SBN 224578) DEVON ARCHER (SBN 301462) 777 South Flower Street, Suite 4200 Los Angeles, California 90017 Telephone: (213) 555-7200 Facsimile: (213) 555-7201 Attorneys for Defendant AURELIUS MEDIA AMERICAS INC. PROOF OF SERVICE PROOF OF SERVICE STATE OF CALIFORNIA, COUNTY OF L