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PRIVILEGED & CONFIDENTIAL — ATTORNEY WORK PRODUCT

This memorandum is a privileged and confidential attorney work product prepared by Calderwood & Harkness LLP in connection with its representation of Aurelius Global Media Group PLC and its Board of Directors. This memorandum is protected by the attorney-client privilege and the work product doctrine. Distribution is limited to the addressees and copy recipients listed below. Any unauthorized disclosure, reproduction, or distribution of this memorandum or its contents is strictly prohibited.

CALDERWOOD & HARKNESS LLP 787 Seventh Avenue New York, New York 10019

April 21, 2024

Matter: Aurelius Global Media Group PLC — Board Advisory Matter No.: 1017-00002

To:

Dame Elspeth Greenvale, Independent Non-Executive Chair, Aurelius Global Media Group PLC

Members of the Board of Directors of Aurelius Global Media Group PLC

Cc:

Nadine Khalil, General Counsel & Corporate Secretary, Aurelius Global Media Group PLC

Tobias Kessler, Chair, Special Committee of the Board of Directors, Aurelius Global Media Group PLC

From:

Nathaniel Bower, Partner, Calderwood & Harkness LLP

Colette Whitman, Partner, Calderwood & Harkness LLP

Audrey Zhou, Associate, Calderwood & Harkness LLP

Re: Review and Commentary on Proposed Engagement Letter from Stonebridge Crane & Co. for Financial Advisory Services — Strategic Alternatives Review

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I. Executive Summary

Calderwood & Harkness LLP ("C&H" or "we") has reviewed the draft engagement letter dated April 18, 2024 (the "Proposed Letter") submitted by Stonebridge Crane & Co. ("Stonebridge"), 383 Madison Avenue, New York, New York 10179, to Aurelius Global Media Group PLC ("AGMG" or the "Company"), pursuant to which Stonebridge proposes to serve as financial advisor to the Board of Directors (the "Board") of AGMG in connection with the evaluation of strategic alternatives available to the Company. The Proposed Letter was delivered to C&H by Nadine Khalil, General Counsel & Corporate Secretary of AGMG, on April 19, 2024, together with a cover letter from Anil Kapoor-Mehta, Managing Director of Stonebridge's Financial Advisory Group, who serves as the lead Stonebridge banker on this proposed engagement.

This memorandum is prepared in the context of the Board's April 15, 2024 determination that it is in the best interests of AGMG and its stockholders to engage a financial advisor to conduct a comprehensive review of strategic alternatives as a defensive measure in response to the proxy contest initiated by Corvus Peak Capital Partners LP ("Corvus Peak"). As the Board is aware, Corvus Peak filed its preliminary proxy statement with the Securities and Exchange Commission on March 28, 2024, seeking to elect a slate of five nominees to the Board at the Company's upcoming Annual General Meeting, currently scheduled for June 7, 2024. The Board is expected to adopt a formal resolution authorizing the engagement of Stonebridge at its meeting on April 22, 2024.

This memorandum identifies the key provisions of the Proposed Letter, highlights areas of concern, and provides C&H's recommended mark-ups and negotiating positions with respect to each material term. A complete redline of the Proposed Letter reflecting all of C&H's recommended changes is attached hereto as Appendix A and is incorporated by reference into this memorandum.

Overall Assessment. The Proposed Letter is broadly consistent with market terms for financial advisory engagements of this nature and scope. Stonebridge is a well-regarded independent advisory firm with significant experience in media and entertainment sector transactions, and the general framework of the engagement is appropriate. However, certain provisions of the Proposed Letter require modification in order to protect the Board's interests, preserve the Board's fiduciary flexibility, and ensure that the financial terms are consistent with current market practice for a company of AGMG's size and complexity. Most critically, the Proposed Letter omits an express fiduciary-out provision—an omission that, in C&H's view, must be remedied before execution.

The sections that follow address each material provision of the Proposed Letter in turn. Section XII provides a consolidated summary of all recommended mark-ups for ease of reference in connection with negotiations.

II. Scope of Services

A. Summary of Proposed Scope

The Proposed Letter describes the scope of Stonebridge's engagement in broad terms. Specifically, Stonebridge proposes to advise the Board on "evaluating strategic alternatives available to the Company, including but not limited to potential mergers, acquisitions, divestitures, joint ventures, recapitalizations, and other extraordinary transactions." The Proposed Letter further specifies that Stonebridge's services will include, without limitation, the following:

(a) preparation of financial analyses and valuation work relating to AGMG and its constituent business segments;

(b) identification and evaluation of potential counterparties for strategic transactions;

(d) participation in meetings of the Board and any committee thereof, as requested, to provide financial advice and present analyses; and

(e) preparation and delivery of a fairness opinion to the Board if a specific transaction is pursued and the Board requests such an opinion.

The scope as drafted is intentionally broad, encompassing the full range of strategic alternatives that the Board may wish to consider. C&H notes that this breadth is appropriate given the Board's stated objective of conducting a comprehensive review that does not foreclose any category of potential transaction. The description of services is consistent with engagement letters we have reviewed in comparable situations involving large-cap public companies considering strategic alternatives in the context of activist campaigns.

B. C&H Commentary and Recommended Modifications

Notwithstanding the general appropriateness of the proposed scope, C&H recommends several modifications to ensure the Board's interests are fully protected.

1. Limitation to Board Direction. C&H recommends adding express language to the Proposed Letter providing that Stonebridge will act solely at the direction of, and report exclusively to, the Board (or a duly authorized committee thereof, including the Special Committee chaired by Tobias Kessler), and not to management independently. While the Proposed Letter generally contemplates that Stonebridge's client is the Board, it does not contain an explicit statement to this effect. This distinction is critical. The strategic alternatives review is a Board-level initiative, and the Board must maintain exclusive control over the process, the information flows, and the ultimate decision-making authority. Management—including any interim or permanent CEO—should receive information from Stonebridge only as authorized by the Board or the Special Committee. Adding this language will also serve to reinforce the Board's position in any future litigation challenging the process, as Delaware courts have consistently looked favorably upon processes in which the Board maintains clear control over its financial advisors. We recommend the following insertion in the opening paragraph of the scope-of-services section of the Proposed Letter:

"Stonebridge shall act solely at the direction of and report exclusively to the Board of Directors of AGMG (or such committee of the Board as the Board may designate from time to time, including the Special Committee). Stonebridge shall not take direction from, or report to, the management of AGMG unless expressly authorized in writing by the Board or the Special Committee."

2. Coordination with CEO Search. The Proposed Letter does not address the intersection between the strategic alternatives review and the ongoing CEO succession process. As the Board is aware, the search for a permanent successor to Jonathan Hale, who departed the Company on February 14, 2024, is being conducted by the Nominating and Governance Committee with the assistance of Penrose Advisors. There is an inherent risk that confidential information generated in the strategic alternatives review could inadvertently be shared with CEO candidates, or that information relating to CEO candidates could influence strategic alternatives analyses, in either case creating disclosure risks and potential conflicts. C&H recommends inserting language in the Proposed Letter requiring Stonebridge to coordinate with C&H and the Special Committee to ensure that appropriate information barriers are maintained between the two workstreams. We will be delivering a separate memorandum to the Board on or about April 26, 2024, setting forth detailed confidentiality and information barrier protocols for both the strategic alternatives review and the CEO succession process. The engagement letter should incorporate those protocols by reference once finalized.

3. Interaction with Standing Outside Counsel. The Proposed Letter does not address the relationship between Stonebridge's engagement and AGMG's existing advisory relationships. In particular, Ashworth Velmoran LLP, led by Martin Cho, Head of Public Company Advisory, currently serves as the Company's standing outside counsel on general corporate matters and has been involved in responding to the Corvus Peak proxy contest. C&H recommends adding a clarifying provision to the Proposed Letter specifying that Stonebridge's engagement does not alter, supersede, or otherwise affect the Company's existing relationships with its legal advisors, and delineating the respective roles of Stonebridge (financial advisory), C&H (Board advisory and engagement letter matters), and Ashworth Velmoran (general corporate and proxy contest matters). Clear delineation of roles at the outset will reduce the risk of confusion, duplicative work, or gaps in coverage during what is likely to be an intensive and fast-moving process.

4. No Authority to Bind the Company. The Proposed Letter does not contain an explicit statement that Stonebridge has no authority to bind AGMG to any transaction or to negotiate on behalf of the Company without prior Board authorization. While this limitation is generally implied in an advisory engagement, C&H strongly recommends making it explicit. We propose the following insertion:

"For the avoidance of doubt, Stonebridge shall have no authority to bind the Company to any transaction, commitment, or obligation, or to negotiate on behalf of the Company with any third party, without the prior written authorization of the Board or the Special Committee. Stonebridge's role under this engagement letter is advisory only."

5. AGMG Company Profile for Scoping Purposes. For context in evaluating the appropriateness of the Proposed Letter's financial terms, we note the following profile of AGMG. The Company is incorporated in the State of Delaware, headquartered in the United Kingdom, and listed on the New York Stock Exchange under the ticker symbol "AGMG," with a secondary listing on the London Stock Exchange Main Market under the ticker symbol "AGMG.L." As of March 1, 2024, the Company had a market capitalization of approximately $8.65 billion (£6.82 billion at the prevailing exchange rate of $1.2683 per British pound sterling), with approximately 412,600,000 shares of common stock outstanding. For the fiscal year ended December 31, 2023, AGMG reported revenue of approximately $4.37 billion and EBITDA of approximately $812 million, representing an EBITDA margin of 18.6%. The Company employs approximately 23,400 individuals worldwide and operates through four reportable business segments: Streaming & Digital Content (representing approximately 42% of FY 2023 revenue), Live Entertainment & Events (approximately 24%), E-Commerce & Merchandising (approximately 19%), and Advertising & Brand Partnerships (approximately 15%). These financial characteristics, including the Company's enterprise value, dual-listed status, and multi-segment structure, are relevant to the assessment of the reasonableness of Stonebridge's proposed fees and to the complexity of the engagement.

III. Fee Structure

A. Monthly Retainer

Proposed Term. The Proposed Letter provides for a monthly retainer of $250,000, payable in advance on the first business day of each calendar month, commencing upon execution of the engagement letter. The retainer is described as non-refundable and non-creditable against any transaction fee that may become payable under the engagement.

C&H Commentary. The proposed monthly retainer of $250,000 is at the high end of the market range for comparable financial advisory engagements. Based on C&H's review of recent precedent engagement letters involving independent advisory firms retained in connection with strategic alternatives reviews at large-cap public companies (enterprise values in the $5 billion to $15 billion range), monthly retainers have typically ranged from $125,000 to $275,000, with most falling in the $150,000 to $225,000 range. The $250,000 figure proposed by Stonebridge is therefore within the market range but above the median. Given the complexity of AGMG's structure as a dual-listed, multi-segment media conglomerate, and the heightened intensity of the current situation involving an active proxy contest, C&H believes the retainer amount, while at the high end, is within an acceptable range and may be difficult to negotiate downward significantly.

However, C&H takes a stronger view on the non-creditability of the retainer against the transaction fee. The Proposed Letter provides that retainer payments are non-creditable—that is, if a transaction is ultimately consummated and a transaction fee becomes payable, none of the retainer payments previously made would reduce the transaction fee. C&H recommends negotiating for partial creditability. Specifically, we propose that 50% of aggregate retainer payments made during the engagement period be credited against any transaction fee ultimately payable to Stonebridge. This approach is increasingly common in the market for engagements of this type and appropriately balances Stonebridge's interest in receiving compensation for its ongoing advisory work with the Company's interest in managing total advisory costs in the event a transaction is consummated. If, for example, the engagement runs for 12 months before a transaction closes, aggregate retainer payments would total $3.0 million, and a 50% credit would reduce the transaction fee by $1.5 million—a meaningful but not unreasonable adjustment.

Additionally, C&H recommends including a termination provision with respect to the retainer, allowing the Company to terminate its retainer obligations on 30 days' written notice. This is discussed further in Section VI below.

We note that, assuming the Board adopts the authorizing resolution on April 22, 2024, as anticipated, retainer payments will begin accruing from that date. The first monthly payment of $250,000 would therefore be due on the first business day of May 2024.

B. Transaction Fee

Proposed Term. The Proposed Letter provides for a transaction fee equal to 0.25% of the aggregate enterprise value of any "Change of Control Transaction" (as defined in the Proposed Letter) consummated during the engagement period or during the 12-month tail period following termination of the engagement.

Enterprise Value Definition. The Proposed Letter defines "enterprise value" to mean the total consideration paid or payable in connection with a Change of Control Transaction, including the value of all equity consideration, debt assumed or refinanced, earn-out payments (valued at their maximum achievable value), and all other forms of consideration, but excluding transaction costs and expenses.

Change of Control Transaction Definition. The Proposed Letter defines "Change of Control Transaction" broadly to include any merger, consolidation, tender offer, exchange offer, sale of all or substantially all assets, recapitalization, or similar transaction in which more than 50% of the Company's voting power is transferred to a third party or group.

Minimum Fee. The Proposed Letter specifies a minimum transaction fee of $5 million, which would apply in the event that 0.25% of the relevant enterprise value yields a figure below that floor.

C&H Commentary and Recommended Modifications.

1. Transaction Fee Quantum. At the Company's current enterprise value of approximately $8.65 billion (based on the market capitalization of $8.65 billion as of March 1, 2024, plus net debt), a 0.25% transaction fee would yield a fee of approximately $21.6 million. This is a significant sum by any measure. Based on C&H's review of comparable transactions, advisory fees for independent financial advisors in change-of-control transactions involving companies with enterprise values in the $8 billion to $12 billion range have typically ranged from 0.15% to 0.30% of enterprise value, with the percentage generally declining as enterprise value increases. While the 0.25% rate is within the market range, the absolute dollar amount warrants scrutiny, and C&H recommends that the Board consider whether a declining percentage structure—for example, 0.25% on the first $8 billion of enterprise value and 0.15% on any amount in excess of $8 billion—would be more appropriate.

2. Enterprise Value Definition — Earn-Outs. C&H recommends narrowing the definition of "enterprise value" with respect to earn-out consideration. The Proposed Letter values earn-outs at their "maximum achievable value," which could substantially overstate the actual consideration received by the Company's stockholders and result in a fee that is disproportionate to the value of the transaction. C&H recommends that earn-out consideration be included in the enterprise value calculation at the amount reasonably estimated to be payable at closing based on management's projections and assumptions at the time of signing, rather than at the theoretical maximum. This is a more equitable approach and is consistent with how earn-outs are typically treated for purposes of calculating advisory fees in current market practice. To the extent earn-out payments subsequently exceed the estimated amount, the engagement letter could provide for a true-up mechanism, with additional fee payable only on the incremental earn-out amounts actually received.

3. Change of Control Transaction Definition. C&H recommends several modifications to the definition of "Change of Control Transaction":

(a) Consummation Requirement. The definition should be tightened to require that the transaction be actually consummated—i.e., the closing must have occurred—before the transaction fee becomes payable. The Proposed Letter's language is somewhat ambiguous on this point and could be read to require payment upon the execution of a definitive agreement, even if the transaction does not ultimately close. C&H recommends inserting the phrase "actually consummated" and clarifying that no fee is payable with respect to a transaction that is abandoned, terminated, or otherwise fails to close.

(b) Pre-Engagement Transactions. The definition should expressly exclude any transaction that was initiated and substantially completed prior to the commencement of the engagement. While this scenario may be unlikely, it is good practice to include this exclusion to avoid any argument that Stonebridge is entitled to a fee for a transaction in which it played no role.

(c) Company-Initiated Transactions. In the event that the Board elects to pursue a proactive transaction (such as a strategic acquisition by AGMG of another company), C&H recommends clarifying whether such a transaction would fall within the definition of "Change of Control Transaction" and, if so, whether the same fee structure would apply. The Proposed Letter is silent on this point. Given that the engagement is primarily defensive in nature, C&H recommends that purely acquisitive transactions by AGMG not trigger the transaction fee absent a separate agreement.

4. Minimum Fee. The Proposed Letter includes a minimum transaction fee of $5 million. C&H views this as reasonable given the scope of work contemplated and the intensity of the advisory services that would be required in connection with any change-of-control transaction. We do not recommend seeking to reduce or eliminate the minimum fee.

5. Fee Cap. The Proposed Letter does not include a cap on the transaction fee. Given the significant quantum of the fee at current enterprise value levels—approximately $21.6 million—and the possibility that enterprise value could increase in the context of a competitive bidding process or a premium acquisition, C&H recommends negotiating a cap on the transaction fee. We propose a cap of $25 million, which would represent approximately 0.29% of the Company's current enterprise value and would provide the Board with certainty as to the maximum advisory cost. A fee cap is not uncommon in engagements of this size and is a reasonable request.

6. Partial Transactions. The Proposed Letter does not address the scenario in which AGMG divests a single business segment rather than consummating a whole-company sale. This is a significant gap given the Company's multi-segment structure. It is entirely possible that the strategic alternatives review could result in the Board's determination that the optimal course of action is a divestiture of one or more business segments—for example, the E-Commerce & Merchandising segment (which represented approximately 19% of FY 2023 revenue) or the Streaming & Digital Content segment (approximately 42%)—rather than a sale of the entire Company. C&H recommends that the Proposed Letter be amended to address partial transactions, providing that the transaction fee for any divestiture of less than all of the Company's business segments or assets be calculated on the enterprise value attributable to the divested business, rather than the full Company enterprise value. This approach is equitable and reflects the actual scope of the advisory services provided.

C. Tail Period Fee Provisions

Proposed Term. The Proposed Letter provides for a 12-month tail period commencing on the date of termination of the engagement. If a Change of Control Transaction is consummated during the tail period with any party (i) contacted by Stonebridge during the engagement period or (ii) with whom Stonebridge had substantive discussions during the engagement period, the full transaction fee would be payable as if the engagement had not been terminated.

C&H Commentary.

1. Tail Period Duration. The 12-month tail period is market standard for financial advisory engagements of this type. C&H does not recommend attempting to negotiate a shorter tail period (e.g., 6 or 9 months), as Stonebridge is unlikely to agree to such a reduction and it would consume negotiating capital that is better directed at other provisions. We note, however, that certain recent engagement letters have provided for a 12-month tail that declines to a 50% fee in the final 6 months of the tail period. The Board may wish to consider proposing such a declining structure as part of the overall fee negotiation.

2. Tail Party List. This is a critical issue. The Proposed Letter's tail fee provisions are triggered by a transaction with any party "contacted by Stonebridge" or "with whom Stonebridge had substantive discussions." This language is vague and could be interpreted broadly. C&H strongly recommends requiring Stonebridge to deliver, within 10 business days of termination, a written list identifying all parties contacted and/or with whom substantive discussions occurred during the engagement period (the "Tail Party List"). The tail fee obligation should apply only with respect to transactions consummated with parties specifically identified on the Tail Party List, and not to any counterparty generally. The failure to deliver the Tail Party List within the prescribed period should result in the expiration of the tail fee obligation. This requirement serves several purposes: it provides the Board (and any reconstituted Board) with clarity regarding the Company's ongoing financial exposure; it limits the scope of the tail fee to parties with whom Stonebridge had a genuine nexus; and it creates an administrable and enforceable mechanism for determining whether a post-termination transaction triggers a tail fee.

3. Board Exposure Considerations. C&H wishes to draw the Board's particular attention to the financial exposure created by the tail fee provisions in light of the current circumstances. The Board's engagement of Stonebridge is partly a defensive measure in response to the Corvus Peak proxy contest. If Corvus Peak's nominees are elected at the June 7, 2024 Annual General Meeting and the reconstituted Board decides to shelve or abandon the strategic alternatives review, it is likely that the Stonebridge engagement would be terminated. In that scenario, the tail fee provisions would remain in effect for a full 12 months following termination. If any Change of Control Transaction were consummated during that tail period with a party on the Tail Party List (assuming C&H's recommended modification is adopted), the approximately $21.6 million transaction fee would become payable. The Board should be fully aware of this ongoing financial exposure when authorizing the engagement.

4. Fiduciary-Out Interaction. The tail fee provisions must be structured so that they do not, as a practical matter, constrain the Board's ability to exercise its fiduciary duties post-termination. This issue is discussed further in Section V below, but C&H notes here that the tail fee provisions, combined with the absence of a fiduciary-out, could create an argument that the Board is effectively locked into a financial relationship with Stonebridge that influences its decision-making. C&H's recommended fiduciary-out provision (see Section V) would address this concern.

D. Expense Reimbursement

Proposed Term. The Proposed Letter provides that AGMG will reimburse Stonebridge for all reasonable out-of-pocket expenses incurred in connection with the engagement, including travel, accommodation, data services, printing, and fees of third-party professionals retained by Stonebridge. The Proposed Letter does not include any cap on expense reimbursement or any prior approval requirement.

C&H Commentary. While expense reimbursement is a standard feature of financial advisory engagement letters, the absence of any cap or approval mechanism creates an open-ended financial obligation that is difficult for the Board to monitor or control. C&H recommends the following modifications:

(a) Quarterly Cap. Impose a quarterly cap of $100,000 on aggregate reimbursable expenses, with any expenses in excess of the cap requiring prior written approval of the Board or its designee.

(b) Single-Item Approval Threshold. Require prior Board approval for any single expense item exceeding $25,000.

(c) Monthly Reporting. Require Stonebridge to submit monthly expense reports with reasonable supporting documentation (receipts, invoices, or other evidence of expenditure), to be delivered to the Company within 15 business days following the end of each calendar month.

(d) Excluded Expenses. Clarify that the Company will not reimburse expenses for entertainment, alcoholic beverages, or any expense that is not directly and reasonably related to the advisory engagement.

These modifications are reasonable, consistent with good governance practices, and should not be objectionable to Stonebridge.

IV. Indemnification Provisions

A. Summary of Proposed Indemnification

The Proposed Letter contains a standard broad-form indemnification provision in favor of Stonebridge and its affiliates, directors, officers, employees, agents, and controlling persons (collectively, the "Indemnified Parties"). Under the proposed indemnification, AGMG would agree to indemnify and hold harmless the Indemnified Parties against all losses, claims, damages, liabilities, and expenses (including attorneys' fees and costs of litigation or other proceedings) arising out of or in connection with the engagement or any actions taken or omitted by any Indemnified Party in connection with the engagement.

The sole exception to the indemnification obligation is for losses that are found by a court of competent jurisdiction, in a final and non-appealable judgment, to have resulted from the gross negligence or willful misconduct of the relevant Indemnified Party.

The Proposed Letter also includes the following related provisions:

(a) Advance of Expenses. AGMG is required to advance legal fees and expenses to the Indemnified Parties as incurred, subject to an undertaking by the Indemnified Party to repay such advances if it is ultimately determined that the indemnification exception (gross negligence or willful misconduct) applies.

(b) Contribution. If indemnification is for any reason unavailable or insufficient, AGMG and Stonebridge are required to contribute to losses in such proportion as is appropriate to reflect the relative benefits received by AGMG on the one hand and Stonebridge on the other, as well as any other equitable considerations.

B. C&H Commentary and Recommended Modifications

The proposed indemnification is broad, and while broad indemnification provisions are standard and generally accepted in financial advisory engagement letters, C&H recommends several modifications to narrow the scope of the Company's exposure and to ensure that the indemnification is structured in accordance with best practices.

1. Gross Negligence / Willful Misconduct Carve-Out Standard. The Proposed Letter conditions the carve-out from the indemnification obligation on a "final, non-appealable judgment" by a court of competent jurisdiction finding that the relevant Indemnified Party engaged in gross negligence or willful misconduct. The "non-appealable" standard is extremely favorable to Stonebridge, as it means that AGMG would remain obligated to fund defense costs and indemnification throughout the entire appellate process—which, in complex commercial litigation, can span several years—with recourse to recover such payments only after all appellate rights have been exhausted. C&H recommends modifying the standard to require only a "final judgment" (removing the word "non-appealable"), which would permit the Company to recover advances and seek contribution once a trial court has entered a final judgment finding gross negligence or willful misconduct, without waiting for the conclusion of any appellate proceedings. This is a more balanced approach and is supported by precedent in recent engagement letters reviewed by C&H.

2. Bad Faith Carve-Out. The Proposed Letter limits the carve-out from indemnification to gross negligence and willful misconduct. C&H recommends adding "bad faith" as a third basis for the carve-out. Bad faith conduct—such as deliberate fraud, intentional misrepresentation, or knowing violations of law by Stonebridge personnel—should not be covered by the Company's indemnification obligation, even if such conduct does not rise to the level of gross negligence or willful misconduct as those terms are defined under applicable law. The addition of a bad faith carve-out is consistent with market practice and should not be controversial.

3. Cap on Advance of Expenses. The Proposed Letter requires AGMG to advance legal fees and expenses to Indemnified Parties as incurred, without any cap or limitation. C&H recommends including an aggregate cap of $2 million on advances that may be made without further Board approval. If Stonebridge anticipates that its defense costs will exceed $2 million, it should be required to seek Board approval for additional advances. This cap provides the Board with a mechanism to monitor and control its exposure and ensures that defense costs do not escalate without Board oversight.

4. Contribution Provision. The Proposed Letter's contribution provision is somewhat open-ended in its formulation. C&H recommends that the Company's contribution obligation be expressly limited to a proportion that reflects the relative benefits received by the Company in connection with the engagement as compared to the benefits received by Stonebridge. The Company's contribution should not exceed the aggregate fees (retainer plus transaction fee) actually paid to Stonebridge under the engagement. This cap on contribution provides a natural ceiling on the Company's exposure under the contribution mechanism.

5. Company Consent to Settlement. The Proposed Letter does not contain a provision requiring Stonebridge to obtain the Company's consent before settling any claim for which indemnification is sought. This is a significant gap. C&H recommends adding a provision requiring the Company's prior written consent (not to be unreasonably withheld, conditioned, or delayed) before any Indemnified Party settles any claim, action, or proceeding for which indemnification is or may be sought from the Company. Without such a provision, Stonebridge could settle a claim on terms unfavorable to AGMG—for example, admitting liability or agreeing to injunctive relief that adversely affects the Company's interests—and then seek full indemnification from the Company for the settlement amount and associated costs.

6. Notice Requirement. C&H recommends adding a provision requiring Stonebridge to provide prompt written notice to the Company of any claim, action, or proceeding for which indemnification may be sought. The notice should be delivered within 10 business days of the date on which the Indemnified Party first becomes aware of the claim. The Company's indemnification obligation should be reduced to the extent that the Company is materially prejudiced by any failure to provide timely notice. This is a standard and reasonable provision that protects the Company's ability to participate in the defense of any claim for which it may bear financial responsibility.

C. D&O Insurance Interaction

C&H wishes to bring to the Board's attention a separate but related consideration. The Company's existing directors' and officers' liability insurance policy, placed with Helmsley Indemnity Corp. (Policy No. HIC-DOL-2024-009347), provides coverage of $75 million per occurrence and $150 million in the aggregate, with an annual premium of $3.8 million and a policy period running from January 1, 2024, through December 31, 2024. C&H has reviewed the relevant provisions of the D&O policy and confirms that the policy does not cover indemnification obligations owed by the Company to third-party advisors such as Stonebridge. Accordingly, the Company's indemnification obligations under the Stonebridge engagement letter represent an additional, uncapped contractual exposure that is separate from and not backstopped by the D&O insurance program. The Board should take this into account when evaluating the indemnification provisions and in considering C&H's recommended modifications to limit the Company's exposure.

Nadine Khalil may wish to consult with the Company's insurance broker, Ashbury Risk Partners, to determine whether any supplemental coverage or policy endorsement is available to address the Company's exposure under the Stonebridge indemnification. C&H is available to assist in that process if requested.

V. Fiduciary-Out Provisions

A. Summary of Proposed Terms

The Proposed Letter does not include an express fiduciary-out provision permitting the Board to terminate the engagement or decline to follow Stonebridge's advice if doing so would conflict with the Board's fiduciary duties under applicable law.

B. C&H Commentary and Recommendation

This is a material omission that must be addressed before the engagement letter is executed. C&H regards the absence of a fiduciary-out provision as the single most significant deficiency in the Proposed Letter, and we strongly recommend that the Board insist upon the inclusion of such a provision as a condition to execution.

Under Delaware law, which governs the internal affairs of AGMG as a Delaware-incorporated company, the Board of Directors owes fiduciary duties of care and loyalty to the Company and its stockholders. These duties are non-delegable and cannot be contracted away or constrained by agreement with a third-party advisor. In the context of a strategic alternatives review, the Board's fiduciary obligations require it to act in the best interests of the Company and its stockholders at all times, including by retaining the ability to change course, terminate advisory relationships, engage additional advisors, or reject the recommendations of its financial advisor if doing so is in the best interests of the Company.

An engagement letter that does not expressly preserve the Board's fiduciary flexibility creates a potential argument—however tenuous—that the Board has contractually limited its ability to exercise independent judgment. In the current environment, where Corvus Peak has publicly accused the Board of entrenchment and self-dealing (see Corvus Peak's preliminary proxy statement, filed March 28, 2024, at pages 14–17), any ambiguity in the engagement letter regarding the Board's fiduciary authority could be exploited to support those allegations.

C&H recommends the insertion of the following provision in the Proposed Letter:

"Notwithstanding any other provision of this engagement letter, nothing herein shall be construed to limit, restrict, or otherwise impair the ability of the Board of Directors of AGMG to exercise its fiduciary duties under applicable law, including, without limitation, the Board's right to (a) terminate this engagement at any time, (b) decline to accept, follow, or act upon any advice or recommendation provided by Stonebridge, (c) engage one or more additional financial advisors, legal advisors, or other consultants, and (d) determine, in its sole discretion, whether to pursue, negotiate, or consummate any strategic alternative or transaction. In the event of any conflict between the terms of this engagement letter and the Board's fiduciary obligations under applicable law, the Board's fiduciary obligations shall govern and control. For the avoidance of doubt, Stonebridge's role under this engagement letter is advisory only, and all decisions regarding the Company's strategic direction, the conduct of any transaction process, and the terms of any transaction shall remain at the sole discretion of the Board."

This provision is particularly important in the current context for the following reasons:

(i) Corvus Peak Proxy Contest. The Corvus Peak definitive proxy statement is expected to be filed with the SEC in early May 2024. Corvus Peak has nominated five directors—Malcolm Trask, Vanessa Loring, Dr. Raymond Chu, and two additional nominees—and has publicly stated its intention to pursue changes in the Company's strategic direction. If Corvus Peak's nominees are elected at the June 7, 2024 Annual General Meeting, the reconstituted Board must have the unfettered ability to reassess the strategic alternatives review, including the Stonebridge engagement, without being constrained by contractual commitments entered into by the current Board.

(ii) Board Reconstitution. The possibility of board reconstitution at the June 7 AGM means that the individuals who approved the Stonebridge engagement may not be the individuals who oversee its execution. The fiduciary-out ensures that any future Board composition retains full flexibility to exercise its independent judgment.

(iii) CEO Succession Process. The parallel CEO succession process adds an additional dimension of complexity. A new CEO may have views regarding strategic direction that differ from the current Board's perspective. The fiduciary-out preserves the Board's ability to pivot as circumstances evolve.

C&H anticipates that Stonebridge will not object to the inclusion of a fiduciary-out provision, as such provisions are widely recognized as appropriate and necessary in the context of Board-level advisory engagements. If Stonebridge does resist, C&H recommends that the Board treat the fiduciary-out as a non-negotiable condition to execution.

VI. Term and Termination

A. Summary of Proposed Terms

The Proposed Letter contains the following provisions regarding term and termination:

(a) Initial Term. The engagement will have an initial term of 12 months from the date of execution.

(b) Automatic Renewal. The engagement will renew automatically for successive 6-month periods unless either party provides 30 days' written notice of non-renewal prior to the expiration of the then-current term.

(c) Termination for Convenience. Either party may terminate the engagement at any time by providing 60 days' written notice to the other party.

(d) Effect of Termination. Upon termination: (i) all accrued and unpaid retainer payments become immediately due and payable and are non-refundable; (ii) the tail fee provisions (Section III.C above) survive for 12 months; (iii) the indemnification obligations (Section IV above) survive indefinitely; and (iv) expense reimbursement obligations survive with respect to expenses incurred prior to termination.

B. C&H Commentary and Recommended Modifications

1. Termination Notice Period. The 60-day notice period for termination for convenience is longer than C&H considers appropriate or necessary. In the fast-moving environment of a proxy contest and strategic alternatives review, 60 days is an eternity. If the Board determines that the Stonebridge engagement should be terminated—whether because the strategic alternatives review is completed, the process is shelved following board reconstitution, or for any other reason—the Board should have the ability to effect that termination promptly. C&H recommends shortening the termination notice period to 30 days. A 30-day notice period is sufficient to allow for an orderly transition and is consistent with the Board's fiduciary flexibility. If Stonebridge insists on a period longer than 30 days, C&H would consider 45 days as a reasonable compromise, but 60 days should be resisted.

2. Automatic Renewal. C&H recommends deleting the automatic renewal provision entirely. The engagement should terminate at the end of the initial 12-month term unless affirmatively renewed by the Board through a written agreement. Automatic renewal provisions can result in the engagement continuing beyond the point at which it is useful or desired by the Board, and they require the Board to take affirmative action (by delivering a non-renewal notice) to prevent extension, rather than requiring affirmative action to extend. Given the dynamic nature of the current situation—including the pending proxy contest, the AGM, and the CEO succession process—the Board should retain maximum control over the duration of the engagement. If the Board wishes to continue the engagement beyond the initial 12-month term, it can do so by executing a renewal letter at that time, on terms that reflect the circumstances then prevailing.

3. Termination Fee. C&H notes that the Proposed Letter does not include a separate termination or break fee payable to Stonebridge upon early termination of the engagement. This is appropriate, and C&H recommends that the Board resist any attempt by Stonebridge to introduce such a fee during negotiations. The tail fee provisions already provide Stonebridge with protection in the event that a transaction is consummated with a party contacted during the engagement, and the addition of a separate termination fee would represent an unnecessary and duplicative financial burden on the Company.

4. Work Product on Termination. The Proposed Letter does not address the disposition of work product upon termination. This is a significant omission. C&H recommends adding a provision requiring Stonebridge, within 10 business days of the effective date of termination, to deliver to the Company all work product, analyses, financial models, presentations, memoranda, and other materials prepared by Stonebridge in connection with the engagement. The Company should own all work product prepared specifically for and paid for by AGMG under the engagement, and this ownership should survive termination. Stonebridge should be permitted to retain copies of its general methodologies, proprietary models, and internal correspondence, but all Company-specific materials should be the property of AGMG. This is essential to ensure that the Company (or any successor Board) has access to the analytical work performed during the engagement, regardless of whether the Stonebridge relationship continues.

5. Tail Party List Delivery. As discussed in Section III.C above, C&H recommends requiring Stonebridge to deliver the Tail Party List within 10 business days of termination. This should be specified as a condition to the enforceability of the tail fee provisions.

VII. Exclusivity

A. Summary of Proposed Terms

The Proposed Letter contains two related exclusivity provisions:

(a) Right of First Refusal. Stonebridge is granted a "right of first refusal" to serve as lead financial advisor on any Change of Control Transaction arising during the engagement period or the 12-month tail period following termination.

(b) Restriction on Additional Advisors. AGMG agrees not to retain any additional financial advisor in connection with the strategic alternatives review or any related transaction without Stonebridge's consent, which is stated to not be unreasonably withheld.

B. C&H Commentary and Recommended Modifications

The exclusivity provisions in the Proposed Letter are unacceptable in their current form and must be substantially modified or deleted.

The Board must retain the unfettered ability to engage additional financial advisors as fiduciary duties may require. There are numerous scenarios in which the Board might need or wish to engage a second financial advisor: for example, if a potential acquirer has a pre-existing relationship with Stonebridge, creating a conflict; if the Board determines that a specialized advisor with particular sector or geographic expertise is needed for a specific aspect of the strategic review; if the reconstituted Board (post-AGM) wishes to engage its own advisor; or if the Board simply concludes that a second opinion would be beneficial in the exercise of its fiduciary duties. The Delaware courts have consistently recognized the importance of the Board's ability to obtain independent financial advice, and a contractual provision that requires the consent of the existing advisor before a second advisor can be retained is inconsistent with this principle.

C&H recommends deleting the exclusivity provision entirely. If Stonebridge resists complete deletion, C&H would consider, as a fallback, modifying the provision to designate Stonebridge as the "lead financial advisor" for the engagement, without precluding the Board from engaging additional financial advisors in its sole discretion and without requiring Stonebridge's consent. Under this formulation, Stonebridge would have the designation and the associated prestige of being the lead advisor, but the Board would retain full flexibility to supplement its advisory team as needed.

C&H also notes that the exclusivity provision as drafted could create unnecessary friction with the Company's existing advisory relationships. Ashworth Velmoran LLP (Martin Cho) currently serves as the Company's standing outside counsel on general corporate matters and is actively involved in responding to the Corvus Peak proxy contest. While Ashworth Velmoran is a legal, rather than financial, advisor, the broadly drafted restriction on "additional advisors" could arguably be read to encompass legal advisors who perform financial analyses or provide advice on transaction structuring. The provision should be clarified to ensure that it does not interfere with the Company's existing relationships with its legal counsel.

VIII. Confidentiality

A. Summary of Proposed Terms

The Proposed Letter contains mutual confidentiality obligations. Stonebridge agrees not to disclose confidential information relating to the Company or the engagement except:

(i) to its employees and advisors on a need-to-know basis;

(ii) as required by applicable law or regulation; and

(iii) in connection with any legal proceeding relating to the engagement.

The confidentiality obligations include a carve-out for information that is publicly available or independently developed by Stonebridge without reference to confidential information received from the Company.

B. C&H Commentary and Recommended Modifications

The confidentiality provisions are generally adequate in their current form but require several enhancements to address the specific circumstances of AGMG's dual-listed structure and the parallel workstreams currently underway.

1. Dual-Listing Securities Law Compliance. AGMG's secondary listing on the London Stock Exchange Main Market subjects the Company and its advisors to UK securities law obligations, including the requirements of the Financial Conduct Authority's Disclosure Guidance and Transparency Rules (DTR), particularly DTR 5 (Vote Holder and Issuer Notification Rules) and the Market Abuse Regulation (UK MAR). In addition, AGMG's primary NYSE listing subjects the Company and its advisors to US securities law restrictions, including the prohibitions on insider trading under Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. C&H recommends adding an express acknowledgment to the confidentiality provisions stating that Stonebridge will comply with all applicable UK and US securities law restrictions on the use and disclosure of material non-public information received in connection with the engagement. This provision serves both a protective function (reinforcing Stonebridge's legal obligations) and an evidentiary function (creating a contractual basis for the Company to seek recourse in the event of a breach).

2. Information Barrier Protocols (Wall Procedures). As discussed in Section II.B above, the parallel conduct of the strategic alternatives review and the CEO succession process creates a risk of inadvertent information leakage between the two workstreams. C&H recommends that the confidentiality provisions of the Proposed Letter be amended to incorporate by reference the information barrier protocols that C&H is preparing for delivery on or about April 26, 2024. These protocols will establish specific procedures for the handling, storage, and dissemination of confidential information relating to each workstream, including the identification of designated personnel authorized to access information from each workstream and the establishment of physical and electronic barriers to prevent cross-contamination.

3. Return or Destruction of Confidential Information. The Proposed Letter does not address the disposition of confidential information upon termination of the engagement. C&H recommends adding a provision requiring Stonebridge, upon termination, to return or destroy all confidential information received from the Company, including all copies, notes, analyses, and derivative works, and to provide the Company with a written certification of destruction signed by an authorized officer of Stonebridge. Stonebridge should be permitted to retain one archival copy of confidential information solely for legal compliance and recordkeeping purposes, subject to the ongoing confidentiality obligations of the engagement letter.

4. Duration of Confidentiality Obligations. C&H recommends clarifying that the confidentiality obligations survive termination of the engagement for a period of not less than three years, which is consistent with market practice for advisory engagements involving access to sensitive financial and strategic information.

IX. Governing Law, Dispute Resolution, and Forum

A. Summary of Proposed Terms

The Proposed Letter contains the following provisions regarding governing law and dispute resolution:

(a) Governing Law. The engagement letter is governed by the laws of the State of New York, without giving effect to any conflict of laws principles that would result in the application of the laws of another jurisdiction.

(b) Dispute Resolution. Any dispute arising out of or in connection with the engagement letter is to be resolved by binding arbitration before a single arbitrator, conducted under the rules of a specified arbitral institution (the Proposed Letter references the rules of the American Arbitration Association), with the arbitration seated in New York, New York.

(c) Waiver of Jury Trial. The Proposed Letter includes a mutual waiver of the right to a jury trial, applicable as a fallback in the event that the arbitration provision is found unenforceable for any reason.

B. C&H Commentary

1. Governing Law. The choice of New York law as the governing law of the engagement letter is standard and appropriate for an advisory engagement of this nature, where both the advisory firm and the principal negotiating counterpart are based in New York. C&H does not recommend any modification to this provision.

2. Arbitration. Binding arbitration before a single arbitrator under the rules of the American Arbitration Association is a typical dispute resolution mechanism for financial advisory engagement letters. Arbitration offers certain advantages in this context, including confidentiality of proceedings (which is particularly important given the sensitive nature of the strategic alternatives review), speed relative to court proceedings, and the ability to select an arbitrator with relevant expertise in financial advisory disputes. C&H does not recommend resisting the arbitration provision. However, C&H recommends confirming that the arbitration clause includes the following subsidiary provisions, which are standard but not explicitly addressed in the Proposed Letter:

(a) The arbitrator shall have the authority to award monetary damages but shall not have the authority to award punitive or consequential damages.

(b) The arbitrator's decision shall be final and binding, and judgment upon the award may be entered in any court of competent jurisdiction.

(c) The costs of the arbitration (including the arbitrator's fees) shall be borne by the non-prevailing party, or as otherwise determined by the arbitrator.

(d) The arbitration proceedings shall be confidential, and neither party shall disclose the existence, content, or results of the arbitration except as required by law or regulation.

3. Forum Selection Clause Interaction. C&H notes for the Board's reference that AGMG's Amended and Restated Bylaws (Section 11.1, as adopted effective March 22, 2022) designate the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, any other court of the State of Delaware or the United States District Court for the District of Delaware) as the exclusive forum for certain intra-corporate disputes, including claims arising under the Delaware General Corporation Law. The arbitration provision in the engagement letter would not conflict with this forum selection clause, as disputes arising under the engagement letter are contractual in nature and do not constitute intra-corporate disputes within the meaning of the bylaws provision. Nevertheless, C&H recommends adding an express acknowledgment to the engagement letter confirming that the arbitration clause does not affect or waive any rights under the Company's bylaws with respect to intra-corporate disputes.

X. Representations and Warranties

A. Summary of Proposed Terms

The Proposed Letter contains the following representations and warranties:

(a) Company Information Representation. AGMG represents that all information furnished to Stonebridge in connection with the engagement will be accurate and complete in all material respects.

(b) Reliance Acknowledgment. AGMG acknowledges that Stonebridge will rely on information furnished by the Company without undertaking any independent verification of such information.

(c) Stonebridge Conflict Representation. Stonebridge represents that, as of the date of the engagement letter, it has no conflict of interest with the Company or its directors and officers that would prevent it from performing its obligations under the engagement.

B. C&H Commentary and Recommended Modifications

1. Company's Information Warranty. The Company's representation regarding the accuracy and completeness of information furnished to Stonebridge is standard in financial advisory engagement letters and reflects the practical reality that Stonebridge will rely on information provided by the Company (and its management and other advisors) in performing its financial analyses. However, the representation as drafted—that all information "will be accurate and complete in all material respects"—is unqualified. C&H recommends qualifying the completeness element with the phrase "to the Company's knowledge" to account for the possibility that the Company may not be aware of all information that Stonebridge would consider material. The accuracy element may remain unqualified, as the Company should be expected to ensure that the information it affirmatively provides is accurate. The recommended formulation would read:

"The Company represents that all information furnished to Stonebridge in connection with the engagement will be accurate in all material respects and, to the Company's knowledge, complete in all material respects."

2. Stonebridge Conflict Representation — Expansion. The Stonebridge conflict representation as drafted is generic and does not address the specific circumstances of the current engagement. Given the contested nature of the current situation—including the active Corvus Peak proxy contest, the involvement of identified individuals and entities on both sides, and the heightened scrutiny to which the Board's actions will be subjected—a robust and specific conflict disclosure is essential. C&H recommends expanding the Stonebridge conflict representation to require Stonebridge to disclose any relationships (whether advisory, financial, social, or otherwise) with:

(a) Corvus Peak Capital Partners LP;

(b) Corvus Peak Management LLC (the general partner of Corvus Peak);

(d) Erin Nakamura (Corvus Peak's Chief Investment Officer);

(e) Any of the Corvus Peak board nominees: Malcolm Trask, Vanessa Loring, and Dr. Raymond Chu;

(f) Jonathan Hale (former CEO of AGMG, who departed February 14, 2024); and

(g) Any portfolio company or affiliate of Corvus Peak.

This expanded disclosure is necessary to ensure that the Board can evaluate whether any actual or potential conflict exists that could compromise Stonebridge's independence or create an appearance of impropriety. Even if Stonebridge discloses a relationship with one or more of these parties, the disclosure itself is valuable, as it allows the Board to make an informed decision about whether to proceed with the engagement and, if so, what safeguards may be appropriate.

3. Ongoing Conflicts Disclosure. The Proposed Letter's conflict representation speaks only as of the date of the engagement letter. C&H recommends adding an ongoing disclosure obligation, requiring Stonebridge to promptly notify the Board of any conflict of interest that arises or becomes known to Stonebridge during the course of the engagement. This obligation should cover not only conflicts involving the parties identified above but also conflicts involving any potential counterparty, acquirer, or other party with whom Stonebridge has substantive discussions in connection with the strategic alternat

PRIVILEGED & CONFIDENTIAL — ATTORNEY WORK PRODUCT
This memorandum is a privileged and confidential attorney work product prepared by Calderwood & Harkness LLP in connection with its representation of Aurelius Global Media Group PLC and its Board of Directors. This memorandum is protected by the attorney-client privilege and the work product doctrine. Distribution is limited to the addressees and copy recipients listed below. Any unauthorized disclosure, reproduction, or distribution of this memorandum or its contents is strictly prohibited.
CALDERWOOD & HARKNESS LLP 787 Seventh Avenue New York, New York 10019
April 21, 2024
Matter: Aurelius Global Media Group PLC — Board Advisory Matter No.: 1017-00002
To:
Dame Elspeth Greenvale, Independent Non-Executive Chair, Aurelius Global Media Group PLC
Members of the Board of Directors of Aurelius Global Media Group PLC
Cc:
Nadine Khalil, General Counsel & Corporate Secretary, Aurelius Global Media Group PLC
Tobias Kessler, Chair, Special Committee of the Board of Directors, Aurelius Global Media Group PLC
From:
Nathaniel Bower, Partner, Calderwood & Harkness LLP
Colette Whitman, Partner, Calderwood & Harkness LLP
Audrey Zhou, Associate, Calderwood & Harkness LLP
Re: Review and Commentary on Proposed Engagement Letter from Stonebridge Crane & Co. for Financial Advisory Services — Strategic Alternatives Review
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I. Executive Summary
Calderwood & Harkness LLP ("C&H" or "we") has reviewed the draft engagement letter dated April 18, 2024 (the "Proposed Letter") submitted by Stonebridge Crane & Co. ("Stonebridge"), 383 Madison Avenue, New York, New York 10179, to Aurelius Global Media Group PLC ("AGMG" or the "Company"), pursuant to which Stonebridge proposes to serve as financial advisor to the Board of Directors (the "Board") of AGMG in connection with the evaluation of strategic alternatives available to the Company. The Proposed Letter was delivered to C&H by Nadine Khalil, General Counsel & Corporate Secretary of AGMG, on April 19, 2024, together with a cover letter from Anil Kapoor-Mehta, Managing Director of Stonebridge's Financial Advisory Group, who serves as the lead Stonebridge banker on this proposed engagement.
This memorandum is prepared in the context of the Board's April 15, 2024 determination that it is in the best interests of AGMG and its stockholders to engage a financial advisor to conduct a comprehensive review of strategic alternatives as a defensive measure in response to the proxy contest initiated by Corvus Peak Capital Partners LP ("Corvus Peak"). As the Board is aware, Corvus Peak filed its preliminary proxy statement with the Securities and Exchange Commission on March 28, 2024, seeking to elect a slate of five nominees to the Board at the Company's upcoming Annual General Meeting, currently scheduled for June 7, 2024. The Board is expected to adopt a formal resolution authorizing the engagement of Stonebridge at its meeting on April 22, 2024.
This memorandum identifies the key provisions of the Proposed Letter, highlights areas of concern, and provides C&H's recommended mark-ups and negotiating positions with respect to each material term. A complete redline of the Proposed Letter reflecting all of C&H's recommended changes is attached hereto as Appendix A and is incorporated by reference into this memorandum.
Overall Assessment. The Proposed Letter is broadly consistent with market terms for financial advisory engagements of this nature and scope. Stonebridge is a well-regarded independent advisory firm with significant experience in media and entertainment sector transactions, and the general framework of the engagement is appropriate. However, certain provisions of the Proposed Letter require modification in order to protect the Board's interests, preserve the Board's fiduciary flexibility, and ensure that the financial terms are consistent with current market practice for a company of AGMG's size and complexity. Most critically, the Proposed Letter omits an express fiduciary-out provision—an omission that, in C&H's view, must be remedied before execution.
The sections that follow address each material provision of the Proposed Letter in turn. Section XII provides a consolidated summary of all recommended mark-ups for ease of reference in connection with negotiations.
II. Scope of Services
A. Summary of Proposed Scope
The Proposed Letter describes the scope of Stonebridge's engagement in broad terms. Specifically, Stonebridge proposes to advise the Board on "evaluating strategic alternatives available to the Company, including but not limited to potential mergers, acquisitions, divestitures, joint ventures, recapitalizations, and other extraordinary transactions." The Proposed Letter further specifies that Stonebridge's services will include, without limitation, the following:
(a) preparation of financial analyses and valuation work relating to AGMG and its constituent business segments;
(b) identification and evaluation of potential counterparties for strategic transactions;
(c) assistance in structuring, negotiating, and executing any potential transaction that the Board elects to pursue;
(d) participation in meetings of the Board and any committee thereof, as requested, to provide financial advice and present analyses; and
(e) preparation and delivery of a fairness opinion to the Board if a specific transaction is pursued and the Board requests such an opinion.
The scope as drafted is intentionally broad, encompassing the full range of strategic alternatives that the Board may wish to consider. C&H notes that this breadth is appropriate given the Board's stated objective of conducting a comprehensive review that does not foreclose any category of potential transaction. The description of services is consistent with engagement letters we have reviewed in comparable situations involving large-cap public companies considering strategic alternatives in the context of activist campaigns.
B. C&H Commentary and Recommended Modifications
Notwithstanding the general appropriateness of the proposed scope, C&H recommends several modifications to ensure the Board's interests are fully protected.
1. Limitation to Board Direction. C&H recommends adding express language to the Proposed Letter providing that Stonebridge will act solely at the direction of, and report exclusively to, the Board (or a duly authorized committee thereof, including the Special Committee chaired by Tobias Kessler), and not to management independently. While the Proposed Letter generally contemplates that Stonebridge's client is the Board, it does not contain an explicit statement to this effect. This distinction is critical. The strategic alternatives review is a Board-level initiative, and the Board must maintain exclusive control over the process, the information flows, and the ultimate decision-making authority. Management—including any interim or permanent CEO—should receive information from Stonebridge only as authorized by the Board or the Special Committee. Adding this language will also serve to reinforce the Board's position in any future litigation challenging the process, as Delaware courts have consistently looked favorably upon processes in which the Board maintains clear control over its financial advisors. We recommend the following insertion in the opening paragraph of the scope-of-services section of the Proposed Letter:
"Stonebridge shall act solely at the direction of and report exclusively to the Board of Directors of AGMG (or such committee of the Board as the Board may designate from time to time, including the Special Committee). Stonebridge shall not take direction from, or report to, the management of AGMG unless expressly authorized in writing by the Board or the Special Committee."
2. Coordination with CEO Search. The Proposed Letter does not address the intersection between the strategic alternatives review and the ongoing CEO succession process. As the Board is aware, the search for a permanent successor to Jonathan Hale, who departed the Company on February 14, 2024, is being conducted by the Nominating and Governance Committee with the assistance of Penrose Advisors. There is an inherent risk that confidential information generated in the strategic alternatives review could inadvertently be shared with CEO candidates, or that information relating to CEO candidates could influence strategic alternatives analyses, in either case creating disclosure risks and potential conflicts. C&H recommends inserting language in the Proposed Letter requiring Stonebridge to coordinate with C&H and the Special Committee to ensure that appropriate information barriers are maintained between the two workstreams. We will be delivering a separate memorandum to the Board on or about April 26, 2024, setting forth detailed confidentiality and information barrier protocols for both the strategic alternatives review and the CEO succession process. The engagement letter should incorporate those protocols by reference once finalized.
3. Interaction with Standing Outside Counsel. The Proposed Letter does not address the relationship between Stonebridge's engagement and AGMG's existing advisory relationships. In particular, Ashworth Velmoran LLP, led by Martin Cho, Head of Public Company Advisory, currently serves as the Company's standing outside counsel on general corporate matters and has been involved in responding to the Corvus Peak proxy contest. C&H recommends adding a clarifying provision to the Proposed Letter specifying that Stonebridge's engagement does not alter, supersede, or otherwise affect the Company's existing relationships with its legal advisors, and delineating the respective roles of Stonebridge (financial advisory), C&H (Board advisory and engagement letter matters), and Ashworth Velmoran (general corporate and proxy contest matters). Clear delineation of roles at the outset will reduce the risk of confusion, duplicative work, or gaps in coverage during what is likely to be an intensive and fast-moving process.
4. No Authority to Bind the Company. The Proposed Letter does not contain an explicit statement that Stonebridge has no authority to bind AGMG to any transaction or to negotiate on behalf of the Company without prior Board authorization. While this limitation is generally implied in an advisory engagement, C&H strongly recommends making it explicit. We propose the following insertion:
"For the avoidance of doubt, Stonebridge shall have no authority to bind the Company to any transaction, commitment, or obligation, or to negotiate on behalf of the Company with any third party, without the prior written authorization of the Board or the Special Committee. Stonebridge's role under this engagement letter is advisory only."
5. AGMG Company Profile for Scoping Purposes. For context in evaluating the appropriateness of the Proposed Letter's financial terms, we note the following profile of AGMG. The Company is incorporated in the State of Delaware, headquartered in the United Kingdom, and listed on the New York Stock Exchange under the ticker symbol "AGMG," with a secondary listing on the London Stock Exchange Main Market under the ticker symbol "AGMG.L." As of March 1, 2024, the Company had a market capitalization of approximately $8.65 billion (£6.82 billion at the prevailing exchange rate of $1.2683 per British pound sterling), with approximately 412,600,000 shares of common stock outstanding. For the fiscal year ended December 31, 2023, AGMG reported revenue of approximately $4.37 billion and EBITDA of approximately $812 million, representing an EBITDA margin of 18.6%. The Company employs approximately 23,400 individuals worldwide and operates through four reportable business segments: Streaming & Digital Content (representing approximately 42% of FY 2023 revenue), Live Entertainment & Events (approximately 24%), E-Commerce & Merchandising (approximately 19%), and Advertising & Brand Partnerships (approximately 15%). These financial characteristics, including the Company's enterprise value, dual-listed status, and multi-segment structure, are relevant to the assessment of the reasonableness of Stonebridge's proposed fees and to the complexity of the engagement.
III. Fee Structure
A. Monthly Retainer
Proposed Term. The Proposed Letter provides for a monthly retainer of $250,000, payable in advance on the first business day of each calendar month, commencing upon execution of the engagement letter. The retainer is described as non-refundable and non-creditable against any transaction fee that may become payable under the engagement.
C&H Commentary. The proposed monthly retainer of $250,000 is at the high end of the market range for comparable financial advisory engagements. Based on C&H's review of recent precedent engagement letters involving independent advisory firms retained in connection with strategic alternatives reviews at large-cap public companies (enterprise values in the $5 billion to $15 billion range), monthly retainers have typically ranged from $125,000 to $275,000, with most falling in the $150,000 to $225,000 range. The $250,000 figure proposed by Stonebridge is therefore within the market range but above the median. Given the complexity of AGMG's structure as a dual-listed, multi-segment media conglomerate, and the heightened intensity of the current situation involving an active proxy contest, C&H believes the retainer amount, while at the high end, is within an acceptable range and may be difficult to negotiate downward significantly.
However, C&H takes a stronger view on the non-creditability of the retainer against the transaction fee. The Proposed Letter provides that retainer payments are non-creditable—that is, if a transaction is ultimately consummated and a transaction fee becomes payable, none of the retainer payments previously made would reduce the transaction fee. C&H recommends negotiating for partial creditability. Specifically, we propose that 50% of aggregate retainer payments made during the engagement period be credited against any transaction fee ultimately payable to Stonebridge. This approach is increasingly common in the market for engagements of this type and appropriately balances Stonebridge's interest in receiving compensation for its ongoing advisory work with the Company's interest in managing total advisory costs in the event a transaction is consummated. If, for example, the engagement runs for 12 months before a transaction closes, aggregate retainer payments would total $3.0 million, and a 50% credit would reduce the transaction fee by $1.5 million—a meaningful but not unreasonable adjustment.
Additionally, C&H recommends including a termination provision with respect to the retainer, allowing the Company to terminate its retainer obligations on 30 days' written notice. This is discussed further in Section VI below.
We note that, assuming the Board adopts the authorizing resolution on April 22, 2024, as anticipated, retainer payments will begin accruing from that date. The first monthly payment of $250,000 would therefore be due on the first business day of May 2024.
B. Transaction Fee
Proposed Term. The Proposed Letter provides for a transaction fee equal to 0.25% of the aggregate enterprise value of any "Change of Control Transaction" (as defined in the Proposed Letter) consummated during the engagement period or during the 12-month tail period following termination of the engagement.
Enterprise Value Definition. The Proposed Letter defines "enterprise value" to mean the total consideration paid or payable in connection with a Change of Control Transaction, including the value of all equity consideration, debt assumed or refinanced, earn-out payments (valued at their maximum achievable value), and all other forms of consideration, but excluding transaction costs and expenses.
Change of Control Transaction Definition. The Proposed Letter defines "Change of Control Transaction" broadly to include any merger, consolidation, tender offer, exchange offer, sale of all or substantially all assets, recapitalization, or similar transaction in which more than 50% of the Company's voting power is transferred to a third party or group.
Minimum Fee. The Proposed Letter specifies a minimum transaction fee of $5 million, which would apply in the event that 0.25% of the relevant enterprise value yields a figure below that floor.
C&H Commentary and Recommended Modifications.
1. Transaction Fee Quantum. At the Company's current enterprise value of approximately $8.65 billion (based on the market capitalization of $8.65 billion as of March 1, 2024, plus net debt), a 0.25% transaction fee would yield a fee of approximately $21.6 million. This is a significant sum by any measure. Based on C&H's review of comparable transactions, advisory fees for independent financial advisors in change-of-control transactions involving companies with enterprise values in the $8 billion to $12 billion range have typically ranged from 0.15% to 0.30% of enterprise value, with the percentage generally declining as enterprise value increases. While the 0.25% rate is within the market range, the absolute dollar amount warrants scrutiny, and C&H recommends that the Board consider whether a declining percentage structure—for example, 0.25% on the first $8 billion of enterprise value and 0.15% on any amount in excess of $8 billion—would be more appropriate.
2. Enterprise Value Definition — Earn-Outs. C&H recommends narrowing the definition of "enterprise value" with respect to earn-out consideration. The Proposed Letter values earn-outs at their "maximum achievable value," which could substantially overstate the actual consideration received by the Company's stockholders and result in a fee that is disproportionate to the value of the transaction. C&H recommends that earn-out consideration be included in the enterprise value calculation at the amount reasonably estimated to be payable at closing based on management's projections and assumptions at the time of signing, rather than at the theoretical maximum. This is a more equitable approach and is consistent with how earn-outs are typically treated for purposes of calculating advisory fees in current market practice. To the extent earn-out payments subsequently exceed the estimated amount, the engagement letter could provide for a true-up mechanism, with additional fee payable only on the incremental earn-out amounts actually received.
3. Change of Control Transaction Definition. C&H recommends several modifications to the definition of "Change of Control Transaction":
(a) Consummation Requirement. The definition should be tightened to require that the transaction be actually consummated—i.e., the closing must have occurred—before the transaction fee becomes payable. The Proposed Letter's language is somewhat ambiguous on this point and could be read to require payment upon the execution of a definitive agreement, even if the transaction does not ultimately close. C&H recommends inserting the phrase "actually consummated" and clarifying that no fee is payable with respect to a transaction that is abandoned, terminated, or otherwise fails to close.
(b) Pre-Engagement Transactions. The definition should expressly exclude any transaction that was initiated and substantially completed prior to the commencement of the engagement. While this scenario may be unlikely, it is good practice to include this exclusion to avoid any argument that Stonebridge is entitled to a fee for a transaction in which it played no role.
(c) Company-Initiated Transactions. In the event that the Board elects to pursue a proactive transaction (such as a strategic acquisition by AGMG of another company), C&H recommends clarifying whether such a transaction would fall within the definition of "Change of Control Transaction" and, if so, whether the same fee structure would apply. The Proposed Letter is silent on this point. Given that the engagement is primarily defensive in nature, C&H recommends that purely acquisitive transactions by AGMG not trigger the transaction fee absent a separate agreement.
4. Minimum Fee. The Proposed Letter includes a minimum transaction fee of $5 million. C&H views this as reasonable given the scope of work contemplated and the intensity of the advisory services that would be required in connection with any change-of-control transaction. We do not recommend seeking to reduce or eliminate the minimum fee.
5. Fee Cap. The Proposed Letter does not include a cap on the transaction fee. Given the significant quantum of the fee at current enterprise value levels—approximately $21.6 million—and the possibility that enterprise value could increase in the context of a competitive bidding process or a premium acquisition, C&H recommends negotiating a cap on the transaction fee. We propose a cap of $25 million, which would represent approximately 0.29% of the Company's current enterprise value and would provide the Board with certainty as to the maximum advisory cost. A fee cap is not uncommon in engagements of this size and is a reasonable request.
6. Partial Transactions. The Proposed Letter does not address the scenario in which AGMG divests a single business segment rather than consummating a whole-company sale. This is a significant gap given the Company's multi-segment structure. It is entirely possible that the strategic alternatives review could result in the Board's determination that the optimal course of action is a divestiture of one or more business segments—for example, the E-Commerce & Merchandising segment (which represented approximately 19% of FY 2023 revenue) or the Streaming & Digital Content segment (approximately 42%)—rather than a sale of the entire Company. C&H recommends that the Proposed Letter be amended to address partial transactions, providing that the transaction fee for any divestiture of less than all of the Company's business segments or assets be calculated on the enterprise value attributable to the divested business, rather than the full Company enterprise value. This approach is equitable and reflects the actual scope of the advisory services provided.
C. Tail Period Fee Provisions
Proposed Term. The Proposed Letter provides for a 12-month tail period commencing on the date of termination of the engagement. If a Change of Control Transaction is consummated during the tail period with any party (i) contacted by Stonebridge during the engagement period or (ii) with whom Stonebridge had substantive discussions during the engagement period, the full transaction fee would be payable as if the engagement had not been terminated.
C&H Commentary.
1. Tail Period Duration. The 12-month tail period is market standard for financial advisory engagements of this type. C&H does not recommend attempting to negotiate a shorter tail period (e.g., 6 or 9 months), as Stonebridge is unlikely to agree to such a reduction and it would consume negotiating capital that is better directed at other provisions. We note, however, that certain recent engagement letters have provided for a 12-month tail that declines to a 50% fee in the final 6 months of the tail period. The Board may wish to consider proposing such a declining structure as part of the overall fee negotiation.
2. Tail Party List. This is a critical issue. The Proposed Letter's tail fee provisions are triggered by a transaction with any party "contacted by Stonebridge" or "with whom Stonebridge had substantive discussions." This language is vague and could be interpreted broadly. C&H strongly recommends requiring Stonebridge to deliver, within 10 business days of termination, a written list identifying all parties contacted and/or with whom substantive discussions occurred during the engagement period (the "Tail Party List"). The tail fee obligation should apply only with respect to transactions consummated with parties specifically identified on the Tail Party List, and not to any counterparty generally. The failure to deliver the Tail Party List within the prescribed period should result in the expiration of the tail fee obligation. This requirement serves several purposes: it provides the Board (and any reconstituted Board) with clarity regarding the Company's ongoing financial exposure; it limits the scope of the tail fee to parties with whom Stonebridge had a genuine nexus; and it creates an administrable and enforceable mechanism for determining whether a post-termination transaction triggers a tail fee.
3. Board Exposure Considerations. C&H wishes to draw the Board's particular attention to the financial exposure created by the tail fee provisions in light of the current circumstances. The Board's engagement of Stonebridge is partly a defensive measure in response to the Corvus Peak proxy contest. If Corvus Peak's nominees are elected at the June 7, 2024 Annual General Meeting and the reconstituted Board decides to shelve or abandon the strategic alternatives review, it is likely that the Stonebridge engagement would be terminated. In that scenario, the tail fee provisions would remain in effect for a full 12 months following termination. If any Change of Control Transaction were consummated during that tail period with a party on the Tail Party List (assuming C&H's recommended modification is adopted), the approximately $21.6 million transaction fee would become payable. The Board should be fully aware of this ongoing financial exposure when authorizing the engagement.
4. Fiduciary-Out Interaction. The tail fee provisions must be structured so that they do not, as a practical matter, constrain the Board's ability to exercise its fiduciary duties post-termination. This issue is discussed further in Section V below, but C&H notes here that the tail fee provisions, combined with the absence of a fiduciary-out, could create an argument that the Board is effectively locked into a financial relationship with Stonebridge that influences its decision-making. C&H's recommended fiduciary-out provision (see Section V) would address this concern.
D. Expense Reimbursement
Proposed Term. The Proposed Letter provides that AGMG will reimburse Stonebridge for all reasonable out-of-pocket expenses incurred in connection with the engagement, including travel, accommodation, data services, printing, and fees of third-party professionals retained by Stonebridge. The Proposed Letter does not include any cap on expense reimbursement or any prior approval requirement.
C&H Commentary. While expense reimbursement is a standard feature of financial advisory engagement letters, the absence of any cap or approval mechanism creates an open-ended financial obligation that is difficult for the Board to monitor or control. C&H recommends the following modifications:
(a) Quarterly Cap. Impose a quarterly cap of $100,000 on aggregate reimbursable expenses, with any expenses in excess of the cap requiring prior written approval of the Board or its designee.
(b) Single-Item Approval Threshold. Require prior Board approval for any single expense item exceeding $25,000.
(c) Monthly Reporting. Require Stonebridge to submit monthly expense reports with reasonable supporting documentation (receipts, invoices, or other evidence of expenditure), to be delivered to the Company within 15 business days following the end of each calendar month.
(d) Excluded Expenses. Clarify that the Company will not reimburse expenses for entertainment, alcoholic beverages, or any expense that is not directly and reasonably related to the advisory engagement.
These modifications are reasonable, consistent with good governance practices, and should not be objectionable to Stonebridge.
IV. Indemnification Provisions
A. Summary of Proposed Indemnification
The Proposed Letter contains a standard broad-form indemnification provision in favor of Stonebridge and its affiliates, directors, officers, employees, agents, and controlling persons (collectively, the "Indemnified Parties"). Under the proposed indemnification, AGMG would agree to indemnify and hold harmless the Indemnified Parties against all losses, claims, damages, liabilities, and expenses (including attorneys' fees and costs of litigation or other proceedings) arising out of or in connection with the engagement or any actions taken or omitted by any Indemnified Party in connection with the engagement.
The sole exception to the indemnification obligation is for losses that are found by a court of competent jurisdiction, in a final and non-appealable judgment, to have resulted from the gross negligence or willful misconduct of the relevant Indemnified Party.
The Proposed Letter also includes the following related provisions:
(a) Advance of Expenses. AGMG is required to advance legal fees and expenses to the Indemnified Parties as incurred, subject to an undertaking by the Indemnified Party to repay such advances if it is ultimately determined that the indemnification exception (gross negligence or willful misconduct) applies.
(b) Contribution. If indemnification is for any reason unavailable or insufficient, AGMG and Stonebridge are required to contribute to losses in such proportion as is appropriate to reflect the relative benefits received by AGMG on the one hand and Stonebridge on the other, as well as any other equitable considerations.
B. C&H Commentary and Recommended Modifications
The proposed indemnification is broad, and while broad indemnification provisions are standard and generally accepted in financial advisory engagement letters, C&H recommends several modifications to narrow the scope of the Company's exposure and to ensure that the indemnification is structured in accordance with best practices.
1. Gross Negligence / Willful Misconduct Carve-Out Standard. The Proposed Letter conditions the carve-out from the indemnification obligation on a "final, non-appealable judgment" by a court of competent jurisdiction finding that the relevant Indemnified Party engaged in gross negligence or willful misconduct. The "non-appealable" standard is extremely favorable to Stonebridge, as it means that AGMG would remain obligated to fund defense costs and indemnification throughout the entire appellate process—which, in complex commercial litigation, can span several years—with recourse to recover such payments only after all appellate rights have been exhausted. C&H recommends modifying the standard to require only a "final judgment" (removing the word "non-appealable"), which would permit the Company to recover advances and seek contribution once a trial court has entered a final judgment finding gross negligence or willful misconduct, without waiting for the conclusion of any appellate proceedings. This is a more balanced approach and is supported by precedent in recent engagement letters reviewed by C&H.
2. Bad Faith Carve-Out. The Proposed Letter limits the carve-out from indemnification to gross negligence and willful misconduct. C&H recommends adding "bad faith" as a third basis for the carve-out. Bad faith conduct—such as deliberate fraud, intentional misrepresentation, or knowing violations of law by Stonebridge personnel—should not be covered by the Company's indemnification obligation, even if such conduct does not rise to the level of gross negligence or willful misconduct as those terms are defined under applicable law. The addition of a bad faith carve-out is consistent with market practice and should not be controversial.
3. Cap on Advance of Expenses. The Proposed Letter requires AGMG to advance legal fees and expenses to Indemnified Parties as incurred, without any cap or limitation. C&H recommends including an aggregate cap of $2 million on advances that may be made without further Board approval. If Stonebridge anticipates that its defense costs will exceed $2 million, it should be required to seek Board approval for additional advances. This cap provides the Board with a mechanism to monitor and control its exposure and ensures that defense costs do not escalate without Board oversight.
4. Contribution Provision. The Proposed Letter's contribution provision is somewhat open-ended in its formulation. C&H recommends that the Company's contribution obligation be expressly limited to a proportion that reflects the relative benefits received by the Company in connection with the engagement as compared to the benefits received by Stonebridge. The Company's contribution should not exceed the aggregate fees (retainer plus transaction fee) actually paid to Stonebridge under the engagement. This cap on contribution provides a natural ceiling on the Company's exposure under the contribution mechanism.
5. Company Consent to Settlement. The Proposed Letter does not contain a provision requiring Stonebridge to obtain the Company's consent before settling any claim for which indemnification is sought. This is a significant gap. C&H recommends adding a provision requiring the Company's prior written consent (not to be unreasonably withheld, conditioned, or delayed) before any Indemnified Party settles any claim, action, or proceeding for which indemnification is or may be sought from the Company. Without such a provision, Stonebridge could settle a claim on terms unfavorable to AGMG—for example, admitting liability or agreeing to injunctive relief that adversely affects the Company's interests—and then seek full indemnification from the Company for the settlement amount and associated costs.
6. Notice Requirement. C&H recommends adding a provision requiring Stonebridge to provide prompt written notice to the Company of any claim, action, or proceeding for which indemnification may be sought. The notice should be delivered within 10 business days of the date on which the Indemnified Party first becomes aware of the claim. The Company's indemnification obligation should be reduced to the extent that the Company is materially prejudiced by any failure to provide timely notice. This is a standard and reasonable provision that protects the Company's ability to participate in the defense of any claim for which it may bear financial responsibility.
C. D&O Insurance Interaction
C&H wishes to bring to the Board's attention a separate but related consideration. The Company's existing directors' and officers' liability insurance policy, placed with Helmsley Indemnity Corp. (Policy No. HIC-DOL-2024-009347), provides coverage of $75 million per occurrence and $150 million in the aggregate, with an annual premium of $3.8 million and a policy period running from January 1, 2024, through December 31, 2024. C&H has reviewed the relevant provisions of the D&O policy and confirms that the policy does not cover indemnification obligations owed by the Company to third-party advisors such as Stonebridge. Accordingly, the Company's indemnification obligations under the Stonebridge engagement letter represent an additional, uncapped contractual exposure that is separate from and not backstopped by the D&O insurance program. The Board should take this into account when evaluating the indemnification provisions and in considering C&H's recommended modifications to limit the Company's exposure.
Nadine Khalil may wish to consult with the Company's insurance broker, Ashbury Risk Partners, to determine whether any supplemental coverage or policy endorsement is available to address the Company's exposure under the Stonebridge indemnification. C&H is available to assist in that process if requested.
V. Fiduciary-Out Provisions
A. Summary of Proposed Terms
The Proposed Letter does not include an express fiduciary-out provision permitting the Board to terminate the engagement or decline to follow Stonebridge's advice if doing so would conflict with the Board's fiduciary duties under applicable law.
B. C&H Commentary and Recommendation
This is a material omission that must be addressed before the engagement letter is executed. C&H regards the absence of a fiduciary-out provision as the single most significant deficiency in the Proposed Letter, and we strongly recommend that the Board insist upon the inclusion of such a provision as a condition to execution.
Under Delaware law, which governs the internal affairs of AGMG as a Delaware-incorporated company, the Board of Directors owes fiduciary duties of care and loyalty to the Company and its stockholders. These duties are non-delegable and cannot be contracted away or constrained by agreement with a third-party advisor. In the context of a strategic alternatives review, the Board's fiduciary obligations require it to act in the best interests of the Company and its stockholders at all times, including by retaining the ability to change course, terminate advisory relationships, engage additional advisors, or reject the recommendations of its financial advisor if doing so is in the best interests of the Company.
An engagement letter that does not expressly preserve the Board's fiduciary flexibility creates a potential argument—however tenuous—that the Board has contractually limited its ability to exercise independent judgment. In the current environment, where Corvus Peak has publicly accused the Board of entrenchment and self-dealing (see Corvus Peak's preliminary proxy statement, filed March 28, 2024, at pages 14–17), any ambiguity in the engagement letter regarding the Board's fiduciary authority could be exploited to support those allegations.
C&H recommends the insertion of the following provision in the Proposed Letter:
"Notwithstanding any other provision of this engagement letter, nothing herein shall be construed to limit, restrict, or otherwise impair the ability of the Board of Directors of AGMG to exercise its fiduciary duties under applicable law, including, without limitation, the Board's right to (a) terminate this engagement at any time, (b) decline to accept, follow, or act upon any advice or recommendation provided by Stonebridge, (c) engage one or more additional financial advisors, legal advisors, or other consultants, and (d) determine, in its sole discretion, whether to pursue, negotiate, or consummate any strategic alternative or transaction. In the event of any conflict between the terms of this engagement letter and the Board's fiduciary obligations under applicable law, the Board's fiduciary obligations shall govern and control. For the avoidance of doubt, Stonebridge's role under this engagement letter is advisory only, and all decisions regarding the Company's strategic direction, the conduct of any transaction process, and the terms of any transaction shall remain at the sole discretion of the Board."
This provision is particularly important in the current context for the following reasons:
(i) Corvus Peak Proxy Contest. The Corvus Peak definitive proxy statement is expected to be filed with the SEC in early May 2024. Corvus Peak has nominated five directors—Malcolm Trask, Vanessa Loring, Dr. Raymond Chu, and two additional nominees—and has publicly stated its intention to pursue changes in the Company's strategic direction. If Corvus Peak's nominees are elected at the June 7, 2024 Annual General Meeting, the reconstituted Board must have the unfettered ability to reassess the strategic alternatives review, including the Stonebridge engagement, without being constrained by contractual commitments entered into by the current Board.
(ii) Board Reconstitution. The possibility of board reconstitution at the June 7 AGM means that the individuals who approved the Stonebridge engagement may not be the individuals who oversee its execution. The fiduciary-out ensures that any future Board composition retains full flexibility to exercise its independent judgment.
(iii) CEO Succession Process. The parallel CEO succession process adds an additional dimension of complexity. A new CEO may have views regarding strategic direction that differ from the current Board's perspective. The fiduciary-out preserves the Board's ability to pivot as circumstances evolve.
C&H anticipates that Stonebridge will not object to the inclusion of a fiduciary-out provision, as such provisions are widely recognized as appropriate and necessary in the context of Board-level advisory engagements. If Stonebridge does resist, C&H recommends that the Board treat the fiduciary-out as a non-negotiable condition to execution.
VI. Term and Termination
A. Summary of Proposed Terms
The Proposed Letter contains the following provisions regarding term and termination:
(a) Initial Term. The engagement will have an initial term of 12 months from the date of execution.
(b) Automatic Renewal. The engagement will renew automatically for successive 6-month periods unless either party provides 30 days' written notice of non-renewal prior to the expiration of the then-current term.
(c) Termination for Convenience. Either party may terminate the engagement at any time by providing 60 days' written notice to the other party.
(d) Effect of Termination. Upon termination: (i) all accrued and unpaid retainer payments become immediately due and payable and are non-refundable; (ii) the tail fee provisions (Section III.C above) survive for 12 months; (iii) the indemnification obligations (Section IV above) survive indefinitely; and (iv) expense reimbursement obligations survive with respect to expenses incurred prior to termination.
B. C&H Commentary and Recommended Modifications
1. Termination Notice Period. The 60-day notice period for termination for convenience is longer than C&H considers appropriate or necessary. In the fast-moving environment of a proxy contest and strategic alternatives review, 60 days is an eternity. If the Board determines that the Stonebridge engagement should be terminated—whether because the strategic alternatives review is completed, the process is shelved following board reconstitution, or for any other reason—the Board should have the ability to effect that termination promptly. C&H recommends shortening the termination notice period to 30 days. A 30-day notice period is sufficient to allow for an orderly transition and is consistent with the Board's fiduciary flexibility. If Stonebridge insists on a period longer than 30 days, C&H would consider 45 days as a reasonable compromise, but 60 days should be resisted.
2. Automatic Renewal. C&H recommends deleting the automatic renewal provision entirely. The engagement should terminate at the end of the initial 12-month term unless affirmatively renewed by the Board through a written agreement. Automatic renewal provisions can result in the engagement continuing beyond the point at which it is useful or desired by the Board, and they require the Board to take affirmative action (by delivering a non-renewal notice) to prevent extension, rather than requiring affirmative action to extend. Given the dynamic nature of the current situation—including the pending proxy contest, the AGM, and the CEO succession process—the Board should retain maximum control over the duration of the engagement. If the Board wishes to continue the engagement beyond the initial 12-month term, it can do so by executing a renewal letter at that time, on terms that reflect the circumstances then prevailing.
3. Termination Fee. C&H notes that the Proposed Letter does not include a separate termination or break fee payable to Stonebridge upon early termination of the engagement. This is appropriate, and C&H recommends that the Board resist any attempt by Stonebridge to introduce such a fee during negotiations. The tail fee provisions already provide Stonebridge with protection in the event that a transaction is consummated with a party contacted during the engagement, and the addition of a separate termination fee would represent an unnecessary and duplicative financial burden on the Company.
4. Work Product on Termination. The Proposed Letter does not address the disposition of work product upon termination. This is a significant omission. C&H recommends adding a provision requiring Stonebridge, within 10 business days of the effective date of termination, to deliver to the Company all work product, analyses, financial models, presentations, memoranda, and other materials prepared by Stonebridge in connection with the engagement. The Company should own all work product prepared specifically for and paid for by AGMG under the engagement, and this ownership should survive termination. Stonebridge should be permitted to retain copies of its general methodologies, proprietary models, and internal correspondence, but all Company-specific materials should be the property of AGMG. This is essential to ensure that the Company (or any successor Board) has access to the analytical work performed during the engagement, regardless of whether the Stonebridge relationship continues.
5. Tail Party List Delivery. As discussed in Section III.C above, C&H recommends requiring Stonebridge to deliver the Tail Party List within 10 business days of termination. This should be specified as a condition to the enforceability of the tail fee provisions.
VII. Exclusivity
A. Summary of Proposed Terms
The Proposed Letter contains two related exclusivity provisions:
(a) Right of First Refusal. Stonebridge is granted a "right of first refusal" to serve as lead financial advisor on any Change of Control Transaction arising during the engagement period or the 12-month tail period following termination.
(b) Restriction on Additional Advisors. AGMG agrees not to retain any additional financial advisor in connection with the strategic alternatives review or any related transaction without Stonebridge's consent, which is stated to not be unreasonably withheld.
B. C&H Commentary and Recommended Modifications
The exclusivity provisions in the Proposed Letter are unacceptable in their current form and must be substantially modified or deleted.
The Board must retain the unfettered ability to engage additional financial advisors as fiduciary duties may require. There are numerous scenarios in which the Board might need or wish to engage a second financial advisor: for example, if a potential acquirer has a pre-existing relationship with Stonebridge, creating a conflict; if the Board determines that a specialized advisor with particular sector or geographic expertise is needed for a specific aspect of the strategic review; if the reconstituted Board (post-AGM) wishes to engage its own advisor; or if the Board simply concludes that a second opinion would be beneficial in the exercise of its fiduciary duties. The Delaware courts have consistently recognized the importance of the Board's ability to obtain independent financial advice, and a contractual provision that requires the consent of the existing advisor before a second advisor can be retained is inconsistent with this principle.
C&H recommends deleting the exclusivity provision entirely. If Stonebridge resists complete deletion, C&H would consider, as a fallback, modifying the provision to designate Stonebridge as the "lead financial advisor" for the engagement, without precluding the Board from engaging additional financial advisors in its sole discretion and without requiring Stonebridge's consent. Under this formulation, Stonebridge would have the designation and the associated prestige of being the lead advisor, but the Board would retain full flexibility to supplement its advisory team as needed.
C&H also notes that the exclusivity provision as drafted could create unnecessary friction with the Company's existing advisory relationships. Ashworth Velmoran LLP (Martin Cho) currently serves as the Company's standing outside counsel on general corporate matters and is actively involved in responding to the Corvus Peak proxy contest. While Ashworth Velmoran is a legal, rather than financial, advisor, the broadly drafted restriction on "additional advisors" could arguably be read to encompass legal advisors who perform financial analyses or provide advice on transaction structuring. The provision should be clarified to ensure that it does not interfere with the Company's existing relationships with its legal counsel.
VIII. Confidentiality
A. Summary of Proposed Terms
The Proposed Letter contains mutual confidentiality obligations. Stonebridge agrees not to disclose confidential information relating to the Company or the engagement except:
(i) to its employees and advisors on a need-to-know basis;
(ii) as required by applicable law or regulation; and
(iii) in connection with any legal proceeding relating to the engagement.
The confidentiality obligations include a carve-out for information that is publicly available or independently developed by Stonebridge without reference to confidential information received from the Company.
B. C&H Commentary and Recommended Modifications
The confidentiality provisions are generally adequate in their current form but require several enhancements to address the specific circumstances of AGMG's dual-listed structure and the parallel workstreams currently underway.
1. Dual-Listing Securities Law Compliance. AGMG's secondary listing on the London Stock Exchange Main Market subjects the Company and its advisors to UK securities law obligations, including the requirements of the Financial Conduct Authority's Disclosure Guidance and Transparency Rules (DTR), particularly DTR 5 (Vote Holder and Issuer Notification Rules) and the Market Abuse Regulation (UK MAR). In addition, AGMG's primary NYSE listing subjects the Company and its advisors to US securities law restrictions, including the prohibitions on insider trading under Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. C&H recommends adding an express acknowledgment to the confidentiality provisions stating that Stonebridge will comply with all applicable UK and US securities law restrictions on the use and disclosure of material non-public information received in connection with the engagement. This provision serves both a protective function (reinforcing Stonebridge's legal obligations) and an evidentiary function (creating a contractual basis for the Company to seek recourse in the event of a breach).
2. Information Barrier Protocols (Wall Procedures). As discussed in Section II.B above, the parallel conduct of the strategic alternatives review and the CEO succession process creates a risk of inadvertent information leakage between the two workstreams. C&H recommends that the confidentiality provisions of the Proposed Letter be amended to incorporate by reference the information barrier protocols that C&H is preparing for delivery on or about April 26, 2024. These protocols will establish specific procedures for the handling, storage, and dissemination of confidential information relating to each workstream, including the identification of designated personnel authorized to access information from each workstream and the establishment of physical and electronic barriers to prevent cross-contamination.
3. Return or Destruction of Confidential Information. The Proposed Letter does not address the disposition of confidential information upon termination of the engagement. C&H recommends adding a provision requiring Stonebridge, upon termination, to return or destroy all confidential information received from the Company, including all copies, notes, analyses, and derivative works, and to provide the Company with a written certification of destruction signed by an authorized officer of Stonebridge. Stonebridge should be permitted to retain one archival copy of confidential information solely for legal compliance and recordkeeping purposes, subject to the ongoing confidentiality obligations of the engagement letter.
4. Duration of Confidentiality Obligations. C&H recommends clarifying that the confidentiality obligations survive termination of the engagement for a period of not less than three years, which is consistent with market practice for advisory engagements involving access to sensitive financial and strategic information.
IX. Governing Law, Dispute Resolution, and Forum
A. Summary of Proposed Terms
The Proposed Letter contains the following provisions regarding governing law and dispute resolution:
(a) Governing Law. The engagement letter is governed by the laws of the State of New York, without giving effect to any conflict of laws principles that would result in the application of the laws of another jurisdiction.
(b) Dispute Resolution. Any dispute arising out of or in connection with the engagement letter is to be resolved by binding arbitration before a single arbitrator, conducted under the rules of a specified arbitral institution (the Proposed Letter references the rules of the American Arbitration Association), with the arbitration seated in New York, New York.
(c) Waiver of Jury Trial. The Proposed Letter includes a mutual waiver of the right to a jury trial, applicable as a fallback in the event that the arbitration provision is found unenforceable for any reason.
B. C&H Commentary
1. Governing Law. The choice of New York law as the governing law of the engagement letter is standard and appropriate for an advisory engagement of this nature, where both the advisory firm and the principal negotiating counterpart are based in New York. C&H does not recommend any modification to this provision.
2. Arbitration. Binding arbitration before a single arbitrator under the rules of the American Arbitration Association is a typical dispute resolution mechanism for financial advisory engagement letters. Arbitration offers certain advantages in this context, including confidentiality of proceedings (which is particularly important given the sensitive nature of the strategic alternatives review), speed relative to court proceedings, and the ability to select an arbitrator with relevant expertise in financial advisory disputes. C&H does not recommend resisting the arbitration provision. However, C&H recommends confirming that the arbitration clause includes the following subsidiary provisions, which are standard but not explicitly addressed in the Proposed Letter:
(a) The arbitrator shall have the authority to award monetary damages but shall not have the authority to award punitive or consequential damages.
(b) The arbitrator's decision shall be final and binding, and judgment upon the award may be entered in any court of competent jurisdiction.
(c) The costs of the arbitration (including the arbitrator's fees) shall be borne by the non-prevailing party, or as otherwise determined by the arbitrator.
(d) The arbitration proceedings shall be confidential, and neither party shall disclose the existence, content, or results of the arbitration except as required by law or regulation.
3. Forum Selection Clause Interaction. C&H notes for the Board's reference that AGMG's Amended and Restated Bylaws (Section 11.1, as adopted effective March 22, 2022) designate the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, any other court of the State of Delaware or the United States District Court for the District of Delaware) as the exclusive forum for certain intra-corporate disputes, including claims arising under the Delaware General Corporation Law. The arbitration provision in the engagement letter would not conflict with this forum selection clause, as disputes arising under the engagement letter are contractual in nature and do not constitute intra-corporate disputes within the meaning of the bylaws provision. Nevertheless, C&H recommends adding an express acknowledgment to the engagement letter confirming that the arbitration clause does not affect or waive any rights under the Company's bylaws with respect to intra-corporate disputes.
X. Representations and Warranties
A. Summary of Proposed Terms
The Proposed Letter contains the following representations and warranties:
(a) Company Information Representation. AGMG represents that all information furnished to Stonebridge in connection with the engagement will be accurate and complete in all material respects.
(b) Reliance Acknowledgment. AGMG acknowledges that Stonebridge will rely on information furnished by the Company without undertaking any independent verification of such information.
(c) Stonebridge Conflict Representation. Stonebridge represents that, as of the date of the engagement letter, it has no conflict of interest with the Company or its directors and officers that would prevent it from performing its obligations under the engagement.
B. C&H Commentary and Recommended Modifications
1. Company's Information Warranty. The Company's representation regarding the accuracy and completeness of information furnished to Stonebridge is standard in financial advisory engagement letters and reflects the practical reality that Stonebridge will rely on information provided by the Company (and its management and other advisors) in performing its financial analyses. However, the representation as drafted—that all information "will be accurate and complete in all material respects"—is unqualified. C&H recommends qualifying the completeness element with the phrase "to the Company's knowledge" to account for the possibility that the Company may not be aware of all information that Stonebridge would consider material. The accuracy element may remain unqualified, as the Company should be expected to ensure that the information it affirmatively provides is accurate. The recommended formulation would read:
"The Company represents that all information furnished to Stonebridge in connection with the engagement will be accurate in all material respects and, to the Company's knowledge, complete in all material respects."
2. Stonebridge Conflict Representation — Expansion. The Stonebridge conflict representation as drafted is generic and does not address the specific circumstances of the current engagement. Given the contested nature of the current situation—including the active Corvus Peak proxy contest, the involvement of identified individuals and entities on both sides, and the heightened scrutiny to which the Board's actions will be subjected—a robust and specific conflict disclosure is essential. C&H recommends expanding the Stonebridge conflict representation to require Stonebridge to disclose any relationships (whether advisory, financial, social, or otherwise) with:
(a) Corvus Peak Capital Partners LP;
(b) Corvus Peak Management LLC (the general partner of Corvus Peak);
(c) Damien Solberg (Corvus Peak's founder and managing partner);
(d) Erin Nakamura (Corvus Peak's Chief Investment Officer);
(e) Any of the Corvus Peak board nominees: Malcolm Trask, Vanessa Loring, and Dr. Raymond Chu;
(f) Jonathan Hale (former CEO of AGMG, who departed February 14, 2024); and
(g) Any portfolio company or affiliate of Corvus Peak.
This expanded disclosure is necessary to ensure that the Board can evaluate whether any actual or potential conflict exists that could compromise Stonebridge's independence or create an appearance of impropriety. Even if Stonebridge discloses a relationship with one or more of these parties, the disclosure itself is valuable, as it allows the Board to make an informed decision about whether to proceed with the engagement and, if so, what safeguards may be appropriate.
3. Ongoing Conflicts Disclosure. The Proposed Letter's conflict representation speaks only as of the date of the engagement letter. C&H recommends adding an ongoing disclosure obligation, requiring Stonebridge to promptly notify the Board of any conflict of interest that arises or becomes known to Stonebridge during the course of the engagement. This obligation should cover not only conflicts involving the parties identified above but also conflicts involving any potential counterparty, acquirer, or other party with whom Stonebridge has substantive discussions in connection with the strategic alternat

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