DRAFT — PRIVILEGED & CONFIDENTIAL — SUBJECT TO BOARD APPROVAL
TERM SHEET: PROPOSED COOPERATION AGREEMENT
Between
AURELIUS GLOBAL MEDIA GROUP PLC ("AGMG" or the "Company")
and
CORVUS PEAK CAPITAL PARTNERS LP ("Corvus Peak")
June 2, 2024
Prepared by: Calderwood & Harkness LLP, 787 Seventh Avenue, New York, NY 10019 Matter No. 1017-00002 Lead Partner: Nathaniel Bower
This term sheet is a draft for discussion purposes only and does not constitute a binding agreement. All terms are subject to negotiation, definitive documentation, and approval by the Board of Directors of AGMG. Neither party shall have any obligation with respect to the matters described herein unless and until a definitive agreement is executed and delivered by both parties. This document is protected by the attorney-client privilege and the work product doctrine and is intended solely for the use of the Board of Directors of Aurelius Global Media Group PLC and its authorized advisors.
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Section 1: Parties
1.1 The Company
Aurelius Global Media Group PLC ("AGMG" or the "Company") is a public limited company incorporated under the laws of the State of Delaware, United States, and registered as an overseas company in England and Wales under the Companies Act 2006.
The principal executive office of the Company is located at 14 Sceptre Row, London EC2V 7QN, United Kingdom. The Company maintains its registered agent in the State of Delaware at c/o Pinnacle Corporate Services Inc., 1209 Orange Street, Wilmington, DE 19801.
The Company's shares of common stock are listed and traded on the New York Stock Exchange under the ticker symbol AGMG and on the London Stock Exchange Main Market (premium segment, Official List of the Financial Conduct Authority) under the ticker symbol AGMG.L.
As of the date hereof, there are 412,600,000 shares of the Company's common stock, par value $0.01 per share, issued and outstanding. The Company's Delaware File Number is 4827193, and its Employer Identification Number (EIN) is 26-4831097.
1.2 The Investor
Corvus Peak Capital Partners LP ("Corvus Peak") is a limited partnership duly organized and existing under the laws of the State of Delaware, with its principal office located at 590 Lexington Avenue, 34th Floor, New York, NY 10022.
The sole general partner of Corvus Peak is Corvus Peak Management LLC, a Delaware limited liability company. The Founding Partner and Chief Investment Officer of Corvus Peak Management LLC is Damien Solberg. The Portfolio Manager responsible for the AGMG investment campaign is Erin Nakamura. Corvus Peak's Employer Identification Number (EIN) is 83-2196504.
As of the date hereof, Corvus Peak beneficially owns approximately 8.7% of the outstanding shares of the Company's common stock, representing approximately 35,896,200 shares based on 412,600,000 shares outstanding. The average cost basis of Corvus Peak's position is approximately $20.97 per share, representing an aggregate investment of approximately $752.8 million.
Corvus Peak filed its initial Schedule 13D with the United States Securities and Exchange Commission (the "SEC") on January 18, 2024, disclosing beneficial ownership of approximately 6.1% of the Company's outstanding shares. Corvus Peak filed an Amendment No. 1 to its Schedule 13D on February 26, 2024, disclosing increased beneficial ownership of approximately 8.7% of the Company's outstanding shares.
1.3 Definition of Affiliates and Associates
For purposes of this Term Sheet and the Definitive Agreement, the term "Corvus Peak Group" shall mean, collectively, Corvus Peak Capital Partners LP, Corvus Peak Management LLC, and their respective affiliates, associates, principals, partners, members, officers, directors, employees, agents, and any other persons acting in concert with any of them with respect to the securities of the Company or the matters described herein.
The terms "affiliate," "associate," and "beneficial ownership" (and related terms) shall have the meanings ascribed to them in Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and Section 13(d) of the Exchange Act, as applicable. The term "group" shall have the meaning ascribed to it in Section 13(d)(3) of the Exchange Act.
Section 2: Recitals / Background
The following recitals set forth the factual background and context for the proposed Cooperation Agreement. These recitals are intended to be incorporated into the Definitive Agreement and shall serve as interpretive context for the substantive provisions set forth herein.
WHEREAS, Aurelius Global Media Group PLC is a public media and entertainment conglomerate whose shares of common stock are listed and traded on both the New York Stock Exchange and the London Stock Exchange Main Market (premium segment, Official List of the Financial Conduct Authority). As of March 1, 2024, the Company's market capitalization was approximately £6.82 billion (approximately $8.65 billion at an exchange rate of $1.2683 per pound sterling). For the fiscal year ended December 31, 2023, the Company reported total revenue of approximately $4.37 billion, earnings before interest, taxes, depreciation, and amortization ("EBITDA") of approximately $812 million (representing an EBITDA margin of approximately 18.6%), and employed approximately 23,400 persons worldwide across its global operations.
WHEREAS, the Company operates through four principal business segments: (i) Streaming & Digital Content, which accounts for approximately 42% of total revenue and includes the Company's Luminos streaming platform and digital content licensing operations; (ii) Live Entertainment & Events, which accounts for approximately 24% of total revenue and includes the Company's concert, festival, and live event production operations; (iii) E-Commerce & Merchandising, which accounts for approximately 19% of total revenue and includes the Company's branded merchandise, direct-to-consumer retail, and licensing operations; and (iv) Advertising & Brand Partnerships, which accounts for approximately 15% of total revenue and includes the Company's advertising sales, sponsorship, and brand integration operations.
WHEREAS, Corvus Peak Capital Partners LP has accumulated a significant equity stake in the Company, currently amounting to approximately 8.7% of the Company's outstanding common stock (approximately 35,896,200 shares), acquired at an average cost basis of approximately $20.97 per share, representing a total investment of approximately $752.8 million.
WHEREAS, on February 12, 2024, Corvus Peak sent a public letter to the Board of Directors of the Company (the "Board") demanding, among other things, the appointment of new independent directors to the Board, the commencement of a comprehensive strategic review of the Company's operations and capital allocation, and the initiation of a formal CEO succession plan.
WHEREAS, on March 1, 2024, Corvus Peak submitted formal director nominations for the Company's 2024 Annual General Meeting of Shareholders, nominating Malcolm Trask, Vanessa Loring, and Dr. Raymond Chu as candidates for election to the Board.
WHEREAS, on March 8, 2024, Marcus Vane, the Company's Chief Executive Officer, resigned from his position, creating a vacancy on the Board. In response to Mr. Vane's departure, the Board designated Priya Nair-Whitfield, the Company's Chief Operating Officer, as Interim Chief Executive Officer, effective immediately.
WHEREAS, on March 18, 2024, the Board formed a Special Committee, comprising Tobias Kessler (Chair), Lucinda Farrow-Grant, and Dr. Anwen Llewellyn, each an independent director, to oversee the CEO succession process and to formulate the Board's response to the activist campaign initiated by Corvus Peak.
WHEREAS, the parties have engaged in the process of a contested proxy solicitation in anticipation of the Company's 2024 Annual General Meeting. Corvus Peak filed a preliminary proxy statement with the SEC on April 1, 2024, and a definitive proxy statement on May 6, 2024. The Company filed its preliminary proxy statement with the SEC on April 5, 2024, and its definitive proxy statement on May 3, 2024. The 2024 Annual General Meeting is currently scheduled to be held on June 7, 2024.
WHEREAS, on May 10, 2024, Corvus Peak transmitted a settlement proposal to the Board, proposing that two of its three director nominees be seated immediately on the Board and that the CEO search process be paused pending the seating of the new directors. The Board considered and rejected this proposal on May 12, 2024, on the grounds that the proposal did not adequately address the Board's concerns regarding the structure of the CEO search process and the scope of the standstill provisions.
WHEREAS, on May 17, 2024, Cobalt Ridge Solutions ("ISS") issued a proxy advisory report recommending that shareholders vote in favor of the election of two of the three Corvus Peak director nominees — specifically, Malcolm Trask and Dr. Raymond Chu — and in favor of the Company's management nominees for the remaining Board seats. On May 22, 2024, Westmark Solutions ("Tarrant Partners LLC") issued a proxy advisory report recommending that shareholders vote in favor of the election of all three Corvus Peak director nominees.
WHEREAS, Windermere Pension Trust, a significant institutional shareholder holding approximately 4.4% of the Company's outstanding common stock (approximately 18,154,400 shares), has publicly stated its support for the full Corvus Peak slate.
WHEREAS, on June 1, 2024, the Board of Directors, having considered the recommendations of its proxy advisory firms, the publicly expressed views of significant institutional shareholders, and the analysis and recommendations set forth in Calderwood & Harkness LLP's May 30, 2024 settlement analysis memorandum recommending a negotiated two-seat settlement, authorized Dame Elspeth Greenvale, Independent Non-Executive Chair, and the Special Committee to reopen settlement discussions with Corvus Peak and to negotiate the terms of a potential cooperation agreement.
WHEREAS, the parties desire to reach a negotiated resolution to avoid the cost, distraction, and uncertainty of a contested proxy election at the June 7, 2024 Annual General Meeting, and to establish a constructive framework for the ongoing relationship between the Company and Corvus Peak as a significant shareholder.
NOW, THEREFORE, the parties propose to enter into a Definitive Agreement (the "Definitive Agreement" or the "Cooperation Agreement") on the terms and conditions set forth in this Term Sheet, subject to the negotiation of definitive documentation and the approval of the Board of Directors of AGMG.
Section 3: Board Representation
3.1 Appointment of Corvus Peak Designees
Immediately upon execution of the Definitive Agreement, the Board shall appoint two (2) individuals designated by Corvus Peak to serve as members of the Board of Directors of the Company (each, a "Corvus Designee" and, collectively, the "Corvus Designees").
The two Corvus Designees shall be selected from among the three individuals previously nominated by Corvus Peak for election at the 2024 Annual General Meeting: Malcolm Trask, Vanessa Loring, or Dr. Raymond Chu. Biographical information regarding each of these individuals is set forth in Appendix B to this Term Sheet.
Corvus Peak shall designate which two of its three nominees it wishes to have seated on the Board within three (3) business days following execution of the Definitive Agreement by delivering written notice to the Company's General Counsel & Corporate Secretary, Nadine Khalil, at the address specified in Section 15.6 of this Term Sheet.
Each Corvus Designee must satisfy the independence requirements set forth in Section 303A of the NYSE Listed Company Manual and the Company's Corporate Governance Guidelines (as adopted by the Board on July 14, 2022, and as most recently amended on November 15, 2023). Each Corvus Designee must also complete and submit a customary director questionnaire and background check, in form and substance consistent with those required of all other members of the Board, prior to the effective date of appointment.
3.2 Board Expansion or Vacancies
In order to accommodate the appointment of the Corvus Designees, the Board shall either (a) increase the size of the Board by the number of seats necessary to seat both Corvus Designees, or (b) fill existing vacancies on the Board, including the vacancy created by the resignation of Marcus Vane on March 8, 2024, with the Corvus Designees, or (c) a combination of the foregoing.
Following the appointment of both Corvus Designees, the total size of the Board shall consist of up to eleven (11) voting members. As of the date hereof, the Board is constituted as follows (ten seats, one vacancy):
3.3 Committee Assignments
Upon appointment, the Corvus Designees shall be assigned to the following Board committees:
(a) Nominating & Governance Committee. At least one Corvus Designee shall be appointed as a member of the Nominating & Governance Committee of the Board, effective upon such Corvus Designee's appointment to the Board.
(b) CEO Search Committee. At least one Corvus Designee shall be appointed as a member of the reconstituted CEO Search Committee described in Section 6 of this Term Sheet, effective upon such Corvus Designee's appointment to the Board.
(c) Other Committees. The Corvus Designees shall be eligible for appointment to other standing and ad hoc committees of the Board, consistent with independence requirements and applicable NYSE listing standards, as determined by the Board or the Nominating & Governance Committee in consultation with Corvus Peak.
(d) Temporary Committee Restrictions. Notwithstanding the foregoing, neither Corvus Designee shall be appointed to the Compensation Committee or the Audit Committee during the first six (6) months following such Corvus Designee's appointment to the Board, unless otherwise mutually agreed in writing by the Company and Corvus Peak. This restriction is intended to allow the Corvus Designees sufficient time to become familiar with the Company's operations, financial reporting processes, and executive compensation programs before assuming the responsibilities associated with Audit Committee and Compensation Committee service.
3.4 Withdrawal of Proxy Contest
Upon execution of the Definitive Agreement, Corvus Peak shall promptly take the following actions to effectuate the withdrawal of its proxy contest:
(a) Corvus Peak shall withdraw its definitive proxy statement filed with the SEC on May 6, 2024, and all related soliciting materials previously disseminated to shareholders of the Company, in each case in accordance with applicable SEC rules and regulations.
(b) Corvus Peak shall, within two (2) business days following execution of the Definitive Agreement, file a supplement to its Schedule 14A with the SEC notifying shareholders of the withdrawal of the proxy contest and recommending that shareholders vote the Company's management proxy card at the June 7, 2024 Annual General Meeting in accordance with the Board's recommendations for all matters to be presented at such meeting.
(c) The Company shall supplement its definitive proxy statement filed with the SEC on May 3, 2024, to reflect the terms of the Cooperation Agreement, the nomination of the Corvus Designees by the Board, and the withdrawal of the Corvus Peak proxy contest. Such supplement shall be filed with the SEC and disseminated to shareholders as promptly as practicable following execution of the Definitive Agreement.
3.5 Replacement Designee Rights
In the event that a Corvus Designee is unable or unwilling to serve as a director of the Company at any time during the Standstill Period (as defined in Section 4.1 below) — whether due to death, disability, resignation, removal, or any other reason — Corvus Peak shall have the right to designate a replacement individual (a "Replacement Designee") to fill the vacancy created by such Corvus Designee's departure from the Board.
Any Replacement Designee shall be subject to approval by the Board, which approval shall not be unreasonably withheld, conditioned, or delayed. A Replacement Designee must satisfy the independence requirements set forth in Section 303A of the NYSE Listed Company Manual and the Company's Corporate Governance Guidelines, and must complete and submit the customary director questionnaire and background check required of all Board members. The Board shall act on any Replacement Designee nomination within ten (10) business days of receipt of the nomination and all required supporting materials.
The right to designate a Replacement Designee shall expire upon termination of the Standstill Period, whether by expiration or early termination as described in Section 4.
3.6 Incumbent Director Matters
The Company shall use reasonable best efforts to ensure the re-election of all incumbent directors standing on the management slate at the June 7, 2024 Annual General Meeting. As set forth in Section 3.2 above, the pre-reconstitution Board (following the Vane resignation) comprises nine (9) seated directors and one vacancy.
The third Corvus Peak nominee who is not selected as a Corvus Designee shall formally withdraw his or her candidacy for election at the June 7, 2024 Annual General Meeting within three (3) business days following execution of the Definitive Agreement. Such withdrawal shall be communicated to the Company's Corporate Secretary and disclosed in the Corvus Peak Schedule 14A supplement described in Section 3.4(b) above.
Section 4: Standstill Provisions
4.1 Standstill Period
The "Standstill Period" shall mean the period beginning on the date of execution of the Definitive Agreement and ending on the date that is eighteen (18) months after such date of execution, unless earlier terminated in accordance with Section 4.5 of this Term Sheet.
4.2 Ownership Cap
During the Standstill Period, the Corvus Peak Group shall not, directly or indirectly, acquire, or agree, offer, seek, or propose to acquire (whether through purchase, swap, derivative transaction, or otherwise), beneficial ownership of shares of the Company's common stock, or any securities convertible into or exercisable or exchangeable for shares of the Company's common stock, if and to the extent that such acquisition would result in the Corvus Peak Group's aggregate beneficial ownership exceeding twelve percent (12%) of the then-outstanding shares of the Company's common stock.
For reference, based on the Company's currently outstanding shares of 412,600,000, the twelve percent (12%) cap would represent approximately 49,512,000 shares. Corvus Peak's current beneficial ownership is approximately 35,896,200 shares (8.7%), leaving headroom of approximately 13,615,800 shares under the proposed cap.
This ownership cap shall not be deemed to have been breached solely as a result of any decrease in the total number of shares of the Company's common stock outstanding (for example, as a result of share repurchases by the Company), provided that Corvus Peak does not acquire additional shares at a time when such acquisition would cause its beneficial ownership to exceed the twelve percent (12%) threshold.
4.3 Prohibited Actions During Standstill Period
During the Standstill Period, the Corvus Peak Group shall not, and shall cause each of its members not to, directly or indirectly, take any of the following actions:
(a) Solicit, or participate in, encourage, or facilitate any solicitation of, proxies or written consents from shareholders of the Company, or become a "participant" in any "solicitation" (as such terms are defined in Rule 14a-1 under the Exchange Act) with respect to any matter submitted to a vote of the Company's shareholders, in each case in opposition to any recommendation of the Board;
(b) Submit any shareholder proposal for consideration at any annual or special meeting of shareholders of the Company, whether pursuant to Rule 14a-8 under the Exchange Act or otherwise, or submit any nomination for election to the Board (other than to fill vacancies with Replacement Designees in accordance with Section 3.5 of this Term Sheet);
(c) Call, request the calling of, or otherwise seek to call, a special meeting of the shareholders of the Company, or seek to set the record date for any such special meeting;
(d) Seek to place, or cause to be placed, any matter on the agenda of any annual or special meeting of the shareholders of the Company;
(e) Form, join, participate in, or encourage the formation of any "group" (as defined in Section 13(d)(3) of the Exchange Act) with any other person or entity with respect to the Company's securities, for the purpose of acquiring, holding, voting, or disposing of shares of the Company's common stock or otherwise taking any action described in this Section 4.3;
(f) Seek, propose, or support any amendment to, or waiver of any provision of, the Company's Certificate of Incorporation, Amended and Restated Bylaws (as effective March 22, 2022, and as may be amended from time to time), or any other governance document of the Company;
(g) Initiate, encourage, solicit, or participate in any tender offer, exchange offer, merger, consolidation, acquisition, business combination, recapitalization, restructuring, liquidation, dissolution, or other extraordinary transaction involving the Company or any of its subsidiaries, or propose or announce any intention to do any of the foregoing;
(h) Publicly request, propose, or advocate for any amendment to or waiver of the standstill provisions set forth in this Section 4;
(i) Take any action that would reasonably be expected to require the Company to make any public announcement or disclosure regarding any of the matters described in subsections (a) through (h) above; or
(j) Enter into any arrangement, understanding, or agreement (whether written or oral, formal or informal) with any third party to do, or assist any third party in doing, any of the foregoing.
The detailed enumeration of prohibited activities during the Standstill Period is set forth in Appendix C to this Term Sheet.
4.4 Exceptions to Standstill
Notwithstanding the restrictions set forth in Section 4.3, the standstill provisions shall not apply to, and shall not be deemed to be violated by, the following:
(i) Private communications between Corvus Peak (including Damien Solberg, Erin Nakamura, and the Corvus Designees) and the Board or management of the Company regarding the Company's strategy, operations, governance, or other matters of mutual interest, provided that such communications are conducted in a manner that does not require the Company to make any public disclosure under applicable securities laws or stock exchange rules;
(ii) The voting of shares of the Company's common stock beneficially owned by the Corvus Peak Group in accordance with Corvus Peak's fiduciary duties as an investment manager to its limited partners and investors, subject to the voting commitments set forth in Section 8 of this Term Sheet;
(iii) Actions taken solely in Corvus Peak's capacity as a passive investor in response to a bona fide third-party tender offer, exchange offer, merger proposal, or other extraordinary transaction involving the Company that is not initiated, encouraged, solicited, or facilitated by the Corvus Peak Group; and
(iv) The exercise of statutory rights under Section 220 of the Delaware General Corporation Law ("DGCL") relating to books-and-records demands; provided, however, that Corvus Peak's pending Section 220 demand dated March 22, 2024, is addressed separately in Section 10 of this Term Sheet and is subject to the withdrawal provisions set forth therein.
4.5 Early Termination of Standstill
The Standstill Period shall terminate prior to its scheduled expiration upon the occurrence of any of the following events:
(i) Material Breach by the Company. The Company materially breaches any of its obligations under the Definitive Agreement and fails to cure such breach within fifteen (15) business days following receipt of written notice of such breach from Corvus Peak, specifying in reasonable detail the nature of the alleged breach;
(ii) Adoption of Shareholder Rights Plan. The Board adopts, implements, or approves a shareholder rights plan (commonly known as a "poison pill") that would apply to, or adversely affect the rights of, Corvus Peak with respect to its existing beneficial ownership or any ownership level at or below the ownership cap set forth in Section 4.2;
(iii) Change-of-Control Agreement. The Company enters into a definitive agreement providing for a change-of-control transaction, including without limitation a merger, consolidation, tender offer, exchange offer, or sale of all or substantially all of the Company's assets, with any third party; or
(iv) Unsolicited Tender Offer. A third party commences (within the meaning of Rule 14d-2 under the Exchange Act) a tender offer for more than fifty percent (50%) of the Company's outstanding shares of common stock, and the Board fails to issue a public recommendation that the Company's shareholders reject such tender offer within ten (10) business days following the commencement of such tender offer.
Upon the occurrence of an early termination event, Corvus Peak shall provide written notice to the Company of its election to terminate the Standstill Period, and the termination shall be effective as of the date of delivery of such notice.
Section 5: Mutual Non-Disparagement
5.1 Company Obligations
From and after the date of execution of the Definitive Agreement, neither the Company nor any of its directors, officers, employees, or authorized spokespersons shall make, issue, or cause to be made or issued, any public statement, comment, or communication, whether written or oral, that disparages, defames, criticizes, is derogatory of, or casts in a negative light, Corvus Peak, any member of the Corvus Peak Group, Damien Solberg, Erin Nakamura, the Corvus Designees, or any of their respective partners, officers, employees, or agents.
Without limiting the generality of the foregoing, the Company shall refrain from publicly characterizing Corvus Peak's activism campaign as having been motivated by short-term financial interests to the detriment of the Company's long-term strategic objectives, and shall not publicly question the qualifications or independence of the Corvus Designees.
5.2 Corvus Peak Obligations
From and after the date of execution of the Definitive Agreement, neither Corvus Peak nor any member of the Corvus Peak Group, including without limitation Damien Solberg, Erin Nakamura, and each of the individuals nominated by Corvus Peak as director candidates, shall make, issue, or cause to be made or issued, any public statement, comment, or communication, whether written or oral, that disparages, defames, criticizes, is derogatory of, or casts in a negative light, the Company, the Board, any director of the Company (including without limitation Dame Elspeth Greenvale, Priya Nair-Whitfield, Tobias Kessler, Lucinda Farrow-Grant, Reginald Osei, Sofia Delgado-Ríos, Hugh Pemberton, Dr. Anwen Llewellyn, or Garrett Voss), or any officer, employee, or agent of the Company.
Without limiting the generality of the foregoing, Corvus Peak shall cease all public criticism of the Board's designation of Priya Nair-Whitfield as Interim Chief Executive Officer, including but not limited to the characterization of such designation as a "predetermined outcome," as set forth in Corvus Peak's public letter to shareholders dated April 15, 2024. Corvus Peak shall take commercially reasonable steps to remove or cause to be removed any such characterizations from its website, social media accounts, and other platforms under its control, to the extent reasonably practicable.
5.3 Scope
The non-disparagement obligations set forth in this Section 5 shall apply solely to public statements, comments, and communications. These obligations shall not restrict or limit:
(a) Private communications between Corvus Peak and the Board or management of the Company, including communications made in the context of Board meetings, committee meetings, or one-on-one discussions between Corvus Peak representatives and Company directors or officers;
(b) Truthful statements made in any legal, regulatory, or administrative proceeding, or in any filing or communication required by applicable law, regulation, or stock exchange rule, including without limitation filings with the SEC, the FCA, or any court of competent jurisdiction; or
(c) Statements made in response to a subpoena or other compulsory legal process.
The non-disparagement obligations set forth in this Section 5 shall survive the termination or expiration of the Definitive Agreement as set forth in Section 14.4.
Section 6: CEO Succession Process
6.1 Reset of Search Process
The parties acknowledge that the CEO succession process initiated following the resignation of Marcus Vane on March 8, 2024, has been the subject of significant disagreement between the parties. In order to address this disagreement and to establish a search process that both parties view as fair, rigorous, and credible, the CEO succession process shall be reset and conducted from the outset by a newly constituted search committee (the "CEO Search Committee").
The existing Special Committee of the Board, comprising Tobias Kessler (Chair), Lucinda Farrow-Grant, and Dr. Anwen Llewellyn, shall be dissolved upon execution of the Definitive Agreement. The Special Committee shall be reconstituted as the CEO Search Committee with the modified composition set forth in Section 6.2 below. All work product, candidate materials, and other information gathered by the Special Committee prior to its dissolution shall be preserved and made available to the CEO Search Committee.
6.2 CEO Search Committee Composition
The CEO Search Committee shall consist of five (5) independent directors of the Company, constituted as follows:
(a) Two (2) members designated by the continuing Board from among the following independent directors: Dame Elspeth Greenvale, Tobias Kessler, Lucinda Farrow-Grant, Reginald Osei, Sofia Delgado-Ríos, or Dr. Anwen Llewellyn;
(b) One (1) Corvus Designee, as determined by Corvus Peak from among the two Corvus Designees appointed to the Board pursuant to Section 3.1; and
(c) Two (2) additional independent directors mutually agreed upon by the Board and Corvus Peak. Such additional independent directors may be selected from among the existing members of the Board who are not otherwise serving on the CEO Search Committee, or from the Corvus Designees, as the case may be.
The Chair of the CEO Search Committee shall be mutually agreed upon by the Board and Corvus Peak. If the parties are unable to agree on a Chair within five (5) business days following the constitution of the CEO Search Committee, the Chair shall be selected by a majority vote of the members of the CEO Search Committee.
6.3 Search Process Parameters
The CEO Search Committee shall retain Hargrove Tate Partners LLC to serve as the executive search firm responsible for conducting a comprehensive search for a permanent Chief Executive Officer of the Company. Hargrove Tate Partners LLC was previously engaged by the Nominating & Governance Committee of the Board on March 15, 2024, pursuant to an engagement letter with the following fee structure:
• Total Fee: $750,000, payable as a flat fee plus reimbursement of reasonable out-of-pocket expenses;
• Payment Schedule: Three installments — (i) $250,000 upon engagement (paid on March 18, 2024); (ii) $250,000 upon delivery of an initial candidate slate to the CEO Search Committee; and (iii) $250,000 upon completion of the placement;
• Remaining Installments: $500,000 in aggregate, to be paid in accordance with the existing engagement letter; and
• Lead Partner: Christine Aldridge, Hargrove Tate Partners LLC, 200 Clarendon Street, 48th Floor, Boston, MA 02116.
If the parties are unable to agree to continue the engagement of Hargrove Tate Partners LLC, the CEO Search Committee shall retain another nationally recognized executive search firm mutually agreed upon by the Board and Corvus Peak, on terms and conditions approved by the CEO Search Committee.
The search shall consider both internal and external candidates on equal footing, without any predetermined preference for either category. For avoidance of doubt:
• Priya Nair-Whitfield shall be considered as an internal candidate. Ms. Nair-Whitfield currently serves as Interim Chief Executive Officer and Chief Operating Officer of the Company. She has been with AGMG for twelve (12) years, led the launch of the Company's Luminos streaming platform in 2019, holds an MBA from Ashford Business School, and is currently 48 years of age.
• Jonathan Hale, former Chief Executive Officer of Meridian Studios International, age 56, shall be considered as a potential external candidate, subject to appropriate evaluation of his qualifications and independence. The parties acknowledge that Mr. Hale has a pre-existing relationship with Damien Solberg, including shared board service at Keystone Digital Ventures Ltd., and that such relationship shall be disclosed to the full CEO Search Committee and evaluated in the context of the Committee's deliberations.
The CEO Search Committee may, in its discretion, retain Brackenridge Howard Associates Inc. (Lead Consultant: Miriam Estabrook) to advise the Committee on compensation benchmarking for the successor CEO, including the design of an appropriate compensation package that is competitive with industry peers and aligned with the Company's long-term strategic objectives.
The target date for completion of the search process is 120 days following execution of the Definitive Agreement. The parties acknowledge that this timeline is aspirational and that the actual completion date may vary depending on the availability of qualified candidates and the progress of the search process.
6.4 Information Sharing
All members of the CEO Search Committee shall have equal access to all candidate information, interview schedules and participation, reference check results, evaluation materials, and other information and documentation related to the search process. No member of the CEO Search Committee shall receive information or access that is not equally available to all other members.
Appropriate confidentiality protections and information barriers shall be established to prevent premature or unauthorized disclosure of candidate identities, evaluation materials, and deliberations of the CEO Search Committee. The confidentiality and information barrier protocols shall be consistent with the framework outlined in Calderwood & Harkness LLP's April 26, 2024 memorandum to the Board regarding confidentiality and information barrier protocols for the CEO search process, as modified by mutual agreement of the parties to reflect the reconstituted composition of the CEO Search Committee.
The Corvus Designees serving on the CEO Search Committee shall be subject to the same fiduciary obligations, duties of care and loyalty, and confidentiality requirements as all other members of the Committee in their capacity as directors of the Company. For the avoidance of doubt, the Corvus Designees shall not share any non-public information obtained through their service on the CEO Search Committee with any member of the Corvus Peak Group who is not serving on the CEO Search Committee, except as specifically authorized by the Committee.
6.5 Interim CEO Arrangements
Priya Nair-Whitfield shall continue to serve as Interim Chief Executive Officer of the Company pending completion of the search process by the CEO Search Committee. Ms. Nair-Whitfield's service in such capacity shall continue on the terms and conditions of her existing employment arrangements with the Company, as modified by the Interim CEO designation approved by the Board on March 8, 2024.
No commitment, assurance, or representation is made by either party regarding the outcome of the CEO search process. The ultimate selection of a permanent Chief Executive Officer shall be made by the full Board of Directors in the exercise of its fiduciary duties, taking into account the recommendation of the CEO Search Committee.
Section 7: Governance Commitments
7.1 Board Composition and Refreshment
The Board shall maintain a majority of independent directors at all times during the Standstill Period, as required by Section 303A of the NYSE Listed Company Manual and the Company's Corporate Governance Guidelines. The Company shall take all actions necessary to ensure continued compliance with applicable independence requirements.
The Board's declassified structure — pursuant to which all directors are elected annually by the Company's shareholders — as approved by the Company's shareholders at the 2021 Annual General Meeting, shall be maintained throughout the Standstill Period. The Company shall not take any action to reclassify the Board or otherwise stagger the terms of directors during the Standstill Period.
The total size of the Board shall not be increased above twelve (12) directors during the Standstill Period without the prior written consent of Corvus Peak, which consent shall not be unreasonably withheld, conditioned, or delayed. This restriction is intended to prevent the dilution of the Corvus Designees' proportional representation on the Board through unilateral Board expansion.
7.2 Majority Voting / Plurality Voting
The Company's existing voting standards for the election of directors shall remain in effect throughout the Standstill Period: majority of votes cast in uncontested elections and plurality standard in contested elections, as set forth in the Company's Amended and Restated Bylaws (as effective March 22, 2022).
The Company shall not amend its Certificate of Incorporation, Amended and Restated Bylaws, or Corporate Governance Guidelines to modify the applicable voting standard for the election of directors during the Standstill Period without the prior written consent of Corvus Peak.
7.3 Shareholder Rights Plan
The Company shall not adopt, approve, implement, or maintain any shareholder rights plan, commonly known as a "poison pill," during the Standstill Period. This commitment is consistent with the Board's decision on April 10, 2024, after thorough deliberation and upon the advice of Calderwood & Harkness LLP, not to adopt a shareholder rights plan in response to Corvus Peak's accumulation of shares. In reaching its April 10 determination, the Board considered the applicable legal framework, including the standards set forth in Moran v. Household International, Inc., 500 A.2d 1346 (Del. 1985), and the proportionality analysis required under Unocal Corp. v. Mesa Petroleum Co., 493 A.2d 946 (Del. 1985), as refined by Unitrin, Inc. v. American General Corp., 651 A.2d 1361 (Del. 1995).
For the avoidance of doubt, the adoption by the Board of a shareholder rights plan during the Standstill Period that would apply to Corvus Peak's existing beneficial ownership or any ownership level at or below the twelve percent (12%) cap set forth in Section 4.2 shall constitute an early termination event under Section 4.5(ii).
7.4 Advance Notice Bylaw
The Company's advance notice provisions, as set forth in the Amended and Restated Bylaws (effective March 22, 2022), shall not be amended during the Standstill Period in a manner that would impose materially more restrictive requirements on the nomination of directors or the submission of shareholder proposals.
The Company's current advance notice window requires that nominations and proposals be submitted no earlier than 120 days and no later than 90 days before the anniversary of the prior year's annual meeting of shareholders. This window shall not be shortened, and no additional procedural requirements (including, without limitation, enhanced disclosure obligations, additional questionnaire requirements, or representations and warranties beyond those currently required) shall be imposed during the Standstill Period without the prior written consent of Corvus Peak.
7.5 Forum Selection
The Company's existing exclusive forum selection provision, set forth in Section 11.1 of the Amended and Restated Bylaws, designating the Court of Chancery of the State of Delaware as the sole and exclusive forum for the adjudication of intra-corporate disputes (including claims arising under the DGCL, the Company's Certificate of Incorporation, or the Amended and Restated Bylaws), shall remain in effect throughout the Standstill Period and shall not be amended or waived without the prior written consent of Corvus Peak.
7.6 Strategic Review
Within ninety (90) days following execution of the Definitive Agreement, the Board shall undertake a comprehensive review of the Company's strategic plan and capital allocation priorities. This strategic review shall encompass, at a minimum, the following matters:
(a) An evaluation of the Company's four business segments (Streaming & Digital Content, Live Entertainment & Events, E-Commerce & Merchandising, and Advertising & Brand Partnerships), including an assessment of each segment's financial performance, growth prospects, and strategic fit within the Company's portfolio;
(b) A review of the Company's capital allocation framework, including dividend policy, share repurchase programs, capital expenditure plans, and potential strategic acquisitions or divestitures;
(c) An assessment of the Company's cost structure and operational efficiency, including potential opportunities for margin improvement; and
(d) A review of the Company's balance sheet and financing strategy.
The Corvus Designees shall participate fully in the strategic review in their capacity as members of the Board, with equal access to all materials, analyses, and presentations prepared in connection with the review.
The Board has previously engaged Stonebridge Crane & Co. (engaged April 22, 2024) to evaluate strategic alternatives for the Company. The terms of the Stonebridge engagement include a monthly retainer of $250,000 and a transaction fee of 0.25% of enterprise value, payable upon the consummation of any transaction resulting from the engagement. The Board may, in its discretion, continue or terminate the Stonebridge engagement as part of the strategic review, in consultation with the Corvus Designees.
Section 8: Voting Commitments
8.1 Corvus Peak Voting Obligations
During the Standstill Period, the Corvus Peak Group shall cause all shares of the Company's common stock beneficially owned by the Corvus Peak Group to be present, in person or by proxy, at each annual and special meeting of the Company's shareholders, so as to be counted for purposes of establishing a quorum.
At each such meeting, the Corvus Peak Group shall vote all shares beneficially owned by the Corvus Peak Group in accordance with the Board's recommendations on all matters presented to shareholders for a vote, except the following matters, on which Corvus Peak may vote in its sole discretion:
(a) Extraordinary Transactions. Any proposal relating to a merger, consolidation, business combination, acquisition, or disposition of assets representing more than twenty-five percent (25%) of the Company's enterprise value;
(b) Charter and Bylaw Amendments. Any proposal to amend the Company's Certificate of Incorporation or Amended and Restated Bylaws; and
(c) Other Matters Not Addressed. Any other matter that the parties mutually agree in writing should be excluded from the voting commitment set forth in this Section 8.1.
8.2 Company Voting Obligations
During the Standstill Period, the Company shall include each of the Corvus Designees (and any Replacement Designee appointed in accordance with Section 3.5) on the Company's management slate of director nominees for re-election at each annual meeting of shareholders of the Company, and the Board shall recommend the election of each such Corvus Designee or Replacement Designee to the same extent and with the same level of support as it recommends the election of any other director nominee on the management slate.
The Company shall not take any action to remove any Corvus Designee or Replacement Designee from the Board during the Standstill Period except for cause (as determined by a majority vote of the independent directors of the Board, excluding the Corvus Designees).
Section 9: Information Rights
9.1 Regular Information
Each Corvus Designee serving on the Board shall receive all information, materials, reports, analyses, and other documentation provided to other members of the Board on the same basis, in the same form, and at the same time as such information is provided to other members of the Board. This includes, without limitation, Board packages, committee materials (for committees on which the Corvus Designee serves), management reports, financial statements, budgets, forecasts, and strategic planning documents.
For the avoidance of doubt, Corvus Peak, in its capacity as a shareholder of the Company (as distinct from the Corvus Designees' capacity as directors), shall not have any special or enhanced information rights beyond those available to all shareholders of the Company under applicable law and stock exchange rules. Any information to which Corvus Peak is entitled in its capacity as a shareholder shall be obtained through the customary channels available to all shareholders, including publicly filed reports, press releases, and investor relations materials.
9.2 Confidentiality
Each of Corvus Peak, Damien Solberg, Erin Nakamura, and each Corvus Designee shall maintain the strict confidentiality of all non-public information received in connection with Board service, CEO Search Committee service, or the negotiation and execution of the Definitive Agreement (collectively, "Confidential Information"). No Confidential Information shall be disclosed to any person or entity other than as expressly authorized by the Board or as required by applicable law, regulation, or court order.
Corvus Peak shall establish, maintain, and document appropriate information barriers within its organization between (a) the investment professionals and analysts responsible for the Corvus Peak Group's investment activities with respect to the Company's securities and (b) the Corvus Designees and any other individuals who have access to Confidential Information by virtue of the Definitive Agreement. The information barrier protocols shall be documented in writing and shall be subject to review by the Company's General Counsel upon reasonable request.
The confidentiality obligations set forth in this Section 9.2 shall survive the termination or expiration of the Definitive Agreement as set forth in Section 14.4.
Section 10: Pending Legal Matters
10.1 Section 220 Demand
Corvus Peak's demand for inspection of books and records under Section 220 of the DGCL, dated March 22, 2024 (the "Section 220 Demand"), seeking production of materials relating to the CEO search committee, CEO succession process, and related Board deliberations, shall be withdrawn with prejudice by Corvus Peak promptly upon execution of the Definitive Agreement.
The Company's objection to the Section 220 Demand on grounds of attorney-client privilege and work product doctrine, as set forth in the Company's response letter dated April 2, 2024 (prepared by Calderwood & Harkness LLP, on behalf of the Company, and addressed to Dominic Sayer at Blackthorn Howell & Crane LLP, counsel to Corvus Peak), shall become moot upon Corvus Peak's withdrawal of the Section 220 Demand.
The withdrawal of the Section 220 Demand and the mooting of the Company's objections shall not constitute an admission by either party regarding the validity of the Section 220 Demand, the merits of Corvus Peak's stated purpose for inspection, the applicability of the attorney-client privilege or work product doctrine to the requested materials, or any other matter relating to the Section 220 Demand.
10.2 Release of Claims
Upon execution of the Definitive Agreement, the parties shall exchange mutual releases (the "Mutual Release") of all claims, demands, causes of action, obligations, and liabilities, whether known or unknown, that either party may have against the other arising from, relating to, or in connection with:
(a) The proxy contest relating to the Company's 2024 Annual General Meeting, including all proxy solicitations, Schedule 13D filings, Schedule 14A filings, soliciting materials, press releases, public letters, and other communications made in connection therewith;
(b) The Section 220 Demand and the Company's response thereto;
(c) Any and all public statements made by either party or their respective affiliates, representatives, advisors, or agents relating to the matters described in this Term Sheet; and
(d) All other matters arising from or relating to the relationship between the parties through the date of execution of the Definitive Agreement.
The Mutual Release shall contain customary carve-outs for (i) claims arising from fraud or willful misconduct; (ii) obligations arising under the Definitive Agreement itself; and (iii) claims by third parties that are not within the control of the releasing party.
Section 11: Public Announcement
11.1 Joint Press Release
Promptly following execution of the Definitive Agreement, the parties shall issue a joint press release (the "Joint Press Release") in a form mutually agreed upon by the parties prior to execution. The Joint Press Release shall describe the material terms of the Cooperation Agreement, including the appointment of the Corvus Designees to the Board, the standstill provisions, the reset and reconstitution of the CEO search process, the mutual non-disparagement commitments, and the withdrawal of the Corvus Peak proxy contest.
A draft form of the Joint Press Release is attached to this Term Sheet as Appendix A. The final form of the Joint Press Release shall be agreed upon by the parties prior to execution of the Definitive Agreement, with each party having the right to approve any quotations attributed to its representatives.