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PRIVILEGED & CONFIDENTIAL ATTORNEY-CLIENT COMMUNICATION ATTORNEY WORK PRODUCT

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

June 11, 2024

MEMORANDUM

TO: Board of Directors, Aurelius Global Media Group PLC

ATTENTION: Dame Elspeth Greenvale, Independent Non-Executive Chair Nadine Khalil, General Counsel & Corporate Secretary

FROM: Calderwood & Harkness LLP

RE: D&O Insurance Implications of Board Reconstitution Following 2024 Annual General Meeting

MATTER NO.: 1017-00002

PREPARED BY: Colette Whitman (Billing Partner); Audrey Zhou (Lead Associate)

REVIEWED BY: Nathaniel Bower (Responsible Partner)

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I. Executive Summary

The purpose of this memorandum is to analyze the implications of the results of Aurelius Global Media Group PLC's ("AGMG" or the "Company") June 7, 2024 Annual General Meeting (the "AGM") on the Company's directors' and officers' liability insurance coverage, with particular focus on continuing coverage for departing directors and the notice obligations triggered by the board reconstitution. This memorandum is provided at the direction of Dame Elspeth Greenvale, Independent Non-Executive Chair, and Nadine Khalil, General Counsel & Corporate Secretary, and is intended to serve as a comprehensive guide for the Board of Directors as it navigates the insurance and indemnification landscape during this period of governance transition.

As the Board is aware, the 2024 AGM resulted in the election of three director nominees put forward by Corvus Peak Capital Partners LP ("Corvus Peak"), an activist investor holding approximately 8.7% of the Company's outstanding ordinary shares. The successful Corvus Peak nominees — Malcolm Trask, Vanessa Loring, and Dr. Raymond Chu — replaced three incumbent directors who were not re-elected: Tobias Kessler, Hugh Pemberton, and Sofia Delgado-Ríos. This reconstitution of the Board, effected through a contested proxy election, gives rise to a series of significant insurance-related concerns that require prompt and careful attention.

The Company's primary directors' and officers' liability insurance is carried by Helmsley Indemnity Corp. ("Helmsley") under policy number HIC-DOL-2024-009347, with an annual premium of $3.8 million, per-occurrence limits of $75 million, and aggregate limits of $150 million. The policy period runs from January 1, 2024 through December 31, 2024.

After a thorough review of the applicable policy provisions, the relevant Delaware statutory and bylaw framework, and the specific circumstances surrounding the board reconstitution, we have reached the following key conclusions:

1. Continuing Coverage for Departing Directors. Departing directors Kessler, Pemberton, and Delgado-Ríos remain "Insured Persons" under the Helmsley policy for claims arising from Wrongful Acts committed during their respective periods of service on the Board. However, the Board must take affirmative steps to preserve this coverage, including by filing timely notice with Helmsley and evaluating the procurement of extended reporting period ("tail") coverage.

2. Prompt Notice Required. The board reconstitution constitutes a material change in the composition of the Board that almost certainly triggers notice obligations under the Helmsley policy. In addition, the activist campaign, contested proxy election, pending Section 220 books-and-records demand, and related matters constitute "circumstances" that may give rise to future claims and should be reported to Helmsley on a precautionary basis to preserve coverage under the current policy period.

3. Tail Coverage Evaluation. The Board should evaluate whether to procure tail (extended reporting period) coverage or a standalone run-off policy for the departing directors, in order to ensure that claims asserted after the current policy period (or after any future policy renewal that may exclude former directors) are covered. We estimate that a six-year tail endorsement for the departing directors could cost between approximately $1.5 million and $3.3 million.

4. Potential Coverage Gaps. Potential coverage gaps exist with respect to the activist-related claims environment, including the applicability of the policy's "change in control" provision, the "Insured vs. Insured" exclusion, and coverage for non-U.S. regulatory proceedings. These gaps require immediate review and, where possible, remediation through endorsements or supplemental coverage.

Each of these conclusions is discussed in detail below.

II. Overview of Current D&O Policy

A. Policy Details

The Company's current directors' and officers' liability insurance program is summarized as follows:

The policy is structured as a claims-made policy, meaning that it covers claims first made against Insured Persons during the policy period (or any applicable extended reporting period), regardless of when the underlying Wrongful Act occurred, provided the Wrongful Act occurred after the policy's retroactive date. This claims-made structure is standard in the D&O insurance market and has important implications for the timing of notice, the availability of tail coverage, and the preservation of coverage for departing directors, as discussed in detail in Sections IV and V below.

B. Key Policy Provisions Relevant to Board Changes

Several provisions of the Helmsley policy are directly implicated by the board reconstitution. While we have been working from the policy summary and key provisions previously made available to us by the Company, we note that a complete review of the full policy text — including all endorsements, riders, and amendments — is necessary to confirm the analysis set forth in this memorandum. We have included a recommendation to obtain and review the complete policy text as one of our immediate action items in Section X below.

Definition of "Insured Person." D&O policies typically define "Insured Person" broadly to include any natural person who was, is, or shall become a duly elected or appointed director or officer of the Named Insured or any of its subsidiaries. This definition is designed to ensure that coverage follows the individual, not the position, and extends to former directors and officers for claims arising from Wrongful Acts committed during their period of service. Under this standard formulation, departing directors Kessler, Pemberton, and Delgado-Ríos would remain Insured Persons for claims arising from acts or omissions that occurred while they served on the Board. This conclusion holds even after their departure, provided that the claim is first made during the policy period (or any applicable extended reporting period).

"Change in Control" Provisions. Many D&O policies — and we believe the Helmsley policy is likely among them — include a "change in control" provision that may limit or modify coverage upon the occurrence of a defined change-in-control event. The significance of this provision in the present context cannot be overstated: if the board reconstitution is deemed to constitute a "change in control" under the Helmsley policy, the policy could automatically convert to run-off-only coverage for the remainder of the policy period, and the Company would need to procure an entirely new policy for prospective coverage of the reconstituted Board. We analyze this provision in detail in Section VI below.

Severability Clause. The severability clause is a critical protection for individual insureds. Under a standard severability provision, the coverage available to any one Insured Person is not vitiated by the conduct, representations, or knowledge of any other Insured Person. This means that even if one director's conduct gives rise to a policy exclusion or defense (for example, fraud or intentional misconduct), the coverage available to other directors should not be affected. The severability clause is particularly important in the current environment, where the Board includes directors with potentially divergent interests and loyalties.

"Wrongful Act" Definition. The Helmsley policy's definition of "Wrongful Act" is the gateway to coverage. D&O policies typically define Wrongful Act broadly to include any actual or alleged error, misstatement, misleading statement, act, omission, neglect, or breach of duty by an Insured Person in their capacity as a director or officer of the Named Insured. This definition should encompass the full range of potential claims that may arise from the activist campaign, the proxy contest, the CEO succession process, and related matters, provided that the alleged conduct occurred in the Insured Persons' directorial or officer capacity.

C. Side A, B, and C Coverage Structure

The Helmsley policy, like most modern D&O policies, provides three distinct types of coverage, conventionally referred to as Side A, Side B, and Side C:

Side A (Direct Coverage). Side A provides direct coverage to individual directors and officers for losses arising from claims for Wrongful Acts when the Company is unable to indemnify them. This inability to indemnify may arise due to the Company's insolvency, a legal prohibition on indemnification (for example, where a director has been found liable for a breach of the duty of loyalty that cannot be indemnified under Delaware law), or a refusal by the Company to provide indemnification. Side A coverage is the single most important protection for individual directors and officers, as it provides a direct payment obligation from the insurer to the individual insured, without any requirement that the Company serve as an intermediary. For departing directors who will no longer have direct access to the Company's ongoing indemnification infrastructure and decision-making processes, Side A coverage assumes even greater significance, as discussed further in Section IX below.

Side B (Reimbursement Coverage). Side B reimburses the Company for indemnification payments that the Company has made to its directors and officers in connection with covered claims. In the typical case, when a director is sued and the Company advances defense costs and ultimately indemnifies the director, the Company looks to Side B of the D&O policy to recover those indemnification expenditures. Side B coverage thus protects the Company's balance sheet and incentivizes robust indemnification. However, Side B coverage is of limited utility to departing directors if the reconstituted Board declines to indemnify them or delays indemnification payments — in that scenario, only Side A coverage provides direct protection.

Side C (Entity Coverage). Side C covers the Company itself for securities claims — that is, claims brought against the Company alleging violations of securities laws. Side C coverage is relevant here because the governance turmoil and activist campaign may give rise to securities class action litigation against both the Company and its individual directors and officers, as discussed in Section VIII.A below.

The interaction among these three coverage layers is critical to the analysis. For departing directors, the hierarchy of protections can be summarized as follows: Side B reimburses the Company for indemnification payments it makes on their behalf; if the Company is unable or unwilling to indemnify, Side A steps in to cover the individual directors directly. The reliability of Side B coverage depends on the Company's willingness to indemnify departing directors — a willingness that may be tested under the reconstituted Board. We note in this regard that AGMG is incorporated in Delaware, and that the Company's Amended and Restated Bylaws (effective March 22, 2022), together with the framework established by Section 145 of the Delaware General Corporation Law ("DGCL"), govern the Company's indemnification obligations. The interplay between the indemnification framework and the D&O insurance coverage is discussed in Section IX below.

III. Impact of Board Reconstitution on Coverage

A. Departing Directors: Tobias Kessler, Hugh Pemberton, and Sofia Delgado-Ríos

All three departing directors ceased to serve as members of the Board of Directors as of the conclusion of the June 7, 2024 AGM, when the results of the contested election were certified and the Corvus Peak nominees were declared elected. Under standard D&O policy terms, and consistent with the definition of "Insured Person" discussed in Section II.B above, departing directors should remain Insured Persons under the Helmsley policy for claims arising from Wrongful Acts committed during their tenure on the Board. Their coverage does not automatically terminate upon the conclusion of their service; rather, it continues for the duration of the policy period (and any applicable extended reporting period), subject to the policy's terms and conditions.

Notwithstanding this general principle, the departing directors face a number of specific risks that warrant careful attention:

Key Risk Areas. The activist campaign mounted by Corvus Peak, the contested proxy election, the deadlocked CEO succession process, the Board's consideration and rejection of defensive measures (including the poison pill), and the pending Section 220 books-and-records demand collectively constitute a highly charged environment in which claims against the departing directors are reasonably foreseeable. Such claims could take the form of shareholder derivative actions alleging breach of fiduciary duty, securities class actions alleging material misstatements or omissions in proxy solicitation materials, or regulatory investigations and enforcement proceedings. Each of these categories of potential claims is analyzed in Section VIII below.

Tobias Kessler. Mr. Kessler served as Chair of the Special Committee established by the Board to manage the CEO search process. In this capacity, Mr. Kessler oversaw the engagement of executive search firms, participated in the evaluation of candidates, and was centrally involved in the Board's deliberations regarding the Interim CEO designation of Priya Nair-Whitfield. Corvus Peak publicly criticized the Interim CEO designation as a "predetermined outcome" in its April 15, 2024 public letter, and the activist has specifically identified Mr. Kessler's role in the process as a basis for its concerns. Mr. Kessler's leadership of the Special Committee also placed him at the center of the Board's response to Corvus Peak's activist campaign, including the evaluation and rejection of Corvus Peak's May 10, 2024 settlement proposal. These activities give rise to heightened exposure for claims that decisions made in connection with the CEO search and activist response constituted breaches of fiduciary duty.

Hugh Pemberton. Mr. Pemberton is a co-founder of AGMG and held approximately 2.1% of the Company's outstanding ordinary shares (8,664,600 shares) at the time of his departure from the Board. His insider status and significant equity stake create a distinct risk profile. Potential claims against Mr. Pemberton could include allegations that his participation in Board deliberations was influenced by his personal financial interests as a substantial shareholder, rather than by the best interests of the Company and its shareholders as a whole. In addition, Mr. Pemberton's long tenure and deep involvement in the Company's affairs may expose him to claims relating to historical corporate decisions that are revisited in the context of the current governance dispute.

Sofia Delgado-Ríos. Ms. Delgado-Ríos participated in Board deliberations regarding the Company's defensive posture in the face of the Corvus Peak campaign, including the Board's consideration and ultimate rejection of a shareholder rights plan (poison pill) on April 10, 2024. She also participated in discussions regarding the Board's response to Corvus Peak's demands and the evaluation of strategic alternatives. Potential claims could allege that the Board's decision to reject the poison pill left the Company and its shareholders vulnerable, or conversely, that the Board's consideration of defensive measures reflected improper entrenchment motives.

Section 220 Books-and-Records Demand. We note with particular concern the ongoing Section 220 books-and-records demand filed by Corvus Peak on March 22, 2024, seeking access to CEO search committee materials and related Board deliberations. The Company objected to the demand on privilege grounds in its April 2, 2024 response. If Corvus Peak escalates this demand by filing suit in the Delaware Court of Chancery to compel production, the departing directors who participated in the decision to withhold materials on privilege grounds could face claims or be drawn into the resulting litigation. Moreover, as discussed in Section VIII.C below, the reconstituted Board may decide to voluntarily produce materials previously withheld on privilege grounds, with potentially adverse consequences for the departing directors.

B. Incoming Directors: Malcolm Trask, Vanessa Loring, Dr. Raymond Chu

The three Corvus Peak nominees — Malcolm Trask, Vanessa Loring, and Dr. Raymond Chu — automatically became Insured Persons under the existing Helmsley policy upon their election at the AGM. No affirmative action is required to add them to the policy; the standard definition of "Insured Person," which encompasses any natural person who becomes a director during the policy period, operates to extend coverage to them as of June 7, 2024.

However, the circumstances of their nomination and election give rise to several coverage-related concerns:

Potential Conflict of Interest. Each of the incoming directors was nominated by Corvus Peak, and Vanessa Loring is a Managing Director at Corvus Peak Capital Partners LP. The presence on the Board of a director who is simultaneously serving as a senior professional at the Company's largest activist shareholder creates a structural conflict of interest. Actions taken by the incoming directors that serve the interests of Corvus Peak — rather than the interests of the Company and its shareholders as a whole — could give rise to fiduciary duty claims. From an insurance perspective, such claims could trigger disputes regarding coverage, including the application of the "Insured vs. Insured" exclusion discussed in Section VII below.

Malcolm Trask. Mr. Trask was elected Lead Independent Director at the June 10, 2024 meeting of the reconstituted Board. His assumption of this leadership role positions him as a central figure in the reconstituted Board's governance and decision-making, and accordingly increases his personal exposure to claims arising from the Board's post-reconstitution actions.

Vanessa Loring. Ms. Loring was named Chair of the reconstituted Nominating & Governance Committee on June 17, 2024. In connection with her appointment, Ms. Loring announced the Board's intention to engage new governance counsel. This development is particularly relevant to the present analysis, as it signals that the reconstituted Board may alter the Company's approach to governance and insurance matters, including D&O coverage decisions, in ways that could affect the interests of the departing directors.

Dr. Raymond Chu. Dr. Chu's specific committee assignments and leadership roles have not yet been publicly announced. However, as a Corvus Peak nominee, he shares the general conflict-of-interest concerns applicable to the other incoming directors.

C. Continuing Directors

The following directors and officers continue in their positions and are covered without interruption under the Helmsley policy:

Dame Elspeth Greenvale. Dame Elspeth remains as Transitional Chair of the Board through September 30, 2024, as previously announced. Her coverage under the Helmsley policy continues without interruption. However, her role during the transition period — which includes overseeing the handover of governance responsibilities to the reconstituted Board — exposes her to heightened risk of claims related to the adequacy and good faith of the transition process.

Priya Nair-Whitfield. Ms. Nair-Whitfield continues as Interim CEO/COO and Executive Director. Her coverage under the Helmsley policy continues without interruption, both in her capacity as an officer and as a director. Given the contested nature of her designation as Interim CEO and the public criticisms leveled by Corvus Peak, Ms. Nair-Whitfield faces ongoing exposure to claims related to the CEO succession process.

Lucinda Farrow-Grant, Reginald Osei, Dr. Anwen Llewellyn, and Garrett Voss. These four directors continue in their positions on the Board, and their coverage under the Helmsley policy continues without interruption. Each participated in pre-reconstitution Board deliberations and may have exposure to claims arising from those deliberations, to the same extent as the departing directors, with respect to Wrongful Acts occurring during the relevant period.

Nadine Khalil. Ms. Khalil continues as General Counsel & Corporate Secretary. Although she is not a voting member of the Board, she attends Board meetings in her capacity as Corporate Secretary and is covered as an officer under the Helmsley policy. Her coverage continues without interruption. Ms. Khalil's role in managing the notice obligations and insurance matters discussed in this memorandum is critical, and her continued coverage is essential to her ability to discharge those responsibilities.

IV. Notice Obligations

A. Notice of Board Reconstitution

Virtually all D&O policies require the Named Insured to provide prompt written notice to the carrier of material changes in the composition of the board of directors. This obligation is typically heightened when the change results from a contested election or activist campaign, as such events signal an increased risk of claims against directors and officers. The rationale for the notice requirement is straightforward: the carrier needs to be aware of material changes in the insured risk in order to assess its exposure and manage its reserves.

The Helmsley policy likely requires written notice within a specified period — commonly 30 or 60 days — of a "material change" event. The replacement of three out of ten voting directors through a contested proxy election unquestionably constitutes a material change in the composition of the Board, and we believe that the Company has an obligation to notify Helmsley of this event promptly.

Recommendation. Nadine Khalil, as General Counsel & Corporate Secretary, should provide written notice to Helmsley Indemnity Corp. promptly, and in no event later than 30 days after June 7, 2024 (i.e., by July 7, 2024 at the latest). The notice should:

(a) Reference policy number HIC-DOL-2024-009347;

(b) Describe the results of the June 7, 2024 AGM, including the contested nature of the election;

(d) Identify the incoming directors: Malcolm Trask, Vanessa Loring, and Dr. Raymond Chu, and note that they were nominees of Corvus Peak Capital Partners LP;

(e) Describe the reconstitution of Board committees, including the election of Malcolm Trask as Lead Independent Director and the appointment of Vanessa Loring as Chair of the Nominating & Governance Committee; and

(f) Request written confirmation from Helmsley that the departing directors remain Insured Persons under the policy for claims arising from Wrongful Acts committed during their period of service.

The notice should be sent by certified mail and email to Helmsley Indemnity Corp. at One Beacon Street, Boston, MA 02108, directed to the attention of the Claims and Underwriting departments, with a copy retained in the Company's insurance records.

B. Notice of Circumstances That May Give Rise to Claims

In addition to the notice of board reconstitution, we strongly recommend that the Company file a "notice of circumstances" with Helmsley under the policy's reporting provisions. A notice of circumstances is a precautionary filing that identifies specific facts and circumstances that may give rise to future claims against Insured Persons. The purpose of filing such a notice is to "anchor" these circumstances to the current policy period, so that if a claim is subsequently asserted — even after the current policy period expires on December 31, 2024 — the claim will be deemed to have been first made during the current policy period and will be covered under the current policy's terms and limits.

The importance of this filing cannot be overstated. In a claims-made policy, the timing of the claim is critical: if a claim is first made during a subsequent policy period, it is governed by the terms and limits of that subsequent policy, not the current policy. If the reconstituted Board decides not to renew the D&O policy on comparable terms, or if a future carrier imposes exclusions for activist-related claims, a failure to file a timely notice of circumstances could leave the departing directors (and other Insured Persons) without coverage for claims that are directly related to events occurring during the current policy period.

Specific Circumstances to Identify. The notice of circumstances should identify the following matters as potential sources of future claims against the Company's directors and officers:

(i) Corvus Peak's Proxy Contest and the Contested Election. Corvus Peak initiated a proxy contest to elect its nominees to the Board, culminating in the contested election at the June 7, 2024 AGM. The proxy campaign involved extensive public communications, solicitation materials, and media engagement by both the Company and Corvus Peak. The conduct of the proxy solicitation, the accuracy of proxy disclosures, and the procedural fairness of the election process are all potential sources of claims against directors who participated in the Company's response to the campaign.

(ii) Corvus Peak's Section 220 Books-and-Records Demand (March 22, 2024). Corvus Peak filed a demand under DGCL Section 220 seeking access to CEO search committee materials and related Board deliberations. The Company objected on privilege grounds in its April 2, 2024 response. This demand remains pending and could escalate into litigation in the Delaware Court of Chancery.

(iii) Public Allegations Regarding the Interim CEO Designation. In its April 15, 2024 public letter, Corvus Peak alleged that the Board's designation of Priya Nair-Whitfield as Interim CEO constituted a "predetermined outcome" that undermined the integrity of the CEO search process. These allegations could form the basis of derivative or securities claims.

(iv) Board's Rejection of the Poison Pill (April 10, 2024). The Board considered and rejected the adoption of a shareholder rights plan (poison pill) as a defensive measure against Corvus Peak's activist campaign. Potential claimants could allege that the Board's failure to adopt available defensive measures constituted a breach of fiduciary duty, or conversely, that the Board's consideration of the poison pill reflected entrenchment motives.

(v) Board's Rejection of Corvus Peak's Settlement Proposal (May 10, 2024). The Board declined Corvus Peak's May 10, 2024 proposal for a negotiated settlement of the proxy contest. Potential claimants could allege that the Board's rejection of a reasonable compromise constituted a waste of corporate resources or a breach of the duty of care.

(vi) Strategic Alternatives Review (April 22, 2024). The Board initiated a review of strategic alternatives through its financial advisor, Stonebridge Crane & Co. If strategic alternatives are later alleged to have been pursued or shelved improperly — for example, if the reconstituted Board abandons the review in a manner that is perceived as serving Corvus Peak's interests rather than the interests of all shareholders — fiduciary duty claims could follow.

Recommendation. The notice of circumstances should be filed concurrently with the notice of board reconstitution discussed in Section IV.A above, and should be sent to the same recipients at Helmsley Indemnity Corp. The notice should be drafted carefully to identify the circumstances with sufficient specificity to satisfy the policy's reporting requirements, while avoiding any admissions of liability or characterizations that could be used against the Company or its directors in future proceedings.

We are prepared to draft both notices for Ms. Khalil's review and execution, and we recommend that they be transmitted no later than June 25, 2024 to ensure compliance with the policy's reporting requirements.

V. Tail Coverage / Extended Reporting Period Analysis

A. Need for Tail Coverage

"Tail" or "extended reporting period" ("ERP") coverage is a mechanism that extends the time during which claims can be reported under a claims-made policy after the policy period ends or after an insured person ceases to be covered under the policy. In the context of D&O insurance, tail coverage is particularly important for departing directors and officers, who face the risk that claims arising from their board service may not be asserted until months or years after their departure — well beyond the expiration of the policy period during which they served.

The need for tail coverage in the present circumstances is acute for several reasons:

Risk of Post-Policy-Period Claims. The current Helmsley policy expires on December 31, 2024. While the departing directors remain Insured Persons through that date for claims first made during the current policy period, the highly charged nature of the governance dispute and the pendency of the Section 220 demand suggest that claims may not be asserted until 2025 or later. Derivative litigation, in particular, often follows a protracted timeline: shareholders must first make a demand on the Board (or demonstrate that demand would be futile), and the reconstituted Board must evaluate and respond to such a demand. Securities class action litigation may also develop over an extended period, particularly if AGMG's stock price experiences further volatility.

Risk of Non-Renewal or Modified Renewal Terms. The reconstituted Board will control the Company's insurance procurement decisions. If the Board, influenced by Corvus Peak nominees, decides not to renew D&O coverage on terms that protect former directors — for example, by selecting a carrier that excludes claims related to the pre-reconstitution period, or by declining to maintain coverage levels adequate to protect former directors — the departing directors could face a coverage gap.

Limitations of Indemnification as a Backstop. As discussed in Section IX below, the Company's indemnification obligations under the Amended and Restated Bylaws and DGCL Section 145 provide a legal backstop for departing directors. However, these obligations are only as reliable as the Company's financial ability and willingness to honor them. If the reconstituted Board contests indemnification requests from former directors, or if the Company encounters financial difficulties, the indemnification backstop may prove inadequate. D&O insurance — particularly Side A coverage — is the critical safeguard in such scenarios.

Statute of Limitations Considerations. Under Delaware law, the statute of limitations for breach of fiduciary duty claims is generally three years, and federal securities fraud claims under Section 10(b) of the Securities Exchange Act of 1934 are subject to a two-year statute of limitations (and a five-year statute of repose). In practice, claims arising from the governance dispute could be asserted at any point within these limitations periods. A six-year tail coverage period is standard in the market and would provide adequate protection against claims arising from the departing directors' service.

B. Options for Securing Tail Coverage

We have identified three principal options for securing tail coverage for the departing directors:

1. Negotiate Tail Endorsement Under Existing Helmsley Policy. The most straightforward option is to request that Helmsley Indemnity Corp. issue a tail endorsement to the existing policy, extending the reporting period for departing directors Kessler, Pemberton, and Delgado-Ríos. A tail endorsement would allow claims arising from the departing directors' service to be reported under the existing policy's terms and limits for a specified period — typically six years — after their departure or after the policy period ends, whichever is later.

The cost of a tail endorsement varies depending on the carrier, the risk profile, and the duration of the extended reporting period. As a general market benchmark, tail premiums are typically calculated as 150% to 300% of the annual run-rate premium attributable to the departing insured persons. For purposes of an illustrative estimate:

• Three departing directors out of approximately ten to eleven Insured Persons (directors and named officers) suggest a proportionate share of the $3.8 million annual premium of approximately $1.0 million to $1.1 million.

• Applying the 150% to 300% multiplier, the tail premium for a six-year extended reporting period could range from approximately $1.5 million to $3.3 million.

• This estimate is indicative only and would need to be confirmed through direct discussion with Helmsley.

2. Standalone Run-Off Policy. As an alternative to a tail endorsement, the Company (or the departing directors individually) could procure a separate, standalone run-off D&O policy from Helmsley or another carrier. A standalone run-off policy would provide dedicated coverage for the departing directors for claims arising from their board service, independent of the Company's ongoing D&O program. This option offers the advantage of insulating the departing directors' coverage from future changes to the Company's insurance program, but may be more expensive and administratively complex than a tail endorsement.

3. Indemnification Agreements. As a complement to (but not a substitute for) insurance coverage, the Company should ensure that individual indemnification agreements between AGMG and each departing director are in place and enforceable. These agreements provide a contractual obligation of indemnification that survives the director's departure from the Board and cannot be unilaterally amended by the reconstituted Board (subject to the terms of the agreement). However, as noted above, indemnification agreements are only as reliable as the Company's financial ability and willingness to honor them, and they do not provide the same certainty and immediacy of protection as insurance coverage.

Recommendation. We recommend that the Company pursue Option 1 — the tail endorsement under the existing Helmsley policy — as the most cost-effective and administratively straightforward option. Discussions with Helmsley should be initiated immediately, given the time-sensitive nature of the governance transition and the need to secure coverage before the reconstituted Board potentially deprioritizes the matter.

C. Timing Considerations

Several timing factors bear on the tail coverage analysis:

Policy Expiration. The current Helmsley policy expires on December 31, 2024. Tail coverage should ideally be secured before renewal negotiations begin for the 2025 policy year, as the renewal process will be controlled by the reconstituted Board and may not prioritize the interests of departing directors.

Reconstituted Board's Control Over Insurance Decisions. Following the board reconstitution, the incoming Corvus Peak nominees — together with whichever continuing directors they are able to align with — will have significant influence over the Company's insurance procurement decisions. If the incoming directors decline to authorize tail coverage for departing directors, or if they delay action on this matter until the issue becomes moot, the departing directors may be forced to procure personal coverage at their own expense. Personal D&O coverage is available in the market, but it is significantly more expensive than company-procured coverage and may offer narrower terms.

Special Committee Dissolution. The Board's June 14, 2024 resolution tabling the CEO succession process and dissolving the Special Committee may signal a broader shift in priorities that could deprioritize former directors' interests. This development underscores the urgency of securing tail coverage before the reconstituted Board consolidates procedural control over governance and insurance matters.

Recommendation. We recommend that the Board authorize the procurement of tail coverage at the earliest available Board meeting, and in any event before Corvus Peak-aligned directors are able to consolidate procedural control over insurance-related decisions. If a Board resolution is not feasible in the immediate term, Dame Elspeth Greenvale, as Transitional Chair, and Nadine Khalil, as General Counsel, should initiate preliminary discussions with Helmsley to obtain pricing and terms for a tail endorsement, so that a proposal can be presented to the Board for approval at the earliest opportunity.

VI. "Change in Control" Provision Analysis

A. Potential Trigger

A significant number of D&O policies contain a "change in control" provision that operates to modify or limit coverage upon the occurrence of a defined change-in-control event affecting the Named Insured. The typical effect of a change-in-control trigger is that the existing policy automatically converts to a "run-off-only" policy for the remainder of the policy term, meaning that the policy will cover only claims arising from Wrongful Acts committed prior to the change-in-control event, and the Named Insured must procure a new policy to obtain prospective coverage for the reconstituted Board.

The "change in control" definition in D&O policies varies by carrier and policy form, but commonly includes one or more of the following triggering events:

(a) The acquisition by any person or group of a specified percentage of the Named Insured's voting securities (often 50% or more);

(b) A merger, consolidation, or similar business combination involving the Named Insured;

(d) A change in the composition of a majority of the board of directors within a specified period, whether through election, resignation, removal, or otherwise.

Application to the Present Facts. The June 7, 2024 AGM resulted in the replacement of three out of ten voting directors on the AGMG Board. This represents a change in 30% of the Board's composition — less than a majority. Under the most common formulation of the "change in control" definition (which requires a change in a majority of the board), the reconstitution would likely not constitute a change in control.

However, we caution that some D&O policies define "change in control" more broadly. Certain policy forms include within the definition any change in board composition that results from a contested election or proxy contest, regardless of the number of seats affected. Other policies may define "change in control" to include any event that results in a single shareholder or group of shareholders obtaining effective control of the board, even if the shareholder does not hold a majority of voting securities. Given that Corvus Peak holds 8.7% of AGMG's outstanding shares and has now placed three nominees on a ten-person board, an argument could be made — depending on the precise policy language — that Corvus Peak has obtained a degree of influence sufficient to trigger a broadly drafted change-in-control provision.

Consequences if Triggered. If the Helmsley policy's "change in control" provision is triggered by the board reconstitution, the consequences would be significant:

(i) The existing policy would automatically convert to run-off-only coverage for the remainder of the policy term (i.e., through December 31, 2024), covering only claims arising from Wrongful Acts committed prior to the change-in-control event;

(ii) The Company would need to procure an entirely new D&O policy to obtain prospective coverage for the reconstituted Board, potentially at a higher premium and on less favorable terms;

(iii) The conversion to run-off-only coverage could have implications for the availability and pricing of tail coverage for departing directors; and

(iv) The aggregate limits of the run-off policy would be shared among all Insured Persons for claims arising from the pre-reconstitution period, creating the potential for competition among insureds for limited coverage.

If Not Triggered. If the board reconstitution does not constitute a "change in control" under the Helmsley policy, the policy continues on its existing terms for the remainder of the policy period. The incoming directors are automatically covered as Insured Persons, and the departing directors retain their coverage for claims arising from Wrongful Acts committed during their service. This is the more favorable outcome from the perspective of all Insured Persons.

B. Recommendation

Given the potentially far-reaching consequences of a change-in-control determination, we recommend the following actions:

1. Obtain and Review the Complete Helmsley Policy. As noted in Section II.B above, a complete review of the Helmsley policy — including all endorsements, riders, and amendments — is necessary to determine the precise "change in control" definition applicable to the Company's coverage. Nadine Khalil should request the complete policy text from Helmsley (or from the Company's insurance broker) immediately, and Calderwood & Harkness should review the relevant provisions upon receipt.

2. Request Written Confirmation from Helmsley. If the policy text reveals any ambiguity regarding whether the June 7, 2024 board reconstitution constitutes a "change in control," we recommend requesting a written confirmation from Helmsley that the reconstitution does not trigger the change-in-control provision. Such a confirmation — often referred to as a "no-action" or "no-trigger" letter — would provide certainty regarding the continuing status of the policy and would be valuable documentation in the event of a future coverage dispute.

3. Prepare for Alternative Scenarios. In the event that the change-in-control provision is triggered (or that Helmsley takes the position that it has been triggered), the Company should be prepared to procure a new prospective D&O policy promptly. We recommend that the Company's insurance broker be placed on notice of this contingency so that preliminary market soundings can be conducted.

VII. "Insured vs. Insured" Exclusion

A standard feature of virtually all D&O policies is the "Insured vs. Insured" exclusion, which bars coverage for claims brought by one Insured Person (or by the Named Insured itself) against another Insured Person. The purpose of this exclusion is to prevent collusive or self-dealing claims — that is, claims manufactured by or at the direction of the insured entity or its insiders in order to trigger coverage and extract insurance proceeds.

Relevance to the Present Situation. The "Insured vs. Insured" exclusion is of particular concern in the current environment because of the potential for the reconstituted Board to authorize the Company to bring claims against the departing directors. Corvus Peak's public statements — including its April 15, 2024 letter criticizing the Board's handling of the Interim CEO designation — have laid the groundwork for allegations that the pre-reconstitution Board breached its fiduciary duties. If the reconstituted Board, now including three Corvus Peak nominees, determines that such claims have merit and authorizes the Company to pursue them, the "Insured vs. Insured" exclusion could bar coverage for the departing directors' defense costs and any resulting liability.

This scenario is not hypothetical. In numerous contested governance situations, incoming directors aligned with activist shareholders have caused the company to investigate and pursue claims against their predecessors, often as a means of vindicating the activist's narrative and creating leverage for related negotiations. The departing directors' exposure in this regard is real and significant.

Scope and Limitations of the Exclusion. The "Insured vs. Insured" exclusion varies in scope depending on the specific policy language. Important distinctions include:

(a) Direct Claims vs. Derivative Claims. The exclusion typically applies to direct claims brought by the Named Insured or by an Insured Person against another Insured Person. However, many policies expressly carve out shareholder derivative claims — that is, claims brought by shareholders on behalf of the company — from the scope of the exclusion. This carve-out is significant because derivative claims are the most common vehicle for fiduciary duty litigation against directors. If the Helmsley policy includes a derivative claim carve-out, the departing directors would retain coverage for derivative claims even if the "Insured vs. Insured" exclusion would otherwise apply to direct claims by the Company.

(b) Whistleblower and Employment-Related Carve-Outs. Many policies also carve out claims brought by insured persons in a whistleblower capacity or employment-related claims from the "Insured vs. Insured" exclusion. While these carve-outs are less directly relevant to the governance context, they illustrate the general principle that the exclusion is not absolute and may be subject to negotiated exceptions.

(c) "At the Direction of" Language. Some policies extend the exclusion to claims brought "at the direction of" or "with the cooperation of" an Insured Person, even if the nominal plaintiff is a third party (e.g., a shareholder filing a derivative suit at the instigation of a Board member). This language could be relevant if Corvus Peak-aligned directors encourage or facilitate shareholder litigation against the departing directors.

Recommendation. We recommend that Calderwood & Harkness obtain and review the specific "Insured vs. Insured" exclusion language in the Helmsley policy as part of the comprehensive policy review recommended in Section X below. If the exclusion is broadly drafted and does not include adequate carve-outs for the types of claims that may be asserted against the departing directors, we recommend exploring the following remedial options:

(i) Negotiate a Carve-Out or Endorsement. Request that Helmsley issue an endorsement narrowing the "Insured vs. Insured" exclusion to preserve coverage for departing directors against Board-authorized claims. Such an endorsement could, for example, exclude from the "Insured vs. Insured" exclusion any claim brought against a former Insured Person by or at the direction of a reconstituted Board, provided that the former Insured Person did not participate in or consent to the bringing of the claim.

(ii) Supplement with Standalone Side A Coverage. If the "Insured vs. Insured" exclusion cannot be adequately narrowed, consider procuring standalone Side A coverage for the departing directors that does not contain an "Insured vs. Insured" exclusion or that contains a more favorable version of the exclusion.

VIII. Specific Risk Scenarios and Coverage Implications

A. Securities Litigation Risk

The contested proxy campaign, the CEO succession deadlock, and the public disputes between the Board and Corvus Peak have generated significant negative publicity and market uncertainty regarding AGMG. In the experience of the authors, the combination of a contested proxy election, public allegations of board dysfunction, and a high-profile CEO succession dispute is precisely the type of governance crisis that attracts securities class action litigation.

Dual Listing Exposure. AGMG shares trade on the New York Stock Exchange under the ticker symbol AGMG and on the London Stock Exchange Main Market under the ticker symbol AGMG.L. This dual listing significantly expands the universe of potential plaintiffs and regulatory inquiries. In the United States, shareholders may bring claims under Sections 10(b) and 14(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, as well as under state securities laws. In the United Kingdom, the Company is subject to the regulatory jurisdiction of the Financial Conduct Authority ("FCA"), and potential regulatory actions arising from disclosure failures or market abuse could give rise to additional claims against directors, as discussed in Section VIII.D below.

Market Capitalization and Stock Price Risk. AGMG's market capitalization as of March 1, 2024 was approximately £6.82 billion (approximately $8.65 billion at an exchange rate of $1.2683 per British pound). Any material decline in the Company's stock price attributable to the governance crisis — whether resulting from negative publicity, market uncertainty, investor flight, or the perception of board dysfunction — could trigger securities class action claims under the U.S. federal securities laws. The magnitude of potential damages in a securities class action is directly related to the stock price decline, and a company of AGMG's market capitalization could face claims in the hundreds of millions of dollars.

Coverage Implications. Securities class action claims against the Company would be covered under Side C (entity coverage) of the Helmsley policy, while claims against individual directors and officers would be covered under Side A (direct coverage) and Side B (reimbursement coverage). The aggregate policy limit of $150 million, while substantial, could be significantly eroded by securities class action claims, potentially leaving inadequate limits available for other types of claims against individual directors. This underscores the importance of preserving the current policy's limits through timely notice and claims management.

SEC-Related Risks. The proxy solicitation process is subject to detailed regulatory requirements under Regulation 14A of the Securities Exchange Act of 1934, including requirements regarding the accuracy and completeness of proxy solicitation materials. Any material misstatement or omission in the Company's proxy statement, or any failure to comply with the procedural requirements of Schedule 14A, could give rise to SEC enforcement actions or private litigation. Both the Company and individual directors who participated in the proxy solicitation process — including the departing directors — face potential exposure in this regard.

B. Derivative Litigation Risk

Shareholder derivative claims represent perhaps the most significant source of potential liability for the departing directors. Corvus Peak, with its 8.7% stake (35,896,200 shares), has both the economic incentive and the procedural standing to bring derivative claims against the pre-reconstitution Board. Other shareholders could similarly bring derivative actions.

Potential derivative claims could allege that the pre-reconstitution Board:

(a) Breached its fiduciary duties in the CEO succession process, including by designating Priya Nair-Whitfield as Interim CEO in a manner alleged to be a "predetermined outcome";

(b) Failed to pursue available defensive measures, including by rejecting the shareholder rights plan (poison pill) on April 10, 2024;

(c) Improperly resisted a negotiated resolution of the proxy contest by rejecting Corvus Peak's May 10, 2024 settlement proposal;

(d) Wasted corporate assets by engaging multiple advisors at significant cost, including Calderwood & Harkness LLP (fees totaling $1,073,067 as of the date of this memorandum), Stonebridge Crane & Co. (retained at $250,000 per month), Hargrove Tate ($250,000 paid of a $750,000 total engagement), and Citrine (advisory fees); or

(e) Failed to properly conduct or complete the strategic alternatives review initiated on April 22, 2024.

Exclusive Forum. Section 11.1 of the Company's Amended and Restated Bylaws designates the Delaware Court of Chancery as the exclusive forum for intra-corporate disputes, including derivative claims. This provision channels derivative litigation into a single forum and provides a degree of predictability regarding the applicable procedural and substantive standards. However, it does not reduce the substantive exposure of the departing directors to derivative claims.

Coverage Implications. Derivative claims against individual directors would be covered under Side A (if the Company cannot indemnify) and Side B (if the Company indemnifies and seeks reimbursement). The "Insured vs. Insured" exclusion analysis discussed in Section VII is critical here: if the reconstituted Board authorizes or cooperates with derivative claims against the departing directors, the exclusion could potentially limit coverage, depending on the specific policy language and the applicable carve-outs.

C. Section 220 Demand Escalation

Corvus Peak's March 22, 2024 demand under DGCL Section 220 for access to CEO search committee materials and related Board deliberations remains pending. The Company objected to the demand on privilege grounds in its April 2, 2024 response, asserting that the requested materials are protected by the attorney-client privilege and the work-product doctrine.

Litigation Risk. If Corvus Peak is dissatisfied with the Company's response, it may file suit in the Delaware Court of Chancery to compel production of the requested materials. Such a proceeding would generate defense costs for the Company, and individual directors who were involved in the privilege determinations — including departing directors who served on the Special Committee — could be drawn into the litigation as witnesses or, in some scenarios, as parties.

Coverage Implications. Defense costs incurred in connection with a Section 220 proceeding should be covered under the Helmsley policy, subject to the policy's definitions and exclusions. However, we note that the coverage analysis may be complicated if the reconstituted Board decides to change course on the privilege objection.

Post-Reconstitution Risk: Voluntary Waiver of Privilege. A particularly concerning scenario is one in which the reconstituted Board — under the influence of Corvus Peak-aligned directors — decides to voluntarily produce materials that the pre-reconstitution Board withheld on privilege grounds. Such a decision could waive the attorney-client privilege over CEO search materials and related Board deliberations, potentially exposing the substance of those deliberations to scrutiny by Corvus Peak and other potential claimants. Former directors who participated in privileged deliberations could face increased litigation risk as a result.

The decision to waive privilege is within the authority of the current Board, and the departing directors would have no ability to prevent it. This underscores the importance of ensuring that the departing directors have robust D&O coverage — and particularly Side A coverage — to protect against claims that may arise from the disclosure of previously privileged materials.

D. UK Regulatory Exposure

AGMG's secondary listing on the London Stock Exchange Main Market subjects the Company and its directors to the regulatory jurisdiction of the FCA. Relevant regulatory requirements include:

(a) DTR 5 Major Shareholding Notifications. Under the FCA's Disclosure Guidance and Transparency Rules, shareholders who acquire or dispose of major shareholdings (at or above specified thresholds) must notify the Company and the FCA. The Company has corresponding disclosure obligations. Any failure to comply with these notification requirements could give rise to regulatory action against the Company and its directors.

(b) Market Abuse Regulation. The Company and its directors are subject to the UK Market Abuse Regulation (UK MAR), which prohibits insider dealing, unlawful disclosure of inside information, and market manipulation. The governance crisis and related communications could give rise to allegations of improper disclosure of inside information, particularly in light of the public exchanges between the Company and Corvus Peak.

(c) Financial Reporting Council. The Company's financial reporting and corporate governance practices are subject to oversight by the Financial Reporting Council ("FRC"). Any investigation or enforcement action by the FRC could result in claims against directors covered under the D&O policy.

Coverage Implications. Many U.S.-issued D&O policies provide coverage for regulatory investigations and proceedings initiated by non-U.S. regulators, but such coverage is not universal. We recommend confirming that the Helmsley policy extends coverage to regulatory investigations and proceedings initiated by the FCA and the FRC. If coverage is limited or unclear, the Company should explore the possibility of obtaining an endorsement extending coverage to UK regulatory matters.

IX. Indemnification Framework — Interaction with D&O Coverage

A. AGMG's Indemnification Obligations

The Company's Amended and Restated Bylaws (effective March 22, 2022) contain indemnification provisions consistent with DGCL Section 145, which establishes the framework for corporate indemnification of directors and officers under Delaware law. The principal elements of this framework are as follows:

Mandatory Indemnification. Under DGCL Section 145(c), a corporation is required to indemnify a present or former director or officer who has been successful on the merits or otherwise in defense of any proceeding to which the individual was a party by reason of their service as a director or officer. This mandatory indemnification covers expenses (including attorneys' fees) actually and reasonably incurred in connection with the proceeding.

Permissive Indemnification. Under DGCL Section 145(a) and (b), a corporation may indemnify a present or former director or officer against expenses, judgments, fines, and amounts paid in settlement in connection with proceedings to which the individual was a party by reason of their service, provided that the individual acted in good faith and in a manner reasonably believed to be in or not opposed to the best interests of the corporation (and, in the case of criminal proceedings, had no reasonable cause to believe that the conduct was unlawful). Permissive indemnification is subject to a determination that the applicable standard of conduct has been met, which may be made by the board of directors, by independent legal counsel, or by the stockholders.

Advancement of Expenses. A critical component of the indemnification framework is the advancement of defense costs. The Company's Bylaws should provide for mandatory advancement of defense costs to directors and officers upon receipt of an undertaking to repay such amounts if it is ultimately determined that the individual is not entitled to indemnification. Mandatory advancement ensures that directors have access to legal representation from the outset of a proceeding, without having to bear the financial burden of defense costs pending the resolution of the indemnification determination. We recommend confirming that this provision is included in the current Bylaws and that it has not been amended.

Non-Exclusivity. DGCL Section 145(f) provides that the indemnification rights established by statute and by the corporation's governing documents are not exclusive of any other rights to which a director or officer may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors, or otherwise. This non-exclusivity provision is the basis for individual indemnification agreements, which supplement the bylaw and statutory protections.

B. Risk of Changed Indemnification Posture Post-Reconstitution

The reconstituted Board, potentially under the influence of Corvus Peak nominees, poses a risk to the indemnification protections of departing directors. Several concerning scenarios are foreseeable:

Bylaw Am

PRIVILEGED & CONFIDENTIAL ATTORNEY-CLIENT COMMUNICATION ATTORNEY WORK PRODUCT
CALDERWOOD & HARKNESS LLP 787 Seventh Avenue New York, NY 10019
June 11, 2024
MEMORANDUM
TO: Board of Directors, Aurelius Global Media Group PLC
ATTENTION: Dame Elspeth Greenvale, Independent Non-Executive Chair Nadine Khalil, General Counsel & Corporate Secretary
FROM: Calderwood & Harkness LLP
RE: D&O Insurance Implications of Board Reconstitution Following 2024 Annual General Meeting
MATTER NO.: 1017-00002
PREPARED BY: Colette Whitman (Billing Partner); Audrey Zhou (Lead Associate)
REVIEWED BY: Nathaniel Bower (Responsible Partner)
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I. Executive Summary
The purpose of this memorandum is to analyze the implications of the results of Aurelius Global Media Group PLC's ("AGMG" or the "Company") June 7, 2024 Annual General Meeting (the "AGM") on the Company's directors' and officers' liability insurance coverage, with particular focus on continuing coverage for departing directors and the notice obligations triggered by the board reconstitution. This memorandum is provided at the direction of Dame Elspeth Greenvale, Independent Non-Executive Chair, and Nadine Khalil, General Counsel & Corporate Secretary, and is intended to serve as a comprehensive guide for the Board of Directors as it navigates the insurance and indemnification landscape during this period of governance transition.
As the Board is aware, the 2024 AGM resulted in the election of three director nominees put forward by Corvus Peak Capital Partners LP ("Corvus Peak"), an activist investor holding approximately 8.7% of the Company's outstanding ordinary shares. The successful Corvus Peak nominees — Malcolm Trask, Vanessa Loring, and Dr. Raymond Chu — replaced three incumbent directors who were not re-elected: Tobias Kessler, Hugh Pemberton, and Sofia Delgado-Ríos. This reconstitution of the Board, effected through a contested proxy election, gives rise to a series of significant insurance-related concerns that require prompt and careful attention.
The Company's primary directors' and officers' liability insurance is carried by Helmsley Indemnity Corp. ("Helmsley") under policy number HIC-DOL-2024-009347, with an annual premium of $3.8 million, per-occurrence limits of $75 million, and aggregate limits of $150 million. The policy period runs from January 1, 2024 through December 31, 2024.
After a thorough review of the applicable policy provisions, the relevant Delaware statutory and bylaw framework, and the specific circumstances surrounding the board reconstitution, we have reached the following key conclusions:
1. Continuing Coverage for Departing Directors. Departing directors Kessler, Pemberton, and Delgado-Ríos remain "Insured Persons" under the Helmsley policy for claims arising from Wrongful Acts committed during their respective periods of service on the Board. However, the Board must take affirmative steps to preserve this coverage, including by filing timely notice with Helmsley and evaluating the procurement of extended reporting period ("tail") coverage.
2. Prompt Notice Required. The board reconstitution constitutes a material change in the composition of the Board that almost certainly triggers notice obligations under the Helmsley policy. In addition, the activist campaign, contested proxy election, pending Section 220 books-and-records demand, and related matters constitute "circumstances" that may give rise to future claims and should be reported to Helmsley on a precautionary basis to preserve coverage under the current policy period.
3. Tail Coverage Evaluation. The Board should evaluate whether to procure tail (extended reporting period) coverage or a standalone run-off policy for the departing directors, in order to ensure that claims asserted after the current policy period (or after any future policy renewal that may exclude former directors) are covered. We estimate that a six-year tail endorsement for the departing directors could cost between approximately $1.5 million and $3.3 million.
4. Potential Coverage Gaps. Potential coverage gaps exist with respect to the activist-related claims environment, including the applicability of the policy's "change in control" provision, the "Insured vs. Insured" exclusion, and coverage for non-U.S. regulatory proceedings. These gaps require immediate review and, where possible, remediation through endorsements or supplemental coverage.
Each of these conclusions is discussed in detail below.
II. Overview of Current D&O Policy
A. Policy Details
The Company's current directors' and officers' liability insurance program is summarized as follows:
The policy is structured as a claims-made policy, meaning that it covers claims first made against Insured Persons during the policy period (or any applicable extended reporting period), regardless of when the underlying Wrongful Act occurred, provided the Wrongful Act occurred after the policy's retroactive date. This claims-made structure is standard in the D&O insurance market and has important implications for the timing of notice, the availability of tail coverage, and the preservation of coverage for departing directors, as discussed in detail in Sections IV and V below.
B. Key Policy Provisions Relevant to Board Changes
Several provisions of the Helmsley policy are directly implicated by the board reconstitution. While we have been working from the policy summary and key provisions previously made available to us by the Company, we note that a complete review of the full policy text — including all endorsements, riders, and amendments — is necessary to confirm the analysis set forth in this memorandum. We have included a recommendation to obtain and review the complete policy text as one of our immediate action items in Section X below.
Definition of "Insured Person." D&O policies typically define "Insured Person" broadly to include any natural person who was, is, or shall become a duly elected or appointed director or officer of the Named Insured or any of its subsidiaries. This definition is designed to ensure that coverage follows the individual, not the position, and extends to former directors and officers for claims arising from Wrongful Acts committed during their period of service. Under this standard formulation, departing directors Kessler, Pemberton, and Delgado-Ríos would remain Insured Persons for claims arising from acts or omissions that occurred while they served on the Board. This conclusion holds even after their departure, provided that the claim is first made during the policy period (or any applicable extended reporting period).
"Change in Control" Provisions. Many D&O policies — and we believe the Helmsley policy is likely among them — include a "change in control" provision that may limit or modify coverage upon the occurrence of a defined change-in-control event. The significance of this provision in the present context cannot be overstated: if the board reconstitution is deemed to constitute a "change in control" under the Helmsley policy, the policy could automatically convert to run-off-only coverage for the remainder of the policy period, and the Company would need to procure an entirely new policy for prospective coverage of the reconstituted Board. We analyze this provision in detail in Section VI below.
Severability Clause. The severability clause is a critical protection for individual insureds. Under a standard severability provision, the coverage available to any one Insured Person is not vitiated by the conduct, representations, or knowledge of any other Insured Person. This means that even if one director's conduct gives rise to a policy exclusion or defense (for example, fraud or intentional misconduct), the coverage available to other directors should not be affected. The severability clause is particularly important in the current environment, where the Board includes directors with potentially divergent interests and loyalties.
"Wrongful Act" Definition. The Helmsley policy's definition of "Wrongful Act" is the gateway to coverage. D&O policies typically define Wrongful Act broadly to include any actual or alleged error, misstatement, misleading statement, act, omission, neglect, or breach of duty by an Insured Person in their capacity as a director or officer of the Named Insured. This definition should encompass the full range of potential claims that may arise from the activist campaign, the proxy contest, the CEO succession process, and related matters, provided that the alleged conduct occurred in the Insured Persons' directorial or officer capacity.
C. Side A, B, and C Coverage Structure
The Helmsley policy, like most modern D&O policies, provides three distinct types of coverage, conventionally referred to as Side A, Side B, and Side C:
Side A (Direct Coverage). Side A provides direct coverage to individual directors and officers for losses arising from claims for Wrongful Acts when the Company is unable to indemnify them. This inability to indemnify may arise due to the Company's insolvency, a legal prohibition on indemnification (for example, where a director has been found liable for a breach of the duty of loyalty that cannot be indemnified under Delaware law), or a refusal by the Company to provide indemnification. Side A coverage is the single most important protection for individual directors and officers, as it provides a direct payment obligation from the insurer to the individual insured, without any requirement that the Company serve as an intermediary. For departing directors who will no longer have direct access to the Company's ongoing indemnification infrastructure and decision-making processes, Side A coverage assumes even greater significance, as discussed further in Section IX below.
Side B (Reimbursement Coverage). Side B reimburses the Company for indemnification payments that the Company has made to its directors and officers in connection with covered claims. In the typical case, when a director is sued and the Company advances defense costs and ultimately indemnifies the director, the Company looks to Side B of the D&O policy to recover those indemnification expenditures. Side B coverage thus protects the Company's balance sheet and incentivizes robust indemnification. However, Side B coverage is of limited utility to departing directors if the reconstituted Board declines to indemnify them or delays indemnification payments — in that scenario, only Side A coverage provides direct protection.
Side C (Entity Coverage). Side C covers the Company itself for securities claims — that is, claims brought against the Company alleging violations of securities laws. Side C coverage is relevant here because the governance turmoil and activist campaign may give rise to securities class action litigation against both the Company and its individual directors and officers, as discussed in Section VIII.A below.
The interaction among these three coverage layers is critical to the analysis. For departing directors, the hierarchy of protections can be summarized as follows: Side B reimburses the Company for indemnification payments it makes on their behalf; if the Company is unable or unwilling to indemnify, Side A steps in to cover the individual directors directly. The reliability of Side B coverage depends on the Company's willingness to indemnify departing directors — a willingness that may be tested under the reconstituted Board. We note in this regard that AGMG is incorporated in Delaware, and that the Company's Amended and Restated Bylaws (effective March 22, 2022), together with the framework established by Section 145 of the Delaware General Corporation Law ("DGCL"), govern the Company's indemnification obligations. The interplay between the indemnification framework and the D&O insurance coverage is discussed in Section IX below.
III. Impact of Board Reconstitution on Coverage
A. Departing Directors: Tobias Kessler, Hugh Pemberton, and Sofia Delgado-Ríos
All three departing directors ceased to serve as members of the Board of Directors as of the conclusion of the June 7, 2024 AGM, when the results of the contested election were certified and the Corvus Peak nominees were declared elected. Under standard D&O policy terms, and consistent with the definition of "Insured Person" discussed in Section II.B above, departing directors should remain Insured Persons under the Helmsley policy for claims arising from Wrongful Acts committed during their tenure on the Board. Their coverage does not automatically terminate upon the conclusion of their service; rather, it continues for the duration of the policy period (and any applicable extended reporting period), subject to the policy's terms and conditions.
Notwithstanding this general principle, the departing directors face a number of specific risks that warrant careful attention:
Key Risk Areas. The activist campaign mounted by Corvus Peak, the contested proxy election, the deadlocked CEO succession process, the Board's consideration and rejection of defensive measures (including the poison pill), and the pending Section 220 books-and-records demand collectively constitute a highly charged environment in which claims against the departing directors are reasonably foreseeable. Such claims could take the form of shareholder derivative actions alleging breach of fiduciary duty, securities class actions alleging material misstatements or omissions in proxy solicitation materials, or regulatory investigations and enforcement proceedings. Each of these categories of potential claims is analyzed in Section VIII below.
Tobias Kessler. Mr. Kessler served as Chair of the Special Committee established by the Board to manage the CEO search process. In this capacity, Mr. Kessler oversaw the engagement of executive search firms, participated in the evaluation of candidates, and was centrally involved in the Board's deliberations regarding the Interim CEO designation of Priya Nair-Whitfield. Corvus Peak publicly criticized the Interim CEO designation as a "predetermined outcome" in its April 15, 2024 public letter, and the activist has specifically identified Mr. Kessler's role in the process as a basis for its concerns. Mr. Kessler's leadership of the Special Committee also placed him at the center of the Board's response to Corvus Peak's activist campaign, including the evaluation and rejection of Corvus Peak's May 10, 2024 settlement proposal. These activities give rise to heightened exposure for claims that decisions made in connection with the CEO search and activist response constituted breaches of fiduciary duty.
Hugh Pemberton. Mr. Pemberton is a co-founder of AGMG and held approximately 2.1% of the Company's outstanding ordinary shares (8,664,600 shares) at the time of his departure from the Board. His insider status and significant equity stake create a distinct risk profile. Potential claims against Mr. Pemberton could include allegations that his participation in Board deliberations was influenced by his personal financial interests as a substantial shareholder, rather than by the best interests of the Company and its shareholders as a whole. In addition, Mr. Pemberton's long tenure and deep involvement in the Company's affairs may expose him to claims relating to historical corporate decisions that are revisited in the context of the current governance dispute.
Sofia Delgado-Ríos. Ms. Delgado-Ríos participated in Board deliberations regarding the Company's defensive posture in the face of the Corvus Peak campaign, including the Board's consideration and ultimate rejection of a shareholder rights plan (poison pill) on April 10, 2024. She also participated in discussions regarding the Board's response to Corvus Peak's demands and the evaluation of strategic alternatives. Potential claims could allege that the Board's decision to reject the poison pill left the Company and its shareholders vulnerable, or conversely, that the Board's consideration of defensive measures reflected improper entrenchment motives.
Section 220 Books-and-Records Demand. We note with particular concern the ongoing Section 220 books-and-records demand filed by Corvus Peak on March 22, 2024, seeking access to CEO search committee materials and related Board deliberations. The Company objected to the demand on privilege grounds in its April 2, 2024 response. If Corvus Peak escalates this demand by filing suit in the Delaware Court of Chancery to compel production, the departing directors who participated in the decision to withhold materials on privilege grounds could face claims or be drawn into the resulting litigation. Moreover, as discussed in Section VIII.C below, the reconstituted Board may decide to voluntarily produce materials previously withheld on privilege grounds, with potentially adverse consequences for the departing directors.
B. Incoming Directors: Malcolm Trask, Vanessa Loring, Dr. Raymond Chu
The three Corvus Peak nominees — Malcolm Trask, Vanessa Loring, and Dr. Raymond Chu — automatically became Insured Persons under the existing Helmsley policy upon their election at the AGM. No affirmative action is required to add them to the policy; the standard definition of "Insured Person," which encompasses any natural person who becomes a director during the policy period, operates to extend coverage to them as of June 7, 2024.
However, the circumstances of their nomination and election give rise to several coverage-related concerns:
Potential Conflict of Interest. Each of the incoming directors was nominated by Corvus Peak, and Vanessa Loring is a Managing Director at Corvus Peak Capital Partners LP. The presence on the Board of a director who is simultaneously serving as a senior professional at the Company's largest activist shareholder creates a structural conflict of interest. Actions taken by the incoming directors that serve the interests of Corvus Peak — rather than the interests of the Company and its shareholders as a whole — could give rise to fiduciary duty claims. From an insurance perspective, such claims could trigger disputes regarding coverage, including the application of the "Insured vs. Insured" exclusion discussed in Section VII below.
Malcolm Trask. Mr. Trask was elected Lead Independent Director at the June 10, 2024 meeting of the reconstituted Board. His assumption of this leadership role positions him as a central figure in the reconstituted Board's governance and decision-making, and accordingly increases his personal exposure to claims arising from the Board's post-reconstitution actions.
Vanessa Loring. Ms. Loring was named Chair of the reconstituted Nominating & Governance Committee on June 17, 2024. In connection with her appointment, Ms. Loring announced the Board's intention to engage new governance counsel. This development is particularly relevant to the present analysis, as it signals that the reconstituted Board may alter the Company's approach to governance and insurance matters, including D&O coverage decisions, in ways that could affect the interests of the departing directors.
Dr. Raymond Chu. Dr. Chu's specific committee assignments and leadership roles have not yet been publicly announced. However, as a Corvus Peak nominee, he shares the general conflict-of-interest concerns applicable to the other incoming directors.
C. Continuing Directors
The following directors and officers continue in their positions and are covered without interruption under the Helmsley policy:
Dame Elspeth Greenvale. Dame Elspeth remains as Transitional Chair of the Board through September 30, 2024, as previously announced. Her coverage under the Helmsley policy continues without interruption. However, her role during the transition period — which includes overseeing the handover of governance responsibilities to the reconstituted Board — exposes her to heightened risk of claims related to the adequacy and good faith of the transition process.
Priya Nair-Whitfield. Ms. Nair-Whitfield continues as Interim CEO/COO and Executive Director. Her coverage under the Helmsley policy continues without interruption, both in her capacity as an officer and as a director. Given the contested nature of her designation as Interim CEO and the public criticisms leveled by Corvus Peak, Ms. Nair-Whitfield faces ongoing exposure to claims related to the CEO succession process.
Lucinda Farrow-Grant, Reginald Osei, Dr. Anwen Llewellyn, and Garrett Voss. These four directors continue in their positions on the Board, and their coverage under the Helmsley policy continues without interruption. Each participated in pre-reconstitution Board deliberations and may have exposure to claims arising from those deliberations, to the same extent as the departing directors, with respect to Wrongful Acts occurring during the relevant period.
Nadine Khalil. Ms. Khalil continues as General Counsel & Corporate Secretary. Although she is not a voting member of the Board, she attends Board meetings in her capacity as Corporate Secretary and is covered as an officer under the Helmsley policy. Her coverage continues without interruption. Ms. Khalil's role in managing the notice obligations and insurance matters discussed in this memorandum is critical, and her continued coverage is essential to her ability to discharge those responsibilities.
IV. Notice Obligations
A. Notice of Board Reconstitution
Virtually all D&O policies require the Named Insured to provide prompt written notice to the carrier of material changes in the composition of the board of directors. This obligation is typically heightened when the change results from a contested election or activist campaign, as such events signal an increased risk of claims against directors and officers. The rationale for the notice requirement is straightforward: the carrier needs to be aware of material changes in the insured risk in order to assess its exposure and manage its reserves.
The Helmsley policy likely requires written notice within a specified period — commonly 30 or 60 days — of a "material change" event. The replacement of three out of ten voting directors through a contested proxy election unquestionably constitutes a material change in the composition of the Board, and we believe that the Company has an obligation to notify Helmsley of this event promptly.
Recommendation. Nadine Khalil, as General Counsel & Corporate Secretary, should provide written notice to Helmsley Indemnity Corp. promptly, and in no event later than 30 days after June 7, 2024 (i.e., by July 7, 2024 at the latest). The notice should:
(a) Reference policy number HIC-DOL-2024-009347;
(b) Describe the results of the June 7, 2024 AGM, including the contested nature of the election;
(c) Identify the departing directors: Tobias Kessler, Hugh Pemberton, and Sofia Delgado-Ríos;
(d) Identify the incoming directors: Malcolm Trask, Vanessa Loring, and Dr. Raymond Chu, and note that they were nominees of Corvus Peak Capital Partners LP;
(e) Describe the reconstitution of Board committees, including the election of Malcolm Trask as Lead Independent Director and the appointment of Vanessa Loring as Chair of the Nominating & Governance Committee; and
(f) Request written confirmation from Helmsley that the departing directors remain Insured Persons under the policy for claims arising from Wrongful Acts committed during their period of service.
The notice should be sent by certified mail and email to Helmsley Indemnity Corp. at One Beacon Street, Boston, MA 02108, directed to the attention of the Claims and Underwriting departments, with a copy retained in the Company's insurance records.
B. Notice of Circumstances That May Give Rise to Claims
In addition to the notice of board reconstitution, we strongly recommend that the Company file a "notice of circumstances" with Helmsley under the policy's reporting provisions. A notice of circumstances is a precautionary filing that identifies specific facts and circumstances that may give rise to future claims against Insured Persons. The purpose of filing such a notice is to "anchor" these circumstances to the current policy period, so that if a claim is subsequently asserted — even after the current policy period expires on December 31, 2024 — the claim will be deemed to have been first made during the current policy period and will be covered under the current policy's terms and limits.
The importance of this filing cannot be overstated. In a claims-made policy, the timing of the claim is critical: if a claim is first made during a subsequent policy period, it is governed by the terms and limits of that subsequent policy, not the current policy. If the reconstituted Board decides not to renew the D&O policy on comparable terms, or if a future carrier imposes exclusions for activist-related claims, a failure to file a timely notice of circumstances could leave the departing directors (and other Insured Persons) without coverage for claims that are directly related to events occurring during the current policy period.
Specific Circumstances to Identify. The notice of circumstances should identify the following matters as potential sources of future claims against the Company's directors and officers:
(i) Corvus Peak's Proxy Contest and the Contested Election. Corvus Peak initiated a proxy contest to elect its nominees to the Board, culminating in the contested election at the June 7, 2024 AGM. The proxy campaign involved extensive public communications, solicitation materials, and media engagement by both the Company and Corvus Peak. The conduct of the proxy solicitation, the accuracy of proxy disclosures, and the procedural fairness of the election process are all potential sources of claims against directors who participated in the Company's response to the campaign.
(ii) Corvus Peak's Section 220 Books-and-Records Demand (March 22, 2024). Corvus Peak filed a demand under DGCL Section 220 seeking access to CEO search committee materials and related Board deliberations. The Company objected on privilege grounds in its April 2, 2024 response. This demand remains pending and could escalate into litigation in the Delaware Court of Chancery.
(iii) Public Allegations Regarding the Interim CEO Designation. In its April 15, 2024 public letter, Corvus Peak alleged that the Board's designation of Priya Nair-Whitfield as Interim CEO constituted a "predetermined outcome" that undermined the integrity of the CEO search process. These allegations could form the basis of derivative or securities claims.
(iv) Board's Rejection of the Poison Pill (April 10, 2024). The Board considered and rejected the adoption of a shareholder rights plan (poison pill) as a defensive measure against Corvus Peak's activist campaign. Potential claimants could allege that the Board's failure to adopt available defensive measures constituted a breach of fiduciary duty, or conversely, that the Board's consideration of the poison pill reflected entrenchment motives.
(v) Board's Rejection of Corvus Peak's Settlement Proposal (May 10, 2024). The Board declined Corvus Peak's May 10, 2024 proposal for a negotiated settlement of the proxy contest. Potential claimants could allege that the Board's rejection of a reasonable compromise constituted a waste of corporate resources or a breach of the duty of care.
(vi) Strategic Alternatives Review (April 22, 2024). The Board initiated a review of strategic alternatives through its financial advisor, Stonebridge Crane & Co. If strategic alternatives are later alleged to have been pursued or shelved improperly — for example, if the reconstituted Board abandons the review in a manner that is perceived as serving Corvus Peak's interests rather than the interests of all shareholders — fiduciary duty claims could follow.
Recommendation. The notice of circumstances should be filed concurrently with the notice of board reconstitution discussed in Section IV.A above, and should be sent to the same recipients at Helmsley Indemnity Corp. The notice should be drafted carefully to identify the circumstances with sufficient specificity to satisfy the policy's reporting requirements, while avoiding any admissions of liability or characterizations that could be used against the Company or its directors in future proceedings.
We are prepared to draft both notices for Ms. Khalil's review and execution, and we recommend that they be transmitted no later than June 25, 2024 to ensure compliance with the policy's reporting requirements.
V. Tail Coverage / Extended Reporting Period Analysis
A. Need for Tail Coverage
"Tail" or "extended reporting period" ("ERP") coverage is a mechanism that extends the time during which claims can be reported under a claims-made policy after the policy period ends or after an insured person ceases to be covered under the policy. In the context of D&O insurance, tail coverage is particularly important for departing directors and officers, who face the risk that claims arising from their board service may not be asserted until months or years after their departure — well beyond the expiration of the policy period during which they served.
The need for tail coverage in the present circumstances is acute for several reasons:
Risk of Post-Policy-Period Claims. The current Helmsley policy expires on December 31, 2024. While the departing directors remain Insured Persons through that date for claims first made during the current policy period, the highly charged nature of the governance dispute and the pendency of the Section 220 demand suggest that claims may not be asserted until 2025 or later. Derivative litigation, in particular, often follows a protracted timeline: shareholders must first make a demand on the Board (or demonstrate that demand would be futile), and the reconstituted Board must evaluate and respond to such a demand. Securities class action litigation may also develop over an extended period, particularly if AGMG's stock price experiences further volatility.
Risk of Non-Renewal or Modified Renewal Terms. The reconstituted Board will control the Company's insurance procurement decisions. If the Board, influenced by Corvus Peak nominees, decides not to renew D&O coverage on terms that protect former directors — for example, by selecting a carrier that excludes claims related to the pre-reconstitution period, or by declining to maintain coverage levels adequate to protect former directors — the departing directors could face a coverage gap.
Limitations of Indemnification as a Backstop. As discussed in Section IX below, the Company's indemnification obligations under the Amended and Restated Bylaws and DGCL Section 145 provide a legal backstop for departing directors. However, these obligations are only as reliable as the Company's financial ability and willingness to honor them. If the reconstituted Board contests indemnification requests from former directors, or if the Company encounters financial difficulties, the indemnification backstop may prove inadequate. D&O insurance — particularly Side A coverage — is the critical safeguard in such scenarios.
Statute of Limitations Considerations. Under Delaware law, the statute of limitations for breach of fiduciary duty claims is generally three years, and federal securities fraud claims under Section 10(b) of the Securities Exchange Act of 1934 are subject to a two-year statute of limitations (and a five-year statute of repose). In practice, claims arising from the governance dispute could be asserted at any point within these limitations periods. A six-year tail coverage period is standard in the market and would provide adequate protection against claims arising from the departing directors' service.
B. Options for Securing Tail Coverage
We have identified three principal options for securing tail coverage for the departing directors:
1. Negotiate Tail Endorsement Under Existing Helmsley Policy. The most straightforward option is to request that Helmsley Indemnity Corp. issue a tail endorsement to the existing policy, extending the reporting period for departing directors Kessler, Pemberton, and Delgado-Ríos. A tail endorsement would allow claims arising from the departing directors' service to be reported under the existing policy's terms and limits for a specified period — typically six years — after their departure or after the policy period ends, whichever is later.
The cost of a tail endorsement varies depending on the carrier, the risk profile, and the duration of the extended reporting period. As a general market benchmark, tail premiums are typically calculated as 150% to 300% of the annual run-rate premium attributable to the departing insured persons. For purposes of an illustrative estimate:
• Three departing directors out of approximately ten to eleven Insured Persons (directors and named officers) suggest a proportionate share of the $3.8 million annual premium of approximately $1.0 million to $1.1 million.
• Applying the 150% to 300% multiplier, the tail premium for a six-year extended reporting period could range from approximately $1.5 million to $3.3 million.
• This estimate is indicative only and would need to be confirmed through direct discussion with Helmsley.
2. Standalone Run-Off Policy. As an alternative to a tail endorsement, the Company (or the departing directors individually) could procure a separate, standalone run-off D&O policy from Helmsley or another carrier. A standalone run-off policy would provide dedicated coverage for the departing directors for claims arising from their board service, independent of the Company's ongoing D&O program. This option offers the advantage of insulating the departing directors' coverage from future changes to the Company's insurance program, but may be more expensive and administratively complex than a tail endorsement.
3. Indemnification Agreements. As a complement to (but not a substitute for) insurance coverage, the Company should ensure that individual indemnification agreements between AGMG and each departing director are in place and enforceable. These agreements provide a contractual obligation of indemnification that survives the director's departure from the Board and cannot be unilaterally amended by the reconstituted Board (subject to the terms of the agreement). However, as noted above, indemnification agreements are only as reliable as the Company's financial ability and willingness to honor them, and they do not provide the same certainty and immediacy of protection as insurance coverage.
Recommendation. We recommend that the Company pursue Option 1 — the tail endorsement under the existing Helmsley policy — as the most cost-effective and administratively straightforward option. Discussions with Helmsley should be initiated immediately, given the time-sensitive nature of the governance transition and the need to secure coverage before the reconstituted Board potentially deprioritizes the matter.
C. Timing Considerations
Several timing factors bear on the tail coverage analysis:
Policy Expiration. The current Helmsley policy expires on December 31, 2024. Tail coverage should ideally be secured before renewal negotiations begin for the 2025 policy year, as the renewal process will be controlled by the reconstituted Board and may not prioritize the interests of departing directors.
Reconstituted Board's Control Over Insurance Decisions. Following the board reconstitution, the incoming Corvus Peak nominees — together with whichever continuing directors they are able to align with — will have significant influence over the Company's insurance procurement decisions. If the incoming directors decline to authorize tail coverage for departing directors, or if they delay action on this matter until the issue becomes moot, the departing directors may be forced to procure personal coverage at their own expense. Personal D&O coverage is available in the market, but it is significantly more expensive than company-procured coverage and may offer narrower terms.
Special Committee Dissolution. The Board's June 14, 2024 resolution tabling the CEO succession process and dissolving the Special Committee may signal a broader shift in priorities that could deprioritize former directors' interests. This development underscores the urgency of securing tail coverage before the reconstituted Board consolidates procedural control over governance and insurance matters.
Recommendation. We recommend that the Board authorize the procurement of tail coverage at the earliest available Board meeting, and in any event before Corvus Peak-aligned directors are able to consolidate procedural control over insurance-related decisions. If a Board resolution is not feasible in the immediate term, Dame Elspeth Greenvale, as Transitional Chair, and Nadine Khalil, as General Counsel, should initiate preliminary discussions with Helmsley to obtain pricing and terms for a tail endorsement, so that a proposal can be presented to the Board for approval at the earliest opportunity.
VI. "Change in Control" Provision Analysis
A. Potential Trigger
A significant number of D&O policies contain a "change in control" provision that operates to modify or limit coverage upon the occurrence of a defined change-in-control event affecting the Named Insured. The typical effect of a change-in-control trigger is that the existing policy automatically converts to a "run-off-only" policy for the remainder of the policy term, meaning that the policy will cover only claims arising from Wrongful Acts committed prior to the change-in-control event, and the Named Insured must procure a new policy to obtain prospective coverage for the reconstituted Board.
The "change in control" definition in D&O policies varies by carrier and policy form, but commonly includes one or more of the following triggering events:
(a) The acquisition by any person or group of a specified percentage of the Named Insured's voting securities (often 50% or more);
(b) A merger, consolidation, or similar business combination involving the Named Insured;
(c) The sale or disposition of all or substantially all of the Named Insured's assets; or
(d) A change in the composition of a majority of the board of directors within a specified period, whether through election, resignation, removal, or otherwise.
Application to the Present Facts. The June 7, 2024 AGM resulted in the replacement of three out of ten voting directors on the AGMG Board. This represents a change in 30% of the Board's composition — less than a majority. Under the most common formulation of the "change in control" definition (which requires a change in a majority of the board), the reconstitution would likely not constitute a change in control.
However, we caution that some D&O policies define "change in control" more broadly. Certain policy forms include within the definition any change in board composition that results from a contested election or proxy contest, regardless of the number of seats affected. Other policies may define "change in control" to include any event that results in a single shareholder or group of shareholders obtaining effective control of the board, even if the shareholder does not hold a majority of voting securities. Given that Corvus Peak holds 8.7% of AGMG's outstanding shares and has now placed three nominees on a ten-person board, an argument could be made — depending on the precise policy language — that Corvus Peak has obtained a degree of influence sufficient to trigger a broadly drafted change-in-control provision.
Consequences if Triggered. If the Helmsley policy's "change in control" provision is triggered by the board reconstitution, the consequences would be significant:
(i) The existing policy would automatically convert to run-off-only coverage for the remainder of the policy term (i.e., through December 31, 2024), covering only claims arising from Wrongful Acts committed prior to the change-in-control event;
(ii) The Company would need to procure an entirely new D&O policy to obtain prospective coverage for the reconstituted Board, potentially at a higher premium and on less favorable terms;
(iii) The conversion to run-off-only coverage could have implications for the availability and pricing of tail coverage for departing directors; and
(iv) The aggregate limits of the run-off policy would be shared among all Insured Persons for claims arising from the pre-reconstitution period, creating the potential for competition among insureds for limited coverage.
If Not Triggered. If the board reconstitution does not constitute a "change in control" under the Helmsley policy, the policy continues on its existing terms for the remainder of the policy period. The incoming directors are automatically covered as Insured Persons, and the departing directors retain their coverage for claims arising from Wrongful Acts committed during their service. This is the more favorable outcome from the perspective of all Insured Persons.
B. Recommendation
Given the potentially far-reaching consequences of a change-in-control determination, we recommend the following actions:
1. Obtain and Review the Complete Helmsley Policy. As noted in Section II.B above, a complete review of the Helmsley policy — including all endorsements, riders, and amendments — is necessary to determine the precise "change in control" definition applicable to the Company's coverage. Nadine Khalil should request the complete policy text from Helmsley (or from the Company's insurance broker) immediately, and Calderwood & Harkness should review the relevant provisions upon receipt.
2. Request Written Confirmation from Helmsley. If the policy text reveals any ambiguity regarding whether the June 7, 2024 board reconstitution constitutes a "change in control," we recommend requesting a written confirmation from Helmsley that the reconstitution does not trigger the change-in-control provision. Such a confirmation — often referred to as a "no-action" or "no-trigger" letter — would provide certainty regarding the continuing status of the policy and would be valuable documentation in the event of a future coverage dispute.
3. Prepare for Alternative Scenarios. In the event that the change-in-control provision is triggered (or that Helmsley takes the position that it has been triggered), the Company should be prepared to procure a new prospective D&O policy promptly. We recommend that the Company's insurance broker be placed on notice of this contingency so that preliminary market soundings can be conducted.
VII. "Insured vs. Insured" Exclusion
A standard feature of virtually all D&O policies is the "Insured vs. Insured" exclusion, which bars coverage for claims brought by one Insured Person (or by the Named Insured itself) against another Insured Person. The purpose of this exclusion is to prevent collusive or self-dealing claims — that is, claims manufactured by or at the direction of the insured entity or its insiders in order to trigger coverage and extract insurance proceeds.
Relevance to the Present Situation. The "Insured vs. Insured" exclusion is of particular concern in the current environment because of the potential for the reconstituted Board to authorize the Company to bring claims against the departing directors. Corvus Peak's public statements — including its April 15, 2024 letter criticizing the Board's handling of the Interim CEO designation — have laid the groundwork for allegations that the pre-reconstitution Board breached its fiduciary duties. If the reconstituted Board, now including three Corvus Peak nominees, determines that such claims have merit and authorizes the Company to pursue them, the "Insured vs. Insured" exclusion could bar coverage for the departing directors' defense costs and any resulting liability.
This scenario is not hypothetical. In numerous contested governance situations, incoming directors aligned with activist shareholders have caused the company to investigate and pursue claims against their predecessors, often as a means of vindicating the activist's narrative and creating leverage for related negotiations. The departing directors' exposure in this regard is real and significant.
Scope and Limitations of the Exclusion. The "Insured vs. Insured" exclusion varies in scope depending on the specific policy language. Important distinctions include:
(a) Direct Claims vs. Derivative Claims. The exclusion typically applies to direct claims brought by the Named Insured or by an Insured Person against another Insured Person. However, many policies expressly carve out shareholder derivative claims — that is, claims brought by shareholders on behalf of the company — from the scope of the exclusion. This carve-out is significant because derivative claims are the most common vehicle for fiduciary duty litigation against directors. If the Helmsley policy includes a derivative claim carve-out, the departing directors would retain coverage for derivative claims even if the "Insured vs. Insured" exclusion would otherwise apply to direct claims by the Company.
(b) Whistleblower and Employment-Related Carve-Outs. Many policies also carve out claims brought by insured persons in a whistleblower capacity or employment-related claims from the "Insured vs. Insured" exclusion. While these carve-outs are less directly relevant to the governance context, they illustrate the general principle that the exclusion is not absolute and may be subject to negotiated exceptions.
(c) "At the Direction of" Language. Some policies extend the exclusion to claims brought "at the direction of" or "with the cooperation of" an Insured Person, even if the nominal plaintiff is a third party (e.g., a shareholder filing a derivative suit at the instigation of a Board member). This language could be relevant if Corvus Peak-aligned directors encourage or facilitate shareholder litigation against the departing directors.
Recommendation. We recommend that Calderwood & Harkness obtain and review the specific "Insured vs. Insured" exclusion language in the Helmsley policy as part of the comprehensive policy review recommended in Section X below. If the exclusion is broadly drafted and does not include adequate carve-outs for the types of claims that may be asserted against the departing directors, we recommend exploring the following remedial options:
(i) Negotiate a Carve-Out or Endorsement. Request that Helmsley issue an endorsement narrowing the "Insured vs. Insured" exclusion to preserve coverage for departing directors against Board-authorized claims. Such an endorsement could, for example, exclude from the "Insured vs. Insured" exclusion any claim brought against a former Insured Person by or at the direction of a reconstituted Board, provided that the former Insured Person did not participate in or consent to the bringing of the claim.
(ii) Supplement with Standalone Side A Coverage. If the "Insured vs. Insured" exclusion cannot be adequately narrowed, consider procuring standalone Side A coverage for the departing directors that does not contain an "Insured vs. Insured" exclusion or that contains a more favorable version of the exclusion.
VIII. Specific Risk Scenarios and Coverage Implications
A. Securities Litigation Risk
The contested proxy campaign, the CEO succession deadlock, and the public disputes between the Board and Corvus Peak have generated significant negative publicity and market uncertainty regarding AGMG. In the experience of the authors, the combination of a contested proxy election, public allegations of board dysfunction, and a high-profile CEO succession dispute is precisely the type of governance crisis that attracts securities class action litigation.
Dual Listing Exposure. AGMG shares trade on the New York Stock Exchange under the ticker symbol AGMG and on the London Stock Exchange Main Market under the ticker symbol AGMG.L. This dual listing significantly expands the universe of potential plaintiffs and regulatory inquiries. In the United States, shareholders may bring claims under Sections 10(b) and 14(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, as well as under state securities laws. In the United Kingdom, the Company is subject to the regulatory jurisdiction of the Financial Conduct Authority ("FCA"), and potential regulatory actions arising from disclosure failures or market abuse could give rise to additional claims against directors, as discussed in Section VIII.D below.
Market Capitalization and Stock Price Risk. AGMG's market capitalization as of March 1, 2024 was approximately £6.82 billion (approximately $8.65 billion at an exchange rate of $1.2683 per British pound). Any material decline in the Company's stock price attributable to the governance crisis — whether resulting from negative publicity, market uncertainty, investor flight, or the perception of board dysfunction — could trigger securities class action claims under the U.S. federal securities laws. The magnitude of potential damages in a securities class action is directly related to the stock price decline, and a company of AGMG's market capitalization could face claims in the hundreds of millions of dollars.
Coverage Implications. Securities class action claims against the Company would be covered under Side C (entity coverage) of the Helmsley policy, while claims against individual directors and officers would be covered under Side A (direct coverage) and Side B (reimbursement coverage). The aggregate policy limit of $150 million, while substantial, could be significantly eroded by securities class action claims, potentially leaving inadequate limits available for other types of claims against individual directors. This underscores the importance of preserving the current policy's limits through timely notice and claims management.
SEC-Related Risks. The proxy solicitation process is subject to detailed regulatory requirements under Regulation 14A of the Securities Exchange Act of 1934, including requirements regarding the accuracy and completeness of proxy solicitation materials. Any material misstatement or omission in the Company's proxy statement, or any failure to comply with the procedural requirements of Schedule 14A, could give rise to SEC enforcement actions or private litigation. Both the Company and individual directors who participated in the proxy solicitation process — including the departing directors — face potential exposure in this regard.
B. Derivative Litigation Risk
Shareholder derivative claims represent perhaps the most significant source of potential liability for the departing directors. Corvus Peak, with its 8.7% stake (35,896,200 shares), has both the economic incentive and the procedural standing to bring derivative claims against the pre-reconstitution Board. Other shareholders could similarly bring derivative actions.
Potential derivative claims could allege that the pre-reconstitution Board:
(a) Breached its fiduciary duties in the CEO succession process, including by designating Priya Nair-Whitfield as Interim CEO in a manner alleged to be a "predetermined outcome";
(b) Failed to pursue available defensive measures, including by rejecting the shareholder rights plan (poison pill) on April 10, 2024;
(c) Improperly resisted a negotiated resolution of the proxy contest by rejecting Corvus Peak's May 10, 2024 settlement proposal;
(d) Wasted corporate assets by engaging multiple advisors at significant cost, including Calderwood & Harkness LLP (fees totaling $1,073,067 as of the date of this memorandum), Stonebridge Crane & Co. (retained at $250,000 per month), Hargrove Tate ($250,000 paid of a $750,000 total engagement), and Citrine (advisory fees); or
(e) Failed to properly conduct or complete the strategic alternatives review initiated on April 22, 2024.
Exclusive Forum. Section 11.1 of the Company's Amended and Restated Bylaws designates the Delaware Court of Chancery as the exclusive forum for intra-corporate disputes, including derivative claims. This provision channels derivative litigation into a single forum and provides a degree of predictability regarding the applicable procedural and substantive standards. However, it does not reduce the substantive exposure of the departing directors to derivative claims.
Coverage Implications. Derivative claims against individual directors would be covered under Side A (if the Company cannot indemnify) and Side B (if the Company indemnifies and seeks reimbursement). The "Insured vs. Insured" exclusion analysis discussed in Section VII is critical here: if the reconstituted Board authorizes or cooperates with derivative claims against the departing directors, the exclusion could potentially limit coverage, depending on the specific policy language and the applicable carve-outs.
C. Section 220 Demand Escalation
Corvus Peak's March 22, 2024 demand under DGCL Section 220 for access to CEO search committee materials and related Board deliberations remains pending. The Company objected to the demand on privilege grounds in its April 2, 2024 response, asserting that the requested materials are protected by the attorney-client privilege and the work-product doctrine.
Litigation Risk. If Corvus Peak is dissatisfied with the Company's response, it may file suit in the Delaware Court of Chancery to compel production of the requested materials. Such a proceeding would generate defense costs for the Company, and individual directors who were involved in the privilege determinations — including departing directors who served on the Special Committee — could be drawn into the litigation as witnesses or, in some scenarios, as parties.
Coverage Implications. Defense costs incurred in connection with a Section 220 proceeding should be covered under the Helmsley policy, subject to the policy's definitions and exclusions. However, we note that the coverage analysis may be complicated if the reconstituted Board decides to change course on the privilege objection.
Post-Reconstitution Risk: Voluntary Waiver of Privilege. A particularly concerning scenario is one in which the reconstituted Board — under the influence of Corvus Peak-aligned directors — decides to voluntarily produce materials that the pre-reconstitution Board withheld on privilege grounds. Such a decision could waive the attorney-client privilege over CEO search materials and related Board deliberations, potentially exposing the substance of those deliberations to scrutiny by Corvus Peak and other potential claimants. Former directors who participated in privileged deliberations could face increased litigation risk as a result.
The decision to waive privilege is within the authority of the current Board, and the departing directors would have no ability to prevent it. This underscores the importance of ensuring that the departing directors have robust D&O coverage — and particularly Side A coverage — to protect against claims that may arise from the disclosure of previously privileged materials.
D. UK Regulatory Exposure
AGMG's secondary listing on the London Stock Exchange Main Market subjects the Company and its directors to the regulatory jurisdiction of the FCA. Relevant regulatory requirements include:
(a) DTR 5 Major Shareholding Notifications. Under the FCA's Disclosure Guidance and Transparency Rules, shareholders who acquire or dispose of major shareholdings (at or above specified thresholds) must notify the Company and the FCA. The Company has corresponding disclosure obligations. Any failure to comply with these notification requirements could give rise to regulatory action against the Company and its directors.
(b) Market Abuse Regulation. The Company and its directors are subject to the UK Market Abuse Regulation (UK MAR), which prohibits insider dealing, unlawful disclosure of inside information, and market manipulation. The governance crisis and related communications could give rise to allegations of improper disclosure of inside information, particularly in light of the public exchanges between the Company and Corvus Peak.
(c) Financial Reporting Council. The Company's financial reporting and corporate governance practices are subject to oversight by the Financial Reporting Council ("FRC"). Any investigation or enforcement action by the FRC could result in claims against directors covered under the D&O policy.
Coverage Implications. Many U.S.-issued D&O policies provide coverage for regulatory investigations and proceedings initiated by non-U.S. regulators, but such coverage is not universal. We recommend confirming that the Helmsley policy extends coverage to regulatory investigations and proceedings initiated by the FCA and the FRC. If coverage is limited or unclear, the Company should explore the possibility of obtaining an endorsement extending coverage to UK regulatory matters.
IX. Indemnification Framework — Interaction with D&O Coverage
A. AGMG's Indemnification Obligations
The Company's Amended and Restated Bylaws (effective March 22, 2022) contain indemnification provisions consistent with DGCL Section 145, which establishes the framework for corporate indemnification of directors and officers under Delaware law. The principal elements of this framework are as follows:
Mandatory Indemnification. Under DGCL Section 145(c), a corporation is required to indemnify a present or former director or officer who has been successful on the merits or otherwise in defense of any proceeding to which the individual was a party by reason of their service as a director or officer. This mandatory indemnification covers expenses (including attorneys' fees) actually and reasonably incurred in connection with the proceeding.
Permissive Indemnification. Under DGCL Section 145(a) and (b), a corporation may indemnify a present or former director or officer against expenses, judgments, fines, and amounts paid in settlement in connection with proceedings to which the individual was a party by reason of their service, provided that the individual acted in good faith and in a manner reasonably believed to be in or not opposed to the best interests of the corporation (and, in the case of criminal proceedings, had no reasonable cause to believe that the conduct was unlawful). Permissive indemnification is subject to a determination that the applicable standard of conduct has been met, which may be made by the board of directors, by independent legal counsel, or by the stockholders.
Advancement of Expenses. A critical component of the indemnification framework is the advancement of defense costs. The Company's Bylaws should provide for mandatory advancement of defense costs to directors and officers upon receipt of an undertaking to repay such amounts if it is ultimately determined that the individual is not entitled to indemnification. Mandatory advancement ensures that directors have access to legal representation from the outset of a proceeding, without having to bear the financial burden of defense costs pending the resolution of the indemnification determination. We recommend confirming that this provision is included in the current Bylaws and that it has not been amended.
Non-Exclusivity. DGCL Section 145(f) provides that the indemnification rights established by statute and by the corporation's governing documents are not exclusive of any other rights to which a director or officer may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors, or otherwise. This non-exclusivity provision is the basis for individual indemnification agreements, which supplement the bylaw and statutory protections.
B. Risk of Changed Indemnification Posture Post-Reconstitution
The reconstituted Board, potentially under the influence of Corvus Peak nominees, poses a risk to the indemnification protections of departing directors. Several concerning scenarios are foreseeable:
Bylaw Am

PRIVILEGED & CONFIDENTIAL ATTORNEY-CLIENT COMMUNICATION ATTORNEY WORK PRODUCT

MEMORANDUM

MATTER NO.: 1017-00002

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