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PRIVILEGED & CONFIDENTIAL ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT

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

MEMORANDUM

June 16, 2024

FROM: Nathaniel Bower, Partner, Calderwood & Harkness LLP

TO: The Board of Directors, Aurelius Global Media Group PLC

RE: Fiduciary Implications of Termination of Strategic Alternatives Review; Stonebridge Crane & Co. Engagement Termination Provisions and Tail Fee Exposure

MATTER NO.: 1017-00002

PREPARED BY: Audrey Zhou (Lead Associate) and Brendan Walsh (Working Associate), under the supervision of Nathaniel Bower (Responsible Partner) and Colette Whitman (Billing Partner)

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I. Executive Summary

The purpose of this memorandum is to advise the reconstituted Board of Directors (the "Board") of Aurelius Global Media Group PLC ("AGMG" or the "Company") on the fiduciary implications and contractual consequences of the Board's decision, taken at its meeting of June 14, 2024, to table the CEO succession process indefinitely, dissolve the Special Committee, and — as a related matter now under active consideration — shelve the strategic alternatives review process that was initiated on April 22, 2024 in connection with the activist campaign mounted by Corvus Peak Capital Partners LP ("Corvus Peak"). This memorandum addresses the Delaware fiduciary duty framework governing the Board's discretion to discontinue the review, the contractual termination provisions of the Stonebridge Crane & Co. ("Stonebridge") financial advisory engagement, and certain ancillary matters that the Board and successor counsel should address in connection with the wind-down.

After thorough review of applicable Delaware case law, the Stonebridge engagement letter, the Board resolutions and meeting minutes from April 22 through June 14, 2024, and the current status of the strategic alternatives process, Calderwood & Harkness has reached the following conclusions:

First, the Board has broad discretion under Delaware law to terminate the strategic alternatives process at this time, provided the decision is made on an informed basis, in good faith, and in the honest belief that termination serves the best interests of the Company and its stockholders. The business judgment rule governs the Board's decision, and Delaware courts will not second-guess the Board's substantive judgment so long as the proper procedural safeguards are observed.

Second, the decision to shelve the strategic alternatives process does not implicate the enhanced duties established under Revlon, Inc. v. MacAndrews & Forbaci Holdings, Inc., 506 A.2d 173 (Del. 1986), because no change-of-control transaction was agreed to or became inevitable during the review. The Board explored strategic alternatives on a preliminary basis, but never entered the so-called "Revlon zone" that would require the Board to act as an auctioneer charged with maximizing immediate stockholder value.

Third, the Stonebridge engagement letter contains termination provisions and a tail fee clause that create potential financial exposure of approximately $21.6 million if a change-of-control transaction (as broadly defined in the engagement letter) is consummated within the 12-month tail period following termination of the engagement. This tail fee exposure is a material contingent liability that the Board should carefully consider in connection with any future strategic decision-making during the tail period.

Fourth, the Board should document its rationale for shelving the strategic alternatives process contemporaneously, including express reference to the reconstituted Board's informed determination that pursuing strategic alternatives at this time is not in the Company's best interests. Detailed board minutes and a formal resolution are essential to establishing a strong evidentiary record that will support the Board's reliance on the business judgment rule in the event of any future stockholder challenge.

Fifth, Calderwood & Harkness's engagement as independent board governance counsel is being terminated effective July 8, 2024. Successor counsel should be fully briefed on the tail fee exposure, the status of the Stonebridge engagement, and any residual obligations arising under the engagement letter or in connection with the wind-down of the strategic alternatives process. This memorandum is intended to serve as a principal reference document for that transition.

II. Background

A. Initiation of the Strategic Alternatives Review

On April 22, 2024, the Board of Directors of AGMG, acting on the unanimous recommendation of the Special Committee of Independent Directors (the "Special Committee"), authorized the engagement of Stonebridge Crane & Co. as financial advisor to the Board for the purpose of evaluating strategic alternatives available to the Company. The Special Committee was then chaired by Tobias Kessler, with Lucinda Farrow-Grant and Dr. Anwen Llewellyn serving as its other members. The Special Committee had been formed on March 8, 2024, by resolution of the full Board, with a mandate to oversee the Board's response to the proxy contest initiated by Corvus Peak and to evaluate governance-related matters, including the CEO succession process and the potential exploration of strategic alternatives.

The authorization of the Stonebridge engagement was memorialized in a formal board resolution adopted at a duly convened meeting of the Board on April 22, 2024. The resolution granted the Special Committee delegated authority to direct the scope and pace of the strategic alternatives review, subject to periodic reporting to the full Board and subject to the reservation by the full Board of the authority to approve or reject any definitive transaction.

Concurrently, on the same date, the engagement scope of Calderwood & Harkness LLP was expanded via an amended engagement letter to include coordination with Stonebridge on the legal aspects of the strategic alternatives review, including the negotiation and review of any confidentiality agreements, preliminary indications of interest, or transaction documentation that might arise during the process. This expansion of scope was documented in Amendment No. 1 to the Calderwood & Harkness engagement letter, executed by Dame Elspeth Greenvale on behalf of the Board and by Nathaniel Bower on behalf of Calderwood & Harkness.

The strategic alternatives process was designed to explore a broad range of options, including, without limitation: (i) potential asset divestitures involving one or more of the Company's four operating segments; (ii) joint ventures or strategic partnerships with media, technology, or entertainment companies; (iii) recapitalization transactions, including leveraged recapitalizations, special dividends, or share buyback programs; and (iv) a possible sale of the entire Company, whether by negotiated merger, tender offer, or other structure. The overarching objective of the process was to identify value-maximizing strategies that could be presented to shareholders as evidence of the Board's proactive governance and commitment to enhancing long-term stockholder value, while simultaneously serving as a credible response to the criticisms raised by Corvus Peak in its proxy solicitation materials.

B. AGMG Corporate and Financial Profile

Aurelius Global Media Group PLC is incorporated in the State of Delaware and registered as an overseas company in England and Wales under the Companies Act 2006. The Company maintains a dual listing, with its shares of common stock listed on the New York Stock Exchange under the ticker symbol "AGMG" and its depositary interests listed on the Main Market of the London Stock Exchange, premium segment, under the ticker symbol "AGMG.L." The Company's principal executive offices are located at 14 Sceptre Row, London EC2V 7QN, United Kingdom. Its registered agent in Delaware is Pinnacle Corporate Services Inc., located at 1209 Orange Street, Wilmington, Delaware 19801.

As of March 1, 2024, the Company's market capitalization was approximately £6.82 billion, equivalent to approximately $8.65 billion at the prevailing exchange rate of $1.2683 per pound sterling. For the fiscal year ended December 31, 2023, the Company reported total revenues of $4.37 billion and EBITDA of $812 million, representing an EBITDA margin of approximately 18.6%. As of the most recent public filings, the Company had approximately 412,600,000 shares of common stock outstanding.

The Company's operations are organized into four reportable business segments:

• Streaming & Digital Content — This segment, which represents the Company's largest business by revenue, accounted for approximately 42% of total FY 2023 revenue, or $1,835.4 million. The segment encompasses the Company's direct-to-consumer streaming platform, digital content licensing, and original programming operations.

• Live Entertainment & Events — This segment accounted for approximately 24% of total FY 2023 revenue, or $1,048.8 million. It includes the Company's live event production capabilities, venue operations, and experiential entertainment offerings across North America, Europe, and Asia-Pacific.

• E-Commerce & Merchandising — This segment accounted for approximately 19% of total FY 2023 revenue, or $830.3 million. It encompasses the Company's direct-to-consumer and wholesale merchandising operations, including proprietary e-commerce platforms, licensing arrangements, and retail partnerships.

• Advertising & Brand Partnerships — This segment accounted for approximately 15% of total FY 2023 revenue, or $655.5 million. It includes digital and traditional advertising sales across the Company's media properties, as well as branded content and sponsorship arrangements.

The Company employs approximately 23,400 individuals worldwide, with operations spanning North America, Europe, Asia-Pacific, and Latin America.

C. Proxy Contest and Board Reconstitution

Corvus Peak Capital Partners LP is a Delaware limited partnership with approximately $7.2 billion in assets under management. Corvus Peak is led by its Founding Partner and Chief Investment Officer, Damien Solberg, and Portfolio Manager Erin Nakamura, who has served as the lead portfolio manager for the Corvus Peak position in AGMG. Through a series of open-market purchases disclosed in Schedule 13D filings with the U.S. Securities and Exchange Commission, Corvus Peak acquired an approximately 8.7% beneficial ownership stake in the Company, comprising approximately 35,896,200 shares of common stock at an average cost basis of approximately $20.97 per share, representing a total investment of approximately $752.8 million.

On February 14, 2024, Corvus Peak delivered to the Company a notice of its intention to nominate three candidates for election to the Board at the Company's 2024 Annual General Meeting (the "AGM"). The three Corvus Peak nominees were:

• Malcolm Trask, age 58, the former Chief Executive Officer of Archway Digital Holdings Inc., a publicly traded digital media and technology company, where he served from 2014 to 2022;

• Vanessa Loring, age 44, a Managing Director at Corvus Peak Capital Partners LP, with primary coverage responsibility for Corvus Peak's media and entertainment portfolio investments; and

• Dr. Raymond Chu, age 61, the former President of Helix Media Networks Inc., a diversified media company, where he served from 2010 to 2019, and a current member of the board of directors of two privately held media technology companies.

At the Company's AGM held on June 7, 2024, all three Corvus Peak nominees were elected to the Board by substantial margins. The voting results were as follows:

Total shares voted at the AGM were 351,280,400, representing approximately 85.1% of the 412,600,000 shares of common stock outstanding. As a consequence of the election results, three incumbent directors — Tobias Kessler, Hugh Pemberton, and Sofia Delgado-Ríos — were not re-elected to the Board.

On June 10, 2024, the reconstituted Board held its first meeting following the AGM. At that meeting, Malcolm Trask was elected Lead Independent Director by unanimous vote of the Board. Dame Elspeth Greenvale, who had served as Chair of the Board since 2021, was confirmed as transitional Chair through September 30, 2024, at which point the Board will revisit the permanent Chair appointment. On June 17, 2024, the Board appointed Vanessa Loring as Chair of the Nominating & Governance Committee.

On June 14, 2024, at a regularly scheduled meeting of the reconstituted Board, the Board adopted resolutions (i) tabling the CEO succession process indefinitely, (ii) dissolving the Special Committee, and (iii) directing that Priya Nair-Whitfield continue to serve as Interim Chief Executive Officer pending further action by the Board. The dissolution of the Special Committee effectively removed the body that had been delegated oversight authority over the strategic alternatives review, raising the question — now before the full Board — of whether to formally shelve the strategic alternatives process.

D. Status of the Strategic Alternatives Review

During the approximately eight-week period from April 22 through mid-June 2024, Stonebridge conducted a preliminary assessment of strategic alternatives available to the Company. This preliminary work included:

• Development of a detailed financial model of the Company's standalone value based on management projections provided by the Interim CEO and Chief Financial Officer;

• Preparation of preliminary valuation analyses, including discounted cash flow analysis, comparable company analysis, and precedent transaction analysis;

• Initial outreach, at the direction of the Special Committee, to a limited number of potential strategic counterparties to assess preliminary interest levels; and

• Preparation of a preliminary presentation to the Special Committee (delivered on May 17, 2024) summarizing findings to date and recommending a course of action for the next phase of the review.

Critically, no confidentiality agreements were executed with any potential acquirers or transaction counterparties during the review period. No term sheets, letters of intent, or preliminary indications of interest were received from or negotiated with any third party. No data room was established, and no due diligence was conducted by or on behalf of any potential counterparty. The process remained at a purely exploratory and preliminary stage.

From the perspective of the Delaware fiduciary duty framework, no "Revlon trigger" event occurred during the review. The Board did not initiate an active auction process. The Board did not agree to or approve any change-of-control transaction. No break-up of the Company became inevitable. The strategic alternatives review remained, at all times, a preliminary exploration conducted under the protection of the business judgment rule.

The reconstituted Board has informally determined, through discussions at the June 14 meeting and in subsequent individual conversations among Board members, that continuing the strategic alternatives process at this time is not in the Company's best interests. The Board intends to take formal action to shelve the process, and this memorandum is intended to inform that decision.

III. Fiduciary Duty Analysis — Termination of Strategic Alternatives Process

A. Applicable Legal Framework Under Delaware Law

The fiduciary duties of the directors of a Delaware corporation are well established. Directors owe duties of care and loyalty to the corporation and its stockholders. The duty of care requires that directors inform themselves of all material information reasonably available before making a business decision. The duty of loyalty requires that directors act in good faith and in the honest belief that their actions are in the best interests of the corporation and its stockholders, free from self-dealing or conflicting interests.

Under the business judgment rule, which serves as the default standard of review in Delaware, a court will not second-guess the substantive merits of a board's decision so long as the board acted on an informed basis, in good faith, and in the honest belief that the action was taken in the best interests of the corporation. Aronson v. Lewis, 473 A.2d 805, 812 (Del. 1984). The business judgment rule creates a presumption that the directors' decision was the product of a valid exercise of business judgment, and a stockholder challenging the decision bears the burden of rebutting that presumption by demonstrating that the directors breached their fiduciary duties. In re Walt Disney Co. Derivative Litigation, 906 A.2d 27, 52 (Del. 2006).

The business judgment rule presumption applies to a board's decision to initiate, continue, or discontinue the exploration of strategic alternatives. A board's decision not to pursue a sale of the company, or to terminate a process that was exploring a potential sale, is a quintessential exercise of business judgment. See, e.g., Paramount Communications, Inc. v. Time Inc., 571 A.2d 1140, 1154 (Del. 1989) (affirming that a board of directors is not obligated to abandon its long-term strategic plan in favor of a short-term premium offer, and that the decision to pursue or not pursue a sale is within the board's business judgment); In re Dollar Thrifty Shareholder Litigation, 14 A.3d 573 (Del. Ch. 2010) (recognizing the board's discretion in managing the sale process and timing).

The enhanced scrutiny standards established under Revlon, Inc. v. MacAndrews & Forbaci Holdings, Inc., 506 A.2d 173 (Del. 1986), are triggered only in specific circumstances. Under Revlon, when a board decides to sell the company or approves a transaction resulting in a change of control or break-up of the corporate entity, the board's fiduciary duty shifts from the preservation of the corporate enterprise to the maximization of the company's value at a sale for the stockholders' benefit. Id. at 182. The Revlon enhanced duties require the board to act as an auctioneer and to take reasonable steps to secure the best price reasonably available for the stockholders.

Importantly, the mere exploration of strategic alternatives — without a definitive decision to sell the company — does not implicate Revlon. As the Delaware Court of Chancery has observed, "a board does not enter 'Revlon-land' merely by authorizing its financial advisor to explore strategic alternatives." In re Smurfit-Stone Container Corp. Shareholder Litigation, C.A. No. 6164-VCP, 2011 WL 2028076, at *17 (Del. Ch. May 20, 2011). There is a clear and well-established distinction between the initiation of a preliminary exploration of alternatives — which is governed by the business judgment rule — and the point at which the board enters the "Revlon zone" by deciding to sell the company or by engaging in conduct that makes a change of control or break-up of the company inevitable.

The enhanced scrutiny standards established under Unocal Corp. v. Mesa Petroleum Co., 493 A.2d 946 (Del. 1985), apply to defensive measures taken by a board in response to a perceived threat to corporate policy and effectiveness. Under Unocal, the board must demonstrate that (i) it had reasonable grounds for believing that a danger to corporate policy and effectiveness existed, and (ii) the defensive measure adopted was reasonable in relation to the threat posed. However, the decision to terminate a strategic alternatives review that was initiated as a defensive measure is itself protected by the business judgment rule, absent evidence of bad faith, self-dealing, or entrenchment. The termination of a defensive exploration does not constitute the adoption of a new defensive measure subject to Unocal scrutiny; rather, it is the withdrawal of a prior strategic initiative, and the board's judgment in making that withdrawal is entitled to deference under the ordinary business judgment standard.

B. Application to the Board's Decision to Shelve the Process

Applying the foregoing legal framework to the facts at hand, we reach the following conclusions regarding the Board's contemplated decision to shelve the strategic alternatives process.

No Revlon duties are triggered. The Board authorized the exploration of strategic alternatives on April 22, 2024, but at no point during the ensuing eight-week period did the Board make a definitive decision to sell the Company. The Board did not authorize the execution of a definitive merger agreement, stock purchase agreement, or any other agreement that would effect a change of control. The Board did not enter into an auction process that generated binding commitments from potential acquirers. No confidentiality agreements were executed with potential counterparties, no indications of interest were received, and no term sheets were negotiated. The strategic alternatives review remained at a preliminary stage throughout its duration. Accordingly, the Board never entered the "Revlon zone," and the enhanced duty to maximize immediate stockholder value does not apply to the Board's decision to shelve the process.

The business judgment rule governs the Board's decision. The reconstituted Board's decision to shelve the strategic alternatives process is a matter of business judgment, to be evaluated under the deferential standard of the business judgment rule. The Board is entitled to conclude, in the exercise of its informed business judgment, that the Company is better served by operational focus under its current leadership structure, and by the development of a long-term strategic plan under the reconstituted Board's direction, rather than by pursuing a transformative transaction at this time. Delaware courts have consistently recognized that directors are not required to sell the company or to continue exploring a sale merely because the process has been initiated. The Board's prerogative to change course is an essential element of the board's management authority.

Factors the Board should consider and document. In order to establish a robust evidentiary record supporting the Board's reliance on the business judgment rule, we recommend that the Board consider and expressly reference the following factors in its resolution and in the minutes of the meeting at which the resolution is adopted:

(a) The reconstituted Board's fresh mandate from shareholders. The June 7, 2024 AGM resulted in the election of three new directors nominated by Corvus Peak, the Company's largest activist stockholder. The election results reflect a clear shareholder mandate for a change in governance direction. The reconstituted Board is entitled to reassess the strategic priorities of the Company in light of this new mandate, and to conclude that the prior Board's decision to initiate a strategic alternatives review does not reflect the current Board's view of the Company's best interests.

(b) The tabled CEO succession process and the inadvisability of pursuing parallel strategic alternatives. The CEO succession process has been tabled indefinitely as of the June 14, 2024 Board resolution, and Priya Nair-Whitfield continues to serve as Interim CEO. The Board has determined that pursuing a strategic alternatives review without settled senior management would be inadvisable, as the identity and vision of the Company's permanent CEO will materially affect the range of strategic options available to the Company and the credibility of the Company's standalone plan in the eyes of potential counterparties.

(c) The absence of compelling indications from preliminary Stonebridge analysis. The preliminary assessment conducted by Stonebridge during the review period did not identify any strategic transaction opportunity that, based on the information available, would clearly deliver superior value to stockholders relative to the Company's standalone business plan. While the review was preliminary in nature, the absence of any compelling early-stage indication supports the Board's judgment that continued expenditure of resources on the process is not warranted at this time.

(d) The potential distraction and uncertainty created by a public strategic alternatives process. A continuation of the strategic alternatives review, particularly if it were to become publicly known, could create significant uncertainty and distraction for the Company's approximately 23,400 employees, its business partners, content creators, and other key stakeholders. Such uncertainty could adversely affect the Company's ability to retain talent, maintain key commercial relationships, and execute on its near-term operational objectives.

(e) The cost of maintaining the Stonebridge engagement. The Stonebridge engagement carries a monthly retainer of $250,000. In the absence of a clear strategic objective and a settled management team to work alongside, the continued expenditure of this retainer is not, in the Board's judgment, a prudent use of Company resources.

C. Potential Challenges and Risk Factors

While we believe the Board's decision to shelve the strategic alternatives process is well within the scope of its business judgment, we identify below certain potential challenges and risk factors that the Board should be aware of.

Stockholder litigation risk. A stockholder of the Company, including Corvus Peak (which holds approximately 8.7% of the outstanding shares), could theoretically challenge the termination of the strategic alternatives process as a breach of fiduciary duty. Such a challenge would most likely be framed as a claim that the Board acted in bad faith or with the primary purpose of entrenching management rather than serving the interests of stockholders. However, we assess the risk of a successful challenge as low for several reasons. Most significantly, the decision to shelve the process is being made by a reconstituted Board that includes three directors nominated by Corvus Peak itself — the very activist stockholder that precipitated the strategic alternatives review. The participation and concurrence of the Corvus Peak nominees in the decision to shelve the process substantially undermines any claim that the decision was motivated by entrenchment. Moreover, the business judgment rule places a heavy burden on the plaintiff to rebut the presumption of good faith, and the factual record here — including the preliminary nature of the review, the absence of any definitive transaction opportunity, and the unsettled CEO succession process — supports the Board's exercise of informed judgment.

Section 220 demand. Corvus Peak previously served a demand for books and records under Section 220 of the Delaware General Corporation Law ("DGCL") on March 22, 2024, seeking materials related to the CEO search committee's deliberations. Although that demand was focused on the CEO succession process, the strategic alternatives materials could become the subject of a similar demand in the future, whether by Corvus Peak or by another stockholder. A Section 220 demand for materials related to the strategic alternatives review would be evaluated under the standard established in Seinfeld v. Harborview Holdings, Inc., 909 A.2d 117 (Del. 2006), which requires the demanding stockholder to demonstrate a proper purpose for the demand. We recommend that the Company preserve all Stonebridge work product and Board materials related to the strategic alternatives review in accordance with the Company's document retention policies and in anticipation of potential future Section 220 demands or stockholder litigation. Premature destruction of such materials could give rise to adverse inferences and could undermine the Board's ability to defend its decision-making process.

FCA/DTR disclosure obligations. As a company with shares admitted to the premium segment of the Official List maintained by the Financial Conduct Authority ("FCA") and with depositary interests trading on the Main Market of the London Stock Exchange, AGMG is subject to the Disclosure Guidance and Transparency Rules ("DTR") and the UK Market Abuse Regulation ("UK MAR"). The termination of a strategic alternatives process could, depending on the circumstances, constitute inside information within the meaning of Article 7 of UK MAR, requiring disclosure as soon as possible unless the Company is entitled to delay disclosure under Article 17(4) of UK MAR. Successor counsel should confirm with UK regulatory counsel whether the termination of the strategic alternatives process requires an RNS announcement or other public disclosure under the applicable UK regulatory framework. We note that, because no public announcement was made regarding the initiation of the strategic alternatives review, the disclosure analysis may differ from the case in which a company has publicly announced such a review and must then disclose its termination.

D. Recommended Board Process

To establish a robust evidentiary record and to protect the Board's decision from potential future challenge, we recommend the following process:

First, the Board should adopt a formal resolution directing the termination of the strategic alternatives review. The resolution should include detailed recitals documenting the Board's rationale, expressly referencing the factors enumerated in Section III.B above. The resolution should recite that the Board has carefully considered the matter, has been advised by its financial advisor and legal counsel, and has determined, in the exercise of its informed business judgment, that continuing the strategic alternatives process at this time is not in the best interests of the Company and its stockholders.

Second, the Board's rationale should be documented in detailed board minutes of the meeting at which the resolution is adopted. The minutes should reflect the discussion among the directors, the factors considered, the information reviewed (including any Stonebridge presentations or reports), and the vote on the resolution. The minutes should be prepared by the Corporate Secretary (Nadine Khalil) or her designee and should be reviewed by counsel before finalization.

Third, the resolution should expressly reserve the Board's right to reinitiate a strategic alternatives process at any future time if circumstances warrant. This reservation preserves the Board's flexibility and negates any implication that the Board has permanently foreclosed the possibility of a strategic transaction.

Fourth, the Board should ensure that all three Corvus Peak nominees — Malcolm Trask, Vanessa Loring, and Dr. Raymond Chu — participate in the vote on the resolution. The concurrence of the Corvus Peak nominees is critically important to immunizing the decision from claims that it was taken over the objection of stockholder-nominated directors or that it was motivated by entrenchment of incumbent management. If any of the Corvus Peak nominees has a concern about the termination, that concern should be addressed and resolved before the vote is taken, so that the resolution can be adopted by unanimous vote of the full Board if possible.

IV. Stonebridge Crane & Co. Engagement — Termination Provisions

A. Key Terms of the Stonebridge Engagement

Stonebridge Crane & Co. was engaged by the Board on April 22, 2024, pursuant to a written engagement letter executed on that date, to serve as financial advisor to the Board for the evaluation of strategic alternatives available to the Company. The lead banker on the engagement is Anil Kapoor-Mehta, Managing Director in Stonebridge's Financial Advisory Group, based at Stonebridge's principal office at 383 Madison Avenue, New York, New York 10179.

The key financial terms of the Stonebridge engagement are as follows:

• Monthly retainer: $250,000 per month, with the first monthly period commencing on April 22, 2024, and subsequent monthly periods commencing on each successive monthly anniversary of that date. The monthly retainer is payable regardless of the level of activity during the applicable period and is not creditable against any transaction fee.

• Transaction fee: In the event that a "Transaction" (as defined in the engagement letter) is consummated during the term of the engagement or during the tail period (discussed below), Stonebridge shall be entitled to a transaction fee equal to 0.25% of the "Enterprise Value" (as defined in the engagement letter) of the Company as determined at the time of the consummation of the Transaction.

• Expense reimbursement: The Company is obligated to reimburse Stonebridge for all reasonable out-of-pocket expenses incurred in connection with the engagement, including travel, lodging, document production, and third-party research costs, subject to a cap of $100,000 per calendar quarter without prior Board approval.

• Indemnification: The engagement letter contains customary indemnification provisions requiring the Company to indemnify Stonebridge and its affiliates, directors, officers, employees, agents, and controlling persons against certain losses, claims, damages, and expenses arising out of or in connection with the engagement.

The engagement letter was reviewed and marked up by Calderwood & Harkness prior to execution, pursuant to a draft engagement letter review completed on April 21, 2024. Calderwood & Harkness's markup resulted in several modifications to the initial draft, including the addition of a cap on expense reimbursement, the narrowing of the definition of "Transaction" to exclude certain ordinary-course commercial transactions, and the inclusion of a provision requiring Stonebridge to cooperate with successor financial advisors in the event of termination. The tail fee provision, however, was retained in substantially the form proposed by Stonebridge, as discussed below.

B. Termination Provisions

The Stonebridge engagement letter provides that either party may terminate the engagement upon thirty (30) days' prior written notice to the other party. The notice must be delivered in writing to the attention of the designated contact at each party (in the case of Stonebridge, Anil Kapoor-Mehta; in the case of the Company, the Chair of the Board or the General Counsel & Corporate Secretary).

Upon termination of the engagement, all accrued and unpaid monthly retainer fees become immediately due and payable. To the extent that any retainer payments have been invoiced but not yet paid, those amounts become payable immediately upon the effective date of termination.

Assuming the Board delivers written notice of termination on or about June 16–20, 2024, the 30-day notice period would result in an effective termination date in approximately mid-to-late July 2024. Based on this timeline, the Company's aggregate retainer obligation from the commencement of the engagement on April 22, 2024 through the anticipated effective termination date would be approximately three (3) months of retainer, or approximately $750,000 in total. We understand that some portion of this amount has already been invoiced and paid by the Company; the specific amount of the outstanding retainer balance should be confirmed by the Company's finance team.

The indemnification provisions of the engagement letter expressly survive termination. This means that the Company's obligation to indemnify Stonebridge in connection with claims arising out of the engagement will continue following termination, subject to the terms and limitations set forth in the engagement letter. Successor counsel should be aware of this continuing obligation and should advise the Board accordingly if any claim is made against Stonebridge in connection with its work on the strategic alternatives review.

C. Tail Fee Exposure

The engagement letter contains a provision that is of critical importance to the Board's future strategic decision-making: a twelve (12) month tail fee provision.

Under the tail fee provision, if a "Transaction" involving the Company is consummated within twelve (12) months following the effective date of termination of the Stonebridge engagement, Stonebridge shall be entitled to receive the full transaction fee — that is, 0.25% of the Enterprise Value of the Company — as if the engagement had remained in effect at the time of the Transaction. The definition of "Transaction" in the engagement letter is broadly drafted and includes, without limitation:

(a) any merger, consolidation, or business combination involving the Company;

(b) any acquisition of the Company (whether by stock purchase, asset purchase, tender offer, exchange offer, or otherwise);

(d) any recapitalization, restructuring, or similar transaction involving the Company; and

(e) any transaction or series of related transactions that results in a change of more than 50% of the members of the Board of Directors or more than 50% of the voting power of the Company's outstanding capital stock (other than changes resulting from routine director elections in the ordinary course).

The breadth of this definition is notable. It encompasses not only a traditional change-of-control transaction (such as a negotiated merger or tender offer) but also certain recapitalization transactions and even certain changes in Board composition or voting power that might result from a future activist campaign or proxy contest. The Board should be advised that the definition is broader than what Calderwood & Harkness would typically recommend, and that the tail fee provision as drafted could be triggered by a wider range of transactions than a narrowly tailored provision would cover.

Estimated tail fee exposure. The transaction fee is calculated as 0.25% of the Company's Enterprise Value. For purposes of this analysis, we use the Company's market capitalization as of March 1, 2024 (approximately $8.65 billion) as a proxy for Enterprise Value, recognizing that the actual Enterprise Value at the time of any future Transaction would be determined in accordance with the methodology specified in the engagement letter and would take into account the Company's net debt position and other adjustments. Based on this estimate:

Estimated tail fee = 0.25% × $8,650,000,000 = $21,625,000 (approximately $21.6 million)

The tail period would commence on the effective date of termination of the Stonebridge engagement and would expire on the twelve-month anniversary of that date. If the Board terminates the engagement with an effective date in approximately mid-to-late July 2024, the tail period would extend through approximately mid-to-late July 2025.

Crucially, the tail fee applies regardless of whether Stonebridge played any role in identifying, introducing, or advising on the counterparty to the eventual Transaction. The tail fee is not limited to transactions involving counterparties that Stonebridge identified or contacted during the engagement. Rather, it applies to any Transaction (as defined) consummated during the tail period, regardless of the source of the transaction opportunity.

While the inclusion of a tail fee provision in a financial advisory engagement letter is customary in the investment banking industry, and while the twelve-month tail period is within the range of market practice (though at the longer end), the breadth of the definition of "Transaction" and the absence of any limitation to Stonebridge-introduced counterparties make this tail fee provision particularly expansive. The approximately $21.6 million in potential tail fee exposure represents a material contingent liability that the Board should consider carefully in connection with any future strategic decision-making during the tail period.

D. Negotiation Opportunities

The Board may wish to consider negotiating a reduction or modification of the tail fee provision in connection with the termination of the Stonebridge engagement. Financial advisors will frequently agree to negotiate tail fee provisions at termination, particularly where the engagement was of relatively short duration and where the advisor's work did not progress to an advanced stage. The following are potential negotiation approaches that the Board could consider:

(a) Reducing the tail period from 12 months to 6 months. A shorter tail period would reduce the window of exposure and provide the Board with greater flexibility to pursue strategic alternatives sooner following termination without triggering the tail fee. A six-month tail is well within the range of market practice and would be a reasonable request in light of the relatively short duration of the engagement (approximately three months).

(b) Limiting the tail to Stonebridge-introduced counterparties. Under this approach, the tail fee would apply only to Transactions involving counterparties that were specifically identified or contacted by Stonebridge during the engagement. This limitation is common in modified tail provisions and would significantly narrow the scope of the Company's exposure, given that the number of counterparties contacted by Stonebridge during the preliminary review was limited.

(c) Negotiating a reduced tail fee percentage. The Board could seek to reduce the tail fee percentage from 0.25% to a lower rate, such as 0.125% of Enterprise Value, for Transactions consummated during the tail period. This approach would reduce the potential exposure from approximately $21.6 million to approximately $10.8 million.

(d) Obtaining a full waiver of the tail fee in exchange for a termination payment. The Board could offer Stonebridge a one-time termination payment (sometimes referred to as a "breakage fee" or "termination premium") in exchange for a complete waiver of the tail fee provision. The appropriate amount of such a payment would need to be negotiated, and the Company should be prepared for Stonebridge to seek a payment that reflects the expected value of the tail fee (Discounted for the probability that a Transaction would actually be consummated during the tail period).

Any negotiation with Stonebridge should be conducted by or under the direct supervision of the Board or a duly authorized committee of the Board, and the terms of any modification to the engagement letter should be documented in a written amendment or termination agreement executed by both parties. Successor counsel should be advised of this negotiation opportunity and should be prepared to assist the Board in evaluating and executing any modification.

V. Interaction with Other Pending Matters

A. CEO Succession Process

The strategic alternatives review was initiated in part as a complement to the CEO succession process, with the objective of providing the Board with a comprehensive picture of the value-maximizing options available to the Company. The two processes were intended to inform one another: the strategic alternatives review would assess whether a transformative transaction could deliver superior value relative to the standalone plan, while the CEO succession process would identify a permanent leader capable of executing either the standalone plan or the Company's role in a strategic transaction.

With the CEO succession process now tabled indefinitely pursuant to the June 14, 2024 Board resolution, and with Priya Nair-Whitfield continuing to serve as Interim CEO for the foreseeable future, the strategic rationale for maintaining the alternatives review has diminished substantially. A strategic alternatives process that is conducted without a settled CEO is inherently disadvantaged: potential counterparties will question the Company's management stability, the Company's standalone projections will lack the imprimatur of a permanent CEO, and the Board's ability to evaluate strategic options will be hampered by the uncertainty surrounding the Company's future leadership.

If the reconstituted Board reopens the CEO search under new governance counsel — reportedly Blackthorn Howell & Crane LLP, per the Board's June 17, 2024 announcement — any future strategic alternatives review should be carefully managed in coordination with the CEO search. As Calderwood & Harkness advised in its April 26, 2024 memorandum on confidentiality and information barrier protocols (the "Information Barrier Memo"), the Board should consider establishing appropriate information barriers between the CEO search process and any strategic alternatives review to prevent the cross-contamination of sensitive information and to protect the integrity of both processes. The Information Barrier Memo contains detailed recommendations regarding the segregation of Board materials, the use of separate outside advisors, and the limitation of overlapping committee membership, and successor counsel should be provided with a copy of that memorandum for reference.

B. Hargrove Tate Partners LLC Engagement

The executive search firm Hargrove Tate Partners LLC ("Hargrove Tate") was retained by the Board on March 15, 2024, to conduct a search for a permanent CEO. The Hargrove Tate engagement is led by Christine Aldridge, a Senior Partner at the firm. The engagement was structured as a $750,000 flat fee arrangement, payable in three equal installments of $250,000 each: the first installment upon execution of the engagement letter, the second installment upon delivery of a shortlist of candidates, and the third installment upon the successful placement of a candidate.

Following the tabling of the CEO succession process on June 14, 2024, only the first installment of $250,000 has been paid. The second and third installments, totaling $500,000, remain unpaid and are the subject of potential contractual exposure depending on the terms of the Hargrove Tate engagement letter.

While the Hargrove Tate engagement is a separate matter from the Stonebridge engagement and the strategic alternatives review, the two should be addressed in a coordinated manner. The Board should determine whether to formally terminate the Hargrove Tate engagement or to place it on hold (i.e., to suspend performance under the engagement without formally terminating it), and in either case should evaluate the contractual exposure for the remaining $500,000 in unpaid fees. The Hargrove Tate engagement letter should be reviewed by successor counsel to determine whether termination triggers any obligation to pay the remaining installments, any termination fee, or any tail provision analogous to the Stonebridge tail fee.

C. Calderwood & Harkness Engagement Termination

Calderwood & Harkness was notified on June 21, 2024, that its engagement as independent board governance counsel to the Board will be terminated effective July 8, 2024. This memorandum is among Calderwood & Harkness's final work product deliverables in connection with the engagement.

For the Board's records, the following is a summary of fees and expenses billed in connection with the engagement through the date of this memorandum:

The outstanding balance of $312,817.00 represents fees and expenses for services rendered through the date of this memorandum and includes the preparation of this memorandum and the transition memorandum (to be dated July 1, 2024). Calderwood & Harkness will submit a final invoice upon termination of the engagement, and the Company's prompt payment in accordance with the terms of the engagement letter is requested.

Successor counsel should be provided with a copy of the Stonebridge engagement letter, this memorandum, the Information Barrier Memo (dated April 26, 2024), and all related materials generated during the strategic alternatives review to ensure continuity of advice on the tail fee exposure and related matters. Calderwood & Harkness is prepared to cooperate with successor counsel during the transition period and to make ourselves available for consultation as reasonably necessary.

D. D&O Insurance Considerations

The Board's decision to shelve the strategic alternatives process, and the broader series of governance decisions taken by the reconstituted Board in June 2024, may be relevant to future claims under the Company's directors' and officers' liability insurance policy. The Company maintains a D&O insurance policy with Helmsley Indemnity Corp. (Policy No. HIC-DOL-2024-009347), which provides coverage of $75 million per occurrence and $150 million in the aggregate, with an annual premium of $3.8 million. The policy period runs from January 1, 2024 through December 31, 2024.

In the event that a stockholder brings a derivative or class action claim challenging the Board's decision to shelve the strategic alternatives process or the manner in which the process was conducted, the Company and the individual directors would seek to invoke the D&O policy for defense costs and, if applicable, indemnification of any settlement or judgment. Successor counsel should review the D&O policy to confirm that the Board's strategic decision-making process is adequately documented for coverage purposes and that no exclusion or limitation in the policy would jeopardize coverage for claims arising from the conduct described in this memorandum. In particular, successor counsel should confirm that the policy's "prior knowledge" and "prior notice" provisions are satisfied, and that any required notice of potential claims has been or will be timely provided to Helmsley Indemnity Corp.

VI. Recommended Board Actions

Based on the analysis set forth in this memorandum, Calderwood & Harkness recommends that the Board take the following actions:

1. Adopt a formal resolution directing the termination of the strategic alternatives review. The resolution should include detailed recitals documenting the Board's rationale for shelving the process, expressly referencing (i) the reconstituted Board's fresh mandate from shareholders following the June 7, 2024 AGM, (ii) the absence of any compelling transaction opportunity identified during the preliminary Stonebridge review, (iii) the tabling of the CEO succession process and the resulting lack of settled senior management to support a strategic alternatives process, (iv) the potential distraction and uncertainty that continuation of the process could create for the Company's employees, partners, and stakeholders, and (v) the Board's informed business judgment that continuing the process at this time is not in the best interests of the Company and its stockholders. The resolution should expressly reserve the Board's right to reinitiate a strategic alternatives process at any future time if circumstances warrant.

2. Authorize the Chair or Lead Independent Director to deliver notice of termination to Stonebridge. The Board should authorize Dame Elspeth Greenvale, in her capacity as transitional Chair, or Malcolm Trask, in his capacity as Lead Independent Director, to deliver written notice of termination to Stonebridge Crane & Co. in accordance with the engagement letter's 30-day notice provision. The notice should be delivered promptly following the Board's adoption of the termination resolution, and should be prepared in consultation with the General Counsel & Corporate Secretary to ensure compliance with the notice requirements of the engagement letter.

3. Direct successor counsel to review and negotiate the tail fee provision. The Board should direct successor counsel (anticipated to be Blackthorn Howell & Crane LLP) to review the Stonebridge engagement letter and, if possible, to negotiate a reduction in the 12-month tail fee provision. Potential approaches include reducing the tail period to six months, limiting the tail to transactions involving counterparties specifically identified or contacted by Stonebridge during the engagement, negotiating a reduced tail fee percentage, or obtaining a full waiver of the tail fee in exchange for a negotiated termination payment. Successor counsel should be provided with a copy of the engagement letter and this memorandum to inform the negotiation.

4. Preserve all materials generated during the strategic alternatives review. The Board should direct the General Counsel & Corporate Secretary to preserve all materials generated during the strategic alternatives review, including but not limited to Stonebridge work product, Board presentations, Special Committee presentations, meeting minutes, correspondence with Stonebridge and other advisors, and internal memoranda. These materials should be preserved in accordance with the Company's document retention policies and in anticipation of potential future DGCL § 220 demands, regulatory inquiries, or stockholder litigation. The Board should issue a litigation hold notice if one has not already been issued.

5. Assess FCA/DTR disclosure requirements. The Board should direct successor counsel, in coordination with UK regulatory counsel, to assess whether the termination of the strategic alternatives process requires an RNS announcement or other public disclosure under the FCA Disclosure Guidance and Transparency Rules, the UK Market Abuse Regulation, or any other applicable regulatory framework governing the Company's premium listing on the LSE Main Market. The assessment should be completed promptly and the Board should be advised of the results before the effective date of termination of the Stonebridge engagement.

6. Brief successor counsel comprehensively. The Board should ensure that the transition memorandum (to be dated July 1, 2024) provided to the Board and to successor counsel includes comprehensive coverage of the Stonebridge tail fee exposure, the status of the Hargrove Tate engagement, the D&O insurance considerations, and all other open issues identified in this memorandum. Calderwood & Harkness is prepared to participate in a transition call with successor counsel to ensure a complete and accurate transfer of institutional knowledge. The objective is to ensure that Blackthorn Howell & Crane LLP (or other successor counsel) can advise the Board on these matters without interruption.

VII. Conclusion

For the reasons set forth in this memorandum, the reconstituted Board of Directors of Aurelius Global Media Group PLC has broad discretion under Delaware law to shelve the strategic alternatives process that was initiated on April 22, 2024. The decision is governed by the business judgment rule, and no Revlon duties have been triggered by the preliminary exploration of strategic alternatives that occurred during the review period. The Board's decision, if properly documented and adopted on an informed basis, will be entitled to the strong presumption of validity that the business judgment rule affords.

The principal financial risk associated with termination of the Stonebridge engagement is the tail fee exposure of approximately $21.6 million, which will persist for twelve (12) months following the effective date of termination of the engagement. This contingent liability is material and should be carefully considered by the Board in connection with any future strategic decision-making during the tail period. The Board has an opportunity to negotiate a reduction or modification of the tail fee provision in connection with termination, and successor counsel should be directed to pursue this negotiation as a priority.

Calderwood & Harkness recommends that the Board take the actions enumerated in Section VI of this memorandum to protect the Company's interests, to establish a robust evidentiary record supporting the Board's decision, and to ensure an orderly termination of the Stonebridge engagement.

We remain available to discuss the contents of this memorandum with the Board and with individual directors through the end of our engagement on July 8, 2024, and to coordinate with successor counsel as needed during the transition period.

Respectfully submitted,

CALDERWOOD & HARKNESS LLP

By: ________

Name: Nathaniel Bower

Title: Partner

By: ________

Name: Colette Whitman

Title: Partner

DISTRIBUTION AND CONFIDENTIALITY NOTICE

This memorandum constitutes a privileged and confidential attorney-client communication and attorney work product. It was prepared by Calderwood & Harkness LLP at the direction of and for the exclusive benefit of the Board of Directors of Aurelius Global Media Group PLC. The contents of this memorandum are protected by the attorney-client privilege and the work product doctrine, and this memorandum is not to be disclosed to any third party without the prior written consent of the Board of Directors and Calderwood & Harkness LLP. Any unauthorized disclosure, distribution, or copying of this memorandum, in whole or in part, is strictly prohibited.

Distribution:

Dame Elspeth Greenvale — Transitional Chair, Board of Directors

Malcolm Trask — Lead Independent Director

Vanessa Loring — Chair, Nominating & Governance Committee

Nadine Khalil — General Counsel & Corporate Secretary

Calderwood & Harkness LLP	787 Seventh Avenue, New York, NY 10019	Matter No. 1017-00002	PRIVILEGED & CONFIDENTIAL
Candidate	Votes FOR	Percentage	Votes WITHHELD / AGAINST
Malcolm Trask (Corvus Peak)	241,632,915	68.8%	109,647,485
Vanessa Loring (Corvus Peak)	228,231,780	65.0%	123,048,620
Dr. Raymond Chu (Corvus Peak)	234,554,027	66.8%	116,726,373
Tobias Kessler (Incumbent)	156,321,778	44.5%	194,958,622
Hugh Pemberton (Incumbent)	138,204,558	39.3%	213,075,842
Sofia Delgado-Ríos (Incumbent)	147,627,022	42.0%	203,653,378
Category	Amount
Total professional fees billed	$1,034,625.00
Total expenses billed	$38,442.00
Grand total billed	$1,073,067.00
Payments received to date	$760,250.00
Outstanding balance at termination	$312,817.00

PRIVILEGED & CONFIDENTIAL ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT
CALDERWOOD & HARKNESS LLP 787 Seventh Avenue New York, New York 10019
MEMORANDUM
June 16, 2024
FROM: Nathaniel Bower, Partner, Calderwood & Harkness LLP
TO: The Board of Directors, Aurelius Global Media Group PLC
RE: Fiduciary Implications of Termination of Strategic Alternatives Review; Stonebridge Crane & Co. Engagement Termination Provisions and Tail Fee Exposure
MATTER NO.: 1017-00002
PREPARED BY: Audrey Zhou (Lead Associate) and Brendan Walsh (Working Associate), under the supervision of Nathaniel Bower (Responsible Partner) and Colette Whitman (Billing Partner)
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I. Executive Summary
The purpose of this memorandum is to advise the reconstituted Board of Directors (the "Board") of Aurelius Global Media Group PLC ("AGMG" or the "Company") on the fiduciary implications and contractual consequences of the Board's decision, taken at its meeting of June 14, 2024, to table the CEO succession process indefinitely, dissolve the Special Committee, and — as a related matter now under active consideration — shelve the strategic alternatives review process that was initiated on April 22, 2024 in connection with the activist campaign mounted by Corvus Peak Capital Partners LP ("Corvus Peak"). This memorandum addresses the Delaware fiduciary duty framework governing the Board's discretion to discontinue the review, the contractual termination provisions of the Stonebridge Crane & Co. ("Stonebridge") financial advisory engagement, and certain ancillary matters that the Board and successor counsel should address in connection with the wind-down.
After thorough review of applicable Delaware case law, the Stonebridge engagement letter, the Board resolutions and meeting minutes from April 22 through June 14, 2024, and the current status of the strategic alternatives process, Calderwood & Harkness has reached the following conclusions:
First, the Board has broad discretion under Delaware law to terminate the strategic alternatives process at this time, provided the decision is made on an informed basis, in good faith, and in the honest belief that termination serves the best interests of the Company and its stockholders. The business judgment rule governs the Board's decision, and Delaware courts will not second-guess the Board's substantive judgment so long as the proper procedural safeguards are observed.
Second, the decision to shelve the strategic alternatives process does not implicate the enhanced duties established under Revlon, Inc. v. MacAndrews & Forbaci Holdings, Inc., 506 A.2d 173 (Del. 1986), because no change-of-control transaction was agreed to or became inevitable during the review. The Board explored strategic alternatives on a preliminary basis, but never entered the so-called "Revlon zone" that would require the Board to act as an auctioneer charged with maximizing immediate stockholder value.
Third, the Stonebridge engagement letter contains termination provisions and a tail fee clause that create potential financial exposure of approximately $21.6 million if a change-of-control transaction (as broadly defined in the engagement letter) is consummated within the 12-month tail period following termination of the engagement. This tail fee exposure is a material contingent liability that the Board should carefully consider in connection with any future strategic decision-making during the tail period.
Fourth, the Board should document its rationale for shelving the strategic alternatives process contemporaneously, including express reference to the reconstituted Board's informed determination that pursuing strategic alternatives at this time is not in the Company's best interests. Detailed board minutes and a formal resolution are essential to establishing a strong evidentiary record that will support the Board's reliance on the business judgment rule in the event of any future stockholder challenge.
Fifth, Calderwood & Harkness's engagement as independent board governance counsel is being terminated effective July 8, 2024. Successor counsel should be fully briefed on the tail fee exposure, the status of the Stonebridge engagement, and any residual obligations arising under the engagement letter or in connection with the wind-down of the strategic alternatives process. This memorandum is intended to serve as a principal reference document for that transition.
II. Background
A. Initiation of the Strategic Alternatives Review
On April 22, 2024, the Board of Directors of AGMG, acting on the unanimous recommendation of the Special Committee of Independent Directors (the "Special Committee"), authorized the engagement of Stonebridge Crane & Co. as financial advisor to the Board for the purpose of evaluating strategic alternatives available to the Company. The Special Committee was then chaired by Tobias Kessler, with Lucinda Farrow-Grant and Dr. Anwen Llewellyn serving as its other members. The Special Committee had been formed on March 8, 2024, by resolution of the full Board, with a mandate to oversee the Board's response to the proxy contest initiated by Corvus Peak and to evaluate governance-related matters, including the CEO succession process and the potential exploration of strategic alternatives.
The authorization of the Stonebridge engagement was memorialized in a formal board resolution adopted at a duly convened meeting of the Board on April 22, 2024. The resolution granted the Special Committee delegated authority to direct the scope and pace of the strategic alternatives review, subject to periodic reporting to the full Board and subject to the reservation by the full Board of the authority to approve or reject any definitive transaction.
Concurrently, on the same date, the engagement scope of Calderwood & Harkness LLP was expanded via an amended engagement letter to include coordination with Stonebridge on the legal aspects of the strategic alternatives review, including the negotiation and review of any confidentiality agreements, preliminary indications of interest, or transaction documentation that might arise during the process. This expansion of scope was documented in Amendment No. 1 to the Calderwood & Harkness engagement letter, executed by Dame Elspeth Greenvale on behalf of the Board and by Nathaniel Bower on behalf of Calderwood & Harkness.
The strategic alternatives process was designed to explore a broad range of options, including, without limitation: (i) potential asset divestitures involving one or more of the Company's four operating segments; (ii) joint ventures or strategic partnerships with media, technology, or entertainment companies; (iii) recapitalization transactions, including leveraged recapitalizations, special dividends, or share buyback programs; and (iv) a possible sale of the entire Company, whether by negotiated merger, tender offer, or other structure. The overarching objective of the process was to identify value-maximizing strategies that could be presented to shareholders as evidence of the Board's proactive governance and commitment to enhancing long-term stockholder value, while simultaneously serving as a credible response to the criticisms raised by Corvus Peak in its proxy solicitation materials.
B. AGMG Corporate and Financial Profile
Aurelius Global Media Group PLC is incorporated in the State of Delaware and registered as an overseas company in England and Wales under the Companies Act 2006. The Company maintains a dual listing, with its shares of common stock listed on the New York Stock Exchange under the ticker symbol "AGMG" and its depositary interests listed on the Main Market of the London Stock Exchange, premium segment, under the ticker symbol "AGMG.L." The Company's principal executive offices are located at 14 Sceptre Row, London EC2V 7QN, United Kingdom. Its registered agent in Delaware is Pinnacle Corporate Services Inc., located at 1209 Orange Street, Wilmington, Delaware 19801.
As of March 1, 2024, the Company's market capitalization was approximately £6.82 billion, equivalent to approximately $8.65 billion at the prevailing exchange rate of $1.2683 per pound sterling. For the fiscal year ended December 31, 2023, the Company reported total revenues of $4.37 billion and EBITDA of $812 million, representing an EBITDA margin of approximately 18.6%. As of the most recent public filings, the Company had approximately 412,600,000 shares of common stock outstanding.
The Company's operations are organized into four reportable business segments:
• Streaming & Digital Content — This segment, which represents the Company's largest business by revenue, accounted for approximately 42% of total FY 2023 revenue, or $1,835.4 million. The segment encompasses the Company's direct-to-consumer streaming platform, digital content licensing, and original programming operations.
• Live Entertainment & Events — This segment accounted for approximately 24% of total FY 2023 revenue, or $1,048.8 million. It includes the Company's live event production capabilities, venue operations, and experiential entertainment offerings across North America, Europe, and Asia-Pacific.
• E-Commerce & Merchandising — This segment accounted for approximately 19% of total FY 2023 revenue, or $830.3 million. It encompasses the Company's direct-to-consumer and wholesale merchandising operations, including proprietary e-commerce platforms, licensing arrangements, and retail partnerships.
• Advertising & Brand Partnerships — This segment accounted for approximately 15% of total FY 2023 revenue, or $655.5 million. It includes digital and traditional advertising sales across the Company's media properties, as well as branded content and sponsorship arrangements.
The Company employs approximately 23,400 individuals worldwide, with operations spanning North America, Europe, Asia-Pacific, and Latin America.
C. Proxy Contest and Board Reconstitution
Corvus Peak Capital Partners LP is a Delaware limited partnership with approximately $7.2 billion in assets under management. Corvus Peak is led by its Founding Partner and Chief Investment Officer, Damien Solberg, and Portfolio Manager Erin Nakamura, who has served as the lead portfolio manager for the Corvus Peak position in AGMG. Through a series of open-market purchases disclosed in Schedule 13D filings with the U.S. Securities and Exchange Commission, Corvus Peak acquired an approximately 8.7% beneficial ownership stake in the Company, comprising approximately 35,896,200 shares of common stock at an average cost basis of approximately $20.97 per share, representing a total investment of approximately $752.8 million.
On February 14, 2024, Corvus Peak delivered to the Company a notice of its intention to nominate three candidates for election to the Board at the Company's 2024 Annual General Meeting (the "AGM"). The three Corvus Peak nominees were:
• Malcolm Trask, age 58, the former Chief Executive Officer of Archway Digital Holdings Inc., a publicly traded digital media and technology company, where he served from 2014 to 2022;
• Vanessa Loring, age 44, a Managing Director at Corvus Peak Capital Partners LP, with primary coverage responsibility for Corvus Peak's media and entertainment portfolio investments; and
• Dr. Raymond Chu, age 61, the former President of Helix Media Networks Inc., a diversified media company, where he served from 2010 to 2019, and a current member of the board of directors of two privately held media technology companies.
At the Company's AGM held on June 7, 2024, all three Corvus Peak nominees were elected to the Board by substantial margins. The voting results were as follows:
Total shares voted at the AGM were 351,280,400, representing approximately 85.1% of the 412,600,000 shares of common stock outstanding. As a consequence of the election results, three incumbent directors — Tobias Kessler, Hugh Pemberton, and Sofia Delgado-Ríos — were not re-elected to the Board.
On June 10, 2024, the reconstituted Board held its first meeting following the AGM. At that meeting, Malcolm Trask was elected Lead Independent Director by unanimous vote of the Board. Dame Elspeth Greenvale, who had served as Chair of the Board since 2021, was confirmed as transitional Chair through September 30, 2024, at which point the Board will revisit the permanent Chair appointment. On June 17, 2024, the Board appointed Vanessa Loring as Chair of the Nominating & Governance Committee.
On June 14, 2024, at a regularly scheduled meeting of the reconstituted Board, the Board adopted resolutions (i) tabling the CEO succession process indefinitely, (ii) dissolving the Special Committee, and (iii) directing that Priya Nair-Whitfield continue to serve as Interim Chief Executive Officer pending further action by the Board. The dissolution of the Special Committee effectively removed the body that had been delegated oversight authority over the strategic alternatives review, raising the question — now before the full Board — of whether to formally shelve the strategic alternatives process.
D. Status of the Strategic Alternatives Review
During the approximately eight-week period from April 22 through mid-June 2024, Stonebridge conducted a preliminary assessment of strategic alternatives available to the Company. This preliminary work included:
• Development of a detailed financial model of the Company's standalone value based on management projections provided by the Interim CEO and Chief Financial Officer;
• Preparation of preliminary valuation analyses, including discounted cash flow analysis, comparable company analysis, and precedent transaction analysis;
• Initial outreach, at the direction of the Special Committee, to a limited number of potential strategic counterparties to assess preliminary interest levels; and
• Preparation of a preliminary presentation to the Special Committee (delivered on May 17, 2024) summarizing findings to date and recommending a course of action for the next phase of the review.
Critically, no confidentiality agreements were executed with any potential acquirers or transaction counterparties during the review period. No term sheets, letters of intent, or preliminary indications of interest were received from or negotiated with any third party. No data room was established, and no due diligence was conducted by or on behalf of any potential counterparty. The process remained at a purely exploratory and preliminary stage.
From the perspective of the Delaware fiduciary duty framework, no "Revlon trigger" event occurred during the review. The Board did not initiate an active auction process. The Board did not agree to or approve any change-of-control transaction. No break-up of the Company became inevitable. The strategic alternatives review remained, at all times, a preliminary exploration conducted under the protection of the business judgment rule.
The reconstituted Board has informally determined, through discussions at the June 14 meeting and in subsequent individual conversations among Board members, that continuing the strategic alternatives process at this time is not in the Company's best interests. The Board intends to take formal action to shelve the process, and this memorandum is intended to inform that decision.
III. Fiduciary Duty Analysis — Termination of Strategic Alternatives Process
A. Applicable Legal Framework Under Delaware Law
The fiduciary duties of the directors of a Delaware corporation are well established. Directors owe duties of care and loyalty to the corporation and its stockholders. The duty of care requires that directors inform themselves of all material information reasonably available before making a business decision. The duty of loyalty requires that directors act in good faith and in the honest belief that their actions are in the best interests of the corporation and its stockholders, free from self-dealing or conflicting interests.
Under the business judgment rule, which serves as the default standard of review in Delaware, a court will not second-guess the substantive merits of a board's decision so long as the board acted on an informed basis, in good faith, and in the honest belief that the action was taken in the best interests of the corporation. Aronson v. Lewis, 473 A.2d 805, 812 (Del. 1984). The business judgment rule creates a presumption that the directors' decision was the product of a valid exercise of business judgment, and a stockholder challenging the decision bears the burden of rebutting that presumption by demonstrating that the directors breached their fiduciary duties. In re Walt Disney Co. Derivative Litigation, 906 A.2d 27, 52 (Del. 2006).
The business judgment rule presumption applies to a board's decision to initiate, continue, or discontinue the exploration of strategic alternatives. A board's decision not to pursue a sale of the company, or to terminate a process that was exploring a potential sale, is a quintessential exercise of business judgment. See, e.g., Paramount Communications, Inc. v. Time Inc., 571 A.2d 1140, 1154 (Del. 1989) (affirming that a board of directors is not obligated to abandon its long-term strategic plan in favor of a short-term premium offer, and that the decision to pursue or not pursue a sale is within the board's business judgment); In re Dollar Thrifty Shareholder Litigation, 14 A.3d 573 (Del. Ch. 2010) (recognizing the board's discretion in managing the sale process and timing).
The enhanced scrutiny standards established under Revlon, Inc. v. MacAndrews & Forbaci Holdings, Inc., 506 A.2d 173 (Del. 1986), are triggered only in specific circumstances. Under Revlon, when a board decides to sell the company or approves a transaction resulting in a change of control or break-up of the corporate entity, the board's fiduciary duty shifts from the preservation of the corporate enterprise to the maximization of the company's value at a sale for the stockholders' benefit. Id. at 182. The Revlon enhanced duties require the board to act as an auctioneer and to take reasonable steps to secure the best price reasonably available for the stockholders.
Importantly, the mere exploration of strategic alternatives — without a definitive decision to sell the company — does not implicate Revlon. As the Delaware Court of Chancery has observed, "a board does not enter 'Revlon-land' merely by authorizing its financial advisor to explore strategic alternatives." In re Smurfit-Stone Container Corp. Shareholder Litigation, C.A. No. 6164-VCP, 2011 WL 2028076, at *17 (Del. Ch. May 20, 2011). There is a clear and well-established distinction between the initiation of a preliminary exploration of alternatives — which is governed by the business judgment rule — and the point at which the board enters the "Revlon zone" by deciding to sell the company or by engaging in conduct that makes a change of control or break-up of the company inevitable.
The enhanced scrutiny standards established under Unocal Corp. v. Mesa Petroleum Co., 493 A.2d 946 (Del. 1985), apply to defensive measures taken by a board in response to a perceived threat to corporate policy and effectiveness. Under Unocal, the board must demonstrate that (i) it had reasonable grounds for believing that a danger to corporate policy and effectiveness existed, and (ii) the defensive measure adopted was reasonable in relation to the threat posed. However, the decision to terminate a strategic alternatives review that was initiated as a defensive measure is itself protected by the business judgment rule, absent evidence of bad faith, self-dealing, or entrenchment. The termination of a defensive exploration does not constitute the adoption of a new defensive measure subject to Unocal scrutiny; rather, it is the withdrawal of a prior strategic initiative, and the board's judgment in making that withdrawal is entitled to deference under the ordinary business judgment standard.
B. Application to the Board's Decision to Shelve the Process
Applying the foregoing legal framework to the facts at hand, we reach the following conclusions regarding the Board's contemplated decision to shelve the strategic alternatives process.
No Revlon duties are triggered. The Board authorized the exploration of strategic alternatives on April 22, 2024, but at no point during the ensuing eight-week period did the Board make a definitive decision to sell the Company. The Board did not authorize the execution of a definitive merger agreement, stock purchase agreement, or any other agreement that would effect a change of control. The Board did not enter into an auction process that generated binding commitments from potential acquirers. No confidentiality agreements were executed with potential counterparties, no indications of interest were received, and no term sheets were negotiated. The strategic alternatives review remained at a preliminary stage throughout its duration. Accordingly, the Board never entered the "Revlon zone," and the enhanced duty to maximize immediate stockholder value does not apply to the Board's decision to shelve the process.
The business judgment rule governs the Board's decision. The reconstituted Board's decision to shelve the strategic alternatives process is a matter of business judgment, to be evaluated under the deferential standard of the business judgment rule. The Board is entitled to conclude, in the exercise of its informed business judgment, that the Company is better served by operational focus under its current leadership structure, and by the development of a long-term strategic plan under the reconstituted Board's direction, rather than by pursuing a transformative transaction at this time. Delaware courts have consistently recognized that directors are not required to sell the company or to continue exploring a sale merely because the process has been initiated. The Board's prerogative to change course is an essential element of the board's management authority.
Factors the Board should consider and document. In order to establish a robust evidentiary record supporting the Board's reliance on the business judgment rule, we recommend that the Board consider and expressly reference the following factors in its resolution and in the minutes of the meeting at which the resolution is adopted:
(a) The reconstituted Board's fresh mandate from shareholders. The June 7, 2024 AGM resulted in the election of three new directors nominated by Corvus Peak, the Company's largest activist stockholder. The election results reflect a clear shareholder mandate for a change in governance direction. The reconstituted Board is entitled to reassess the strategic priorities of the Company in light of this new mandate, and to conclude that the prior Board's decision to initiate a strategic alternatives review does not reflect the current Board's view of the Company's best interests.
(b) The tabled CEO succession process and the inadvisability of pursuing parallel strategic alternatives. The CEO succession process has been tabled indefinitely as of the June 14, 2024 Board resolution, and Priya Nair-Whitfield continues to serve as Interim CEO. The Board has determined that pursuing a strategic alternatives review without settled senior management would be inadvisable, as the identity and vision of the Company's permanent CEO will materially affect the range of strategic options available to the Company and the credibility of the Company's standalone plan in the eyes of potential counterparties.
(c) The absence of compelling indications from preliminary Stonebridge analysis. The preliminary assessment conducted by Stonebridge during the review period did not identify any strategic transaction opportunity that, based on the information available, would clearly deliver superior value to stockholders relative to the Company's standalone business plan. While the review was preliminary in nature, the absence of any compelling early-stage indication supports the Board's judgment that continued expenditure of resources on the process is not warranted at this time.
(d) The potential distraction and uncertainty created by a public strategic alternatives process. A continuation of the strategic alternatives review, particularly if it were to become publicly known, could create significant uncertainty and distraction for the Company's approximately 23,400 employees, its business partners, content creators, and other key stakeholders. Such uncertainty could adversely affect the Company's ability to retain talent, maintain key commercial relationships, and execute on its near-term operational objectives.
(e) The cost of maintaining the Stonebridge engagement. The Stonebridge engagement carries a monthly retainer of $250,000. In the absence of a clear strategic objective and a settled management team to work alongside, the continued expenditure of this retainer is not, in the Board's judgment, a prudent use of Company resources.
C. Potential Challenges and Risk Factors
While we believe the Board's decision to shelve the strategic alternatives process is well within the scope of its business judgment, we identify below certain potential challenges and risk factors that the Board should be aware of.
Stockholder litigation risk. A stockholder of the Company, including Corvus Peak (which holds approximately 8.7% of the outstanding shares), could theoretically challenge the termination of the strategic alternatives process as a breach of fiduciary duty. Such a challenge would most likely be framed as a claim that the Board acted in bad faith or with the primary purpose of entrenching management rather than serving the interests of stockholders. However, we assess the risk of a successful challenge as low for several reasons. Most significantly, the decision to shelve the process is being made by a reconstituted Board that includes three directors nominated by Corvus Peak itself — the very activist stockholder that precipitated the strategic alternatives review. The participation and concurrence of the Corvus Peak nominees in the decision to shelve the process substantially undermines any claim that the decision was motivated by entrenchment. Moreover, the business judgment rule places a heavy burden on the plaintiff to rebut the presumption of good faith, and the factual record here — including the preliminary nature of the review, the absence of any definitive transaction opportunity, and the unsettled CEO succession process — supports the Board's exercise of informed judgment.
Section 220 demand. Corvus Peak previously served a demand for books and records under Section 220 of the Delaware General Corporation Law ("DGCL") on March 22, 2024, seeking materials related to the CEO search committee's deliberations. Although that demand was focused on the CEO succession process, the strategic alternatives materials could become the subject of a similar demand in the future, whether by Corvus Peak or by another stockholder. A Section 220 demand for materials related to the strategic alternatives review would be evaluated under the standard established in Seinfeld v. Harborview Holdings, Inc., 909 A.2d 117 (Del. 2006), which requires the demanding stockholder to demonstrate a proper purpose for the demand. We recommend that the Company preserve all Stonebridge work product and Board materials related to the strategic alternatives review in accordance with the Company's document retention policies and in anticipation of potential future Section 220 demands or stockholder litigation. Premature destruction of such materials could give rise to adverse inferences and could undermine the Board's ability to defend its decision-making process.
FCA/DTR disclosure obligations. As a company with shares admitted to the premium segment of the Official List maintained by the Financial Conduct Authority ("FCA") and with depositary interests trading on the Main Market of the London Stock Exchange, AGMG is subject to the Disclosure Guidance and Transparency Rules ("DTR") and the UK Market Abuse Regulation ("UK MAR"). The termination of a strategic alternatives process could, depending on the circumstances, constitute inside information within the meaning of Article 7 of UK MAR, requiring disclosure as soon as possible unless the Company is entitled to delay disclosure under Article 17(4) of UK MAR. Successor counsel should confirm with UK regulatory counsel whether the termination of the strategic alternatives process requires an RNS announcement or other public disclosure under the applicable UK regulatory framework. We note that, because no public announcement was made regarding the initiation of the strategic alternatives review, the disclosure analysis may differ from the case in which a company has publicly announced such a review and must then disclose its termination.
D. Recommended Board Process
To establish a robust evidentiary record and to protect the Board's decision from potential future challenge, we recommend the following process:
First, the Board should adopt a formal resolution directing the termination of the strategic alternatives review. The resolution should include detailed recitals documenting the Board's rationale, expressly referencing the factors enumerated in Section III.B above. The resolution should recite that the Board has carefully considered the matter, has been advised by its financial advisor and legal counsel, and has determined, in the exercise of its informed business judgment, that continuing the strategic alternatives process at this time is not in the best interests of the Company and its stockholders.
Second, the Board's rationale should be documented in detailed board minutes of the meeting at which the resolution is adopted. The minutes should reflect the discussion among the directors, the factors considered, the information reviewed (including any Stonebridge presentations or reports), and the vote on the resolution. The minutes should be prepared by the Corporate Secretary (Nadine Khalil) or her designee and should be reviewed by counsel before finalization.
Third, the resolution should expressly reserve the Board's right to reinitiate a strategic alternatives process at any future time if circumstances warrant. This reservation preserves the Board's flexibility and negates any implication that the Board has permanently foreclosed the possibility of a strategic transaction.
Fourth, the Board should ensure that all three Corvus Peak nominees — Malcolm Trask, Vanessa Loring, and Dr. Raymond Chu — participate in the vote on the resolution. The concurrence of the Corvus Peak nominees is critically important to immunizing the decision from claims that it was taken over the objection of stockholder-nominated directors or that it was motivated by entrenchment of incumbent management. If any of the Corvus Peak nominees has a concern about the termination, that concern should be addressed and resolved before the vote is taken, so that the resolution can be adopted by unanimous vote of the full Board if possible.
IV. Stonebridge Crane & Co. Engagement — Termination Provisions
A. Key Terms of the Stonebridge Engagement
Stonebridge Crane & Co. was engaged by the Board on April 22, 2024, pursuant to a written engagement letter executed on that date, to serve as financial advisor to the Board for the evaluation of strategic alternatives available to the Company. The lead banker on the engagement is Anil Kapoor-Mehta, Managing Director in Stonebridge's Financial Advisory Group, based at Stonebridge's principal office at 383 Madison Avenue, New York, New York 10179.
The key financial terms of the Stonebridge engagement are as follows:
• Monthly retainer: $250,000 per month, with the first monthly period commencing on April 22, 2024, and subsequent monthly periods commencing on each successive monthly anniversary of that date. The monthly retainer is payable regardless of the level of activity during the applicable period and is not creditable against any transaction fee.
• Transaction fee: In the event that a "Transaction" (as defined in the engagement letter) is consummated during the term of the engagement or during the tail period (discussed below), Stonebridge shall be entitled to a transaction fee equal to 0.25% of the "Enterprise Value" (as defined in the engagement letter) of the Company as determined at the time of the consummation of the Transaction.
• Expense reimbursement: The Company is obligated to reimburse Stonebridge for all reasonable out-of-pocket expenses incurred in connection with the engagement, including travel, lodging, document production, and third-party research costs, subject to a cap of $100,000 per calendar quarter without prior Board approval.
• Indemnification: The engagement letter contains customary indemnification provisions requiring the Company to indemnify Stonebridge and its affiliates, directors, officers, employees, agents, and controlling persons against certain losses, claims, damages, and expenses arising out of or in connection with the engagement.
The engagement letter was reviewed and marked up by Calderwood & Harkness prior to execution, pursuant to a draft engagement letter review completed on April 21, 2024. Calderwood & Harkness's markup resulted in several modifications to the initial draft, including the addition of a cap on expense reimbursement, the narrowing of the definition of "Transaction" to exclude certain ordinary-course commercial transactions, and the inclusion of a provision requiring Stonebridge to cooperate with successor financial advisors in the event of termination. The tail fee provision, however, was retained in substantially the form proposed by Stonebridge, as discussed below.
B. Termination Provisions
The Stonebridge engagement letter provides that either party may terminate the engagement upon thirty (30) days' prior written notice to the other party. The notice must be delivered in writing to the attention of the designated contact at each party (in the case of Stonebridge, Anil Kapoor-Mehta; in the case of the Company, the Chair of the Board or the General Counsel & Corporate Secretary).
Upon termination of the engagement, all accrued and unpaid monthly retainer fees become immediately due and payable. To the extent that any retainer payments have been invoiced but not yet paid, those amounts become payable immediately upon the effective date of termination.
Assuming the Board delivers written notice of termination on or about June 16–20, 2024, the 30-day notice period would result in an effective termination date in approximately mid-to-late July 2024. Based on this timeline, the Company's aggregate retainer obligation from the commencement of the engagement on April 22, 2024 through the anticipated effective termination date would be approximately three (3) months of retainer, or approximately $750,000 in total. We understand that some portion of this amount has already been invoiced and paid by the Company; the specific amount of the outstanding retainer balance should be confirmed by the Company's finance team.
The indemnification provisions of the engagement letter expressly survive termination. This means that the Company's obligation to indemnify Stonebridge in connection with claims arising out of the engagement will continue following termination, subject to the terms and limitations set forth in the engagement letter. Successor counsel should be aware of this continuing obligation and should advise the Board accordingly if any claim is made against Stonebridge in connection with its work on the strategic alternatives review.
C. Tail Fee Exposure
The engagement letter contains a provision that is of critical importance to the Board's future strategic decision-making: a twelve (12) month tail fee provision.
Under the tail fee provision, if a "Transaction" involving the Company is consummated within twelve (12) months following the effective date of termination of the Stonebridge engagement, Stonebridge shall be entitled to receive the full transaction fee — that is, 0.25% of the Enterprise Value of the Company — as if the engagement had remained in effect at the time of the Transaction. The definition of "Transaction" in the engagement letter is broadly drafted and includes, without limitation:
(a) any merger, consolidation, or business combination involving the Company;
(b) any acquisition of the Company (whether by stock purchase, asset purchase, tender offer, exchange offer, or otherwise);
(c) any sale, lease, exchange, or other disposition of all or substantially all of the Company's assets;
(d) any recapitalization, restructuring, or similar transaction involving the Company; and
(e) any transaction or series of related transactions that results in a change of more than 50% of the members of the Board of Directors or more than 50% of the voting power of the Company's outstanding capital stock (other than changes resulting from routine director elections in the ordinary course).
The breadth of this definition is notable. It encompasses not only a traditional change-of-control transaction (such as a negotiated merger or tender offer) but also certain recapitalization transactions and even certain changes in Board composition or voting power that might result from a future activist campaign or proxy contest. The Board should be advised that the definition is broader than what Calderwood & Harkness would typically recommend, and that the tail fee provision as drafted could be triggered by a wider range of transactions than a narrowly tailored provision would cover.
Estimated tail fee exposure. The transaction fee is calculated as 0.25% of the Company's Enterprise Value. For purposes of this analysis, we use the Company's market capitalization as of March 1, 2024 (approximately $8.65 billion) as a proxy for Enterprise Value, recognizing that the actual Enterprise Value at the time of any future Transaction would be determined in accordance with the methodology specified in the engagement letter and would take into account the Company's net debt position and other adjustments. Based on this estimate:
Estimated tail fee = 0.25% × $8,650,000,000 = $21,625,000 (approximately $21.6 million)
The tail period would commence on the effective date of termination of the Stonebridge engagement and would expire on the twelve-month anniversary of that date. If the Board terminates the engagement with an effective date in approximately mid-to-late July 2024, the tail period would extend through approximately mid-to-late July 2025.
Crucially, the tail fee applies regardless of whether Stonebridge played any role in identifying, introducing, or advising on the counterparty to the eventual Transaction. The tail fee is not limited to transactions involving counterparties that Stonebridge identified or contacted during the engagement. Rather, it applies to any Transaction (as defined) consummated during the tail period, regardless of the source of the transaction opportunity.
While the inclusion of a tail fee provision in a financial advisory engagement letter is customary in the investment banking industry, and while the twelve-month tail period is within the range of market practice (though at the longer end), the breadth of the definition of "Transaction" and the absence of any limitation to Stonebridge-introduced counterparties make this tail fee provision particularly expansive. The approximately $21.6 million in potential tail fee exposure represents a material contingent liability that the Board should consider carefully in connection with any future strategic decision-making during the tail period.
D. Negotiation Opportunities
The Board may wish to consider negotiating a reduction or modification of the tail fee provision in connection with the termination of the Stonebridge engagement. Financial advisors will frequently agree to negotiate tail fee provisions at termination, particularly where the engagement was of relatively short duration and where the advisor's work did not progress to an advanced stage. The following are potential negotiation approaches that the Board could consider:
(a) Reducing the tail period from 12 months to 6 months. A shorter tail period would reduce the window of exposure and provide the Board with greater flexibility to pursue strategic alternatives sooner following termination without triggering the tail fee. A six-month tail is well within the range of market practice and would be a reasonable request in light of the relatively short duration of the engagement (approximately three months).
(b) Limiting the tail to Stonebridge-introduced counterparties. Under this approach, the tail fee would apply only to Transactions involving counterparties that were specifically identified or contacted by Stonebridge during the engagement. This limitation is common in modified tail provisions and would significantly narrow the scope of the Company's exposure, given that the number of counterparties contacted by Stonebridge during the preliminary review was limited.
(c) Negotiating a reduced tail fee percentage. The Board could seek to reduce the tail fee percentage from 0.25% to a lower rate, such as 0.125% of Enterprise Value, for Transactions consummated during the tail period. This approach would reduce the potential exposure from approximately $21.6 million to approximately $10.8 million.
(d) Obtaining a full waiver of the tail fee in exchange for a termination payment. The Board could offer Stonebridge a one-time termination payment (sometimes referred to as a "breakage fee" or "termination premium") in exchange for a complete waiver of the tail fee provision. The appropriate amount of such a payment would need to be negotiated, and the Company should be prepared for Stonebridge to seek a payment that reflects the expected value of the tail fee (Discounted for the probability that a Transaction would actually be consummated during the tail period).
Any negotiation with Stonebridge should be conducted by or under the direct supervision of the Board or a duly authorized committee of the Board, and the terms of any modification to the engagement letter should be documented in a written amendment or termination agreement executed by both parties. Successor counsel should be advised of this negotiation opportunity and should be prepared to assist the Board in evaluating and executing any modification.
V. Interaction with Other Pending Matters
A. CEO Succession Process
The strategic alternatives review was initiated in part as a complement to the CEO succession process, with the objective of providing the Board with a comprehensive picture of the value-maximizing options available to the Company. The two processes were intended to inform one another: the strategic alternatives review would assess whether a transformative transaction could deliver superior value relative to the standalone plan, while the CEO succession process would identify a permanent leader capable of executing either the standalone plan or the Company's role in a strategic transaction.
With the CEO succession process now tabled indefinitely pursuant to the June 14, 2024 Board resolution, and with Priya Nair-Whitfield continuing to serve as Interim CEO for the foreseeable future, the strategic rationale for maintaining the alternatives review has diminished substantially. A strategic alternatives process that is conducted without a settled CEO is inherently disadvantaged: potential counterparties will question the Company's management stability, the Company's standalone projections will lack the imprimatur of a permanent CEO, and the Board's ability to evaluate strategic options will be hampered by the uncertainty surrounding the Company's future leadership.
If the reconstituted Board reopens the CEO search under new governance counsel — reportedly Blackthorn Howell & Crane LLP, per the Board's June 17, 2024 announcement — any future strategic alternatives review should be carefully managed in coordination with the CEO search. As Calderwood & Harkness advised in its April 26, 2024 memorandum on confidentiality and information barrier protocols (the "Information Barrier Memo"), the Board should consider establishing appropriate information barriers between the CEO search process and any strategic alternatives review to prevent the cross-contamination of sensitive information and to protect the integrity of both processes. The Information Barrier Memo contains detailed recommendations regarding the segregation of Board materials, the use of separate outside advisors, and the limitation of overlapping committee membership, and successor counsel should be provided with a copy of that memorandum for reference.
B. Hargrove Tate Partners LLC Engagement
The executive search firm Hargrove Tate Partners LLC ("Hargrove Tate") was retained by the Board on March 15, 2024, to conduct a search for a permanent CEO. The Hargrove Tate engagement is led by Christine Aldridge, a Senior Partner at the firm. The engagement was structured as a $750,000 flat fee arrangement, payable in three equal installments of $250,000 each: the first installment upon execution of the engagement letter, the second installment upon delivery of a shortlist of candidates, and the third installment upon the successful placement of a candidate.
Following the tabling of the CEO succession process on June 14, 2024, only the first installment of $250,000 has been paid. The second and third installments, totaling $500,000, remain unpaid and are the subject of potential contractual exposure depending on the terms of the Hargrove Tate engagement letter.
While the Hargrove Tate engagement is a separate matter from the Stonebridge engagement and the strategic alternatives review, the two should be addressed in a coordinated manner. The Board should determine whether to formally terminate the Hargrove Tate engagement or to place it on hold (i.e., to suspend performance under the engagement without formally terminating it), and in either case should evaluate the contractual exposure for the remaining $500,000 in unpaid fees. The Hargrove Tate engagement letter should be reviewed by successor counsel to determine whether termination triggers any obligation to pay the remaining installments, any termination fee, or any tail provision analogous to the Stonebridge tail fee.
C. Calderwood & Harkness Engagement Termination
Calderwood & Harkness was notified on June 21, 2024, that its engagement as independent board governance counsel to the Board will be terminated effective July 8, 2024. This memorandum is among Calderwood & Harkness's final work product deliverables in connection with the engagement.
For the Board's records, the following is a summary of fees and expenses billed in connection with the engagement through the date of this memorandum:
The outstanding balance of $312,817.00 represents fees and expenses for services rendered through the date of this memorandum and includes the preparation of this memorandum and the transition memorandum (to be dated July 1, 2024). Calderwood & Harkness will submit a final invoice upon termination of the engagement, and the Company's prompt payment in accordance with the terms of the engagement letter is requested.
Successor counsel should be provided with a copy of the Stonebridge engagement letter, this memorandum, the Information Barrier Memo (dated April 26, 2024), and all related materials generated during the strategic alternatives review to ensure continuity of advice on the tail fee exposure and related matters. Calderwood & Harkness is prepared to cooperate with successor counsel during the transition period and to make ourselves available for consultation as reasonably necessary.
D. D&O Insurance Considerations
The Board's decision to shelve the strategic alternatives process, and the broader series of governance decisions taken by the reconstituted Board in June 2024, may be relevant to future claims under the Company's directors' and officers' liability insurance policy. The Company maintains a D&O insurance policy with Helmsley Indemnity Corp. (Policy No. HIC-DOL-2024-009347), which provides coverage of $75 million per occurrence and $150 million in the aggregate, with an annual premium of $3.8 million. The policy period runs from January 1, 2024 through December 31, 2024.
In the event that a stockholder brings a derivative or class action claim challenging the Board's decision to shelve the strategic alternatives process or the manner in which the process was conducted, the Company and the individual directors would seek to invoke the D&O policy for defense costs and, if applicable, indemnification of any settlement or judgment. Successor counsel should review the D&O policy to confirm that the Board's strategic decision-making process is adequately documented for coverage purposes and that no exclusion or limitation in the policy would jeopardize coverage for claims arising from the conduct described in this memorandum. In particular, successor counsel should confirm that the policy's "prior knowledge" and "prior notice" provisions are satisfied, and that any required notice of potential claims has been or will be timely provided to Helmsley Indemnity Corp.
VI. Recommended Board Actions
Based on the analysis set forth in this memorandum, Calderwood & Harkness recommends that the Board take the following actions:
1. Adopt a formal resolution directing the termination of the strategic alternatives review. The resolution should include detailed recitals documenting the Board's rationale for shelving the process, expressly referencing (i) the reconstituted Board's fresh mandate from shareholders following the June 7, 2024 AGM, (ii) the absence of any compelling transaction opportunity identified during the preliminary Stonebridge review, (iii) the tabling of the CEO succession process and the resulting lack of settled senior management to support a strategic alternatives process, (iv) the potential distraction and uncertainty that continuation of the process could create for the Company's employees, partners, and stakeholders, and (v) the Board's informed business judgment that continuing the process at this time is not in the best interests of the Company and its stockholders. The resolution should expressly reserve the Board's right to reinitiate a strategic alternatives process at any future time if circumstances warrant.
2. Authorize the Chair or Lead Independent Director to deliver notice of termination to Stonebridge. The Board should authorize Dame Elspeth Greenvale, in her capacity as transitional Chair, or Malcolm Trask, in his capacity as Lead Independent Director, to deliver written notice of termination to Stonebridge Crane & Co. in accordance with the engagement letter's 30-day notice provision. The notice should be delivered promptly following the Board's adoption of the termination resolution, and should be prepared in consultation with the General Counsel & Corporate Secretary to ensure compliance with the notice requirements of the engagement letter.
3. Direct successor counsel to review and negotiate the tail fee provision. The Board should direct successor counsel (anticipated to be Blackthorn Howell & Crane LLP) to review the Stonebridge engagement letter and, if possible, to negotiate a reduction in the 12-month tail fee provision. Potential approaches include reducing the tail period to six months, limiting the tail to transactions involving counterparties specifically identified or contacted by Stonebridge during the engagement, negotiating a reduced tail fee percentage, or obtaining a full waiver of the tail fee in exchange for a negotiated termination payment. Successor counsel should be provided with a copy of the engagement letter and this memorandum to inform the negotiation.
4. Preserve all materials generated during the strategic alternatives review. The Board should direct the General Counsel & Corporate Secretary to preserve all materials generated during the strategic alternatives review, including but not limited to Stonebridge work product, Board presentations, Special Committee presentations, meeting minutes, correspondence with Stonebridge and other advisors, and internal memoranda. These materials should be preserved in accordance with the Company's document retention policies and in anticipation of potential future DGCL § 220 demands, regulatory inquiries, or stockholder litigation. The Board should issue a litigation hold notice if one has not already been issued.
5. Assess FCA/DTR disclosure requirements. The Board should direct successor counsel, in coordination with UK regulatory counsel, to assess whether the termination of the strategic alternatives process requires an RNS announcement or other public disclosure under the FCA Disclosure Guidance and Transparency Rules, the UK Market Abuse Regulation, or any other applicable regulatory framework governing the Company's premium listing on the LSE Main Market. The assessment should be completed promptly and the Board should be advised of the results before the effective date of termination of the Stonebridge engagement.
6. Brief successor counsel comprehensively. The Board should ensure that the transition memorandum (to be dated July 1, 2024) provided to the Board and to successor counsel includes comprehensive coverage of the Stonebridge tail fee exposure, the status of the Hargrove Tate engagement, the D&O insurance considerations, and all other open issues identified in this memorandum. Calderwood & Harkness is prepared to participate in a transition call with successor counsel to ensure a complete and accurate transfer of institutional knowledge. The objective is to ensure that Blackthorn Howell & Crane LLP (or other successor counsel) can advise the Board on these matters without interruption.
VII. Conclusion
For the reasons set forth in this memorandum, the reconstituted Board of Directors of Aurelius Global Media Group PLC has broad discretion under Delaware law to shelve the strategic alternatives process that was initiated on April 22, 2024. The decision is governed by the business judgment rule, and no Revlon duties have been triggered by the preliminary exploration of strategic alternatives that occurred during the review period. The Board's decision, if properly documented and adopted on an informed basis, will be entitled to the strong presumption of validity that the business judgment rule affords.
The principal financial risk associated with termination of the Stonebridge engagement is the tail fee exposure of approximately $21.6 million, which will persist for twelve (12) months following the effective date of termination of the engagement. This contingent liability is material and should be carefully considered by the Board in connection with any future strategic decision-making during the tail period. The Board has an opportunity to negotiate a reduction or modification of the tail fee provision in connection with termination, and successor counsel should be directed to pursue this negotiation as a priority.
Calderwood & Harkness recommends that the Board take the actions enumerated in Section VI of this memorandum to protect the Company's interests, to establish a robust evidentiary record supporting the Board's decision, and to ensure an orderly termination of the Stonebridge engagement.
We remain available to discuss the contents of this memorandum with the Board and with individual directors through the end of our engagement on July 8, 2024, and to coordinate with successor counsel as needed during the transition period.
Respectfully submitted,
CALDERWOOD & HARKNESS LLP
By: ________
Name: Nathaniel Bower
Title: Partner
By: ________
Name: Colette Whitman
Title: Partner
DISTRIBUTION AND CONFIDENTIALITY NOTICE
This memorandum constitutes a privileged and confidential attorney-client communication and attorney work product. It was prepared by Calderwood & Harkness LLP at the direction of and for the exclusive benefit of the Board of Directors of Aurelius Global Media Group PLC. The contents of this memorandum are protected by the attorney-client privilege and the work product doctrine, and this memorandum is not to be disclosed to any third party without the prior written consent of the Board of Directors and Calderwood & Harkness LLP. Any unauthorized disclosure, distribution, or copying of this memorandum, in whole or in part, is strictly prohibited.
Distribution:
Dame Elspeth Greenvale — Transitional Chair, Board of Directors
Malcolm Trask — Lead Independent Director
Vanessa Loring — Chair, Nominating & Governance Committee
Nadine Khalil — General Counsel & Corporate Secretary
Calderwood & Harkness LLP | 787 Seventh Avenue, New York, NY 10019 | Matter No. 1017-00002 | PRIVILEGED & CONFIDENTIAL
Candidate | Votes FOR | Percentage | Votes WITHHELD / AGAINST
Malcolm Trask (Corvus Peak) | 241,632,915 | 68.8% | 109,647,485
Vanessa Loring (Corvus Peak) | 228,231,780 | 65.0% | 123,048,620
Dr. Raymond Chu (Corvus Peak) | 234,554,027 | 66.8% | 116,726,373
Tobias Kessler (Incumbent) | 156,321,778 | 44.5% | 194,958,622
Hugh Pemberton (Incumbent) | 138,204,558 | 39.3% | 213,075,842
Sofia Delgado-Ríos (Incumbent) | 147,627,022 | 42.0% | 203,653,378
Category | Amount
Total professional fees billed | $1,034,625.00
Total expenses billed | $38,442.00
Grand total billed | $1,073,067.00
Payments received to date | $760,250.00
Outstanding balance at termination | $312,817.00

PRIVILEGED & CONFIDENTIAL ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT

MEMORANDUM

MATTER NO.: 1017-00002

CALDERWOOD & HARKNESS LLP

DISTRIBUTION AND CONFIDENTIALITY NOTICE

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