[sheet: Cover]

[sheet: Cover]
Field | Value
Document Title | Memorandum re: Valuation of Aldrich RSU Acceleration Scenarios
Marking | CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGED / ATTORNEY WORK PRODUCT
To | Gregory Tanaka, VP Legal & Compliance, AMA
CC | Philippa Cartwright, General Counsel, AGMG
From | Nadia Petrov, Associate, Calderwood & Harkness LLP
Date | November 22, 2023
Re | Valuation of Aldrich RSU Acceleration Scenarios — Aldrich v. Aurelius Media Americas Inc., Case No. 22STCV41087
Matter No. | 1017-00004
Purpose | This memorandum models three RSU acceleration scenarios for the Aldrich executive settlement, analyzing the financial impact to AMA/AGMG of each scenario for use in the upcoming standalone mediation session scheduled for December 8, 2023 before Hon. Patricia Okoro (Ret.) of Westpark Dispute Resolution Inc.
Supervising Partner | David Sondheimer, Partner, Calderwood & Harkness LLP
Client Entity | Aurelius Media Americas Inc. (AMA), a wholly owned subsidiary of Aurelius Global Media Group PLC (AGMG)
Distribution | Restricted — Do not distribute outside of addressees and counsel of record without prior written authorization
[sheet: Background]
Item | Detail
Employee | Gavin Aldrich, former SVP of Original Content & Executive Producer, Aurelius Media Americas Inc.
Employment Agreement Date | September 5, 2017 (as amended August 1, 2020)
Employment Period | September 5, 2017 – October 14, 2022
Termination Basis | Terminated 'for cause' under § 7.2(b) of Employment Agreement — unauthorized transmission of confidential information to personal email and to Halcyon Creek Productions LLC; insubordination
Total RSU Grant | 42,500 AGMG restricted stock units
RSUs Vested at Termination | 27,200
RSUs Unvested at Termination | 15,300
Severance (if Without Cause) | 24 months' base salary = $970,000; plus pro-rata bonus; plus 18-month COBRA subsidy; plus RSU acceleration per Employment Agreement terms
For Cause Consequence | Forfeiture of all unvested RSUs per § 8.3 of Employment Agreement
Aldrich's Demand | Full acceleration of all 15,300 unvested RSUs as part of $4,150,000 aggregate settlement demand
AMA's Position | Aldrich was terminated for cause; no RSU acceleration is owed; any acceleration in settlement is a concession
Issuing Entity | Aurelius Global Media Group PLC (LSE: AGMG)
Listing | London Stock Exchange
Aldrich Case No. | 22STCV41087
Court | Superior Court of the State of California, County of Los Angeles — Central District
Assigned Judge | Hon. Catherine Villanueva, Dept. 52
Aldrich's Counsel | Cameron Whitfield, Whitfield & Associates, 9465 Wilshire Boulevard, Suite 320, Beverly Hills, CA 90212
[sheet: Market Data]
Parameter | Value | Source / Notes
AGMG Share Price (as of November 20, 2023) | £19.50 | LSE closing price
AGMG Share Price (as of October 14, 2022 — termination date) | £18.79 | LSE closing price on date of termination
GBP/USD Exchange Rate (November 2023) | 1.2400 | Approximate mid-market rate
GBP/USD Exchange Rate (October 2022 — termination date) | ~1.155 | Approximate rate at time of termination
AGMG Share Price in USD (November 2023) | $24.18 | £19.50 × 1.2400
AGMG Share Price in USD (October 2022) | ~$21.71 | £18.79 × ~1.155
AGMG 52-Week High (GBP) | £21.35 | For reference
AGMG 52-Week Low (GBP) | £17.10 | For reference
AGMG Market Capitalization (Nov. 2023) | £3.82B (~$4.74B) | Based on current share price and shares outstanding
Valuation Date for Scenarios | November 20, 2023 | Most recent trading day prior to memo date
[sheet: Scenario Analysis]
Scenario | RSUs Accelerated | RSUs Forfeited | Price per RSU — GBP | Price per RSU — USD | Total Value of Accelerated RSUs — GBP | Total Value of Accelerated RSUs — USD | AMA/AGMG Equity Dilution Cost — USD | AMA/AGMG Forfeiture Savings vs. Full Acceleration — USD | Notes
Scenario A: No Acceleration (AMA Starting Position) | 0 | 15300 | £19.50 | $24.18 | £0 | $0 | $0 | $369,954 | All 15,300 unvested RSUs forfeited per Employment Agreement § 8.3. Maximum savings to AGMG. Consistent with 'for cause' termination position.
Scenario B: Partial Acceleration (Compromise — Recommended) | 10200 | 5100 | £19.50 | $24.18 | £198,900 | $246,636 | $246,636 | $123,318 | Acceleration of 10,200 RSUs (66.7% of unvested); forfeiture of 5,100 RSUs (33.3%). Represents meaningful concession to Aldrich while preserving significant forfeiture. Recommended settlement position.
Scenario C: Full Acceleration (Aldrich's Demand) | 15300 | 0 | £19.50 | $24.18 | £298,350 | $369,954 | $369,954 | $0 | Full acceleration of all 15,300 unvested RSUs. Equivalent to 'without cause' termination treatment. Maximum cost to AGMG. Not recommended.
Summary: Scenario B Savings vs. Full Acceleration | $123,318 | Scenario B saves AGMG $123,318 compared to Aldrich's full acceleration demand. At Oct 2022 prices, Aldrich valued full acceleration at ~$332,163; current valuation reflects $37,791 appreciation.
[sheet: Historical Comparison]
Metric | At Termination (Oct 14, 2022) | At Valuation Date (Nov 20, 2023) | Change | Change %
AGMG Share Price (GBP) | £18.79 | £19.50 | £0.71 | 3.8%
GBP/USD Exchange Rate | ~1.155 | 1.2400 | 0.085 | 7.4%
AGMG Share Price (USD) | ~$21.71 | $24.18 | $2.47 | 11.4%
Value of 15,300 RSUs (Full — USD) | ~$332,163 | $369,954 | $37,791 | 11.4%
Value of 10,200 RSUs (Partial — USD) | ~$221,442 | $246,636 | $25,194 | 11.4%
Value of 5,100 RSUs (Forfeited in Scenario B — USD) | ~$110,721 | $123,318 | $12,597 | 11.4%
[sheet: Settlement Context]
Component | Aldrich's Demand | AMA's Assessment / Position | Notes
Severance (24 months' base salary) | $970,000 | $970,000 (if 'for cause' overturned) | Per Employment Agreement § 7.1: $485,000/yr × 2
Pro-Rata Bonus (FY 2022) | $168,750 | $168,750 (if 'for cause' overturned) | $225,000 × 9.5/12 months worked in FY 2022
RSU Acceleration (at Oct 2022 prices) | ~$332,200 | $0 (for cause) to ~$246,636 (partial at current prices) | 15,300 RSUs at $21.71 (demand) vs. 10,200 RSUs at $24.18 (compromise)
COBRA Subsidy (18 months) | ~$50,400 | ~$50,400 (if 'for cause' overturned) | ~$2,800/mo × 18
Expense Reimbursement | $28,400 | $28,400 (legitimate if documented) | Per Cal. Lab. Code § 2802
Emotional Distress | $500,000 | $50,000–$150,000 | No physical injury alleged
Lost Future Compensation (2-year horizon) | $1,200,000 | $0–$300,000 | Subject to mitigation; Aldrich's post-termination employment status unknown
Attorneys' Fees | $750,000 | $250,000–$500,000 | If contract claim prevails
Punitive Damages | $200,000 | $0 | Unlikely to be awarded
Total Demand | $4,150,000 | Aggregate initial demand per Aldrich complaint
Recommended Settlement Range (Cash) | $2,000,000–$2,500,000 | Per settlement authority memo dated November 28, 2023
RSU Component (Scenario B — Partial) | $246,636 (10,200 RSUs) | In addition to cash settlement; net cost to AGMG