1017-00005 · Aurelius Global Media Group · Insurance & Risk

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CALDERWOOD & HARKNESS LLP Attorneys at Law

1999 Avenue of the Stars, Suite 2800 Los Angeles, California 90067 Telephone: (310) 555-7400 Facsimile: (310) 555-7401 www.calderwoodharkness.com

May 5, 2023

VIA CERTIFIED MAIL (RETURN RECEIPT REQUESTED) AND EMAIL

Castlemaine Underwriters Ltd.

Attn: Claims Department — Directors & Officers Liability Division

71 Fenchurch Street, 4th Floor London EC3M 4BS United Kingdom

Re: Precautionary Notice of Circumstances Under Directors & Officers Liability Insurance Policy No. CU-DO-2023-11283

Insured: Aurelius Global Media Group PLC and its Subsidiaries

Dear Sir or Madam:

I. Opening and Purpose of Notice

This firm, Calderwood & Harkness LLP, writes on behalf of our client, Aurelius Global Media Group PLC ("AGMG"), a public limited company incorporated in England and Wales under company number 07284531, with its registered office at 45 Aldwych House, Kingsway, London WC2B 6AH, United Kingdom. AGMG is listed on the London Stock Exchange's AIM market and operates as a diversified global media conglomerate.

The purpose of this letter is to provide Castlemaine Underwriters Ltd. ("Castlemaine" or the "Insurer") with precautionary notice of circumstances that may give rise to one or more claims under Directors & Officers Liability Insurance Policy No. CU-DO-2023-11283 (the "Policy"), which was issued by Castlemaine to AGMG as named insured. As you are aware, the Policy provides a tower limit of $50,000,000 (Fifty Million United States Dollars) in aggregate for covered claims against the directors and officers of AGMG and its subsidiaries during the applicable policy period.

This notice is provided on a precautionary basis in order to preserve and protect the rights of AGMG and its current and former directors and officers (collectively, the "Insureds") under the Policy. It is given in accordance with the notice provisions set forth in the Policy and is intended to ensure that the Insureds' entitlement to coverage is fully preserved with respect to the circumstances described herein, as well as any claims that may subsequently arise from those circumstances.

Calderwood & Harkness LLP was retained by the Board of Directors of AGMG to conduct an independent, privileged workplace investigation into the matters described below. This notice is being transmitted at the express direction and authorization of the Board of Directors, acting through its People & Culture Committee and Audit & Risk Committee. The Board has determined that the circumstances warrant immediate notification to Castlemaine as the D&O carrier of record.

II. Identification of the Insured

The named insured under the Policy is Aurelius Global Media Group PLC, the ultimate parent company of the corporate group.

The subsidiary principally implicated in the circumstances described in this notice is Aurelius Pacific Studios Inc. ("APS"), a corporation organized and existing under the laws of the State of Delaware and a wholly owned subsidiary of AGMG. APS is headquartered at 3200 West Alameda Avenue, Suite 400, Burbank, California 91505.

To provide Castlemaine with the necessary context regarding the scope and significance of these entities:

Aurelius Global Media Group PLC. AGMG operates through four global divisions: (i) filmed entertainment, (ii) streaming and digital media, (iii) publishing, and (iv) e-commerce. The group employs approximately 14,200 individuals worldwide, of whom approximately 4,600 are located in the United States. AGMG's Board of Directors currently comprises eleven (11) members, including a mix of executive and independent non-executive directors. AGMG is subject to the AIM Rules for Companies, the UK Corporate Governance Code (to the extent voluntarily adopted), and applicable United Kingdom and European Union regulatory requirements.

Aurelius Pacific Studios Inc. APS serves as the primary operational entity for AGMG's United States-based filmed entertainment and streaming content production activities. APS employs approximately 2,300 individuals and reported revenue of approximately $1.12 billion for the fiscal year ended December 31, 2022. APS constitutes a material subsidiary within the AGMG group and its operations are integral to the group's filmed entertainment and streaming divisions.

III. Description of Circumstances Giving Rise to Potential Claims

A. Nature of the Allegations

Calderwood & Harkness has been made aware of the following facts and circumstances, which are set forth here to the extent reasonably known at this time and subject to the ongoing investigation described in Section IV below.

1. Initial Complaint — Jenna Morales (April 18, 2023). On April 18, 2023, a formal written complaint was filed through AGMG's Ethics & Compliance Hotline, which is operated and administered by an independent third-party vendor, Meridian Compliance Solutions LLC. The complaint was assigned case reference number MCS-1014-00001. The complainant is Jenna Morales, who holds the position of Vice President of Development at Aurelius Pacific Studios Inc.

Ms. Morales's complaint alleges that Marcus Hale, President of Aurelius Pacific Studios Inc., engaged in the following conduct directed at Ms. Morales over a period extending from approximately August 2022 through April 2023:

(a) Sexual harassment, including a pattern of unwelcome sexual attention and conduct in the workplace;

(b) Unwanted sexual advances made on multiple occasions, including during business travel and at company-sponsored events;

(c) Sexually explicit and inappropriate comments directed at Ms. Morales and made in her presence during professional meetings and interactions; and

(d) Retaliatory reassignment of Ms. Morales's work responsibilities and deliberate exclusion from high-profile development projects following Ms. Morales's verbal objection to Mr. Hale's conduct in or about March 2023.

Mr. Hale is a senior executive officer of Aurelius Pacific Studios Inc. He is fifty-four (54) years of age and has served as President of APS since January 2019. In his capacity as President, Mr. Hale reports directly to Elliot Vane, the Chief Executive Officer of AGMG. According to publicly filed information and internal compensation records made available to this firm, Mr. Hale's total annual compensation is approximately $4.7 million, comprised of a base salary of approximately $1.85 million, a target annual bonus of approximately $1.39 million, and equity-based awards valued at approximately $1.46 million. Mr. Hale's seniority within the corporate group, his compensation level, and his reporting relationship to the CEO are relevant to the potential exposure of AGMG's directors and officers to claims relating to the oversight, retention, and supervision of senior management.

2. Corroborating Complaint — Claire Ngo (April 24, 2023). On April 24, 2023, a second, independent complaint was filed with the AGMG Ethics & Compliance Hotline by Claire Ngo, who holds the position of Senior Director of Talent Relations at Aurelius Pacific Studios Inc. Ms. Ngo's complaint alleges that Mr. Hale made sexually suggestive remarks directed at Ms. Ngo during a company off-site event held in or about February 2023. Ms. Ngo further alleges that, following the off-site event, she was excluded from key meetings and strategic discussions related to talent acquisition and management, which she had previously attended as a regular participant in her professional capacity. Ms. Ngo's complaint was also lodged through Meridian Compliance Solutions LLC and has been assigned a separate case reference number.

3. Voluntary Report — Darren Whitfield (April 26, 2023). On April 26, 2023, Darren Whitfield, Senior Vice President of Physical Production at Aurelius Pacific Studios Inc., voluntarily contacted AGMG's in-house legal department to report concerns regarding retaliatory conduct by Mr. Hale. Mr. Whitfield states that he had previously raised informal concerns with Mr. Hale's chief of staff regarding Mr. Hale's conduct toward female employees at APS. Mr. Whitfield alleges that, following his having raised those concerns, he experienced a pattern of retaliation by Mr. Hale, including exclusion from production-related decision-making and unfavorable treatment with respect to project assignments.

These three reports — by Ms. Morales, Ms. Ngo, and Mr. Whitfield — collectively describe a pattern of alleged misconduct by the President of APS that, if substantiated, raises significant legal, regulatory, and governance implications for AGMG, its directors, and its officers.

B. Potential Legal Claims

The circumstances described above may give rise to, or have already given rise to, the following categories of claims, proceedings, or investigations that may implicate coverage under the Policy:

1. Employment-Related Claims Under California Law. The allegations set forth in the complaints of Ms. Morales, Ms. Ngo, and Mr. Whitfield may give rise to claims under the California Fair Employment and Housing Act, Cal. Gov. Code §§ 12940 et seq. ("FEHA"), including but not limited to claims for sexual harassment (Cal. Gov. Code § 12940(j)), failure to prevent harassment (Cal. Gov. Code § 12940(k)), and retaliation against employees who oppose practices prohibited by FEHA or who file complaints (Cal. Gov. Code § 12940(h)). Individual directors and officers of AGMG and APS may be named as defendants in any such proceedings to the extent they are alleged to have participated in, aided, abetted, or failed to take reasonable steps to prevent the unlawful conduct.

2. Pre-Litigation Demand. We note that on April 20, 2023 — two days after Ms. Morales filed her complaint with the Ethics & Compliance Hotline — outside legal counsel acting on behalf of Ms. Morales, specifically Sandra Reeves of the firm Nakamura Reeves LLP, transmitted a formal demand letter to Aurelius Pacific Studios Inc. Ms. Reeves's letter alleges violations of FEHA by APS and demands, among other things, the immediate preservation of all documents, communications, and electronically stored information relevant to the allegations. The demand letter further reserves Ms. Morales's right to file a complaint with the California Civil Rights Department (formerly the Department of Fair Employment and Housing) and to pursue all available legal remedies. This demand letter has been forwarded to, and is in the possession of, Calderwood & Harkness LLP.

3. Potential Claims Against Directors and Officers for Oversight Failures. The circumstances may expose AGMG's directors and officers to potential claims — including claims brought by AGMG itself, derivatively on behalf of AGMG by its shareholders, or by regulatory authorities — relating to alleged oversight failures, inadequacy of internal controls for the prevention and detection of harassment and discrimination at a material subsidiary, or decisions relating to the initial hiring, retention, supervision, compensation, or termination (or failure to terminate) senior executives against whom allegations of serious misconduct have been raised. Such claims may be framed as breaches of fiduciary duty, including the duty of care and the duty of loyalty, and may reference the principles articulated in the Caremark line of authority (or their equivalents under English law) regarding board-level oversight responsibilities.

4. Shareholder Derivative Actions and Regulatory Inquiries. Given that AGMG is a publicly listed company on the AIM market, the alleged misconduct by a senior executive at a principal subsidiary, and the surrounding circumstances, may give rise to shareholder derivative actions in the English courts or in other jurisdictions where AGMG or its subsidiaries maintain operations. There is also potential for regulatory inquiries by the Financial Conduct Authority, the London Stock Exchange, or the California Civil Rights Department, among other regulatory bodies, in connection with the conduct of a senior executive at a subsidiary of a publicly listed company, the adequacy of the company's governance and compliance frameworks, and any related disclosure obligations.

AGMG wishes to emphasize that the investigation described in Section IV is ongoing and that additional facts, claims, or proceedings may emerge as the investigation progresses. AGMG expressly reserves the right to supplement this notice as additional information becomes available.

C. Involved Directors and Officers

The following current directors and officers of AGMG and APS are identified as individuals who may be involved in, affected by, or named in connection with claims arising from the circumstances described herein:

(a) Dame Cordelia Ashworth, Independent Non-Executive Director and Chair of the People & Culture Committee of the AGMG Board of Directors. Dame Cordelia authorized the commencement of the independent investigation described in Section IV on behalf of the Board.

(b) Raymond Okoro, Independent Non-Executive Director and Chair of the Audit & Risk Committee of the AGMG Board of Directors. Mr. Okoro co-authorized the investigation in coordination with Dame Cordelia Ashworth, in recognition of the potential financial and risk management implications of the underlying circumstances.

(c) Elliot Vane, Chief Executive Officer of AGMG. Mr. Vane has formally recused himself from all oversight of and participation in the investigation, due to his direct reporting relationship with Mr. Hale and his role in the original appointment and ongoing supervision of Mr. Hale as President of APS. Mr. Vane's recusal was documented in a resolution of the People & Culture Committee dated April 28, 2023.

(d) Fiona Blackwood, General Counsel of AGMG. Ms. Blackwood is serving as the Board's primary liaison with Calderwood & Harkness LLP in connection with the investigation and related matters, including the preparation and submission of this notice.

(e) Marcus Hale, President of Aurelius Pacific Studios Inc. Mr. Hale is the subject of the investigation and of the complaints described in Section III.A above. As described in Section IV below, Mr. Hale was placed on paid administrative leave as of May 3, 2023.

(f) All other current and former directors and officers of AGMG and its subsidiaries (including APS) who may be named in or affected by any future claims, proceedings, or investigations arising from the circumstances described herein.

AGMG's identification of the above individuals is not exhaustive and is provided for the purpose of this precautionary notice only. AGMG reserves the right to identify additional individuals whose coverage under the Policy may be implicated as additional facts become known.

IV. The Investigation

On April 28, 2023, the People & Culture Committee and the Audit & Risk Committee of the AGMG Board of Directors held a joint special meeting and passed a resolution to retain independent outside counsel to conduct a privileged investigation into the allegations set forth in the complaints described in Section III.A above. The resolution specifically directed that the investigation be conducted under the protection of the attorney-client privilege and the work-product doctrine, and that the investigation be independent of AGMG's management, including the CEO, Mr. Vane, who was formally recused from any involvement.

Pursuant to that resolution, Calderwood & Harkness LLP was formally engaged on May 2, 2023 to conduct the investigation. The engagement has been assigned internal matter number 1017-00005. The responsible partner for the engagement is Bernard Crawford, and the co-lead is Renata Vasquez, both partners at the firm's Los Angeles office.

The following steps have been taken in the initial stages of the investigation:

(a) Administrative Leave of Marcus Hale. On May 3, 2023, upon the recommendation of Calderwood & Harkness and with the approval of Dame Cordelia Ashworth and Raymond Okoro as authorized representatives of the Board, Marcus Hale was placed on paid administrative leave from his position as President of APS, effective immediately and pending the outcome of the investigation. Concurrently, Mr. Hale's access to all company information systems, email accounts, shared drives, cloud-based storage platforms, and physical premises of APS has been suspended. An interim management structure for APS has been implemented under the direction of AGMG's Chief Operating Officer.

(b) Retention of Personal Counsel by Mr. Hale. AGMG has been informed that Mr. Hale has retained personal legal counsel in connection with the investigation. Mr. Hale is represented by Graham Thornfield of Thornfield & Associates LLP. All communications with Mr. Hale in connection with the investigation will be conducted through Mr. Thornfield, as appropriate.

(c) Forensic Collection and Preservation. Calderwood & Harkness has retained Linden Forensics Group Inc., a nationally recognized digital forensics firm, to perform forensic collection, imaging, and processing of electronic communications, including email, text messages, instant messages, and other electronically stored information relevant to the investigation. Linden Forensics has commenced forensic preservation activities, including the imaging of Mr. Hale's company-issued devices and the collection of communications from AGMG's enterprise email and messaging systems.

(d) Scope of Investigation. The investigation will encompass, among other things: (i) a comprehensive review of electronic communications involving Mr. Hale and the complainants; (ii) a review of all relevant human resources records maintained by APS and AGMG, including personnel files, prior complaints, performance evaluations, and records of any prior allegations or investigations; (iii) interviews with the complainants, Mr. Hale (through his counsel), and other relevant witnesses, including current and former employees of APS who may have information bearing on the allegations; and (iv) a review of AGMG's and APS's harassment, discrimination, and retaliation policies and the effectiveness of their implementation.

(e) Cross-Border Privilege Coordination. Given that AGMG is a UK-incorporated entity and the investigation involves both US- and UK-based personnel and records, Pendleton & Warwick LLP, AGMG's regular outside corporate counsel in the United Kingdom, is coordinating with Calderwood & Harkness on privilege protocols applicable to cross-border matters. Pendleton & Warwick is advising on the maintenance and protection of legal professional privilege under English law in connection with communications and documents generated in the course of the investigation.

(f) Notification to External Auditors. AGMG's external auditor, Greystone Advisors LLP, has been notified of the investigation in connection with potential financial reporting implications. In particular, Mr. Hale's employment agreement with APS contains both change-of-control provisions and termination-for-cause provisions, the application of which may have material financial consequences for APS and the group as a whole depending on the outcome of the investigation. Greystone Advisors has been asked to assess any potential implications for AGMG's financial statements, including with respect to contingent liabilities, compensation accruals, and related disclosures.

The investigation is in its early stages, and Calderwood & Harkness anticipates that additional facts and circumstances will emerge as the investigation progresses. AGMG will supplement this notice as warranted by material developments.

V. Related Insurance Coverage and Coordination

AGMG maintains, in addition to the D&O Policy issued by Castlemaine, a separate Employment Practices Liability Insurance ("EPLI") policy. Specifically, AGMG is separately providing notice of the circumstances described herein to Northbridge Mutual Insurance Co. under AGMG's Employment Practices Liability Insurance Policy No. NM-EPLI-2023-00417. The EPLI Policy has a policy period of January 1, 2023 through December 31, 2023, a per-claim limit of $10,000,000 (Ten Million United States Dollars), an aggregate limit of $25,000,000 (Twenty-Five Million United States Dollars), and a self-insured retention of $500,000 (Five Hundred Thousand United States Dollars). Notice under the EPLI Policy is being provided separately and concurrently with this notice.

AGMG's insurance broker, Kessler & Dunn Insurance Brokers Ltd., has been notified of the circumstances described in this letter and of the potential for claims under both the D&O Policy and the EPLI Policy. Kessler & Dunn is coordinating with AGMG and its counsel to ensure that all applicable insurance carriers are properly notified.

For the avoidance of doubt, this notice under the D&O Policy is provided on a precautionary basis and is not intended to trigger coverage under the EPLI Policy, nor is notice under the EPLI Policy intended to trigger coverage under the D&O Policy. The notices are independent of one another and are provided under separate and distinct insurance policies with different coverage terms, conditions, and exclusions. AGMG reserves all rights under both policies and does not, by providing notice under one policy, waive, limit, or otherwise prejudice its rights under the other.

VI. Reservation of Rights

AGMG and its directors and officers expressly reserve all of their respective rights under the Policy, including but not limited to the following:

(a) The right to supplement, amend, or update this notice as additional information becomes available through the ongoing investigation or through the assertion of claims, the commencement of proceedings, or the initiation of regulatory inquiries relating to the circumstances described herein.

(b) The right to seek coverage under the Policy for defense costs, investigation costs, settlements, judgments, penalties, or any other amounts for which coverage may be available under the terms of the Policy, in connection with any claims or proceedings arising out of or related to the circumstances described in this notice.

(c) The right to assert that this notice constitutes timely and sufficient notice of circumstances under the Policy, such that any claims subsequently arising from the circumstances described herein shall be deemed to have been made during the policy period for all purposes under the Policy.

(d) All other rights and remedies available to the Insureds under the Policy, at law, or in equity.

Nothing in this notice shall be construed as an admission of liability, fault, or wrongdoing by AGMG, any of its subsidiaries, or any of their respective directors, officers, employees, or agents. This notice is provided solely for the purpose of complying with the notice provisions of the Policy and preserving the Insureds' rights thereunder.

AGMG respectfully requests that Castlemaine Underwriters promptly acknowledge receipt of this notice and confirm in writing that coverage under the Policy is preserved with respect to the circumstances described herein and any claims that may subsequently arise therefrom.

VII. Privilege and Confidentiality

This notice and all information contained herein are provided on a privileged and confidential basis. The investigation described in Section IV is being conducted under the attorney-client privilege and the work-product doctrine at the express direction of the AGMG Board of Directors. The factual information set forth in this letter has been compiled in the course of, and for the purpose of, that privileged investigation.

The disclosure of this notice and the information contained herein to Castlemaine Underwriters is made solely and exclusively for the limited purpose of providing notice under the Policy in compliance with its terms and conditions. This disclosure is not intended to, and shall not, waive, limit, or otherwise affect the attorney-client privilege, the work-product protection, or any other applicable privilege or protection with respect to the investigation, the underlying facts, or any communications or documents generated in connection therewith. To the extent necessary, AGMG asserts the common-interest doctrine or any other applicable exception to waiver in connection with this disclosure to its insurer.

AGMG respectfully requests that Castlemaine treat all information set forth in this notice, and any supplemental information provided in connection herewith, as strictly confidential. AGMG further requests that Castlemaine restrict access to this notice and the information contained herein to those individuals within Castlemaine (and its authorized representatives, including claims handlers, coverage counsel, and reinsurers) who have a legitimate need to access such information for the purpose of evaluating and administering coverage under the Policy, and that Castlemaine take all reasonable steps to ensure that such individuals maintain the confidentiality of the information.

VIII. Contact Information and Request for Acknowledgment

All correspondence, communications, and inquiries regarding this matter should be directed to:

Bernard Crawford Partner Calderwood & Harkness LLP 1999 Avenue of the Stars, Suite 2800 Los Angeles, California 90067 Telephone: (310) 555-7412

Email: b.crawford@calderwoodharkness.com

Copies of all correspondence should also be directed to:

Fiona Blackwood General Counsel Aurelius Global Media Group PLC 45 Aldwych House, Kingsway London WC2B 6AH United Kingdom

Email: f.blackwood@aureliusglobal.co.uk

AGMG respectfully requests that Castlemaine Underwriters:

(a) Acknowledge receipt of this notice in writing at the earliest practicable opportunity;

(b) Provide the name, direct contact information, and email address of the claims handler assigned to this matter on behalf of Castlemaine;

(c) Confirm its agreement that this notice is timely and sufficient to preserve the Insureds' rights under Policy No. CU-DO-2023-11283 in accordance with the notice provisions thereof; and

(d) Confirm that any claims, proceedings, or investigations that may subsequently arise from the circumstances described herein will be treated as having been reported during the current policy period for all purposes under the Policy.

We look forward to Castlemaine's prompt response and to working cooperatively with Castlemaine's claims professionals in connection with this matter. Should you require any additional information at this time, please do not hesitate to contact the undersigned directly.

Yours faithfully,

CALDERWOOD & HARKNESS LLP

By: ________

Bernard Crawford Partner

Date: May 5, 2023

cc: (via email)

Fiona Blackwood, General Counsel, Aurelius Global Media Group PLC

Renata Vasquez, Partner, Calderwood & Harkness LLP

Kessler & Dunn Insurance Brokers Ltd. — Attn: AGMG Account Team

PRIVILEGED AND CONFIDENTIAL — This letter and the information contained herein are protected by the attorney-client privilege, the work-product doctrine, and applicable confidentiality protections. Any unauthorized review, use, disclosure, or distribution is strictly prohibited. If you have received this communication in error, please contact the sender immediately and destroy all copies.

CALDERWOOD & HARKNESS LLP Attorneys at Law
1999 Avenue of the Stars, Suite 2800 Los Angeles, California 90067 Telephone: (310) 555-7400 Facsimile: (310) 555-7401 www.calderwoodharkness.com
May 5, 2023
VIA CERTIFIED MAIL (RETURN RECEIPT REQUESTED) AND EMAIL
Castlemaine Underwriters Ltd.
Attn: Claims Department — Directors & Officers Liability Division
71 Fenchurch Street, 4th Floor London EC3M 4BS United Kingdom
Re: Precautionary Notice of Circumstances Under Directors & Officers Liability Insurance Policy No. CU-DO-2023-11283
Insured: Aurelius Global Media Group PLC and its Subsidiaries
Dear Sir or Madam:
I. Opening and Purpose of Notice
This firm, Calderwood & Harkness LLP, writes on behalf of our client, Aurelius Global Media Group PLC ("AGMG"), a public limited company incorporated in England and Wales under company number 07284531, with its registered office at 45 Aldwych House, Kingsway, London WC2B 6AH, United Kingdom. AGMG is listed on the London Stock Exchange's AIM market and operates as a diversified global media conglomerate.
The purpose of this letter is to provide Castlemaine Underwriters Ltd. ("Castlemaine" or the "Insurer") with precautionary notice of circumstances that may give rise to one or more claims under Directors & Officers Liability Insurance Policy No. CU-DO-2023-11283 (the "Policy"), which was issued by Castlemaine to AGMG as named insured. As you are aware, the Policy provides a tower limit of $50,000,000 (Fifty Million United States Dollars) in aggregate for covered claims against the directors and officers of AGMG and its subsidiaries during the applicable policy period.
This notice is provided on a precautionary basis in order to preserve and protect the rights of AGMG and its current and former directors and officers (collectively, the "Insureds") under the Policy. It is given in accordance with the notice provisions set forth in the Policy and is intended to ensure that the Insureds' entitlement to coverage is fully preserved with respect to the circumstances described herein, as well as any claims that may subsequently arise from those circumstances.
Calderwood & Harkness LLP was retained by the Board of Directors of AGMG to conduct an independent, privileged workplace investigation into the matters described below. This notice is being transmitted at the express direction and authorization of the Board of Directors, acting through its People & Culture Committee and Audit & Risk Committee. The Board has determined that the circumstances warrant immediate notification to Castlemaine as the D&O carrier of record.
II. Identification of the Insured
The named insured under the Policy is Aurelius Global Media Group PLC, the ultimate parent company of the corporate group.
The subsidiary principally implicated in the circumstances described in this notice is Aurelius Pacific Studios Inc. ("APS"), a corporation organized and existing under the laws of the State of Delaware and a wholly owned subsidiary of AGMG. APS is headquartered at 3200 West Alameda Avenue, Suite 400, Burbank, California 91505.
To provide Castlemaine with the necessary context regarding the scope and significance of these entities:
Aurelius Global Media Group PLC. AGMG operates through four global divisions: (i) filmed entertainment, (ii) streaming and digital media, (iii) publishing, and (iv) e-commerce. The group employs approximately 14,200 individuals worldwide, of whom approximately 4,600 are located in the United States. AGMG's Board of Directors currently comprises eleven (11) members, including a mix of executive and independent non-executive directors. AGMG is subject to the AIM Rules for Companies, the UK Corporate Governance Code (to the extent voluntarily adopted), and applicable United Kingdom and European Union regulatory requirements.
Aurelius Pacific Studios Inc. APS serves as the primary operational entity for AGMG's United States-based filmed entertainment and streaming content production activities. APS employs approximately 2,300 individuals and reported revenue of approximately $1.12 billion for the fiscal year ended December 31, 2022. APS constitutes a material subsidiary within the AGMG group and its operations are integral to the group's filmed entertainment and streaming divisions.
III. Description of Circumstances Giving Rise to Potential Claims
A. Nature of the Allegations
Calderwood & Harkness has been made aware of the following facts and circumstances, which are set forth here to the extent reasonably known at this time and subject to the ongoing investigation described in Section IV below.
1. Initial Complaint — Jenna Morales (April 18, 2023). On April 18, 2023, a formal written complaint was filed through AGMG's Ethics & Compliance Hotline, which is operated and administered by an independent third-party vendor, Meridian Compliance Solutions LLC. The complaint was assigned case reference number MCS-1014-00001. The complainant is Jenna Morales, who holds the position of Vice President of Development at Aurelius Pacific Studios Inc.
Ms. Morales's complaint alleges that Marcus Hale, President of Aurelius Pacific Studios Inc., engaged in the following conduct directed at Ms. Morales over a period extending from approximately August 2022 through April 2023:
(a) Sexual harassment, including a pattern of unwelcome sexual attention and conduct in the workplace;
(b) Unwanted sexual advances made on multiple occasions, including during business travel and at company-sponsored events;
(c) Sexually explicit and inappropriate comments directed at Ms. Morales and made in her presence during professional meetings and interactions; and
(d) Retaliatory reassignment of Ms. Morales's work responsibilities and deliberate exclusion from high-profile development projects following Ms. Morales's verbal objection to Mr. Hale's conduct in or about March 2023.
Mr. Hale is a senior executive officer of Aurelius Pacific Studios Inc. He is fifty-four (54) years of age and has served as President of APS since January 2019. In his capacity as President, Mr. Hale reports directly to Elliot Vane, the Chief Executive Officer of AGMG. According to publicly filed information and internal compensation records made available to this firm, Mr. Hale's total annual compensation is approximately $4.7 million, comprised of a base salary of approximately $1.85 million, a target annual bonus of approximately $1.39 million, and equity-based awards valued at approximately $1.46 million. Mr. Hale's seniority within the corporate group, his compensation level, and his reporting relationship to the CEO are relevant to the potential exposure of AGMG's directors and officers to claims relating to the oversight, retention, and supervision of senior management.
2. Corroborating Complaint — Claire Ngo (April 24, 2023). On April 24, 2023, a second, independent complaint was filed with the AGMG Ethics & Compliance Hotline by Claire Ngo, who holds the position of Senior Director of Talent Relations at Aurelius Pacific Studios Inc. Ms. Ngo's complaint alleges that Mr. Hale made sexually suggestive remarks directed at Ms. Ngo during a company off-site event held in or about February 2023. Ms. Ngo further alleges that, following the off-site event, she was excluded from key meetings and strategic discussions related to talent acquisition and management, which she had previously attended as a regular participant in her professional capacity. Ms. Ngo's complaint was also lodged through Meridian Compliance Solutions LLC and has been assigned a separate case reference number.
3. Voluntary Report — Darren Whitfield (April 26, 2023). On April 26, 2023, Darren Whitfield, Senior Vice President of Physical Production at Aurelius Pacific Studios Inc., voluntarily contacted AGMG's in-house legal department to report concerns regarding retaliatory conduct by Mr. Hale. Mr. Whitfield states that he had previously raised informal concerns with Mr. Hale's chief of staff regarding Mr. Hale's conduct toward female employees at APS. Mr. Whitfield alleges that, following his having raised those concerns, he experienced a pattern of retaliation by Mr. Hale, including exclusion from production-related decision-making and unfavorable treatment with respect to project assignments.
These three reports — by Ms. Morales, Ms. Ngo, and Mr. Whitfield — collectively describe a pattern of alleged misconduct by the President of APS that, if substantiated, raises significant legal, regulatory, and governance implications for AGMG, its directors, and its officers.
B. Potential Legal Claims
The circumstances described above may give rise to, or have already given rise to, the following categories of claims, proceedings, or investigations that may implicate coverage under the Policy:
1. Employment-Related Claims Under California Law. The allegations set forth in the complaints of Ms. Morales, Ms. Ngo, and Mr. Whitfield may give rise to claims under the California Fair Employment and Housing Act, Cal. Gov. Code §§ 12940 et seq. ("FEHA"), including but not limited to claims for sexual harassment (Cal. Gov. Code § 12940(j)), failure to prevent harassment (Cal. Gov. Code § 12940(k)), and retaliation against employees who oppose practices prohibited by FEHA or who file complaints (Cal. Gov. Code § 12940(h)). Individual directors and officers of AGMG and APS may be named as defendants in any such proceedings to the extent they are alleged to have participated in, aided, abetted, or failed to take reasonable steps to prevent the unlawful conduct.
2. Pre-Litigation Demand. We note that on April 20, 2023 — two days after Ms. Morales filed her complaint with the Ethics & Compliance Hotline — outside legal counsel acting on behalf of Ms. Morales, specifically Sandra Reeves of the firm Nakamura Reeves LLP, transmitted a formal demand letter to Aurelius Pacific Studios Inc. Ms. Reeves's letter alleges violations of FEHA by APS and demands, among other things, the immediate preservation of all documents, communications, and electronically stored information relevant to the allegations. The demand letter further reserves Ms. Morales's right to file a complaint with the California Civil Rights Department (formerly the Department of Fair Employment and Housing) and to pursue all available legal remedies. This demand letter has been forwarded to, and is in the possession of, Calderwood & Harkness LLP.
3. Potential Claims Against Directors and Officers for Oversight Failures. The circumstances may expose AGMG's directors and officers to potential claims — including claims brought by AGMG itself, derivatively on behalf of AGMG by its shareholders, or by regulatory authorities — relating to alleged oversight failures, inadequacy of internal controls for the prevention and detection of harassment and discrimination at a material subsidiary, or decisions relating to the initial hiring, retention, supervision, compensation, or termination (or failure to terminate) senior executives against whom allegations of serious misconduct have been raised. Such claims may be framed as breaches of fiduciary duty, including the duty of care and the duty of loyalty, and may reference the principles articulated in the Caremark line of authority (or their equivalents under English law) regarding board-level oversight responsibilities.
4. Shareholder Derivative Actions and Regulatory Inquiries. Given that AGMG is a publicly listed company on the AIM market, the alleged misconduct by a senior executive at a principal subsidiary, and the surrounding circumstances, may give rise to shareholder derivative actions in the English courts or in other jurisdictions where AGMG or its subsidiaries maintain operations. There is also potential for regulatory inquiries by the Financial Conduct Authority, the London Stock Exchange, or the California Civil Rights Department, among other regulatory bodies, in connection with the conduct of a senior executive at a subsidiary of a publicly listed company, the adequacy of the company's governance and compliance frameworks, and any related disclosure obligations.
AGMG wishes to emphasize that the investigation described in Section IV is ongoing and that additional facts, claims, or proceedings may emerge as the investigation progresses. AGMG expressly reserves the right to supplement this notice as additional information becomes available.
C. Involved Directors and Officers
The following current directors and officers of AGMG and APS are identified as individuals who may be involved in, affected by, or named in connection with claims arising from the circumstances described herein:
(a) Dame Cordelia Ashworth, Independent Non-Executive Director and Chair of the People & Culture Committee of the AGMG Board of Directors. Dame Cordelia authorized the commencement of the independent investigation described in Section IV on behalf of the Board.
(b) Raymond Okoro, Independent Non-Executive Director and Chair of the Audit & Risk Committee of the AGMG Board of Directors. Mr. Okoro co-authorized the investigation in coordination with Dame Cordelia Ashworth, in recognition of the potential financial and risk management implications of the underlying circumstances.
(c) Elliot Vane, Chief Executive Officer of AGMG. Mr. Vane has formally recused himself from all oversight of and participation in the investigation, due to his direct reporting relationship with Mr. Hale and his role in the original appointment and ongoing supervision of Mr. Hale as President of APS. Mr. Vane's recusal was documented in a resolution of the People & Culture Committee dated April 28, 2023.
(d) Fiona Blackwood, General Counsel of AGMG. Ms. Blackwood is serving as the Board's primary liaison with Calderwood & Harkness LLP in connection with the investigation and related matters, including the preparation and submission of this notice.
(e) Marcus Hale, President of Aurelius Pacific Studios Inc. Mr. Hale is the subject of the investigation and of the complaints described in Section III.A above. As described in Section IV below, Mr. Hale was placed on paid administrative leave as of May 3, 2023.
(f) All other current and former directors and officers of AGMG and its subsidiaries (including APS) who may be named in or affected by any future claims, proceedings, or investigations arising from the circumstances described herein.
AGMG's identification of the above individuals is not exhaustive and is provided for the purpose of this precautionary notice only. AGMG reserves the right to identify additional individuals whose coverage under the Policy may be implicated as additional facts become known.
IV. The Investigation
On April 28, 2023, the People & Culture Committee and the Audit & Risk Committee of the AGMG Board of Directors held a joint special meeting and passed a resolution to retain independent outside counsel to conduct a privileged investigation into the allegations set forth in the complaints described in Section III.A above. The resolution specifically directed that the investigation be conducted under the protection of the attorney-client privilege and the work-product doctrine, and that the investigation be independent of AGMG's management, including the CEO, Mr. Vane, who was formally recused from any involvement.
Pursuant to that resolution, Calderwood & Harkness LLP was formally engaged on May 2, 2023 to conduct the investigation. The engagement has been assigned internal matter number 1017-00005. The responsible partner for the engagement is Bernard Crawford, and the co-lead is Renata Vasquez, both partners at the firm's Los Angeles office.
The following steps have been taken in the initial stages of the investigation:
(a) Administrative Leave of Marcus Hale. On May 3, 2023, upon the recommendation of Calderwood & Harkness and with the approval of Dame Cordelia Ashworth and Raymond Okoro as authorized representatives of the Board, Marcus Hale was placed on paid administrative leave from his position as President of APS, effective immediately and pending the outcome of the investigation. Concurrently, Mr. Hale's access to all company information systems, email accounts, shared drives, cloud-based storage platforms, and physical premises of APS has been suspended. An interim management structure for APS has been implemented under the direction of AGMG's Chief Operating Officer.
(b) Retention of Personal Counsel by Mr. Hale. AGMG has been informed that Mr. Hale has retained personal legal counsel in connection with the investigation. Mr. Hale is represented by Graham Thornfield of Thornfield & Associates LLP. All communications with Mr. Hale in connection with the investigation will be conducted through Mr. Thornfield, as appropriate.
(c) Forensic Collection and Preservation. Calderwood & Harkness has retained Linden Forensics Group Inc., a nationally recognized digital forensics firm, to perform forensic collection, imaging, and processing of electronic communications, including email, text messages, instant messages, and other electronically stored information relevant to the investigation. Linden Forensics has commenced forensic preservation activities, including the imaging of Mr. Hale's company-issued devices and the collection of communications from AGMG's enterprise email and messaging systems.
(d) Scope of Investigation. The investigation will encompass, among other things: (i) a comprehensive review of electronic communications involving Mr. Hale and the complainants; (ii) a review of all relevant human resources records maintained by APS and AGMG, including personnel files, prior complaints, performance evaluations, and records of any prior allegations or investigations; (iii) interviews with the complainants, Mr. Hale (through his counsel), and other relevant witnesses, including current and former employees of APS who may have information bearing on the allegations; and (iv) a review of AGMG's and APS's harassment, discrimination, and retaliation policies and the effectiveness of their implementation.
(e) Cross-Border Privilege Coordination. Given that AGMG is a UK-incorporated entity and the investigation involves both US- and UK-based personnel and records, Pendleton & Warwick LLP, AGMG's regular outside corporate counsel in the United Kingdom, is coordinating with Calderwood & Harkness on privilege protocols applicable to cross-border matters. Pendleton & Warwick is advising on the maintenance and protection of legal professional privilege under English law in connection with communications and documents generated in the course of the investigation.
(f) Notification to External Auditors. AGMG's external auditor, Greystone Advisors LLP, has been notified of the investigation in connection with potential financial reporting implications. In particular, Mr. Hale's employment agreement with APS contains both change-of-control provisions and termination-for-cause provisions, the application of which may have material financial consequences for APS and the group as a whole depending on the outcome of the investigation. Greystone Advisors has been asked to assess any potential implications for AGMG's financial statements, including with respect to contingent liabilities, compensation accruals, and related disclosures.
The investigation is in its early stages, and Calderwood & Harkness anticipates that additional facts and circumstances will emerge as the investigation progresses. AGMG will supplement this notice as warranted by material developments.
V. Related Insurance Coverage and Coordination
AGMG maintains, in addition to the D&O Policy issued by Castlemaine, a separate Employment Practices Liability Insurance ("EPLI") policy. Specifically, AGMG is separately providing notice of the circumstances described herein to Northbridge Mutual Insurance Co. under AGMG's Employment Practices Liability Insurance Policy No. NM-EPLI-2023-00417. The EPLI Policy has a policy period of January 1, 2023 through December 31, 2023, a per-claim limit of $10,000,000 (Ten Million United States Dollars), an aggregate limit of $25,000,000 (Twenty-Five Million United States Dollars), and a self-insured retention of $500,000 (Five Hundred Thousand United States Dollars). Notice under the EPLI Policy is being provided separately and concurrently with this notice.
AGMG's insurance broker, Kessler & Dunn Insurance Brokers Ltd., has been notified of the circumstances described in this letter and of the potential for claims under both the D&O Policy and the EPLI Policy. Kessler & Dunn is coordinating with AGMG and its counsel to ensure that all applicable insurance carriers are properly notified.
For the avoidance of doubt, this notice under the D&O Policy is provided on a precautionary basis and is not intended to trigger coverage under the EPLI Policy, nor is notice under the EPLI Policy intended to trigger coverage under the D&O Policy. The notices are independent of one another and are provided under separate and distinct insurance policies with different coverage terms, conditions, and exclusions. AGMG reserves all rights under both policies and does not, by providing notice under one policy, waive, limit, or otherwise prejudice its rights under the other.
VI. Reservation of Rights
AGMG and its directors and officers expressly reserve all of their respective rights under the Policy, including but not limited to the following:
(a) The right to supplement, amend, or update this notice as additional information becomes available through the ongoing investigation or through the assertion of claims, the commencement of proceedings, or the initiation of regulatory inquiries relating to the circumstances described herein.
(b) The right to seek coverage under the Policy for defense costs, investigation costs, settlements, judgments, penalties, or any other amounts for which coverage may be available under the terms of the Policy, in connection with any claims or proceedings arising out of or related to the circumstances described in this notice.
(c) The right to assert that this notice constitutes timely and sufficient notice of circumstances under the Policy, such that any claims subsequently arising from the circumstances described herein shall be deemed to have been made during the policy period for all purposes under the Policy.
(d) All other rights and remedies available to the Insureds under the Policy, at law, or in equity.
Nothing in this notice shall be construed as an admission of liability, fault, or wrongdoing by AGMG, any of its subsidiaries, or any of their respective directors, officers, employees, or agents. This notice is provided solely for the purpose of complying with the notice provisions of the Policy and preserving the Insureds' rights thereunder.
AGMG respectfully requests that Castlemaine Underwriters promptly acknowledge receipt of this notice and confirm in writing that coverage under the Policy is preserved with respect to the circumstances described herein and any claims that may subsequently arise therefrom.
VII. Privilege and Confidentiality
This notice and all information contained herein are provided on a privileged and confidential basis. The investigation described in Section IV is being conducted under the attorney-client privilege and the work-product doctrine at the express direction of the AGMG Board of Directors. The factual information set forth in this letter has been compiled in the course of, and for the purpose of, that privileged investigation.
The disclosure of this notice and the information contained herein to Castlemaine Underwriters is made solely and exclusively for the limited purpose of providing notice under the Policy in compliance with its terms and conditions. This disclosure is not intended to, and shall not, waive, limit, or otherwise affect the attorney-client privilege, the work-product protection, or any other applicable privilege or protection with respect to the investigation, the underlying facts, or any communications or documents generated in connection therewith. To the extent necessary, AGMG asserts the common-interest doctrine or any other applicable exception to waiver in connection with this disclosure to its insurer.
AGMG respectfully requests that Castlemaine treat all information set forth in this notice, and any supplemental information provided in connection herewith, as strictly confidential. AGMG further requests that Castlemaine restrict access to this notice and the information contained herein to those individuals within Castlemaine (and its authorized representatives, including claims handlers, coverage counsel, and reinsurers) who have a legitimate need to access such information for the purpose of evaluating and administering coverage under the Policy, and that Castlemaine take all reasonable steps to ensure that such individuals maintain the confidentiality of the information.
VIII. Contact Information and Request for Acknowledgment
All correspondence, communications, and inquiries regarding this matter should be directed to:
Bernard Crawford Partner Calderwood & Harkness LLP 1999 Avenue of the Stars, Suite 2800 Los Angeles, California 90067 Telephone: (310) 555-7412
Email: b.crawford@calderwoodharkness.com
Copies of all correspondence should also be directed to:
Fiona Blackwood General Counsel Aurelius Global Media Group PLC 45 Aldwych House, Kingsway London WC2B 6AH United Kingdom
Email: f.blackwood@aureliusglobal.co.uk
AGMG respectfully requests that Castlemaine Underwriters:
(a) Acknowledge receipt of this notice in writing at the earliest practicable opportunity;
(b) Provide the name, direct contact information, and email address of the claims handler assigned to this matter on behalf of Castlemaine;
(c) Confirm its agreement that this notice is timely and sufficient to preserve the Insureds' rights under Policy No. CU-DO-2023-11283 in accordance with the notice provisions thereof; and
(d) Confirm that any claims, proceedings, or investigations that may subsequently arise from the circumstances described herein will be treated as having been reported during the current policy period for all purposes under the Policy.
We look forward to Castlemaine's prompt response and to working cooperatively with Castlemaine's claims professionals in connection with this matter. Should you require any additional information at this time, please do not hesitate to contact the undersigned directly.
Yours faithfully,
CALDERWOOD & HARKNESS LLP
By: ________
Bernard Crawford Partner
Date: May 5, 2023
cc: (via email)
Fiona Blackwood, General Counsel, Aurelius Global Media Group PLC
Renata Vasquez, Partner, Calderwood & Harkness LLP
Kessler & Dunn Insurance Brokers Ltd. — Attn: AGMG Account Team
PRIVILEGED AND CONFIDENTIAL — This letter and the information contained herein are protected by the attorney-client privilege, the work-product doctrine, and applicable confidentiality protections. Any unauthorized review, use, disclosure, or distribution is strictly prohibited. If you have received this communication in error, please contact the sender immediately and destroy all copies.

CALDERWOOD & HARKNESS LLP Attorneys at Law

VIA CERTIFIED MAIL (RETURN RECEIPT REQUESTED) AND EMAIL

CALDERWOOD & HARKNESS LLP

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