Contract analysis

I. EXECUTIVE SUMMARY AND PURPOSE The purpose of this memorandum is to summarize the principal legal due diligence findings in connection with the proposed acquisition by Vantage Mobility Systems Corp. ("VMS"), a portfolio company of Ridgepoint Capital Partners, LP ("Ridgepoint"), of substantially all of the assets of Meridian Precision Components, Inc. (the "Debtor" or "Meridian") pursuant to Section 363 of Title 11

II. CORPORATE ORGANIZATION AND GOOD STANDING A. Formation and Jurisdiction Meridian Precision Components, Inc. is a corporation organized and existing under the laws of the State of Ohio. The company was originally incorporated in Ohio and has maintained its corporate existence in that jurisdiction continuously since its founding. The Debtor's Employer Identification Number is 34-1987625. Meridian's principal place o

III. THE BANKRUPTCY CASE — OVERVIEW A. Petition and Case Information On February 14, 2022, Meridian Precision Components, Inc. filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Northern District of Ohio. The case has been assigned Case No. 22-50318-JLG and is being administered before the Honorable Janet L. Grasso. According to the schedules an

1. Aldric Stamping & Tool Co. — a trade creditor owed approximately $3.8 million for goods and services provided to Meridian pre-petition. Aldric Stamping & Tool Co. serves as the chair of the Committee.

2. Northern Basin Employee Benefits Trust — the holder of pension and OPEB claims estimated at approximately $14.7 million. Northern Basin's claim represents the single largest unsecured claim in the case and reflects Meridian's legacy obligations under its defined benefit pension plan and retiree medical benefit programs.

3. Crestwood Logistics, Inc. — a freight and logistics vendor owed approximately $1.1 million for pre-petition transportation services. The Committee has retained the following professionals: Committee Counsel: Pendergast McCabe & Lowe LLP, with offices at 311 South Wacker Drive, Suite 5400, Chicago, Illinois 60606. The engagement is led by partner the Honorable Franklin Lowe (ret.) and associate Sandra Okoro. Judge

IV. REAL PROPERTY A. Overview of Facilities Meridian owns all three of its operating facilities in fee simple. No leased real property was identified in the data room for manufacturing operations. This is noteworthy from a transaction structuring perspective, as the absence of real property leases simplifies the assumption and assignment analysis under Section 365 of the Bankruptcy Code for the company's primary oper

V. MATERIAL CONTRACTS AND CUSTOMER PROGRAMS A. Customer Contracts Overview Meridian's revenue is concentrated among a limited number of OEM and Tier 1 automotive customers. Based on our review of the customer contracts and financial information provided in the data room, the top five customers by revenue represent approximately 78% of the Debtor's FY2021 revenue. This level of customer concentration is not unusual fo

VI. INTELLECTUAL PROPERTY A. Trademarks and Trade Names Meridian's trade name, "Meridian," together with its associated logos and brand identifiers, is included among the assets to be acquired by VMS under the proposed APA. Our review of the United States Patent and Trademark Office records identified several active trademark registrations held by Meridian. No material lapses, cancellation proceedings, or oppositions

VII. LABOR AND EMPLOYMENT A. Workforce Overview As of the petition date, Meridian employed approximately 620 people across its three operating facilities. The workforce includes both unionized production workers and non-union salaried, management, and administrative personnel. The distribution of employees across the three facilities is as follows: the Elyria facility houses the largest contingent, including the unio

VIII. ENVIRONMENTAL MATTERS A. Phase I and Phase II Environmental Site Assessments Environmental due diligence for the proposed transaction was conducted in coordination with Pinehurst Environmental Sciences, Inc. ("Pinehurst"), located at 6300 Rockside Road, Suite 200, Independence, Ohio 44131. Pinehurst was retained by VMS as its independent environmental consultant to evaluate the environmental conditions at each

IX. PENDING AND THREATENED LITIGATION A. Overview. We reviewed Meridian's litigation docket as reflected in the data room materials, including all pending cases, known threatened claims, and pre-petition demand letters received by the company. The Debtor's counsel, Hargrove Tillinghast LLP, provided supplemental information regarding the status of pending matters. A summary of the litigation docket is set forth in Ap

1. Personal Injury Claims (Lorain County, Ohio). Two pending state court actions in the Lorain County Court of Common Pleas brought by former employees alleging workplace injuries sustained during the course of their employment at the Elyria facility. The claims allege, respectively, injuries from press line operation and a slip-and-fall incident. The combined exposure from these two cases is estimated at less than $

2. Breach of Contract Claim (Cuyahoga County, Ohio). One pending breach-of-contract action in the Cuyahoga County Court of Common Pleas brought by a former raw material supplier alleging non-payment for goods delivered to Meridian during the pre-petition period. The amount in controversy is approximately $1.2 million. This action is stayed by the automatic stay imposed by Section 362 of the Bankruptcy Code and will b

3. Federal Court Litigation. No federal court litigation involving Meridian was identified. 4. intellectual Property Litigation. No patent, trademark, or intellectual property litigation involving Meridian was identified. C. Regulatory Matters The principal regulatory matter involving Meridian is the Ohio EPA remediation matter at the Elyria facility, which is addressed in detail in Section VIII above. No pending cit

X. TAX MATTERS A. Federal and State Income Taxes Meridian is treated as a C corporation for federal income tax purposes. We reviewed the Debtor's federal and state income tax returns for the fiscal years ended December 31, 2019 ("FY2019"), December 31, 2020 ("FY2020"), and December 31, 2021 ("FY2021"). No pending audits, examinations, or assessments by the Internal Revenue Service ("IRS") or any state taxing authorit

Section 1146(a) of the Bankruptcy Code provides an exemption from stamp taxes and similar transfer taxes for transfers made under a confirmed plan of reorganization. Courts have generally extended this exemption to transfers consummated pursuant to a Section 363 sale order approved by the Bankruptcy Court, provided that the sale order includes appropriate language invoking the exemption. We will ensure that the propo

XI. PENSION AND OPEB LIABILITIES A. Defined Benefit Pension Plan Meridian sponsors (or historically sponsored) a defined benefit pension plan that provides retirement benefits to certain current and former employees. The plan is subject to the Employee Retirement Income Security Act of 1974 ("ERISA") and is administered through the Northern Basin Employee Benefits Trust ("Northern Basin"). Northern Basin holds the pe