Contract analysis

I. Executive Summary This memorandum analyzes the benefits, mechanics, and practical considerations of the proposed joint election under Section 338(h)(10) of the Internal Revenue Code of 1986, as amended (the "Code"), in connection with the sale by Aurelius Media Holdings Inc. ("AMH") of one hundred percent (100%) of the membership interests (the "Membership Interests") in Meridian Press Holdings LLC ("MPH") to Ridg

II. Background and Transaction Structure A. Seller Structure Aurelius Global Media Group PLC (Companies House No. 08431276) is a United Kingdom-headquartered publicly listed media conglomerate. Aurelius maintains a Premium Listing on the London Stock Exchange and is also listed on the Nasdaq Stock Market through its American Depositary Receipts program. Aurelius operates a diversified portfolio of media, publishing,

III. Tax Classification of Meridian Press Holdings LLC A. Single-Member LLC — Disregarded Entity Status MPH is a Delaware limited liability company organized under the Delaware Limited Liability Company Act (6 Del. C. § 18-101 et seq.). AMH is the sole member of MPH, and no other person or entity holds any membership interests, economic interests, or other equity interests in MPH. Under the entity classification rule

IV. Section 338(h)(10) Election — Legal Framework A. Overview of Section 338 Generally

Section 338 of the Code provides a mechanism by which certain stock purchases can be treated as asset acquisitions for United States federal income tax purposes. The purpose of Section 338 is to allow the tax consequences of a transaction to reflect its economic substance — namely, that the acquisition of control of a corporation through a stock purchase is economically equivalent, in many respects, to the acquisitio

Section 338 operates by creating a legal fiction: when a qualifying stock purchase occurs and an election is properly made, the target is deemed to have sold all of its assets at the close of the acquisition date in a single transaction, and is then deemed to have purchased all of those assets as a new corporation on the day following the acquisition date. This deemed sale and repurchase results in a new cost basis i

Section 338(g) — Unilateral Buyer Election. Under Section 338(g), the buyer may unilaterally elect to treat a qualified stock purchase as an asset acquisition. In this scenario, the target is treated as having sold its assets at their fair market value and immediately repurchased them. However, the "old" target recognizes gain on the deemed asset sale, which generates a tax liability at the target level. Because the

Section 338(h)(10) — Joint Buyer-Seller Election. Section 338(h)(10) is a special provision that permits a joint election by the buyer and the seller when the target is a member of a consolidated group (or an S corporation). Under Section 338(h)(10), the old target is treated as selling all of its assets in a single transaction while still a member of the selling consolidated group, and the actual stock sale is disre

V. Tax Consequences to Seller (Aurelius Media Holdings Inc.) A. Deemed Asset Sale Treatment Under the combined effect of MPH's disregarded entity status and the Section 338(h)(10) election with respect to MDS and Bellweather, the transaction will be treated for United States federal income tax purposes as follows:

1. AMH is deemed to sell the assets held directly by MPH (a disregarded entity). Because MPH is a disregarded entity, the sale of the Membership Interests in MPH is treated as a sale by AMH of all of MPH's directly held assets. This includes tangible personal property (distribution center equipment, fixtures, IT hardware and infrastructure), real property (owned distribution centers in Edison, NJ; Columbus, OH; Dalla

2. The corporate subsidiaries (MDS and Bellweather) are deemed to sell all of their respective assets in a single transaction at the close of the acquisition date, while still members of the AMH selling consolidated group. This treatment results from the Section 338(h)(10) election. The "old" MDS and "old" Bellweather are each treated as having sold all of their assets at fair market value in a single transaction. Th

3. The "old" MDS and "old" Bellweather are treated as liquidating into MPH (and through MPH into AMH) following the deemed asset sale. Under the mechanics of Section 338(h)(10), after the deemed asset sale, the "old" targets are treated as distributing all of their remaining assets (i.e., the deemed sale proceeds) to their parent (MPH / AMH) in complete liquidation. No gain or loss is recognized on this deemed liquid

VI. Tax Consequences to Buyer (Ridgeline Publishing Acquisition Corp.) A. Step-Up in Tax Basis The primary and most significant tax benefit to Buyer from the Section 338(h)(10) election is the stepped-up tax basis that Ridgeline will obtain in all of the acquired assets. As a result of the election, Ridgeline is treated as having purchased all of the assets of MDS and Bellweather at their fair market value as of the

VII. Allocation of Purchase Price Among Asset Classes A. Residual Method Under Section 1060 / Treasury Regulations Section 1.338-6 The deemed asset sale resulting from the Section 338(h)(10) election requires that the Aggregate Deemed Sale Price (from Seller's perspective) and the Adjusted Grossed-Up Basis (from Buyer's perspective) be allocated among seven asset classes under the residual method prescribed by Treasu

VIII. State and Local Tax Considerations A. State Income / Franchise Tax Impact on Seller As noted in Section V.C above, the deemed asset sale will generate income that is subject to apportionment among multiple states in which MPH and its subsidiaries conduct business. The apportionment analysis is based on the sales, payroll, and property factors of MPH and its subsidiaries in each state, weighted according to the