Contract analysis

I. Executive Summary and Purpose This memorandum summarizes the key findings and risk items identified through seller-side due diligence conducted by Calderwood & Harkness LLP in connection with the proposed carve-out and sale of 100% of the membership interests in Meridian Press Holdings LLC ("MPH" or the "Company") by Aurelius Media Holdings Inc. ("AMH" or "Seller") to Ridgeline Publishing Acquisition Corp. ("Ridge

II. Corporate Organization and Capitalization A. Meridian Press Holdings LLC We have reviewed the organizational documents, formation records, and good standing status of the Company. The key details are as follows: We have confirmed that MPH is in good standing in the State of Delaware and in all states where the Company is qualified to do business as a foreign limited liability company. Certificates of good standin

1. Meridian Distribution Services Inc. ("MDS") MDS is a Delaware corporation (File No. 4736201), incorporated on March 7, 2011, and is a direct wholly owned subsidiary of MPH. MDS operates the Company's distribution and fulfillment infrastructure, consisting of 14 distribution centers located across North America. MDS is the primary operational entity within the carve-out group responsible for warehousing, order fulf

2. Bellweather Academic Press Inc. ("Bellweather") Bellweather is a Delaware corporation (File No. 4801133), incorporated on September 22, 2012, and is a direct wholly owned subsidiary of MPH. Bellweather operates the Company's educational content and academic publishing imprint under the "Bellweather Academic" brand. Bellweather's operations encompass the acquisition, editing, production, marketing, and distribution

3. Foxglove Media LLC ("Foxglove") Foxglove is a New York limited liability company, formed on June 15, 2013, and is a direct wholly owned subsidiary of MPH. Foxglove operates the Company's periodical publishing business under the "Foxglove Periodicals" brand, which includes the publication of a portfolio of consumer and trade magazines, both in print and digital formats. Foxglove's operating agreement reflects a sin

4. Meridian Press Canada ULC ("Meridian Canada") Meridian Canada is a British Columbia unlimited liability company, organized under the laws of the Province of British Columbia, and is an indirect wholly owned subsidiary of MPH (held through MDS). Meridian Canada operates the Company's Canadian business, with offices in Toronto, Ontario and Vancouver, British Columbia. The use of an unlimited liability company struct

III. Financial Overview We have reviewed the financial information provided by Seller's management, the carve-out audited financial statements prepared by Pemberton Graves LLP, and the financial data presented during the management presentation to Buyer on April 12, 2024. The key financial metrics for the Company are summarized below. Revenue and Profitability MPH's FY2023 revenue of approximately $1.14 billion is ge

IV. Material Contracts Requiring Consent A. Oakbridge Distribution Alliance Agreement The Oakbridge Distribution Alliance Agreement, dated as of February 1, 2018, by and between Meridian Distribution Services Inc. and Oakbridge Logistics Partners LLC (as amended by Amendment No. 1, dated November 15, 2020, and Amendment No. 2, dated March 1, 2023) (the "Oakbridge Agreement"), is the most significant third-party comme

V. Employees and Benefits A. Workforce Overview Approximately 2,400 employees will transfer with the Business in connection with the Transaction. The Company's workforce is distributed across multiple locations in the United States and Canada, as follows: • New York Headquarters (1180 Avenue of the Americas, 22nd Floor): approximately 450 employees engaged in editorial, marketing, sales, corporate functions, and exec

VI. Intellectual Property A. Trademark Registrations We have reviewed the Company's trademark portfolio, including all US and Canadian trademark registrations and pending applications. The key trademark assets of the Business are the "Meridian Press," "Bellweather Academic," and "Foxglove" word marks and associated design marks (logos), which are the primary brand identifiers for the Company's three business lines. A

VII. Real Property A. Owned Properties MPH and its subsidiary MDS own four (4) distribution center properties in fee simple. These properties constitute the core physical distribution infrastructure of the Business. The owned properties are as follows: Title searches on all four owned properties are being conducted by Foxworth Daniels & Co. (Wilmington, DE), which is also performing UCC searches on the carved-out ass

VIII. Tax Matters We have reviewed the tax-related documentation and information provided in connection with the diligence process. The key tax matters are summarized below. A more detailed analysis of certain tax structuring issues is being prepared by Leonard Cross, Tax specialist partner, in a separate memorandum. Entity Tax Classification. MPH is treated as a disregarded entity for US federal income tax purposes,

Section 338(h)(10) Election. Buyer and Seller have agreed in principle to jointly make an election under Section 338(h)(10) of the Internal Revenue Code (and corresponding state and local elections where applicable) with respect to the Transaction. The effect of the Section 338(h)(10) election is to treat the sale of the membership interests in MPH as a deemed asset sale for US federal (and applicable state) income t

IX. Intercompany Arrangements A. Intercompany Promissory Note MPH (as maker) has issued an intercompany promissory note (the "Intercompany Note") in the principal amount of $50,000,000, payable to AMH (as payee). The Intercompany Note was issued on March 15, 2019, bears interest at a rate of SOFR plus 200 basis points (adjusted quarterly), and matures on March 15, 2029. The outstanding principal balance as of the dat

X. Litigation and Legal Proceedings We have conducted a comprehensive review of pending and threatened litigation involving MPH and its subsidiaries. This review included examination of litigation files, demand letters, regulatory correspondence, and insurance claim records maintained by the Company, as well as discussions with Jonathan Kessler and the Company's in-house legal team. Material Pending Litigation. No ma

XI. Environmental Matters Our environmental diligence focused on the four owned distribution center properties (Edison, NJ; Columbus, OH; Dallas, TX; and Reno, NV) and, to a lesser extent, on the leased warehouse and office locations. Phase I Environmental Site Assessments. Phase I environmental site assessments ("ESAs") have been obtained for each of the four owned properties. The Phase I ESAs were prepared by certi

XII. Insurance Current Coverage. MPH and its subsidiaries currently participate in the Aurelius group insurance program, which provides coverage across the following principal lines: • Commercial general liability; • Property insurance (covering owned and leased premises, business personal property, and business interruption); • Workers' compensation and employers' liability; • Directors' and officers' liability (D&O

XIII. Regulatory and Antitrust Hart-Scott-Rodino Act Filing. The Transaction exceeds the applicable HSR Act size-of-transaction threshold, and a pre-merger notification filing under the HSR Act is required. The filing was submitted on May 20, 2024 (HSR Transaction No. 20241537). The filing fee of $280,150 is borne by Buyer pursuant to the terms of the term sheet. Based on our antitrust analysis (see Antitrust Risk As