Contract analysis

I. Executive Summary Calderwood & Harkness LLP has reviewed the non-binding indicative term sheet dated April 22, 2024 (the "Term Sheet") submitted by Pinnacle Ridge Capital Partners Fund IV, L.P. ("Pinnacle Ridge" or "PRCP IV"), a Delaware limited partnership (Delaware Secretary of State file no. 6234577), managed by Pinnacle Ridge Capital Management LLC, in connection with the proposed acquisition of one hundred pe

II. Summary of Key Terms A. Parties. Seller. The seller of the membership interests in MPH would be Aurelius Media Holdings Inc. ("AMH"), a Delaware corporation (Delaware Secretary of State file no. 5987324). AMH is the direct holder of one hundred percent (100%) of the membership interests in MPH. AMH is a wholly owned subsidiary of Aurelius Global Media Group PLC (Companies House No. 08431276), which is headquarter

1. Meridian Distribution Services Inc., a Delaware corporation (Delaware Secretary of State file no. 4736201), which operates MPH's network of distribution centers across North America.

2. Bellweather Academic Press Inc., a Delaware corporation (Delaware Secretary of State file no. 4801133), which operates the Bellweather Academic imprint and educational content licensing operations.

3. Foxglove Media LLC, a New York limited liability company, which operates the Foxglove Periodicals imprint and related media properties.

4. Meridian Press Canada ULC, an unlimited liability company organized under the laws of British Columbia, which operates MPH's Canadian publishing and distribution operations. Financial Advisors. The financial advisors to the respective parties are as follows: • Buyer's Financial Advisor: Drummond Zanthor Partners LLC (Philip Arnaud, Managing Director), 1251 Avenue of the Americas, 34th Floor, New York, New York 100

1. HSR Act Clearance. The filing of the required notification under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the expiration or early termination of the applicable waiting period. The filing is required based on the $480,000,000 transaction value. The filing fee of $280,150 is to be borne by the Buyer. Early termination will be requested.

2. Canadian Competition Act Notification and Clearance. The filing of the required notification under the Canadian Competition Act in connection with the Meridian Press Canada ULC operations, and the receipt of clearance or the expiration of the applicable waiting period.

3. No CFIUS Review Required. The parties have confirmed that MPH does not operate a TID US business (as defined under the Foreign Investment Risk Review Modernization Act of 2018), and accordingly no mandatory filing with the Committee on Foreign Investment in the United States ("CFIUS") is required.

4. Absence of Legal Impediments. No court order, injunction, decree, or governmental action shall be in effect that prohibits, restrains, or makes illegal the consummation of the transaction.

5. Receipt of Required Third-Party Consents. The receipt of all required consents under material contracts, including key customer and supplier agreements and landlord consents for the assignment of leased properties (discussed in Section IX below).

6. Accuracy of Representations and Warranties at Closing. The representations and warranties of each party shall be true and correct at and as of the closing date, subject to a material adverse effect qualifier (i.e., a bring-down condition permitting immaterial inaccuracies).

7. Compliance with Pre-Closing Covenants. Each party shall have complied in all material respects with its respective covenants and agreements to be performed prior to closing.

8. No Financing Condition. The Term Sheet expressly states that the definitive agreement shall not contain a financing condition. The Buyer's obligation to close shall not be conditioned on the Buyer's ability to obtain debt or equity financing. Commentary. The absence of a financing condition is of critical importance to Aurelius and is a threshold requirement for any acceptable proposal. Aurelius should insist that

III. Indemnification Framework — Analysis and Recommendations The indemnification provisions set forth in the Term Sheet represent one of the most significant areas for negotiation in the definitive agreement phase. Below, we analyze each component of the proposed indemnification framework and provide our recommendations. A. Indemnification Cap The Term Sheet proposes a cap on the Seller's aggregate indemnification o

IV. Transition Services Agreement A. Scope of Services The Term Sheet acknowledges that MPH currently relies extensively on Aurelius's shared corporate infrastructure for a wide range of operational and back-office functions. The carve-out nature of the transaction means that MPH does not operate as a fully standalone business and will require continued access to Aurelius's systems, processes, and personnel during a

1. Service Mapping Exercise. Engage the Aurelius corporate development and IT teams to conduct a comprehensive mapping of all shared services dependencies between Aurelius's retained operations and MPH. This exercise should identify every system, process, contract, and personnel dependency that must be addressed in the TSA.

2. Service Catalogue Development. Develop a comprehensive service catalogue listing each service to be provided under the TSA, together with a description of the service, the estimated monthly cost, the proposed pricing methodology, and the anticipated duration of need.

3. Change-of-Control Protections. Ensure that the TSA includes provisions addressing the impact of a subsequent change of control of MPH. If MPH is sold by Pinnacle Ridge to a third party during the TSA term, Aurelius should have the right to terminate the TSA upon reasonable notice or to require the new owner to assume MPH's obligations under the TSA.

4. Dispute Resolution. Include a multi-tiered dispute resolution mechanism in the TSA, providing for (i) escalation of disputes to designated senior executives of each party, (ii) mediation by a mutually acceptable mediator, and (iii) binding arbitration or litigation as a final resort.

5. Standalone Readiness Milestones. Consider including milestones in the TSA that require the Buyer to demonstrate progress toward standalone readiness, reducing the risk of the Buyer becoming overly dependent on Aurelius's services beyond the intended transition period.

V. Tax Structuring — Section 338(h)(10) Election A. Buyer's Request The Term Sheet includes a request for Aurelius (through AMH) to agree to a joint election under Section 338(h)(10) of the Internal Revenue Code of 1986, as amended (the "Code"), in connection with the acquisition of the membership interests in MPH. Section 338(h)(10) permits the buyer and seller in a qualified stock purchase (or, in this context, a m

1. Incremental Tax Indemnity. The Buyer must agree to indemnify AMH and Aurelius for any incremental tax liability arising solely from the Section 338(h)(10) election — that is, any additional tax cost to AMH above what AMH would have owed in the absence of the election. While we do not anticipate a material incremental federal tax cost given MPH's disregarded entity status, there may be incremental state tax costs i

2. Cooperation on Tax Filings. The Buyer and Seller must agree to cooperate in the preparation and filing of IRS Form 8023 (Elections Under Section 338 for Corporations Making Qualified Stock Purchases) and IRS Form 8883 (Asset Allocation Statement Under Section 338), as well as any corresponding state and local tax election forms.

3. Purchase Price Allocation. The parties must agree on the allocation of the deemed purchase price among the applicable asset classes (as specified in Section 1060 of the Code and Treasury Regulation Section 1.338-6) prior to the signing of the definitive agreement. The purchase price allocation has significant tax implications for both parties — for the Buyer, it determines the amount of depreciable and amortizable

4. Transfer Tax Allocation. Transfer taxes arising from the deemed asset sale (if any) should be allocated 50/50 between the Buyer and the Seller, consistent with prevailing market practice. Leonard Cross (Tax Partner, Calderwood & Harkness LLP) is preparing a detailed tax analysis memorandum addressing the mechanics and implications of the Section 338(h)(10) election, including the anticipated state-by-state tax imp

VI. Non-Competition and Non-Solicitation The Term Sheet proposes that Aurelius agree to a non-competition covenant following the closing of the transaction, restricting Aurelius and its affiliates from engaging in book publishing, periodical publishing, and educational content businesses. The specific duration and geographic scope of the non-compete are to be negotiated as part of the definitive agreement process. In

VII. Intellectual Property Considerations A. Trademarks Transferring As part of the carve-out, all trademarks, service marks, trade names, and associated logos owned by or registered to MPH and its subsidiaries will transfer with the membership interests. The principal marks transferring include: • The Meridian Press mark and logo (United States and Canadian trademark registrations) • The Bellweather Academic mark an

VIII. Employee and Benefits Matters The Term Sheet addresses the treatment of MPH's approximately 2,400 employees in connection with the carve-out. The following provisions are proposed: Employee Transfer. All employees of MPH and its subsidiaries will transfer with the business as part of the membership interest purchase. Because MPH is being sold as a going concern through a membership interest purchase, the employ