PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGED ATTORNEY WORK PRODUCT
CALDERWOOD & HARKNESS LLP 425 Park Avenue New York, New York 10022
MEMORANDUM
November 22, 2024
TO: Claudia Restrepo, General Counsel, Aurelius Global Media Group PLC Thomas Whitfield, SVP, Corporate Development, Aurelius Global Media Group PLC
FROM: Beatrice Holloway, Partner, Calderwood & Harkness LLP Megan Chu, Associate, Calderwood & Harkness LLP
RE: Closing Memorandum — Sale of Meridian Press Holdings LLC to Ridgeline Publishing Acquisition Corp.
Matter No.: 1043-00002
Engagement Reference: SC/BH/JP/2024-0304/AGMG
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I. Executive Summary
The purpose of this memorandum is to provide Aurelius Global Media Group PLC ("AGMG" or the "Parent") and its wholly owned subsidiary Aurelius Media Holdings Inc. ("AMH" or the "Seller") with a comprehensive summary of the completed carve-out and divestiture of the legacy publishing division operated through Meridian Press Holdings LLC ("MPH," "Meridian Press," or the "Target"), including the key terms of the definitive transaction documents, the structure and flow of consideration, the regulatory approvals and third-party consents obtained, the closing deliverables exchanged, and the post-closing obligations that remain outstanding as of the date hereof.
The transaction closed on November 15, 2024 (the "Closing Date"), which was one week after the target closing date of November 8, 2024 as originally set forth in the Membership Interest Purchase Agreement (the "MIPA"). The brief delay was attributable to the receipt of the final landlord consent required under the closing conditions, which was obtained on November 1, 2024, necessitating a short additional period for the preparation and execution of final closing deliverables. The delay did not result in any adjustment to the economic terms of the transaction, and no termination rights were triggered.
The transaction involved the sale of 100% of the membership interests in Meridian Press Holdings LLC, a Delaware limited liability company (Delaware Secretary of State file no. 4521889), by Aurelius Media Holdings Inc., a Delaware corporation (Delaware Secretary of State file no. 5987324), to Ridgeline Publishing Acquisition Corp. ("Buyer" or "Ridgeline"), a Delaware corporation (Delaware Secretary of State file no. 6501982) and newly formed acquisition vehicle of Pinnacle Ridge Capital Partners Fund IV, L.P. (Delaware Secretary of State file no. 6234577), a private equity fund managed by Pinnacle Ridge Capital Management LLC.
The transaction was consummated at an enterprise value of $480,000,000, representing an implied EV/Adjusted EBITDA multiple of 5.0x based on MPH's fiscal year 2023 ("FY2023") Adjusted EBITDA of $96,000,000. The estimated equity purchase price at closing was $418,000,000, reflecting customary adjustments for estimated closing indebtedness, estimated closing cash, estimated target transaction expenses, and an estimated net working capital shortfall. Net cash received by Seller at closing was $346,000,000, after giving effect to the escrow deposit of $72,000,000 (representing 15% of enterprise value) with Granite Trust Company, N.A. as escrow agent. The equity purchase price remains subject to a customary post-closing true-up based on a final determination of net working capital, closing indebtedness, closing cash, and transaction expenses, which is to be completed within 90 calendar days of closing (deadline: February 13, 2025).
As of the date of this memorandum, the matter status is Closed / Completed. However, certain post-closing obligations remain outstanding and are being actively tracked, as detailed in Section XIV below and in the Post-Closing Obligations Tracker (Appendix D, dated November 18, 2024).
Calderwood & Harkness LLP served as counsel to the Seller throughout the engagement, commencing with the execution of the engagement letter on March 4, 2024. The key members of the Calderwood & Harkness team were as follows:
• Beatrice Holloway — Responsible Partner (M&A)
• James Prentice — Billing Partner (M&A)
• Megan Chu — Lead Associate
• Derek Okonkwo — Working Associate
• Leonard Cross — Specialist Partner (Tax)
This memorandum is intended solely for the use of the addressees identified above, as well as other authorized representatives of AGMG and AMH, and is subject to attorney-client privilege and the work product doctrine. This memorandum does not constitute legal advice with respect to any particular future matter or ongoing obligation and should not be relied upon as such without further consultation with Calderwood & Harkness LLP.
II. Parties to the Transaction
A. Seller
The Seller in the transaction is Aurelius Media Holdings Inc. ("AMH"), a corporation organized and existing under the laws of the State of Delaware (Delaware Secretary of State file no. 5987324). AMH was the direct holder of 100% of the membership interests in Meridian Press Holdings LLC and served as the selling party under the MIPA. AMH is a wholly owned subsidiary of Aurelius Global Media Group PLC.
Aurelius Global Media Group PLC ("AGMG"), a public limited company incorporated in England and Wales (Companies House registration no. 08431276), is the ultimate parent entity of the Aurelius corporate group. AGMG joined the MIPA solely for purposes of certain specified provisions, including the non-competition and non-solicitation covenants and the parent guaranty of certain of Seller's obligations under the MIPA. AGMG did not sell any interests directly in the transaction.
The principal offices of Aurelius are located at 14 Clarges Street, London W1J 8AQ, United Kingdom. AGMG is listed on the London Stock Exchange (Premium Listing, ticker: AGMG) and on the Nasdaq Stock Market (in the form of American Depositary Receipts, ticker: AURM). For FY2023, AGMG reported consolidated revenues of approximately £3.8 billion across three operating segments:
• Digital Media & Streaming — approximately 45% of consolidated revenue
• E-Commerce & Marketplace — approximately 30% of consolidated revenue
• Legacy Publishing — approximately 25% of consolidated revenue (the business divested in this transaction)
Key personnel of Aurelius who were involved in the transaction include:
• Sir Edmund Hargreaves, KBE — Chief Executive Officer, AGMG
• Priya Nandakumar — Chief Financial Officer, AGMG
• Claudia Restrepo — General Counsel, AGMG
• Thomas Whitfield — Senior Vice President, Corporate Development, AGMG
The divestiture of the legacy publishing division was undertaken as part of Aurelius's broader strategic initiative to streamline its portfolio and focus on higher-growth digital media and e-commerce operations, as publicly disclosed by AGMG in its FY2023 Annual Report and subsequent investor communications.
B. Buyer
The Buyer in the transaction is Ridgeline Publishing Acquisition Corp. ("Ridgeline" or the "Buyer"), a corporation organized and existing under the laws of the State of Delaware (Delaware Secretary of State file no. 6501982). Ridgeline was incorporated on October 2, 2024, as a newly formed acquisition vehicle established for the specific purpose of acquiring and holding the membership interests in Meridian Press Holdings LLC.
Ridgeline is a portfolio company of Pinnacle Ridge Capital Partners Fund IV, L.P. ("PRCP IV"), a Delaware limited partnership (Delaware Secretary of State file no. 6234577). PRCP IV's general partner is Pinnacle Ridge Capital GP IV LLC, and the fund is managed by Pinnacle Ridge Capital Management LLC, headquartered at 600 Lexington Avenue, 38th Floor, New York, New York 10022. PRCP IV is a $6.2 billion private equity fund (vintage 2022) focused on middle-market investments in the media, information services, and business services sectors. As of the date of this transaction, PRCP IV had deployed approximately $2.8 billion across nine platform investments prior to the acquisition of Meridian Press. The Meridian Press acquisition represents PRCP IV's largest single platform investment to date.
PRCP IV joined the MIPA solely for purposes of certain specified provisions, including its equity commitment and guaranty of Buyer's obligations. The equity contribution from PRCP IV to Ridgeline at closing was $240,000,000, representing approximately 50% of the enterprise value.
Key personnel of Pinnacle Ridge Capital who were involved in the transaction include:
• Victor Stanhope — Managing Partner
• Rachel Osei-Mensah — Partner, Media & Communications
• Nathaniel Griggs — Principal
C. Target / Carved-Out Business
The Target entity is Meridian Press Holdings LLC ("MPH"), a limited liability company organized and existing under the laws of the State of Delaware (Delaware Secretary of State file no. 4521889). MPH's principal office is located at 1180 Avenue of the Americas, 22nd Floor, New York, New York 10036. MPH's registered agent in Delaware is Fenmore Health IT Statutory Agent, located at 251 Little Falls Drive, Wilmington, Delaware 19808.
MPH serves as the operating entity for Aurelius's legacy publishing division, encompassing three distinct imprints:
• Meridian Books — the flagship consumer trade publishing imprint, covering fiction, non-fiction, and general interest categories
• Bellweather Academic — the academic, scholarly, and professional publishing imprint, with a focus on social sciences, humanities, and STEM disciplines
• Foxglove Periodicals — the periodical and magazine publishing imprint, encompassing both print and digital periodical products
The carve-out included MPH and the following key subsidiaries:
• Meridian Distribution Services Inc. — a Delaware corporation (Delaware Secretary of State file no. 4736201), responsible for physical distribution, warehousing, and fulfillment operations across North America
• Bellweather Academic Press Inc. — a Delaware corporation (Delaware Secretary of State file no. 4801133), the operating entity for the Bellweather Academic imprint
• Foxglove Media LLC — a New York limited liability company, the operating entity for Foxglove Periodicals and certain digital media properties
• Meridian Press Canada ULC — an unlimited liability company organized under the laws of British Columbia, Canada, responsible for Canadian distribution, sales, and editorial operations
For FY2023, the Meridian Press business reported revenue of $1,140,000,000 and Adjusted EBITDA of $96,000,000, representing an Adjusted EBITDA margin of approximately 8.4%. Approximately 2,400 employees transferred to the Buyer in connection with the closing of the transaction.
The Meridian Press business operates a network of 14 distribution centers across North America. The owned facilities are located at:
• 45 Fieldcrest Avenue, Edison, New Jersey
• 2200 Westbelt Drive, Columbus, Ohio
• 8700 Freeport Parkway, Dallas, Texas
• 1400 Scheels Drive, Reno, Nevada
In addition to the four owned facilities, the business operates eight leased distribution and warehouse locations in the United States and two leased locations in Canada (Toronto, Ontario and Vancouver, British Columbia). Additional detail regarding the real property transferred or assigned is provided in Section XI below.
Key management personnel of the Target who were involved in the transaction include:
• Jonathan Kessler — President, Meridian Press Holdings LLC
• Angela Moretti — Senior Vice President, Finance, Meridian Press Holdings LLC
D. Key Advisors and Service Providers
Set forth below is a summary of the key advisors and service providers engaged in connection with the transaction:
In addition to the foregoing, Pemberton Graves LLP served as the preparer of the carve-out audited financial statements of the Meridian Press business, which were delivered to Buyer's counsel on June 14, 2024. Whitecliff & Harding LLP conducted the quality of earnings analysis on behalf of Buyer during the due diligence process. In the event of a dispute regarding the final determination of closing net working capital or other purchase price adjustment components, Kensington Forensic Advisors LLP has been designated as the neutral accountant under the MIPA, with both Pemberton Graves LLP and Whitecliff & Harding LLP contractually excluded from serving in that capacity.
III. Transaction Structure and Consideration
A. Structure
The transaction was structured as a membership interest sale. Aurelius Media Holdings Inc., as the sole member of Meridian Press Holdings LLC, sold, transferred, assigned, and conveyed 100% of its membership interests in MPH to Ridgeline Publishing Acquisition Corp., the newly formed acquisition vehicle of PRCP IV. Upon consummation of the transaction, Ridgeline became the sole member of MPH and, through MPH, the indirect owner of each of the Target's subsidiaries (Meridian Distribution Services Inc., Bellweather Academic Press Inc., Foxglove Media LLC, and Meridian Press Canada ULC).
The transaction was structured as a carve-out divestiture, effectuating the separation of the legacy publishing division from the Aurelius corporate group. The retained operations of Aurelius — the Digital Media & Streaming segment and the E-Commerce & Marketplace segment — were not part of the transaction. Certain shared services and infrastructure that had historically been provided by Aurelius to the Meridian Press business on an intercompany basis were addressed through the Transition Services Agreement described in Section VII.A below, which provides for the continued provision of those services by Aurelius to the Buyer for a period of up to 18 months following closing.
The MIPA and all ancillary transaction documents (except as otherwise noted therein) are governed by the laws of the State of Delaware, without regard to the conflict of laws principles thereof. Disputes arising under the MIPA are subject to the exclusive jurisdiction of the Delaware Court of Chancery (or, if the Delaware Court of Chancery lacks subject matter jurisdiction, the United States District Court for the District of Delaware).
B. Enterprise Value and Equity Purchase Price
The parties agreed upon a fixed enterprise value of $480,000,000 for the Meridian Press business. This enterprise value represents an implied EV/Adjusted EBITDA multiple of 5.0x, calculated on the basis of MPH's FY2023 Adjusted EBITDA of $96,000,000 as reported in the carve-out audited financial statements prepared by Pemberton Graves LLP and delivered on June 14, 2024.
The estimated equity purchase price at closing was $418,000,000, derived from the enterprise value after giving effect to the customary adjustments set forth in the MIPA. The calculation of the estimated equity purchase price is summarized in the following table:
The estimated equity purchase price was based on the Seller's estimated closing statement delivered at closing. This estimate is subject to a customary post-closing true-up, pursuant to which the Buyer is required to deliver a proposed final closing statement within 90 calendar days after the Closing Date. The deadline for delivery of the proposed final closing statement is February 13, 2025. The mechanics of the post-closing true-up are described in greater detail in Section XIV.A below.
The intercompany promissory note of $50,000,000 represented an outstanding intercompany loan from AMH to MPH that was treated as closing indebtedness under the MIPA. This note was repaid in full at closing from the transaction proceeds, as reflected in the funds flow memorandum. The capital lease obligations of $12,500,000 related to equipment and machinery leases at certain of the distribution center facilities and were assumed by the Buyer as part of the transaction. The estimated transaction expenses of $4,700,000 represented advisory, legal, and other professional fees incurred by or on behalf of the Target in connection with the transaction that were either unpaid as of closing or required to be paid at or promptly following closing.
The net working capital adjustment reflected an estimated shortfall of $3,000,000 relative to the contractually agreed NWC Target (peg) of $145,000,000. The estimated closing net working capital was $142,000,000, resulting in a dollar-for-dollar downward adjustment to the equity purchase price in the amount of the shortfall. This estimate is preliminary and subject to the post-closing true-up process.
C. Payment Mechanics
At closing, the estimated equity purchase price of $418,000,000 was paid as follows:
• Net Cash to Seller at Closing: $346,000,000, representing the estimated equity purchase price of $418,000,000 less the escrow deposit of $72,000,000. This amount was wired in immediately available funds to Seller's designated account as specified in the funds flow memorandum.
• Escrow Deposit: $72,000,000, representing 15% of the enterprise value, deposited with Granite Trust Company, N.A. in its capacity as escrow agent under the Escrow Agreement. The escrow account reference number is GT-ESC-2024-11150048. The escrow deposit serves as collateral for the Seller's indemnification obligations under the MIPA, as described more fully in Sections IV.E and V below.
The NWC Target (peg) under the MIPA is $145,000,000. As noted above, the estimated closing net working capital was $142,000,000, resulting in an estimated shortfall of $3,000,000 that was reflected as a reduction to the estimated equity purchase price. The post-closing true-up is to be completed by February 13, 2025.
In the event of a dispute between the parties regarding any component of the final closing statement (including the final determination of closing net working capital, closing indebtedness, closing cash, or transaction expenses), the disputed items are to be submitted to Kensington Forensic Advisors LLP as the neutral accountant for binding resolution. Pursuant to the terms of the MIPA, both Pemberton Graves LLP (Seller's auditor) and Whitecliff & Harding LLP (Buyer's quality of earnings advisor) are excluded from serving as the neutral accountant. The determination of the neutral accountant shall be final and binding on the parties, absent manifest error. The fees and expenses of the neutral accountant shall be allocated between the parties based on the relative proximity of each party's position to the neutral accountant's final determination.
D. Sources and Uses of Funds
The sources and uses of funds in connection with the closing of the transaction are summarized below:
Sources:
Uses:
The equity contribution from PRCP IV of $240,000,000 represented approximately 50% of the enterprise value, reflecting the leveraged buyout structure typical of middle-market private equity transactions. The remaining approximately 50% of the acquisition financing was provided through the Term Loan B facility, together with the assumption of existing capital lease obligations and the retention of the Target's cash on hand.
E. Buyer's Financing
The Buyer's acquisition debt financing was provided through senior secured credit facilities arranged by Clearwater National Bank, N.A. as Administrative Agent, Lead Arranger, and Sole Bookrunner, with Trident Capital Finance LLC serving as Co-Lender under the Term Loan B facility. The credit facilities comprise the following:
• Term Loan B: $200,000,000 in aggregate principal amount, with a maturity date of seven years from the Closing Date. The Term Loan B bears interest at a rate of SOFR plus 425 basis points, with customary SOFR floors and step-down provisions. The Term Loan B proceeds were drawn in full at closing and were applied toward the acquisition consideration as described above.
• Revolving Credit Facility: $60,000,000 in aggregate commitment amount, with a maturity date of five years from the Closing Date. The Revolving Credit Facility bears interest at a rate of SOFR plus 375 basis points. The Revolving Credit Facility was undrawn at closing and is available to the Buyer for general corporate purposes, working capital needs, and other permitted uses, subject to customary conditions to borrowing.
The debt commitment letter in respect of the senior secured credit facilities was delivered by Clearwater National Bank, N.A. on the signing date of July 19, 2024. The definitive credit agreement was executed on the Closing Date. The Buyer's financing counsel was Amberley & Kincaid LLP, led by Martin Cho.
The credit facilities are secured by a first-priority lien on substantially all of the assets of Ridgeline Publishing Acquisition Corp. and its subsidiaries (including MPH and its subsidiaries), subject to customary exclusions. The credit agreement contains customary financial maintenance covenants, affirmative and negative covenants, and events of default, the terms of which were reviewed by Calderwood & Harkness LLP in the context of the Seller's intercreditor arrangements with the Buyer's lenders but are not described in detail herein as they are Buyer-side obligations.
IV. Definitive Agreement — Key Terms
A. Membership Interest Purchase Agreement (MIPA)
The Membership Interest Purchase Agreement (the "MIPA") was executed on July 19, 2024, by and among the following parties:
• Aurelius Media Holdings Inc., as Seller
• Ridgeline Publishing Acquisition Corp., as Buyer
• Aurelius Global Media Group PLC, solely for purposes of certain specified provisions (including the non-competition covenant, the non-solicitation covenant, and the parent guaranty of certain of Seller's obligations)
• Pinnacle Ridge Capital Partners Fund IV, L.P., solely for purposes of certain specified provisions (including the equity commitment letter and the guaranty of Buyer's obligations)
The MIPA is governed by the laws of the State of Delaware, without giving effect to any choice of law or conflict of laws provision or rule that would cause the application of the laws of any other jurisdiction. As noted in Section III.A, disputes arising under the MIPA are subject to the exclusive jurisdiction of the Delaware Court of Chancery (or, if the Delaware Court of Chancery declines or lacks subject matter jurisdiction, the United States District Court for the District of Delaware).
The MIPA was negotiated over the course of approximately eight weeks, with the initial draft circulated by Seller's counsel (Calderwood & Harkness LLP) on May 28, 2024, and the final negotiation issues list resolved on July 12, 2024. The MIPA was approved by the Board of Directors of AGMG PLC and the Board of Directors of AMH on July 17, 2024, and by the Investment Committee of Pinnacle Ridge Capital Management LLC on July 15, 2024.
B. Representations and Warranties
Seller made customary representations and warranties in the MIPA regarding MPH and its subsidiaries, organized into the following principal categories:
(i) organization, existence, and good standing of MPH and each subsidiary;
(ii) authority and enforceability of the MIPA and the ancillary agreements;
(iii) capitalization and ownership of MPH and each subsidiary, including the absence of outstanding options, warrants, or other rights to acquire equity interests;
(iv) financial statements, including the carve-out audited financial statements for FY2021, FY2022, and FY2023 prepared by Pemberton Graves LLP, and the interim unaudited financial statements for the six months ended June 30, 2024;
(v) absence of undisclosed liabilities (other than those arising in the ordinary course of business after the date of the most recent balance sheet);
(vi) absence of a material adverse effect since December 31, 2023;
(vii) compliance with applicable laws and governmental orders;
(viii) tax matters, including the filing and accuracy of tax returns, payment of taxes, tax liens, transfer pricing, and tax elections;
(ix) material contracts, including the accuracy and completeness of the disclosed contract list, the absence of material defaults, and the enforceability of such contracts;
(x) real property (owned and leased), including title, condition, and compliance with zoning and land use requirements;
(xi) intellectual property, including ownership of, and absence of material infringement or misappropriation claims with respect to, the proprietary trademarks, copyrights, and domain names of the business;
(xii) employee and benefit matters, including compliance with ERISA, the existence and terms of employee benefit plans, and the absence of unfunded or underfunded pension obligations;
(xiii) environmental matters, including compliance with environmental laws and the absence of material environmental liabilities;
(xiv) insurance coverage, including the existence and adequacy of insurance policies covering the business;
(xv) litigation and proceedings, including the absence of pending or threatened material litigation, arbitration, or governmental investigation; and
(xvi) brokers and finders, including the absence of any brokerage or advisory fee obligations other than those of Haverford Whitmore & Co.
The representations and warranties are qualified by the Seller Disclosure Schedules, which were delivered concurrently with the execution of the MIPA and which set forth the exceptions, qualifications, and disclosures made by Seller in respect of the foregoing representations and warranties. The Seller Disclosure Schedules were prepared with the assistance of Calderwood & Harkness LLP and were reviewed and finalized by the Seller's internal team, including Claudia Restrepo and Thomas Whitfield, prior to execution.
Buyer also made customary representations and warranties in the MIPA regarding its organization, authority, enforceability, financing, litigation, and solvency.
The MIPA defines "Material Adverse Effect" as any change, event, occurrence, or development that, individually or in the aggregate, has had or would reasonably be expected to have a material adverse effect on (a) the business, financial condition, assets, or results of operations of the Business, taken as a whole, or (b) the ability of Seller to consummate the transactions contemplated by the MIPA. The definition of Material Adverse Effect is subject to the following customary exclusions (i.e., the following types of changes, events, occurrences, or developments shall not be taken into account in determining whether a Material Adverse Effect has occurred or would reasonably be expected to occur):
(a) changes in general economic, financial, or capital markets conditions (whether domestic or international);
(b) changes that generally affect the industries or markets in which the Business operates;
(c) changes in applicable law or regulations or in GAAP or other applicable accounting standards;
(d) natural disasters, epidemics, pandemics (including COVID-19), or public health emergencies;
(e) acts of war, sabotage, terrorism, military action, or any escalation or worsening thereof;
(f) the announcement or pendency of the transactions contemplated by the MIPA, including any impact on relationships with customers, suppliers, employees, or other business relationships attributable thereto; and
(g) any failure by the Business to meet internal or published projections or forecasts (provided that the underlying cause of such failure may be considered in determining whether a Material Adverse Effect has occurred).
The foregoing exclusions are subject to a "disproportionate impact" proviso, such that the exclusions in clauses (a) through (e) shall not apply to the extent that such changes, events, occurrences, or developments have a disproportionate adverse impact on the Business relative to other participants in the industries and markets in which the Business operates.
C. Pre-Closing Covenants
The MIPA contained customary pre-closing covenants governing the conduct of the business during the period between signing and closing. The key pre-closing covenants included:
• Ordinary Course Covenant: Seller agreed to cause the Business to be operated in the ordinary course of business consistent with past practice during the interim period. This covenant encompassed restrictions on the incurrence of indebtedness, the making of capital expenditures in excess of specified thresholds, the entry into or modification of material contracts, the hiring or termination of senior employees (other than for cause), changes in compensation or benefits, and the declaration or payment of dividends or distributions.
• Regulatory Efforts Covenants: The parties agreed to use their commercially reasonable efforts to obtain all regulatory approvals necessary for the consummation of the transaction, including the filing of the required notifications under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and the Canadian Competition Act, and to cooperate in the preparation and filing of such notifications. The parties further agreed to use commercially reasonable efforts to obtain any required third-party consents, including the consent of the counterparty under the Oakbridge Distribution Alliance Agreement and the landlord consents required for the assignment of certain leases.
• No-Shop: Seller agreed to a customary no-shop provision, consistent with the exclusivity provisions granted under the LOI/Term Sheet executed on May 3, 2024. The no-shop restricted Seller and its representatives from soliciting, encouraging, or engaging in discussions or negotiations with any third party regarding any alternative acquisition proposal during the period between signing and closing.
• Access and Information: Seller agreed to provide Buyer and its representatives with reasonable access to the properties, books, records, and personnel of the Business during the interim period, subject to customary limitations regarding attorney-client privilege, competitive sensitivity, and legal and regulatory restrictions.
D. Closing Conditions
The obligation of each party to consummate the transaction at closing was subject to the satisfaction or waiver of the following conditions:
Mutual Conditions:
(i) Accuracy of the other party's representations and warranties in all material respects (with respect to Seller's representations, subject to the Material Adverse Effect qualifier as applicable);
(ii) Performance by the other party of its covenants and obligations under the MIPA in all material respects;
(iii) Expiration or termination of all applicable waiting periods under the HSR Act;
(iv) Expiration or termination of all applicable waiting periods or receipt of all required approvals under the Canadian Competition Act;
(v) No injunction, order, judgment, or ruling by any court or governmental authority of competent jurisdiction restraining, enjoining, or otherwise prohibiting the consummation of the transactions; and
(vi) No pending or threatened legal proceeding by any governmental authority seeking to prevent or materially delay the consummation of the transactions.
Buyer's Additional Conditions:
(vii) Receipt of all required third-party consents identified on the closing conditions schedule, including consent under the Oakbridge Distribution Alliance Agreement and the landlord consents for the four specified leases;
(viii) Absence of a Material Adverse Effect since December 31, 2023;
(ix) Delivery by Seller of all closing deliverables specified in the MIPA (officer's certificates, secretary's certificates, good standing certificates, FIRPTA certificate, assignment of membership interests, estimated closing statement, payoff letter for the intercompany promissory note, and lien release); and
(x) The Escrow Agreement having been duly executed and delivered by each party thereto.
All closing conditions were satisfied in full as of the Closing Date. In particular:
• The HSR Act waiting period expired early following the grant of early termination on June 28, 2024 (HSR Transaction No. 20241537).
• Canadian Competition Act clearance was received on July 30, 2024.
• All required third-party consents were obtained prior to closing, with the final landlord consent obtained on November 1, 2024.
• The bring-down certificate delivered by Seller at closing confirmed that Seller's representations and warranties were true and correct in all material respects as of the Closing Date (with the same effect as though such representations and warranties had been made on and as of the Closing Date) and that no Material Adverse Effect had occurred since December 31, 2023.
E. Indemnification Framework
The indemnification framework under the MIPA is summarized as follows:
Indemnification Cap: The aggregate liability of Seller for indemnifiable losses under the MIPA is capped at $72,000,000, representing 15% of the enterprise value. This cap is coextensive with the escrow deposit, and subject to the fraud and willful misconduct carve-outs described below, the escrow serves as the exclusive source of recovery for indemnification claims against Seller.
Basket / Deductible: Seller has no liability for indemnifiable losses until the aggregate amount of all indemnifiable losses exceeds $4,800,000 (1% of enterprise value). The basket operates as a tipping basket — once the aggregate indemnifiable losses exceed the basket threshold, the Buyer is entitled to recover losses from the first dollar (i.e., the full amount of indemnifiable losses, not merely the excess over the basket amount).
De Minimis Threshold: Individual claims for indemnifiable losses of less than $250,000 per claim shall not count toward the basket and shall not be indemnifiable. This de minimis threshold is intended to prevent the aggregation of immaterial claims to reach the basket threshold.
Survival Periods:
• General Representations: The general representations and warranties of Seller (i.e., all representations other than the Fundamental Representations and the tax representations) survive the closing for a period of 18 months (expiry: May 15, 2026). No claim may be brought with respect to any general representation after the expiration of such survival period, except for claims that have been timely asserted by written notice prior to the expiration thereof.
• Fundamental Representations: The Fundamental Representations — consisting of the representations regarding organization, authority, capitalization/title to membership interests, tax matters, and brokers — survive the closing for a period of 36 months (expiry: November 15, 2027).
• Tax Indemnity: The Seller's tax indemnification obligations under the MIPA survive until 60 days after the expiration of the applicable statute of limitations (including any extensions or waivers thereof) with respect to the relevant tax matter.
Exceptions to Cap: The indemnification cap of $72,000,000 does not apply to losses arising out of or resulting from (i) fraud or willful misconduct by Seller, or (ii) breaches of the Fundamental Representations. In the case of fraud, willful misconduct, or breaches of the Fundamental Representations, the Seller's aggregate liability is subject to a separate cap equal to the full enterprise value of $480,000,000. Claims for fraud or willful misconduct are also not subject to the basket or the de minimis threshold.
Escrow as Exclusive Remedy: The escrow deposit of $72,000,000 serves as the exclusive remedy for indemnification claims under the general cap. Buyer has agreed that, subject to the fraud, willful misconduct, and Fundamental Representations carve-outs, it will look solely to the escrow funds for satisfaction of any indemnification claims, and Seller shall have no obligation to fund any indemnification payments from sources other than the escrow.
F. Termination Provisions
The MIPA contained customary termination provisions, which would have permitted either party to terminate the agreement prior to closing under the following circumstances:
(i) by mutual written consent of Buyer and Seller;
(ii) by either party if the closing had not occurred by the outside date of December 31, 2024 (the "Outside Date"), provided that the failure to close by such date was not primarily caused by a breach of the terminating party's obligations;
(iii) by either party if any governmental authority of competent jurisdiction had issued a final, non-appealable order permanently restraining, enjoining, or otherwise prohibiting the consummation of the transactions; or
(iv) by either party if the other party had breached any representation, warranty, covenant, or agreement set forth in the MIPA, which breach (a) would give rise to a failure of a closing condition and (b) was not curable within 30 days following written notice thereof (or was not cured within such cure period).
None of the termination provisions were exercised. The transaction proceeded to closing on November 15, 2024, well in advance of the Outside Date.
V. Escrow Arrangement
The Escrow Agreement was executed on the Closing Date, November 15, 2024, by and among Aurelius Media Holdings Inc. (Seller), Ridgeline Publishing Acquisition Corp. (Buyer), and Granite Trust Company, N.A. (Escrow Agent). The key terms of the Escrow Agreement are summarized below:
Escrow Deposit: $72,000,000 in cash, deposited into an interest-bearing escrow account maintained by Granite Trust Company, N.A. at its offices at 100 Federal Street, Boston, Massachusetts 02110. The escrow account reference number is GT-ESC-2024-11150048. The Trust Officer responsible for the administration of the escrow is Margaret Huang.
Purpose: The escrow deposit secures the Seller's indemnification obligations under the MIPA, as described in Section IV.E above. The escrow funds serve as the exclusive source of recovery for indemnification claims against Seller (subject to the fraud, willful misconduct, and Fundamental Representations carve-outs).
Release Mechanics:
• General Claims Release: The balance of the escrow funds (after deduction of any amounts subject to pending claims) shall be released to Seller upon the expiration of the 18-month general survival period for Seller's general representations and warranties, which expiry date is May 15, 2026. If any indemnification claims are pending as of such date, the Escrow Agent shall retain in escrow an amount equal to the aggregate claimed amounts of all such pending claims, and the remainder shall be released to Seller.
• Fundamental Representations Holdback Release: If any indemnification claims relating to breaches of the Fundamental Representations are pending as of May 15, 2026, the Escrow Agent shall continue to hold the amounts attributable to such claims in escrow until the expiration of the 36-month fundamental survival period, which expiry date is November 15, 2027. Upon the expiration of the 36-month period, any remaining escrow funds (after satisfaction or resolution of all pending claims) shall be released to Seller.
• Claim-Specific Releases: Upon resolution of any individual indemnification claim (whether by agreement of the parties, determination of the neutral accountant, or final judicial determination), the Escrow Agent shall release funds to the applicable party in accordance with the resolution.
Release Instructions: Any release from escrow requires joint written instructions signed by authorized representatives of both Buyer and Seller, or a final, non-appealable order of a court of competent jurisdiction, or an arbitration award (as applicable). The Escrow Agent shall not release any funds from escrow absent such instructions or order.
Investment of Escrow Funds: The escrow funds are invested in accordance with the investment guidelines set forth in Schedule A to the Escrow Agreement, which permit investment in United States Treasury obligations with a maturity of not more than 90 days, money market funds investing exclusively in United States government securities, and certificates of deposit issued by FDIC-insured financial institutions with a maturity of not more than 90 days. Interest and investment income earned on the escrow funds accrue to the account and are reported for tax purposes in the name of Seller (the party ultimately entitled to the escrow funds to the extent not applied to indemnification claims).
Escrow Agent Fees: The fees and expenses of Granite Trust Company, N.A. in its capacity as Escrow Agent are split equally between Buyer and Seller. As of the date of this memorandum, the initial escrow agent fee has been paid, and annual administration fees will be invoiced by Granite Trust Company, N.A. on each anniversary of the Closing Date.
Resignation and Removal: The Escrow Agent may resign upon 30 days' prior written notice to both parties. The parties may remove the Escrow Agent upon joint written notice. In either case, a successor escrow agent must be appointed before the resignation or removal becomes effective.
VI. Representations and Warranties Insurance
In connection with the transaction, a representations and warranties insurance policy (the "R&W Policy") was procured to supplement the contractual indemnification framework under the MIPA. The key terms of the R&W Policy are summarized below:
Carrier: Kelvantis Omnivrel Insurance Company, 300 First Stamford Place, Stamford, Connecticut 06902. The underwriting contact for the policy is David Kowalski.
Policy Number: RWI-2024-MPH-00417
Binding Date: The R&W Policy was bound on July 22, 2024, three days after the execution of the MIPA.
Coverage Limit: $72,000,000 in aggregate coverage, matching the indemnification cap under the MIPA. The R&W Policy provides the Buyer with an additional layer of protection beyond the escrow, insuring against losses arising from breaches of the Seller's representations and warranties in the MIPA, subject to the terms, conditions, and exclusions of the policy.
Retention: $4,800,000, matching the basket/deductible threshold under the MIPA. The retention represents the amount of losses that must be borne by the Buyer before the R&W Policy responds. In the indemnification context, losses up to the retention amount are recoverable from the Seller through the escrow mechanism (once the tipping basket threshold is exceeded), and losses in excess of the retention amount are covered under the R&W Policy up to the coverage limit.
Premium: $1,800,000 in total, representing 2.5% of the coverage limit. The premium was split equally between Buyer and Seller, with each party bearing $900,000. The premium was paid in full at the time the policy was bound.
Policy Period: 36 months from the Closing Date, extending through approximately November 15, 2027. The 36-month policy period is aligned with the survival period for the Fundamental Representations under the MIPA.
Scope of Coverage: The R&W Policy covers losses arising from breaches of the Seller's representations and warranties as set forth in the MIPA, subject to customary exclusions. The policy is a "buy-side" policy, with Buyer as the named insured. Key exclusions from coverage typically include matters that were known to the Buyer's deal team prior to binding (based on the data room, due diligence, and the Seller Disclosure Schedules), as well as certain categories of risk that are addressed through specific indemnification provisions in the MIPA (such as the tax indemnity).