1017-00006 · Aurelius Global Media Group · Transaction Documents/MIPA

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SELLER DISCLOSURE SCHEDULES

MEMBERSHIP INTEREST PURCHASE AGREEMENT

EXECUTION VERSION.

SELLER DISCLOSURE SCHEDULES

Delivered by Aurelius Media Holdings Inc., a Delaware corporation ("Seller"), to Ridgeline Publishing Acquisition Corp., a Delaware corporation ("Buyer"), pursuant to and in connection with that certain Membership Interest Purchase Agreement, dated as of July 19, 2024 (the "Agreement"), by and among Aurelius Media Holdings Inc., Ridgeline Publishing Acquisition Corp., and, solely for purposes of certain provisions thereof, Aurelius Global Media Group PLC, a public limited company organized under the laws of England and Wales, and Pinnacle Ridge Capital Partners Fund IV, L.P., a Delaware limited partnership.

Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Agreement.

INTRODUCTORY NOTES AND GENERAL DISCLAIMERS

The following introductory notes and general disclaimers apply to all of the Disclosure Schedules set forth herein and should be read in conjunction with each individual schedule:

1. Cross-References and Deemed Disclosure. These Disclosure Schedules are arranged in sections and subsections that correspond to the numbered and lettered sections and subsections of Article III (Representations and Warranties of Seller) of the Agreement. Notwithstanding such arrangement, information disclosed in any particular section or subsection of these Disclosure Schedules shall be deemed disclosed with respect to, and shall be deemed to qualify and be an exception to, each other section and subsection of the Agreement (including, without limitation, each other representation and warranty set forth in Article III) to the extent that the relevance of such disclosure to such other section or subsection is reasonably apparent on the face of such disclosure, without regard to the specific section or subsection in which such information appears.

2. No Admission of Materiality. The inclusion of any item, matter, or information in these Disclosure Schedules shall not be deemed an admission by Seller that such item, matter, or information is material, constitutes or would constitute a Material Adverse Effect (as defined in the Agreement), or is required to be disclosed under the terms of the Agreement. Items, matters, and information are disclosed herein for informational purposes and out of an abundance of caution, and in certain cases are included solely to provide Buyer with additional context regarding the Company and its subsidiaries. The disclosure of any particular item, matter, or information herein should not be taken as an indication that such item, matter, or information meets or exceeds any particular threshold of materiality.

3. Headings. Headings and subheadings used in these Disclosure Schedules are included for convenience of reference only and shall not limit, expand, or otherwise affect the scope or content of any schedule or any information disclosed therein.

4. Qualification by Agreement. These Disclosure Schedules are qualified in their entirety by reference to the specific provisions of the Agreement, including the definitions, limitations, exclusions, and other terms and conditions set forth therein. Nothing in these Disclosure Schedules is intended to, nor shall be deemed or construed to, broaden the scope of any representation, warranty, covenant, or agreement of Seller or any other party contained in the Agreement. In the event of any conflict between the terms of the Agreement and the terms of these Disclosure Schedules, the terms of the Agreement shall control.

5. Information Date. Unless otherwise specifically noted, the information set forth in these Disclosure Schedules is provided as of the date of the Agreement (July 19, 2024). Seller undertakes no obligation to update these Disclosure Schedules after such date except to the extent expressly required by Section 5.6 of the Agreement.

6. Preparation. These Disclosure Schedules have been prepared by Calderwood & Harkness LLP, counsel to Seller, based upon a diligence review of the records and documents of the Company and its subsidiaries and information provided by Seller, the Company, their respective officers, employees, and other advisors. Calderwood & Harkness LLP has relied upon the accuracy and completeness of the information so provided and has not independently verified all such information. Calderwood & Harkness LLP Matter No. 1043-00002.

7. Documents and Agreements Referenced. Descriptions of documents, agreements, and other instruments set forth in these Disclosure Schedules are summaries only and are qualified in their entirety by reference to the full text of such documents, agreements, and instruments, copies of which have been made available to Buyer and its representatives in the virtual data room maintained in connection with the transactions contemplated by the Agreement (the "Data Room") or delivered directly to Buyer's counsel.

8. Privilege. Nothing in these Disclosure Schedules is intended to, or shall be deemed to, waive any attorney-client privilege, work product protection, or other applicable privilege or immunity with respect to any matter disclosed herein or any document or communication referenced herein.

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SCHEDULE 3.1

ORGANIZATION AND GOOD STANDING

Section 3.1(a) — Organization of the Company

The Company is organized as follows:

Meridian Press Holdings LLC

• Entity Type: Limited liability company

• Jurisdiction of Organization: State of Delaware

• Delaware Secretary of State File Number: 4521889

• Date of Formation: March 14, 2003

• Registered Agent: Fenmore Health IT Statutory Agent, 251 Little Falls Drive, Wilmington, Delaware 19808

• Principal Office: 1180 Avenue of the Americas, 22nd Floor, New York, New York 10036

• Manager and Sole Member (Pre-Closing): Aurelius Media Holdings Inc., a Delaware corporation

• Status: Formed, validly existing, and in good standing under the laws of the State of Delaware as of the date hereof. A Certificate of Good Standing issued by the Delaware Secretary of State, dated July 12, 2024, has been delivered to Buyer's counsel and is included in the Data Room at Folder 1.01.

• President: Jonathan Kessler

• Senior Vice President, Finance: Angela Moretti

• Secretary: David Hawthorne (General Counsel, Aurelius Media Holdings Inc.)

The Company's limited liability company agreement, as amended and restated as of June 1, 2018 (the "MPH Operating Agreement"), governs the management, operations, and affairs of the Company. A true and complete copy of the MPH Operating Agreement has been made available to Buyer in the Data Room at Folder 1.02. The MPH Operating Agreement provides that Aurelius Media Holdings Inc., as the sole member, shall have the exclusive right to manage the affairs of the Company and to appoint officers of the Company.

Section 3.1(b) — Subsidiaries of the Company

The following entities are direct or indirect wholly owned subsidiaries of Meridian Press Holdings LLC and are included in the carve-out transactions contemplated by the Agreement:

Each of the foregoing subsidiaries is duly organized, validly existing, and in good standing (or equivalent status, as applicable, in its jurisdiction of organization) under the laws of its respective jurisdiction of organization as of the date hereof. Certificates of good standing or equivalent status certificates for each subsidiary have been obtained from the applicable governmental authorities and have been delivered to Buyer's counsel and are included in the Data Room at Folder 1.03.

Except for the subsidiaries listed above, Meridian Press Holdings LLC does not own, directly or indirectly, any equity interest in any other Person, and neither the Company nor any of its subsidiaries is a party to any joint venture, partnership, or similar arrangement.

Section 3.1(c) — Foreign Qualifications

The following sets forth the jurisdictions in which Meridian Press Holdings LLC and each of its subsidiaries is qualified or registered to do business as a foreign entity:

Meridian Press Holdings LLC:

• New York

• New Jersey

• Ohio

• Texas

• Nevada

• California

Meridian Distribution Services Inc.:

• New Jersey (qualified in connection with the Edison, NJ distribution center facility)

• Ohio (qualified in connection with the Columbus, OH distribution center facility)

• Texas (qualified in connection with the Dallas, TX distribution center facility)

• Nevada (qualified in connection with the Reno, NV distribution center facility)

• California (qualified in connection with sales operations and customer relationships in the state)

• New York (qualified in connection with the Company's principal office located in New York, NY)

Bellweather Academic Press Inc.:

• New York

• New Jersey

• California

• Massachusetts

• Illinois

Foxglove Media LLC:

Foxglove Media LLC is organized under the laws of the State of New York and is not qualified as a foreign entity in any other jurisdiction. Its operations are conducted solely from the Company's principal office in New York, New York.

Meridian Press Canada ULC:

• Province of Ontario (extra-provincially registered in connection with the Toronto, Ontario office)

• Province of British Columbia (jurisdiction of organization; registered office maintained in Vancouver, British Columbia)

Neither the Company nor any of its subsidiaries is required to be qualified or registered to do business as a foreign entity in any jurisdiction in which it is not so qualified or registered, except where the failure to be so qualified or registered would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

SCHEDULE 3.2

CAPITALIZATION

Section 3.2(a) — Membership Interests of the Company

Meridian Press Holdings LLC

One hundred percent (100%) of the outstanding membership interests in Meridian Press Holdings LLC (the "Membership Interests") are held of record and beneficially by Aurelius Media Holdings Inc., a Delaware corporation (Delaware Secretary of State File No. 5987324). The Membership Interests constitute all of the issued and outstanding equity interests of the Company. No other classes, series, or types of membership interests, units, equity securities, or other ownership interests in the Company are authorized, issued, or outstanding.

There are no outstanding options, warrants, convertible notes, convertible securities, subscription rights, exchange rights, or other rights, agreements, arrangements, or commitments of any kind (whether contingent or otherwise) that obligate the Company to issue, deliver, sell, repurchase, or redeem, or cause to be issued, delivered, sold, repurchased, or redeemed, any membership interests, units, equity securities, or other ownership interests in the Company, or that give any Person a right to subscribe for or acquire any equity interest in the Company.

There are no outstanding contractual obligations of the Company to make any investment (in the form of a loan, capital contribution, or otherwise) in any other Person, except as set forth in Section 3.1(b) of these Disclosure Schedules with respect to the Company's wholly owned subsidiaries.

Section 3.2(b) — Capitalization of Subsidiaries

The authorized, issued, and outstanding equity securities or ownership interests of each subsidiary of the Company are as follows:

Meridian Distribution Services Inc.

• Authorized Capital Stock: 1,000 shares of common stock, par value $0.01 per share

• Issued and Outstanding: 1,000 shares of common stock

• Sole Stockholder: Meridian Press Holdings LLC (100%)

• No other classes of capital stock are authorized. No options, warrants, convertible instruments, or other rights to acquire equity interests are outstanding.

Bellweather Academic Press Inc.

• Authorized Capital Stock: 1,000 shares of common stock, par value $0.01 per share

• Issued and Outstanding: 1,000 shares of common stock

• Sole Stockholder: Meridian Press Holdings LLC (100%)

• No other classes of capital stock are authorized. No options, warrants, convertible instruments, or other rights to acquire equity interests are outstanding.

Foxglove Media LLC

• 100% of the outstanding membership interests are held by Meridian Press Holdings LLC

• No other classes of membership interests, units, or equity securities are authorized or outstanding

• No options, warrants, convertible instruments, or other rights to acquire equity interests are outstanding

Meridian Press Canada ULC

• Authorized Share Capital: 100 shares of common stock, no par value

• Issued and Outstanding: 100 shares of common stock

• Sole Shareholder: Meridian Press Holdings LLC (100%)

• No other classes of shares are authorized. No options, warrants, convertible instruments, or other rights to acquire equity interests are outstanding.

Section 3.2(c) — Encumbrances on Equity

The Membership Interests in Meridian Press Holdings LLC are subject to a pledge and security interest granted in favor of Aurelius Media Holdings Inc. pursuant to that certain Pledge and Security Agreement, dated as of January 15, 2019, entered into in connection with the Intercompany Promissory Note (as defined below) in the original principal amount of $50,000,000, payable by Meridian Press Holdings LLC (as maker) to Aurelius Media Holdings Inc. (as payee). The outstanding principal balance of the Intercompany Promissory Note as of the date hereof is $50,000,000, together with accrued and unpaid interest. The pledge and all liens and security interests securing the Intercompany Promissory Note will be released at Closing upon repayment in full of the Intercompany Promissory Note, in accordance with the terms of the Agreement. A payoff letter and UCC-3 termination statement will be delivered by Aurelius Media Holdings Inc. at Closing.

Except as set forth above, and except for restrictions on transfer set forth in the MPH Operating Agreement and restrictions imposed by applicable federal and state securities laws, the Membership Interests are not subject to any lien, pledge, security interest, encumbrance, charge, option, right of first refusal, right of first offer, preemptive right, or other restriction on transfer.

SCHEDULE 3.3

AUTHORITY; NO CONFLICTS

No exceptions to the representations and warranties of Seller set forth in Section 3.3 of the Agreement are required to be disclosed in this Schedule 3.3.

The execution, delivery, and performance by Seller of the Agreement and each of the other Transaction Documents to which Seller is a party, and the consummation of the transactions contemplated thereby, have been duly authorized by all necessary corporate action on the part of Seller, including the approval of the Board of Directors of Aurelius Media Holdings Inc. by unanimous written consent dated July 17, 2024.

For required consents and approvals of governmental authorities and third parties, see Schedule 3.4.

SCHEDULE 3.4

CONSENTS AND APPROVALS

Section 3.4(a) — Governmental Consents

The following governmental filings, notices, consents, and approvals are required to be made, given, or obtained in connection with the execution, delivery, and performance of the Agreement and the consummation of the transactions contemplated thereby:

No other governmental consents, approvals, authorizations, filings, or notifications are required to be obtained or made in connection with the transactions contemplated by the Agreement, except where the failure to obtain or make such consents, approvals, authorizations, filings, or notifications would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect or to prevent, materially delay, or materially impair the consummation of the transactions.

Section 3.4(b) — Third-Party Consents

The following third-party consents are required to be obtained in connection with the execution, delivery, and performance of the Agreement and the consummation of the transactions contemplated thereby:

Distribution Agreements:

Author / Content License Agreements:

Real Property Leases:

Note: Of the ten (10) leased properties occupied by the Company and its subsidiaries, four (4) contain provisions requiring landlord consent in connection with a change of control of the tenant or an assignment of the lease. All four (4) such consents have been obtained as set forth above. The remaining six (6) leases do not contain change-of-control consent provisions, and no consent of the landlord is required under such leases in connection with the transactions contemplated by the Agreement.

Intercompany Agreements:

The Shared Services Intercompany Agreement, dated as of January 1, 2017, as amended, between Aurelius Media Holdings Inc. and Meridian Press Holdings LLC, will be terminated effective at Closing in accordance with the terms of the Agreement. No third-party consent is required in connection with such termination. The services provided thereunder will be replaced by the Transition Services Agreement, effective as of the Closing Date.

SCHEDULE 3.5

FINANCIAL STATEMENTS

Section 3.5(a) — Carve-Out Financial Statements

The following audited carve-out financial statements of Meridian Press Holdings LLC and its subsidiaries (the "Carve-Out Financial Statements") have been prepared and delivered to Buyer on June 14, 2024, and are included in the Data Room at Folder 4.01:

(i) Audited carve-out combined balance sheet of Meridian Press Holdings LLC and its subsidiaries as of December 31, 2021, and the related audited carve-out combined statements of operations, comprehensive income (loss), parent company equity, and cash flows for the fiscal year then ended, together with the notes thereto and the report of the independent registered public accounting firm thereon.

(ii) Audited carve-out combined balance sheet of Meridian Press Holdings LLC and its subsidiaries as of December 31, 2022, and the related audited carve-out combined statements of operations, comprehensive income (loss), parent company equity, and cash flows for the fiscal year then ended, together with the notes thereto and the report of the independent registered public accounting firm thereon.

(iii) Audited carve-out combined balance sheet of Meridian Press Holdings LLC and its subsidiaries as of December 31, 2023, and the related audited carve-out combined statements of operations, comprehensive income (loss), parent company equity, and cash flows for the fiscal year then ended, together with the notes thereto and the report of the independent registered public accounting firm thereon.

The Carve-Out Financial Statements were audited by Pemberton Graves LLP, an independent registered public accounting firm, under the supervision of engagement partner Robert Ainsley (United States engagement partner). Pemberton Graves LLP issued an unqualified audit opinion with respect to each of the fiscal years covered by the Carve-Out Financial Statements. Copies of the audit opinions are included as part of the Carve-Out Financial Statements delivered to Buyer.

Selected financial highlights from the Carve-Out Financial Statements for the fiscal year ended December 31, 2023, are summarized below:

For context, Aurelius Global Media Group PLC, the indirect parent of Seller, reported consolidated revenue for FY2023 of approximately £3,800,000,000. The Legacy Publishing segment, which is operated principally through Meridian Press Holdings LLC and its subsidiaries, represents approximately 25% of the consolidated revenue of Aurelius Global Media Group PLC for such fiscal year.

Section 3.5(b) — Interim Financial Statements

The following unaudited interim carve-out financial statements of Meridian Press Holdings LLC and its subsidiaries (the "Interim Financial Statements") have been prepared and delivered to Buyer and are included in the Data Room at Folder 4.02:

(i) Unaudited interim carve-out combined balance sheet of Meridian Press Holdings LLC and its subsidiaries as of June 30, 2024, and the related unaudited interim carve-out combined statements of operations, comprehensive income (loss), parent company equity, and cash flows for the six-month period then ended, together with the notes thereto.

The Interim Financial Statements have been prepared on a basis consistent with the Carve-Out Financial Statements and in accordance with US GAAP for interim financial reporting, subject to normal year-end audit adjustments (which are not expected to be material in the aggregate) and the absence of footnote disclosures required under US GAAP for annual financial statements.

Section 3.5(c) — Accounting Principles

The Carve-Out Financial Statements and the Interim Financial Statements have been prepared in accordance with United States generally accepted accounting principles ("US GAAP"), applied on a consistent basis throughout the periods covered thereby, except as otherwise described in the notes to such financial statements. Because Meridian Press Holdings LLC and its subsidiaries have historically been operated as a division or business unit of Aurelius Media Holdings Inc., the Carve-Out Financial Statements include certain carve-out adjustments, which are described in detail in the notes thereto, including without limitation:

(a) Allocations of shared corporate overhead costs incurred by Aurelius Media Holdings Inc. and its affiliates on behalf of the Company and its subsidiaries, including costs related to corporate management, information technology, finance and accounting, human resources, legal, tax, insurance, and facilities management. Such allocations were made using methodologies described in Note 2 to the Carve-Out Financial Statements and management believes such allocations are reasonable.

(b) Adjustments to reflect the standalone capital structure of the Company as if it had operated as an independent entity during the periods presented, including adjustments related to intercompany borrowings, parent company equity contributions, and the elimination of intercompany receivables and payables not related to the ongoing operations of the Business.

SCHEDULE 3.6

ABSENCE OF UNDISCLOSED LIABILITIES

No exceptions are required to be disclosed in this Schedule 3.6 other than the following:

1. Liabilities Reflected in Financial Statements. Liabilities reflected, reserved against, or otherwise disclosed in the Carve-Out Financial Statements (including the notes thereto) as of December 31, 2023, or incurred in the ordinary course of business consistent with past practice since December 31, 2023, and not in excess of the amounts so reflected or reserved or, in the case of liabilities incurred since December 31, 2023, not material in amount.

2. Intercompany Promissory Note. Liabilities arising under the Intercompany Promissory Note in the outstanding principal amount of $50,000,000, payable by Meridian Press Holdings LLC to Aurelius Media Holdings Inc., together with accrued and unpaid interest thereon. This obligation constitutes part of the estimated Closing Indebtedness under the Agreement and will be repaid in full at Closing.

3. Capital Lease Obligations. Capital (finance) lease obligations of the Company and its subsidiaries in the aggregate outstanding amount of approximately $12,500,000, primarily related to equipment leases and distribution center fixture leases. These obligations constitute part of the estimated Closing Indebtedness under the Agreement ($62,500,000 total estimated Closing Indebtedness, comprised of $50,000,000 under the Intercompany Promissory Note and $12,500,000 in capital lease obligations).

4. Estimated Target Transaction Expenses. Estimated target transaction expenses of $4,700,000, payable at Closing in accordance with Section 2.5 of the Agreement, consisting of fees and expenses of legal counsel, financial advisors, accountants, and other professional service providers engaged by the Company in connection with the transactions contemplated by the Agreement.

5. Key Employee Retention Arrangements. Obligations under the Key Employee Retention Agreements described in Schedule 3.14(b), with an aggregate retention pool of $7,200,000, of which $3,600,000 is payable at Closing and $3,600,000 is payable at the 12-month anniversary of Closing.

6. Liabilities Arising Under the Agreement. Liabilities and obligations arising under or in connection with the Agreement, the Transaction Documents, and the transactions contemplated thereby.

SCHEDULE 3.7

ABSENCE OF CERTAIN CHANGES

Since December 31, 2023, the Business has been conducted in the ordinary course of business consistent with past practice in all material respects, and no Material Adverse Effect has occurred.

No specific exceptions to the representations and warranties of Seller set forth in Section 3.7 of the Agreement are required to be disclosed in this Schedule 3.7, other than changes, events, or developments arising out of, relating to, or resulting from the negotiation, execution, announcement, or pendency of the Agreement and the transactions contemplated thereby, including without limitation:

(a) The incurrence of transaction expenses in connection with the transactions contemplated by the Agreement (see Schedule 3.6, item 4).

(b) The entry into Key Employee Retention Agreements with 12 senior managers of the Business (see Schedule 3.14(b)).

(c) The negotiation and execution of the Transaction Documents, including the Transition Services Agreement, the Reverse TSA, the Trademark License Agreement, and the Non-Competition and Non-Solicitation Agreement.

SCHEDULE 3.8

MATERIAL CONTRACTS

Section 3.8(a) — List of Material Contracts

The following is a list of the contracts, agreements, arrangements, and commitments that are required to be disclosed pursuant to Section 3.8 of the Agreement (collectively, the "Material Contracts"). True and complete copies (or, in the case of oral agreements, written summaries) of each Material Contract have been made available to Buyer in the Data Room.

I. Distribution Agreements

1. Oakbridge Distribution Alliance Agreement, dated as of September 1, 2016, as amended by First Amendment dated March 15, 2018, Second Amendment dated July 1, 2020, and Third Amendment dated January 10, 2023, by and between Meridian Distribution Services Inc. and Oakbridge Distribution Alliance, LLC. This agreement governs the distribution partnership for book and periodical distribution across North America, including warehousing, order fulfillment, logistics coordination, and returns processing. The agreement has a current term expiring on August 31, 2026, with automatic renewal for successive two-year periods unless terminated by either party upon not less than twelve (12) months' prior written notice. Section 12.4 of the agreement requires consent of Oakbridge Distribution Alliance, LLC in connection with any change of control of Meridian Distribution Services Inc. or its parent entity. Consent was obtained on July 2, 2024. (Data Room Folder 3.01)

II. Author / Content License Agreements (Top 5 by Revenue Contribution)

2. Author/Content License Agreement, dated as of March 15, 2018, by and between Meridian Press Holdings LLC and Thornton Literary Trust (Author: Margaret R. Thornton). This agreement grants the Company exclusive worldwide English-language publishing rights (print and digital) for a series of twelve (12) literary fiction titles. Section 9.2 requires consent for change of control. Consent obtained June 14, 2024. Estimated annual royalty payments: approximately $18,500,000. (Data Room Folder 3.02)

3. Author/Content License Agreement, dated as of June 22, 2019, by and between Meridian Press Holdings LLC and Evergreen Creative Partners LLC (Author: James D. Calloway). This agreement grants the Company exclusive North American publishing rights (print and digital) for a series of nine (9) non-fiction titles in the categories of business, leadership, and personal development. Section 8.1 requires consent for change of control. Consent obtained July 8, 2024. Estimated annual royalty payments: approximately $14,200,000. (Data Room Folder 3.03)

4. Author/Content License Agreement, dated as of November 3, 2020, by and between Bellweather Academic Press Inc. and Briarwood intellectual Properties Inc. (Author: Dr. Helena Vasquez). This agreement grants the Company exclusive worldwide English-language publishing rights for a series of seven (7) academic and professional reference texts in the fields of neuroscience and cognitive psychology. Section 10.3 requires consent for change of control. Consent obtained August 19, 2024. Estimated annual royalty payments: approximately $9,800,000. (Data Room Folder 3.04)

5. Author/Content License Agreement, dated as of February 14, 2021, by and between Foxglove Media LLC and Ironwood Press Rights Management (Author: Chen Wei-Lin). This agreement grants the Company exclusive North American publishing rights (print, digital, and audio) for a series of six (6) contemporary fiction titles. Section 7.5 requires consent for change of control. Consent obtained September 5, 2024. Estimated annual royalty payments: approximately $7,600,000. (Data Room Folder 3.05)

6. Author/Content License Agreement, dated as of August 8, 2022, by and between Meridian Press Holdings LLC and Hargrove & Associates Literary Agency (Author: Patricia N. Okafor). This agreement grants the Company exclusive worldwide English-language publishing rights (print and digital) for a series of four (4) literary fiction and essay collection titles. Section 11.2 requires consent for change of control. Consent obtained October 22, 2024. Estimated annual royalty payments: approximately $6,300,000. (Data Room Folder 3.06)

III. Real Property Leases

7–16. The Company and its subsidiaries are party to ten (10) real property leases for office, editorial, sales, and operational facilities located in the United States and Canada. A complete list and description of each lease is set forth in Schedule 3.10(b). Four (4) of the ten (10) leases contain change-of-control consent provisions; all four (4) such consents have been obtained. (Data Room Folder 3.07)

IV. Intercompany Agreements

17. Shared Services Intercompany Agreement, dated as of January 1, 2017, as amended, by and between Aurelius Media Holdings Inc. and Meridian Press Holdings LLC. This agreement provides for the provision by Aurelius Media Holdings Inc. of shared services to the Company and its subsidiaries, including information technology infrastructure and support, finance and accounting services, human resources and payroll administration, legal and compliance support, tax reporting and compliance, insurance program administration, and facilities management. The Shared Services Intercompany Agreement will be terminated effective at Closing in accordance with Section 5.14 of the Agreement, and the services provided thereunder will be replaced by the Transition Services Agreement. (Data Room Folder 3.08)

18. Intercompany Promissory Note, dated as of January 15, 2019, in the original principal amount of $50,000,000, issued by Meridian Press Holdings LLC (as maker) in favor of Aurelius Media Holdings Inc. (as payee), bearing interest at a rate of SOFR plus 2.50% per annum. The outstanding principal balance as of the date hereof is $50,000,000. The Intercompany Promissory Note will be repaid in full at Closing, and the related Pledge and Security Agreement will be terminated and all liens released. (Data Room Folder 3.09)

V. Capital Leases

19. Various Capital (Finance) Lease Obligations. The Company and its subsidiaries are party to various capital (finance) lease agreements with aggregate outstanding obligations of approximately $12,500,000 as of the date hereof. These leases relate primarily to printing and binding equipment, warehouse racking and automation systems, and distribution center fixtures. A schedule of all capital lease obligations, including lessor names, lease commencement and expiration dates, and outstanding balances, is set forth in Data Room Folder 3.10.

VI. Employee Agreements

20. Key Employee Retention Agreements. The Company has entered into Key Employee Retention Agreements with twelve (12) senior managers of the Business, providing for an aggregate retention pool of $7,200,000. See Schedule 3.14(b) for a complete description of such agreements, including the names and titles of the participating senior managers and the payment schedule. (Data Room Folder 3.11)

VII. Other Material Contracts

21. Paper and Printing Supply Agreement, dated as of April 1, 2022, as amended, by and between Meridian Distribution Services Inc. and Northwoods Paper & Pulp Co., LLC. This agreement provides for the supply of paper stock, cover board, and related printing materials for the Company's book and periodical publishing operations. The agreement has a current term expiring on March 31, 2025, with automatic renewal for successive one-year periods. Estimated annual spend under this agreement: approximately $42,000,000. (Data Room Folder 3.12)

22. Offset and Digital Printing Services Agreement, dated as of October 15, 2021, by and between Meridian Distribution Services Inc. and Lakeside Printing Group Inc. This agreement provides for offset and digital print-on-demand production services for the Company's book titles. The agreement has a current term expiring on October 14, 2026. Estimated annual spend under this agreement: approximately $28,000,000. (Data Room Folder 3.13)

23. Educational Content Licensing Framework Agreement, dated as of August 1, 2020, by and between Bellweather Academic Press Inc. and the Consortium of American School Districts (representing participating school districts in 22 states). This agreement provides for the licensing of educational content, textbooks, and supplementary materials for K-12 educational use. The agreement has a current term expiring on July 31, 2025. Estimated annual revenue under this agreement: approximately $86,000,000. (Data Room Folder 3.14)

24. University Press Partnership Agreement, dated as of March 1, 2019, as amended, by and between Bellweather Academic Press Inc. and the Association of North American University Presses. This agreement provides for co-publishing, distribution, and marketing arrangements with participating university presses. The agreement has a current term expiring on February 28, 2027. Estimated annual revenue under this agreement: approximately $31,000,000. (Data Room Folder 3.15)

25. Digital Content Distribution Agreement, dated as of May 15, 2021, by and between Foxglove Media LLC and Sterling Digital Platforms Inc. This agreement provides for the distribution of the Company's digital content (e-books and audiobooks) through Sterling Digital Platforms' online retail channels. The agreement has a current term expiring on May 14, 2026. Estimated annual revenue from digital content distribution: approximately $67,000,000. (Data Room Folder 3.16)

26. Digital Content Distribution Agreement, dated as of September 1, 2022, by and between Foxglove Media LLC and Sterling Reach & Co. (an Hollowell & Co. subsidiary). This agreement provides for the distribution of audiobook content through the Audible platform. The agreement has a current term expiring on August 31, 2025, with automatic renewal for successive one-year periods. Estimated annual revenue under this agreement: approximately $23,000,000. (Data Room Folder 3.17)

27. Master Software License and Services Agreement, dated as of February 1, 2020, by and between Meridian Press Holdings LLC and ContentStream Technologies Inc. This agreement provides for the licensing of the ContentStream editorial workflow and content management platform used by the Company's editorial staff. The agreement has a current term expiring on January 31, 2025, with automatic renewal for successive one-year periods. Estimated annual spend: approximately $3,200,000. (Data Room Folder 3.18)

Section 3.8(b) — Contracts Requiring Consent

For a complete list of Material Contracts requiring third-party consent in connection with the execution, delivery, and performance of the Agreement and the consummation of the transactions contemplated thereby, see Schedule 3.4(b). All required consents have been obtained as of the date immediately prior to Closing.

SCHEDULE 3.9

LITIGATION

The following sets forth all material pending or, to the Knowledge of Seller, threatened litigation, arbitration, mediation, investigation, or other legal or administrative proceedings involving the Company or any of its subsidiaries as of the date hereof:

1. Whitfield v. Meridian Press Holdings LLC et al.

• Parties: Robert J. Whitfield, individually and on behalf of a putative class of similarly situated authors (Plaintiff) v. Meridian Press Holdings LLC and Bellweather Academic Press Inc. (Defendants)

• Forum: United States District Court, Southern District of New York, Case No. 1:23-cv-08471-PKC

• Date Filed: October 12, 2023

• Nature of Claim: Plaintiff, a former author under contract with Bellweather Academic Press Inc., alleges breach of contract and unjust enrichment arising from the alleged underpayment of royalties on digital editions of certain academic titles during the period from January 2020 through June 2023. Plaintiff seeks class certification, compensatory damages, disgorgement of profits, and attorneys' fees.

• Amount Claimed: Approximately $4,500,000 (individually and on behalf of the putative class)

• Status: Defendants filed a motion to dismiss on January 19, 2024; the motion was denied in part and granted in part on April 5, 2024. The unjust enrichment claim was dismissed; the breach of contract claim survives. Discovery is ongoing. Class certification briefing is scheduled to commence in September 2024.

• Company's Position: The Company believes the claims are without merit and intends to vigorously defend against them. The Company has not established a reserve for this matter, as the likelihood of a material adverse outcome is not considered probable at this time. Outside counsel for this matter is Whitaker & Dunne LLP (lead partner: Sarah Pemberton).

2. Meridian Distribution Services Inc. v. Pacific Rim Logistics Corp.

• Parties: Meridian Distribution Services Inc. (Plaintiff) v. Pacific Rim Logistics Corp. (Defendant)

• Forum: Superior Court of the State of California, County of Los Angeles, Case No. 24STCV01882

• Date Filed: March 8, 2024

• Nature of Claim: Plaintiff brought this action for breach of contract and negligence arising from Defendant's failure to timely deliver approximately 180,000 units of printed book inventory from Defendant's port facility to the Company's distribution centers, resulting in delayed fulfillment of customer orders during the 2023 holiday season.

• Amount Claimed: Approximately $2,100,000 in compensatory damages (lost revenue, expedited shipping costs, and customer credits)

• Status: Defendant filed an answer and counterclaim on May 15, 2024, alleging that the delays were caused by force majeure events and seeking dismissal. The matter is in early discovery. A case management conference is scheduled for October 2024.

SELLER DISCLOSURE SCHEDULES
TO
MEMBERSHIP INTEREST PURCHASE AGREEMENT
EXECUTION VERSION.
SELLER DISCLOSURE SCHEDULES
Delivered by Aurelius Media Holdings Inc., a Delaware corporation ("Seller"), to Ridgeline Publishing Acquisition Corp., a Delaware corporation ("Buyer"), pursuant to and in connection with that certain Membership Interest Purchase Agreement, dated as of July 19, 2024 (the "Agreement"), by and among Aurelius Media Holdings Inc., Ridgeline Publishing Acquisition Corp., and, solely for purposes of certain provisions thereof, Aurelius Global Media Group PLC, a public limited company organized under the laws of England and Wales, and Pinnacle Ridge Capital Partners Fund IV, L.P., a Delaware limited partnership.
Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Agreement.
INTRODUCTORY NOTES AND GENERAL DISCLAIMERS
The following introductory notes and general disclaimers apply to all of the Disclosure Schedules set forth herein and should be read in conjunction with each individual schedule:
1. Cross-References and Deemed Disclosure. These Disclosure Schedules are arranged in sections and subsections that correspond to the numbered and lettered sections and subsections of Article III (Representations and Warranties of Seller) of the Agreement. Notwithstanding such arrangement, information disclosed in any particular section or subsection of these Disclosure Schedules shall be deemed disclosed with respect to, and shall be deemed to qualify and be an exception to, each other section and subsection of the Agreement (including, without limitation, each other representation and warranty set forth in Article III) to the extent that the relevance of such disclosure to such other section or subsection is reasonably apparent on the face of such disclosure, without regard to the specific section or subsection in which such information appears.
2. No Admission of Materiality. The inclusion of any item, matter, or information in these Disclosure Schedules shall not be deemed an admission by Seller that such item, matter, or information is material, constitutes or would constitute a Material Adverse Effect (as defined in the Agreement), or is required to be disclosed under the terms of the Agreement. Items, matters, and information are disclosed herein for informational purposes and out of an abundance of caution, and in certain cases are included solely to provide Buyer with additional context regarding the Company and its subsidiaries. The disclosure of any particular item, matter, or information herein should not be taken as an indication that such item, matter, or information meets or exceeds any particular threshold of materiality.
3. Headings. Headings and subheadings used in these Disclosure Schedules are included for convenience of reference only and shall not limit, expand, or otherwise affect the scope or content of any schedule or any information disclosed therein.
4. Qualification by Agreement. These Disclosure Schedules are qualified in their entirety by reference to the specific provisions of the Agreement, including the definitions, limitations, exclusions, and other terms and conditions set forth therein. Nothing in these Disclosure Schedules is intended to, nor shall be deemed or construed to, broaden the scope of any representation, warranty, covenant, or agreement of Seller or any other party contained in the Agreement. In the event of any conflict between the terms of the Agreement and the terms of these Disclosure Schedules, the terms of the Agreement shall control.
5. Information Date. Unless otherwise specifically noted, the information set forth in these Disclosure Schedules is provided as of the date of the Agreement (July 19, 2024). Seller undertakes no obligation to update these Disclosure Schedules after such date except to the extent expressly required by Section 5.6 of the Agreement.
6. Preparation. These Disclosure Schedules have been prepared by Calderwood & Harkness LLP, counsel to Seller, based upon a diligence review of the records and documents of the Company and its subsidiaries and information provided by Seller, the Company, their respective officers, employees, and other advisors. Calderwood & Harkness LLP has relied upon the accuracy and completeness of the information so provided and has not independently verified all such information. Calderwood & Harkness LLP Matter No. 1043-00002.
7. Documents and Agreements Referenced. Descriptions of documents, agreements, and other instruments set forth in these Disclosure Schedules are summaries only and are qualified in their entirety by reference to the full text of such documents, agreements, and instruments, copies of which have been made available to Buyer and its representatives in the virtual data room maintained in connection with the transactions contemplated by the Agreement (the "Data Room") or delivered directly to Buyer's counsel.
8. Privilege. Nothing in these Disclosure Schedules is intended to, or shall be deemed to, waive any attorney-client privilege, work product protection, or other applicable privilege or immunity with respect to any matter disclosed herein or any document or communication referenced herein.
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SCHEDULE 3.1
ORGANIZATION AND GOOD STANDING
Section 3.1(a) — Organization of the Company
The Company is organized as follows:
Meridian Press Holdings LLC
• Entity Type: Limited liability company
• Jurisdiction of Organization: State of Delaware
• Delaware Secretary of State File Number: 4521889
• Date of Formation: March 14, 2003
• Registered Agent: Fenmore Health IT Statutory Agent, 251 Little Falls Drive, Wilmington, Delaware 19808
• Principal Office: 1180 Avenue of the Americas, 22nd Floor, New York, New York 10036
• Manager and Sole Member (Pre-Closing): Aurelius Media Holdings Inc., a Delaware corporation
• Status: Formed, validly existing, and in good standing under the laws of the State of Delaware as of the date hereof. A Certificate of Good Standing issued by the Delaware Secretary of State, dated July 12, 2024, has been delivered to Buyer's counsel and is included in the Data Room at Folder 1.01.
• President: Jonathan Kessler
• Senior Vice President, Finance: Angela Moretti
• Secretary: David Hawthorne (General Counsel, Aurelius Media Holdings Inc.)
The Company's limited liability company agreement, as amended and restated as of June 1, 2018 (the "MPH Operating Agreement"), governs the management, operations, and affairs of the Company. A true and complete copy of the MPH Operating Agreement has been made available to Buyer in the Data Room at Folder 1.02. The MPH Operating Agreement provides that Aurelius Media Holdings Inc., as the sole member, shall have the exclusive right to manage the affairs of the Company and to appoint officers of the Company.
Section 3.1(b) — Subsidiaries of the Company
The following entities are direct or indirect wholly owned subsidiaries of Meridian Press Holdings LLC and are included in the carve-out transactions contemplated by the Agreement:
Each of the foregoing subsidiaries is duly organized, validly existing, and in good standing (or equivalent status, as applicable, in its jurisdiction of organization) under the laws of its respective jurisdiction of organization as of the date hereof. Certificates of good standing or equivalent status certificates for each subsidiary have been obtained from the applicable governmental authorities and have been delivered to Buyer's counsel and are included in the Data Room at Folder 1.03.
Except for the subsidiaries listed above, Meridian Press Holdings LLC does not own, directly or indirectly, any equity interest in any other Person, and neither the Company nor any of its subsidiaries is a party to any joint venture, partnership, or similar arrangement.
Section 3.1(c) — Foreign Qualifications
The following sets forth the jurisdictions in which Meridian Press Holdings LLC and each of its subsidiaries is qualified or registered to do business as a foreign entity:
Meridian Press Holdings LLC:
• New York
• New Jersey
• Ohio
• Texas
• Nevada
• California
Meridian Distribution Services Inc.:
• New Jersey (qualified in connection with the Edison, NJ distribution center facility)
• Ohio (qualified in connection with the Columbus, OH distribution center facility)
• Texas (qualified in connection with the Dallas, TX distribution center facility)
• Nevada (qualified in connection with the Reno, NV distribution center facility)
• California (qualified in connection with sales operations and customer relationships in the state)
• New York (qualified in connection with the Company's principal office located in New York, NY)
Bellweather Academic Press Inc.:
• New York
• New Jersey
• California
• Massachusetts
• Illinois
Foxglove Media LLC:
Foxglove Media LLC is organized under the laws of the State of New York and is not qualified as a foreign entity in any other jurisdiction. Its operations are conducted solely from the Company's principal office in New York, New York.
Meridian Press Canada ULC:
• Province of Ontario (extra-provincially registered in connection with the Toronto, Ontario office)
• Province of British Columbia (jurisdiction of organization; registered office maintained in Vancouver, British Columbia)
Neither the Company nor any of its subsidiaries is required to be qualified or registered to do business as a foreign entity in any jurisdiction in which it is not so qualified or registered, except where the failure to be so qualified or registered would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
SCHEDULE 3.2
CAPITALIZATION
Section 3.2(a) — Membership Interests of the Company
Meridian Press Holdings LLC
One hundred percent (100%) of the outstanding membership interests in Meridian Press Holdings LLC (the "Membership Interests") are held of record and beneficially by Aurelius Media Holdings Inc., a Delaware corporation (Delaware Secretary of State File No. 5987324). The Membership Interests constitute all of the issued and outstanding equity interests of the Company. No other classes, series, or types of membership interests, units, equity securities, or other ownership interests in the Company are authorized, issued, or outstanding.
There are no outstanding options, warrants, convertible notes, convertible securities, subscription rights, exchange rights, or other rights, agreements, arrangements, or commitments of any kind (whether contingent or otherwise) that obligate the Company to issue, deliver, sell, repurchase, or redeem, or cause to be issued, delivered, sold, repurchased, or redeemed, any membership interests, units, equity securities, or other ownership interests in the Company, or that give any Person a right to subscribe for or acquire any equity interest in the Company.
There are no outstanding contractual obligations of the Company to make any investment (in the form of a loan, capital contribution, or otherwise) in any other Person, except as set forth in Section 3.1(b) of these Disclosure Schedules with respect to the Company's wholly owned subsidiaries.
Section 3.2(b) — Capitalization of Subsidiaries
The authorized, issued, and outstanding equity securities or ownership interests of each subsidiary of the Company are as follows:
Meridian Distribution Services Inc.
• Authorized Capital Stock: 1,000 shares of common stock, par value $0.01 per share
• Issued and Outstanding: 1,000 shares of common stock
• Sole Stockholder: Meridian Press Holdings LLC (100%)
• No other classes of capital stock are authorized. No options, warrants, convertible instruments, or other rights to acquire equity interests are outstanding.
Bellweather Academic Press Inc.
• Authorized Capital Stock: 1,000 shares of common stock, par value $0.01 per share
• Issued and Outstanding: 1,000 shares of common stock
• Sole Stockholder: Meridian Press Holdings LLC (100%)
• No other classes of capital stock are authorized. No options, warrants, convertible instruments, or other rights to acquire equity interests are outstanding.
Foxglove Media LLC
• 100% of the outstanding membership interests are held by Meridian Press Holdings LLC
• No other classes of membership interests, units, or equity securities are authorized or outstanding
• No options, warrants, convertible instruments, or other rights to acquire equity interests are outstanding
Meridian Press Canada ULC
• Authorized Share Capital: 100 shares of common stock, no par value
• Issued and Outstanding: 100 shares of common stock
• Sole Shareholder: Meridian Press Holdings LLC (100%)
• No other classes of shares are authorized. No options, warrants, convertible instruments, or other rights to acquire equity interests are outstanding.
Section 3.2(c) — Encumbrances on Equity
The Membership Interests in Meridian Press Holdings LLC are subject to a pledge and security interest granted in favor of Aurelius Media Holdings Inc. pursuant to that certain Pledge and Security Agreement, dated as of January 15, 2019, entered into in connection with the Intercompany Promissory Note (as defined below) in the original principal amount of $50,000,000, payable by Meridian Press Holdings LLC (as maker) to Aurelius Media Holdings Inc. (as payee). The outstanding principal balance of the Intercompany Promissory Note as of the date hereof is $50,000,000, together with accrued and unpaid interest. The pledge and all liens and security interests securing the Intercompany Promissory Note will be released at Closing upon repayment in full of the Intercompany Promissory Note, in accordance with the terms of the Agreement. A payoff letter and UCC-3 termination statement will be delivered by Aurelius Media Holdings Inc. at Closing.
Except as set forth above, and except for restrictions on transfer set forth in the MPH Operating Agreement and restrictions imposed by applicable federal and state securities laws, the Membership Interests are not subject to any lien, pledge, security interest, encumbrance, charge, option, right of first refusal, right of first offer, preemptive right, or other restriction on transfer.
SCHEDULE 3.3
AUTHORITY; NO CONFLICTS
No exceptions to the representations and warranties of Seller set forth in Section 3.3 of the Agreement are required to be disclosed in this Schedule 3.3.
The execution, delivery, and performance by Seller of the Agreement and each of the other Transaction Documents to which Seller is a party, and the consummation of the transactions contemplated thereby, have been duly authorized by all necessary corporate action on the part of Seller, including the approval of the Board of Directors of Aurelius Media Holdings Inc. by unanimous written consent dated July 17, 2024.
For required consents and approvals of governmental authorities and third parties, see Schedule 3.4.
SCHEDULE 3.4
CONSENTS AND APPROVALS
Section 3.4(a) — Governmental Consents
The following governmental filings, notices, consents, and approvals are required to be made, given, or obtained in connection with the execution, delivery, and performance of the Agreement and the consummation of the transactions contemplated thereby:
No other governmental consents, approvals, authorizations, filings, or notifications are required to be obtained or made in connection with the transactions contemplated by the Agreement, except where the failure to obtain or make such consents, approvals, authorizations, filings, or notifications would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect or to prevent, materially delay, or materially impair the consummation of the transactions.
Section 3.4(b) — Third-Party Consents
The following third-party consents are required to be obtained in connection with the execution, delivery, and performance of the Agreement and the consummation of the transactions contemplated thereby:
Distribution Agreements:
Author / Content License Agreements:
Real Property Leases:
Note: Of the ten (10) leased properties occupied by the Company and its subsidiaries, four (4) contain provisions requiring landlord consent in connection with a change of control of the tenant or an assignment of the lease. All four (4) such consents have been obtained as set forth above. The remaining six (6) leases do not contain change-of-control consent provisions, and no consent of the landlord is required under such leases in connection with the transactions contemplated by the Agreement.
Intercompany Agreements:
The Shared Services Intercompany Agreement, dated as of January 1, 2017, as amended, between Aurelius Media Holdings Inc. and Meridian Press Holdings LLC, will be terminated effective at Closing in accordance with the terms of the Agreement. No third-party consent is required in connection with such termination. The services provided thereunder will be replaced by the Transition Services Agreement, effective as of the Closing Date.
SCHEDULE 3.5
FINANCIAL STATEMENTS
Section 3.5(a) — Carve-Out Financial Statements
The following audited carve-out financial statements of Meridian Press Holdings LLC and its subsidiaries (the "Carve-Out Financial Statements") have been prepared and delivered to Buyer on June 14, 2024, and are included in the Data Room at Folder 4.01:
(i) Audited carve-out combined balance sheet of Meridian Press Holdings LLC and its subsidiaries as of December 31, 2021, and the related audited carve-out combined statements of operations, comprehensive income (loss), parent company equity, and cash flows for the fiscal year then ended, together with the notes thereto and the report of the independent registered public accounting firm thereon.
(ii) Audited carve-out combined balance sheet of Meridian Press Holdings LLC and its subsidiaries as of December 31, 2022, and the related audited carve-out combined statements of operations, comprehensive income (loss), parent company equity, and cash flows for the fiscal year then ended, together with the notes thereto and the report of the independent registered public accounting firm thereon.
(iii) Audited carve-out combined balance sheet of Meridian Press Holdings LLC and its subsidiaries as of December 31, 2023, and the related audited carve-out combined statements of operations, comprehensive income (loss), parent company equity, and cash flows for the fiscal year then ended, together with the notes thereto and the report of the independent registered public accounting firm thereon.
The Carve-Out Financial Statements were audited by Pemberton Graves LLP, an independent registered public accounting firm, under the supervision of engagement partner Robert Ainsley (United States engagement partner). Pemberton Graves LLP issued an unqualified audit opinion with respect to each of the fiscal years covered by the Carve-Out Financial Statements. Copies of the audit opinions are included as part of the Carve-Out Financial Statements delivered to Buyer.
Selected financial highlights from the Carve-Out Financial Statements for the fiscal year ended December 31, 2023, are summarized below:
For context, Aurelius Global Media Group PLC, the indirect parent of Seller, reported consolidated revenue for FY2023 of approximately £3,800,000,000. The Legacy Publishing segment, which is operated principally through Meridian Press Holdings LLC and its subsidiaries, represents approximately 25% of the consolidated revenue of Aurelius Global Media Group PLC for such fiscal year.
Section 3.5(b) — Interim Financial Statements
The following unaudited interim carve-out financial statements of Meridian Press Holdings LLC and its subsidiaries (the "Interim Financial Statements") have been prepared and delivered to Buyer and are included in the Data Room at Folder 4.02:
(i) Unaudited interim carve-out combined balance sheet of Meridian Press Holdings LLC and its subsidiaries as of June 30, 2024, and the related unaudited interim carve-out combined statements of operations, comprehensive income (loss), parent company equity, and cash flows for the six-month period then ended, together with the notes thereto.
The Interim Financial Statements have been prepared on a basis consistent with the Carve-Out Financial Statements and in accordance with US GAAP for interim financial reporting, subject to normal year-end audit adjustments (which are not expected to be material in the aggregate) and the absence of footnote disclosures required under US GAAP for annual financial statements.
Section 3.5(c) — Accounting Principles
The Carve-Out Financial Statements and the Interim Financial Statements have been prepared in accordance with United States generally accepted accounting principles ("US GAAP"), applied on a consistent basis throughout the periods covered thereby, except as otherwise described in the notes to such financial statements. Because Meridian Press Holdings LLC and its subsidiaries have historically been operated as a division or business unit of Aurelius Media Holdings Inc., the Carve-Out Financial Statements include certain carve-out adjustments, which are described in detail in the notes thereto, including without limitation:
(a) Allocations of shared corporate overhead costs incurred by Aurelius Media Holdings Inc. and its affiliates on behalf of the Company and its subsidiaries, including costs related to corporate management, information technology, finance and accounting, human resources, legal, tax, insurance, and facilities management. Such allocations were made using methodologies described in Note 2 to the Carve-Out Financial Statements and management believes such allocations are reasonable.
(b) Adjustments to reflect the standalone capital structure of the Company as if it had operated as an independent entity during the periods presented, including adjustments related to intercompany borrowings, parent company equity contributions, and the elimination of intercompany receivables and payables not related to the ongoing operations of the Business.
(c) Tax provisions calculated on a separate-return basis, as described in Note 9 to the Carve-Out Financial Statements.
SCHEDULE 3.6
ABSENCE OF UNDISCLOSED LIABILITIES
No exceptions are required to be disclosed in this Schedule 3.6 other than the following:
1. Liabilities Reflected in Financial Statements. Liabilities reflected, reserved against, or otherwise disclosed in the Carve-Out Financial Statements (including the notes thereto) as of December 31, 2023, or incurred in the ordinary course of business consistent with past practice since December 31, 2023, and not in excess of the amounts so reflected or reserved or, in the case of liabilities incurred since December 31, 2023, not material in amount.
2. Intercompany Promissory Note. Liabilities arising under the Intercompany Promissory Note in the outstanding principal amount of $50,000,000, payable by Meridian Press Holdings LLC to Aurelius Media Holdings Inc., together with accrued and unpaid interest thereon. This obligation constitutes part of the estimated Closing Indebtedness under the Agreement and will be repaid in full at Closing.
3. Capital Lease Obligations. Capital (finance) lease obligations of the Company and its subsidiaries in the aggregate outstanding amount of approximately $12,500,000, primarily related to equipment leases and distribution center fixture leases. These obligations constitute part of the estimated Closing Indebtedness under the Agreement ($62,500,000 total estimated Closing Indebtedness, comprised of $50,000,000 under the Intercompany Promissory Note and $12,500,000 in capital lease obligations).
4. Estimated Target Transaction Expenses. Estimated target transaction expenses of $4,700,000, payable at Closing in accordance with Section 2.5 of the Agreement, consisting of fees and expenses of legal counsel, financial advisors, accountants, and other professional service providers engaged by the Company in connection with the transactions contemplated by the Agreement.
5. Key Employee Retention Arrangements. Obligations under the Key Employee Retention Agreements described in Schedule 3.14(b), with an aggregate retention pool of $7,200,000, of which $3,600,000 is payable at Closing and $3,600,000 is payable at the 12-month anniversary of Closing.
6. Liabilities Arising Under the Agreement. Liabilities and obligations arising under or in connection with the Agreement, the Transaction Documents, and the transactions contemplated thereby.
SCHEDULE 3.7
ABSENCE OF CERTAIN CHANGES
Since December 31, 2023, the Business has been conducted in the ordinary course of business consistent with past practice in all material respects, and no Material Adverse Effect has occurred.
No specific exceptions to the representations and warranties of Seller set forth in Section 3.7 of the Agreement are required to be disclosed in this Schedule 3.7, other than changes, events, or developments arising out of, relating to, or resulting from the negotiation, execution, announcement, or pendency of the Agreement and the transactions contemplated thereby, including without limitation:
(a) The incurrence of transaction expenses in connection with the transactions contemplated by the Agreement (see Schedule 3.6, item 4).
(b) The entry into Key Employee Retention Agreements with 12 senior managers of the Business (see Schedule 3.14(b)).
(c) The negotiation and execution of the Transaction Documents, including the Transition Services Agreement, the Reverse TSA, the Trademark License Agreement, and the Non-Competition and Non-Solicitation Agreement.
SCHEDULE 3.8
MATERIAL CONTRACTS
Section 3.8(a) — List of Material Contracts
The following is a list of the contracts, agreements, arrangements, and commitments that are required to be disclosed pursuant to Section 3.8 of the Agreement (collectively, the "Material Contracts"). True and complete copies (or, in the case of oral agreements, written summaries) of each Material Contract have been made available to Buyer in the Data Room.
I. Distribution Agreements
1. Oakbridge Distribution Alliance Agreement, dated as of September 1, 2016, as amended by First Amendment dated March 15, 2018, Second Amendment dated July 1, 2020, and Third Amendment dated January 10, 2023, by and between Meridian Distribution Services Inc. and Oakbridge Distribution Alliance, LLC. This agreement governs the distribution partnership for book and periodical distribution across North America, including warehousing, order fulfillment, logistics coordination, and returns processing. The agreement has a current term expiring on August 31, 2026, with automatic renewal for successive two-year periods unless terminated by either party upon not less than twelve (12) months' prior written notice. Section 12.4 of the agreement requires consent of Oakbridge Distribution Alliance, LLC in connection with any change of control of Meridian Distribution Services Inc. or its parent entity. Consent was obtained on July 2, 2024. (Data Room Folder 3.01)
II. Author / Content License Agreements (Top 5 by Revenue Contribution)
2. Author/Content License Agreement, dated as of March 15, 2018, by and between Meridian Press Holdings LLC and Thornton Literary Trust (Author: Margaret R. Thornton). This agreement grants the Company exclusive worldwide English-language publishing rights (print and digital) for a series of twelve (12) literary fiction titles. Section 9.2 requires consent for change of control. Consent obtained June 14, 2024. Estimated annual royalty payments: approximately $18,500,000. (Data Room Folder 3.02)
3. Author/Content License Agreement, dated as of June 22, 2019, by and between Meridian Press Holdings LLC and Evergreen Creative Partners LLC (Author: James D. Calloway). This agreement grants the Company exclusive North American publishing rights (print and digital) for a series of nine (9) non-fiction titles in the categories of business, leadership, and personal development. Section 8.1 requires consent for change of control. Consent obtained July 8, 2024. Estimated annual royalty payments: approximately $14,200,000. (Data Room Folder 3.03)
4. Author/Content License Agreement, dated as of November 3, 2020, by and between Bellweather Academic Press Inc. and Briarwood intellectual Properties Inc. (Author: Dr. Helena Vasquez). This agreement grants the Company exclusive worldwide English-language publishing rights for a series of seven (7) academic and professional reference texts in the fields of neuroscience and cognitive psychology. Section 10.3 requires consent for change of control. Consent obtained August 19, 2024. Estimated annual royalty payments: approximately $9,800,000. (Data Room Folder 3.04)
5. Author/Content License Agreement, dated as of February 14, 2021, by and between Foxglove Media LLC and Ironwood Press Rights Management (Author: Chen Wei-Lin). This agreement grants the Company exclusive North American publishing rights (print, digital, and audio) for a series of six (6) contemporary fiction titles. Section 7.5 requires consent for change of control. Consent obtained September 5, 2024. Estimated annual royalty payments: approximately $7,600,000. (Data Room Folder 3.05)
6. Author/Content License Agreement, dated as of August 8, 2022, by and between Meridian Press Holdings LLC and Hargrove & Associates Literary Agency (Author: Patricia N. Okafor). This agreement grants the Company exclusive worldwide English-language publishing rights (print and digital) for a series of four (4) literary fiction and essay collection titles. Section 11.2 requires consent for change of control. Consent obtained October 22, 2024. Estimated annual royalty payments: approximately $6,300,000. (Data Room Folder 3.06)
III. Real Property Leases
7–16. The Company and its subsidiaries are party to ten (10) real property leases for office, editorial, sales, and operational facilities located in the United States and Canada. A complete list and description of each lease is set forth in Schedule 3.10(b). Four (4) of the ten (10) leases contain change-of-control consent provisions; all four (4) such consents have been obtained. (Data Room Folder 3.07)
IV. Intercompany Agreements
17. Shared Services Intercompany Agreement, dated as of January 1, 2017, as amended, by and between Aurelius Media Holdings Inc. and Meridian Press Holdings LLC. This agreement provides for the provision by Aurelius Media Holdings Inc. of shared services to the Company and its subsidiaries, including information technology infrastructure and support, finance and accounting services, human resources and payroll administration, legal and compliance support, tax reporting and compliance, insurance program administration, and facilities management. The Shared Services Intercompany Agreement will be terminated effective at Closing in accordance with Section 5.14 of the Agreement, and the services provided thereunder will be replaced by the Transition Services Agreement. (Data Room Folder 3.08)
18. Intercompany Promissory Note, dated as of January 15, 2019, in the original principal amount of $50,000,000, issued by Meridian Press Holdings LLC (as maker) in favor of Aurelius Media Holdings Inc. (as payee), bearing interest at a rate of SOFR plus 2.50% per annum. The outstanding principal balance as of the date hereof is $50,000,000. The Intercompany Promissory Note will be repaid in full at Closing, and the related Pledge and Security Agreement will be terminated and all liens released. (Data Room Folder 3.09)
V. Capital Leases
19. Various Capital (Finance) Lease Obligations. The Company and its subsidiaries are party to various capital (finance) lease agreements with aggregate outstanding obligations of approximately $12,500,000 as of the date hereof. These leases relate primarily to printing and binding equipment, warehouse racking and automation systems, and distribution center fixtures. A schedule of all capital lease obligations, including lessor names, lease commencement and expiration dates, and outstanding balances, is set forth in Data Room Folder 3.10.
VI. Employee Agreements
20. Key Employee Retention Agreements. The Company has entered into Key Employee Retention Agreements with twelve (12) senior managers of the Business, providing for an aggregate retention pool of $7,200,000. See Schedule 3.14(b) for a complete description of such agreements, including the names and titles of the participating senior managers and the payment schedule. (Data Room Folder 3.11)
VII. Other Material Contracts
21. Paper and Printing Supply Agreement, dated as of April 1, 2022, as amended, by and between Meridian Distribution Services Inc. and Northwoods Paper & Pulp Co., LLC. This agreement provides for the supply of paper stock, cover board, and related printing materials for the Company's book and periodical publishing operations. The agreement has a current term expiring on March 31, 2025, with automatic renewal for successive one-year periods. Estimated annual spend under this agreement: approximately $42,000,000. (Data Room Folder 3.12)
22. Offset and Digital Printing Services Agreement, dated as of October 15, 2021, by and between Meridian Distribution Services Inc. and Lakeside Printing Group Inc. This agreement provides for offset and digital print-on-demand production services for the Company's book titles. The agreement has a current term expiring on October 14, 2026. Estimated annual spend under this agreement: approximately $28,000,000. (Data Room Folder 3.13)
23. Educational Content Licensing Framework Agreement, dated as of August 1, 2020, by and between Bellweather Academic Press Inc. and the Consortium of American School Districts (representing participating school districts in 22 states). This agreement provides for the licensing of educational content, textbooks, and supplementary materials for K-12 educational use. The agreement has a current term expiring on July 31, 2025. Estimated annual revenue under this agreement: approximately $86,000,000. (Data Room Folder 3.14)
24. University Press Partnership Agreement, dated as of March 1, 2019, as amended, by and between Bellweather Academic Press Inc. and the Association of North American University Presses. This agreement provides for co-publishing, distribution, and marketing arrangements with participating university presses. The agreement has a current term expiring on February 28, 2027. Estimated annual revenue under this agreement: approximately $31,000,000. (Data Room Folder 3.15)
25. Digital Content Distribution Agreement, dated as of May 15, 2021, by and between Foxglove Media LLC and Sterling Digital Platforms Inc. This agreement provides for the distribution of the Company's digital content (e-books and audiobooks) through Sterling Digital Platforms' online retail channels. The agreement has a current term expiring on May 14, 2026. Estimated annual revenue from digital content distribution: approximately $67,000,000. (Data Room Folder 3.16)
26. Digital Content Distribution Agreement, dated as of September 1, 2022, by and between Foxglove Media LLC and Sterling Reach & Co. (an Hollowell & Co. subsidiary). This agreement provides for the distribution of audiobook content through the Audible platform. The agreement has a current term expiring on August 31, 2025, with automatic renewal for successive one-year periods. Estimated annual revenue under this agreement: approximately $23,000,000. (Data Room Folder 3.17)
27. Master Software License and Services Agreement, dated as of February 1, 2020, by and between Meridian Press Holdings LLC and ContentStream Technologies Inc. This agreement provides for the licensing of the ContentStream editorial workflow and content management platform used by the Company's editorial staff. The agreement has a current term expiring on January 31, 2025, with automatic renewal for successive one-year periods. Estimated annual spend: approximately $3,200,000. (Data Room Folder 3.18)
Section 3.8(b) — Contracts Requiring Consent
For a complete list of Material Contracts requiring third-party consent in connection with the execution, delivery, and performance of the Agreement and the consummation of the transactions contemplated thereby, see Schedule 3.4(b). All required consents have been obtained as of the date immediately prior to Closing.
SCHEDULE 3.9
LITIGATION
The following sets forth all material pending or, to the Knowledge of Seller, threatened litigation, arbitration, mediation, investigation, or other legal or administrative proceedings involving the Company or any of its subsidiaries as of the date hereof:
1. Whitfield v. Meridian Press Holdings LLC et al.
• Parties: Robert J. Whitfield, individually and on behalf of a putative class of similarly situated authors (Plaintiff) v. Meridian Press Holdings LLC and Bellweather Academic Press Inc. (Defendants)
• Forum: United States District Court, Southern District of New York, Case No. 1:23-cv-08471-PKC
• Date Filed: October 12, 2023
• Nature of Claim: Plaintiff, a former author under contract with Bellweather Academic Press Inc., alleges breach of contract and unjust enrichment arising from the alleged underpayment of royalties on digital editions of certain academic titles during the period from January 2020 through June 2023. Plaintiff seeks class certification, compensatory damages, disgorgement of profits, and attorneys' fees.
• Amount Claimed: Approximately $4,500,000 (individually and on behalf of the putative class)
• Status: Defendants filed a motion to dismiss on January 19, 2024; the motion was denied in part and granted in part on April 5, 2024. The unjust enrichment claim was dismissed; the breach of contract claim survives. Discovery is ongoing. Class certification briefing is scheduled to commence in September 2024.
• Company's Position: The Company believes the claims are without merit and intends to vigorously defend against them. The Company has not established a reserve for this matter, as the likelihood of a material adverse outcome is not considered probable at this time. Outside counsel for this matter is Whitaker & Dunne LLP (lead partner: Sarah Pemberton).
2. Meridian Distribution Services Inc. v. Pacific Rim Logistics Corp.
• Parties: Meridian Distribution Services Inc. (Plaintiff) v. Pacific Rim Logistics Corp. (Defendant)
• Forum: Superior Court of the State of California, County of Los Angeles, Case No. 24STCV01882
• Date Filed: March 8, 2024
• Nature of Claim: Plaintiff brought this action for breach of contract and negligence arising from Defendant's failure to timely deliver approximately 180,000 units of printed book inventory from Defendant's port facility to the Company's distribution centers, resulting in delayed fulfillment of customer orders during the 2023 holiday season.
• Amount Claimed: Approximately $2,100,000 in compensatory damages (lost revenue, expedited shipping costs, and customer credits)
• Status: Defendant filed an answer and counterclaim on May 15, 2024, alleging that the delays were caused by force majeure events and seeking dismissal. The matter is in early discovery. A case management conference is scheduled for October 2024.
• Company's Position: The Company believes its claims are meritorious and intends to pursue recovery. Outside counsel for this matter is Mitchell Blackwood LLP (lead partner: Andrew Tran).
3. Investigation by the New York State Department of Labor
• Parties: New York State Department of Labor (investigating agency); Meridian Press Holdings LLC (subject)
• Forum: Administrative proceeding / investigation
• Date Commenced: February 2024
• Nature of Matter: The New York State Department of Labor initiated a routine wage and hour compliance audit of the Company's New York operations, focusing on the classification of certain editorial freelancers and independent contractors. No formal complaint or citation has been issued.
• Amount Claimed: Not yet determined; the investigation is preliminary in nature
• Status: The Company has cooperated fully with the investigation and has provided all requested documentation. No findings have been issued as of the date hereof. The Company does not anticipate any material liability arising from this matter.
• Company's Position: The Company believes its classification practices comply with applicable law. Outside counsel monitoring this matter is Calderwood & Harkness LLP.
Except as set forth above, there are no material legal proceedings pending or, to the Knowledge of Seller, threatened against the Company or any of its subsidiaries. To the Knowledge of Seller, there are no facts or circumstances that would reasonably be expected to give rise to any additional material legal proceedings involving the Company or any of its subsidiaries.
SCHEDULE 3.10
REAL PROPERTY
Section 3.10(a) — Owned Real Property
The following real properties are owned in fee simple by the Company or its subsidiaries:
The Company and its subsidiaries operate a total of fourteen (14) distribution centers across North America. Four (4) of these distribution centers are situated on owned real property, as set forth in the table above. The remaining ten (10) distribution centers and other operational facilities are located at leased properties, as described in Section 3.10(b) below.
Each owned property is held free and clear of all Liens, except for: (a) Permitted Liens (as defined in the Agreement); (b) real estate taxes and assessments not yet due and payable or that are being contested in good faith by appropriate proceedings and for which adequate reserves have been established in accordance with US GAAP; and (c) easements, rights-of-way, and other encumbrances of record that do not materially interfere with the current use of the property. Title insurance commitments for each owned property have been obtained and delivered to Buyer's counsel and are included in the Data Room at Folder 5.01.
Section 3.10(b) — Leased Real Property
The following real properties are leased by the Company or its subsidiaries:
All leases are in full force and effect, and neither the Company nor any of its subsidiaries, nor, to the Knowledge of Seller, any landlord, is in material default or breach under any such lease. All rents and other amounts due and payable under such leases have been paid in full through the date hereof.
Section 3.10(c) — Shared Space / TSA Premises
The Company currently occupies office space at 1180 Avenue of the Americas, 22nd Floor, New York, New York 10036, which serves as the Company's principal office and corporate headquarters. The master lease for this location is held by Aurelius Media Holdings Inc. and is not being assigned or transferred to Buyer in connection with the transactions contemplated by the Agreement.
Following the Closing, the Company will continue to occupy premises at this location under the Transition Services Agreement, pursuant to the Facilities & Real Estate service category, at a monthly fee of $220,000, for a period of up to eighteen (18) months from the Closing Date. This property is not being transferred to Buyer; the Company's occupancy of the premises will be governed exclusively by the terms and conditions of the Transition Services Agreement. Buyer acknowledges that it will be responsible for identifying and securing permanent office space for the Company prior to the expiration of the TSA term.
SCHEDULE 3.11
INTELLECTUAL PROPERTY
Section 3.11(a) — Registered intellectual Property
The following is a list of all registered intellectual property owned by the Company or its subsidiaries:
Trademarks — United States Registrations (United States Patent and Trademark Office):
Trademarks — Canadian Registrations (Canadian intellectual Property Office):
All trademark registrations listed above are currently active and in good standing with the applicable trademark offices. All required maintenance filings, renewals, declarations of use, and other filings necessary to maintain such registrations have been timely made. No opposition, cancellation, or other adversarial proceedings are pending or, to the Knowledge of Seller, threatened with respect to any such registrations.
The Company and its subsidiaries do not own any registered patents, registered copyrights (other than copyright registrations in individual published works in the ordinary course of business, which are too numerous to list individually), or registered domain names other than the following principal domain names: meridianpress.com, bellweatheracademic.com, foxglovemedia.com, meridianpress.ca, and related variations thereof, all of which are registered in the name of the Company or its applicable subsidiary.
Section 3.11(b) — ISBN Prefix Assignments
The following ISBN (International Standard Book Number) prefix assignments are currently held by or on behalf of the Business and are being transferred to Meridian Press Holdings LLC (or its applicable subsidiary) as part of the carve-out contemplated by the Agreement:
All ISBN prefix assignments will be confirmed as transferred to the applicable Company entity prior to or simultaneously with the Closing. Adriatic Group and Library and Archives Canada have been notified of the anticipated change of ownership.
Section 3.11(c) — Trademark License-Back
Pursuant to the Trademark License Agreement, to be entered into effective as of the Closing Date, Ridgeline Publishing Acquisition Corp. (or its designee, as successor owner of the Meridian Press marks) will grant to Aurelius Media Holdings Inc. a license to use the "Meridian" name and associated marks and logos on the following terms:
• Term: Three (3) years from the Closing Date
• Scope: Non-exclusive, non-transferable, non-sublicensable (except to wholly owned subsidiaries of Aurelius Media Holdings Inc.)
• Royalty: Royalty-free
• Permitted Use: Solely in connection with legacy digital content currently archived on and accessible through the Aurelius Digital Media streaming platform, including use of the "Meridian Press" and "Meridian Books" names in metadata, author attribution, and content description fields associated with such archived content
• Restrictions: The license does not extend to the publication of new titles, the creation of new content, or any use in connection with any new publishing venture or business
• Quality Control: Aurelius Media Holdings Inc. shall use the licensed marks in a manner consistent with past practice and shall not take any action that would materially diminish the goodwill associated with such marks
This license represents a post-Closing encumbrance on the Meridian Press marks and associated intellectual property being transferred to Buyer.
Section 3.11(d) — Material IP Licenses (Inbound)
The following categories of material inbound intellectual property licenses are held by the Company or its subsidiaries:
(a) Author / Content License Agreements. The Company and its subsidiaries hold exclusive publishing rights under content license agreements with authors, literary estates, literary agencies, and content creators. The five (5) most significant such agreements by revenue contribution are described in detail in Schedule 3.8 (items 2 through 6). In addition to those five agreements, the Company and its subsidiaries are party to approximately 1,200 additional author and content license agreements covering the Company's active backlist and frontlist titles.
(b) Educational Content Licensing Agreements. Bellweather Academic Press Inc. holds licenses for educational content used in connection with its K-12 and higher education publishing programs, including the Educational Content Licensing Framework Agreement with the Consortium of American School Districts and the University Press Partnership Agreement with the Association of North American University Presses, each as described in Schedule 3.8.
(c) Third-Party Software Licenses. The Company and its subsidiaries hold licenses for various third-party software applications used in their operations, including the ContentStream editorial workflow and content management platform (see Schedule 3.8, item 27) and standard enterprise software applications (e.g., Larkspur Health IT, Quillon Data Systems, Aldermere Services Inc. modules).
Section 3.11(e) — IP Owned by Aurelius (Retained, Not Transferred)
The following categories of intellectual property are owned by or licensed to Aurelius Media Holdings Inc. or its affiliates (other than the Company and its subsidiaries) and are not being transferred to Buyer in connection with the transactions contemplated by the Agreement:
(a) Technology Platforms. Certain proprietary technology platforms developed by or for Aurelius Media Holdings Inc. or its affiliates, including the Aurelius Content Management System ("ACMS"), the Aurelius Digital Rights Management Platform ("ADRM"), and the Aurelius Data Analytics Suite ("ADAS"). These platforms are currently used by the Company in its operations and will be made available to the Company during the TSA period under the IT Infrastructure & Systems service category (monthly fee: $485,000).
(b) Corporate Software. Enterprise-wide software licenses held by Aurelius Media Holdings Inc. or its affiliates that currently cover the Company's operations, including enterprise resource planning (ERP), human capital management (HCM), and financial reporting systems. To the extent the Company currently uses such software, access will be provided during the TSA period, and Buyer will be responsible for procuring standalone licenses or migrating to alternative systems prior to the expiration of the TSA term.
(c) "Aurelius" Name and Marks. All trademarks, service marks, trade names, domain names, and other intellectual property incorporating or associated with the "Aurelius" name or brand are retained by Aurelius and are not being transferred. The Company shall cease all use of the "Aurelius" name and marks promptly following the Closing, subject to a limited wind-down period of ninety (90) days for the purpose of updating signage, stationery, and digital properties.
SCHEDULE 3.12
TAX MATTERS
Section 3.12(a) — Tax Status
The federal income tax classification of the Company and each of its subsidiaries is as follows:
No entity elections under Treasury Regulation § 301.7701-3 have been filed or are pending with respect to the Company or any of its subsidiaries, other than the existing check-the-box election for Meridian Press Canada ULC, which was filed on Form 8832 effective as of the date of formation of such entity.
Section 3.12(b) — Tax Returns and Audits
All required federal, state, local, and foreign income and other material tax returns have been timely filed (or valid extensions of time for filing have been obtained and such returns have been filed within the extended filing period) by or on behalf of the Company and its subsidiaries for all taxable periods for which returns are due as of the date hereof. All taxes shown as due and payable on such returns have been paid in full, and no deficiency or assessment of additional taxes has been proposed, asserted, or assessed against the Company or any of its subsidiaries that remains unpaid.
As of the date hereof, there are no pending or, to the Knowledge of Seller, threatened tax audits, examinations, investigations, or assessments with respect to the Company or any of its subsidiaries, except as follows:
(a) New York State Sales Tax Audit. The New York State Department of Taxation and Finance initiated a routine sales and use tax audit of Meridian Press Holdings LLC for the audit period January 1, 2021, through December 31, 2022. The audit is in the information-gathering phase. The Company has cooperated with the audit and does not anticipate any material assessment. The aggregate amount in controversy is estimated not to exceed $175,000.
(b) Canada Revenue Agency — Transfer Pricing Review. The Canada Revenue Agency ("CRA") has issued an information request to Meridian Press Canada ULC in connection with a review of transfer pricing for intercompany transactions between Meridian Press Canada ULC and Meridian Press Holdings LLC for the fiscal year ended December 31, 2022. The review is ongoing. The Company's transfer pricing positions are supported by a contemporaneous transfer pricing study prepared by Pemberton Graves LLP. The Company does not anticipate any material adjustment arising from this review.
Section 3.12(c) — Section 338(h)(10) Election
Pursuant to Section 6.8 of the Agreement, Seller and Buyer have agreed to jointly make an election under Section 338(h)(10) of the Internal Revenue Code of 1986, as amended (the "Code") (and corresponding elections under applicable state and local tax laws) with respect to the acquisition by Buyer of the Membership Interests. The effect of such election is to treat the transaction as a deemed asset sale for US federal and applicable state and local income tax purposes.
The mechanics of the Section 338(h)(10) election, including the preparation and filing of IRS Form 8023 and the allocation of the deemed purchase price among the assets of the Company and its subsidiaries in accordance with Section 338(b)(5) of the Code and the regulations thereunder, are governed by the Section 338(h)(10) Election Agreement entered into by Seller and Buyer, dated as of July 19, 2024 (the "Election Agreement"). A copy of the Election Agreement is included in the Data Room at Folder 6.01.
Based on the Election Agreement and the estimated purchase price allocation prepared by Seller's tax advisors, the estimated tax consequences to Seller arising from the Section 338(h)(10) election are as follows:
The foregoing estimates are based on preliminary calculations and are subject to adjustment upon finalization of the purchase price (including any post-Closing adjustments pursuant to Section 2.6 of the Agreement) and completion of the purchase price allocation.
Section 3.12(d) — State Tax Nexus
The Company and its subsidiaries file tax returns and/or have established nexus (including economic nexus) for state income, franchise, sales and use, and/or other material tax purposes in the following states and jurisdictions:
• Delaware
• New York
• New Jersey
• Ohio
• Texas (franchise tax; no state income tax)
• Nevada (commerce tax; no state income tax)
• California
• Georgia
• Massachusetts
• Illinois
• Colorado
• Tennessee
• Pennsylvania
The foregoing list includes all states and jurisdictions in which the Company and its subsidiaries are currently filing tax returns or in which they have identified nexus for material tax purposes. The Company and its subsidiaries have not received any notice from any taxing authority in any jurisdiction asserting nexus or filing obligations not reflected above.
Section 3.12(e) — Transfer Taxes
Pursuant to Section 6.9 of the Agreement, any transfer taxes, recording fees, documentary stamp taxes, or similar taxes or fees arising from the transfer of the Membership Interests or the transactions contemplated by the Agreement shall be borne equally (50% each) by Buyer and Seller. The parties do not anticipate material transfer taxes in connection with the transfer of membership interests in a Delaware limited liability company, but have agreed to the foregoing allocation out of an abundance of caution.
Section 3.12(f) — UK Tax Considerations
The sale proceeds from the disposition of the Membership Interests will be received by Aurelius Media Holdings Inc. (a US corporation and direct subsidiary of Aurelius Global Media Group PLC, a UK public limited company). Based on the corporate structure of the transaction and the analysis set forth below, no direct UK corporation tax liability is expected to arise in connection with the disposal.
Aurelius Global Media Group PLC, as the ultimate parent company, has obtained an analysis of the potential application of the Substantial Shareholding Exemption ("SSE") under Schedule 7AC of the UK Taxation of Chargeable Gains Act 1992 to any chargeable gain that might otherwise arise to Aurelius Global Media Group PLC or its UK-resident affiliates in connection with the indirect disposal of the Business. The SSE analysis was jointly performed by Pemberton Graves LLP (London tax practice) and Calderwood & Harkness LLP (Leonard Cross, Specialist Partner, Tax) and concludes that the conditions for the SSE are satisfied, including:
(a) Aurelius Global Media Group PLC has held a substantial shareholding (i.e., at least a 10% interest) in the relevant intermediate holding company (Aurelius Media Holdings Inc.) for a continuous period of at least 12 months in the two years preceding the disposal.
(b) The relevant intermediate holding company (Aurelius Media Holdings Inc.) is a trading company or the holding company of a trading group for purposes of the SSE.
(c) All other conditions for the application of the SSE, as applicable, are met.
Accordingly, no UK corporation tax liability is expected to arise in connection with the transactions contemplated by the Agreement. The SSE analysis memorandum is included in the Data Room at Folder 6.02. This analysis does not constitute tax advice to Buyer, and Buyer is encouraged to consult its own tax advisors regarding any tax consequences to Buyer arising from the transactions.
SCHEDULE 3.13
ENVIRONMENTAL MATTERS
The following environmental matters are disclosed with respect to the owned and leased real properties of the Company and its subsidiaries:
Phase I Environmental Site Assessments
Phase I Environmental Site Assessments ("ESAs"), conducted in accordance with ASTM Standard E1527-21, were completed on each of the four (4) owned distribution center properties during the period from April through May 2024. The assessments were performed by Golder Environmental Consulting LLC and are summarized below:
Copies of the complete Phase I ESA reports have been delivered to Buyer and are included in the Data Room at Folder 7.01.
Environmental Permits
The Company and its subsidiaries hold the following material environmental permits in connection with their operations:
(a) Air quality operating permits for printing and binding operations at the Edison, NJ and Columbus, OH distribution centers, issued by the New Jersey Department of Environmental Protection and the Ohio Environmental Protection Agency, respectively. Both permits are current and in compliance.
(b) Stormwater discharge permits (NPDES general permits) for each of the four owned distribution center properties, issued by the applicable state environmental agencies. All permits are current and in compliance.
(c) Hazardous waste generator identification numbers (EPA ID numbers) for the Edison, NJ and Dallas, TX distribution centers, reflecting the generation of small quantities of waste solvents and inks used in printing operations. The Company maintains compliance with all applicable hazardous waste management and reporting requirements under the Resource Conservation and Recovery Act ("RCRA") and analogous state regulations.
Known or Suspected Environmental Contamination
Other than the CREC at the Dallas, TX property (which has been addressed and closed by TCEQ as described above), the Company is not aware of any known or suspected environmental contamination, releases of hazardous substances, or environmental conditions at any owned or leased property that would reasonably be expected to give rise to material environmental liability or require material remediation expenditures.
Compliance
To the Knowledge of Seller, the Company and its subsidiaries are in compliance in all material respects with all applicable environmental laws, regulations, and permit requirements. No notices of violation, orders, consent decrees, or other enforcement actions have been issued or are

SELLER DISCLOSURE SCHEDULES

MEMBERSHIP INTEREST PURCHASE AGREEMENT

EXECUTION VERSION.

SELLER DISCLOSURE SCHEDULES

INTRODUCTORY NOTES AND GENERAL DISCLAIMERS

SCHEDULE 3.1

ORGANIZATION AND GOOD STANDING

SCHEDULE 3.2

CAPITALIZATION

SCHEDULE 3.3

SCHEDULE 3.4

CONSENTS AND APPROVALS

SCHEDULE 3.5

FINANCIAL STATEMENTS

SCHEDULE 3.6

ABSENCE OF UNDISCLOSED LIABILITIES

SCHEDULE 3.7

ABSENCE OF CERTAIN CHANGES

SCHEDULE 3.8

MATERIAL CONTRACTS

SCHEDULE 3.9

LITIGATION

Record

Parties

Dates

Amounts