Contract analysis

I. Executive Summary The purpose of this memorandum is to identify, analyze, and provide preliminary recommendations on the key intercreditor issues that will need to be resolved in connection with the proposed $40,000,000 asset-based revolving credit facility (the "Proposed ABL Facility") to be provided by Ridgeline National Bank, N.A. ("Ridgeline"), given the existence of Meridian Consumer Brands LLC's ("Meridian"

II. Background and Transaction Overview A. Meridian Consumer Brands LLC — Company Overview Meridian Consumer Brands LLC is a Delaware limited liability company headquartered at 401 West 33rd Street, Suite 1200, New York, New York 10001. The Company operates in the consumer products industry, with a focus on personal care products, household goods, and retail distribution. Meridian maintains a diversified product port

III. Proposed Split-Collateral Intercreditor Structure A. Overview of Split-Collateral Framework The split-collateral (or "split-lien") intercreditor structure is the market-standard approach for ABL revolving facilities co-existing with term loan facilities in sponsored middle-market transactions. This framework has been widely adopted in the U.S. leveraged lending market and has been the subject of extensive judici

1. ABL Priority Collateral (Ridgeline — First Lien) Under the proposed structure, the following categories of assets will constitute "ABL Priority Collateral," subject to Ridgeline's first-priority lien: • Accounts receivable, including all trade receivables, credit card receivables, and other rights to payment for goods sold or services rendered by Meridian. Eligible receivables are currently estimated at approximat

2. Term Loan Priority Collateral (Greystone — First Lien) The following categories of assets will constitute "Term Loan Priority Collateral," subject to Greystone's first-priority lien: • Real property, including any owned real estate, leasehold interests, and fixtures related thereto. • Equipment and fixtures, including all machinery, vehicles, furniture, computer hardware, and other tangible personal property used

3. Cross-Liens (Second Priority) Under the split-collateral structure, each secured party will also hold a subordinated, second-priority security interest in the other party's Priority Collateral: • Ridgeline will hold a second-priority lien on all Term Loan Priority Collateral, subordinate and junior to Greystone's first-priority lien on those assets. • Greystone will hold a second-priority lien on all ABL Priority

IV. Required Greystone Consents A. Negative Pledge / Lien Covenant The Existing Term Loan credit agreement, dated December 15, 2019, contains a negative pledge covenant that prohibits Meridian from creating, incurring, assuming, or permitting to exist any lien on any of its assets or properties, except for liens expressly permitted under the credit agreement (commonly referred to as "Permitted Liens"). The proposed A

V. Key Intercreditor Agreement Provisions — Analysis and Negotiating Points This Section sets forth our analysis of the principal provisions that are expected to be included in the ICA, identifies the key negotiating issues associated with each provision, and provides our preliminary recommendations from Meridian's perspective. We have organized these provisions in approximate order of significance and likely negotia

Section 363 Sales. The ICA will address consent rights and credit-bid rights in connection with sales of the debtor's assets under Section 363 of the Bankruptcy Code. In a 363 sale, the debtor may sell assets free and clear of liens, with liens attaching to the sale proceeds. The ICA's waterfall provisions will govern the distribution of proceeds in this context, and the credit-bid rights discussed above will determi

I. Reporting and Information Sharing The ICA may require or permit limited sharing of financial information and borrowing base reports between Ridgeline and Greystone. This is a provision that, while seemingly administrative, can have significant strategic implications for Meridian. As the ABL lender, Ridgeline will have access to detailed borrowing base certificates, monthly collateral reports, and periodic field ex

VI. Practical and Timing Considerations A. Sequencing of Negotiations As noted above, the ABL term sheet with Ridgeline has not yet been finalized. Multiple outstanding issues remain with respect to collateral eligibility criteria, advance rates, the composition and methodology of the borrowing base, and certain financial covenant thresholds. These issues are being addressed in ongoing negotiations and are the subjec

VII. Summary of Recommendations Based on our analysis of the foregoing issues, we summarize our preliminary recommendations as follows:

1. Do not initiate formal ICA negotiations with Greystone until the ABL term sheet with Ridgeline is substantially finalized. The informal confirmation from Alan Fitzpatrick (per his email of February 8, 2022) provides sufficient assurance of Greystone's willingness to engage for the current stage of negotiations.