Contract analysis

I. Executive Summary The purpose of this memorandum is to consolidate and synthesize the findings from all due diligence workstreams conducted in connection with Meridian Consumer Brands LLC's ("Meridian" or the "Buyer") proposed acquisition of the consumer product lines known as CleanLeaf (home cleaning) and PureHaven (personal care) (collectively, the "Product Lines" or the "Acquired Business") from Briarwood Home

1. Inventory Valuation Variance ($2,500,000). Whitfield Ames LLP's preliminary net realizable value analysis indicates that the Seller's book value of inventory ($14,300,000) exceeds estimated net realizable value ($11,800,000) by approximately $2,500,000. This is the most significant financial diligence finding and a primary area of negotiation between the parties.

2. Recognized Environmental Condition — Marysville Manufacturing Facility. The Phase I Environmental Site Assessment identified a recognized environmental condition ("REC") involving potential soil contamination at the Marysville manufacturing facility. A Phase II Environmental Site Assessment has not been commenced.

3. Unresolved Landlord Consent — Marysville Lease. The assignment of the Marysville manufacturing facility lease requires the prior written consent of the landlord, Buckeye Industrial Properties LLC. A consent request was sent on October 7, 2022, but no response has been received as of the date of this memorandum.

4. Customer Contract Assignment Consents. Seven (7) of the twenty-three (23) customer contracts to be assigned to Meridian contain change-of-control or assignment consent provisions requiring third-party consent prior to closing.

5. Regulatory Filing Gap — State Product Registrations. Calderwood & Harkness has identified that certain state product registration filings for CleanLeaf cleaning products are incomplete or lapsed in multiple states. This memorandum should be read in conjunction with the underlying detailed diligence memoranda and reports listed in Section XVI and the comprehensive Risk Matrix set forth in Section XIV.

II. Transaction Overview A. Parties Buyer. Meridian Consumer Brands LLC is a Delaware limited liability company headquartered at 440 Park Avenue South, 18th Floor, New York, NY 10016. Meridian's registered agent is Ashgrove Services Inc., located at 28 Liberty Street, New York, NY 10005. Its employer identification number is 83-2947106. Meridian owns and operates five consumer brands across the household cleaning, la

III. Corporate and Organizational Diligence This section summarizes the findings of the corporate and organizational diligence workstream, which is the subject of a detailed memorandum dated July 8, 2022, prepared by Naomi Petersen and reviewed by Andrew Fitzpatrick. Entity Status and Good Standing. Briarwood Home Essentials, Inc. is an Ohio corporation in good standing with the Ohio Secretary of State. Calderwood &

IV. Material Contracts Diligence This section summarizes the findings of the material contracts diligence workstream, which is the subject of a detailed memorandum dated July 29, 2022, prepared by Naomi Petersen and Andrew Fitzpatrick. Customer Contracts. Briarwood is party to twenty-three (23) customer contracts with major national and regional retailers for the sale and distribution of CleanLeaf and PureHaven produ

V. Real Property and Leases Diligence This section summarizes the findings of the real property and leases diligence workstream, which is the subject of a detailed memorandum dated August 15, 2022, prepared by Naomi Petersen. A. Marysville Manufacturing Facility Location. 2800 Industrial Parkway, Marysville, OH 43040. Ownership and Lease Structure. The Marysville manufacturing facility is leased by Briarwood from Buc

VI. Intellectual Property Diligence This section summarizes the findings of the intellectual property diligence workstream, which is the subject of a detailed memorandum dated August 18, 2022, prepared by Naomi Petersen. CleanLeaf Brand. The CleanLeaf brand is protected by federal trademark registrations with the United States Patent and Trademark Office ("USPTO"), covering the primary brand name, logo, and tagline f

VII. Employment and Benefits Diligence This section summarizes the findings of the employment and benefits diligence workstream, which is the subject of a detailed memorandum dated August 25, 2022, prepared by Naomi Petersen. Transferring Employees. One hundred eighty-six (186) employees currently engaged in the operation of the CleanLeaf and PureHaven product lines are expected to transfer to Meridian in connection

VIII. Environmental Diligence This section summarizes the findings of the environmental diligence workstream, which is the subject of a detailed memorandum dated September 8, 2022, prepared by Andrew Fitzpatrick. The environmental diligence was conducted by Terrapoint Environmental Group, Inc. (Keith Novak, project manager), which completed Phase I Environmental Site Assessments for both the Marysville manufacturing

IX. Litigation and Regulatory Diligence This section summarizes the findings of the litigation and regulatory diligence workstream, which is the subject of a detailed memorandum dated September 12, 2022, prepared by Naomi Petersen. A. Pending and Threatened Litigation No Material Pending Litigation. Calderwood & Harkness conducted a comprehensive review of all pending litigation involving Briarwood and the Product Li

X. Financial Diligence Summary and Inventory Valuation Dispute This section summarizes the key findings of the financial and accounting diligence workstream, which has been conducted by Whitfield Ames LLP (Susan Clearwater, engagement partner). The preliminary financial diligence memorandum is expected to be delivered on October 14, 2022. The findings referenced in this section are based on advance communications wit

1. Excess and Obsolete Inventory. Whitfield Ames identified certain SKUs with slow movement rates, including products approaching or past their shelf-life expiration dates. These items are unlikely to be sold at their carrying values and, in some cases, may have no realizable value at all.

2. Overvaluation of Raw Materials. Certain raw material inventories are carried on Briarwood's books at historical acquisition costs that exceed current market prices. Raw material costs in the cleaning and personal care products industry have experienced volatility, and Briarwood's carrying values do not reflect the decline in current replacement costs for certain key inputs.

3. Inventory Costing Methodology. Briarwood employs a weighted average cost methodology for inventory valuation. Whitfield Ames believes that this methodology, as applied by Briarwood, does not adequately reflect current net realizable values for aged and slow-moving inventory items. Under GAAP, inventory must be stated at the lower of cost or net realizable value, and Whitfield Ames's analysis suggests that Briarwoo

XI. Insurance Diligence A. Representations and Warranties Insurance Policy Placement. Meridian engaged Northbridge Risk Advisors LLC (Alison Chu, broker) to place a representations and warranties ("R&W") insurance policy in connection with the Transaction. A preliminary underwriting submission was prepared on October 1, 2022 and submitted to Sentinel Specialty Insurance Company (Mark Ellison, underwriter) for review.