1011-00005 · Meridian Consumer Brands LLC · Diligence

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PRIVILEGED & CONFIDENTIAL — ATTORNEY WORK PRODUCT / ATTORNEY-CLIENT COMMUNICATION

DUE DILIGENCE MEMORANDUM — ENVIRONMENTAL

TO:

Diana Ressler, General Counsel, Meridian Consumer Brands LLC Priya Anand, Chief Financial Officer, Meridian Consumer Brands LLC Thomas Liang, Managing Partner, Lakepoint Capital Partners, LP

FROM:

Andrew Fitzpatrick, Lead Associate, Calderwood & Harkness LLP

REVIEWED BY:

Sandra Tung, Responsible Partner, Calderwood & Harkness LLP

DATE:

September 8, 2022

RE:

Environmental Due Diligence — Proposed Acquisition of CleanLeaf and PureHaven Product Lines from Briarwood Home Essentials, Inc.

MATTER NO.:

1011-00005

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I. EXECUTIVE SUMMARY

This memorandum summarizes the findings and recommendations arising from Calderwood & Harkness LLP's ("C&H") environmental due diligence investigation conducted in connection with Meridian Consumer Brands LLC's ("Meridian") proposed acquisition of the CleanLeaf home cleaning product line and the PureHaven personal care product line (together, the "Product Lines") from Briarwood Home Essentials, Inc. ("Briarwood" or "Seller"). The proposed transaction is structured as an asset purchase at a total consideration of approximately $95,000,000 (the "Transaction") and is to be documented under a definitive Asset Purchase Agreement (the "APA").

Two real property assets are included within the definition of "Acquired Assets" under the proposed APA:

1. Marysville Manufacturing Facility — located at 2800 Industrial Parkway, Marysville, OH 43040 (Union County, Ohio). This facility is the primary manufacturing site for the CleanLeaf and PureHaven product lines, producing approximately 142 active stock-keeping units ("SKUs"). The property is currently leased by Briarwood from Buckeye Industrial Properties LLC ("Buckeye") under a commercial lease agreement. The proposed Transaction contemplates assignment of this lease to Meridian, which requires the prior written consent of Buckeye as landlord.

2. West Jefferson Distribution Center — located at 500 Commerce Boulevard, West Jefferson, OH 43162 (Madison County, Ohio). This facility is used for warehousing and distribution of finished CleanLeaf and PureHaven products. The property is owned by Briarwood in fee simple and is included in the Acquired Assets as a fee simple interest to be conveyed to Meridian at closing.

C&H engaged Terrapoint Environmental Group, Inc. ("Terrapoint") to conduct a Phase I Environmental Site Assessment ("Phase I ESA") for the Marysville facility in conformance with ASTM International Standard E1527-21, Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process. Terrapoint commenced field work and research in late August 2022, and the Phase I ESA report (Report No. TEG-2022-0441) was delivered on September 2, 2022.

Key Finding — Marysville Facility: The Phase I ESA identified a recognized environmental condition ("REC") at the Marysville facility involving potential soil contamination in the southeastern portion of the property. Historical records and site observations indicate that a former agricultural chemical storage operation on or adjacent to the site may have resulted in releases of pesticides or herbicides into subsurface soils. Terrapoint has concluded that this REC warrants further investigation through a Phase II Environmental Site Assessment ("Phase II ESA"), which would involve subsurface soil sampling and potentially the installation of groundwater monitoring wells. As of the date of this memorandum, no Phase II ESA has been commissioned or commenced.

West Jefferson Distribution Center: Based on available records and a limited site reconnaissance, no material environmental concerns were identified at the West Jefferson distribution center. No RECs, controlled recognized environmental conditions ("CRECs"), or historical recognized environmental conditions ("HRECs") were identified. No further investigation is recommended for this property at this time.

Recommendations: C&H strongly recommends that Meridian authorize Terrapoint to proceed with a Phase II ESA at the Marysville facility before the APA is finalized and before the Transaction proceeds to closing. The estimated cost for the Phase II investigation is $45,000–$65,000, with results anticipated within four to six weeks of mobilization. The findings of the Phase II ESA will have direct implications for the APA's environmental representations and warranties, indemnification provisions, the escrow holdback structure, the pending representations and warranties insurance ("R&W Insurance") application, and the lease assignment consent process with Buckeye.

Overall Risk Assessment:

The balance of this memorandum sets forth the scope of our environmental review, a detailed discussion of the findings for each facility, an analysis of the transaction implications, and a summary of recommended next steps.

II. SCOPE OF ENVIRONMENTAL REVIEW

A. Engagement and Consultant

C&H, acting on behalf of Meridian and in coordination with Lakepoint Capital Partners, LP ("Lakepoint"), engaged Terrapoint Environmental Group, Inc. ("Terrapoint") to perform environmental due diligence in connection with the proposed Transaction. Terrapoint is a nationally recognized environmental consulting firm headquartered at 33 Arch Street, Suite 1400, Boston, MA 02110. Terrapoint was selected based on its extensive experience with transactional environmental due diligence, its familiarity with Ohio environmental regulatory requirements, and its capacity to deliver results within the Transaction's diligence timeline.

The designated project manager for the engagement is Keith Novak, a senior environmental consultant at Terrapoint with over fifteen years of experience conducting Phase I and Phase II ESAs in the industrial and manufacturing sectors. Mr. Novak served as the principal investigator for the Phase I ESA at the Marysville facility and has been in regular communication with C&H throughout the diligence process.

The scope of Terrapoint's engagement encompassed the following:

(a) A Phase I Environmental Site Assessment of the Marysville manufacturing facility conducted in conformance with ASTM International Standard E1527-21. The Phase I ESA included all standard elements prescribed by the ASTM standard, including historical use research, environmental database searches, regulatory file reviews, site reconnaissance, and interviews with knowledgeable parties.

(b) A desktop review and limited site reconnaissance of the West Jefferson distribution center. This review encompassed environmental database searches, historical records research, a review of available property records, and a limited visual inspection of the property. A full Phase I ESA was not conducted for the West Jefferson facility based on a preliminary risk assessment indicating that the property's use history (general commercial warehousing) presented a lower environmental risk profile.

Terrapoint commenced its Phase I ESA field work and research activities in late August 2022. The final Phase I ESA report (Report No. TEG-2022-0441) was delivered to C&H on September 2, 2022.

B. Materials Reviewed

In preparing this memorandum, C&H reviewed the following materials, documents, and data sources:

(i) Terrapoint Phase I ESA Report No. TEG-2022-0441 (dated September 2, 2022) — the complete Phase I Environmental Site Assessment report for the Marysville manufacturing facility, including all appendices, data tables, and supporting documentation.

(ii) Briarwood-Provided Environmental Records and Documents — a substantial volume of environmental records and documents provided by Briarwood and its counsel, Caldwell, Pruitt & Shaw LLP ("Seller's Counsel"), uploaded to the Pemberton Systems virtual data room under project code BHE-CleanLeaf-2022. The reviewed materials included, without limitation:

• Historical environmental compliance records for both the Marysville facility and the West Jefferson distribution center, spanning the period of Briarwood's occupancy and operations (approximately 2008 to present);

• Permits and registrations, including air emissions permits issued by the Ohio Environmental Protection Agency ("Ohio EPA"), water discharge permits, and hazardous waste generator registrations;

• Prior environmental assessments, audits, or investigations conducted at either facility, to the extent such records were made available by Briarwood in the data room;

• Storage tank records, including registrations and inspection records for any underground storage tanks ("USTs") or aboveground storage tanks ("ASTs") at either facility;

• Correspondence between Briarwood and the Ohio EPA or any other federal, state, or local regulatory agencies concerning environmental compliance, inspections, notices of violation, enforcement actions, or remediation activities.

(iii) County and State Environmental Database Search Results — included as appendices to the Terrapoint Phase I ESA report, these searches encompassed federal and state databases maintained by the U.S. Environmental Protection Agency ("USEPA") and the Ohio EPA, including without limitation the CERCLIS/SEMS, RCRA, ERNS, state equivalent databases, and the Ohio EPA Division of Environmental Response and Revitalization records.

(iv) Historical Aerial Photographs and Trelwick Fire Insurance Maps — reviewed by Terrapoint as part of the standard Phase I ESA historical use research, covering available periods from the 1930s to the present, to identify prior uses of the subject properties and adjacent parcels.

(v) Lease Agreement for Marysville Facility — the commercial lease agreement between Buckeye Industrial Properties LLC, as landlord, and Briarwood Home Essentials, Inc., as tenant, for the premises at 2800 Industrial Parkway, Marysville, OH 43040, including all amendments, addenda, and environmental provisions contained therein.

(vi) Property Records for West Jefferson Facility — deed records, title information, property tax records, and related documentation for the property at 500 Commerce Boulevard, West Jefferson, OH 43162, as provided in the Briarwood data room.

C&H notes that our review was necessarily limited to the materials made available by Briarwood and its counsel in the virtual data room and through Terrapoint's independent research. We have not independently verified the completeness of Briarwood's document production and rely on Seller's representations that all material environmental records have been disclosed. Any gaps in the document production could affect the conclusions set forth in this memorandum.

C. Facilities Covered

The environmental due diligence addressed two real property assets included in the Acquired Assets under the proposed APA:

Marysville Manufacturing Facility

Address: 2800 Industrial Parkway, Marysville, OH 43040 (Union County, Ohio)

The Marysville facility serves as the primary manufacturing site for the CleanLeaf and PureHaven product lines. The facility produces approximately 142 active SKUs across both product lines, encompassing a range of home cleaning solutions, surface cleaners, laundry products, and personal care items. Manufacturing operations include formulation, blending, filling, packaging, and quality assurance testing. The facility is leased by Briarwood from Buckeye Industrial Properties LLC under a commercial lease agreement. The proposed Transaction contemplates assignment of this lease to Meridian, subject to the landlord's prior written consent.

West Jefferson Distribution Center

Address: 500 Commerce Boulevard, West Jefferson, OH 43162 (Madison County, Ohio)

The West Jefferson facility functions as a warehouse and distribution center for finished CleanLeaf and PureHaven products. The facility handles inbound receipt of finished goods from the Marysville manufacturing facility, warehousing and inventory management, and outbound distribution to wholesale and retail customers. The property is owned by Briarwood in fee simple and is included in the Acquired Assets as a fee simple interest to be conveyed to Meridian at closing by special warranty deed.

III. MARYSVILLE MANUFACTURING FACILITY — PHASE I ESA FINDINGS

A. Site Description and History

The Marysville manufacturing facility is located at 2800 Industrial Parkway, Marysville, OH 43040, in Union County, Ohio. The property is situated in a light industrial and commercial area along Industrial Parkway, adjacent to other industrial and warehouse operations. The surrounding land use is predominantly industrial and agricultural.

Property Type: Industrial/manufacturing.

Current Occupancy and Operations: Briarwood has operated at this location since approximately 2008, utilizing the facility for the manufacture of its eco-friendly home cleaning (CleanLeaf) and personal care (PureHaven) product lines. Manufacturing operations at the facility encompass formulation and blending of raw materials (including surfactants, solvents, fragrances, and other chemical inputs), filling and packaging of finished products, and quality assurance and testing. The facility operates with approximately 85 to 100 production employees across two shifts.

Landlord: Buckeye Industrial Properties LLC, a commercial real estate holding company with a principal office at 77 East Nationwide Boulevard, Suite 200, Columbus, OH 43215. Buckeye owns the underlying real property and leases the facility to Briarwood under a commercial lease agreement.

Lease Status: The proposed Transaction contemplates assignment of the Marysville facility lease from Briarwood to Meridian. The lease agreement contains a provision requiring the prior written consent of Buckeye as landlord before any assignment or transfer of the tenant's interest. A formal consent request was transmitted to Buckeye on October 7, 2022, which is subsequent to the date of this memorandum; this fact is noted here for context and completeness, as the lease assignment consent process may be affected by the environmental findings discussed below. As of the last available update, no response from Buckeye has been received.

Prior Uses: Terrapoint's historical use research, including review of Trelwick fire insurance maps, historical aerial photographs, county records, and environmental database searches, revealed that the subject property and portions of immediately adjoining parcels were previously used for light industrial purposes and, significantly, for agricultural chemical storage operations prior to Briarwood's occupancy of the site in approximately 2008. The agricultural chemical storage use appears to have been conducted during the 1980s and 1990s by one or more prior operators. The specific identity of the prior agricultural chemical storage operator and the precise nature and volume of chemicals stored on-site have not been definitively established through the Phase I ESA records review, though available database records suggest involvement in the regional distribution of pesticide and herbicide products.

The transition from agricultural chemical storage to the current light manufacturing use appears to have occurred in stages during the late 1990s and early 2000s, with the facility undergoing modifications and renovation prior to Briarwood's occupancy. Terrapoint noted that the extent of any environmental investigation or cleanup conducted in connection with the cessation of agricultural chemical storage operations is unclear from available records.

B. Recognized Environmental Condition (REC)

Terrapoint's Phase I ESA identified a recognized environmental condition at the Marysville facility, which constitutes the most significant environmental finding in this due diligence review.

Nature of the REC: The recognized environmental condition involves potential soil contamination in the southeastern portion of the property, potentially resulting from the historical agricultural chemical storage operations described above. Specifically, Terrapoint concluded that the historical storage and handling of pesticide and herbicide products on or adjacent to the site during the 1980s and 1990s may have resulted in releases of these chemical compounds into the subsurface soils beneath the southeastern portion of the current Briarwood facility. The concern extends to the possibility that such contamination, if present, could have migrated into the underlying groundwater.

Under ASTM E1527-21, a "recognized environmental condition" is defined as the presence or likely presence of any hazardous substances or petroleum products in, on, or at a property: (1) due to a release to the environment; (2) under conditions indicative of a release to the environment; or (3) under conditions that pose a material threat of a future release to the environment. Terrapoint determined that the conditions observed at the Marysville facility satisfy this definition.

Evidence Supporting the REC: Terrapoint's conclusion is supported by several converging lines of evidence:

(a) State Environmental Database Records: Environmental database search results revealed the existence of a former registered storage facility for agricultural chemicals on a portion of the current property or on an immediately adjoining parcel. The database records indicate that this storage facility was operational during the 1980s and 1990s and was associated with the storage and distribution of various pesticide and herbicide formulations. While the precise boundaries of the former storage operation relative to the current property lines are not entirely clear from available records, the location is consistent with the southeastern portion of the current Briarwood facility.

(b) Visible Staining Observed During Site Reconnaissance: During the site reconnaissance conducted by Terrapoint as part of the Phase I ESA, staining was observed on concrete pads located in the southeastern loading area of the facility. The staining is consistent with historical chemical spillage or releases, though the specific source of the staining could not be definitively determined through visual inspection alone. The staining pattern and location are consistent with the area where agricultural chemical storage or loading/unloading activities may have historically occurred.

(c) Anecdotal Information from Briarwood Personnel: During interviews conducted as part of the Phase I ESA process, Briarwood's Vice President of Operations, Janet Tsao, provided information indicating that during a 2019 facility improvement project involving excavation work in the southeastern portion of the property, workers encountered discolored soil at shallow depth. Ms. Tsao reported that the discolored soil was noted by construction personnel at the time, but no formal environmental investigation or sampling was conducted in response to this observation. The soil was reportedly reburied, and the construction project proceeded. No documentation of this observation was located in the Briarwood data room or in available environmental records.

The convergence of these three categories of evidence — historical database records of chemical storage operations, visible staining in the area of concern, and anecdotal reports of discolored soil encountered during excavation — led Terrapoint to conclude that the presence of a recognized environmental condition is warranted.

Terrapoint's Conclusion: The Phase I ESA report (Report No. TEG-2022-0441) concludes that the identified REC warrants further investigation through a Phase II Environmental Site Assessment. The recommended Phase II investigation would involve the advancement of subsurface soil borings and the collection of soil samples from the southeastern portion of the property, with laboratory analysis for pesticides, herbicides, and related compounds. Depending on the initial soil sampling results, Terrapoint has further recommended that the scope may need to be expanded to include the installation of groundwater monitoring wells and the collection of groundwater samples to evaluate whether any soil contamination has impacted the underlying groundwater.

C. Other Phase I Observations

In addition to the identified REC, the Phase I ESA and supplementary records review yielded several additional observations regarding the environmental condition and regulatory compliance status of the Marysville facility. While none of these additional observations rise to the level of a recognized environmental condition, they are noted below for completeness and for the deal team's consideration.

Chemical Storage: Briarwood maintains on-site storage of various raw materials used in the manufacture of CleanLeaf and PureHaven products, including surfactants, solvents, fragrances, essential oils, and other chemical inputs. These materials are stored in a dedicated chemical storage area within the facility. Based on Terrapoint's visual inspection during the site reconnaissance, the chemical storage area appeared to be maintained in compliance with applicable Occupational Safety and Health Administration ("OSHA") requirements and Ohio EPA regulations, including proper labeling, segregation of incompatible materials, secondary containment where required, and maintenance of Safety Data Sheets ("SDS"). No evidence of spills, releases, or non-compliant storage conditions was observed in the chemical storage area.

Underground Storage Tanks (USTs): No evidence of current or former underground storage tanks on the property was identified through Terrapoint's records review, environmental database searches, or site reconnaissance. The Ohio Bureau of Underground Storage Tank Regulations ("BUSTR") database search returned no listings for the subject property.

Aboveground Storage Tanks (ASTs): Two aboveground storage tanks were identified at the facility, used for the bulk storage of certain raw materials utilized in the manufacturing process. The ASTs appeared to be in good condition based on visual inspection, with no evidence of releases, leaks, or deterioration. Secondary containment in the form of concrete bermed containment areas was observed around both ASTs. Registration and inspection records for the ASTs were reviewed in the Briarwood data room and appeared to be current and in order.

Asbestos-Containing Materials (ACMs): Portions of the Marysville facility building date to the 1970s, based on available construction records. Given the age of these building components, there is a potential for asbestos-containing materials to be present in certain building elements, including but not limited to roofing materials, floor tiles, pipe insulation, and other building systems typical of construction from that era. Terrapoint did not conduct a comprehensive asbestos survey as part of the Phase I ESA, as such a survey is outside the standard ASTM E1527-21 scope. However, Terrapoint has recommended that a targeted asbestos survey be conducted if Meridian contemplates any renovation, demolition, or significant alteration of the older portions of the facility, as the disturbance of ACMs without proper abatement procedures would trigger regulatory requirements under both federal and state law and could expose Meridian to significant liability.

Air Emissions Permits: Briarwood currently holds air emissions permits issued by the Ohio EPA for the Marysville facility, authorizing emissions of volatile organic compounds ("VOCs") generated during manufacturing processes, including formulation, blending, and filling operations. A review of available compliance records, inspection reports, and correspondence with the Ohio EPA did not reveal any notices of violation, compliance orders, or pending enforcement actions related to air emissions. The current permits appear to be in good standing. As a transaction consideration, Meridian should confirm with the Ohio EPA whether the existing air permits are transferable or whether new permit applications will be required in connection with the change of operator.

Wastewater Discharge: The Marysville facility discharges process wastewater generated during manufacturing operations under an industrial pretreatment permit issued by the local municipal wastewater treatment system. The permit establishes discharge limits for various parameters, including pH, biochemical oxygen demand ("BOD"), total suspended solids ("TSS"), and certain chemical-specific limits. A review of available discharge monitoring reports, inspection records, and correspondence with the local pretreatment authority and the Ohio EPA did not reveal any notices of violation, permit exceedances, or pending enforcement actions related to wastewater discharge.

Hazardous Waste: The Marysville facility is classified as a small-quantity generator of hazardous waste under the Resource Conservation and Recovery Act ("RCRA") and corresponding Ohio regulations. Hazardous waste generated at the facility includes certain spent solvents and cleaning materials generated during manufacturing operations. A review of hazardous waste manifests, land disposal restriction notifications, and disposal facility records in the Briarwood data room indicated that the facility's hazardous waste management practices appeared to be complete and in compliance with applicable RCRA requirements, including generator requirements for waste characterization, storage time limits, manifesting, and use of permitted treatment, storage, and disposal facilities ("TSDFs"). No open violations or pending enforcement actions related to hazardous waste management were identified.

D. Recommendations for Marysville Facility

Based on the Phase I ESA findings and our review of available records, C&H makes the following recommendations with respect to the Marysville manufacturing facility:

1. Phase II Environmental Site Assessment

C&H strongly recommends that Meridian authorize the commencement of a Phase II Environmental Site Assessment at the Marysville facility before the APA is finalized and before the Transaction proceeds to closing. The Phase II ESA is necessary to evaluate the nature and extent of the potential soil contamination identified as a recognized environmental condition in the southeastern portion of the property. Without the Phase II investigation, the deal team cannot adequately assess the magnitude of potential environmental liability associated with this property or properly allocate environmental risk in the APA.

The recommended Phase II scope of work, as outlined in Terrapoint's preliminary proposal, includes the following components:

(a) Advancement of subsurface soil borings at multiple locations in the southeastern portion of the property, with soil sample collection at various depth intervals;

(b) Laboratory analysis of soil samples for a comprehensive suite of pesticide and herbicide compounds, including organochlorine pesticides, organophosphorus pesticides, and chlorophenoxy acid herbicides;

(c) Depending on the results of the initial soil sampling, potential expansion of the scope to include installation of groundwater monitoring wells and collection of groundwater samples for laboratory analysis; and

(d) Preparation of a Phase II ESA report presenting the findings, conclusions, and recommendations, including an assessment of whether any identified contamination exceeds applicable Ohio EPA cleanup standards and whether remediation may be required.

Estimated Cost: Terrapoint has provided a preliminary budget estimate of $45,000 to $65,000 for the Phase II scope described above. The range accounts for variability in the number of soil borings required, the potential need for groundwater monitoring well installation, and laboratory analytical costs. If the Phase II investigation reveals the need for expanded investigation (e.g., additional borings, delineation of a contamination plume, or risk assessment), additional costs may be incurred.

Timeline: Terrapoint has indicated that Phase II results would be available within four to six weeks of mobilization. Given the current Transaction timeline, C&H recommends that Meridian authorize commencement of the Phase II investigation as promptly as practicable.

2. Asbestos Survey

If Meridian plans any renovation, demolition, or significant alteration of the older portions of the Marysville facility (particularly those building components dating to the 1970s), an asbestos survey should be conducted to identify and characterize any asbestos-containing materials. This survey can be conducted concurrently with the Phase II ESA to minimize disruption and cost. If no renovation or demolition is contemplated in the near term, the asbestos survey may be deferred, though awareness of the potential presence of ACMs should be maintained in any facility management planning.

3. Significance for the Transaction

The environmental findings at the Marysville facility have several significant implications for the proposed Transaction:

(a) Remediation Costs and Liability Allocation: If the Phase II ESA confirms the presence of contamination exceeding applicable cleanup standards, remediation will likely be required. Remediation costs for pesticide- or herbicide-contaminated soils can vary widely depending on the nature and extent of contamination, the applicable cleanup standards, and the remediation methodology employed, but could range from tens of thousands to several hundred thousand dollars or more in significant cases. The allocation of remediation liability among the buyer, the seller, and the landlord (Buckeye Industrial Properties LLC) must be carefully addressed in the APA and in any negotiations with Buckeye regarding the lease assignment.

(b) APA Environmental Provisions: The environmental representations, warranties, and indemnification provisions in the APA should be reviewed and potentially strengthened in light of the REC. These provisions are discussed in greater detail in Section V.B of this memorandum.

(c) Lease Assignment Consent: If contamination is confirmed at the Marysville facility, Buckeye Industrial Properties LLC may raise environmental concerns as a basis for withholding or conditioning its consent to the assignment of the lease to Meridian. This potential complication should be anticipated in discussions with Buckeye and its counsel.

(d) R&W Insurance: The fact that the Phase II ESA has not yet been completed may result in an environmental exclusion from the R&W insurance policy being sought through Northbridge Risk Advisors LLC and Sentinel Specialty Insurance Company. This issue is discussed further in Section V.B of this memorandum.

4. Status: As of the date of this memorandum, the Phase II ESA has not been commissioned or commenced. C&H recommends that Meridian authorize commencement promptly.

IV. WEST JEFFERSON DISTRIBUTION CENTER — ENVIRONMENTAL REVIEW FINDINGS

A. Site Description and History

The West Jefferson distribution center is located at 500 Commerce Boulevard, West Jefferson, OH 43162, in Madison County, Ohio. The property is situated in a commercial and light industrial area along Commerce Boulevard, with surrounding land uses consisting primarily of commercial warehousing, light industrial operations, and undeveloped land.

Property Type: Warehouse/distribution.

Ownership: The West Jefferson property is owned by Briarwood in fee simple. Under the proposed APA, this property is included in the Acquired Assets and will be conveyed to Meridian at closing by special warranty deed, transferring fee simple interest.

Current Use: The facility is used exclusively for the warehousing and distribution of finished CleanLeaf and PureHaven products. Operations at the facility encompass inbound receipt of finished goods (primarily from the Marysville manufacturing facility), inventory management and storage, order fulfillment, and outbound distribution to wholesale and retail customers. The facility does not involve any manufacturing, formulation, blending, or chemical processing operations. The facility operates with approximately 30 to 40 warehouse and logistics personnel.

Prior Uses: Terrapoint's historical use research, including review of available county records, aerial photographs, and environmental databases, indicates that the subject property was previously used as a general commercial warehouse by prior operators. No industrial or manufacturing history was identified for the property. The available records suggest that the current building was either constructed or substantially renovated in the 1990s. No evidence of agricultural chemical storage, petroleum handling, industrial manufacturing, or other potentially contaminating activities was identified in the historical use record for this property.

B. Findings. Based on Terrapoint's desktop review and limited site reconnaissance, C&H reports the following findings for the West Jefferson distribution center:

Recognized Environmental Conditions: No recognized environmental conditions ("RECs"), controlled recognized environmental conditions ("CRECs"), or historical recognized environmental conditions ("HRECs") were identified at the West Jefferson property. The property's history of use as a general commercial warehouse, the absence of any industrial or manufacturing history, and the negative results of environmental database searches collectively support the conclusion that the property does not present material environmental risk.

Environmental Database Search: Environmental database search results returned no listings for the subject property or for immediately adjacent properties in any federal or state environmental databases, including CERCLIS/SEMS, RCRA, ERNS, Ohio EPA Division of Environmental Response and Revitalization databases, state leaking underground storage tank databases, or other relevant databases.

Storage Tanks and Hazardous Materials: No evidence of underground storage tanks, aboveground storage tanks associated with releases, hazardous waste generation, or storage of hazardous materials was identified at the property. The facility's operations (warehousing and distribution of finished consumer products) do not involve the storage or handling of bulk hazardous materials, and no chemical storage areas were observed during the limited site reconnaissance.

Building Condition: No evidence of asbestos-containing materials or lead-based paint concerns was identified. The building structure appears to have been constructed or substantially renovated in the 1990s, which is after the general cessation of asbestos use in building materials. The building appeared to be in good overall condition based on visual inspection, with no evidence of environmental deterioration, staining, or conditions indicative of releases.

Regulatory Status: No notices of violation, regulatory enforcement actions, environmental liens, institutional controls, or engineering controls associated with the West Jefferson property were identified in available records. The property does not appear to be subject to any environmental use restrictions or ongoing regulatory obligations.

Conclusion: Based on the available records and site reconnaissance, the West Jefferson distribution center presents no material environmental concerns. No further environmental investigation is recommended for this property at this time.

V. TRANSACTION IMPLICATIONS AND RISK ASSESSMENT

A. Risk Matrix Summary

The following table summarizes the environmental risk assessment for the two real property assets included in the Acquired Assets:

The Moderate to High risk rating assigned to the Marysville facility reflects both the inherent uncertainty associated with an unresolved REC (the contamination has been identified as a potential concern but not confirmed through subsurface investigation) and the potential for significant remediation liability and transactional complications if contamination is confirmed. The risk rating may be revised upward or downward based on the findings of the Phase II ESA.

B. APA Considerations

The environmental findings at the Marysville facility have several direct implications for the structuring and negotiation of the APA. C&H recommends that the deal team carefully consider the following issues in the next round of APA negotiations:

Environmental Representations and Warranties

C&H recommends that the Seller's environmental representations and warranties in the APA be robust, comprehensive, and specifically address the Marysville REC. At a minimum, the environmental representations should include the following:

(a) A representation that Seller is in material compliance with all applicable environmental laws, regulations, and permits with respect to the Acquired Assets and the operation of the Product Lines;

(b) A representation that Seller has disclosed all known environmental conditions, contamination, and liabilities affecting the Acquired Assets, including specifically the REC identified at the Marysville facility;

(c) A representation regarding the absence of pending or threatened environmental claims, enforcement actions, or proceedings;

(d) A representation regarding the existence, condition, and compliance status of all environmental permits and registrations necessary for the operation of the Acquired Assets; and

(e) Appropriate disclosure of the Marysville REC in the APA's disclosure schedules, including a description of the identified condition, the Phase I ESA findings, and the anecdotal information provided by Janet Tsao regarding the 2019 soil disturbance observations.

Indemnification

The APA's indemnification provisions should be carefully evaluated for adequacy with respect to potential environmental liabilities. Based on the current proposed indemnification structure, C&H understands that the draft APA contemplates:

• A general indemnification cap of 35% of the purchase price, or $33,250,000;

• A tipping basket (deductible) of $950,000, below which indemnification claims are not payable;

• A 24-month survival period for general representations and warranties from the date of closing.

C&H recommends that the deal team evaluate whether these parameters are adequate to address potential environmental liabilities, particularly in light of the following considerations:

(a) Survival Period: Environmental contamination issues frequently do not manifest or are not fully characterized within a 24-month period following closing. Investigation, regulatory engagement, remediation design, and remediation implementation can extend over multiple years. C&H recommends that the deal team consider whether the environmental representations and warranties should be carved out as "Fundamental Representations" with an extended survival period — ideally, an indefinite survival period or, at minimum, a survival period extending to the applicable statute of limitations for environmental claims under Ohio law and CERCLA.

(b) Basket: If remediation costs fall below the $950,000 tipping basket, the buyer would bear the full cost of remediation without recourse to indemnification. The deal team should assess whether this threshold is acceptable given the range of potential remediation costs.

(c) Cap: While the 35% cap of $33,250,000 provides substantial headroom for most environmental claims, the adequacy of the cap should be confirmed once the Phase II results are available.

Escrow

The proposed Transaction structure includes an escrow holdback of $9,500,000 (10% of the $95,000,000 purchase price). C&H recommends that the deal team assess whether the escrow holdback should specifically account for potential environmental remediation costs, depending on the findings of the Phase II ESA. If the Phase II confirms contamination, the deal team should consider whether a portion of the escrow should be specifically designated or reserved for environmental remediation and whether the escrow release schedule should be structured to ensure that funds remain available during the period in which environmental investigation and remediation activities may occur.

R&W Insurance

The pending R&W insurance application is being handled through Northbridge Risk Advisors LLC (broker: Alison Chu) with the proposed carrier Sentinel Specialty Insurance Company (underwriter: Mark Ellison). The environmental diligence gap — specifically, the fact that the Phase II ESA has not been completed — presents a significant concern for the R&W insurance underwriting process. Based on C&H's experience with R&W insurance placements, there are several potential outcomes:

(a) The carrier may impose a specific environmental exclusion from the R&W policy, excluding from coverage any losses arising from or related to the Marysville REC and any environmental contamination at the Marysville facility. Such an exclusion would leave Meridian without R&W insurance coverage for what may be the most significant identified risk in the Transaction.

(b) The carrier may require completion of the Phase II ESA as a condition precedent to binding coverage, or as a condition to providing environmental coverage without exclusion. This could create a timing issue if the Phase II timeline (4–6 weeks) conflicts with the desired closing date.

(c) In some cases, the carrier may agree to provide coverage subject to a sublimit or increased retention for environmental claims, rather than a blanket exclusion.

C&H strongly recommends that the deal team coordinate with Northbridge Risk Advisors LLC and Alison Chu to determine the carrier's position on environmental coverage and whether completion of the Phase II ESA is a prerequisite for obtaining adequate R&W insurance coverage. This coordination should occur in parallel with the commissioning of the Phase II ESA to avoid unnecessary delays.

Lease Assignment

As noted in Section III.A above, the assignment of the Marysville facility lease to Meridian requires the prior written consent of Buckeye Industrial Properties LLC as landlord. If the Phase II ESA confirms the presence of soil contamination at the Marysville facility, Buckeye may raise environmental concerns as a basis for withholding consent to the lease assignment, conditioning consent on environmental remediation or indemnification commitments from Meridian, or seeking to impose additional environmental obligations on Meridian as a condition of consent. The deal team should anticipate this possibility and develop a strategy for addressing environmental issues in the context of the lease assignment consent negotiations. C&H is available to advise on the allocation of environmental liability among buyer, seller, and landlord in this context.

C. Regulatory Considerations

Ohio Voluntary Action Program (VAP)

If the Phase II ESA confirms the presence of contamination at the Marysville facility exceeding applicable cleanup standards, the Ohio Voluntary Action Program (administered by the Ohio EPA under Ohio Revised Code Chapter 3746) may provide a useful framework for investigation and remediation. The Ohio VAP allows property owners and operators to voluntarily investigate and remediate contaminated properties under the oversight of a certified professional, with the potential to receive a covenant not to sue from the Ohio EPA upon successful completion of the program. A covenant not to sue provides significant liability protection by confirming that the Ohio EPA will not pursue enforcement action against the participant for the conditions addressed under the VAP. Participation in the Ohio VAP is voluntary and does not preclude the use of other regulatory mechanisms.

The Ohio VAP may be particularly advantageous in the context of this Transaction because it provides a defined and predictable process for achieving environmental closure, and a covenant not to sue would enhance the value and marketability of the Marysville property for Meridian going forward.

CERCLA / Superfund Considerations

Neither the Marysville facility nor the West Jefferson distribution center is listed or proposed for listing on the National Priorities List ("NPL") under the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. §§ 9601 et seq. No information suggesting the potential for NPL listing was identified during the environmental database searches or records review.

However, if contamination is confirmed at the Marysville facility, Meridian should be aware of potential CERCLA liability considerations. While the Transaction is structured as an asset purchase rather than a stock acquisition — which generally provides greater protection against successor liability — courts have in certain circumstances imposed CERCLA liability on asset purchasers under theories including the "continuity of enterprise" doctrine and the "substantial continuity" test. The risk of CERCLA successor liability is mitigated by the asset purchase structure and by the fact that the Marysville property is leased rather than owned, but it cannot be entirely eliminated. The APA's environmental indemnification provisions serve as an important contractual backstop against potential CERCLA liability exposure.

State Product Registration Gap

For the sake of completeness, C&H notes that a separate state product registration gap issue has been identified and is addressed in the litigation and regulatory due diligence memorandum dated September 12, 2022. While this issue is not strictly an environmental matter within the scope of this memorandum, it is flagged here because it pertains to the overall regulatory compliance profile of the Product Lines and may intersect with the environmental regulatory analysis in certain respects. The deal team is referred to the September 12, 2022 memorandum for a detailed discussion of the product registration issue.

VI. OPEN ITEMS AND NEXT STEPS

Based on the findings and analysis set forth in this memorandum, C&H identifies the following open items and recommended next steps for the deal team's consideration and action:

1. Phase II ESA — Marysville Facility. Meridian should authorize Terrapoint Environmental Group, Inc. to proceed with the Phase II Environmental Site Assessment at the Marysville manufacturing facility. The estimated cost of the Phase II investigation is $45,000 to $65,000, and results are expected within four to six weeks of mobilization. Keith Novak, Terrapoint's designated project manager, has indicated that Terrapoint is prepared to commence field work promptly upon receipt of authorization. C&H will coordinate with Terrapoint on the scope of work, access arrangements with the landlord and Briarwood, and reporting requirements.

2. Asbestos Survey — Marysville Facility. If Meridian plans any renovation, demolition, or significant alteration of the older portions of the Marysville facility, an asbestos survey should be conducted to identify and characterize any asbestos-containing materials. This survey can be conducted concurrently with the Phase II ESA to minimize scheduling disruption and incremental cost.

3. APA Environmental Provisions. C&H will review and, where appropriate, propose revisions to strengthen the environmental representations, warranties, and indemnification provisions in the next draft cycle of the APA. Specific areas of focus will include the scope and specificity of environmental representations, the treatment of environmental representations as Fundamental Representations with extended or indefinite survival, the adequacy of the tipping basket and indemnification cap as applied to environmental claims, and the disclosure of the Marysville REC in the disclosure schedules. C&H will circulate proposed revisions to the deal team for review and comment.

4. R&W Insurance Coordination. C&H recommends that the deal team coordinate with Northbridge Risk Advisors LLC (contact: Alison Chu) and the proposed carrier, Sentinel Specialty Insurance Company (underwriter: Mark Ellison), to determine: (a) whether completion of the Phase II ESA is a prerequisite for environmental coverage under the proposed R&W policy; (b) the carrier's anticipated position on environmental exclusions or limitations; and (c) the impact of the Phase II timeline on the overall R&W insurance binding timeline. This coordination should occur in parallel with the commissioning of the Phase II ESA.

5. Landlord Communication. The deal team should assess whether and to what extent the environmental findings at the Marysville facility should be communicated to Buckeye Industrial Properties LLC in connection with the pending lease assignment consent request. This assessment should consider the lease agreement's provisions regarding environmental disclosure obligations, the strategic implications of proactive disclosure versus reactive disclosure, and the potential for environmental findings to affect the consent process. C&H is available to advise on the appropriate scope and timing of any communication with Buckeye and its counsel.

6. Seller Engagement. C&H recommends that the deal team request from Briarwood (through Seller's counsel, Caldwell, Pruitt & Shaw LLP, contact: Rachel Underwood) any additional environmental records, documentation, or information related to the Marysville facility, including specifically: (a) any documentation of the 2019 soil disturbance observations referenced by Janet Tsao during her interview with Terrapoint; (b) any records of environmental investigations, sampling, or remediation activities conducted at the facility during or prior to Briarwood's tenancy; (c) any correspondence with the landlord regarding environmental conditions at the property; and (d) any other environmental information not previously produced in the Briarwood data room. C&H further recommends that full and accurate disclosure of all known environmental conditions, including the Marysville REC, be ensured in the APA disclosure schedules.

VII. CONCLUSION

The environmental due diligence investigation conducted in connection with Meridian Consumer Brands LLC's proposed $95,000,000 acquisition of the CleanLeaf and PureHaven product lines from Briarwood Home Essentials, Inc. has yielded the following principal conclusions:

The Phase I Environmental Site Assessment for the Marysville manufacturing facility has identified a recognized environmental condition involving potential soil contamination in the southeastern portion of the property, likely associated with historical agricultural chemical storage operations conducted at or adjacent to the site prior to Briarwood's occupancy. This REC requires further investigation through a Phase II Environmental Site Assessment before the Transaction should proceed to closing. Until the Phase II investigation is completed and the nature and extent of any contamination are determined, the environmental risk profile of the Marysville facility cannot be fully characterized, and the deal team cannot make fully informed decisions regarding risk allocation, indemnification structuring, and pricing adjustments.

The West Jefferson distribution center presents no material environmental concerns based on available records and site reconnaissance. No recognized environmental conditions were identified, and no further investigation is recommended for this property.

C&H recommends that Meridian promptly authorize the Phase II investigation at the Marysville facility and that the deal team factor potential environmental remediation costs and liability allocation into ongoing APA negotiations and the overall Transaction risk assessment. The Phase II findings will also be critical to the R&W insurance underwriting process and the lease assignment consent negotiations with Buckeye Industrial Properties LLC.

This memorandum should be read in conjunction with the following related memoranda prepared by C&H in connection with this Transaction:

• Due Diligence Summary Memorandum (dated October 3, 2022) — providing a comprehensive summary of all due diligence workstreams, including legal, financial, operational, intellectual property, regulatory, and environmental findings.

• R&W Insurance Coverage Analysis Memorandum (dated October 10, 2022) — providing a detailed analysis of the proposed R&W insurance policy terms, coverage scope, exclusions, and the interplay between R&W insurance and the APA's indemnification provisions.

Together, these memoranda provide a comprehensive picture of the environmental risk profile of the Transaction and should inform the deal team's decisions as the Transaction progresses toward closing.

We are available to discuss the contents of this memorandum and the recommended next steps at the deal team's convenience. Please do not hesitate to contact Andrew Fitzpatrick (212-555-0147) or Sandra Tung (212-555-0193) with any questions.

APPENDICES (REFERENCED)

The following appendices are referenced in this memorandum and are available for review in the locations indicated:

Appendix A: Terrapoint Environmental Group, Inc. — Phase I Environmental Site Assessment Report No. TEG-2022-0441 (dated September 2, 2022). The full report, including all appendices, data tables, maps, photographs, and supporting documentation, is maintained in the Pemberton Systems virtual data room under project code BHE-CleanLeaf-2022 (folder: Environmental Diligence) and in the C&H matter file (Matter No. 1011-00005).

Appendix B: Summary of Environmental Records Reviewed from Briarwood Data Room. This summary catalogues the environmental records and documents reviewed by C&H from the Briarwood data room, organized by facility and document category, including notation of any gaps or deficiencies in the document production.

Appendix C: Terrapoint Environmental Group, Inc. — Phase II Environmental Site Assessment Scope of Work and Budget Estimate. This document sets forth Terrapoint's proposed scope of work, methodology, timeline, and estimated cost for the recommended Phase II ESA at the Marysville manufacturing facility.

CONFIDENTIALITY NOTICE: This memorandum constitutes attorney work product and is protected by the attorney-client privilege. It has been prepared by Calderwood & Harkness LLP solely for the use of Meridian Consumer Brands LLC and Lakepoint Capital Partners, LP in connection with the proposed acquisition of the CleanLeaf and PureHaven product lines from Briarwood Home Essentials, Inc. This memorandum contains confidential legal analysis and recommendations and should not be disclosed to any third party without the prior written consent of Calderwood & Harkness LLP. Any unauthorized disclosure may result in a waiver of the attorney-client privilege and/or work product protection.

CALDERWOOD & HARKNESS LLP 599 Lexington Avenue, 36th Floor New York, NY 10022

Facility	Risk Rating
Marysville Manufacturing Facility	Moderate to High
West Jefferson Distribution Center	Low
Facility	Risk Level	Key Issue	Recommended Action
Marysville Manufacturing Facility (2800 Industrial Parkway, Marysville, OH 43040)	Moderate to High	Recognized Environmental Condition — potential soil contamination in southeastern portion of property from historical agricultural chemical storage operations; Phase II ESA required to determine nature and extent	Commission Phase II ESA before closing; estimated cost $45,000–$65,000; 4–6 week timeline
West Jefferson Distribution Center (500 Commerce Boulevard, West Jefferson, OH 43162)	Low	No RECs, CRECs, or HRECs identified; no material environmental concerns based on available records and site reconnaissance	No further action required at this time

PRIVILEGED & CONFIDENTIAL — ATTORNEY WORK PRODUCT / ATTORNEY-CLIENT COMMUNICATION
DUE DILIGENCE MEMORANDUM — ENVIRONMENTAL
TO:
Diana Ressler, General Counsel, Meridian Consumer Brands LLC Priya Anand, Chief Financial Officer, Meridian Consumer Brands LLC Thomas Liang, Managing Partner, Lakepoint Capital Partners, LP
FROM:
Andrew Fitzpatrick, Lead Associate, Calderwood & Harkness LLP
REVIEWED BY:
Sandra Tung, Responsible Partner, Calderwood & Harkness LLP
DATE:
September 8, 2022
RE:
Environmental Due Diligence — Proposed Acquisition of CleanLeaf and PureHaven Product Lines from Briarwood Home Essentials, Inc.
MATTER NO.:
1011-00005
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I. EXECUTIVE SUMMARY
This memorandum summarizes the findings and recommendations arising from Calderwood & Harkness LLP's ("C&H") environmental due diligence investigation conducted in connection with Meridian Consumer Brands LLC's ("Meridian") proposed acquisition of the CleanLeaf home cleaning product line and the PureHaven personal care product line (together, the "Product Lines") from Briarwood Home Essentials, Inc. ("Briarwood" or "Seller"). The proposed transaction is structured as an asset purchase at a total consideration of approximately $95,000,000 (the "Transaction") and is to be documented under a definitive Asset Purchase Agreement (the "APA").
Two real property assets are included within the definition of "Acquired Assets" under the proposed APA:
1. Marysville Manufacturing Facility — located at 2800 Industrial Parkway, Marysville, OH 43040 (Union County, Ohio). This facility is the primary manufacturing site for the CleanLeaf and PureHaven product lines, producing approximately 142 active stock-keeping units ("SKUs"). The property is currently leased by Briarwood from Buckeye Industrial Properties LLC ("Buckeye") under a commercial lease agreement. The proposed Transaction contemplates assignment of this lease to Meridian, which requires the prior written consent of Buckeye as landlord.
2. West Jefferson Distribution Center — located at 500 Commerce Boulevard, West Jefferson, OH 43162 (Madison County, Ohio). This facility is used for warehousing and distribution of finished CleanLeaf and PureHaven products. The property is owned by Briarwood in fee simple and is included in the Acquired Assets as a fee simple interest to be conveyed to Meridian at closing.
C&H engaged Terrapoint Environmental Group, Inc. ("Terrapoint") to conduct a Phase I Environmental Site Assessment ("Phase I ESA") for the Marysville facility in conformance with ASTM International Standard E1527-21, Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process. Terrapoint commenced field work and research in late August 2022, and the Phase I ESA report (Report No. TEG-2022-0441) was delivered on September 2, 2022.
Key Finding — Marysville Facility: The Phase I ESA identified a recognized environmental condition ("REC") at the Marysville facility involving potential soil contamination in the southeastern portion of the property. Historical records and site observations indicate that a former agricultural chemical storage operation on or adjacent to the site may have resulted in releases of pesticides or herbicides into subsurface soils. Terrapoint has concluded that this REC warrants further investigation through a Phase II Environmental Site Assessment ("Phase II ESA"), which would involve subsurface soil sampling and potentially the installation of groundwater monitoring wells. As of the date of this memorandum, no Phase II ESA has been commissioned or commenced.
West Jefferson Distribution Center: Based on available records and a limited site reconnaissance, no material environmental concerns were identified at the West Jefferson distribution center. No RECs, controlled recognized environmental conditions ("CRECs"), or historical recognized environmental conditions ("HRECs") were identified. No further investigation is recommended for this property at this time.
Recommendations: C&H strongly recommends that Meridian authorize Terrapoint to proceed with a Phase II ESA at the Marysville facility before the APA is finalized and before the Transaction proceeds to closing. The estimated cost for the Phase II investigation is $45,000–$65,000, with results anticipated within four to six weeks of mobilization. The findings of the Phase II ESA will have direct implications for the APA's environmental representations and warranties, indemnification provisions, the escrow holdback structure, the pending representations and warranties insurance ("R&W Insurance") application, and the lease assignment consent process with Buckeye.
Overall Risk Assessment:
The balance of this memorandum sets forth the scope of our environmental review, a detailed discussion of the findings for each facility, an analysis of the transaction implications, and a summary of recommended next steps.
II. SCOPE OF ENVIRONMENTAL REVIEW
A. Engagement and Consultant
C&H, acting on behalf of Meridian and in coordination with Lakepoint Capital Partners, LP ("Lakepoint"), engaged Terrapoint Environmental Group, Inc. ("Terrapoint") to perform environmental due diligence in connection with the proposed Transaction. Terrapoint is a nationally recognized environmental consulting firm headquartered at 33 Arch Street, Suite 1400, Boston, MA 02110. Terrapoint was selected based on its extensive experience with transactional environmental due diligence, its familiarity with Ohio environmental regulatory requirements, and its capacity to deliver results within the Transaction's diligence timeline.
The designated project manager for the engagement is Keith Novak, a senior environmental consultant at Terrapoint with over fifteen years of experience conducting Phase I and Phase II ESAs in the industrial and manufacturing sectors. Mr. Novak served as the principal investigator for the Phase I ESA at the Marysville facility and has been in regular communication with C&H throughout the diligence process.
The scope of Terrapoint's engagement encompassed the following:
(a) A Phase I Environmental Site Assessment of the Marysville manufacturing facility conducted in conformance with ASTM International Standard E1527-21. The Phase I ESA included all standard elements prescribed by the ASTM standard, including historical use research, environmental database searches, regulatory file reviews, site reconnaissance, and interviews with knowledgeable parties.
(b) A desktop review and limited site reconnaissance of the West Jefferson distribution center. This review encompassed environmental database searches, historical records research, a review of available property records, and a limited visual inspection of the property. A full Phase I ESA was not conducted for the West Jefferson facility based on a preliminary risk assessment indicating that the property's use history (general commercial warehousing) presented a lower environmental risk profile.
Terrapoint commenced its Phase I ESA field work and research activities in late August 2022. The final Phase I ESA report (Report No. TEG-2022-0441) was delivered to C&H on September 2, 2022.
B. Materials Reviewed
In preparing this memorandum, C&H reviewed the following materials, documents, and data sources:
(i) Terrapoint Phase I ESA Report No. TEG-2022-0441 (dated September 2, 2022) — the complete Phase I Environmental Site Assessment report for the Marysville manufacturing facility, including all appendices, data tables, and supporting documentation.
(ii) Briarwood-Provided Environmental Records and Documents — a substantial volume of environmental records and documents provided by Briarwood and its counsel, Caldwell, Pruitt & Shaw LLP ("Seller's Counsel"), uploaded to the Pemberton Systems virtual data room under project code BHE-CleanLeaf-2022. The reviewed materials included, without limitation:
• Historical environmental compliance records for both the Marysville facility and the West Jefferson distribution center, spanning the period of Briarwood's occupancy and operations (approximately 2008 to present);
• Permits and registrations, including air emissions permits issued by the Ohio Environmental Protection Agency ("Ohio EPA"), water discharge permits, and hazardous waste generator registrations;
• Prior environmental assessments, audits, or investigations conducted at either facility, to the extent such records were made available by Briarwood in the data room;
• Storage tank records, including registrations and inspection records for any underground storage tanks ("USTs") or aboveground storage tanks ("ASTs") at either facility;
• Correspondence between Briarwood and the Ohio EPA or any other federal, state, or local regulatory agencies concerning environmental compliance, inspections, notices of violation, enforcement actions, or remediation activities.
(iii) County and State Environmental Database Search Results — included as appendices to the Terrapoint Phase I ESA report, these searches encompassed federal and state databases maintained by the U.S. Environmental Protection Agency ("USEPA") and the Ohio EPA, including without limitation the CERCLIS/SEMS, RCRA, ERNS, state equivalent databases, and the Ohio EPA Division of Environmental Response and Revitalization records.
(iv) Historical Aerial Photographs and Trelwick Fire Insurance Maps — reviewed by Terrapoint as part of the standard Phase I ESA historical use research, covering available periods from the 1930s to the present, to identify prior uses of the subject properties and adjacent parcels.
(v) Lease Agreement for Marysville Facility — the commercial lease agreement between Buckeye Industrial Properties LLC, as landlord, and Briarwood Home Essentials, Inc., as tenant, for the premises at 2800 Industrial Parkway, Marysville, OH 43040, including all amendments, addenda, and environmental provisions contained therein.
(vi) Property Records for West Jefferson Facility — deed records, title information, property tax records, and related documentation for the property at 500 Commerce Boulevard, West Jefferson, OH 43162, as provided in the Briarwood data room.
C&H notes that our review was necessarily limited to the materials made available by Briarwood and its counsel in the virtual data room and through Terrapoint's independent research. We have not independently verified the completeness of Briarwood's document production and rely on Seller's representations that all material environmental records have been disclosed. Any gaps in the document production could affect the conclusions set forth in this memorandum.
C. Facilities Covered
The environmental due diligence addressed two real property assets included in the Acquired Assets under the proposed APA:
Marysville Manufacturing Facility
Address: 2800 Industrial Parkway, Marysville, OH 43040 (Union County, Ohio)
The Marysville facility serves as the primary manufacturing site for the CleanLeaf and PureHaven product lines. The facility produces approximately 142 active SKUs across both product lines, encompassing a range of home cleaning solutions, surface cleaners, laundry products, and personal care items. Manufacturing operations include formulation, blending, filling, packaging, and quality assurance testing. The facility is leased by Briarwood from Buckeye Industrial Properties LLC under a commercial lease agreement. The proposed Transaction contemplates assignment of this lease to Meridian, subject to the landlord's prior written consent.
West Jefferson Distribution Center
Address: 500 Commerce Boulevard, West Jefferson, OH 43162 (Madison County, Ohio)
The West Jefferson facility functions as a warehouse and distribution center for finished CleanLeaf and PureHaven products. The facility handles inbound receipt of finished goods from the Marysville manufacturing facility, warehousing and inventory management, and outbound distribution to wholesale and retail customers. The property is owned by Briarwood in fee simple and is included in the Acquired Assets as a fee simple interest to be conveyed to Meridian at closing by special warranty deed.
III. MARYSVILLE MANUFACTURING FACILITY — PHASE I ESA FINDINGS
A. Site Description and History
The Marysville manufacturing facility is located at 2800 Industrial Parkway, Marysville, OH 43040, in Union County, Ohio. The property is situated in a light industrial and commercial area along Industrial Parkway, adjacent to other industrial and warehouse operations. The surrounding land use is predominantly industrial and agricultural.
Property Type: Industrial/manufacturing.
Current Occupancy and Operations: Briarwood has operated at this location since approximately 2008, utilizing the facility for the manufacture of its eco-friendly home cleaning (CleanLeaf) and personal care (PureHaven) product lines. Manufacturing operations at the facility encompass formulation and blending of raw materials (including surfactants, solvents, fragrances, and other chemical inputs), filling and packaging of finished products, and quality assurance and testing. The facility operates with approximately 85 to 100 production employees across two shifts.
Landlord: Buckeye Industrial Properties LLC, a commercial real estate holding company with a principal office at 77 East Nationwide Boulevard, Suite 200, Columbus, OH 43215. Buckeye owns the underlying real property and leases the facility to Briarwood under a commercial lease agreement.
Lease Status: The proposed Transaction contemplates assignment of the Marysville facility lease from Briarwood to Meridian. The lease agreement contains a provision requiring the prior written consent of Buckeye as landlord before any assignment or transfer of the tenant's interest. A formal consent request was transmitted to Buckeye on October 7, 2022, which is subsequent to the date of this memorandum; this fact is noted here for context and completeness, as the lease assignment consent process may be affected by the environmental findings discussed below. As of the last available update, no response from Buckeye has been received.
Prior Uses: Terrapoint's historical use research, including review of Trelwick fire insurance maps, historical aerial photographs, county records, and environmental database searches, revealed that the subject property and portions of immediately adjoining parcels were previously used for light industrial purposes and, significantly, for agricultural chemical storage operations prior to Briarwood's occupancy of the site in approximately 2008. The agricultural chemical storage use appears to have been conducted during the 1980s and 1990s by one or more prior operators. The specific identity of the prior agricultural chemical storage operator and the precise nature and volume of chemicals stored on-site have not been definitively established through the Phase I ESA records review, though available database records suggest involvement in the regional distribution of pesticide and herbicide products.
The transition from agricultural chemical storage to the current light manufacturing use appears to have occurred in stages during the late 1990s and early 2000s, with the facility undergoing modifications and renovation prior to Briarwood's occupancy. Terrapoint noted that the extent of any environmental investigation or cleanup conducted in connection with the cessation of agricultural chemical storage operations is unclear from available records.
B. Recognized Environmental Condition (REC)
Terrapoint's Phase I ESA identified a recognized environmental condition at the Marysville facility, which constitutes the most significant environmental finding in this due diligence review.
Nature of the REC: The recognized environmental condition involves potential soil contamination in the southeastern portion of the property, potentially resulting from the historical agricultural chemical storage operations described above. Specifically, Terrapoint concluded that the historical storage and handling of pesticide and herbicide products on or adjacent to the site during the 1980s and 1990s may have resulted in releases of these chemical compounds into the subsurface soils beneath the southeastern portion of the current Briarwood facility. The concern extends to the possibility that such contamination, if present, could have migrated into the underlying groundwater.
Under ASTM E1527-21, a "recognized environmental condition" is defined as the presence or likely presence of any hazardous substances or petroleum products in, on, or at a property: (1) due to a release to the environment; (2) under conditions indicative of a release to the environment; or (3) under conditions that pose a material threat of a future release to the environment. Terrapoint determined that the conditions observed at the Marysville facility satisfy this definition.
Evidence Supporting the REC: Terrapoint's conclusion is supported by several converging lines of evidence:
(a) State Environmental Database Records: Environmental database search results revealed the existence of a former registered storage facility for agricultural chemicals on a portion of the current property or on an immediately adjoining parcel. The database records indicate that this storage facility was operational during the 1980s and 1990s and was associated with the storage and distribution of various pesticide and herbicide formulations. While the precise boundaries of the former storage operation relative to the current property lines are not entirely clear from available records, the location is consistent with the southeastern portion of the current Briarwood facility.
(b) Visible Staining Observed During Site Reconnaissance: During the site reconnaissance conducted by Terrapoint as part of the Phase I ESA, staining was observed on concrete pads located in the southeastern loading area of the facility. The staining is consistent with historical chemical spillage or releases, though the specific source of the staining could not be definitively determined through visual inspection alone. The staining pattern and location are consistent with the area where agricultural chemical storage or loading/unloading activities may have historically occurred.
(c) Anecdotal Information from Briarwood Personnel: During interviews conducted as part of the Phase I ESA process, Briarwood's Vice President of Operations, Janet Tsao, provided information indicating that during a 2019 facility improvement project involving excavation work in the southeastern portion of the property, workers encountered discolored soil at shallow depth. Ms. Tsao reported that the discolored soil was noted by construction personnel at the time, but no formal environmental investigation or sampling was conducted in response to this observation. The soil was reportedly reburied, and the construction project proceeded. No documentation of this observation was located in the Briarwood data room or in available environmental records.
The convergence of these three categories of evidence — historical database records of chemical storage operations, visible staining in the area of concern, and anecdotal reports of discolored soil encountered during excavation — led Terrapoint to conclude that the presence of a recognized environmental condition is warranted.
Terrapoint's Conclusion: The Phase I ESA report (Report No. TEG-2022-0441) concludes that the identified REC warrants further investigation through a Phase II Environmental Site Assessment. The recommended Phase II investigation would involve the advancement of subsurface soil borings and the collection of soil samples from the southeastern portion of the property, with laboratory analysis for pesticides, herbicides, and related compounds. Depending on the initial soil sampling results, Terrapoint has further recommended that the scope may need to be expanded to include the installation of groundwater monitoring wells and the collection of groundwater samples to evaluate whether any soil contamination has impacted the underlying groundwater.
C. Other Phase I Observations
In addition to the identified REC, the Phase I ESA and supplementary records review yielded several additional observations regarding the environmental condition and regulatory compliance status of the Marysville facility. While none of these additional observations rise to the level of a recognized environmental condition, they are noted below for completeness and for the deal team's consideration.
Chemical Storage: Briarwood maintains on-site storage of various raw materials used in the manufacture of CleanLeaf and PureHaven products, including surfactants, solvents, fragrances, essential oils, and other chemical inputs. These materials are stored in a dedicated chemical storage area within the facility. Based on Terrapoint's visual inspection during the site reconnaissance, the chemical storage area appeared to be maintained in compliance with applicable Occupational Safety and Health Administration ("OSHA") requirements and Ohio EPA regulations, including proper labeling, segregation of incompatible materials, secondary containment where required, and maintenance of Safety Data Sheets ("SDS"). No evidence of spills, releases, or non-compliant storage conditions was observed in the chemical storage area.
Underground Storage Tanks (USTs): No evidence of current or former underground storage tanks on the property was identified through Terrapoint's records review, environmental database searches, or site reconnaissance. The Ohio Bureau of Underground Storage Tank Regulations ("BUSTR") database search returned no listings for the subject property.
Aboveground Storage Tanks (ASTs): Two aboveground storage tanks were identified at the facility, used for the bulk storage of certain raw materials utilized in the manufacturing process. The ASTs appeared to be in good condition based on visual inspection, with no evidence of releases, leaks, or deterioration. Secondary containment in the form of concrete bermed containment areas was observed around both ASTs. Registration and inspection records for the ASTs were reviewed in the Briarwood data room and appeared to be current and in order.
Asbestos-Containing Materials (ACMs): Portions of the Marysville facility building date to the 1970s, based on available construction records. Given the age of these building components, there is a potential for asbestos-containing materials to be present in certain building elements, including but not limited to roofing materials, floor tiles, pipe insulation, and other building systems typical of construction from that era. Terrapoint did not conduct a comprehensive asbestos survey as part of the Phase I ESA, as such a survey is outside the standard ASTM E1527-21 scope. However, Terrapoint has recommended that a targeted asbestos survey be conducted if Meridian contemplates any renovation, demolition, or significant alteration of the older portions of the facility, as the disturbance of ACMs without proper abatement procedures would trigger regulatory requirements under both federal and state law and could expose Meridian to significant liability.
Air Emissions Permits: Briarwood currently holds air emissions permits issued by the Ohio EPA for the Marysville facility, authorizing emissions of volatile organic compounds ("VOCs") generated during manufacturing processes, including formulation, blending, and filling operations. A review of available compliance records, inspection reports, and correspondence with the Ohio EPA did not reveal any notices of violation, compliance orders, or pending enforcement actions related to air emissions. The current permits appear to be in good standing. As a transaction consideration, Meridian should confirm with the Ohio EPA whether the existing air permits are transferable or whether new permit applications will be required in connection with the change of operator.
Wastewater Discharge: The Marysville facility discharges process wastewater generated during manufacturing operations under an industrial pretreatment permit issued by the local municipal wastewater treatment system. The permit establishes discharge limits for various parameters, including pH, biochemical oxygen demand ("BOD"), total suspended solids ("TSS"), and certain chemical-specific limits. A review of available discharge monitoring reports, inspection records, and correspondence with the local pretreatment authority and the Ohio EPA did not reveal any notices of violation, permit exceedances, or pending enforcement actions related to wastewater discharge.
Hazardous Waste: The Marysville facility is classified as a small-quantity generator of hazardous waste under the Resource Conservation and Recovery Act ("RCRA") and corresponding Ohio regulations. Hazardous waste generated at the facility includes certain spent solvents and cleaning materials generated during manufacturing operations. A review of hazardous waste manifests, land disposal restriction notifications, and disposal facility records in the Briarwood data room indicated that the facility's hazardous waste management practices appeared to be complete and in compliance with applicable RCRA requirements, including generator requirements for waste characterization, storage time limits, manifesting, and use of permitted treatment, storage, and disposal facilities ("TSDFs"). No open violations or pending enforcement actions related to hazardous waste management were identified.
D. Recommendations for Marysville Facility
Based on the Phase I ESA findings and our review of available records, C&H makes the following recommendations with respect to the Marysville manufacturing facility:
1. Phase II Environmental Site Assessment
C&H strongly recommends that Meridian authorize the commencement of a Phase II Environmental Site Assessment at the Marysville facility before the APA is finalized and before the Transaction proceeds to closing. The Phase II ESA is necessary to evaluate the nature and extent of the potential soil contamination identified as a recognized environmental condition in the southeastern portion of the property. Without the Phase II investigation, the deal team cannot adequately assess the magnitude of potential environmental liability associated with this property or properly allocate environmental risk in the APA.
The recommended Phase II scope of work, as outlined in Terrapoint's preliminary proposal, includes the following components:
(a) Advancement of subsurface soil borings at multiple locations in the southeastern portion of the property, with soil sample collection at various depth intervals;
(b) Laboratory analysis of soil samples for a comprehensive suite of pesticide and herbicide compounds, including organochlorine pesticides, organophosphorus pesticides, and chlorophenoxy acid herbicides;
(c) Depending on the results of the initial soil sampling, potential expansion of the scope to include installation of groundwater monitoring wells and collection of groundwater samples for laboratory analysis; and
(d) Preparation of a Phase II ESA report presenting the findings, conclusions, and recommendations, including an assessment of whether any identified contamination exceeds applicable Ohio EPA cleanup standards and whether remediation may be required.
Estimated Cost: Terrapoint has provided a preliminary budget estimate of $45,000 to $65,000 for the Phase II scope described above. The range accounts for variability in the number of soil borings required, the potential need for groundwater monitoring well installation, and laboratory analytical costs. If the Phase II investigation reveals the need for expanded investigation (e.g., additional borings, delineation of a contamination plume, or risk assessment), additional costs may be incurred.
Timeline: Terrapoint has indicated that Phase II results would be available within four to six weeks of mobilization. Given the current Transaction timeline, C&H recommends that Meridian authorize commencement of the Phase II investigation as promptly as practicable.
2. Asbestos Survey
If Meridian plans any renovation, demolition, or significant alteration of the older portions of the Marysville facility (particularly those building components dating to the 1970s), an asbestos survey should be conducted to identify and characterize any asbestos-containing materials. This survey can be conducted concurrently with the Phase II ESA to minimize disruption and cost. If no renovation or demolition is contemplated in the near term, the asbestos survey may be deferred, though awareness of the potential presence of ACMs should be maintained in any facility management planning.
3. Significance for the Transaction
The environmental findings at the Marysville facility have several significant implications for the proposed Transaction:
(a) Remediation Costs and Liability Allocation: If the Phase II ESA confirms the presence of contamination exceeding applicable cleanup standards, remediation will likely be required. Remediation costs for pesticide- or herbicide-contaminated soils can vary widely depending on the nature and extent of contamination, the applicable cleanup standards, and the remediation methodology employed, but could range from tens of thousands to several hundred thousand dollars or more in significant cases. The allocation of remediation liability among the buyer, the seller, and the landlord (Buckeye Industrial Properties LLC) must be carefully addressed in the APA and in any negotiations with Buckeye regarding the lease assignment.
(b) APA Environmental Provisions: The environmental representations, warranties, and indemnification provisions in the APA should be reviewed and potentially strengthened in light of the REC. These provisions are discussed in greater detail in Section V.B of this memorandum.
(c) Lease Assignment Consent: If contamination is confirmed at the Marysville facility, Buckeye Industrial Properties LLC may raise environmental concerns as a basis for withholding or conditioning its consent to the assignment of the lease to Meridian. This potential complication should be anticipated in discussions with Buckeye and its counsel.
(d) R&W Insurance: The fact that the Phase II ESA has not yet been completed may result in an environmental exclusion from the R&W insurance policy being sought through Northbridge Risk Advisors LLC and Sentinel Specialty Insurance Company. This issue is discussed further in Section V.B of this memorandum.
4. Status: As of the date of this memorandum, the Phase II ESA has not been commissioned or commenced. C&H recommends that Meridian authorize commencement promptly.
IV. WEST JEFFERSON DISTRIBUTION CENTER — ENVIRONMENTAL REVIEW FINDINGS
A. Site Description and History
The West Jefferson distribution center is located at 500 Commerce Boulevard, West Jefferson, OH 43162, in Madison County, Ohio. The property is situated in a commercial and light industrial area along Commerce Boulevard, with surrounding land uses consisting primarily of commercial warehousing, light industrial operations, and undeveloped land.
Property Type: Warehouse/distribution.
Ownership: The West Jefferson property is owned by Briarwood in fee simple. Under the proposed APA, this property is included in the Acquired Assets and will be conveyed to Meridian at closing by special warranty deed, transferring fee simple interest.
Current Use: The facility is used exclusively for the warehousing and distribution of finished CleanLeaf and PureHaven products. Operations at the facility encompass inbound receipt of finished goods (primarily from the Marysville manufacturing facility), inventory management and storage, order fulfillment, and outbound distribution to wholesale and retail customers. The facility does not involve any manufacturing, formulation, blending, or chemical processing operations. The facility operates with approximately 30 to 40 warehouse and logistics personnel.
Prior Uses: Terrapoint's historical use research, including review of available county records, aerial photographs, and environmental databases, indicates that the subject property was previously used as a general commercial warehouse by prior operators. No industrial or manufacturing history was identified for the property. The available records suggest that the current building was either constructed or substantially renovated in the 1990s. No evidence of agricultural chemical storage, petroleum handling, industrial manufacturing, or other potentially contaminating activities was identified in the historical use record for this property.
B. Findings. Based on Terrapoint's desktop review and limited site reconnaissance, C&H reports the following findings for the West Jefferson distribution center:
Recognized Environmental Conditions: No recognized environmental conditions ("RECs"), controlled recognized environmental conditions ("CRECs"), or historical recognized environmental conditions ("HRECs") were identified at the West Jefferson property. The property's history of use as a general commercial warehouse, the absence of any industrial or manufacturing history, and the negative results of environmental database searches collectively support the conclusion that the property does not present material environmental risk.
Environmental Database Search: Environmental database search results returned no listings for the subject property or for immediately adjacent properties in any federal or state environmental databases, including CERCLIS/SEMS, RCRA, ERNS, Ohio EPA Division of Environmental Response and Revitalization databases, state leaking underground storage tank databases, or other relevant databases.
Storage Tanks and Hazardous Materials: No evidence of underground storage tanks, aboveground storage tanks associated with releases, hazardous waste generation, or storage of hazardous materials was identified at the property. The facility's operations (warehousing and distribution of finished consumer products) do not involve the storage or handling of bulk hazardous materials, and no chemical storage areas were observed during the limited site reconnaissance.
Building Condition: No evidence of asbestos-containing materials or lead-based paint concerns was identified. The building structure appears to have been constructed or substantially renovated in the 1990s, which is after the general cessation of asbestos use in building materials. The building appeared to be in good overall condition based on visual inspection, with no evidence of environmental deterioration, staining, or conditions indicative of releases.
Regulatory Status: No notices of violation, regulatory enforcement actions, environmental liens, institutional controls, or engineering controls associated with the West Jefferson property were identified in available records. The property does not appear to be subject to any environmental use restrictions or ongoing regulatory obligations.
Conclusion: Based on the available records and site reconnaissance, the West Jefferson distribution center presents no material environmental concerns. No further environmental investigation is recommended for this property at this time.
V. TRANSACTION IMPLICATIONS AND RISK ASSESSMENT
A. Risk Matrix Summary
The following table summarizes the environmental risk assessment for the two real property assets included in the Acquired Assets:
The Moderate to High risk rating assigned to the Marysville facility reflects both the inherent uncertainty associated with an unresolved REC (the contamination has been identified as a potential concern but not confirmed through subsurface investigation) and the potential for significant remediation liability and transactional complications if contamination is confirmed. The risk rating may be revised upward or downward based on the findings of the Phase II ESA.
B. APA Considerations
The environmental findings at the Marysville facility have several direct implications for the structuring and negotiation of the APA. C&H recommends that the deal team carefully consider the following issues in the next round of APA negotiations:
Environmental Representations and Warranties
C&H recommends that the Seller's environmental representations and warranties in the APA be robust, comprehensive, and specifically address the Marysville REC. At a minimum, the environmental representations should include the following:
(a) A representation that Seller is in material compliance with all applicable environmental laws, regulations, and permits with respect to the Acquired Assets and the operation of the Product Lines;
(b) A representation that Seller has disclosed all known environmental conditions, contamination, and liabilities affecting the Acquired Assets, including specifically the REC identified at the Marysville facility;
(c) A representation regarding the absence of pending or threatened environmental claims, enforcement actions, or proceedings;
(d) A representation regarding the existence, condition, and compliance status of all environmental permits and registrations necessary for the operation of the Acquired Assets; and
(e) Appropriate disclosure of the Marysville REC in the APA's disclosure schedules, including a description of the identified condition, the Phase I ESA findings, and the anecdotal information provided by Janet Tsao regarding the 2019 soil disturbance observations.
Indemnification
The APA's indemnification provisions should be carefully evaluated for adequacy with respect to potential environmental liabilities. Based on the current proposed indemnification structure, C&H understands that the draft APA contemplates:
• A general indemnification cap of 35% of the purchase price, or $33,250,000;
• A tipping basket (deductible) of $950,000, below which indemnification claims are not payable;
• A 24-month survival period for general representations and warranties from the date of closing.
C&H recommends that the deal team evaluate whether these parameters are adequate to address potential environmental liabilities, particularly in light of the following considerations:
(a) Survival Period: Environmental contamination issues frequently do not manifest or are not fully characterized within a 24-month period following closing. Investigation, regulatory engagement, remediation design, and remediation implementation can extend over multiple years. C&H recommends that the deal team consider whether the environmental representations and warranties should be carved out as "Fundamental Representations" with an extended survival period — ideally, an indefinite survival period or, at minimum, a survival period extending to the applicable statute of limitations for environmental claims under Ohio law and CERCLA.
(b) Basket: If remediation costs fall below the $950,000 tipping basket, the buyer would bear the full cost of remediation without recourse to indemnification. The deal team should assess whether this threshold is acceptable given the range of potential remediation costs.
(c) Cap: While the 35% cap of $33,250,000 provides substantial headroom for most environmental claims, the adequacy of the cap should be confirmed once the Phase II results are available.
Escrow
The proposed Transaction structure includes an escrow holdback of $9,500,000 (10% of the $95,000,000 purchase price). C&H recommends that the deal team assess whether the escrow holdback should specifically account for potential environmental remediation costs, depending on the findings of the Phase II ESA. If the Phase II confirms contamination, the deal team should consider whether a portion of the escrow should be specifically designated or reserved for environmental remediation and whether the escrow release schedule should be structured to ensure that funds remain available during the period in which environmental investigation and remediation activities may occur.
R&W Insurance
The pending R&W insurance application is being handled through Northbridge Risk Advisors LLC (broker: Alison Chu) with the proposed carrier Sentinel Specialty Insurance Company (underwriter: Mark Ellison). The environmental diligence gap — specifically, the fact that the Phase II ESA has not been completed — presents a significant concern for the R&W insurance underwriting process. Based on C&H's experience with R&W insurance placements, there are several potential outcomes:
(a) The carrier may impose a specific environmental exclusion from the R&W policy, excluding from coverage any losses arising from or related to the Marysville REC and any environmental contamination at the Marysville facility. Such an exclusion would leave Meridian without R&W insurance coverage for what may be the most significant identified risk in the Transaction.
(b) The carrier may require completion of the Phase II ESA as a condition precedent to binding coverage, or as a condition to providing environmental coverage without exclusion. This could create a timing issue if the Phase II timeline (4–6 weeks) conflicts with the desired closing date.
(c) In some cases, the carrier may agree to provide coverage subject to a sublimit or increased retention for environmental claims, rather than a blanket exclusion.
C&H strongly recommends that the deal team coordinate with Northbridge Risk Advisors LLC and Alison Chu to determine the carrier's position on environmental coverage and whether completion of the Phase II ESA is a prerequisite for obtaining adequate R&W insurance coverage. This coordination should occur in parallel with the commissioning of the Phase II ESA to avoid unnecessary delays.
Lease Assignment
As noted in Section III.A above, the assignment of the Marysville facility lease to Meridian requires the prior written consent of Buckeye Industrial Properties LLC as landlord. If the Phase II ESA confirms the presence of soil contamination at the Marysville facility, Buckeye may raise environmental concerns as a basis for withholding consent to the lease assignment, conditioning consent on environmental remediation or indemnification commitments from Meridian, or seeking to impose additional environmental obligations on Meridian as a condition of consent. The deal team should anticipate this possibility and develop a strategy for addressing environmental issues in the context of the lease assignment consent negotiations. C&H is available to advise on the allocation of environmental liability among buyer, seller, and landlord in this context.
C. Regulatory Considerations
Ohio Voluntary Action Program (VAP)
If the Phase II ESA confirms the presence of contamination at the Marysville facility exceeding applicable cleanup standards, the Ohio Voluntary Action Program (administered by the Ohio EPA under Ohio Revised Code Chapter 3746) may provide a useful framework for investigation and remediation. The Ohio VAP allows property owners and operators to voluntarily investigate and remediate contaminated properties under the oversight of a certified professional, with the potential to receive a covenant not to sue from the Ohio EPA upon successful completion of the program. A covenant not to sue provides significant liability protection by confirming that the Ohio EPA will not pursue enforcement action against the participant for the conditions addressed under the VAP. Participation in the Ohio VAP is voluntary and does not preclude the use of other regulatory mechanisms.
The Ohio VAP may be particularly advantageous in the context of this Transaction because it provides a defined and predictable process for achieving environmental closure, and a covenant not to sue would enhance the value and marketability of the Marysville property for Meridian going forward.
CERCLA / Superfund Considerations
Neither the Marysville facility nor the West Jefferson distribution center is listed or proposed for listing on the National Priorities List ("NPL") under the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. §§ 9601 et seq. No information suggesting the potential for NPL listing was identified during the environmental database searches or records review.
However, if contamination is confirmed at the Marysville facility, Meridian should be aware of potential CERCLA liability considerations. While the Transaction is structured as an asset purchase rather than a stock acquisition — which generally provides greater protection against successor liability — courts have in certain circumstances imposed CERCLA liability on asset purchasers under theories including the "continuity of enterprise" doctrine and the "substantial continuity" test. The risk of CERCLA successor liability is mitigated by the asset purchase structure and by the fact that the Marysville property is leased rather than owned, but it cannot be entirely eliminated. The APA's environmental indemnification provisions serve as an important contractual backstop against potential CERCLA liability exposure.
State Product Registration Gap
For the sake of completeness, C&H notes that a separate state product registration gap issue has been identified and is addressed in the litigation and regulatory due diligence memorandum dated September 12, 2022. While this issue is not strictly an environmental matter within the scope of this memorandum, it is flagged here because it pertains to the overall regulatory compliance profile of the Product Lines and may intersect with the environmental regulatory analysis in certain respects. The deal team is referred to the September 12, 2022 memorandum for a detailed discussion of the product registration issue.
VI. OPEN ITEMS AND NEXT STEPS
Based on the findings and analysis set forth in this memorandum, C&H identifies the following open items and recommended next steps for the deal team's consideration and action:
1. Phase II ESA — Marysville Facility. Meridian should authorize Terrapoint Environmental Group, Inc. to proceed with the Phase II Environmental Site Assessment at the Marysville manufacturing facility. The estimated cost of the Phase II investigation is $45,000 to $65,000, and results are expected within four to six weeks of mobilization. Keith Novak, Terrapoint's designated project manager, has indicated that Terrapoint is prepared to commence field work promptly upon receipt of authorization. C&H will coordinate with Terrapoint on the scope of work, access arrangements with the landlord and Briarwood, and reporting requirements.
2. Asbestos Survey — Marysville Facility. If Meridian plans any renovation, demolition, or significant alteration of the older portions of the Marysville facility, an asbestos survey should be conducted to identify and characterize any asbestos-containing materials. This survey can be conducted concurrently with the Phase II ESA to minimize scheduling disruption and incremental cost.
3. APA Environmental Provisions. C&H will review and, where appropriate, propose revisions to strengthen the environmental representations, warranties, and indemnification provisions in the next draft cycle of the APA. Specific areas of focus will include the scope and specificity of environmental representations, the treatment of environmental representations as Fundamental Representations with extended or indefinite survival, the adequacy of the tipping basket and indemnification cap as applied to environmental claims, and the disclosure of the Marysville REC in the disclosure schedules. C&H will circulate proposed revisions to the deal team for review and comment.
4. R&W Insurance Coordination. C&H recommends that the deal team coordinate with Northbridge Risk Advisors LLC (contact: Alison Chu) and the proposed carrier, Sentinel Specialty Insurance Company (underwriter: Mark Ellison), to determine: (a) whether completion of the Phase II ESA is a prerequisite for environmental coverage under the proposed R&W policy; (b) the carrier's anticipated position on environmental exclusions or limitations; and (c) the impact of the Phase II timeline on the overall R&W insurance binding timeline. This coordination should occur in parallel with the commissioning of the Phase II ESA.
5. Landlord Communication. The deal team should assess whether and to what extent the environmental findings at the Marysville facility should be communicated to Buckeye Industrial Properties LLC in connection with the pending lease assignment consent request. This assessment should consider the lease agreement's provisions regarding environmental disclosure obligations, the strategic implications of proactive disclosure versus reactive disclosure, and the potential for environmental findings to affect the consent process. C&H is available to advise on the appropriate scope and timing of any communication with Buckeye and its counsel.
6. Seller Engagement. C&H recommends that the deal team request from Briarwood (through Seller's counsel, Caldwell, Pruitt & Shaw LLP, contact: Rachel Underwood) any additional environmental records, documentation, or information related to the Marysville facility, including specifically: (a) any documentation of the 2019 soil disturbance observations referenced by Janet Tsao during her interview with Terrapoint; (b) any records of environmental investigations, sampling, or remediation activities conducted at the facility during or prior to Briarwood's tenancy; (c) any correspondence with the landlord regarding environmental conditions at the property; and (d) any other environmental information not previously produced in the Briarwood data room. C&H further recommends that full and accurate disclosure of all known environmental conditions, including the Marysville REC, be ensured in the APA disclosure schedules.
VII. CONCLUSION
The environmental due diligence investigation conducted in connection with Meridian Consumer Brands LLC's proposed $95,000,000 acquisition of the CleanLeaf and PureHaven product lines from Briarwood Home Essentials, Inc. has yielded the following principal conclusions:
The Phase I Environmental Site Assessment for the Marysville manufacturing facility has identified a recognized environmental condition involving potential soil contamination in the southeastern portion of the property, likely associated with historical agricultural chemical storage operations conducted at or adjacent to the site prior to Briarwood's occupancy. This REC requires further investigation through a Phase II Environmental Site Assessment before the Transaction should proceed to closing. Until the Phase II investigation is completed and the nature and extent of any contamination are determined, the environmental risk profile of the Marysville facility cannot be fully characterized, and the deal team cannot make fully informed decisions regarding risk allocation, indemnification structuring, and pricing adjustments.
The West Jefferson distribution center presents no material environmental concerns based on available records and site reconnaissance. No recognized environmental conditions were identified, and no further investigation is recommended for this property.
C&H recommends that Meridian promptly authorize the Phase II investigation at the Marysville facility and that the deal team factor potential environmental remediation costs and liability allocation into ongoing APA negotiations and the overall Transaction risk assessment. The Phase II findings will also be critical to the R&W insurance underwriting process and the lease assignment consent negotiations with Buckeye Industrial Properties LLC.
This memorandum should be read in conjunction with the following related memoranda prepared by C&H in connection with this Transaction:
• Due Diligence Summary Memorandum (dated October 3, 2022) — providing a comprehensive summary of all due diligence workstreams, including legal, financial, operational, intellectual property, regulatory, and environmental findings.
• R&W Insurance Coverage Analysis Memorandum (dated October 10, 2022) — providing a detailed analysis of the proposed R&W insurance policy terms, coverage scope, exclusions, and the interplay between R&W insurance and the APA's indemnification provisions.
Together, these memoranda provide a comprehensive picture of the environmental risk profile of the Transaction and should inform the deal team's decisions as the Transaction progresses toward closing.
We are available to discuss the contents of this memorandum and the recommended next steps at the deal team's convenience. Please do not hesitate to contact Andrew Fitzpatrick (212-555-0147) or Sandra Tung (212-555-0193) with any questions.
APPENDICES (REFERENCED)
The following appendices are referenced in this memorandum and are available for review in the locations indicated:
Appendix A: Terrapoint Environmental Group, Inc. — Phase I Environmental Site Assessment Report No. TEG-2022-0441 (dated September 2, 2022). The full report, including all appendices, data tables, maps, photographs, and supporting documentation, is maintained in the Pemberton Systems virtual data room under project code BHE-CleanLeaf-2022 (folder: Environmental Diligence) and in the C&H matter file (Matter No. 1011-00005).
Appendix B: Summary of Environmental Records Reviewed from Briarwood Data Room. This summary catalogues the environmental records and documents reviewed by C&H from the Briarwood data room, organized by facility and document category, including notation of any gaps or deficiencies in the document production.
Appendix C: Terrapoint Environmental Group, Inc. — Phase II Environmental Site Assessment Scope of Work and Budget Estimate. This document sets forth Terrapoint's proposed scope of work, methodology, timeline, and estimated cost for the recommended Phase II ESA at the Marysville manufacturing facility.
CONFIDENTIALITY NOTICE: This memorandum constitutes attorney work product and is protected by the attorney-client privilege. It has been prepared by Calderwood & Harkness LLP solely for the use of Meridian Consumer Brands LLC and Lakepoint Capital Partners, LP in connection with the proposed acquisition of the CleanLeaf and PureHaven product lines from Briarwood Home Essentials, Inc. This memorandum contains confidential legal analysis and recommendations and should not be disclosed to any third party without the prior written consent of Calderwood & Harkness LLP. Any unauthorized disclosure may result in a waiver of the attorney-client privilege and/or work product protection.
CALDERWOOD & HARKNESS LLP 599 Lexington Avenue, 36th Floor New York, NY 10022
Facility | Risk Rating
Marysville Manufacturing Facility | Moderate to High
West Jefferson Distribution Center | Low
Facility | Risk Level | Key Issue | Recommended Action
Marysville Manufacturing Facility (2800 Industrial Parkway, Marysville, OH 43040) | Moderate to High | Recognized Environmental Condition — potential soil contamination in southeastern portion of property from historical agricultural chemical storage operations; Phase II ESA required to determine nature and extent | Commission Phase II ESA before closing; estimated cost $45,000–$65,000; 4–6 week timeline
West Jefferson Distribution Center (500 Commerce Boulevard, West Jefferson, OH 43162) | Low | No RECs, CRECs, or HRECs identified; no material environmental concerns based on available records and site reconnaissance | No further action required at this time

PRIVILEGED & CONFIDENTIAL — ATTORNEY WORK PRODUCT / ATTORNEY-CLIENT COMMUNICATION

REVIEWED BY:

MATTER NO.:

I. EXECUTIVE SUMMARY

II. SCOPE OF ENVIRONMENTAL REVIEW

V. TRANSACTION IMPLICATIONS AND RISK ASSESSMENT

VI. OPEN ITEMS AND NEXT STEPS

VII. CONCLUSION

APPENDICES (REFERENCED)

Record

Parties

Dates

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