CONFIDENTIAL — DRAFT — SUBJECT TO FURTHER REVISION
SCHEDULES TO ASSET PURCHASE AGREEMENT
By and Between
MERIDIAN CONSUMER BRANDS LLC (Buyer)
and
BRIARWOOD HOME ESSENTIALS, INC. (Seller)
September 15, 2022
Prepared by:
Calderwood & Harkness LLP 599 Lexington Avenue, 36th Floor New York, NY 10022
Matter No.: 1011-00005
Drafted by: Andrew Fitzpatrick and Naomi Petersen Reviewed by: Sandra Tung
These Schedules are delivered by Buyer as Buyer's initial draft in connection with the second draft of the Asset Purchase Agreement dated September 15, 2022 (the "Agreement"). Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Agreement. These Schedules are intended to be read in conjunction with, and are qualified in their entirety by reference to, the Agreement and the representations, warranties, covenants, and agreements set forth therein.
Nothing contained in these Schedules shall be deemed to enlarge or expand the scope of any representation, warranty, covenant, or agreement of either party under the Agreement. The inclusion of any item or information in these Schedules does not constitute an admission or acknowledgment by either party that such item or information is material or that such item or information would be required to be disclosed under the terms of the Agreement.
CONFIDENTIAL — DRAFT — SUBJECT TO FURTHER REVISION This document and the information contained herein are confidential and proprietary. Distribution is limited to authorized representatives of the parties and their respective legal and financial advisors.
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SCHEDULE 1.1(a) — ACQUIRED ASSETS
Pursuant to and in accordance with Section 1.1(a) of the Agreement, the following sets forth a description of all assets, properties, and rights of Briarwood Home Essentials, Inc. ("Seller") related to, used in, or held for use in connection with the consumer product line business being acquired (collectively, the "Acquired Assets"), other than the Excluded Assets set forth on Schedule 1.1(b). The Acquired Assets shall include, without limitation, all of Seller's right, title, and interest in, to, and under the following assets, properties, and rights, wherever located and whether or not carried or reflected on the books and records of Seller:
Category 1: Inventory
All inventory of finished goods, raw materials, work-in-process, packaging materials, supplies, components, samples, and other inventories related to or held for use in connection with the CleanLeaf (home cleaning) and PureHaven (personal care) product lines (collectively, the "Inventory"), including approximately one hundred forty-two (142) active stock keeping units ("SKUs") across both product lines.
The aggregate book value of the Inventory as of June 30, 2022 (the "Reference Date"), determined in accordance with Seller's customary accounting methods applied on a basis consistent with past practice, was approximately Fourteen Million Three Hundred Thousand Dollars ($14,300,000). The foregoing valuation is an estimate as of the Reference Date and is subject to the closing adjustment mechanism set forth in Section 2.3 of the Agreement, including any true-up for changes in Inventory levels, obsolescence, and valuation adjustments occurring between the Reference Date and the Closing Date.
The Inventory includes, without limitation, all inventory located at or in transit to or from the following locations:
(a) Marysville Manufacturing Facility, 2800 Industrial Parkway, Marysville, OH 43040;
(b) West Jefferson Distribution Center, 500 Commerce Boulevard, West Jefferson, OH 43162;
(c) Any third-party warehouse, distribution center, fulfillment center, or storage facility at which Inventory is held or stored on behalf of Seller as of the Closing Date, including consignment inventory held by retailers or distributors; and
(d) Any Inventory that is in transit between any of the foregoing locations or in transit to customers of the CleanLeaf and PureHaven product lines as of the Closing Date.
For the avoidance of doubt, the Inventory includes all finished goods bearing the CleanLeaf and PureHaven brand names, all raw materials and components acquired or held for use in the manufacture of CleanLeaf and PureHaven products, all work-in-process at any stage of the manufacturing process, all packaging materials (including bottles, caps, labels, cartons, shrink-wrap, pallets, and other shipping materials), and all laboratory samples, quality assurance samples, and retained samples related to either product line.
Category 2: Accounts Receivable
All trade accounts receivable and notes receivable arising from the sale, distribution, or marketing of products under the CleanLeaf and PureHaven brands, including all rights to payment from customers, distributors, retailers, and other counterparties under the Assigned Contracts listed on Schedule 1.1(d), and all rights to payment arising from any other sales or services provided by Seller in connection with the CleanLeaf and PureHaven product lines (collectively, the "Receivables").
The aggregate amount of outstanding Receivables as of the Reference Date was approximately Nine Million Seven Hundred Thousand Dollars ($9,700,000). The Receivables include all billed and unbilled amounts due from customers, together with all rights to interest, late charges, and penalties payable in respect thereof, and all security and collateral therefor, including all rights in any returned or repossessed goods related to any of the Receivables.
Category 3: Real Property — Owned
The following real property owned in fee simple by Seller, together with all buildings, structures, improvements, fixtures, and appurtenances thereto, and all rights, easements, hereditaments, and interests appurtenant thereto (collectively, the "Owned Real Property"):
West Jefferson Distribution Center / Warehouse
• Address: 500 Commerce Boulevard, West Jefferson, OH 43162
• Ownership: Owned in fee simple by Briarwood Home Essentials, Inc.
• Description: Distribution center and warehouse facility, including all improvements, structures, fixtures, and appurtenances located on or forming a part of such real property, together with all rights, privileges, and easements appurtenant thereto, including all development rights, air rights, water rights, mineral rights, and utility rights.
Category 4: Real Property — Leased
All of Seller's right, title, and interest in and to the following leased real property, including all leasehold improvements, fixtures, and appurtenances thereto (collectively, the "Leased Real Property"):
Marysville Manufacturing Facility
• Address: 2800 Industrial Parkway, Marysville, OH 43040
• Landlord: Buckeye Industrial Properties LLC, 77 East Nationwide Boulevard, Suite 200, Columbus, OH 43215
• Description: All of Seller's right, title, and interest in, to, and under the lease agreement between Seller, as tenant, and Buckeye Industrial Properties LLC, as landlord, for the premises located at 2800 Industrial Parkway, Marysville, OH 43040 (the "Marysville Lease"), together with all leasehold improvements, fixtures, and appurtenances thereto, and all prepaid rent and security deposits related thereto.
• Note: The Marysville Lease contains an assignment consent provision requiring the prior written consent of Buckeye Industrial Properties LLC to the assignment of Seller's interest in the Marysville Lease. Seller has requested such consent by letter dated October 7, 2022. As of the date of these Schedules, no response has been received from the landlord. Assignment of the Marysville Lease is subject to receipt of landlord consent in form and substance reasonably satisfactory to Buyer.
Category 5: Tangible Personal Property
All machinery, equipment, tooling, molds, dies, patterns, jigs, furniture, fixtures, vehicles, rolling stock, spare parts, supplies, and other tangible personal property located at or used in connection with the Marysville Manufacturing Facility and the West Jefferson Distribution Center, or otherwise used in the operation of the CleanLeaf and PureHaven product lines (collectively, the "Tangible Personal Property"), including, without limitation, the following:
(a) All manufacturing equipment, including mixing tanks, blending equipment, reactor vessels, filling lines, capping and sealing machines, labeling equipment, and packaging machinery;
(b) All laboratory equipment, including testing apparatus, analytical instruments, quality control equipment, and related supplies;
(c) All warehouse and distribution equipment, including forklifts, pallet jacks, conveyor systems, warehouse racking and shelving, dock levelers, and loading equipment;
(d) All office furniture, cubicles, desks, chairs, filing cabinets, conference room furnishings, and similar office equipment;
(e) All information technology hardware, including servers, desktop computers, laptop computers, monitors, printers, scanners, networking equipment, telecommunications equipment, and related peripheral devices dedicated to or primarily used in the CleanLeaf and PureHaven business;
(f) All vehicles owned or leased by Seller and used primarily in connection with the CleanLeaf and PureHaven product lines, including delivery vehicles and company cars assigned to field sales personnel; and
(g) All other tangible personal property of Seller located at the Marysville Manufacturing Facility, the West Jefferson Distribution Center, or any other location, to the extent used primarily in connection with the CleanLeaf and PureHaven product lines.
Category 6: Intellectual Property
All intellectual property rights owned by or licensed to Seller and related to or used in connection with the CleanLeaf and PureHaven brands and product lines (collectively, the "Transferred intellectual Property"), including, without limitation, the following:
(a) All registered and unregistered trademarks, service marks, trade names, brand names, logos, trade dress, and domain names associated with the CleanLeaf and PureHaven brands, including all federal and state trademark registrations and pending applications therefor, together with all goodwill associated therewith;
(b) All domain names associated with the CleanLeaf and PureHaven brands, including, without limitation, www.cleanleaf.com, www.purehavencare.com, and all related sub-domains and variations;
(c) All product formulations, recipes, specifications, manufacturing processes, and related trade secrets and know-how developed or used in connection with the manufacture, production, or quality control of CleanLeaf and PureHaven products;
(d) All copyrights and copyrightable works, including product labels, packaging designs, marketing materials, advertising copy, promotional materials, website content, social media content, photography, and graphic design assets;
(e) All patents and patent applications, if any, related to the CleanLeaf and PureHaven product lines, including any inventions, discoveries, or improvements embodied therein;
(f) All customer lists, supplier lists, pricing information, marketing data, market research, consumer insights, and other proprietary business information related to the CleanLeaf and PureHaven product lines; and
(g) All goodwill of the business associated with the foregoing intellectual property.
A detailed listing of all registered intellectual property and pending applications to be transferred to Buyer shall be set forth in the intellectual Property Assignment Agreement attached as Exhibit C to the Agreement. The parties acknowledge that the intellectual Property Assignment Agreement will include a comprehensive schedule of all federal and state trademark registrations, domain name registrations, and copyright registrations related to the CleanLeaf and PureHaven brands.
Category 7: Assigned Contracts
All right, title, and interest of Seller in, to, and under the contracts, agreements, arrangements, and commitments listed on Schedule 1.1(d) (the "Assigned Contracts"), including, without limitation, the twenty-three (23) customer contracts and the key supply agreements described therein, together with all rights, benefits, and privileges of Seller arising thereunder.
Category 8: Permits and Licenses
All transferable permits, licenses, registrations, certifications, approvals, consents, authorizations, and similar rights granted by any Governmental Authority related to the manufacture, production, distribution, marketing, and sale of CleanLeaf and PureHaven products, to the extent transferable under applicable Law, including, without limitation, Environmental Permits, health and safety permits, fire safety permits, occupational licenses, product registrations, and any similar governmental authorizations required for the operation of the CleanLeaf and PureHaven product lines.
For the avoidance of doubt, to the extent any permits or licenses are not transferable under applicable Law, Seller shall use commercially reasonable efforts to cooperate with Buyer in obtaining new or replacement permits and licenses in the name of Buyer, as contemplated by the Agreement.
Category 9: Books and Records
All books, records, files, papers, data, databases, correspondence, product specifications, formulation records, quality assurance records, batch records, manufacturing records, customer lists, supplier lists, vendor files, sales records, marketing plans, advertising materials, promotional materials, competitive analyses, and all other business records and documentation related to the CleanLeaf and PureHaven product lines (collectively, the "Books and Records"), in whatever form or medium, whether written, electronic, or otherwise.
The Books and Records shall not include the organizational documents, corporate minute books, stock ledgers, corporate seals, or tax records of Briarwood Home Essentials, Inc. to the extent such documents relate to Seller's corporate organization or the Retained Business, which are Excluded Assets pursuant to Schedule 1.1(b).
Category 10: Prepaid Expenses and Deposits
All prepaid expenses, deposits, advance payments, and credits of Seller related to the Acquired Assets or the operation of the CleanLeaf and PureHaven product lines, including, without limitation, prepaid rent, prepaid insurance premiums (to the extent allocable to the Acquired Assets), security deposits, utility deposits, and advance payments made to suppliers, vendors, and service providers under the Assigned Contracts.
Category 11: Claims and Causes of Action
All claims, causes of action, choses in action, rights of recovery, rights of set-off, rights of recoupment, demands, and counterclaims of Seller related to the Acquired Assets, whether known or unknown, contingent or otherwise, arising after the Closing, including, without limitation, all manufacturer warranties, vendor warranties, indemnity rights, and similar rights against third parties related to the Acquired Assets.
Category 12: Telephone Numbers and IT Systems
All telephone numbers, facsimile numbers, email addresses, uniform resource locators ("URLs"), domain names, social media accounts (including accounts on Kestrel Services Inc., Northpoint Services Inc., Fenmore Solutions, Pinterest, Crowne Albany Partners LLC, and any other social media platforms), website content management systems, and information technology systems dedicated to or primarily used in the CleanLeaf and PureHaven business, together with all associated accounts, login credentials, subscriber lists, follower data, and related digital assets.
SCHEDULE 1.1(b) — EXCLUDED ASSETS
Pursuant to and in accordance with Section 1.1(b) of the Agreement, the following sets forth a description of all assets, properties, and rights of Briarwood Home Essentials, Inc. ("Seller") that are expressly excluded from the Acquired Assets and shall be retained by Seller (collectively, the "Excluded Assets"). For the avoidance of doubt, the Excluded Assets are not being sold, assigned, transferred, or conveyed to Buyer under the Agreement, and Seller shall retain all right, title, and interest in, to, and under the Excluded Assets following the Closing.
Excluded Asset 1: Retained Business
The Commercial Janitorial Services Division of Briarwood Home Essentials, Inc. (the "Retained Business"), including all assets, contracts, intellectual property, permits, employees, customer relationships, equipment, inventories, accounts receivable, and liabilities exclusively related to the commercial janitorial services business operated by Seller. A further description of the Retained Business is set forth in Schedule 1.1(b)-A. For the avoidance of doubt, any assets shared between the Retained Business and the CleanLeaf/PureHaven product lines shall be addressed and allocated pursuant to the Transition Services Agreement to be entered into by the parties at Closing.
Excluded Asset 2: Corporate Headquarters Lease
Seller's lease for the corporate headquarters located at 1175 Creekside Drive, Suite 400, Columbus, OH 43215, and all furniture, fixtures, equipment, leasehold improvements, and personal property located therein that are exclusively used in connection with the Retained Business or Seller's corporate functions. This exclusion includes all security deposits and prepaid rent under such lease.
Excluded Asset 3: Cash and Cash Equivalents
All cash, cash equivalents, bank accounts, checking accounts, savings accounts, money market accounts, certificates of deposit, treasury bills, marketable securities, and similar liquid assets of Briarwood Home Essentials, Inc., wherever held and regardless of the currency in which denominated, including all cash on hand at any facility and all amounts held in any bank or financial institution in the name of Seller.
Excluded Asset 4: Tax Refunds
All rights of Seller to any tax refunds, tax credits, tax rebates, or tax overpayments attributable to any pre-Closing Tax period of Seller or any Straddle Period (to the extent allocable to the portion of the Straddle Period ending on and including the Closing Date), together with all rights to receive any such refunds, credits, or rebates and all interest thereon.
Excluded Asset 5: Corporate Records
All minute books, stock ledgers, stock transfer records, corporate seals, certificates of incorporation, certificates of formation, articles of organization, bylaws, operating agreements, and other organizational documents of Briarwood Home Essentials, Inc., together with all corporate governance records, board resolutions, shareholder records, and similar organizational and corporate records of Seller. For the avoidance of doubt, this exclusion does not extend to the Books and Records included in the Acquired Assets pursuant to Category 9 of Schedule 1.1(a).
Excluded Asset 6: Insurance Policies
All insurance policies of Seller, whether relating to the Acquired Assets, the Retained Business, or otherwise, and all rights thereunder, including all insurance claims, insurance proceeds, premium refunds, dividends, and retrospective premium adjustments, whether arising before, on, or after the Closing Date; provided, however, that to the extent any insurance proceeds relate to any Assumed Liability that has been assumed by Buyer pursuant to Schedule 1.3(a), Seller shall cooperate with Buyer in pursuing and assigning such insurance proceeds to Buyer, as provided in the Agreement.
Excluded Asset 7: Employee Benefit Plans
All employee benefit plans, pension plans, defined benefit plans, defined contribution plans, 401(k) plans, profit-sharing plans, stock option plans, employee stock purchase plans, health and welfare plans, severance plans, and all related trusts, funding vehicles, insurance contracts, and plan assets of Seller, including the Briarwood Home Essentials, Inc. 401(k) Savings Plan. For the avoidance of doubt, Buyer will not assume or become the sponsor of any of Seller's employee benefit plans and will instead offer enrollment in Buyer's own benefit programs to Transferred Employees, as described in Section 4.15 of the Agreement and Schedule 4.15.
Excluded Asset 8: Equity Interests
All equity interests, membership interests, partnership interests, and ownership interests of Seller in any subsidiary, affiliate, joint venture, or other entity. Seller represents that, as of the date hereof, Briarwood Home Essentials, Inc. has no subsidiaries and does not hold any equity interests in any other Person.
Excluded Asset 9: Rights Under This Agreement
All rights of Seller under the Agreement and each of the Ancillary Agreements (including the Transition Services Agreement, the intellectual Property Assignment Agreement, and any other agreement or instrument executed and delivered by the parties in connection with the transactions contemplated by the Agreement), including all rights of Seller to receive the Purchase Price and any other consideration payable to Seller under the Agreement.
SCHEDULE 1.3(a) — ASSUMED LIABILITIES
Pursuant to and in accordance with Section 1.3(a) of the Agreement, the following sets forth a description of the liabilities and obligations of Briarwood Home Essentials, Inc. ("Seller") that shall be assumed by Meridian Consumer Brands LLC ("Buyer") at and effective as of the Closing (collectively, the "Assumed Liabilities"). Except as expressly set forth below, Buyer shall not assume any liabilities or obligations of Seller, and all liabilities and obligations of Seller not expressly identified as Assumed Liabilities shall be retained by Seller as Excluded Liabilities in accordance with Section 1.3(b) of the Agreement.
Assumed Liability 1: Trade Payables
All trade accounts payable and accrued expenses of Seller related to the CleanLeaf and PureHaven product lines arising in the ordinary course of business consistent with past practice (collectively, the "Assumed Trade Payables"), including, without limitation, amounts owed to suppliers of raw materials, packaging materials, components, and other inputs, and amounts owed to third-party service providers, contractors, and vendors for services rendered in connection with the CleanLeaf and PureHaven product lines.
The estimated aggregate amount of outstanding Assumed Trade Payables as of the Reference Date (June 30, 2022) was approximately Four Million Two Hundred Thousand Dollars ($4,200,000). The foregoing is an estimate and is subject to true-up and adjustment based on the actual amounts outstanding as of the Closing Date, in accordance with the closing adjustment mechanism set forth in Section 2.3 of the Agreement.
For the avoidance of doubt, the Assumed Trade Payables do not include (a) any trade payables or accrued expenses related exclusively to the Retained Business, (b) any amounts owed by Seller to its equity holders, affiliates, or related parties, or (c) any amounts arising from a breach or default by Seller of any Assigned Contract occurring prior to the Closing.
Assumed Liability 2: Product Warranty Obligations
All accrued and unaccrued product warranty obligations, product return obligations, product replacement obligations, and similar product-related liabilities of Seller with respect to CleanLeaf and PureHaven products sold or distributed prior to the Closing, including all obligations arising under Seller's standard product warranty terms, retailer return policies, satisfaction guarantee programs, and any other warranty or return commitments made by Seller to customers, retailers, distributors, or end consumers in respect of CleanLeaf and PureHaven products (collectively, the "Assumed Warranty Obligations").
The estimated aggregate accrual for Assumed Warranty Obligations as of the Reference Date (June 30, 2022) was approximately Six Hundred Twenty Thousand Dollars ($620,000), determined in accordance with Seller's customary accounting methods applied on a basis consistent with past practice. The foregoing estimate is subject to adjustment based on actual warranty claims and return activity through the Closing Date.
Assumed Liability 3: Post-Closing Obligations Under Assigned Contracts
All obligations, liabilities, and commitments arising under the Assigned Contracts listed on Schedule 1.1(d) to the extent such obligations, liabilities, and commitments arise from and after the Closing Date and relate to the performance of such Assigned Contracts from and after the Closing Date (collectively, the "Assumed Contract Obligations").
For the avoidance of doubt, the Assumed Contract Obligations do not include any liabilities or obligations arising from any breach, default, violation, or non-performance by Seller of any Assigned Contract occurring prior to the Closing Date, or any liabilities arising out of or related to any event, condition, or circumstance existing or occurring prior to the Closing Date that, with the giving of notice or the lapse of time or both, would constitute a breach or default under any Assigned Contract.
Assumed Liability 4: Post-Closing Lease Obligations
All obligations, liabilities, and commitments arising under the Marysville Lease with Buckeye Industrial Properties LLC for the premises located at 2800 Industrial Parkway, Marysville, OH 43040, to the extent such obligations arise from and after the Closing Date, including, without limitation, all rent, additional rent, operating expense payments, maintenance obligations, and other amounts payable under the Marysville Lease from and after the Closing Date (collectively, the "Assumed Lease Obligations").
The assumption of the Assumed Lease Obligations is conditioned upon and subject to (a) receipt of landlord consent to the assignment of the Marysville Lease from Seller to Buyer in form and substance reasonably satisfactory to Buyer, and (b) the execution and delivery of all documentation required to effectuate such assignment. In the event landlord consent is not obtained prior to or at the Closing, the parties shall address the Marysville Lease in accordance with the provisions of the Agreement governing non-assignable contracts.
Note on Excluded Liabilities
For the avoidance of doubt, and as more fully described in Section 1.3(b) of the Agreement, all liabilities and obligations of Seller not expressly identified as Assumed Liabilities in this Schedule 1.3(a) shall be retained by Seller as Excluded Liabilities. Without limiting the generality of the foregoing, the Excluded Liabilities include, but are not limited to:
(a) All pre-Closing tax liabilities of Seller, including all income taxes, sales and use taxes, employment taxes, and other taxes attributable to any pre-Closing Tax period;
(b) All product liability claims, personal injury claims, property damage claims, and other tort claims arising from or related to products manufactured, sold, or distributed by Seller prior to the Closing Date;
(c) All environmental remediation liabilities, cleanup costs, and other environmental obligations arising from or related to conditions or events existing or occurring at any facility or property of Seller prior to the Closing Date;
(d) All liabilities and obligations related exclusively to the Retained Business (the Commercial Janitorial Services Division);
(e) All liabilities and obligations arising under or related to the Excluded Assets;
(f) All indebtedness, borrowings, and similar financing obligations of Seller, including all amounts owed under any credit facility, loan agreement, note, or similar instrument;
(g) All liabilities and obligations arising from any pending or threatened litigation, arbitration, or other legal proceeding against Seller, to the extent such litigation, arbitration, or proceeding relates to events or circumstances occurring prior to the Closing Date; and
(h) All liabilities and obligations arising from or related to any employee benefit plan of Seller, including the Briarwood Home Essentials, Inc. 401(k) Savings Plan.
SCHEDULE 1.1(d) — ASSIGNED CONTRACTS
Pursuant to and in accordance with the definition of "Assigned Contracts" in the Agreement, the following sets forth a listing of all contracts, agreements, and commitments of Briarwood Home Essentials, Inc. ("Seller") that are to be assigned from Seller to Meridian Consumer Brands LLC ("Buyer") at the Closing. This Schedule includes all material contracts related to the CleanLeaf and PureHaven product lines that Buyer has identified through its due diligence review of the data room as of the date hereof.
A total of twenty-three (23) customer contracts are included in this Schedule. Seven (7) of the twenty-three (23) customer contracts contain change-of-control provisions, assignment consent provisions, or anti-assignment clauses that require the prior written consent of the applicable counterparty to the assignment of Seller's interest in such contract to Buyer. Such contracts are identified below with an asterisk (*) and a "Yes" designation in the "Consent Required?" column.
Part A: Customer Contracts
The following table sets forth a listing of all customer contracts to be assigned to Buyer at the Closing:
Contracts marked with an asterisk () contain change-of-control, anti-assignment, or assignment consent provisions requiring the prior written consent of the applicable counterparty to the assignment of Seller's interest to Buyer.*
Note: Buyer has prepared form consent request letters for the seven (7) contracts identified above as requiring consent. See Schedule 1.1(d) Annex A for the form of consent request letter prepared by Calderwood & Harkness LLP as of October 12, 2022.
Part B: Supply Agreements
The following table sets forth a listing of the key supply agreements for raw materials, packaging, components, and other inputs related to the CleanLeaf and PureHaven product lines to be assigned to Buyer at the Closing:
Part C: Other Material Contracts
The following table sets forth additional material contracts being assigned to Buyer at the Closing:
Part D: Real Property Lease
Marysville Manufacturing Facility Lease
• Landlord: Buckeye Industrial Properties LLC, 77 East Nationwide Boulevard, Suite 200, Columbus, OH 43215
• Premises: 2800 Industrial Parkway, Marysville, OH 43040
• Lease Date: [To be confirmed from data room — Buyer's records indicate an original lease commencement date of approximately March 1, 2015, with a lease amendment and extension executed on or about February 15, 2020]
• Remaining Term: [To be confirmed — based on available data room materials, the current lease term is believed to expire on February 28, 2030]
• Monthly Base Rent: [To be confirmed — based on Seller's preliminary financial disclosures, monthly base rent is estimated to be approximately $87,500, subject to annual escalation of 2.5% per annum]
• Consent Required: Yes — The Marysville Lease contains a provision requiring the prior written consent of Buckeye Industrial Properties LLC (as landlord) to any assignment or transfer of the tenant's interest in the lease. Seller has submitted a consent request letter to Buckeye Industrial Properties LLC dated October 7, 2022. As of the date of these Schedules, no response has been received from the landlord. Buyer's counsel has followed up with landlord's counsel by telephone on October 11, 2022.
SCHEDULE 1.1(e) — PERMITTED ENCUMBRANCES
Pursuant to and in accordance with the definition of "Permitted Encumbrances" in the Agreement, the following sets forth a listing of the liens, encumbrances, security interests, easements, restrictions, covenants, conditions, charges, claims, and other title matters that are permitted to exist on the Acquired Assets at the Closing without giving rise to a breach of any of Seller's representations or warranties under the Agreement. Except as expressly set forth below, Seller shall deliver the Acquired Assets to Buyer at the Closing free and clear of all Encumbrances.
The Permitted Encumbrances are as follows:
1. Statutory Tax Liens. Statutory liens for Taxes not yet due and payable or that are being contested in good faith by appropriate proceedings and for which adequate reserves have been established in accordance with GAAP on the financial statements of Seller, provided that such liens do not, individually or in the aggregate, materially impair the use of the affected Acquired Assets.
2. Mechanics' and Similar Liens. Mechanics' liens, materialmen's liens, carriers' liens, workers' liens, repairers' liens, and other similar liens arising or incurred in the ordinary course of business for amounts not yet due and payable or that are being contested in good faith by appropriate proceedings, provided that such liens do not, individually or in the aggregate, materially impair the use of the affected Acquired Assets.
3. Zoning and Land Use Restrictions. Zoning, building codes, land use ordinances, regulations, restrictions, and other similar governmental regulations and requirements that are applicable to the Owned Real Property or the Leased Real Property that do not materially impair the current use, occupancy, or operation of the affected property as currently conducted by Seller as of the date of the Agreement, including all applicable setback requirements, height restrictions, parking requirements, and similar land use controls.
4. Easements and Encumbrances of Record — West Jefferson Distribution Center. Easements, rights-of-way, covenants, conditions, restrictions, reservations, and other similar encumbrances of record affecting the West Jefferson Distribution Center located at 500 Commerce Boulevard, West Jefferson, OH 43162, as disclosed in the title commitment or title report to be delivered pursuant to the Agreement, provided that such encumbrances do not materially interfere with the use of such property as a warehouse and distribution facility consistent with its current use by Seller. Without limiting the generality of the foregoing, this includes any utility easements, drainage easements, access easements, and restrictive covenants that are of record as of the date of the Agreement.
5. Landlord's Interest — Marysville Lease. The interest of Buckeye Industrial Properties LLC, as landlord, in the Marysville Manufacturing Facility located at 2800 Industrial Parkway, Marysville, OH 43040, pursuant to the Marysville Lease, including all rights reserved to the landlord under the terms of the Marysville Lease.
6. Encumbrances to Be Released at Closing. Any liens, security interests, or other encumbrances that will be released at or prior to the Closing by Seller at Seller's sole cost and expense, including any liens or security interests arising under Seller's existing credit facility or any other financing arrangement of Seller. Seller shall deliver evidence of the release or termination of all such encumbrances at or prior to the Closing, in form and substance reasonably satisfactory to Buyer.
7. Purchase Money Security Interests and Equipment Financing Liens. Purchase money security interests and equipment financing liens on specific items of Tangible Personal Property included in the Acquired Assets, to the extent disclosed in Seller's disclosure schedules delivered pursuant to the Agreement and scheduled to be released at or prior to the Closing. A list of all such purchase money security interests and equipment financing liens, together with a description of the applicable collateral, the secured party, the outstanding balance, and the anticipated release date, shall be provided by Seller in its disclosure schedules.
SCHEDULE 4.15 — TRANSFERRED EMPLOYEES
Pursuant to and in accordance with Section 4.15 of the Agreement, the following sets forth information regarding the employees of Briarwood Home Essentials, Inc. ("Seller") to whom Meridian Consumer Brands LLC ("Buyer") will offer employment in connection with the Closing (the "Transferred Employees").
Total Number of Transferred Employees: One hundred eighty-six (186).
Buyer intends to extend offer letters to all one hundred eighty-six (186) Transferred Employees identified below prior to or at the Closing. All employees listed in this Schedule are currently employed by Seller in connection with the CleanLeaf and PureHaven product lines. Employees exclusively associated with the Retained Business (the Commercial Janitorial Services Division) are not included in this Schedule and are not being offered employment by Buyer.
Employee Table
The following table sets forth certain information regarding the Transferred Employees. Specific employee names, titles, compensation data, hire dates, and exempt/non-exempt classifications are based on information provided in Seller's partial disclosure schedules delivered on September 28, 2022, and supplemental data room materials. Buyer reserves the right to update and supplement this Schedule upon receipt of complete disclosure schedules from Seller.
Note: The complete employee table (TE-001 through TE-186) is pending receipt of complete disclosure schedules from Seller. The partial disclosure schedules received on September 28, 2022 included employee headcount data and location information for approximately 162 of the 186 employees. Buyer has requested that Seller provide complete employee data, including all fields identified above, no later than ten (10) business days prior to the anticipated Closing Date.
Summary by Location
Based on information available as of the date of these Schedules, the Transferred Employees are distributed among the following locations as follows:
The foregoing headcount estimates are based on Seller's partial disclosure schedules and are subject to change upon receipt of complete data from Seller. The allocation between locations may be adjusted to reflect employee transfers, terminations, or new hires occurring between the date of Seller's partial disclosure and the Closing Date.
Notes
1. Pending Data. Employee data set forth in this Schedule is based on information provided in Seller's partial disclosure schedules delivered September 28, 2022, and supplemental data room materials reviewed through October 12, 2022. Buyer reserves the right to update, supplement, and modify this Schedule upon receipt of complete disclosure schedules from Seller. Buyer has requested that Seller deliver final and complete employee disclosure schedules, including all compensation, benefits, employment classification, and demographic data for all Transferred Employees, as promptly as practicable.
2. Offer of Employment. Buyer intends to offer employment to all one hundred eighty-six (186) Transferred Employees on terms and conditions that are substantially comparable to those currently provided by Seller, as required by Section 4.15 of the Agreement. Offer letters will be prepared and distributed to all Transferred Employees in advance of the Closing. Employment with Buyer will be on an at-will basis, subject to the terms and conditions set forth in Buyer's standard employment offer letter and employee handbook.
3. Employee Benefit Plans. Seller's existing employee benefit plans, including the Briarwood Home Essentials, Inc. 401(k) Savings Plan, are Excluded Assets pursuant to Schedule 1.1(b) and will not be assumed by Buyer. Buyer will offer enrollment in Buyer's own employee benefit programs to all Transferred Employees, effective as of their first date of employment with Buyer. Buyer's benefit programs include medical, dental, and vision insurance, life insurance and accidental death and dismemberment insurance, short-term and long-term disability insurance, a 401(k) savings plan with employer matching contributions, paid time off, and other benefits as described in Buyer's standard benefits package.
4. WARN Act Analysis. Based on headcount at the Marysville Manufacturing Facility (approximately 112 employees) and the West Jefferson Distribution Center (approximately 48 employees), the transaction may constitute a "plant closing" or "mass layoff" event under the Worker Adjustment and Retraining Notification Act of 1988, as amended (the "WARN Act"), and any applicable state WARN Act equivalents, if Buyer were to fail to extend offers of employment to substantially all Transferred Employees at such locations. Buyer's current intent to extend offers of employment to all one hundred eighty-six (186) Transferred Employees on substantially comparable terms mitigates WARN Act risk. However, Buyer and Seller acknowledge that compliance with the WARN Act and any applicable state WARN Act equivalents is a shared responsibility, and the parties shall cooperate in good faith to ensure compliance with all applicable notice requirements.
5. Key Employees. Buyer has identified certain key employees among the Transferred Employees who are critical to the ongoing operation of the CleanLeaf and PureHaven product lines. Employment retention agreements or other incentive arrangements may be negotiated with certain key employees separately, subject to the terms of the Agreement.
SCHEDULE 1.1(b)-A — DESCRIPTION OF RETAINED BUSINESS
This Schedule is delivered as a cross-reference to Schedule 1.1(b) (Excluded Assets), Excluded Asset 1, and provides a description of the Retained Business of Briarwood Home Essentials, Inc. ("Seller").
Description of Retained Business
The "Retained Business" means the Commercial Janitorial Services Division of Briarwood Home Essentials, Inc., which is the portion of Seller's business dedicated to the sale and distribution of commercial-grade janitorial products and cleaning solutions to commercial, institutional, and industrial customers, including building management companies, hospitality operators, healthcare facilities, and governmental entities.
The Retained Business includes all of the following assets, contracts, intellectual property, employees, customer relationships, equipment, inventories, and liabilities exclusively related to the commercial janitorial services business operated by Seller:
(a) All inventory, accounts receivable, and other current assets exclusively related to the Retained Business;
(b) All contracts, customer agreements, supply agreements, and other commercial arrangements exclusively related to the Retained Business;
(c) All intellectual property, trademarks, trade names, and goodwill exclusively related to the Retained Business, including the "BriarClean Professional" brand name and associated marks;
(d) All employees exclusively employed in connection with the Retained Business;
(e) All tangible personal property, equipment, and other assets exclusively used in the Retained Business;
(f) All permits, licenses, and governmental authorizations exclusively related to the Retained Business; and
(g) All liabilities and obligations exclusively related to the Retained Business, including all trade payables, product warranty obligations, and other liabilities arising from the conduct of the Retained Business.
For the avoidance of doubt, the Retained Business does not include any assets, contracts, intellectual property, employees, or liabilities that are shared between the Retained Business and the CleanLeaf/PureHaven product lines. To the extent any assets, systems, services, or personnel are shared between the Retained Business and the CleanLeaf/PureHaven product lines, the allocation, separation, and transition of such shared assets and services shall be addressed in the Transition Services Agreement to be entered into by the parties at Closing, in accordance with Section 5.12 (or equivalent section) of the Agreement.
ANNEX A TO SCHEDULE 1.1(d) — FORM OF CUSTOMER CONTRACT CONSENT REQUEST LETTER
This Annex sets forth a reference to the form of consent request letter to be sent to the counterparties of the seven (7) customer contracts identified in Schedule 1.1(d), Part A, as requiring prior written consent to assignment in connection with the transactions contemplated by the Agreement.
The seven (7) customer contracts requiring consent are:
• CC-003: Fairfield Grocers Co.
• CC-007: Crestwood Health & Beauty Corp.
• CC-009: Continental Supermarkets, Inc.
• CC-012: Atlas General Merchandise, Inc.
• CC-015: Pacific Coast Markets, Inc.
• CC-019: Keystone Department Stores, Inc.
• CC-022: Liberty Consumer Brands Corp.
A separate form of consent request letter has been prepared by Calderwood & Harkness LLP as of October 12, 2022, and is maintained in the transaction document index under the following reference:
Document Index Reference: Customer Contract Consent — Form of Request Letter Prepared by: Calderwood & Harkness LLP Date of Preparation: October 12, 2022 Document Control No.: 1011-00005-CRL-001
The form of consent request letter is designed to be sent on the letterhead of Briarwood Home Essentials, Inc., co-signed by an authorized representative of Meridian Consumer Brands LLC, and provides the following information to each counterparty: (a) notice of the proposed transaction and assignment of the applicable contract, (b) a description of the acquiring entity (Meridian Consumer Brands LLC), (c) assurances regarding the continuity of supply and service obligations under the applicable contract, and (d) a request for the counterparty's written consent to the assignment.
Buyer and Seller shall cooperate in the preparation, customization, and delivery of consent request letters to each of the seven (7) counterparties as promptly as practicable following the date of these Schedules. The parties anticipate that consent request letters will be delivered to all seven (7) counterparties no later than fifteen (15) business days following the execution of the Agreement.
GENERAL NOTES AND QUALIFICATIONS
The following general notes and qualifications apply to all Schedules delivered herewith:
1. Estimated Amounts. All dollar amounts set forth in these Schedules are estimates as of the Reference Date (June 30, 2022) and are subject to adjustment at or following the Closing pursuant to the terms of the Agreement, including the closing adjustment mechanism set forth in Section 2.3 of the Agreement. Actual amounts at Closing may differ materially from the estimates set forth herein, and no representation or warranty is made with respect to the accuracy of such estimates as of the Closing Date.
2. Partial Disclosure Schedules. Seller has delivered only partial, first-draft disclosure schedules as of September 28, 2022. Buyer's Schedules will be updated and reconciled upon receipt of complete Seller disclosure schedules, and Buyer reserves the right to add, delete, modify, or supplement any item or information set forth in these Schedules at any time prior to Closing based on additional information received from Seller or identified through Buyer's ongoing due diligence review.
3. No Admission of Materiality. The inclusion of any item, amount, or other information in these Schedules does not constitute an admission by either party that such item, amount, or information is material to the business, financial condition, results of operations, or prospects of the CleanLeaf and PureHaven product lines or the Acquired Assets. The thresholds and materiality qualifications set forth in the Agreement shall govern the determination of materiality for all purposes.
4. Governing Law and Interpretation. These Schedules are qualified in their entirety by reference to the Agreement and shall be interpreted in accordance with the laws of the State of New York, without regard to any conflict of laws principles that would require the application of the law of another jurisdiction, consistent with the governing law provision set forth in Section 10.8 of the Agreement.
5. Right to Supplement. Buyer reserves the right to supplement, amend, or modify these Schedules at any time prior to Closing, subject to the terms and conditions of the Agreement governing updates to the Schedules and disclosure schedules. Any such supplement, amendment, or modification shall be delivered to Seller in writing and shall be subject to Seller's review and comment in accordance with the procedures set forth in the Agreement.
6. Cross-References. Information disclosed in any particular Schedule shall be deemed disclosed with respect to each other Schedule to the extent the relevance of such information to such other Schedule is reasonably apparent on the face of such disclosure, without regard to any specific cross-reference. Headings and titles of the Schedules and the individual categories therein are for convenience of reference only and shall not affect the interpretation of the matters disclosed therein.