CALDERWOOD & HARKNESS LLP 599 Lexington Avenue, 36th Floor New York, NY 10022 Tel: (212) 554-7000
Fax: (212) 554-7001
www.calderwoodharkness.com
June 10, 2022
Via Email and U.S. Mail
Diana Ressler, Esq. General Counsel Meridian Consumer Brands LLC 440 Park Avenue South, 18th Floor New York, NY 10016
Re: Engagement of Calderwood & Harkness LLP by Meridian Consumer Brands LLC — Proposed Asset Purchase of CleanLeaf and PureHaven Product Lines from Briarwood Home Essentials, Inc. Matter No. 1011-00005
Dear Ms. Ressler:
1. Purpose and Confirmation of Engagement
Calderwood & Harkness LLP ("C&H" or the "Firm") is pleased to confirm its engagement by Meridian Consumer Brands LLC, a Delaware limited liability company ("Meridian" or the "Client"), to serve as buyer's counsel in connection with the proposed acquisition by Meridian of certain consumer product line assets — specifically, the "CleanLeaf" and "PureHaven" branded product lines (together, the "Product Lines") — from Briarwood Home Essentials, Inc., an Ohio corporation ("Briarwood" or the "Seller") (the "Transaction").
This engagement arises out of and relates to the non-binding Letter of Intent dated March 28, 2022 (the "LOI"), executed between Meridian (by Gareth Holloway, Chief Executive Officer & Managing Member) and Briarwood (by Malcolm Greer, President & Sole Shareholder), which sets forth the principal terms pursuant to which Meridian would acquire the assets constituting the Product Lines. As contemplated by the LOI, the Transaction is structured as an asset purchase, with an aggregate purchase price of Ninety-Five Million Dollars ($95,000,000), subject to customary purchase price adjustments and other terms to be negotiated and set forth in a definitive Asset Purchase Agreement.
We note that this engagement follows the completion of the Firm's internal conflicts clearance process on June 8, 2022. As described in further detail in Section 7 below, C&H has determined that no conflict of interest exists that would preclude the Firm from undertaking this representation.
This engagement letter (this "Engagement Letter") sets forth the terms and conditions of our representation of Meridian in connection with the Transaction. We ask that you review this letter carefully and, if the terms set forth herein are acceptable, that you execute and return a copy to our attention as described in Section 14 below.
2. Scope of Representation
C&H will represent Meridian as buyer's counsel in all legal aspects of the proposed acquisition of the Product Lines from Briarwood, including but not limited to the following matters:
2.1 Due Diligence. The Firm will coordinate and conduct the legal review of due diligence materials provided by Briarwood and its counsel, Caldwell, Pruitt & Shaw LLP, and any other advisors to Briarwood. This review will encompass, as applicable, corporate and organizational documents, material contracts and commercial agreements, real property and lease documentation, intellectual property registrations and licenses, employment and employee benefits matters, environmental compliance records and reports, pending and threatened litigation, regulatory compliance materials, and financial and accounting records. C&H will coordinate its legal due diligence efforts with Meridian's financial diligence advisor, Whitfield Ames LLP, and Meridian's environmental consultant, Terrapoint Environmental Group, Inc., to ensure a comprehensive and efficient diligence process. The Firm will prepare a due diligence summary memorandum identifying material findings, risks, and areas requiring further investigation or negotiation.
2.2 Transaction Documentation. The Firm will be responsible for drafting, negotiating, and finalizing the definitive Asset Purchase Agreement (the "APA") and all related ancillary agreements and instruments, including without limitation:
(a) the Bill of Sale;
(b) the Assignment and Assumption Agreement;
(c) the intellectual Property Assignment Agreement, covering all trademarks, trade names, copyrights, patents, domain names, trade secrets, and other intellectual property associated with the CleanLeaf and PureHaven Product Lines;
(d) the Transition Services Agreement, pursuant to which Briarwood will provide certain transitional operational support services to Meridian for a period following the closing of the Transaction;
(e) the Escrow Agreement, to be entered into with Atlantic Fiduciary Trust Company, as escrow agent, providing for the establishment and administration of one or more escrow accounts in connection with the Transaction;
(f) the Non-Competition and Non-Solicitation Agreement, to be entered into by Malcolm Greer, President & Sole Shareholder of Briarwood, and any other key Briarwood personnel as may be identified during the course of negotiations; and
(g) such other ancillary documents and instruments as may be necessary or appropriate to effectuate the Transaction.
2.3 Financing Review. The Firm will review and analyze the debt financing documentation related to the Transaction, including the commitment letter issued by Harborview National Bank, N.A., for a Sixty Million Dollar ($60,000,000) senior secured term loan facility, and the related credit agreement, security documents, guarantees, and other ancillary financing instruments. The Firm will also review the equity commitment letter issued by Lakepoint Capital Partners, LP, in the amount of Thirty-Five Million Dollars ($35,000,000), representing Lakepoint's equity contribution to fund the Transaction. C&H's review will focus on ensuring consistency between the terms of the financing documents and the terms of the APA, identifying any conditionality or "market flex" provisions, and advising Meridian on the legal implications of the financing structure.
2.4 Regulatory and Third-Party Consents. The Firm will analyze all regulatory filing requirements applicable to the Transaction, including an assessment of the applicability of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and the preparation and filing of any required notification forms with the Federal Trade Commission and the Antitrust Division of the U.S. Department of Justice. C&H will also identify and coordinate the procurement of all necessary third-party consents and approvals, including without limitation landlord consents (including the consent of Buckeye Industrial Properties LLC with respect to the lease of Briarwood's Marysville, Ohio manufacturing and distribution facility), customer and supplier contract assignment consents, and any other consents required to assign or transfer the acquired assets to Meridian.
2.5 Insurance. The Firm will coordinate with Northbridge Risk Advisors LLC, Meridian's insurance broker, in connection with the procurement of a representations and warranties insurance policy (the "R&W Policy") to be bound at or prior to the closing of the Transaction. C&H will assist in the preparation of underwriting submissions, participate in underwriting calls, and review the proposed R&W Policy terms, conditions, and exclusions issued by Sentinel Specialty Insurance Company (or such other carrier as may be selected).
2.6 Closing. The Firm will prepare and coordinate all closing deliverables, including officer's certificates, secretary's certificates, third-party consents, bring-down certificates, legal opinions, funds flow memoranda, and such other documents as may be required under the APA. C&H will also advise Meridian on post-closing matters, including purchase price adjustment mechanics, escrow release procedures, and compliance with any post-closing covenants set forth in the APA and ancillary agreements.
2.7 Exclusions from Scope. Notwithstanding the foregoing, the scope of this engagement does not include (i) tax advice of any kind, including federal, state, local, or international tax planning, structuring, or compliance advice (it is our understanding that Meridian intends to engage separate tax counsel for such purposes); (ii) representation in connection with any labor or employment litigation, whether existing or arising in connection with the Transaction; or (iii) representation in connection with any matters unrelated to the proposed acquisition of the Product Lines from Briarwood.
2.8 Lakepoint Capital Partners. The Client acknowledges and agrees that C&H is not acting as counsel to Lakepoint Capital Partners, LP ("Lakepoint"), Meridian's private equity sponsor, in connection with this Transaction or otherwise. Meridian may, at its sole discretion, authorize C&H to share work product, communications, and other materials generated in the course of this engagement with Lakepoint and its representatives, but any such sharing shall not create or be deemed to create an attorney-client relationship between C&H and Lakepoint, and shall be subject to the provisions of Section 6 and Section 8 of this Engagement Letter.
3. Engagement Team / Staffing
The Firm will staff this engagement with the following professionals, each of whom is a member of the Firm's Mergers & Acquisitions Group:
Responsible Partner: Sandra Tung, Partner. Ms. Tung will have overall supervisory responsibility for the engagement and will serve as the primary relationship partner for Meridian in connection with this matter. Ms. Tung has extensive experience advising strategic and private equity buyers in complex asset acquisitions and carve-out transactions across the consumer products, retail, and manufacturing sectors. Ms. Tung will participate in all significant negotiations and strategy discussions and will oversee the work of all Firm professionals assigned to this matter.
Billing Partner: Oliver Mackenzie, Partner. Mr. Mackenzie will be responsible for all billing, fee-related, and financial matters associated with this engagement. All billing inquiries should be directed to Mr. Mackenzie at omackenzie@calderwoodharkness.com or (212) 554-7244.
Lead Associate: Andrew Fitzpatrick, Associate. Mr. Fitzpatrick will manage the day-to-day legal work on this engagement, including the drafting and negotiation of the APA and ancillary transaction documents, coordination of the due diligence process, management of the virtual data room review, and primary communications with opposing counsel (Caldwell, Pruitt & Shaw LLP). Mr. Fitzpatrick will serve as the principal point of contact for the Client's deal team on day-to-day operational matters.
Working Associate: Naomi Petersen, Associate. Ms. Petersen will support all aspects of the due diligence review and document preparation, including the preparation of due diligence checklists and request lists, review and summarization of contracts and other diligence materials in the data room, and assistance with the drafting of disclosure schedules and ancillary agreements.
We may, from time to time, assign additional attorneys or professionals to the engagement team as the needs of the Transaction require. Such additions may include attorneys with specialized expertise in environmental law, intellectual property, real estate, employee benefits, or other practice areas relevant to the due diligence review or Transaction documentation. We will provide advance notice to the Client before staffing any such additional professionals and will ensure that all professionals assigned to this engagement comply with the terms of this Engagement Letter.
For the avoidance of doubt, the Client's primary contact for this matter shall be Diana Ressler, General Counsel, Meridian Consumer Brands LLC, or such other individual as the Client may designate in writing from time to time.
4. Fees and Billing Arrangements
4.1 Hourly Rates. This representation will be performed on an hourly basis at the Firm's standard rates then in effect for the professionals assigned to this engagement. The current standard hourly rates (effective January 1, 2022) for the engagement team are as follows:
4.2 Rate Adjustments. The foregoing rates are subject to periodic adjustment, typically on an annual basis effective each January 1. The Firm will provide the Client with written notice of any rate adjustments prior to the effective date of such adjustments. Any adjusted rates will apply to work performed on or after the effective date of the adjustment.
4.3 Invoicing. Invoices will be rendered on a monthly basis and will reflect fees for professional services and disbursements incurred during the preceding calendar month. Invoices will include reasonably detailed descriptions of the services rendered, the professional performing such services, the time expended, and the applicable rate. All invoices will be addressed and delivered to:
Diana Ressler, General Counsel Meridian Consumer Brands LLC 440 Park Avenue South, 18th Floor New York, NY 10016
Email: dressler@meridiancb.com
4.4 Payment Terms. Payment of invoices is due within thirty (30) days of the invoice date. The Firm reserves the right to charge interest on any amounts remaining unpaid after such thirty-day period at a rate of one percent (1.0%) per month, or the maximum rate permitted by applicable law, whichever is less.
4.5 Billing Partner. Oliver Mackenzie will serve as the billing partner for this engagement. All billing inquiries, including questions regarding invoice detail, fee arrangements, or payment matters, should be directed to Mr. Mackenzie.
5. Expenses and Disbursements
The Client will be responsible for all reasonable out-of-pocket disbursements and expenses incurred by the Firm in connection with this representation. Such disbursements may include, without limitation:
(a) filing fees (including, if applicable, HSR Act filing fees);
(b) courier, messenger, and overnight delivery charges;
(c) travel expenses, including airfare, lodging, ground transportation, and meals incurred in connection with travel to Briarwood's facilities, closing meetings, or other Transaction-related events;
(d) computerized legal research and database charges (e.g., Westmark Data Systems, Sundial Solutions, and similar services);
(e) document reproduction, printing, and binding costs;
(f) virtual data room access fees and related costs;
(g) long-distance telephone and video conferencing charges; and
(h) other expenses reasonably incurred in the performance of the Firm's services under this Engagement Letter.
All disbursements will be reflected on the Firm's monthly invoices in reasonable detail. Any single extraordinary expense expected to exceed Five Thousand Dollars ($5,000.00) will be pre-approved by the Client prior to the Firm's incurrence of such expense.
6. Client Identity and Affiliated Entities
For purposes of this engagement, the "Client" is Meridian Consumer Brands LLC (EIN: 83-2947106), a Delaware limited liability company with its principal offices at 440 Park Avenue South, 18th Floor, New York, NY 10016. C&H is not engaged to represent, and does not represent, any affiliate, subsidiary, member, manager, officer, director, employee, or other individual associated with Meridian in their personal or individual capacity. Without limiting the generality of the foregoing, C&H does not represent Lakepoint Capital Partners, LP (EIN: 04-3821567) or any of its affiliates, funds, general partners, limited partners, or portfolio companies in connection with this engagement or otherwise, except to the extent expressly agreed in a separate written engagement letter between C&H and Lakepoint.
As noted in Section 2.8 above, communications and work product generated in connection with this engagement may be shared with Lakepoint Capital Partners, LP (Managing Partner: Thomas Liang) at Meridian's direction and authorization. Any such sharing of information is undertaken at the Client's sole discretion and risk, and shall not create or expand any attorney-client relationship between C&H and Lakepoint. The Client acknowledges its responsibility to take reasonable steps to ensure that the sharing of privileged or confidential materials with Lakepoint is conducted in a manner that preserves applicable privileges, including by entering into common-interest or joint-defense agreements where appropriate.
7. Conflicts of Interest
7.1 Current Conflicts. C&H has conducted a comprehensive conflicts check in accordance with the Firm's standard conflicts clearance procedures (completed June 8, 2022) and confirms that, as of the date of this Engagement Letter, no conflict of interest exists that would preclude the Firm from undertaking this representation under the New York Rules of Professional Conduct.
7.2 General Waiver — Unrelated Matters. C&H is a large, multi-office law firm with offices in multiple jurisdictions throughout the United States and internationally. The Firm represents a substantial number of clients across a wide range of industries and practice areas. The Client acknowledges that C&H may currently represent, and may in the future represent, other clients whose interests may be adverse to Meridian in matters that are wholly unrelated to this engagement and the Transaction. By executing this Engagement Letter, the Client consents to C&H's continued representation of such other clients in matters unrelated to this engagement, even if such clients are adverse to Meridian in those unrelated matters, provided that such representation does not involve the use or disclosure of any confidential information of Meridian that is protected under this Engagement Letter or by the attorney-client privilege.
7.3 Transaction-Specific Restriction. C&H agrees that it will not, during the pendency of this engagement, represent any party with interests directly adverse to Meridian in connection with the specific Transaction described in this Engagement Letter without Meridian's prior written consent.
8. Confidentiality and Privilege
C&H will maintain the confidentiality of all information provided by the Client in connection with this engagement in accordance with applicable law, the New York Rules of Professional Conduct, and the Firm's internal policies regarding the safeguarding of client confidences and secrets. All such information will be used by the Firm solely for the purpose of providing legal services in connection with this engagement, except as may be required by law, regulation, court order, or the rules of professional conduct applicable to the Firm and its attorneys.
The attorney-client privilege and work product doctrine apply to communications between C&H and Meridian and to materials generated by C&H in the course of this representation. The Client understands that the protections afforded by the attorney-client privilege and the work product doctrine may be waived if privileged or work product materials are disclosed to third parties outside the scope of the privilege. The Client agrees to take reasonable measures to preserve the privileged and confidential nature of communications and materials when forwarding or disclosing C&H communications to third parties, including without limitation Lakepoint Capital Partners, LP; Wavecrest Partners LLC; Whitfield Ames LLP; Terrapoint Environmental Group, Inc.; and any other advisors, consultants, or third parties. We recommend that Meridian consider entering into common-interest agreements with such third parties where appropriate to preserve applicable privileges.
9. Document Retention
Upon the conclusion of this engagement, whether by completion of the Transaction, termination, or otherwise, C&H will retain the files and records associated with this engagement in accordance with the Firm's standard document retention policies, which are available for review upon request. The Firm's document retention policies generally provide for the retention of engagement files for a period of ten (10) years following the conclusion of the engagement, after which time files may be archived, transferred to off-site storage, or destroyed.
The Client may, at any time during or after the engagement, request the return of original documents that the Client provided to C&H in connection with this representation. The Firm will comply with any such request within a reasonable time and will retain copies of returned documents as required by the Firm's professional responsibility obligations and applicable law.
Electronic files maintained on the Firm's systems are subject to periodic archival, migration, and destruction in accordance with the Firm's information technology and records management policies. The Firm will provide the Client with not less than sixty (60) days' written notice prior to the destruction of any electronic files associated with this engagement.
10. Limitation of Scope; No Guarantee of Outcome
This engagement is limited to the scope of representation described in Section 2 of this Engagement Letter. C&H has not been engaged to provide legal services to Meridian in connection with any other matter, transaction, dispute, or proceeding. Any expansion of the scope of this engagement, or any new engagement of C&H by Meridian, must be agreed upon in writing by C&H and the Client.
The Client acknowledges and agrees that C&H does not guarantee the outcome of any transaction, negotiation, regulatory proceeding, or other matter undertaken in connection with this engagement. The practice of law involves inherent uncertainty, and the results achieved in any matter depend on range factors, many of which are beyond the control of the Firm. All legal advice rendered by C&H in connection with this engagement is based on the law as it exists at the time such advice is rendered and does not account for subsequent changes in law, regulation, judicial interpretation, or administrative guidance that may affect the analysis or conclusions previously provided.
11. Termination of Engagement
11.1 Termination by Either Party. Either party may terminate this engagement at any time upon written notice to the other party. No reason need be stated for any such termination.
11.2 Fees and Expenses Upon Termination. Upon termination of this engagement, the Client will remain responsible for all fees for professional services rendered and all expenses and disbursements incurred by the Firm through the effective date of termination. The Firm will render a final invoice within thirty (30) days of the effective date of termination, and payment of such final invoice shall be due in accordance with the payment terms set forth in Section 4 above.
11.3 Transition. Upon termination, C&H will take reasonable steps to protect the Client's interests during the transition period, including, upon the Client's request, the orderly transfer of files, documents, and work product to Meridian or to successor counsel designated by Meridian. The Client agrees to cooperate with C&H in facilitating an orderly transition and to execute any documents reasonably necessary to effect the substitution of counsel in any proceeding in which C&H has entered an appearance on behalf of Meridian.
11.4 Withdrawal. C&H reserves the right to withdraw from this engagement in accordance with the applicable rules of professional conduct, including without limitation in circumstances involving the Client's failure to pay fees and expenses when due, the Client's failure to cooperate with the Firm's reasonable requests, or the existence of circumstances that render continued representation impracticable, unethical, or in conflict with the Firm's professional obligations.
12. Governing Law and Dispute Resolution
12.1 Governing Law. This Engagement Letter shall be governed by and construed in accordance with the laws of the State of New York, without regard to conflict-of-laws principles that would require the application of the laws of any other jurisdiction.
12.2 Dispute Resolution. Any dispute, claim, or controversy arising out of or relating to this Engagement Letter, the Firm's services hereunder, or the Firm's fees or billing practices (a "Dispute") shall be resolved by final and binding arbitration administered in New York, New York, in accordance with the Commercial Arbitration Rules of the American Arbitration Association then in effect. The arbitration shall be conducted before a single arbitrator mutually agreed upon by the parties or, failing agreement, appointed in accordance with the rules of the American Arbitration Association. The arbitrator's award shall be final and binding and may be entered as a judgment in any court of competent jurisdiction. Each party shall bear its own attorneys' fees and costs in connection with any arbitration, unless the arbitrator determines that an award of fees and costs to the prevailing party is appropriate.
13. Entire Agreement; Amendments
This Engagement Letter, together with any enclosures or attachments referenced herein, constitutes the entire agreement between C&H and the Client with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements, understandings, negotiations, and discussions, whether oral or written, between the parties relating to the engagement described herein.
No amendment, modification, or waiver of any provision of this Engagement Letter shall be effective unless set forth in a writing signed by both C&H and the Client. No failure or delay by either party in exercising any right or remedy under this Engagement Letter shall constitute a waiver thereof.
14. Acceptance and Counterparts
We respectfully request that the Client indicate its acceptance of the terms and conditions set forth in this Engagement Letter by having an authorized representative of Meridian sign and return a copy of this letter to our attention. A signed copy may be returned by email (in PDF format) to stung@calderwoodharkness.com or by mail to the address set forth in the letterhead above.
This Engagement Letter may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Delivery of an executed counterpart by email (in PDF format) or other electronic transmission shall be equally effective as delivery of a manually executed counterpart.
We look forward to working with you and the Meridian team on this important transaction. We believe the proposed acquisition of the CleanLeaf and PureHaven Product Lines represents a significant strategic opportunity for Meridian, and we are committed to providing the highest quality legal representation throughout the transaction process. Please do not hesitate to contact Sandra Tung or any member of the engagement team with any questions regarding this Engagement Letter or the scope of our representation.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Name: Sandra Tung
Title: Partner, Mergers & Acquisitions Group
Email: stung@calderwoodharkness.com
Tel: (212) 554-7118
By: ________
Name: Oliver Mackenzie
Title: Partner, Mergers & Acquisitions Group
Email: omackenzie@calderwoodharkness.com
Tel: (212) 554-7244
ACKNOWLEDGMENT AND ACCEPTANCE
The undersigned, on behalf of Meridian Consumer Brands LLC, hereby acknowledges receipt of the foregoing Engagement Letter dated June 10, 2022, and agrees to the terms and conditions set forth therein.
ACKNOWLEDGED AND AGREED:
MERIDIAN CONSUMER BRANDS LLC
By: ________
Name: Diana Ressler
Title: General Counsel
Date: ________
Meridian Consumer Brands LLC 440 Park Avenue South, 18th Floor New York, NY 10016
Enclosures:
Calderwood & Harkness LLP — Standard Terms and Conditions of Engagement (Attachment A)
cc:
Gareth Holloway, Chief Executive Officer & Managing Member, Meridian Consumer Brands LLC
Priya Anand, Chief Financial Officer, Meridian Consumer Brands LLC
Thomas Liang, Managing Partner, Lakepoint Capital Partners, LP (courtesy copy, at Client's direction)
| Professional | Role | Hourly Rate |
| Sandra Tung | Partner | $1,350.00 |
| Oliver Mackenzie | Partner | $1,275.00 |
| Andrew Fitzpatrick | Senior Associate (6th Year) | $895.00 |
| Naomi Petersen | Associate (4th Year) | $775.00 |
| Partners (Other) | As needed | $1,175.00 – $1,450.00 |
| Associates (Other) | As needed | $625.00 – $995.00 |
| Paralegals / Legal Assistants | As needed | $375.00 – $475.00 |