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

PRIVILEGED & CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGED — ATTORNEY WORK PRODUCT
CALDERWOOD & HARKNESS LLP One Liberty Plaza, 44th Floor New York, NY 10006
MEMORANDUM
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I. Executive Summary
This memorandum has been prepared by Calderwood & Harkness LLP ("C&H") for the purpose of summarizing the key terms, negotiation outcomes, risk points, and outstanding items in connection with the proposed carve-out divestiture of the PureGlow personal-care product line (the "PureGlow Business" or "PureGlow") by Meridian Consumer Brands LLC ("MCB," "Meridian," or the "Seller") to Lakebridge Home & Personal Care, Inc. ("Lakebridge" or the "Buyer"). This memorandum is intended solely for internal use by the deal team and the client recipients listed above, and is protected by the attorney-client privilege and the work product doctrine.
Transaction Type. The proposed transaction is structured as an asset purchase, effectuated through an Asset Purchase Agreement (the "APA"), pursuant to which the Buyer will acquire identified assets and assume identified liabilities relating exclusively to the PureGlow personal-care product line. The transaction constitutes a carve-out divestiture of a discontinued product line from MCB's broader multi-brand consumer products platform.
Seller. Meridian Consumer Brands LLC is a Delaware limited liability company headquartered at 450 Park Avenue South, 14th Floor, New York, NY 10016. MCB operates a multi-brand consumer products platform spanning household cleaning, personal care, and pet-care product lines, with approximately $620 million in consolidated revenue for the fiscal year ended December 31, 2024 ("FY2024"). MCB is 78.4% owned by Hargrove Capital Partners Fund IV LP, a private equity fund managed by Hargrove Capital Partners LP ("Hargrove" or the "Sponsor"). In the fourth quarter of 2024, MCB's board of managers voted to discontinue the PureGlow personal-care product line as part of a broader portfolio rationalization strategy, and the instant divestiture effectuates that board decision.
Buyer. Lakebridge Home & Personal Care, Inc. is an Ohio corporation headquartered at 7100 Rockside Road, Suite 400, Independence, OH 44131. Lakebridge is a mid-market personal-care and wellness company with approximately $285 million in FY2024 revenue, operating across body wash, skincare, and aromatherapy brands sold through mass-market retail and e-commerce channels. Lakebridge is privately held, with 100% ownership held by the Brennan family trust and current management.
Purchase Price. The total purchase price for the PureGlow Business is $40,000,000 (the "Purchase Price"), payable in cash at closing, subject to a post-closing net working capital adjustment mechanism. Of the Purchase Price, $36,000,000 will be paid directly to the Seller at closing, and $4,000,000 will be deposited into an indemnity escrow account with Pinnacle Trust Company, N.A. (the "Escrow Agent"), representing 10% of the Purchase Price.
Implied Valuation. The Purchase Price of $40,000,000 implies a valuation multiple of approximately 6.9× FY2024 Adjusted EBITDA of $5,800,000. This multiple reflects a discount to comparable mid-market personal-care carve-out transactions, consistent with the declining revenue trajectory of the PureGlow product line and the execution risk inherent in any carve-out separation.
PureGlow Revenue Contribution. The PureGlow product line generated approximately $58,000,000 in FY2024 revenue, representing approximately 9.35% of MCB's consolidated $620 million FY2024 revenue. FY2024 Adjusted EBITDA for PureGlow was $5,800,000, reflecting a 10% EBITDA margin.
Governing Law. The APA and the transaction are governed by the laws of the State of New York, without giving effect to conflict-of-laws principles.
Status of Documentation. C&H circulated the first draft of the APA (v1.0) to the Buyer's counsel, Oakridge Phelps LLP (Warren Gladstone, Lead Partner; Monica Ferreira, Senior Associate), on April 7, 2025, the date of this memorandum. The APA reflects the terms negotiated between the parties as memorialized in the letter of intent executed on March 5, 2025 (LOI-MCB-LHPC-2025-001), supplemented by subsequent discussions between the deal teams. Significant items remain open and subject to further negotiation, as described in detail in Section XIV and Section XVIII below.
HSR Act. No filing under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act") is required for this transaction. The Purchase Price of $40,000,000 falls below the 2025 size-of-transaction threshold of $119.5 million, and accordingly, no pre-closing waiting period applies.
II. Parties and Advisors
A. Seller
Meridian Consumer Brands LLC is a limited liability company organized and existing under the laws of the State of Delaware, with Employer Identification Number (EIN) 83-2947156. MCB's principal headquarters are located at 450 Park Avenue South, 14th Floor, New York, NY 10016. Its registered agent for service of process in Delaware is Capitol Registered Agents Inc., located at 1209 Orange Street, Wilmington, DE 19801.
MCB operates a diversified multi-brand consumer products platform with product lines spanning household cleaning, personal care, and pet-care categories. For the fiscal year ended December 31, 2024, MCB reported consolidated revenue of approximately $620 million. The PureGlow personal-care line, which is the subject of this divestiture, contributed approximately $58 million of that revenue.
MCB's ownership is concentrated in its private equity sponsor, with the following capitalization structure:
•  Hargrove Capital Partners Fund IV LP: 78.4%
•  Management rollover holders: 14.1%
•  Minority co-investors: 7.5%
The foregoing represents 100% of the outstanding membership interests of MCB.
Key personnel of MCB involved in the transaction include:
•  Catherine Albrecht — Chief Executive Officer
•  Rajiv Subramaniam — Chief Financial Officer
•  Gerald Fontenot — General Counsel & Corporate Secretary
•  Diane Choi — Vice President of Business Development (transaction deal lead for Seller)
B. Sponsor
Hargrove Capital Partners LP is a Delaware limited partnership with its principal office at 399 Lexington Avenue, Suite 3200, New York, NY 10017. Hargrove is a middle-market private equity firm focused on consumer products, retail, and consumer services investments. Hargrove controls MCB through its fourth institutional fund, Hargrove Capital Partners Fund IV LP, a Delaware limited partnership (EIN 85-1034782), the general partner of which is Hargrove Capital GenPar IV LLC, a Delaware limited liability company.
Key personnel of Hargrove involved in or with oversight responsibility for the transaction include:
•  Malcolm Hargrove — Founder & Managing Partner
•  Elena Vasquez-Drummond — Partner, Consumer & Retail; Board Observer at MCB
Ms. Vasquez-Drummond serves as the Sponsor's designated board observer at MCB and has been actively engaged in the strategic decision to divest the PureGlow product line as part of MCB's portfolio rationalization.
C. Buyer
Lakebridge Home & Personal Care, Inc. is a corporation organized and existing under the laws of the State of Ohio, with Employer Identification Number (EIN) 31-4589201. Lakebridge's principal headquarters are located at 7100 Rockside Road, Suite 400, Independence, OH 44131. Its registered agent for service of process in Ohio is Buckeye Statutory Services LLC, located at 52 East Gay Street, Columbus, OH 43215.
Lakebridge operates in the personal-care and wellness space, with a portfolio of body wash, skincare, and aromatherapy brands distributed through mass-market retail channels and direct-to-consumer e-commerce platforms. For the fiscal year ended December 31, 2024, Lakebridge reported revenue of approximately $285 million.
Lakebridge is 100% privately held by the Brennan family trust and current management. The company has no institutional private equity sponsor or outside investors.
Key personnel of Lakebridge involved in the transaction include:
•  Thomas Brennan III — Chairman & Chief Executive Officer
•  Lisa Nakamura — Chief Financial Officer
•  Philip Kowalski — Vice President, Corporate Development (transaction deal lead for Buyer)
D. Advisors
The following advisors have been engaged by the respective parties in connection with the transaction:
Whitfield Barrow & Co. LLC has served as MCB's sell-side financial advisor throughout the process, including the marketing of the PureGlow divestiture opportunity and the negotiation of the purchase price and key economic terms with Crestline Advisors LLC, the Buyer's financial advisor. The advisory fees of Whitfield Barrow & Co. are the sole responsibility of the Seller, as reflected in the APA's broker representations.
III. Transaction Structure
A. Overview
The transaction is structured as an asset purchase governed by an Asset Purchase Agreement (the "APA"), rather than as a sale of stock or membership interests. Under the APA, Meridian Consumer Brands LLC will sell, convey, transfer, assign, and deliver to Lakebridge Home & Personal Care, Inc. all of the identified "Acquired Assets" constituting the PureGlow personal-care product line, and Lakebridge will assume certain identified "Assumed Liabilities," all upon the terms and subject to the conditions set forth in the APA.
The asset purchase structure was selected in preference to a stock or interest sale for several reasons. First, PureGlow does not operate through a separate legal entity; it is a product line within the broader MCB operating company, and accordingly, there is no separate equity interest to convey. Second, the asset purchase structure allows for precise delineation of the assets to be acquired and liabilities to be assumed, thereby reducing the risk of unintended liability transfer to the Buyer and allowing the Seller to retain all liabilities not specifically designated as Assumed Liabilities. Third, the asset purchase structure affords certain tax benefits to the Buyer, including a step-up in the tax basis of the acquired assets to fair market value, which will be allocated pursuant to the agreed purchase price allocation under Internal Revenue Code Section 1060.
The divestiture effectuates the decision of MCB's board of managers, taken in the fourth quarter of 2024, to discontinue the PureGlow personal-care product line. MCB has determined that its strategic focus and capital allocation are better directed toward its remaining, higher-growth product lines in household cleaning and pet-care, and that a divestiture of PureGlow to a strategic acquirer with a complementary personal-care platform represents a superior outcome relative to a wind-down of the product line.
B. Acquired Assets
The Acquired Assets to be transferred from the Seller to the Buyer at closing include the following categories, each of which will be specifically defined and, where appropriate, scheduled in the APA:
1.  Inventory. All PureGlow-branded finished goods, raw materials, work-in-process, packaging materials, and supplies, comprising 23 stock keeping units (SKUs) across four product categories: body wash, lotion, facial cleanser, and hand soap. As of the most recently available inventory count, the aggregate book value of PureGlow inventory is approximately $8,200,000.
2.  Manufacturing Equipment and Tangible Personal Property. All manufacturing equipment, machinery, tooling, molds, production line equipment, furniture, fixtures, and other tangible personal property located at the Dayton, Ohio manufacturing facility (2200 Dryden Road, Dayton, OH 45439) and used exclusively or primarily in connection with the PureGlow product line. The aggregate book value of such tangible personal property is approximately $4,600,000.
3.  intellectual Property. All intellectual property rights owned by the Seller and used exclusively or primarily in connection with the PureGlow product line, including without limitation:
(a) all trademarks, service marks, trade names, and trade dress associated with the "PureGlow" brand, whether registered or unregistered, and all applications therefor, together with all goodwill associated therewith;
(b) all domain names incorporating or relating to the "PureGlow" name, including without limitation pureglow.com and any related URLs;
(c) all product formulations, recipes, specifications, and manufacturing processes for PureGlow products, including the salicylic acid formulation used in the OTC-classified PureGlow facial cleanser;
(d) all copyrights in product packaging, marketing materials, and promotional content created exclusively for the PureGlow product line; and
(e) all associated goodwill and rights to sue for past infringement, to the extent transferable.
4.  Customer Contracts. Eight (8) customer supply and/or distribution agreements pursuant to which PureGlow products are sold to retail and wholesale customers, including the supply agreement with Hartwell Retail Group, the largest PureGlow customer, which accounted for FY2024 PureGlow sales of approximately $14,200,000, representing approximately 24.48% of PureGlow revenue. Each of the eight customer contracts will be identified by counterparty, date, and contract number in the Acquired Assets schedule of the APA.
5.  Leasehold Interest. The Seller's leasehold interest in the manufacturing facility located at 2200 Dryden Road, Dayton, OH 45439, a facility comprising approximately 127,000 square feet. The lease is dated July 1, 2020, between MCB (as tenant) and Buckeye Industrial Realty Partners LLC (as landlord), with annual base rent of $1,143,000 and a remaining term of approximately 5.2 years, expiring on June 30, 2030. The assignment of this lease is subject to landlord consent, as discussed in Section XIV.A below.
6.  Books, Records, and Permits. All books, records, files, data, correspondence, and documentation relating exclusively to the PureGlow product line, including customer lists, supplier lists, pricing records, quality control records, regulatory filings, and all permits, licenses, and governmental authorizations relating exclusively to PureGlow operations.
7.  FDA Product Listings. All FDA product listings and registrations for the PureGlow OTC-classified facial cleanser containing salicylic acid as an active ingredient, including related drug establishment registrations, National Drug Code (NDC) numbers, and product listing forms. Transfer of these listings will require coordination with the FDA as described in Section XVI below.
C. Assumed Liabilities
The Buyer will assume, and agree to pay, perform, and discharge when due, only those liabilities specifically identified in the APA as "Assumed Liabilities," which are expected to include:
1.  All liabilities and obligations arising under the Acquired Assets (including the assigned customer contracts and the Dayton facility lease) from and after the Closing Date, including trade payables incurred in the ordinary course of business from and after the Closing Date and all contract performance obligations accruing from and after the Closing Date.
2.  All obligations of the tenant under the assigned Dayton facility lease arising from and after the Closing Date, including base rent payments, property tax pass-throughs, insurance obligations, and maintenance responsibilities.
3.  Such other specific assumed liabilities as may be scheduled in the APA following further negotiation between the parties. The Assumed Liabilities schedule will be prepared and finalized during the APA negotiation process.
All liabilities of the Seller not specifically identified as Assumed Liabilities shall be retained by the Seller as "Excluded Liabilities."
D. Excluded Assets and Excluded Liabilities
Excluded Assets. All assets of the Seller not specifically identified as Acquired Assets will be retained by the Seller and shall constitute "Excluded Assets." Without limiting the generality of the foregoing, Excluded Assets include all assets relating to MCB's other product lines (household cleaning, pet-care, and any other personal-care brands other than PureGlow), all corporate overhead assets, MCB's general corporate cash and cash equivalents, all intercompany receivables, and all assets located at MCB's New York headquarters except to the extent specifically identified as Acquired Assets.
Excluded Liabilities. All liabilities of the Seller other than the Assumed Liabilities will be retained by the Seller as "Excluded Liabilities." Without limiting the generality of the foregoing, Excluded Liabilities include:
(a) all liabilities and obligations arising from the operation of the PureGlow business prior to the Closing Date, except as specifically assumed;
(b) all intercompany balances between PureGlow and MCB's other product lines or divisions;
(c) all tax liabilities of the Seller (including income, franchise, and transfer taxes arising from the transaction);
(d) all liabilities and obligations under or relating to employee benefit plans, pension plans, deferred compensation arrangements, and other employment-related benefit programs maintained by the Seller;
(e) all liabilities arising from litigation, claims, proceedings, or investigations relating to the operation of the PureGlow business prior to the Closing Date; and
(f) all liabilities arising from or relating to any Excluded Asset.
The delineation between Assumed Liabilities and Excluded Liabilities is a critical structural element of the transaction, and the relevant schedules of the APA will be prepared with care to ensure that the allocation of liabilities is clear and unambiguous.
IV. PureGlow Business Overview and Valuation
A. Business Description
The PureGlow personal-care product line encompasses 23 SKUs across four product categories: body wash, lotion, facial cleanser, and hand soap. PureGlow products are manufactured at the Dayton, Ohio facility and distributed through mass-market retail channels and select e-commerce platforms pursuant to eight customer supply and distribution agreements.
Key financial metrics for the PureGlow product line for the fiscal year ended December 31, 2024, are as follows:
The PureGlow product line has experienced declining revenue over recent fiscal years, a trend that contributed to MCB's board of managers' decision in the fourth quarter of 2024 to discontinue the line. The decline has been attributed to increased competition in the mass-market personal-care segment, limited marketing investment by MCB (which has prioritized capital allocation toward its higher-growth household cleaning and pet-care product lines), and pricing pressure from private-label alternatives in key retail channels.
The PureGlow workforce comprises 74 employees, the majority of whom are based at the Dayton, Ohio manufacturing facility, with a smaller contingent at MCB's New York headquarters performing sales, marketing, and administrative functions related to the PureGlow product line. All 74 employees are expected to receive employment offers from the Buyer at closing, as discussed further in Sections X.D and XIV.D below.
The PureGlow facial cleanser, which contains salicylic acid as an active ingredient, is classified as an over-the-counter (OTC) drug product regulated by the U.S. Food and Drug Administration (FDA). This regulatory classification creates certain compliance obligations and requires the transfer of FDA product listings as part of the transaction, as discussed in Section XVI below.
B. Implied Valuation
The agreed Purchase Price of $40,000,000 implies an enterprise value to Adjusted EBITDA multiple of approximately 6.9×, calculated as follows:
$40,000,000 ÷ $5,800,000 = approximately 6.9×
This implied multiple is below the range of comparable carve-out transactions in the mid-market personal-care segment, which, according to the market analysis prepared by Whitfield Barrow & Co. LLC, have generally closed in the 7.5× to 9.0× range over the trailing twenty-four-month period. The discount to comparable transaction multiples reflects several factors, including:
•  the declining revenue trajectory of the PureGlow product line;
•  the carve-out nature of the transaction, which imposes transition and separation costs on the Buyer;
•  the concentration risk associated with Hartwell Retail Group as the single largest customer (~24.48% of PureGlow revenue);
•  the regulatory complexity associated with the OTC facial cleanser product; and
•  the operational investment required by the Buyer to revitalize the brand following MCB's decision to deprioritize and discontinue PureGlow.
Notwithstanding the discount, Whitfield Barrow & Co. has advised that the $40,000,000 purchase price represents a favorable outcome for MCB relative to the alternative of winding down the PureGlow product line, which would have resulted in significant wind-down costs (estimated at approximately $8–12 million), negative working capital impacts, and the loss of residual brand and IP value.
V. Purchase Price and Payment Mechanics
A. Total Purchase Price
The total Purchase Price for the Acquired Assets is $40,000,000, payable in cash, subject to the post-closing net working capital adjustment described in Section V.D below. The Purchase Price is a fixed amount and is not subject to any earnout, contingent consideration, or seller financing arrangements.
B. Payment at Closing
At the Closing, the Purchase Price will be allocated and paid as follows:
1.  Cash at Closing: $36,000,000 (the "Cash at Closing"), payable by wire transfer of immediately available funds to a bank account designated by the Seller in writing not less than two (2) business days prior to the Closing Date. The Cash at Closing represents the total Purchase Price less the Indemnity Escrow Amount.
2.  Indemnity Escrow Amount: $4,000,000 (the "Indemnity Escrow Amount"), representing 10% of the Purchase Price, to be deposited by the Buyer into an escrow account at Pinnacle Trust Company, N.A. (the "Escrow Agent") at the Closing, to be held and distributed in accordance with the terms of the Escrow Agreement described in Section V.C below.
C. Indemnity Escrow
The Indemnity Escrow Amount of $4,000,000 will serve as the primary security for the Seller's indemnification obligations under the APA with respect to breaches of general representations and warranties. The key terms of the escrow arrangement are as follows:
Amount: $4,000,000 (10% of the Purchase Price).
Escrow Agent: Pinnacle Trust Company, N.A., a national banking association with its principal office at 385 Madison Avenue, New York, NY 10179.
Escrow Term: The escrow will remain in effect for a period of eighteen (18) months from the Closing Date (the "Escrow Term"). Based on the target Closing Date of June 16, 2025, the anticipated Escrow Release Date is December 16, 2026.
Extension for Pending Claims: If any indemnification claims remain pending and unresolved at the expiration of the Escrow Term, the Escrow Agent will continue to hold in escrow an amount equal to the aggregate amount of all such pending claims until such claims are fully and finally resolved in accordance with the dispute resolution provisions of the APA.
Escrow Agreement: The escrow arrangement will be documented in a tri-party Escrow Agreement among the Seller, the Buyer, and Pinnacle Trust Company, N.A., to be executed at or prior to the Closing. The form of the Escrow Agreement will be attached as an exhibit to the APA.
Release Mechanics: Release of escrowed funds will require joint written instructions signed by authorized representatives of both the Seller and the Buyer. In the event of a dispute regarding the release of escrowed funds, the disputed amount will remain in escrow pending resolution through the dispute resolution procedures set forth in the APA and the Escrow Agreement. The Escrow Agent will have no discretion to release funds absent joint instructions or a final, non-appealable order of a court of competent jurisdiction.
Investment of Escrowed Funds: Pending distribution, the Escrow Agent will invest the escrowed funds in money market funds or U.S. Treasury obligations as agreed by the parties. Interest and earnings on the escrowed funds will be allocated to the party ultimately entitled to receive the underlying principal amount.
D. Net Working Capital Adjustment
The Purchase Price is subject to a post-closing adjustment based on the net working capital of the PureGlow product line at the Closing (the "Closing NWC"), measured against an agreed target (the "NWC Target"). The net working capital adjustment mechanism is designed to ensure that the Buyer receives a normalized level of working capital at the Closing.
NWC Target: $6,350,000, which is based on the trailing twelve-month average of PureGlow net working capital for the period ending December 31, 2024, as calculated by Graymoor & Keene LLP in coordination with MCB's finance team.
NWC Collar: The NWC adjustment is subject to a collar of ± $250,000 around the NWC Target. If the Closing NWC falls within the range of $6,100,000 to $6,600,000 (inclusive), no adjustment to the Purchase Price will be made. The collar is intended to provide certainty to both parties with respect to minor fluctuations in working capital and to avoid disputes over immaterial amounts.
True-Up Mechanics:
(a) Within sixty (60) calendar days after the Closing Date, the Buyer will prepare and deliver to the Seller a statement setting forth its calculation of the Closing NWC (the "Closing NWC Statement"), prepared in accordance with the NWC methodology and accounting principles specified in the APA.
(b) The Seller will have thirty (30) calendar days following receipt of the Closing NWC Statement to review the calculation and deliver to the Buyer a notice of any objections (the "Objection Notice"). If the Seller does not deliver an Objection Notice within the thirty (30)-day review period, the Closing NWC Statement as delivered by the Buyer will be deemed final and binding.
(c) If the Seller delivers an Objection Notice, the parties will negotiate in good faith for a period of thirty (30) calendar days to resolve any disputes. If the parties are unable to resolve all disputes within such period, the unresolved items will be submitted to an independent accounting firm, mutually agreed upon by the parties, for final determination. The determination of the independent accounting firm will be final and binding, absent manifest error.
(d) The aggregate deadline for the true-up process, from the Closing Date through final resolution, is ninety (90) calendar days (subject to extension for independent accounting firm resolution).
Adjustment Payments:
•  If the final Closing NWC exceeds $6,600,000 (the upper collar), the Buyer will pay to the Seller, dollar-for-dollar, the amount by which the final Closing NWC exceeds $6,600,000.
•  If the final Closing NWC is less than $6,100,000 (the lower collar), the Seller will pay to the Buyer, dollar-for-dollar, the amount by which $6,100,000 exceeds the final Closing NWC.
•  Adjustment payments are due within five (5) business days of the final determination of Closing NWC.
VI. Purchase Price Allocation
The parties have agreed to allocate the Purchase Price among the Acquired Assets in accordance with Section 1060 of the Internal Revenue Code of 1986, as amended (the "Code"), and the Treasury Regulations promulgated thereunder, using the residual method. The purchase price allocation has been coordinated with Graymoor & Keene LLP (Howard Ellison, Tax Partner), MCB's tax and accounting advisor, and will be reflected in an agreed allocation schedule to be attached as an exhibit to the APA.
Both the Seller and the Buyer will file their respective IRS Forms 8594 (Asset Acquisition Statement Under Section 1060) in a manner consistent with the agreed allocation, and neither party will take a position on any tax return or in any tax proceeding that is inconsistent with such allocation, unless required to do so by a final determination (as defined in Section 1313(a) of the Code) of the Internal Revenue Service.
The agreed purchase price allocation is as follows:
The intellectual property allocation of $18,500,000, representing 46.25% of the total Purchase Price, is the single largest component of the allocation and reflects the substantial value attributable to the PureGlow brand, trademarks, trade dress, domain names, and proprietary product formulations (including the salicylic acid facial cleanser formulation). This allocation is consistent with the independent valuation analysis performed by Whitfield Barrow & Co. LLC and reviewed by Graymoor & Keene LLP.
Tax Considerations for Seller. The purchase price allocation has the following principal tax implications for MCB:
(a) Inventory ($8,200,000): Gain on the sale of inventory will be characterized as ordinary income to the Seller.
(b) Tangible Personal Property / Equipment ($4,600,000): Gain on the sale of equipment may be subject to depreciation recapture under Section 1245 of the Code, with recapture amounts taxed as ordinary income and any excess gain potentially eligible for capital gains treatment.
(c) intellectual Property ($18,500,000) and Goodwill ($3,000,000): Gain on the sale of intellectual property and goodwill will generally be characterized as long-term capital gain, provided the assets have been held for more than one year. However, to the extent any of the intellectual property has been subject to amortization under Section 197 of the Code, recapture rules may apply.
(d) Customer Relationships / Contracts ($5,700,000): Gain on the sale of customer-related intangible assets will generally be characterized as long-term capital gain, subject to similar Section 197 amortization recapture considerations.
A separate, detailed Purchase Price Allocation Memorandum is being prepared by Graymoor & Keene LLP in coordination with C&H and will be circulated to the deal team upon completion. The Buyer's tax advisor, Redfield Samuels LLP, is expected to review the proposed allocation during the diligence process.
VII. Representations and Warranties
A. Seller's Representations
The APA will contain customary representations and warranties of the Seller, tailored to the carve-out asset purchase context and the specific characteristics of the PureGlow product line. The Seller's representations and warranties, which will be qualified by the Seller's Disclosure Schedules to be prepared and delivered prior to signing, include the following:
1.  Organization, Existence, and Good Standing. Meridian Consumer Brands LLC is a limited liability company duly organized, validly existing, and in good standing under the laws of the State of Delaware, and is qualified to do business in each jurisdiction where the nature of its business or the ownership of its properties requires such qualification, including the State of Ohio (where the Dayton manufacturing facility is located).
2.  Authority and Enforceability. The Seller has all requisite limited liability company power and authority to execute, deliver, and perform the APA and the ancillary agreements to which it is a party. The execution, delivery, and performance of the APA have been duly authorized by all necessary action on the part of the Seller, including approval of the board of managers of MCB. The APA constitutes a legal, valid, and binding obligation of the Seller, enforceable against the Seller in accordance with its terms, subject to applicable bankruptcy, insolvency, and equitable principles.
3.  No Conflicts. The execution, delivery, and performance of the APA by the Seller will not (a) violate or conflict with the organizational documents of the Seller, (b) violate any material contract to which the Seller is a party or by which any Acquired Asset is bound, or (c) violate any applicable law, regulation, order, or governmental authorization, in each case except as would not reasonably be expected to have a Material Adverse Effect.
4.  Title to Acquired Assets. The Seller has good and marketable title to, or valid leasehold interests in, all of the Acquired Assets, free and clear of all liens, encumbrances, and security interests, other than Permitted Liens (to be defined in the APA).
5.  Financial Statements. The carved-out financial statements of the PureGlow product line (including revenue, cost of goods sold, operating expenses, and Adjusted EBITDA) for the fiscal years ended December 31, 2023 and December 31, 2024, and the interim period ended February 28, 2025, fairly present in all material respects the financial condition and results of operations of the PureGlow business for the periods covered, in accordance with the accounting principles and methodologies described therein and applied on a consistent basis.
6.  Absence of Undisclosed Liabilities. The PureGlow business has no liabilities or obligations of a nature required to be disclosed in financial statements prepared in accordance with GAAP, other than (a) liabilities reflected or reserved against in the most recent carve-out financial statements, (b) liabilities incurred in the ordinary course of business since the date of the most recent carve-out financial statements, and (c) liabilities that would not, individually or in the aggregate, be material to the PureGlow business.
7.  Absence of Material Adverse Effect. Since December 31, 2024, no event, circumstance, change, or effect has occurred that has had, or would reasonably be expected to have, a Material Adverse Effect on the PureGlow business. The definition of "Material Adverse Effect" will include customary carve-outs for general economic conditions, industry conditions, changes in law, natural disasters, pandemics, and conditions resulting from the announcement of the transaction.
8.  Compliance with Laws. The PureGlow business has been operated in compliance with all applicable laws, rules, regulations, orders, and governmental authorizations in all material respects, including, without limitation, FDA regulations applicable to the manufacture, labeling, distribution, and marketing of the OTC-classified PureGlow facial cleanser (salicylic acid formulation).
9.  intellectual Property. The Seller owns or has valid rights to use all intellectual property used in or necessary for the operation of the PureGlow business as currently conducted. To the knowledge of the Seller, the conduct of the PureGlow business does not infringe, misappropriate, or otherwise violate the intellectual property rights of any third party. There are no pending or, to the knowledge of the Seller, threatened claims, actions, or proceedings alleging infringement or misappropriation of any third party's intellectual property rights.
10.  Material Contracts. The Seller has made available to the Buyer true, correct, and complete copies of all material contracts relating to the PureGlow business. Each such material contract is valid, binding, and enforceable in accordance with its terms, and neither the Seller nor, to the knowledge of the Seller, any other party thereto, is in material breach or default under any such contract.
11.  Environmental Matters. The PureGlow business has been operated in compliance with all applicable environmental laws in all material respects. There are no pending or, to the knowledge of the Seller, threatened environmental claims, actions, or proceedings relating to the Acquired Assets or the Dayton facility.
12.  Employee and Labor Matters. The Seller has provided a complete and accurate list of all employees primarily dedicated to the PureGlow business, including each employee's position, location, compensation, and tenure. There are no pending or, to the knowledge of the Seller, threatened labor disputes, union organizing activities, or unfair labor practice charges relating to the PureGlow business.
13.  Tax Matters. All tax returns required to be filed by the Seller with respect to the Acquired Assets have been timely filed, and all taxes due and payable with respect to the Acquired Assets have been paid in full. There are no pending or threatened tax audits, assessments, or claims relating to the Acquired Assets.
14.  Product Liability / Product Warranties. There are no pending or, to the knowledge of the Seller, threatened product liability claims, product recalls, or warranty claims relating to PureGlow products that would, individually or in the aggregate, be material to the PureGlow business.
15.  Inventory Condition. The PureGlow inventory included in the Acquired Assets is, in all material respects, of a quality and quantity usable and salable in the ordinary course of business and is valued consistently with the Seller's historical inventory accounting practices.
16.  Customer and Supplier Relationships. The Seller has not received written notice from any customer or supplier representing five percent (5%) or more of PureGlow revenue or purchases, respectively, of its intention to terminate, materially reduce, or materially modify its relationship with the PureGlow business.
17.  Brokers. The Seller's only obligation for brokerage commissions, finder's fees, or similar compensation in connection with the transaction is to Whitfield Barrow & Co. LLC, and such obligation is the sole responsibility of the Seller.
B. Buyer's Representations
The APA will contain the following representations and warranties of the Buyer:
1.  Organization, Existence, and Good Standing. Lakebridge Home & Personal Care, Inc. is a corporation duly organized, validly existing, and in good standing under the laws of the State of Ohio.
2.  Authority and Enforceability. The Buyer has all requisite corporate power and authority to execute, deliver, and perform the APA and the ancillary agreements to which it is a party. The execution, delivery, and performance of the APA have been duly authorized by all necessary corporate action on the part of the Buyer.
3.  No Conflicts. The execution, delivery, and performance of the APA by the Buyer will not violate or conflict with the Buyer's organizational documents, any material contract to which the Buyer is a party, or any applicable law.
4.  Financial Capability / Sufficiency of Funds. The Buyer has, and at the Closing will have, sufficient cash, available lines of credit, or other sources of immediately available funds to pay the Purchase Price and all fees and expenses incurred by the Buyer in connection with the transaction.
5.  No Brokers. The Buyer's only obligation for brokerage commissions, finder's fees, or similar compensation in connection with the transaction is to Crestline Advisors LLC, and such obligation is the sole responsibility of the Buyer.
6.  Investment Intent / No Distribution. The Buyer is acquiring the Acquired Assets for its own account for use in its business, and not with a view to, or for offer or sale in connection with, any distribution thereof.
C. Classification of Representations
The Seller's representations and warranties will be classified for purposes of the indemnification framework and survival provisions as follows:
Fundamental Representations (Seller). The following representations and warranties of the Seller are designated as "Fundamental Representations," subject to a longer survival period (36 months from Closing) and a higher indemnification cap (100% of the Purchase Price): Organization, Existence, and Good Standing; Authority and Enforceability; Title to Acquired Assets; Brokers; and Tax Matters.
General Representations. All representations and warranties of the Seller other than the Fundamental Representations are designated as "General Representations," subject to the standard survival period (18 months from Closing) and the General Indemnity Cap ($4,000,000, equal to the Indemnity Escrow Amount).
Materiality Qualifiers and MAE Scrape. Certain of the Seller's representations and warranties are qualified by materiality or Material Adverse Effect qualifiers. For purposes of the bring-down closing condition (requiring that the Seller's representations and warranties be true and correct at the Closing), materiality and MAE qualifiers in non-fundamental representations will be read as written (i.e., the bring-down will apply to the representations as qualified). However, for purposes of determining (a) whether a breach of a representation or warranty has occurred giving rise to an indemnification claim, and (b) the amount of Losses resulting from such breach, all materiality and MAE qualifiers will be disregarded — the so-called "double materiality scrape." This approach prevents the materiality qualifiers from serving as both a threshold for liability and a limitation on the calculation of damages.
VIII. Indemnification Framework
A. Seller's Indemnification Obligations
The Seller will indemnify, defend, and hold harmless the Buyer and its affiliates, officers, directors, employees, agents, successors, and permitted assigns (the "Buyer Indemnified Parties") from and against all losses, damages, liabilities, costs, and expenses (including reasonable attorneys' fees and expenses) ("Losses") arising out of or resulting from:
(a) any breach or inaccuracy of any representation or warranty of the Seller contained in the APA;
(b) any breach of any covenant or agreement of the Seller contained in the APA;
(c) any Excluded Liability; and
(d) any pre-closing tax liability of the Seller with respect to the Acquired Assets or the PureGlow business.
B. Buyer's Indemnification Obligations
The Buyer will indemnify, defend, and hold harmless the Seller and its affiliates, members, managers, officers, employees, agents, successors, and permitted assigns (the "Seller Indemnified Parties") from and against all Losses arising out of or resulting from:
(a) any breach or inaccuracy of any representation or warranty of the Buyer contained in the APA;
(b) any breach of any covenant or agreement of the Buyer contained in the APA; and
(c) any Assumed Liability.
C. Caps and Baskets
The indemnification obligations of each party are subject to the following financial limitations:
The tipping basket structure is an important feature of the indemnification framework. Unlike a true deductible (under which the indemnified party bears the first dollar of losses up to the deductible amount even after the threshold is exceeded), the tipping basket provides that once the aggregate amount of qualifying Losses exceeds the $400,000 threshold, the indemnified party is entitled to recovery of all qualifying Losses from the first dollar, subject to the applicable cap. The tipping basket structure was proposed by the Seller and accepted by the Buyer during negotiation, as discussed in Section XVII.B below.
The limitations set forth above do not apply to (a) claims based on fraud or intentional misrepresentation, (b) claims based on willful breach, (c) breaches of Fundamental Representations (which are subject to the Seller Fundamental Rep Cap of $40,000,000), or (d) Excluded Liabilities.
D. Survival Periods
The representations, warranties, covenants, and agreements in the APA will survive the Closing for the following periods:
Upon the expiration of the applicable survival period, neither party will have any further indemnification obligations with respect to breaches of the expired representations, warranties, or covenants, except with respect to claims for which a notice of claim has been delivered in writing prior to the expiration of such survival period, which claims will survive until fully and finally resolved.
E. Exclusive Remedy
Subject to the exceptions described below, the indemnification provisions of the APA will constitute the sole and exclusive remedy of the parties and their respective indemnified parties for any breach of any representation, warranty, covenant, or agreement contained in the APA or otherwise arising out of or relating to the transactions contemplated by the APA. The exclusive remedy provision does not limit or restrict any party's right to seek:
(a) remedies for fraud or intentional misrepresentation;
(b) remedies for willful breach;
(c) injunctive relief, specific performance, or other equitable remedies; or
(d) enforcement of the purchase price adjustment provisions of the APA.
Escrow-Only Recovery for General Rep Breaches. The Seller's indemnification obligations with respect to breaches of General Representations are limited to recovery from the Indemnity Escrow Amount ($4,000,000) held by Pinnacle Trust Company, N.A. The Buyer has no direct recourse against the Seller or its assets beyond the escrow for breaches of General Representations. This limitation does not apply to (a) breaches of Fundamental Representations (for which recovery is available up to the full Purchase Price of $40,000,000), (b) fraud or willful breach, or (c) Excluded Liabilities.
F. Interaction with R&W Insurance
The indemnification framework described above operates independently of, and in parallel with, the Buyer's buy-side representations and warranties insurance policy obtained from Great Northern Mutual Insurance Company (the "R&W Policy"), as described in detail in Section IX below.
The R&W Policy does not reduce or limit the Seller's indemnification obligations under the APA. Rather, the R&W Policy provides the Buyer with an additional, independent source of recovery for Losses arising from breaches of the Seller's representations and warranties, above and beyond the escrow-based recovery available under the APA. The existence of the R&W Policy effectively extends the Buyer's total recovery potential for general representation breaches. Combined with the $4,000,000 Indemnity Escrow Amount and the $10,000,000 R&W Policy limit, the Buyer has a theoretical maximum recovery of $14,000,000 for general representation breaches (subject to the terms, conditions, exclusions, and retention under the R&W Policy).
The R&W Policy carrier has agreed to waive its subrogation rights against the Seller and its affiliates, except in cases of fraud. This subrogation waiver is a significant protection for the Seller, as it ensures that the Seller will not face secondary liability to the R&W insurer for claims paid under the R&W Policy, unless the underlying breach involved fraudulent conduct by the Seller.
IX. Representations & Warranties Insurance
The Buyer has obtained a buy-side representations and warranties insurance policy (the "R&W Policy") from Great Northern Mutual Insurance Company (the "Carrier"), with its principal office at 100 Summer Street, Suite 3000, Boston, MA 02110. The R&W Policy is a key element of the risk allocation framework for this transaction, providing the Buyer with additional coverage for Losses arising from breaches of the Seller's representations and warranties beyond the amounts recoverable from the Indemnity Escrow.
The principal terms and characteristics of the R&W Policy are as follows:
Policy Type: Buy-side representations and warranties insurance policy. The Buyer is the named insured, and the Carrier's obligation to pay claims runs directly to the Buyer, without any requirement for the Buyer to first exhaust its indemnification remedies against the Seller.
Policy Limit: $10,000,000 in excess of the retention (the self-insured retention, or "SIR"). The $10,000,000 policy limit represents 25% of the total Purchase Price.
Retention (Self-Insured Retention / SIR): $1,200,000. The Buyer is responsible for bearing the first $1,200,000 of covered Losses before the R&W Policy responds. The retention is expected to be satisfied through a combination of recovery from the Indemnity Escrow and the Buyer's own funds, depending on the nature of the claim.
SIR Drop-Down: The SIR drops from $1,200,000 to $600,000 (a 50% reduction) after twelve (12) months from the Closing Date, provided that no claims have been made under the R&W Policy during such twelve-month period. This drop-down feature incentivizes early identification and resolution of post-closing issues and reduces the Buyer's self-insured exposure over time.
Premium: The one-time premium for the R&W Policy is $340,000, representing a rate of 3.4% applied to the $10,000,000 policy limit. The premium is borne entirely by the Buyer and is not subject to reimbursement by the Seller. The premium rate of 3.4% is within the market range for R&W policies on mid-market asset purchase transactions in the consumer products sector.
Subrogation Waiver: The Carrier has agreed to waive its subrogation rights against the Seller, its affiliates, and their respective directors, officers, managers, and employees, except in cases where the underlying breach of representation or warranty involved fraud by any of such persons. This subrogation waiver is a key seller protection, negotiated by C&H as a condition of the transaction, and ensures that the Seller's post-closing exposure is effectively limited to the Indemnity Escrow Amount for general representation breaches (absent fraud or willful breach).
Target Binding Date: May 9, 2025. The R&W Policy is expected to be bound on or before this date, following completion of the Carrier's underwriting process. Binding of the R&W Policy is a condition to the Buyer's closing obligations under the APA.
Underwriting Process: The Carrier has engaged underwriting counsel to conduct a review of the virtual data room materials, the APA, the Seller's Disclosure Schedules, and other diligence materials provided by the Buyer and its advisors. The Carrier will require a no-claims declaration from the Seller at the Closing, confirming that, as of the Closing Date, the Seller is not aware of any facts or circumstances that would give rise to a claim under the APA's indemnification provisions.
Policy Period: The R&W Policy is expected to have a policy period of three (3) years from the Closing Date for general representations and six (6) years from the Closing Date for Fundamental Representations and tax representations, subject to final policy terms to be negotiated with the Carrier.
Significance of R&W Policy to the Transaction. The R&W Policy plays an important role in the overall risk allocation between the Seller and the Buyer. From the Seller's perspective, the R&W Policy effectively caps the Seller's practical exposure for general representation breaches at the $4,000,000 Indemnity Escrow Amount, because the Buyer has an alternative source of recovery through the R&W Policy and the Carrier has waived its subrogation rights against the Seller (except for fraud). From the Buyer's perspective, the R&W Policy extends total potential recovery for general representation breaches to $14,000,000 ($4,000,000 escrow plus $10,000,000 policy limit), subject to the SIR and the terms and exclusions of the R&W Policy. This combined coverage level provides the Buyer with a meaningful backstop against unforeseen post-closing liabilities arising from the PureGlow business.
X. Pre-Closing Covenants
A. Conduct of Business
The APA will contain customary interim operating covenants requiring the Seller to operate the PureGlow business in the ordinary course of business consistent with past practice during the period between the execution of the APA and the Closing (the "Pre-Closing Period"). The purpose of these covenants is to preserve the value and integrity of the PureGlow business for the benefit of the Buyer during the Pre-Closing Period, while allowing the Seller to continue normal operations.
In addition to the general affirmative covenant to operate in the ordinary course, the APA will contain negative covenants prohibiting the Seller, without the prior written consent of the Buyer (which consent shall not be unreasonably withheld, conditioned, or delayed), from taking the following actions with respect to the PureGlow business during the Pre-Closing Period:
(a) making any material changes to PureGlow operations, including changes to manufacturing processes, product specifications, or quality control procedures;
(b) terminating the employment of, or materially reducing the compensation or benefits of, any key employee of the PureGlow business;
(c) entering into, materially amending, or terminating any material contract relating to the PureGlow business, including any customer supply or distribution agreement;
(d) making any material changes in the pricing, product mix, or distribution channels for PureGlow products;
(e) making any capital expenditure relating to the PureGlow business in excess of an agreed threshold (to be negotiated in the APA, expected to be in the range of $50,000 to $100,000 per expenditure or $250,000 in the aggregate);
(f) selling, transferring, encumbering, or disposing of any Acquired Asset outside the ordinary course of business;
(g) granting any license or other right to use any PureGlow intellectual property; or
(h) taking any action that would cause any representation or warranty of the Seller in the APA to be untrue or inaccurate in any material respect as of the Closing Date.
B. Access and Information
During the Pre-Closing Period, the Seller will provide the Buyer and its representatives (including Crestline Advisors LLC and Redfield Samuels LLP) with reasonable access, during normal business hours and upon reasonable advance notice, to the PureGlow business's books, records, facilities (including the Dayton, Ohio manufacturing facility), and personnel. Such access will be subject to customary confidentiality restrictions and will not unreasonably interfere with the ongoing operations of the PureGlow business or MCB's other business operations.
The virtual data room established on the Thackeray Solutions platform, which was opened on March 10, 2025, will remain accessible to the Buyer and its advisors through the Closing Date. The Seller will continue to upload responsive documents and materials to the data room as they become available, and will respond in a timely manner to reasonable supplemental diligence requests from the Buyer's advisors.
C. Efforts to Obtain Consents
Both parties will use commercially reasonable efforts to obtain all third-party consents required for the consummation of the transactions contemplated by the APA, including:
1.  Landlord Consent. Consent of Buckeye Industrial Realty Partners LLC, as landlord under the Dayton facility lease, to the assignment of the lease from the Seller to the Buyer. This consent is a condition to the Buyer's closing obligations, as discussed in Sections XI.B and XIV.A. The Seller will initiate the consent request process promptly following the execution of the APA, with the cooperation of the Buyer.
2.  Customer Consents. Consent of three (3) of the eight (8) customer supply and distribution agreements that require the counterparty's consent to assignment, including, most significantly, the supply agreement with Hartwell Retail Group. Initial outreach to these customers will be coordinated by Diane Choi (Seller) and Philip Kowalski (Buyer) to ensure a smooth transition and maintain customer relationships. The receipt of required customer consents (including Hartwell Retail Group) is a condition to the Buyer's closing obligations.
3.  FDA Product Listing Transfers. The parties will cooperate to effectuate the transfer of FDA product listings for the OTC-classified PureGlow facial cleanser from the Seller to the Buyer. While FDA listing transfers are typically processed post-closing, the parties will prepare the necessary transfer documentation during the Pre-Closing Period to facilitate a prompt filing after the Closing Date. The TSA regulatory/quality service will provide transitional support during the transfer process.
D. Employee Matters
The APA will provide that the Buyer will offer employment to all seventy-four (74) employees of the PureGlow business (including employees at the Dayton, Ohio manufacturing facility and the New York headquarters) at the Closing, on terms and conditions of employment that are substantially comparable in the aggregate to the terms and conditions of employment provided by the Seller immediately prior to the Closing. The Buyer will not be obligated to provide identical terms and conditions, but rather terms and conditions that, taken as a whole, are substantially comparable.
Employees who accept the Buyer's employment offer will become employees of the Buyer effective as of the Closing Date (the "Transferred Employees"). The Seller will be responsible for all compensation, benefits, and employment-related liabilities accrued with respect to PureGlow employees through the Closing Date, including accrued wages, vacation pay, and benefits. All employee benefit plan liabilities of the Seller will be Excluded Liabilities and will remain with the Seller.
The Seller will be responsible for compliance with the Worker Adjustment and Retraining Notification Act of 1988 (the "WARN Act") and any applicable state mini-WARN statutes, to the extent triggered by the transaction. A WARN Act analysis is currently pending and will be completed prior to the Closing, as discussed in Section XIV.D below.
Transition of payroll processing and benefits administration for the Transferred Employees will be supported through the HR/payroll service under the Transition Services Agreement, as described in Section XII.
E. Non-Competition and Non-Solicitation
The APA will contain restrictive covenant provisions binding on the Seller and its affiliates (including Hargrove Capital Partners LP and its affiliated entities), as follows:
Non-Competition. The Seller and its affiliates will agree not to compete, directly or indirectly, in the PureGlow product categories (body wash, lotion, facial cleanser, and hand soap) for a specified period following the Closing. C&H's seller-favorable first draft of the APA proposes a three (3)-year non-competition period, measured from the Closing Date. We anticipate that the Buyer may seek a longer restrictive period (potentially four or five years), and this term will be subject to further negotiation. The non-competition covenant will be subject to customary carve-outs and exceptions, including exceptions for passive investments below a specified ownership threshold and for the Seller's continued operation of its retained product lines (to the extent such retained product lines do not directly compete with PureGlow products).
Employee Non-Solicitation. The Seller and its affiliates will agree not to solicit, recruit, or hire any Transferred Employee for a period of two (2) years following the Closing Date. This restriction will be subject to customary exceptions for general advertisements or solicitations not specifically directed at Transferred Employees.
F. No-Shop / Exclusivity
The letter of intent executed on March 5, 2025 (LOI-MCB-LHPC-2025-001) contains an exclusivity provision prohibiting the Seller from soliciting, encouraging, or engaging in discussions or negotiations with any third party regarding the sale of the PureGlow product line during the exclusivity period. The LOI exclusivity period runs from March 5, 2025 through May 4, 2025 (a period of sixty (60) days).
The APA will include a no-shop provision effective from the date of execution of the APA through the Closing Date (or the earlier termination of the APA), prohibiting the Seller from soliciting, initiating, encouraging, or facilitating any competing proposal or alternative transaction with respect to the PureGlow product line.
XI. Closing Conditions
A. Conditions to Both Parties' Obligations
The obligations of both the Seller and the Buyer to consummate the transactions contemplated by the APA at the Closing will be subject to the satisfaction (or waiver by both parties) of the following conditions precedent:
1.  No Governmental Order. No governmental authority shall have enacted, issued, promulgated, enforced, or entered any law, rule, regulation, order, injunction, or decree that is then in effect and that prohibits,