ESCROW AGREEMENT
Dated as of June 16, 2025
Among
MERIDIAN CONSUMER BRANDS LLC, as Depositor,
LAKEBRIDGE HOME & PERSONAL CARE, INC., as Beneficiary,
and
PINNACLE TRUST COMPANY, N.A., as Escrow Agent
Prepared by
Calderwood & Harkness LLP One Liberty Plaza, 44th Floor New York, NY 10006
TABLE OF CONTENTS
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ESCROW AGREEMENT
This Escrow Agreement (this "Agreement") is entered into as of June 16, 2025 (the "Effective Date"), by and among:
(a) Meridian Consumer Brands LLC, a Delaware limited liability company, with its principal office at 450 Park Avenue South, 14th Floor, New York, NY 10016 (the "Depositor" or "Seller");
(b) Lakebridge Home & Personal Care, Inc., an Ohio corporation, with its principal office at 7100 Rockside Road, Suite 400, Independence, OH 44131 (the "Beneficiary" or "Buyer"); and
(c) Pinnacle Trust Company, N.A., a national trust company organized under the laws of the United States of America, with offices at 385 Madison Avenue, New York, NY 10179 (the "Escrow Agent").
Each of Depositor, Beneficiary, and Escrow Agent may be referred to herein individually as a "Party" and collectively as the "Parties."
RECITALS
WHEREAS, Depositor and Beneficiary have entered into that certain Asset Purchase Agreement, dated as of June 16, 2025 (as may be amended, supplemented, restated, or otherwise modified from time to time in accordance with its terms, the "APA"), pursuant to which Depositor has agreed to sell, transfer, convey, and deliver to Beneficiary, and Beneficiary has agreed to purchase and accept from Depositor, certain assets comprising the "PureGlow" personal-care product line, including, without limitation, finished goods inventory, raw materials inventory, manufacturing equipment, machinery, intellectual property (including trademarks, trade names, patents, patent applications, copyrights, trade secrets, and domain names), customer contracts, supplier agreements, governmental permits, and associated goodwill, for an aggregate purchase price of Forty Million Dollars ($40,000,000.00) (the "Purchase Price");
WHEREAS, pursuant to Section 2.5(b) of the APA, Depositor and Beneficiary have agreed that, at the closing of the transactions contemplated by the APA (the "Closing"), a portion of the Purchase Price in the amount of Four Million Dollars ($4,000,000.00) (the "Escrow Amount"), representing ten percent (10%) of the Purchase Price, shall be deposited with the Escrow Agent and held in escrow to secure the indemnification obligations of Depositor under Article IX of the APA;
WHEREAS, the APA provides that the Escrow Amount shall be held, invested, and distributed by the Escrow Agent in accordance with the terms and conditions set forth in this Agreement;
WHEREAS, the Escrow Agent is willing to accept appointment as escrow agent and to hold, invest, and distribute the Escrow Fund (as defined herein) in accordance with the terms and conditions of this Agreement;
WHEREAS, capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the APA; and
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by each of the Parties, the Parties hereby agree as follows:
ARTICLE I — DEFINITIONS
Section 1.1 — Defined Terms
As used in this Agreement, the following terms shall have the meanings set forth below:
"APA" means that certain Asset Purchase Agreement, dated as of June 16, 2025, by and between Depositor and Beneficiary, as the same may be amended, supplemented, restated, or otherwise modified from time to time in accordance with its terms.
"Authorized Representative" means, with respect to Depositor or Beneficiary, any individual designated by such Party as an authorized representative in accordance with Section 5.5 hereof and listed on Exhibit B attached hereto, as such exhibit may be updated from time to time in accordance with the terms of this Agreement.
"Business Day" means any day other than a Saturday, Sunday, or any other day on which banking institutions in the City of New York, State of New York, are authorized or required by applicable law, regulation, or executive order to close.
"Claim Notice" means a written notice delivered by Beneficiary to Depositor and the Escrow Agent in accordance with Section 3.2 hereof, setting forth the basis for and estimated amount of an indemnification claim under Article IX of the APA.
"Claimed Amount" means the estimated amount of Losses set forth in a Claim Notice delivered by Beneficiary.
"Closing Date" means the date on which the Closing occurs as defined in and determined pursuant to the APA, which the Parties anticipate to be June 16, 2025.
"Disputed Amount" means any portion of the Escrow Fund that is the subject of a Pending Claim as of the Escrow Release Date and which has not been finally resolved, settled, or otherwise disposed of as of such date.
"Escrow Account" means the segregated, interest-bearing trust account established and maintained by the Escrow Agent at Pinnacle Trust Company, N.A. pursuant to Section 2.1 hereof for the purpose of holding the Escrow Fund.
"Escrow Amount" means Four Million Dollars ($4,000,000.00), representing ten percent (10%) of the Purchase Price of Forty Million Dollars ($40,000,000.00).
"Escrow Fund" means, at any time, the Escrow Amount together with all interest, earnings, dividends, gains, and other income accrued or earned thereon, net of any distributions, fees, losses, or deductions made in accordance with the terms of this Agreement.
"Escrow Release Date" means the date that is eighteen (18) months following the Closing Date. Assuming a Closing Date of June 16, 2025, the Escrow Release Date shall be December 16, 2026. If the Escrow Release Date falls on a day that is not a Business Day, the Escrow Release Date shall be the next succeeding Business Day.
"Joint Written Instructions" means written instructions signed by an Authorized Representative of each of Depositor and Beneficiary, delivered to the Escrow Agent in accordance with Section 3.1 hereof, directing the Escrow Agent to take specified action with respect to the Escrow Fund.
"Losses" has the meaning ascribed to such term in the APA.
"Pending Claim" means any claim for indemnification under Article IX of the APA with respect to which Beneficiary has delivered a Claim Notice to Depositor and the Escrow Agent prior to the Escrow Release Date and which has not been finally resolved, settled, withdrawn, or otherwise disposed of as of the Escrow Release Date.
"Permitted Investments" has the meaning set forth in Section 4.1 hereof.
"Purchase Price" means Forty Million Dollars ($40,000,000.00), as defined in the APA.
"Response Period" has the meaning set forth in Section 3.3 hereof.
Section 1.2 — Interpretation
The following rules of interpretation shall apply to this Agreement:
(a) References herein to any "Article," "Section," or "Exhibit" shall be to the applicable Article, Section, or Exhibit of or to this Agreement, unless otherwise expressly stated.
(b) The table of contents and the headings and captions of the Articles, Sections, and Exhibits of this Agreement are inserted for convenience of reference only and shall not affect the meaning, interpretation, or construction of this Agreement.
(c) The word "including" (and correlative words such as "include" and "includes") means "including without limitation" and shall not be construed to limit any general statement that it follows to the specific or similar items or matters immediately following it.
(d) Words importing the singular number shall include the plural and vice versa, and words importing gender shall include all genders, in each case unless the context otherwise requires.
(e) All references herein to "dollars" or "$" shall mean United States Dollars.
(f) Capitalized terms used but not defined in this Agreement shall have the respective meanings ascribed to such terms in the APA.
(g) References to any agreement, instrument, statute, regulation, or other document shall be to such agreement, instrument, statute, regulation, or document as amended, supplemented, restated, or otherwise modified from time to time, unless the context otherwise requires.
(h) The words "hereof," "herein," "hereby," "hereunder," and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement.
ARTICLE II — ESTABLISHMENT OF ESCROW
Section 2.1 — Deposit of Escrow Amount
On the Closing Date, Beneficiary shall cause Four Million Dollars ($4,000,000.00), representing the Escrow Amount, to be deposited by wire transfer of immediately available funds into a segregated escrow account (the "Escrow Account") established and maintained by the Escrow Agent at Pinnacle Trust Company, N.A. in accordance with the wire transfer instructions set forth on Exhibit A-1 attached hereto. The Escrow Amount shall be deposited from the Purchase Price funds payable by Beneficiary at the Closing; for the avoidance of doubt, Thirty-Six Million Dollars ($36,000,000.00) of the Purchase Price shall be payable directly to Depositor at the Closing, and the remaining Four Million Dollars ($4,000,000.00) shall be deposited into the Escrow Account pursuant to this Section 2.1.
The Escrow Agent shall acknowledge receipt of the Escrow Amount in writing (which may be by email) to both Depositor and Beneficiary promptly, and in any event within one (1) Business Day, following receipt thereof. In the event the Escrow Agent does not receive the Escrow Amount on the Closing Date, the Escrow Agent shall promptly notify both Depositor and Beneficiary of such non-receipt in writing.
Section 2.2 — Escrow Account; Title
The Escrow Agent shall hold the Escrow Fund in a separate, segregated, interest-bearing account, in trust, for the benefit of Depositor and Beneficiary, in accordance with the terms and conditions of this Agreement. The Escrow Account shall be titled as follows:
"Pinnacle Trust Company, N.A., as Escrow Agent for Meridian Consumer Brands LLC and Lakebridge Home & Personal Care, Inc. — Indemnity Escrow"
The Escrow Agent shall not commingle the Escrow Fund with any other funds held by the Escrow Agent for its own account or for the account of any other person. The Escrow Agent shall maintain accurate books and records reflecting all deposits into, earnings on, distributions from, fees deducted from, and the balance of the Escrow Account, and shall make such books and records available for inspection by Depositor and Beneficiary upon reasonable request during normal business hours. The Escrow Agent shall provide monthly account statements to Depositor and Beneficiary reflecting the balance and activity of the Escrow Account.
Section 2.3 — Tax Identification
The Escrow Account shall be established using the Employer Identification Number of Depositor (EIN: 83-2947156) for all tax reporting purposes. Depositor shall be treated as the owner of the Escrow Fund for federal and state income tax purposes, and all interest, earnings, dividends, gains, and other income on the Escrow Fund shall be reported as income of Depositor unless and until distributed to Beneficiary in accordance with the terms of this Agreement. The Escrow Agent shall report all earnings on IRS Form 1099-INT, IRS Form 1099-DIV, or such other applicable form as may be required under the Internal Revenue Code of 1986, as amended, under Depositor's EIN. Depositor shall be responsible for the payment of all taxes on income earned on the Escrow Fund, and Depositor shall provide the Escrow Agent with a completed and duly executed IRS Form W-9 (or any successor form) on or prior to the Closing Date. Beneficiary shall similarly provide the Escrow Agent with a completed and duly executed IRS Form W-9 (or any successor form) on or prior to the Closing Date for use in connection with any distribution to Beneficiary.
ARTICLE III — DISTRIBUTIONS FROM ESCROW
Section 3.1 — Joint Written Instructions
The Escrow Agent shall distribute funds from the Escrow Account upon receipt of Joint Written Instructions signed by an Authorized Representative of each of Depositor and Beneficiary. Joint Written Instructions shall specify:
(a) the amount to be distributed from the Escrow Account;
(b) the identity of the payee or payees to whom such distribution is to be made;
(c) the wire transfer or other delivery instructions for such distribution, including the bank name, ABA routing number, account number, account name, and reference information; and
(d) a brief description of the basis for such distribution, including (if applicable) a reference to the relevant provision of the APA or this Agreement.
The Escrow Agent shall make distributions in accordance with Joint Written Instructions within three (3) Business Days following receipt thereof; provided, however, that the Escrow Agent shall have no obligation to make any distribution if, at the time of receipt of such Joint Written Instructions, the Escrow Fund is insufficient to fund the distribution in full. The Escrow Agent shall confirm each distribution to Depositor and Beneficiary in writing promptly following the making thereof.
Section 3.2 — Claim Notice and Indemnification Claims
If Beneficiary seeks indemnification under Article IX of the APA from the Escrow Fund, Beneficiary shall deliver a Claim Notice to both Depositor and the Escrow Agent in accordance with the notice provisions of Article X hereof. The Claim Notice shall include:
(i) a description in reasonable detail of the facts and circumstances giving rise to the claim for indemnification, including the nature of the alleged breach and the date on which Beneficiary first became aware of such facts and circumstances;
(ii) a reference to the specific representations, warranties, covenants, or agreements of Depositor set forth in the APA that are alleged to have been breached or with respect to which the indemnification obligation is asserted;
(iii) the estimated amount of Losses claimed by Beneficiary (the "Claimed Amount"), to the extent such amount is reasonably ascertainable, or, if such amount is not then reasonably ascertainable, a good faith estimate of the maximum amount of Losses that Beneficiary reasonably expects to incur; and
(iv) copies of any supporting documentation, correspondence, notices, or other materials related to the claim, to the extent then reasonably available to Beneficiary.
Upon receipt of a Claim Notice, the Escrow Agent shall reserve the Claimed Amount within the Escrow Fund pending resolution of such claim in accordance with Sections 3.3 and 3.4 hereof. The Escrow Agent shall acknowledge receipt of each Claim Notice in writing to both Depositor and Beneficiary within two (2) Business Days of receipt thereof. For the avoidance of doubt, the Escrow Agent shall have no obligation to evaluate the merits of any Claim Notice or to determine whether the claim set forth therein constitutes a valid basis for indemnification under the APA.
Section 3.3 — Response to Claim Notice; Dispute Resolution
Following receipt of a Claim Notice, Depositor shall have thirty (30) calendar days from the date of its receipt of such Claim Notice (the "Response Period") within which to deliver a written response to Beneficiary and the Escrow Agent. Such response shall state one of the following:
(a) Acceptance in Whole. Depositor accepts the claim set forth in the Claim Notice in its entirety, in which case Depositor and Beneficiary shall promptly (and in any event within five (5) Business Days of such acceptance) deliver Joint Written Instructions to the Escrow Agent directing the release of the full Claimed Amount from the Escrow Account to Beneficiary.
(b) Acceptance in Part. Depositor accepts the claim set forth in the Claim Notice in part and disputes the claim as to the remaining portion, in which case Depositor and Beneficiary shall promptly deliver Joint Written Instructions to the Escrow Agent directing the release of the accepted portion of the Claimed Amount to Beneficiary, and the disputed portion of the Claimed Amount shall remain reserved in the Escrow Account pending resolution in accordance with Section 3.4 hereof. Depositor's response shall include a reasonably detailed explanation of the basis for the partial dispute.
(c) Dispute in Whole. Depositor disputes the claim set forth in the Claim Notice in its entirety, in which case the entire Claimed Amount shall remain reserved in the Escrow Account pending resolution in accordance with Section 3.4 hereof. Depositor's response shall include a reasonably detailed explanation of the basis for the dispute.
If Depositor fails to deliver a written response within the Response Period, the Claimed Amount shall remain reserved in the Escrow Account, and the claim shall be treated as disputed in whole, subject to resolution in accordance with Section 3.4 hereof. For the avoidance of doubt, Depositor's failure to respond within the Response Period shall not be deemed an acceptance of the claim.
Section 3.4 — Resolution of Disputed Claims
Any dispute regarding a claim for indemnification shall be resolved in accordance with the dispute resolution provisions set forth in Section 10.12 of the APA, which provides for:
(a) Good Faith Negotiation. The Parties shall first attempt in good faith to resolve the dispute by direct negotiation between senior executives of Depositor and Beneficiary for a period of thirty (30) calendar days following the date on which the dispute is formally submitted for negotiation.
(b) Binding Arbitration or Litigation. If the dispute is not resolved through good faith negotiation within the thirty (30)-day period described in clause (a) above, either Depositor or Beneficiary may pursue resolution of the dispute by initiating binding arbitration proceedings or commencing litigation in the courts of the State of New York or the United States District Court for the Southern District of New York, in each case in accordance with the APA.
Upon final resolution of a disputed claim, whether by mutual agreement of Depositor and Beneficiary, by a final and binding arbitration award rendered by the applicable arbitral tribunal, or by a final, non-appealable order or judgment of a court of competent jurisdiction, the Parties shall promptly (and in any event within five (5) Business Days of such resolution) deliver Joint Written Instructions to the Escrow Agent directing the distribution of the disputed funds in accordance with such resolution. Alternatively, the Escrow Agent may act upon receipt of a certified copy of a final and binding arbitration award or a final, non-appealable order or judgment of a court of competent jurisdiction as authorization to distribute the applicable funds from the Escrow Account without Joint Written Instructions, and the Escrow Agent shall be entitled to conclusively rely upon such certified copy as sufficient authorization for such distribution.
Section 3.5 — Indemnification Thresholds
The Parties acknowledge and agree that the indemnification obligations of Depositor under the APA are subject to certain limitations, thresholds, baskets, and caps as set forth in Article IX of the APA, including the following:
(a) Per-Claim De Minimis (Mini-Basket). Individual claims for indemnification involving Losses of less than Twenty-Five Thousand Dollars ($25,000.00) per claim shall be disregarded and shall not be counted toward the aggregate deductible basket described in clause (b) below.
(b) Aggregate Deductible Basket. Depositor shall not be required to indemnify Beneficiary for any Losses unless and until the aggregate amount of all qualifying Losses (i.e., Losses in excess of the per-claim de minimis threshold described in clause (a) above) exceeds Four Hundred Thousand Dollars ($400,000.00) (representing one percent (1%) of the Purchase Price), at which point Beneficiary shall be entitled to recover the full amount of all qualifying Losses from the first dollar thereof (i.e., on a "tipping basket" basis), subject to the applicable cap.
(c) General Indemnity Cap. Depositor's aggregate liability for indemnification under the APA with respect to breaches of general representations and warranties and general covenants shall not exceed Four Million Dollars ($4,000,000.00), which is equal to the Escrow Amount.
(d) Fundamental Representation Cap. Depositor's aggregate liability for indemnification under the APA with respect to breaches of fundamental representations (as defined in the APA) shall not exceed Forty Million Dollars ($40,000,000.00), which is equal to one hundred percent (100%) of the Purchase Price.
Notwithstanding anything to the contrary in this Agreement, the Escrow Agent shall have no obligation to independently verify, evaluate, adjudicate, or otherwise determine whether any claim for indemnification satisfies or fails to satisfy any of the thresholds, baskets, caps, or other limitations set forth in the APA. The Escrow Agent shall act solely upon Joint Written Instructions or upon a certified copy of a final and binding arbitration award or a final, non-appealable court order, as provided in this Agreement.
Section 3.6 — Escrow Release Date; Scheduled Release
On the Escrow Release Date (which, assuming a Closing Date of June 16, 2025, shall be December 16, 2026), the Escrow Agent shall distribute the Escrow Fund as follows:
(a) Retention of Disputed Amounts. First, any Disputed Amounts — that is, amounts subject to Pending Claims for which Claim Notices have been timely delivered to the Escrow Agent prior to the Escrow Release Date and which remain unresolved as of the Escrow Release Date — shall be retained in the Escrow Account pending the final resolution of such Pending Claims in accordance with Sections 3.4 and 3.7 hereof. The aggregate amount retained shall be equal to the sum of all Claimed Amounts set forth in the outstanding Claim Notices relating to such Pending Claims (or, if the Claimed Amount has been reduced by partial resolution or agreement, the remaining unresolved portion thereof).
(b) Release to Depositor. Second, the remaining balance of the Escrow Fund, after deducting (i) the aggregate Disputed Amounts described in clause (a) above and (ii) any amounts previously distributed from the Escrow Account in accordance with this Agreement, shall be released to Depositor by wire transfer of immediately available funds to the account designated by Depositor on Exhibit A-2 attached hereto (or to such other account as Depositor may designate in writing to the Escrow Agent at least three (3) Business Days prior to the Escrow Release Date).
Beneficiary shall deliver written confirmation to the Escrow Agent and Depositor of the aggregate Disputed Amounts (if any) no later than five (5) Business Days prior to the Escrow Release Date. Such written confirmation shall include a schedule identifying each Pending Claim, the applicable Claim Notice date, and the Claimed Amount or remaining unresolved amount for each Pending Claim. If Beneficiary fails to deliver such written confirmation within the time period specified herein, the Escrow Agent shall be entitled to rely upon its own records regarding outstanding Claim Notices and Pending Claims in determining the aggregate Disputed Amounts.
If no Pending Claims exist as of the Escrow Release Date and no Claim Notices remain outstanding, the entire remaining Escrow Fund shall be released to Depositor by wire transfer of immediately available funds within three (3) Business Days following the Escrow Release Date.
Section 3.7 — Post-Release Date Distributions of Disputed Amounts
Following the Escrow Release Date, any Disputed Amounts retained in the Escrow Account pursuant to Section 3.6(a) hereof shall be released promptly upon the final resolution of the applicable Pending Claim as follows:
(a) To Beneficiary. The portion of the Disputed Amount determined to be owed to Beneficiary pursuant to the final resolution of the Pending Claim (whether by mutual agreement, arbitration award, or final non-appealable court order) shall be released to Beneficiary by wire transfer of immediately available funds to the account designated by Beneficiary on Exhibit A-3 attached hereto (or to such other account as Beneficiary may designate in writing to the Escrow Agent).
(b) To Depositor. The balance (if any) of the Disputed Amount not determined to be owed to Beneficiary shall be released to Depositor by wire transfer of immediately available funds to the account designated by Depositor on Exhibit A-2 attached hereto (or to such other account as Depositor may designate in writing to the Escrow Agent).
The Escrow Agent shall make each such distribution within three (3) Business Days following receipt of Joint Written Instructions or a certified copy of a final and binding arbitration award or final, non-appealable court order directing such distribution.
Upon the final resolution and release of all Disputed Amounts and the termination of all Pending Claims, any remaining balance in the Escrow Account (including any accrued and undistributed earnings thereon) shall be promptly released to Depositor by wire transfer of immediately available funds, and this Agreement shall thereupon terminate in accordance with Section 9.1 hereof (subject to the survival provisions set forth therein).
ARTICLE IV — INVESTMENT OF ESCROW FUND
Section 4.1 — Investment Instructions
The Escrow Agent shall invest and reinvest the Escrow Fund in one or more of the following investments (collectively, "Permitted Investments"), as directed in writing by Joint Written Instructions from Depositor and Beneficiary (or, in the absence of such instructions, in the default investment described below):
(a) Direct obligations of, or obligations the full and timely payment of principal and interest of which are unconditionally guaranteed by, the United States of America, in each case having maturities of ninety (90) days or less from the date of acquisition;
(b) Money market funds that are registered under the Investment Company Act of 1940, as amended, that are rated at least "AAAm" by Standard & Poor's Ratings Services (or the equivalent rating by another nationally recognized statistical rating organization), and that invest exclusively in obligations described in clause (a) above or repurchase agreements fully collateralized by such obligations;
(c) Certificates of deposit, time deposits, or demand deposits at Pinnacle Trust Company, N.A. or at any other depository institution that is a member of the Federal Deposit Insurance Corporation and that has a combined capital and surplus of not less than Five Hundred Million Dollars ($500,000,000.00), in each case having maturities of ninety (90) days or less from the date of deposit; and
(d) Commercial paper issued by corporations organized and existing under the laws of the United States of America or any state thereof, rated not less than "A-1" by Standard & Poor's Ratings Services or "P-1" by Moody's Investors Service, Inc. (or the equivalent rating by another nationally recognized statistical rating organization), in each case having maturities of sixty (60) days or less from the date of acquisition.
Default Investment. In the absence of Joint Written Instructions directing the investment of the Escrow Fund in a specific Permitted Investment, the Escrow Agent shall invest the Escrow Fund in a money market fund described in clause (b) above, as selected by the Escrow Agent in its reasonable discretion. The Escrow Agent shall not be liable for any loss of income or principal resulting from an investment made in the default investment in the absence of Joint Written Instructions.
The Escrow Agent shall have no obligation to invest or reinvest the Escrow Fund on the date of deposit if the Escrow Fund is received after 2:00 p.m. (Eastern Time) on such date. In such case, the Escrow Agent shall invest or reinvest the Escrow Fund on the next succeeding Business Day. The Parties acknowledge that the Escrow Agent or its affiliates may receive compensation in connection with the investment of the Escrow Fund in money market funds or deposits at Pinnacle Trust Company, N.A., and the Parties consent to such arrangements.
Section 4.2 — Earnings and Losses
All interest, dividends, gains, and other earnings on the Escrow Fund shall be credited to the Escrow Account and shall constitute part of the Escrow Fund for all purposes of this Agreement. Any losses on Permitted Investments, including without limitation any decline in value, realized loss upon liquidation, or unrealized depreciation, shall reduce the Escrow Fund. The Escrow Agent shall not be liable for any loss on Permitted Investments made in accordance with this Agreement or for any decline in the market value of any Permitted Investment during the term of this Agreement. The Escrow Agent shall liquidate Permitted Investments as necessary to make distributions from the Escrow Account in accordance with this Agreement, and the Escrow Agent shall not be liable for any loss, penalty, or cost incurred in connection with such liquidation.
Section 4.3 — Tax Treatment
All income earned on the Escrow Fund, including without limitation interest, dividends, and capital gains, shall be allocated to and reported as income of Depositor (EIN: 83-2947156) for federal and state income tax purposes, regardless of whether such income is distributed to or otherwise received by Depositor during the applicable taxable year. Depositor shall be responsible for the payment of all taxes attributable to income earned on the Escrow Fund. Upon any distribution of all or any portion of the Escrow Fund to Beneficiary pursuant to an indemnification claim under this Agreement, the associated portion of income earned on the Escrow Fund attributable to the distributed amount shall be reallocated to Beneficiary for tax purposes, and the Escrow Agent, Depositor, and Beneficiary shall cooperate in the preparation and filing of any amended or corrected tax reporting forms necessary to reflect such reallocation.
The Escrow Agent shall issue IRS Forms 1099-INT, 1099-DIV, or such other applicable forms (or successor forms) to Depositor (and, if applicable, to Beneficiary) reflecting the earnings on the Escrow Fund for each calendar year (or portion thereof) during the term of this Agreement. Each of Depositor and Beneficiary agrees to provide the Escrow Agent with such tax forms, certifications, and other information as the Escrow Agent may reasonably request in order to comply with its tax reporting obligations, including but not limited to completed and duly executed IRS Forms W-9 (or any successor form). If either Depositor or Beneficiary fails to provide a duly completed IRS Form W-9 (or successor form), the Escrow Agent shall be entitled to withhold taxes from distributions as required by applicable law.
ARTICLE V — DUTIES AND RESPONSIBILITIES OF ESCROW AGENT
Section 5.1 — Standard of Care; Limitations
The Escrow Agent undertakes to perform only such duties as are specifically set forth in this Agreement and no implied duties or obligations shall be read into this Agreement against the Escrow Agent. The Escrow Agent shall have no duty to enforce any obligation of any other Party hereunder or under the APA. The Escrow Agent shall not be deemed a fiduciary of Depositor or Beneficiary, except to the extent of its specific obligations under this Agreement to hold, invest, and distribute the Escrow Fund in accordance with the terms hereof.
The Escrow Agent shall act in good faith and exercise reasonable care in performing its duties under this Agreement. Without limiting the foregoing, the Escrow Agent shall have no duty to:
(a) determine or inquire into the happening or occurrence of any condition or event that may give rise to, or affect the timing or amount of, any distribution or other action under the APA or this Agreement, including without limitation the satisfaction or failure of any condition to the Closing or any indemnification event under the APA;
(b) interpret or enforce any provision of the APA (other than provisions of the APA that are expressly incorporated by reference into this Agreement), or to determine the rights, obligations, or liabilities of Depositor or Beneficiary under the APA;
(c) determine whether any claim for indemnification made by Beneficiary satisfies or fails to satisfy the thresholds, baskets, caps, time limitations, or other limitations set forth in the APA, or to evaluate the merits, validity, or legal sufficiency of any such claim; or
(d) resolve, mediate, or arbitrate any dispute between Depositor and Beneficiary, whether arising under this Agreement, the APA, or otherwise.
Section 5.2 — Reliance
The Escrow Agent may rely upon, and shall be fully protected in acting or refraining from acting in reliance upon, any Joint Written Instructions, Claim Notice, certificate, notice, direction, consent, request, waiver, receipt, or other document or communication that the Escrow Agent in good faith believes to be genuine and to have been signed, sent, or presented by the proper Party or Parties or by an Authorized Representative of the proper Party or Parties. The Escrow Agent shall have no duty or obligation to verify or independently confirm the authority of any person signing or delivering any such document or communication on behalf of any Party, provided that the Escrow Agent acts in good faith.
The Escrow Agent may consult with and rely upon the advice of legal counsel (which may be counsel for any Party or counsel selected by the Escrow Agent in its discretion), and the Escrow Agent shall not be liable for any action taken, suffered, or omitted by it in good faith in accordance with the advice of such counsel. The reasonable fees and expenses of any such legal counsel retained by the Escrow Agent shall be reimbursable expenses under Section 6.2 hereof.
Section 5.3 — No Liability
The Escrow Agent shall not be liable for any error of judgment, any act done or step taken or omitted by it in good faith, or any mistake of fact or law, or for anything that it may do or refrain from doing in connection with this Agreement, except in the case of its own gross negligence, willful misconduct, or bad faith. In no event shall the Escrow Agent be liable for any indirect, incidental, consequential, special, punitive, or exemplary damages of any kind, regardless of the form of action and whether or not such damages were foreseeable.
Without limiting the generality of the foregoing, the Escrow Agent shall not be liable for any loss, damage, cost, or expense resulting from:
(a) a default, insolvency, failure, or inability to pay of any depository institution, issuer of any Permitted Investment, clearing system, or other financial institution with which the Escrow Fund or any Permitted Investment is deposited, held, or processed;
(b) any decline in the market value of any Permitted Investment, or any loss realized upon the liquidation, redemption, or sale of any Permitted Investment;
(c) any delay in the receipt of funds by wire transfer, whether caused by the acts or omissions of any intermediary bank, the Federal Reserve System, or any other payment system or financial institution; or
(d) the exercise by the Escrow Agent of any of its rights under Section 5.4 hereof, including without limitation the commencement of any interpleader action.
Section 5.4 — Conflicting Instructions; Interpleader
In the event that the Escrow Agent receives conflicting instructions, claims, demands, or notices from Depositor and Beneficiary, or if at any time the Escrow Agent is unable to determine, to its reasonable satisfaction, the proper disposition of the Escrow Fund or any portion thereof, or if any dispute or disagreement arises between or among any of the Parties with respect to the Escrow Fund or the interpretation or application of any provision of this Agreement, the Escrow Agent shall be entitled (but not required) to take either or both of the following actions:
(a) Refrain from Acting. Refrain from taking any action (other than to continue to hold the Escrow Fund, and to invest the Escrow Fund in Permitted Investments, in accordance with this Agreement) until the Escrow Agent receives Joint Written Instructions signed by an Authorized Representative of each of Depositor and Beneficiary, or a certified copy of a final, non-appealable order or judgment of a court of competent jurisdiction or a final and binding arbitration award, directing the disposition of the Escrow Fund or the applicable portion thereof.
(b) Interpleader. Deposit the Escrow Fund (or the disputed portion thereof) with the United States District Court for the Southern District of New York, or any other court of competent jurisdiction, in an interpleader action or similar proceeding, and upon such deposit the Escrow Agent shall be relieved and discharged of all further obligations, duties, and liability under this Agreement with respect to the Escrow Fund so deposited. In the event the Escrow Agent commences an interpleader action, the Escrow Agent shall be entitled to recover its reasonable attorneys' fees, costs, and expenses incurred in connection with such action from the Escrow Fund or from Depositor and Beneficiary in accordance with Article VII hereof.
The Escrow Agent shall not be liable for any delay in acting, or for any failure to act, pending the resolution of any such conflicting instructions, dispute, or uncertainty, and the Escrow Agent shall not be liable to any Party for any interest, loss, or damage resulting from the Escrow Agent's exercise of its rights under this Section 5.4.
Section 5.5 — Authorized Representatives
Each of Depositor and Beneficiary shall designate in writing, on or prior to the Closing Date, two (2) or more Authorized Representatives who are empowered and authorized to act on behalf of such Party for purposes of delivering and signing Joint Written Instructions, Claim Notices, investment instructions, and other notices, directions, and communications under this Agreement. The initial Authorized Representatives of each Party are set forth on Exhibit B attached hereto.
The initial Authorized Representatives of Depositor (Meridian Consumer Brands LLC) shall be:
(i) Gerald Fontenot, General Counsel & Corporate Secretary; and
(ii) Rajiv Subramaniam, Chief Financial Officer.
The initial Authorized Representatives of Beneficiary (Lakebridge Home & Personal Care, Inc.) shall be:
(i) Lisa Nakamura, Chief Financial Officer; and
(ii) Philip Kowalski, Vice President, Corporate Development.
Either Depositor or Beneficiary may add, remove, or replace any of its Authorized Representatives by delivering written notice to the Escrow Agent and the other Party, signed by an existing Authorized Representative of the notifying Party or by an officer of such Party holding a title of Vice President or above. Any such change shall become effective upon the Escrow Agent's actual receipt of such written notice. The Escrow Agent shall be entitled to rely on the most recently received list of Authorized Representatives until it receives a superseding written notice in accordance with this Section 5.5, and the Escrow Agent shall have no liability for acting in reliance on any such list.
ARTICLE VI — ESCROW AGENT FEES AND EXPENSES
Section 6.1 — Fees
The Escrow Agent shall be entitled to receive compensation for its services hereunder as set forth in the fee schedule attached hereto as Exhibit C (the "Fee Schedule"). Such compensation shall include an annual administration fee, per-transaction processing fees, and such other fees as may be set forth in the Fee Schedule. The annual administration fee shall be payable in advance on the Effective Date and on each anniversary of the Effective Date during the term of this Agreement. If this Agreement terminates prior to an anniversary of the Effective Date, no pro rata refund of the annual administration fee shall be due. Per-transaction processing fees shall be payable within thirty (30) days of the date of invoice therefor.
Section 6.2 — Expense Reimbursement
In addition to the fees described in Section 6.1 hereof, the Escrow Agent shall be entitled to reimbursement of all reasonable and documented out-of-pocket expenses incurred by the Escrow Agent in connection with the performance of its duties under this Agreement, including without limitation reasonable attorneys' fees and disbursements, postage, courier and delivery charges, wire transfer fees imposed by third-party banks or payment systems, and costs incurred in connection with any interpleader action, dispute, or legal proceeding. The Escrow Agent shall provide reasonable documentation of all expenses for which it seeks reimbursement. Reimbursement of expenses shall be payable within thirty (30) days of the date of invoice therefor.
Section 6.3 — Payment of Fees
One-half (50%) of all fees and expenses of the Escrow Agent under this Article VI shall be borne by Depositor and one-half (50%) shall be borne by Beneficiary, unless otherwise agreed in writing by Depositor and Beneficiary. The Escrow Agent shall invoice Depositor and Beneficiary separately for their respective shares of all fees and expenses.
Fees and expenses of the Escrow Agent shall not be deducted from the Escrow Fund unless:
(a) both Depositor and Beneficiary consent in writing to such deduction; or
(b) either Depositor or Beneficiary fails to pay its share of any fee or expense within thirty (30) days of the date of invoice therefor, in which case the Escrow Agent may deduct the unpaid amount from the Escrow Fund upon ten (10) days' prior written notice to both Depositor and Beneficiary, specifying the amount to be deducted and the basis therefor.
Any deduction from the Escrow Fund pursuant to clause (b) above shall reduce the Escrow Fund accordingly, and the Party whose failure to pay gave rise to such deduction shall bear the economic cost of such reduction as between Depositor and Beneficiary.
ARTICLE VII — INDEMNIFICATION OF ESCROW AGENT
Section 7.1 — Indemnification by Depositor and Beneficiary
Depositor and Beneficiary, jointly and severally, shall indemnify, defend, and hold harmless the Escrow Agent and its officers, directors, employees, agents, successors, assigns, and affiliates (collectively, the "Escrow Agent Indemnified Parties") from and against any and all losses, damages, claims, liabilities, penalties, judgments, settlements, costs, and expenses (including reasonable attorneys' fees and disbursements) (collectively, "Escrow Agent Losses") arising out of or in connection with the Escrow Agent's acceptance of appointment as Escrow Agent hereunder or the Escrow Agent's performance of, or failure to perform, its duties under this Agreement, including without limitation any Escrow Agent Losses arising out of or in connection with any legal proceeding, claim, demand, investigation, or action of any kind to which any Escrow Agent Indemnified Party becomes a party or is otherwise involved as a result of this Agreement; provided, however, that no Escrow Agent Indemnified Party shall be entitled to indemnification under this Section 7.1 to the extent that any such Escrow Agent Losses are determined by a court of competent jurisdiction in a final, non-appealable order or judgment to have been caused by the gross negligence, willful misconduct, or bad faith of such Escrow Agent Indemnified Party.
As between themselves, Depositor and Beneficiary shall each bear fifty percent (50%) of any indemnification obligation arising under this Section 7.1. The contribution and allocation provisions of this sentence shall not diminish the joint and several liability of Depositor and Beneficiary to the Escrow Agent Indemnified Parties.
The obligations of Depositor and Beneficiary under this Article VII shall survive the resignation or removal of the Escrow Agent and the termination of this Agreement.
ARTICLE VIII — RESIGNATION AND REMOVAL OF ESCROW AGENT
Section 8.1 — Resignation
The Escrow Agent may resign at any time by giving at least thirty (30) days' prior written notice of its resignation to Depositor and Beneficiary. Such resignation shall not take effect until a successor escrow agent has been appointed in accordance with Section 8.3 hereof and the Escrow Fund has been transferred to such successor escrow agent. During the period between the delivery of the notice of resignation and the effective date of such resignation, the Escrow Agent shall continue to hold the Escrow Fund and perform its duties under this Agreement in accordance with the terms hereof.
Section 8.2 — Removal
The Escrow Agent may be removed at any time, with or without cause, by Joint Written Instructions of Depositor and Beneficiary, delivered to the Escrow Agent at least thirty (30) days prior to the effective date of such removal. Such removal shall not take effect until a successor escrow agent has been appointed in accordance with Section 8.3 hereof and the Escrow Fund has been transferred to such successor escrow agent. During the period between the delivery of the notice of removal and the effective date of such removal, the Escrow Agent shall continue to hold the Escrow Fund and perform its duties under this Agreement in accordance with the terms hereof.
Section 8.3 — Appointment of Successor
If the Escrow Agent resigns or is removed pursuant to Section 8.1 or Section 8.2 hereof, Depositor and Beneficiary shall use commercially reasonable efforts to jointly appoint a successor escrow agent that is a national banking association, state-chartered bank, or national trust company with a combined capital and surplus of not less than Five Hundred Million Dollars ($500,000,000.00), within thirty (30) days following the date of the notice of resignation or removal. The appointment of a successor escrow agent shall be evidenced by a written instrument executed by Depositor, Beneficiary, and the successor escrow agent.
If Depositor and Beneficiary fail to jointly appoint a successor escrow agent within the thirty (30)-day period described above, the Escrow Agent shall be entitled to:
(a) petition the United States District Court for the Southern District of New York, or any other court of competent jurisdiction, to appoint a successor escrow agent; or
(b) deposit the Escrow Fund with such court, and upon such deposit the Escrow Agent shall be relieved and discharged of all further obligations, duties, and liability under this Agreement.
Upon the appointment of and acceptance by a successor escrow agent, the Escrow Agent shall transfer the Escrow Fund to the successor escrow agent, together with such records, documents, and instruments as may be reasonably necessary for the successor escrow agent to perform its duties, and the Escrow Agent shall thereupon be discharged of all further obligations, duties, and liability under this Agreement with respect to the Escrow Fund so transferred; provided, however, that the Escrow Agent shall retain its rights under Article VI (Fees and Expenses) and Article VII (Indemnification) with respect to any fees, expenses, or indemnification obligations accrued or arising prior to the effective date of such transfer.
ARTICLE IX — TERMINATION
Section 9.1 — Termination
This Agreement shall terminate upon the earliest to occur of the following:
(a) the distribution of the entire Escrow Fund in accordance with the terms of this Agreement, such that no funds remain in the Escrow Account;
(b) the deposit of the Escrow Fund (or the remaining balance thereof) with a court of competent jurisdiction pursuant to Section 5.4(b) or Section 8.3(b) hereof; or
(c) the mutual written agreement of all three Parties to terminate this Agreement, executed by an authorized officer or Authorized Representative of each Party.
Notwithstanding the termination of this Agreement, the following provisions shall survive such termination and shall continue in full force and effect: Article VII (Indemnification of Escrow Agent), Section 5.3 (No Liability), Section 6.1 (Fees, to the extent of any accrued and unpaid fees), Section 6.2 (Expense Reimbursement, to the extent of any accrued and unreimbursed expenses), and all provisions of Article XI (Miscellaneous) that by their nature are intended to survive termination, including without limitation Section 11.1 (Governing Law), Section 11.2 (Jurisdiction; Venue), and Section 11.3 (Waiver of Jury Trial).
ARTICLE X — NOTICES
Section 10.1 — Notice Provisions
All notices, instructions, Claim Notices, Joint Written Instructions, requests, demands, consents, approvals, waivers, and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed duly given and received:
(a) when delivered personally to the Party or Parties to whom such notice is directed;
(b) one (1) Business Day after being sent by a nationally recognized overnight courier service (with confirmation of delivery), charges prepaid;
(c) three (3) Business Days after being sent by certified or registered mail, return receipt requested, postage prepaid, through the United States Postal Service; or
(d) when sent by email to the email address specified below (with electronic confirmation of receipt by the recipient), provided that a copy of such notice is sent by nationally recognized overnight courier service within one (1) Business Day thereafter.
All notices shall be addressed to the Parties at the following addresses (or to such other address as a Party may designate by written notice to the other Parties in accordance with this Section 10.1):
If to Depositor:
Meridian Consumer Brands LLC 450 Park Avenue South, 14th Floor New York, NY 10016
Attention: Gerald Fontenot, General Counsel & Corporate Secretary