Exhibit 10.4
 
 
ASSET PURCHASE AGREEMENT
among
PRIMO WATER CORPORATION,
PRIMO PRODUCTS, LLC,
OMNIFRIO BEVERAGE COMPANY, LLC
and
CERTAIN MEMBERS OF OMNIFRIO BEVERAGE COMPANY, LLC
March 8, 2011
 
 

 

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TABLE OF CONTENTS

                      Page      
 
        ARTICLE I DEFINITIONS     1      
 
        ARTICLE II SALE AND PURCHASE OF ASSETS     7   2.1  
Sale and Purchase of Assets
    7   2.2  
Excluded Assets
    8   2.3  
Assumed Liabilities
    9   2.4  
Excluded Liabilities
    9   2.5  
Purchase Price
    10   2.6  
Milestone Payments
    10   2.7  
Closing
    11   2.8  
Allocation of Purchase Price
    11      
 
        ARTICLE III REPRESENTATIONS AND WARRANTIES REGARDING THE MEMBERS     11
  3.1  
Organization and Authority
    11   3.2  
Share Ownership
    11   3.3  
No Conflicts
    12   3.4  
Litigation
    12   3.5  
No Brokers’ Fees
    12      
 
        ARTICLE IV REPRESENTATIONS AND WARRANTIES REGARDING THE SELLER     12  
4.1  
Organization, Qualification and Corporate Power
    12   4.2  
Capitalization
    12   4.3  
Authority
    12   4.4  
No Conflicts
    13   4.5  
Financial Statements
    13   4.6  
Absence of Certain Changes
    13   4.7  
No Undisclosed Liabilities
    14   4.8  
Title to and Sufficiency of Assets
    15   4.9  
Tangible Personal Property; Condition of Purchased Assets
    15   4.10  
Intentionally Omitted
    15   4.11  
Real Property
    15   4.12  
Contracts
    15   4.13  
Intellectual Property
    16   4.14  
Tax
    17   4.15  
Legal Compliance
    18   4.16  
Litigation
    18   4.17  
Intentionally Omitted
    19   4.18  
Environmental
    19   4.19  
Employees
    19   4.20  
Employee Benefits
    19   4.21  
Suppliers
    19   4.22  
Transactions with Related Persons
    19   4.23  
Insurance
    20   4.24  
Regulatory Matters
    20   4.25  
Solvency
    21   4.26  
No Brokers’ Fees
    21   4.27  
Securities Laws
    21   4.28  
Disclosure
    22  

 

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                      Page      
 
        ARTICLE V REPRESENTATIONS AND WARRANTIES REGARDING THE PRIMO PARTIES    
22   5.1  
Organization
    22   5.2  
Capitalization
    22   5.3  
Authority
    22   5.4  
No Conflicts
    23   5.5  
Litigation
    23   5.6  
No Material Adverse Effect
    23   5.7  
No Brokers’ Fees
    23   5.8  
Securities Laws
    23      
 
        ARTICLE VI PRE-CLOSING COVENANTS     24   6.1  
Best Efforts
    24   6.2  
Consents and Approvals
    24   6.3  
Operation of Business
    24   6.4  
Full Access
    24   6.5  
Notice of Developments
    24   6.6  
Exclusivity
    25   6.7  
Confidentiality, Press Releases and Public Announcements
    25   6.8  
No Equity Transfers
    25      
 
        ARTICLE VII CLOSING CONDITIONS     25   7.1  
Conditions to the Buyer’s Obligations
    25   7.2  
Conditions to the Seller’s Obligations
    27      
 
        ARTICLE VIII TERMINATION     28   8.1  
Termination Events
    28   8.2  
Effect of Termination
    28      
 
        ARTICLE IX POST-CLOSING COVENANTS     28   9.1  
Rule 144
    29   9.2  
Payment of Excluded Liabilities
    29   9.3  
Payment of Assumed Liabilities
    29   9.4  
Bulk Transfer Compliance
    29   9.5  
Tax Covenants
    29   9.6  
Consents
    29   9.7  
Mail and Receivables
    30   9.8  
Litigation Support
    30   9.9  
Transition
    30   9.10  
Confidentiality
    30   9.11  
Change and Use of Name
    30   9.12  
Retention of and Access to Books and Records
    31   9.13  
Seller Information
    31   9.14  
GAAP Financial Statements
    31      
 
        ARTICLE X INDEMNIFICATION     31   10.1  
Indemnification by the Sellers
    31   10.2  
Indemnification by the Buyer
    31   10.3  
Survival and Time Limitations
    32   10.4  
Limitations on Indemnification
    32   10.5  
Manner of Payment
    33   10.6  
Third-Party Claims
    34   10.7  
Other Indemnification Matters
    35   10.8  
Exclusive Remedy
    35  

 

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                      Page      
 
        ARTICLE XI MISCELLANEOUS     35   11.1  
Further Assurances
    35   11.2  
No Third-Party Beneficiaries
    35   11.3  
Entire Agreement
    35   11.4  
Successors and Assigns
    35   11.5  
Counterparts
    36   11.6  
Notices
    36   11.7  
JURISDICTION; SERVICE OF PROCESS
    37   11.8  
Governing Law
    37   11.9  
Amendments and Waivers
    37   11.10  
Severability
    37   11.11  
Expenses
    37   11.12  
Interpretation
    37   11.13  
Specific Performance
    38   11.14  
Time Is of the Essence
    38   11.15  
The Members’ Representative.
    38  

 

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      EXHIBITS A  
Consulting Agreement
B-1  
Lock-Up Agreement
B-2  
Two-Year Lock-Up Agreement
C  
Noncompetition Agreement
D  
Bill of Sale and Assignment and Assumption Agreement
E  
Quitclaim Assignment
F  
Registration Rights Agreement
G  
Assignment of Intellectual Property

      SCHEDULES 2.2(c)  
Retained Contracts
2.2(i)  
Other Excluded Assets
2.8  
Allocation of Purchase Price
4.1  
Organization
4.4  
Conflicts and Consents
4.5(a)  
Financial Statements
4.6  
Certain Changes
4.7  
Undisclosed Liabilities
4.8  
Exceptions to Title
4.9  
Tangible Personal Property
4.12(a)  
Material Contracts
4.13(c)  
Owned Intellectual Property
4.13(d)  
Licensed Intellectual Property
4.14  
Tax Returns, Audits and Elections
4.15(a)  
Compliance with Law
4.15(b)  
Permits
4.16  
Litigation and Orders
4.18  
Environmental
4.21  
Suppliers
4.22  
Related Persons Transactions
4.23  
Insurance
5.2  
Buyer Capitalization
5.4  
Buyer Conflicts and Consents
5.5  
Buyer Litigation

 

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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this “Agreement”) is entered into as of March 8,
2011, by Primo Water Corporation, a Delaware corporation (“Primo”), Primo
Products, LLC, a North Carolina limited liability company (the “Buyer”, and
together with Primo, the “Primo Parties”), Omnifrio Beverage Company, LLC, an
Ohio limited liability company (the “Seller”), and those persons identified as
“Members” on the signature pages hereto (collectively, the “Members”).
STATEMENT OF PURPOSE
The Buyer has agreed to purchase from the Seller, and the Seller has agreed to
sell to the Buyer, substantially all of the Seller’s assets for the
consideration, including the Buyer’s assumption of certain stated liabilities,
and on the terms and subject to the conditions set forth in this Agreement.
ARTICLE I
DEFINITIONS
“Acquisition Proposal” is defined in Section 6.6.
“Affiliate” means, with respect to a specified Person, any other Person that
directly or indirectly controls, is controlled by, or is under common control
with, the specified Person. The term “control” means (a) the possession,
directly or indirectly, of the power to vote 50% or more of the securities or
other equity interests of a Person having ordinary voting power, (b) the
possession, directly or indirectly, of the power to direct or cause the
direction of the management policies of a Person, by contract or otherwise or
(c) being a director, officer, executor, trustee or fiduciary (or their
equivalents) of a Person or a Person that controls such Person.
“Agreement” is defined in the opening paragraph.
“Appliance” means the proprietary Omnifrio Single-Serve Beverage Creations
appliance used to dispense custom-made single-serving beverages.
“Assignment of Intellectual Property” means the Assignment of Intellectual
Property, in the form of Exhibit G.
“Assumed Liabilities” is defined in Section 2.3.
“Average Closing Price” means the average of the closing price of Primo Stock on
The NASDAQ Global Select Market for the 20 most recent trading days prior to
(a) the date hereof with respect to the calculation of the Share Consideration
or (b) in the event of a forfeiture pursuant to Section 10.5 hereof, the date
that the amount of Losses is definitively determined.
“Balance Sheet” means the unaudited balance sheet of the Seller as of
December 31, 2010, which is attached to Schedule 4.5.
“Balance Sheet Date” means the date of the Balance Sheet.
“Basket” is defined in Section 10.4.
“Books and Records” is defined in Section 2.1.

 

 

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“Business” means the business conducted by the Seller, including the activities
carried on by the Seller for the purpose of the production, sale and
distribution of Appliances and the other products related thereto including the
(a) flavors and formulations of the cups containing the flavor mixes and (b) the
CO2 cylinders used in connection with such Appliances.
“Business Day” means any day that is not a Saturday, Sunday or any other day on
which banks are required or authorized by law to be closed in Charlotte, North
Carolina.
“Buyer” is defined in the opening paragraph.
“Buyer Basket” is defined in Section 10.4(b).
“Buyer Cap” is defined in Section 10.4(b).
“Cap” is defined in Section 10.4.
“Closing” is defined in Section 2.7.
“Closing Cash Consideration” is defined in Section 2.5.
“Closing Date” is defined in Section 2.7.
“Code” means the Internal Revenue Code of 1986.
“Confidential Information” means information concerning the business or affairs
of any Party, including information relating to the Business, customers,
clients, suppliers, distributors, investors, lenders, consultants, independent
contractors or employees, customer and supplier lists, price lists and pricing
policies, cost information, financial statements and information, budgets and
projections, business plans, production costs, market research, marketing plans
and proposals, sales and distribution strategies, manufacturing and production
processes and techniques, processes and business methods, technical information,
pending projects and proposals, new business plans and initiatives, research and
development projects, inventions, discoveries, ideas, technologies, trade
secrets, know-how, formulae, technical data, designs, patterns, marks, names,
improvements, industrial designs, mask works, compositions, works of authorship
and other Intellectual Property, devices, samples, plans, drawings and
specifications, photographs and digital images, computer software and
programming, all business, employee and financial records, books, ledgers,
files, correspondence, documents and lists of a Party, all other confidential
information and materials relating to the Business or any Party, and all notes,
analyses, compilations, studies, summaries, reports, manuals, documents and
other materials prepared by or for any Party containing or based in whole or in
part on any of the foregoing, whether in verbal, written, graphic, electronic or
any other form and whether or not conceived, developed or prepared in whole or
in part by such Party.
“Consent” means any consent, approval, authorization, permission, waiver or
clearance.
“Consulting Agreement” means the Consulting Agreement with Carl Santoiemmo, in
the form of Exhibit A.
“Contract” means any contract, obligation, understanding, commitment, lease,
license, purchase order, bid or other agreement, whether written or oral or
whether express or implied, together with all amendments and other modifications
thereto.
“Deferred Cash Consideration” is defined in Section 2.5.

 

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“Employee Benefit Plan” means any (a) qualified or nonqualified Employee Pension
Benefit Plan (including any Multiemployer Plan) or deferred compensation or
retirement plan or arrangement, (b) Employee Welfare Benefit Plan or
(c) equity-based plan or arrangement (including any stock option, stock
purchase, stock ownership, stock appreciation or restricted stock plan) or
material fringe benefit or other retirement, severance, bonus, profit-sharing or
incentive plan or arrangement.
“Employee Pension Benefit Plan” has the meaning set forth in ERISA § 3(2).
“Employee Welfare Benefit Plan” has the meaning set forth in ERISA § 3(1).
“Encumbrance” means any lien, mortgage, pledge, encumbrance, charge, security
interest, adverse or other claim, community property interest, condition,
equitable interest, option, warrant, right of first refusal, easement, profit,
license, servitude, covenant or other restriction of any kind or nature.
“Environmental Law” means any Law relating to the environment, health or safety,
including any Law relating to the presence, use, production, generation,
handling, management, transportation, treatment, storage, disposal,
distribution, labeling, testing, processing, discharge, release, threatened
release, control or cleanup of any material, substance or waste limited or
regulated by any Governmental Body.
“Equity” means, with respect to any Person, any and all shares, interests,
participations, rights in or other equivalents of such Person’s capital stock,
partnership interests, membership interests, limited liability company interests
or other equivalent equity or ownership interests and any rights, warrants,
options or other securities exchangeable or exercisable for or convertible into
such capital stock or other equity or ownership interests (whether imbedded in
other securities or not).
“ERISA” means the Employee Retirement Income Security Act of 1974.
“Exchange Act” means the Securities Exchange Act of 1934.
“Excluded Assets” is defined in Section 2.2.
“Excluded Liabilities” is defined in Section 2.4.
“FDA” is defined in Section 4.24(a).
“FDA Permits” is defined in Section 4.24(a).
“Financial Statements” is defined in Section 4.5.
“GAAP” means generally accepted accounting principles in the United States as
set forth in pronouncements of the Financial Accounting Standards Board (and its
predecessors) and the American Institute of Certified Public Accountants and,
unless otherwise specified, as in effect on the date hereof or, with respect to
any financial statements, the date such financial statements were prepared.
“Governmental Body” means any federal, state, local, foreign or other government
or quasi-governmental authority or any department, agency, subdivision, court or
other tribunal of any of the foregoing.
“Hazardous Substance” means any material, substance or waste that is limited or
regulated by any Governmental Body or, even if not so limited or regulated,
could pose a hazard to the health or safety of the occupants of the real
property subject to the Lease or adjacent properties or any property or facility
formerly owned, leased or used by the Seller. The term includes asbestos,
polychlorinated biphenyls, petroleum products and all materials, substances and
wastes regulated under any Environmental Law.

 

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“HHS-OIG” is defined in Section 4.24(b).
“Indebtedness” means as to any Person at any time: (a) obligations of such
Person for borrowed money; (b) obligations of such Person evidenced by bonds,
notes, debentures or other similar instruments; (c) obligations of such Person
to pay the deferred purchase price of property or services (including
obligations under noncompete, consulting or similar arrangements), except trade
accounts payable of such Person arising in the ordinary course of business that
are not past due by more than 90 days or that are being contested in good faith
by appropriate proceedings diligently pursued and for which adequate reserves
have been established on the financial statements of such Person;
(d) capitalized lease obligations of such Person; (e) indebtedness or other
obligations of others guaranteed by such Person; (f) obligations secured by an
Encumbrance existing on any property or asset owned by such Person; and
(g) reimbursement obligations of such Person relating to letters of credit,
bankers’ acceptances, surety or other bonds or similar instruments.
“Indemnified Party” is defined in Section 10.6.
“Indemnifying Party” is defined in Section 10.6.
“Insurance Policies” is defined in Section 2.1.
“Intellectual Property” means all U.S. and worldwide (a) inventions (whether
patentable or unpatentable and whether or not reduced to practice), improvements
thereto, and patents, patent applications, and patent disclosures, together with
reissuances, continuations, continuations-in-part, revisions, extensions and
reexaminations thereof; (b) trademarks, service marks, trade dress, logos, trade
names, and corporate names, together with translations, adaptations, derivations
and combinations thereof and including goodwill associated therewith, and
applications, registrations, and renewals in connection therewith;
(c) copyrightable works, copyrights, and applications, registrations and
renewals in connection therewith; (d) mask works and applications, registrations
and renewals in connection therewith; (e) trade secrets and Confidential
Information; (f) computer software, in object and source code format (including
data and related documentation); (g) plans, drawings, architectural plans and
specifications; (h) websites and domain names; (i) other proprietary rights; and
(j) copies and tangible embodiments and expressions thereof (in whatever form or
medium), all improvements and modifications thereto and derivative works
thereof.
“Inventory” is defined in Section 2.1.
“IRS” means the U.S. Internal Revenue Service.
“Knowledge” means (a) actual knowledge or (b) knowledge that would be expected
to be obtained after a reasonably comprehensive investigation concerning the
matter at issue. A Party will be deemed to have Knowledge of a matter if any
Affiliate of such Party or any employee of such Party with responsibility for
such matter has, or at any time had, Knowledge of such matter. The Seller will
be deemed to have Knowledge of a matter if the Seller or any Member is deemed to
have Knowledge of such matter.
“Law” means any federal, state, local, foreign or other law, statute, ordinance,
regulation, rule, regulatory or administrative guidance, Order, constitution,
treaty, principle of common law or other restriction of any Governmental Body.

 

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“Lease” means that certain Lease Agreement dated September 1, 2009 by and
between Rising Phoenix Co. and Derf Limited, as amended pursuant to a Lease
Amendment dated September 1, 2010, pursuant to which the Seller leases the real
property located at 93 Alpha Park Drive, Highland Heights, Ohio.
“Liability” means any liability, obligation or commitment of any kind or nature,
whether known or unknown, asserted or unasserted, absolute or contingent,
accrued or unaccrued, liquidated or unliquidated, or due or to become due.
“License” is defined in Section 4.13.
“Lock-up Agreements” means, collectively, (a) the Lock-Up Agreement to be signed
by the Seller with respect to the Share Consideration and (b) the Lock-Up
Agreement to be signed by the Seller with respect to a portion of the Share
Consideration equal to $3,150,000 divided by the Average Closing Price, in the
form of Exhibit B-1 and Exhibit B-2, respectively.
“Loss” means any loss, claim, demand, Order, damage, penalty, fine, cost,
settlement payment, Liability, Tax, Encumbrance, diminution of value, expense,
fee, court costs or attorneys’ fees and expenses.
“Material Adverse Effect” means any change, effect, event, occurrence or state
of facts that has or would reasonably be expected to have or result in a
material adverse effect or change on the business, assets, properties,
operations, condition (financial or otherwise) or results of operations of the
Seller or the Business, taken as a whole, (or Primo and the Primo Subsidiaries,
taken as a whole), as the case may be. This definition shall exclude any
material adverse effect or change to the extent arising out of, attributable to
or resulting from: (a) changes in conditions generally affecting the industries
in which the Seller (or Primo and the Primo Subsidiaries) conduct their business
which do not disproportionately affect in any material respect the Seller (or
Primo and the Primo Subsidiaries), in each case taken as a whole, as compared to
other similarly situated participants in the industries in which the Seller (or
Primo and the Primo Subsidiaries) operates, (b) general economic, political or
financial market conditions which do not disproportionately affect in any
material respect the Seller (or Primo and the Primo Subsidiaries), in each case
taken as a whole, and (c) any outbreak or escalation of hostilities involving
the United States (including any declaration of war by the U.S. Congress) or
acts of terrorism.
“Material Contract” is defined in Section 4.12.
“Members” is defined in the opening paragraph.
“Members’ Representative” is defined in Section 11.15.
“Milestone Payments” is defined in Section 2.5.
“Multiemployer Plan” has the meaning set forth in ERISA § 3(37).
“Noncompetition Agreement” means the Noncompetition Agreement to be signed by
the Seller, Carl Santoiemmo and JoAnn Santoiemmo, in the form of Exhibit C.
“Operating Agreement” means that certain Operating Agreement of Omnifrio
Beverage Company, LLC dated November 3, 2010.
“Order” means any order, award, decision, injunction, judgment, ruling, decree,
charge, writ, subpoena or verdict entered, issued, made or rendered by any
Governmental Body or arbitrator.

 

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“Organizational Documents” means (a) any articles of incorporation, organization
or formation and any bylaws, operating agreement or limited liability company
agreement (b) any documents comparable to those described in clause (a) as may
be applicable pursuant to any Law and (c) any amendment or modification to any
of the foregoing.
“Party” means the Buyer, Primo, the Seller or any Member.
“Permit” means any permit, license, franchise or Consent issued by any
Governmental Body or pursuant to any Law.
“Permitted Encumbrance” means (a) any mechanic’s, materialmen’s or similar
statutory lien incurred in the ordinary course of business for monies not yet
due and (b) any lien for Taxes not yet due.
“Person” means any individual, corporation, limited liability company,
partnership, company, sole proprietorship, joint venture, trust, estate,
association, organization, labor union, Governmental Body or other entity.
“Preferred Shares” is defined in Section 5.2.
“Primo” is defined in the opening paragraph.
“Primo Stock” means the shares of common stock, par value $0.001 per share, of
Primo.
“Primo Subsidiaries” is defined in Section 5.2.
“Proceeding” means any proceeding, charge, complaint, claim, demand, notice,
action, suit, litigation, hearing, audit, investigation, arbitration or
mediation (in each case, whether civil, criminal, administrative, investigative
or informal) commenced, conducted, heard or pending by or before any
Governmental Body, arbitrator or mediator.
“Purchase Price” is defined in Section 2.5.
“Purchased Assets” is defined in Section 2.1.
“Quitclaim Assignment” means the Quitclaim Assignment to be signed by the Seller
and Rising Phoenix Company in the form of Exhibit E.
“Registration Rights Agreement” means the Registration Rights Agreement to be
signed by the Seller and Primo in the form of Exhibit F.
“Related Person” means (a) with respect to a specified individual, any member of
such individual’s Family and any Affiliate of any member of such individual’s
Family and (b) with respect to a specified Person other than an individual, any
Affiliate of such Person and any member of the Family of any such Affiliates
that are individuals. The “Family” of a specified individual means the
individual, such individual’s spouse and former spouses, any other individual
who is related to the specified individual or such individual’s spouse or former
spouse within the third degree, and any other individual who resides with the
specified individual. The Seller will not be deemed to be a Related Person of
any Member.
“Representative” means, with respect to a particular Person, any director,
officer, employee, agent, consultant, advisor or other representative of such
Person, including legal counsel, accountants, financial advisors, lenders,
financing sources and underwriters (including counsel for any such lenders,
financing sources or underwriters).

 

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“Safety Notices” is defined in Section 4.24(d).
“SEC” means the U. S. Securities and Exchange Commission.
“Secured Debt” means any Indebtedness that is secured by any Encumbrance other
than a Permitted Encumbrance on any Purchased Asset.
“Securities Act” means the Securities Act of 1933.
“Seller” is defined in the opening paragraph.
“Share Consideration” is defined in Section 2.5.
“Tangible Personal Property” is defined in Section 2.1.
“Tax” means (a) any federal, state, local, foreign or other income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code § 59A),
customs duties, capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, general service, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever, however denominated or
computed, and including any interest, penalty, or addition thereto, whether
disputed or not and (b) Liability for the payment of any amounts of the type
described in clause (a) as a transferee or successor, by Contract or from any
express or implied obligation to indemnify or otherwise assume or succeed to the
Liability of any other Person.
“Tax Return” means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any form, schedule
or attachment thereto and any amendment or supplement thereof.
“Third-Party Claim” is defined in Section 10.6.
“Transaction Documents” means this Agreement, the Noncompetition Agreement, the
Consulting Agreement, the Lock-up Agreements, the Registration Rights Agreement,
the Quitclaim Assignment, the Assignment of Intellectual Property and all other
written agreements, documents and certificates contemplated by any of the
foregoing documents.
“Transaction Expenses” means all expenses incurred by the Seller in connection
with this Agreement and the other Transaction Documents, for itself or on behalf
of its equity holders, and the consummation of the Transactions, including any
and all legal, accounting, financial, advisory or consulting fees and expenses
incurred as of the Closing Date, whether or not paid as of the Closing Date and
whether or not reflected in the Financial Statements.
“Transactions” means the transactions contemplated by the Transaction Documents.
“Transfer Taxes” is defined in Section 9.5.
ARTICLE II
SALE AND PURCHASE OF ASSETS
2.1 Sale and Purchase of Assets. Subject to the terms and conditions of this
Agreement, the Seller will sell, assign, transfer and convey to the Buyer, and
the Buyer will purchase, acquire and accept from the Seller, free and clear of
all Encumbrances other than Permitted Encumbrances, all of the Seller’s assets
of every kind and description (other than the Excluded Assets) on the Closing
Date (the “Purchased Assets”), including:

 

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(a) All machinery, equipment, parts, tools, computer hardware, supplies,
samples, prototypes and other items of tangible personal property (other than
Inventory) (the “Tangible Personal Property”);
(b) All inventories wherever located, including raw materials, goods consigned
to vendors or subcontractors, works in process, finished goods, spare parts,
goods in transit, products under research and development, demonstration
equipment, samples, prototypes and inventory on consignment (the “Inventory”);
(c) All rights and interests in and to any Contracts;
(d) All Intellectual Property;
(e) All business and financial records, books, ledgers, files, correspondence,
documents, lists, studies and reports (other than those related to employees,
personnel and payroll), including customer lists, supplier lists and equipment
repair, maintenance, service, quality control and insurance records, whether
written, electronically stored or otherwise recorded (the “Books and Records”);
(f) All goodwill and all sales, advertising, promotional and marketing
information and materials;
(g) All e-mail addresses assigned to the Seller;
(h) All Permits;
(i) All rights of the Seller to causes of action, lawsuits, judgments, claims
and demands of any nature and all counterclaims, rights of setoff, rights of
indemnification and affirmative defenses to any claims that may be brought
against the Buyer by third parties;
(j) All benefits under all insurance policies to which the Seller is a party, a
named insured or otherwise the beneficiary of coverage (the “Insurance
Policies”);
(k) All rights to refunds from suppliers and all prepaid expenses and deposits;
and
(l) All other properties and assets to the extent the Seller has any rights
thereto or interests therein, whether a present or future interest, an inchoate
right or otherwise and whether such properties or assets are tangible or
intangible and whether or not of a type falling within any of the categories of
assets or properties described above.
2.2 Excluded Assets. The Seller will retain ownership of the following assets of
the Seller (collectively, the “Excluded Assets”):
(a) All cash, cash equivalents and short-term investments;
(b) Organizational Documents, stock books, stock ledgers, minute books and Tax
Returns;
(c) Those Contracts, if any, listed on Schedule 2.2(c);

 

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(d) All rights to causes of action, lawsuits, judgments, claims and demands of
any nature and all counterclaims, rights of setoff, rights of indemnification
and affirmative defenses to any claims that may be brought against the Seller by
third parties, in each case to the extent that they relate to the Excluded
Assets or Excluded Liabilities;
(e) All rights under any Transaction Document;
(f) All fixtures, furniture, office equipment and motor vehicles;
(g) All trade and other accounts receivable;
(h) All leases and subleases of real property as to which the Seller is the
lessor or sublessor and all leases and subleases of real property as to which
the Seller is the lessee or sublessee, including the Lease, together with any
options to purchase the underlying property and leasehold improvements thereon,
and in each case all other rights, subleases, licenses, permits, deposits and
profits appurtenant to or related to such leases and subleases; and
(i) Those assets, if any, listed on Schedule 2.2(i).
2.3 Assumed Liabilities. The Buyer will assume and agree to pay, perform and
discharge only those Liabilities of the Seller to be performed after the Closing
Date under any executory Contract or Permit incurred by the Seller in the
ordinary course of business; provided, however, that such Liabilities will only
be Assumed Liabilities to the extent that all benefits under such Contracts or
Permits are transferred to the Buyer pursuant to this Agreement and the
existence of such Liabilities does not constitute a breach of the
representations and warranties of the Seller set forth in this Agreement or in
such Contract or Permit (the “Assumed Liabilities”).
2.4 Excluded Liabilities. The Excluded Liabilities will remain the sole
responsibility of and will be retained, paid, performed and discharged as and
when due solely by the Seller. “Excluded Liabilities” means every Liability of
the Seller, other than the Assumed Liabilities, including:
(a) All Liabilities under any Transaction Document;
(b) All Liabilities for Taxes (whether federal, state, local or foreign),
including Taxes incurred in respect of or measured by (i) the sales of goods or
services by Seller, (ii) the wages or other compensation paid by Sellers to its
employees, (iii) the value of Seller’s property (personal as well as real
property), (iv) the income of Seller earned or realized on or prior to the
Closing Date, and (v) any gain and income from the sale of the Purchased Assets
and other Transactions;
(c) All Liabilities for environmental, ecological, health or safety claims to
the extent relating to or arising from the ownership or operation of the
Business or the Purchased Assets on or prior to the Closing Date;
(d) All Liabilities under any Contracts listed on Schedule 2.2(c);
(e) All Liabilities to indemnify any Person (including any Member) by reason of
the fact that such Person was a director, manager, officer, employee or agent of
the Seller;
(f) All Liabilities in respect of any Excluded Asset;
(g) All Transaction Expenses of the Seller;

 

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(h) All Indebtedness of the Seller;
(i) All Liabilities for infringement or misappropriation of any Intellectual
Property on or prior to the Closing Date;
(j) All product Liability, warranty and similar claims for damages or injury to
Person or property to the extent relating to or arising out of the ownership or
operating of the Business or the Purchased Assets on or prior to the Closing
Date;
(k) All trade accounts payable;
(l) All accrued and unpaid expenses; and
(m) All other Liabilities, regardless of when made or asserted, which arise out
of any events occurring or actions taken or omitted to be taken by the Seller,
or otherwise arising out of or incurred in connection with the conduct of the
Business on or prior to the Closing Date.
2.5 Purchase Price.
(a) The purchase price for the Purchased Assets (the “Purchase Price”) will be:
(i) an aggregate amount of up to $13,150,000 comprised of:
(A) that number of shares of Primo Stock obtained by dividing $6,150,000 by the
Average Closing Price (the “Share Consideration”);
(B) $2,000,000 in cash (the “Closing Cash Consideration”);
(C) $2,000,000 in cash (the “Deferred Cash Consideration”); and
(D) up to $3,000,000 in cash (the “Milestone Payments”); and
(ii) the assumption of the Assumed Liabilities.
(b) Subject to the terms and conditions of this Agreement, on the Closing Date
(i) Primo will issue to the Seller the Share Consideration and (ii) the Buyer
will pay the Closing Cash Consideration to the Seller. Within five (5) Business
Days after the Closing, Primo will deliver the certificate evidencing the Share
Consideration to the Seller.
(c) Subject to the terms and conditions of this Agreement, the Buyer will pay
(or in the event the Buyer is unable to pay, Primo will pay) (i) the Deferred
Cash Consideration, subject to any amounts set off pursuant to this Agreement
including under Section 10.5, to the Seller on the fifteen-month anniversary of
the Closing Date and (ii) the Milestone Payments to the Seller in accordance
with Section 2.6.
2.6 Milestone Payments.
(a) The Buyer shall pay the Seller $1,000,000 at such time, if within 9 months
of the Closing Date, as the Buyer achieves a pilot manufacturing run of 50
sample Appliances, manufactured in accordance with design specifications
approved by the Buyer and capable, in the reasonable determination of the Buyer,
of being reproduced in commercial production, with all such sample Appliances
functioning properly to the reasonable satisfaction of the Buyer.

 

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(b) The Buyer shall pay the Seller $2,000,000 at such time, if within 9 months
of Closing Date, as the Appliance is certified in writing by MET Laboratories
for compliance to electrical safety standards.
2.7 Closing. The closing of the Transactions to be performed on the Closing Date
(the “Closing”) will take place at the offices of K&L Gates LLP in Charlotte,
North Carolina, commencing at 9:00 a.m. local time on the second Business Day
following the satisfaction or waiver of all conditions to the obligations of the
Parties to consummate the Transactions to be performed on the Closing Date
(other than conditions with respect to actions the Parties will take at the
Closing), or such other date as the Buyer and the Seller may mutually determine
(the “Closing Date”). The sale, assignment, transfer and conveyance to the Buyer
of the Purchased Assets and the assumption by the Buyer of the Assumed
Liabilities will be deemed effective as of 11:59 p.m. local time on the Closing
Date.
2.8 Allocation of Purchase Price. The Purchase Price will be allocated among the
Purchased Assets as provided in Schedule 2.8. The Buyer and the Seller agree
(a) that any such allocation is consistent with the requirements of Code § 1060
and (b) to complete and file IRS Form 8594, or a successor form, and any
amendments thereto, as and when required by applicable Law.
ARTICLE III
REPRESENTATIONS AND WARRANTIES REGARDING THE MEMBERS
Each Member severally represents and warrants as follows:
3.1 Organization and Authority. If such Member is not an individual, such Member
is duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or formation. Such Member has full power,
authority and legal capacity to execute and deliver the Transaction Documents to
which such Member is a party and to perform such Member’s obligations
thereunder. If such Member is not an individual, the execution and delivery by
such Member of each Transaction Document to which it is a party and the
performance by such Member of the Transactions have been duly approved by the
board of directors or comparable governing body of such Member and, if required,
the equityholders of such Member. Except as such validity, binding effect or
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, receivership, conservatorship, fraudulent transfer, moratorium
(whether general or specific) or other Law now or hereafter in effect affecting
the enforceability of creditors’ rights generally, (a) this Agreement
constitutes the valid and legally binding obligation of such Member, enforceable
against such Member in accordance with the terms of this Agreement and (b) upon
the execution and delivery of each Transaction Document to which such Member is
a party, such Transaction Document will constitute the valid and legally binding
obligation of such Member, enforceable against such Member in accordance with
the terms of such Transaction Document.
3.2 Share Ownership. Such Member owns of record and beneficially the Equity of
the Seller set forth next to such Member’s name on Schedule 3.2 free and clear
of any Encumbrance or restriction on transfer (other than any restriction under
any securities Law or set forth in the Operating Agreement and any Encumbrances
listed on Schedule 3.2). Such Member is not a party to (a) any option, warrant,
purchase right, right of first refusal, call, put or other Contract that could
require such Member to sell, transfer or otherwise dispose of any Equity of the
Seller or (b) any voting trust, proxy or other Contract relating to the voting
of any Equity of the Seller.

 

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3.3 No Conflicts. Neither the execution and delivery of this Agreement nor the
performance of the Transactions will, directly or indirectly, with or without
notice or lapse of time: (a) violate any Law to which such Member is subject;
(b) if such Member is not an individual, violate any Organizational Document of
such Member; or (c) violate, conflict with, result in a breach of, constitute a
default under, result in the acceleration of or give any Person the right to
accelerate the maturity or performance of, or to cancel, terminate, modify or
exercise any remedy under, any Contract to which such Member is a party or by
which such Member is bound or the performance of which is guaranteed by such
Member. Such Member is not required to notify, make any filing with, or obtain
any Consent of any Person in order to perform the Transactions.
3.4 Litigation. There is no Proceeding pending or, to the Knowledge of such
Member, threatened or anticipated against such Member relating to or affecting
the Transactions.
3.5 No Brokers’ Fees. Such Member has no Liability for any fee, commission or
payment to any broker, finder or agent with respect to the Transactions to be
performed on or about the Closing Date for which the Buyer could be liable.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES REGARDING THE SELLER
The Seller represents and warrants as follows:
4.1 Organization, Qualification and Corporate Power. Schedule 4.1 sets forth the
Seller’s jurisdiction of organization, the other jurisdictions in which it is
qualified to do business, and its managers and officers. The Seller is a limited
liability company duly organized, validly existing and in good standing under
the laws of its jurisdiction of organization. The Seller has delivered to the
Buyer correct and complete copies of the Organizational Documents of the Seller.
The minute books, the stock certificate books and the stock ledger of the
Seller, in each case as delivered or made available to the Buyer, are correct
and complete.
4.2 Capitalization. The capital structure of Seller is set forth on
Schedule 3.2, which is true and complete. Such outstanding units are owned of
record and beneficially by the Members and in the amounts set forth on
Schedule 3.2. All of the outstanding Equity of the Seller has been duly
authorized and is validly issued, fully paid and nonassessable. Except as set
forth on Schedule 3.2, there are no outstanding securities convertible or
exchangeable into Equity of the Seller. The Seller does not, directly or
indirectly, own or control any direct or indirect equity interest in any Person.
4.3 Authority. The Seller has full limited liability company power and authority
to execute and deliver this Agreement and the other Transaction Documents to
which the Seller is a party and to perform its obligations hereunder and
thereunder. The execution, delivery and performance by the Seller of this
Agreement and of each other Transaction Document to which the Seller is a party
have been approved by the board of directors, members or manager of the Seller,
as applicable. Except as such validity, binding effect or enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, receivership,
conservatorship, fraudulent transfer, moratorium (whether general or specific)
or other Law now or hereafter in effect affecting the enforceability of
creditors’ rights generally, (a) this Agreement constitutes the valid and
legally binding obligation of the Seller, enforceable against the Seller in
accordance with the terms of this Agreement and (b) upon the execution and
delivery of each Transaction Document to which the Seller is a party, such
Transaction Document will constitute the valid and legally binding obligation of
the Seller, enforceable against the Seller in accordance with the terms of such
Transaction Document.

 

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4.4 No Conflicts. Except as set forth on Schedule 4.4, neither the execution and
delivery of this Agreement nor the performance of the Transactions will,
directly or indirectly, with or without notice or lapse of time: (a) violate any
Law to which the Seller or any Purchased Asset is subject; (b) violate any
Permit held by the Seller or give any Governmental Body the right to terminate,
revoke, suspend or modify any Permit held by the Seller; (c) violate any
Organizational Document of the Seller; (d) violate, conflict with, result in a
breach of, constitute a default under, result in the acceleration of or give any
Person the right to accelerate the maturity or performance of, or to cancel,
terminate, modify or exercise any remedy under, any Contract to which the Seller
or any Member is a party or by which the Seller or Member is bound or to which
any Purchased Asset is subject or under which the Seller or any Member has any
rights or the performance of which is guaranteed by the Seller or any Member; or
(e) result in any member of the Seller having the right to exercise dissenters’
appraisal rights. Except as set forth on Schedule 4.4, the Seller is not
required to notify, make any filing with, or obtain any Consent of any Person in
order to perform the Transactions.
4.5 Financial Statements.
(a) Attached to Schedule 4.5(a) are the unaudited balance sheet of the Seller as
of December 31, 2010, and its statement of income for the fiscal year then ended
(collectively, the “Financial Statements”). The Financial Statements present
fairly the financial condition and results of operations of the Seller as of and
for their respective dates.
(b) The Books and Records (i) are complete and correct in all material respects
and all transactions to which the Seller is or has been a party are accurately
reflected therein in all material respects on an accrual basis, (ii) reflect all
discounts, returns and allowances granted by the Seller with respect to the
periods covered thereby, (iii) have been maintained in accordance with customary
and sound business practices in the Sellers’ industry, (iv) form the basis for
the Financial Statements and (v) reflect in all material respects the assets,
liabilities, financial position, results of operations and cash flows of the
Seller on an accrual basis. All computer-generated reports and other computer
output included in the Books and Records are complete and correct in all
material respects and were prepared in accordance with sound business practices
based upon authentic data.
4.6 Absence of Certain Changes. Except as set forth on Schedule 4.6, since the
Balance Sheet Date:
(a) the Seller has not sold, leased, transferred or assigned any asset, other
than for fair consideration in the ordinary course of business;
(b) the Seller has not experienced any damage, destruction or loss (whether or
not covered by insurance) to its property or assets in excess of $50,000;
(c) the Seller has not entered into any Contract (or series of related
Contracts) involving the payment or receipt of more than $50,000 or that cannot
be terminated without penalty on less than six months notice, and no Person has
accelerated, terminated, modified or canceled any Contract (or series of related
Contracts) involving more than $50,000 to which the Seller is a party or by
which the Seller or any of its assets are bound;
(d) no Encumbrance (other than any Permitted Encumbrance) has been imposed upon
any asset of the Seller;
(e) the Seller has not made any capital expenditure (or series of related
capital expenditures) involving more than $50,000 or made any capital investment
in, any loan to, or any acquisition of the securities or assets of, any other
Person (or series of related capital investments, loans or acquisitions)
involving more than $50,000;

 

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(f) the Seller has not issued, created, incurred or assumed any Indebtedness (or
series of related Indebtedness) involving more than $50,000 in the aggregate or
delayed or postponed the payment of accounts payable or other Liabilities beyond
the original due date;
(g) the Seller has not canceled, compromised, waived or released any right or
claim (or series of related rights or claims) or any Indebtedness (or series of
related Indebtedness) owed to it, in any case involving more than $50,000;
(h) the Seller has not issued, sold or otherwise disposed of any of its Equity,
or granted any options, warrants or other rights to acquire (including upon
conversion, exchange or exercise) any of its Equity or declared, set aside, made
or paid any dividend or distribution with respect to its Equity (whether in cash
or in kind) or redeemed, purchased or otherwise acquired any of its Equity or
amended any of its Organizational Documents;
(i) the Seller has not (i) conducted the Business outside the ordinary course of
business consistent with past practices or (ii) made any loan to, or entered
into any other transaction with, any of its directors, managers, members,
officers or employees on terms that would not have resulted from an arms-length
transaction;
(j) the Seller has not made, rescinded or changed any Tax election, changed any
Tax accounting period, adopted or changed any accounting method, filed any
amended Tax return, entered into any closing agreement, settled any Tax claim,
assessment or Liability, surrendered any right to claim a refund of Taxes,
consented to any extension or waiver of the limitation period applicable to any
Tax claim or assessment, or taken any other similar action relating to the
filing of any Tax Return or the payment of any Tax in respect of, or that
otherwise relates to, any of the Purchased Assets (whether directly or
indirectly);
(k) there has not been any Proceeding commenced nor, to the Knowledge of the
Seller, threatened or anticipated relating to or affecting the Seller, the
Business or any asset owned or used by the Seller;
(l) there has not been (i) any loss of any material customer, distribution
channel, sales location or source of supply of Inventory, utilities or contract
services or the receipt of any notice that such a loss may be pending, (ii) any
occurrence, event or incident related to the Seller outside of the ordinary
course of business or (iii) any material adverse change in the Business,
operations, properties, prospects, assets, Liabilities or condition (financial
or otherwise) of the Seller and no event has occurred or circumstance exists
that may result in any such material adverse change; and
(m) the Seller has not agreed or committed to any of the foregoing.
4.7 No Undisclosed Liabilities. Except as set forth on Schedule 4.7, the Seller
has no outstanding Liability and, to the Knowledge of Seller, no basis exists
for any Liability, except for (a) Liabilities under executory Contracts that are
either listed on Schedule 4.12 or are not required to be listed thereon,
excluding Liabilities for any breach of any executory Contract, (b) Liabilities
to the extent reflected or reserved against on the Balance Sheet and (c) current
Liabilities incurred in the ordinary course of business since the Balance Sheet
Date (none of which results from, arises out of, relates to, is in the nature
of, or was caused by any breach of Contract, breach of warranty, tort,
infringement or violation of Law). All of the Assumed Liabilities were incurred
by the Seller in the ordinary course of business.

 

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4.8 Title to and Sufficiency of Assets. Except as set forth on Schedule 4.8, the
Seller has good and marketable title to, or a valid leasehold interest in, the
Purchased Assets, free and clear of any Encumbrances except Permitted
Encumbrances. Except as set forth on Schedule 4.8, the Purchased Assets include
all tangible and intangible property and assets necessary (a) for the continued
conduct of the Business after Closing (i) in the same manner as conducted prior
to Closing and (ii) in compliance in all material respects with all applicable
Laws, Material Contracts and Permits as of the Closing and (b) to perform all of
the Assumed Liabilities and obligations of the Business as they exist at Closing
and (c) for the production of 20,000 Appliances from the Closing Date through
December 31, 2011. The transfer of the Purchased Assets hereunder will convey to
the Buyer good, valid and indefeasible title to the Purchased Assets, free and
clear of any Encumbrances except Permitted Encumbrances.
4.9 Tangible Personal Property; Condition of Purchased Assets. Schedule 4.9
lists each item of Tangible Personal Property that has a net book value in
excess of $500,000 and its net book value. The Purchased Assets are free from
material defects, in good operating condition and repair and adequate for the
uses to which they are being put. None of the Purchased Assets is in need of
maintenance or repairs, except for ordinary, routine maintenance and repairs
that are not material in nature or cost to such Purchased Assets or other
tangible asset.
4.10 Intentionally Omitted.
4.11 Real Property. The Seller does not own, and has never owned, any real
property. The only real property leased, subleased or otherwise occupied or used
by the Seller is the real property that is the subject of the Lease. The Seller
is not a party to or bound by any Contract (including any option) for the
purchase of any real estate interest or any Contract for the lease to or from
the Seller of any real estate interest not currently in possession of the
Seller.
4.12 Contracts.
(a) Schedule 4.12(a) lists the following Contracts to which the Seller is a
party or by which the Seller is bound or to which any asset of the Seller is
subject or under which the Seller has any rights or the performance of which is
guaranteed by the Seller (collectively, with the Lease, Licenses and Insurance
Policies, the “Material Contracts”): (i) each Contract (or series of related
Contracts) that involves delivery or receipt of products or services of an
amount or value in excess of $50,000, that was not entered into in the ordinary
course of business, or that involves expenditures or receipts in excess of
$50,000; (ii) each lease, rental or occupancy agreement, license, installment
and conditional sale agreement, and other Contract affecting the ownership of,
leasing of, title to, use of, or any leasehold or other interest in, any real or
personal property (except personal property leases and installment and
conditional sales agreements having a value per item or aggregate payments of
less than $50,000 and with terms of less than one year), including each Lease
and License; (iii) each licensing agreement, assignment, consent agreement,
coexistence agreement, settlement agreement or other Contract with respect to
Intellectual Property, including any agreement with any current or former
employee, consultant, or contractor regarding the appropriation or the
non-disclosure of any Intellectual Property; (iv) each joint venture,
partnership or Contract involving a sharing of profits, losses, costs or
Liabilities with any other Person; (v) each Contract containing any covenant
that purports to restrict the business activity of the Seller or limit the
freedom of the Seller to engage in any line of business or to compete with any
Person; (vi) each Contract providing for payments to or by any Person based on
sales, purchases or profits, other than direct payments for goods; (vii) each
power of attorney; (viii) each Contract entered into other than in the ordinary
course of business that contains or provides for an express undertaking by the
Seller to be responsible for consequential, incidental or punitive damages;
(ix) each Contract (or series of related Contracts) for capital expenditures in
excess of $50,000; (x) each written warranty, guaranty or other similar
undertaking with respect to contractual performance other than in the ordinary
course of business; (xi) each Contract for Indebtedness; (xii) each employment
or consulting Contract; (xiii) each Contract to which any Member or any Related
Person of any Member is a party or is otherwise bound; and (xiv) each Contract
not terminable without penalty on less than six months notice.

 

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(b) The Seller has delivered to the Buyer a correct and complete copy of each
written Material Contract and a written summary setting forth the terms and
conditions of each other Material Contract. Each Material Contract, with respect
to the Seller, is legal, valid, binding, enforceable, in full force and effect
and will continue to be so on identical terms following the Closing Date. Each
Material Contract, with respect to the other parties to such Material Contract,
to the Knowledge of the Seller, is legal, valid, binding, enforceable, in full
force and effect and will continue to be so on identical terms following the
Closing Date. The Seller is not in breach or default, and no event has occurred
that with notice or lapse of time would constitute a breach or default, or
permit termination, modification or acceleration, under any Material Contract.
To the Knowledge of the Seller, no other party is in breach or default, and no
event has occurred that with notice or lapse of time would constitute a breach
or default, or permit termination, modification or acceleration, under any
Material Contract. No party to any Material Contract has repudiated any
provision of any Material Contract.
4.13 Intellectual Property.
(a) The Seller owns or has the right to use all Intellectual Property necessary
or prudent for the operation of the Business as presently conducted. Each item
of Intellectual Property owned, licensed or used by the Seller immediately prior
to the Closing will be owned, licensed or available for use by the Buyer on
identical terms and conditions immediately following the Closing. The Seller has
taken all necessary and prudent action to maintain and protect each item of
Intellectual Property that it owns, licenses or uses. Each item of Intellectual
Property owned, licensed or used by the Seller is valid and enforceable and
otherwise fully complies with all Laws applicable to the enforceability thereof.
(b) Neither the operation of the Business, the Purchased Assets, the
Intellectual Property used in the Business nor the Seller has violated or
infringed upon or otherwise come into conflict with any Intellectual Property of
any third party, and to the Knowledge of the Seller, the Seller has not received
any notice alleging any such violation, infringement or other conflict. To the
Knowledge of the Seller, no third party has infringed upon or otherwise come
into conflict with any Intellectual Property owned by the Seller.
(c) Schedule 4.13(c) identifies each patent or registration (including
copyright, trademark and service mark and domain name) that is or was owned by
the Seller (whether active and in force or abandoned, lapsed, canceled or
expired) with respect to any of its Intellectual Property, identifies each
patent application or application for registration (whether pending, abandoned,
lapsed, canceled or expired) that the Seller has made with respect to any of its
Intellectual Property, identifies each license, agreement or other permission
that the Seller has granted to any third party (whether active and in force or
terminated, canceled or expired) with respect to any Intellectual Property. The
Seller has delivered to the Buyer correct and complete copies of all such
patents, registrations, applications, licenses, agreements and permissions (or,
if oral, written summaries thereof) and has made available to the Buyer correct
and complete copies of all other written documentation evidencing ownership and
prosecution (if applicable) of each such item. Schedule 4.13(c) also identifies
each trade name or unregistered trademark or service mark owned by the Seller.
With respect to each item of Intellectual Property required to be identified in
Schedule 4.13(c) and except as expressly set forth on Schedule 4.13(c): (i) the
Seller possesses all right, title and interest in and to the item, free and
clear of any Encumbrance; (ii) the item is not subject to any Order; (iii) no
Proceeding has occurred, is pending or, to the Knowledge of the Seller, is
threatened or anticipated that challenges the legality, validity,
enforceability, use or ownership of the item; and (iv) the Seller has not agreed
to indemnify any Person for or against any interference, infringement,
misappropriation or other conflict with respect to the item.

 

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(d) Schedule 4.13(d) identifies each item of Intellectual Property that any
Person other than the Seller owns and that the Seller uses pursuant to a
written, verbal or implied license, agreement or permission (a “License”). With
respect to each item of Intellectual Property required to be identified in
Schedule 4.13(d): (i) to the Knowledge of the Seller, such item is not subject
to any Order; (ii) to the Knowledge of the Seller, no Proceeding has occurred,
is pending or is threatened or anticipated that challenges the legality,
validity or enforceability of such item; and (iii) the Seller has not granted
any sublicense or similar right with respect to the License relating to such
item.
4.14 Tax.
(a) The Seller has timely filed with the appropriate Governmental Body all Tax
Returns that the Seller is required to have filed prior to the date hereof. All
Tax Returns filed by the Seller are true, correct and complete in all respects.
All Taxes owed (or to be remitted) by the Seller (whether or not shown on any
Tax Return) have been timely paid to the appropriate Governmental Body. No event
has occurred which could impose on Buyer any successor or transferee liability
for any Taxes in respect of the Seller. No claim has been made by any
Governmental Body in a jurisdiction where the Seller does not file Tax Returns
that the Seller is or may be subject to the payment, collection or remittance of
any Tax of that jurisdiction or is otherwise subject to taxation by that
jurisdiction. There are no Encumbrances on any of the assets of the Seller that
arose in connection with, or otherwise relate to, any failure (or alleged
failure) to pay any Tax. Since the Balance Sheet Date, the Seller has not
incurred any Liability for Taxes outside the ordinary course of business.
(b) The Seller has withheld or collected, and paid to the appropriate
Governmental Body, all Taxes required to have been withheld or collected and
remitted, and complied with all information reporting and back-up withholding
requirements, and has maintained all required records with respect thereto, in
connection with amounts paid or owing to any employee, customer, creditor,
equityholder, independent contractor, or other third party. The Buyer will not
be required to withhold any amounts upon the transfer of the Purchased Assets to
the Buyer.
(c) There is no basis for any Governmental Body to, and neither the Seller nor
any director or officer (or employee responsible for Tax matters) of the Seller
expects any Governmental Body to, assess any additional Taxes for any period for
which Tax Returns have been filed. There is no dispute or claim concerning any
Liability for Taxes paid, collected or remitted by the Seller either (i) claimed
or raised by any Governmental Body in writing or (ii) as to which the Seller has
Knowledge.
(d) The Seller has not waived any statute or period of limitations with respect
to any Tax or agreed, or been requested by any Governmental Body to agree, to
any extension of time with respect to any Tax. No extension of time within which
to file any Tax Return of the Seller has been requested, granted or currently is
in effect.
(e) The Seller is, and since its organization has been, treated as a partnership
for U.S. federal and applicable state income Tax purposes. The Seller has not
made any payments, is not obligated to make any payments, and is not a party to
any agreement that under certain circumstances could obligate it to make any
payments that will not be deductible under Code § 280G or Code § 162(m). The
Seller has not been a United States real property holding corporation within the
meaning of Code § 897(c)(2) during the applicable period specified in Code §
897(c)(1)(A)(ii). The Seller has disclosed on its federal income Tax Returns all
positions taken therein that could give rise to a substantial understatement of
federal income Tax within the meaning of Code § 6662. The Seller is not a party
to any Tax allocation, sharing, reimbursement or similar agreement. The Seller
has no Liability for Taxes of any Person under Treasury Regulation § 1.1502-6
(or any similar provision of any other Law), as a transferee or successor, by
Contract, or otherwise. No Purchased Asset constitutes “tax-exempt use property”
or “tax-exempt bond financed property” within the meaning of Code § 168. No
Purchased Asset is an interest, directly or indirectly, in any joint venture,
partnership, limited liability company or other entity that is treated as a
partnership for U.S. federal, state or local income Tax purposes. No Purchased
Asset is subject to the anti-churning provisions of Code § 197(f)(9) or the
Treasury Regulations promulgated thereunder.

 

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(f) The Seller has not, directly or indirectly, participated in any transaction
(including, the transactions contemplated by this Agreement) that would
constitute (i) a “reportable transaction” or “listed transaction” as defined in
Treasury Regulation § 1.6011-4 or (ii) a “tax shelter” as defined in Code § 6111
and the Treasury Regulations thereunder.
(g) Schedule 4.14 (i) contains a list of all states, territories and other
jurisdictions (whether domestic or foreign) in which the Seller has filed a Tax
Return at any time during the six-year period ending on the date hereof,
(ii) identifies those Tax Returns that have been audited, (iii) identifies those
Tax Returns that currently are the subject of audit, (iv) lists all Tax rulings
and similar determinations requested or received by, or otherwise relate to, the
Seller, and (v) contains a complete and accurate description of all material Tax
elections that were made by or on behalf of the Seller. The Seller has delivered
or made available to the Buyer true, correct and complete copies of all Tax
Returns filed by, and all examination reports, and statements of deficiencies
assessed against or agreed to by, the Seller during the six-year period ending
on the date hereof.
(h) Schedule 4.14 lists each agreement, contract, plan or other arrangement
(whether or not written and whether or not an Employee Benefit Plan) to which
the Seller is a party that is a “nonqualified deferred compensation plan” within
the meaning of Code §409A and the Treasury Regulations promulgated hereunder.
Each such nonqualified deferred compensation plan (i) complies, and is operated
and administered in accordance, with the requirements of Code §409A, the
Treasury Regulations promulgated hereunder and any other IRS guidance issued
thereunder and (ii) has been operated and administered in good faith compliance
with Code §409A from the period beginning on January 1, 2005.
4.15 Legal Compliance. Except as set forth on Schedule 4.15(a), the Seller is,
and has been, in compliance in all material respects with all applicable Laws
and Permits. Except as set forth on Schedule 4.15(a), no Proceeding is pending,
nor since the Seller’s organization, has been filed or commenced, against the
Seller alleging any failure to comply with any applicable Law or Permit. The
Seller has not received any written notice from any Person regarding any actual,
alleged or potential violation by the Seller of any Law or Permit or any
cancellation, termination or failure to renew any Permit held by the Seller.
Schedule 4.15(b) contains a complete and accurate list of each Permit held by
the Seller or that otherwise relates to the Business or any asset owned or
leased by the Seller and states whether each such Permit is transferable. Each
Permit listed or required to be listed on Schedule 4.15(b) is valid and in full
force and effect. The Permits listed on Schedule 4.15(b) constitute all of the
Permits necessary to allow the Seller to lawfully conduct and operate the
Business as currently conducted and operated and to own and use its assets as
currently owned and used.
4.16 Litigation. There is no Proceeding in the past, pending or, to the
Knowledge of the Seller, threatened or anticipated relating to or affecting
(a) the Seller or the Business or any asset owned or used by it or (b) the
Transactions. To the Knowledge of the Seller, no event has occurred or
circumstance exists that would reasonably be expected to give rise to or serve
as a basis for the commencement of any such Proceeding. There is no outstanding
Order to which the Seller or any asset owned or used by it is subject.
Schedule 4.16 lists all Proceedings pending at any time, in which the Seller has
been named as a defendant (whether directly, by counterclaim or as a third-party
defendant) and all Proceedings pending at any time, in which the Seller has been
a plaintiff. Schedule 4.16 lists all Orders in effect at any time, to which the
Seller has been subject or any Purchased Asset is subject.

 

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4.17 Intentionally Omitted.
4.18 Environmental. Except as set forth on Schedule 4.18, the Seller and its
predecessors have complied and are in compliance with all Environmental Laws.
The Seller has obtained and complied with, and is in compliance with, all
Permits that are required pursuant to any Environmental Law for the occupation
of its facilities and the operation of the Business. All such required Permits
are set forth on Schedule 4.15(b). The Seller has not received any written
notice, report or other information regarding any actual or alleged violation of
any Environmental Law, or any Liabilities or potential Liabilities, including
any investigatory, remedial or corrective obligations, relating to it or its
facilities arising under any Environmental Law. Neither the Seller nor any of
its predecessors has treated, stored, disposed of, arranged for or permitted the
disposal of, transported, handled or released any Hazardous Substance in a
manner that has given or would give rise to any Liability, including any
Liability for response costs, corrective action costs, personal injury, property
damage, natural resources damages or attorney fees, pursuant to any
Environmental Law. Neither this Agreement nor the Transactions will result in
any Liability for site investigation or cleanup, or notification to or Consent
of any Person, pursuant to any “transaction-triggered” or “responsible property
transfer” Environmental Laws. The Seller has not, either expressly or by
operation of law, assumed or undertaken any Liability, including any obligation
for corrective or remedial action, of any other Person relating to any
Environmental Law.
4.19 Employees. To the Knowledge of the Seller, no employee, officer or director
of the Seller is a party to or bound by any agreement that (a) could adversely
affect the performance of his or her duties as an employee, officer or director
other than for the benefit of the Seller, (b) could adversely affect the ability
of the Seller to conduct the Business, (c) restricts or limits in any way the
scope or type of work in which he or she may be engaged other than for the
benefit of the Seller or (d) requires him or her to transfer, assign or disclose
information concerning his or her work to anyone other than the Seller.
4.20 Employee Benefits. There are no Employee Benefit Plans that the Seller
maintains, has maintained or to which the Seller contributes or has contributed,
has any obligation to contribute, has been required to contributed or has or had
any other Liability. Neither the Seller nor any other member of the “controlled
group” (as defined in Code § 1563) that includes the Seller contributes, has
contributed to, has been required to contribute, or as a result of the
Transactions will be required to contribute to any Multiemployer Plan or has any
Liability (including withdrawal liability as defined in ERISA § 4201) under any
Multiemployer Plan.
4.21 Suppliers. With respect to the twelve months most recently completed prior
to the date hereof, Schedule 4.21 lists the ten largest (by dollar volume)
suppliers of the Seller during such period (showing the dollar volume for each).
Since the Balance Sheet Date, no supplier listed on Schedule 4.21 has notified
the Seller of a likely decrease in the volume of sales to the Seller, or an
increase in the price that any such supplier will charge for products or
services sold to the Seller, or of the bankruptcy or liquidation of any such
supplier.
4.22 Transactions with Related Persons. Except as set forth in Schedule 4.22,
neither any equityholder, officer, director or employee of the Seller nor any
Related Person of any of the foregoing has (a) owned any interest in any asset
used in the Business, (b) been involved in any business transaction with the
Seller or (c) engaged in competition with the Seller. Except as set forth in
Schedule 4.22, neither any equityholder, officer, director or employee of the
Seller nor any Related Person of any of the foregoing (i) is a party to any
Contract with, or has any claim or right against, the Seller or (ii) has any
Indebtedness owing to the Seller. Except as set forth in Schedule 4.22, Seller
(A) has no claim or right against any equityholder, officer, director or
employee of the Seller or any Related Person of any of the foregoing or (B) has
no Indebtedness owing to any equityholder, officer, director or employee of the
Seller nor any Related Person of any of the foregoing.

 

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4.23 Insurance. Schedule 4.23 sets forth the following information with respect
to each Insurance Policy: the name of the insurer, the policy number, the name
of the policyholder, the period of coverage, and the amount of coverage. The
Seller has delivered to the Buyer true and complete copies of each Insurance
Policy and each pending application of the Seller for any insurance policy. All
premiums relating to the Insurance Policies have been timely paid. Schedule 4.23
describes any self-insurance arrangements affecting the Seller. Since its
organization the Seller has been covered by insurance in scope and amount
customary and reasonable for the businesses in which it has engaged during such
period. The Seller is in compliance with all obligations relating to insurance
created by Law or any Contract to which the Seller is a party. The Seller has
delivered or made available to the Buyer copies of loss runs and outstanding
claims as of a recent date with respect to each Insurance Policy.
4.24 Regulatory Matters.
(a) The Seller holds, and is operating in material compliance with, such Permits
of the United States Food and Drug Administration (the “FDA”) as are required
for the conduct of the Business as currently conducted (collectively, the “FDA
Permits”), and all such FDA Permits are in full force and effect. The Seller has
fulfilled and performed all of its material obligations with respect to the FDA
Permits, and no event has occurred which allows, or after notice or lapse of
time would allow, revocation or termination thereof or would result in any other
material impairment of the rights of the holder of any FDA Permit. The Seller
has operated and is currently in compliance in all material respects with
applicable Law, including the implementing regulations administered or enforced
by the FDA. The Seller has not received notice of any pending or threatened
Proceeding from the FDA alleging that any operation or activity of the Seller is
in violation of any applicable Law.
(b) Neither the Seller nor any Seller-operated product or manufacturing site
nor, to the Knowledge of the Seller, any contract manufacturer for any of the
Seller’s products has been subject to a shutdown or import or export prohibition
by the U.S. Federal Trade Commission, the FDA, the U.S. Department of Health and
Human Services Office of Inspector General (“HHS-OIG”) or any other Governmental
Body, has received any FDA Form 483 or other Governmental Body notice of
inspectional observations, “warning letters,” “untitled letters” or requests or
requirements to make changes to the Seller’s products, or similar correspondence
or notice from the FDA or other Governmental Body or related products or
alleging or asserting noncompliance with any applicable Law, Permit or such a
request or requirement of a Governmental Body, and, to the Knowledge of the
Seller, neither the FDA nor any other Governmental Body has threatened to take
any such action.
(c) The manufacture of the products by or on behalf of the Seller is being
conducted in compliance in all material respects with all applicable Permits and
Laws, including the FDA’s current good manufacturing practice regulations at 21
C.F.R. Part 110, and FDA’s requirements for bottled water at 21 C.F.R. § 165.110
for products sold in the United States.
(d) There have been no material recalls, field notifications, field corrections,
market withdrawals or replacements, warnings, “dear doctor” letters,
investigator notices, safety alerts or other notice of action relating to a
material alleged lack of safety, efficacy, or regulatory compliance of the
Seller’s products (“Safety Notices”) and to the Knowledge of the Seller, there
are no material complaints with respect to the Seller’s products that are
currently unresolved. There are no material Safety Notices or, to the Knowledge
of the Seller, material product complaints with respect to the Seller’s
products, and to the Knowledge of the Seller, there are no facts that would be
reasonably likely to result in (i) a material Safety Notice with respect to the
Seller’s products, (ii) a material change in labeling of the Seller’s products;
or (iii) a termination or suspension of marketing or testing of the Seller’s
products.

 

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4.25 Solvency. The Seller is not now insolvent nor will be rendered insolvent by
any of the Transactions. As used in this section, “insolvent” means that the sum
of the debts and other probable Liabilities of the Seller exceeds the present
fair saleable value of the Seller’s assets. Immediately after giving effect to
the Transactions: (a) the Seller will be able to pay its Liabilities (including
the Excluded Liabilities) as they become due in the usual course of business,
(b) the Seller will not have unreasonably small capital with which to conduct
its present or proposed business, (c) the Seller will have assets (calculated at
fair market value) that exceed its Liabilities and (d) taking into account all
pending and threatened litigation, final judgments against the Seller in actions
for money damages are not reasonably anticipated to be rendered at a time when,
or in amounts such that, the Seller will be unable to satisfy any such judgments
promptly in accordance with their terms and all other obligations of the Seller.
4.26 No Brokers’ Fees. The Seller has no Liability for any fee, commission or
payment to any broker, finder or agent with respect to the Transactions.
4.27 Securities Laws.
(a) The Seller acknowledges that the offer and sale of the Share Consideration
is intended to be exempt from registration under the Securities Act and all
applicable state securities Laws.
(b) The Seller has been furnished all of the materials relating to Primo and the
Share Consideration that have been requested and has been afforded an
opportunity to ask questions of, and receive answers from, management of Primo
in connection with the Share Consideration. The Seller has not been furnished
with any oral or written representation in connection with the Share
Consideration by or on behalf of Primo that it has relied on that is not
contained in this Agreement.
(c) The Seller: (i) is an “accredited investor” as defined in Rule 501 of
Regulation D under the Securities Act; (ii) has obtained, in the Seller’s
judgment, sufficient information to evaluate the merits and risks of the Share
Consideration; (iii) has sufficient knowledge and experience in financial and
business matters to evaluate the merits and risks associated with the Share
Consideration and to make an informed investment decision with respect thereto;
and (iv) has consulted with its own advisors with respect to the Share
Consideration.
(d) The Share Consideration is being acquired for the Seller’s own account for
investment and not for the benefit or account of any other Person and not with a
view to, or in connection with, any unlawful resale or distribution thereof. The
Seller fully understands and agrees that it must bear the economic risk of the
investment in the Share Consideration for an indefinite period of time because,
among other reasons, such Share Consideration has not been registered under the
Securities Act or under the securities Laws of any states, and, therefore, the
Share Consideration is comprised of “restricted securities” and cannot be
resold, pledged, assigned or otherwise disposed of unless they are subsequently
registered under the Securities Act and under the applicable securities Laws of
such states or an exemption from such registration is otherwise available.
Except as and solely to the extent set forth in the Registration Rights
Agreement, the Seller understands that Primo is not under any obligation to
register such Share Consideration on behalf of the Seller or to assist the
Seller in complying with any exemption from registration under the Securities
Act or applicable state securities Laws. The Seller understands that Primo may
require, as a condition to registering the transfer of such Share Consideration,
an opinion of counsel satisfactory to Primo to the effect that such transfer
does not violate such registration requirements.
(e) The Seller intends that the state securities Laws of Ohio alone (and not the
securities Laws of any other state) will apply to its acquisition of the Share
Consideration. The Seller meets all suitability standards imposed by the state
of Ohio relating to the purchase of the Share Consideration hereunder without
registering such Share Consideration under the securities Laws of such state.

 

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4.28 Disclosure. No representation or warranty contained in this Article IV and
no statement in any Schedule related thereto contains any untrue statement of
material fact or omits to state any material fact necessary to make the
statements therein not misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES REGARDING THE PRIMO PARTIES
The Primo Parties represent and warrant to the Seller as follows:
5.1 Organization. Primo is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation. The Buyer
is a limited liability company duly organized, validly existing and in good
standing under the laws of the jurisdiction of its formation. Primo has no
direct or indirect subsidiaries other than the Buyer, Primo Refill, LLC, Primo
Ice, LLC, Primo Refill Canada Corporation and Primo Direct, LLC (each a “Primo
Subsidiary” and together the “Primo Subsidiaries”), each of which is duly
organized, validly existing and in good standing under the laws of the state of
its formation. The Buyer has no Subsidiaries.
5.2 Capitalization.
(a) The entire authorized capital stock of Primo consists of (a) 70,000,000
shares of common stock, par value $0.001 per share, 19,123,884 shares of which
are outstanding as of January 31, 2011 and (b) 65,000,000 shares of preferred
stock, par value $0.001 per share (the “Preferred Shares”), none of which are
outstanding. All of the outstanding capital stock of Primo has been duly
authorized and validly issued and is fully paid, nonassessable and has been
issued in compliance with U.S. federal and state securities laws and
regulations. Except as set forth on Schedule 5.2 or contemplated under this
Agreement, there are no outstanding securities convertible or exchangeable into
capital stock of the Buyer or any options, warrants, purchase rights,
subscription rights, preemptive rights, conversion rights, exchange rights,
calls, puts, rights of first refusal or other contracts that could require Primo
to issue, sell or otherwise cause to become outstanding or to acquire,
repurchase or redeem capital stock of Primo. Primo does not directly or
indirectly own or control any direct or indirect equity interest in any Person
other than the Primo Subsidiaries. Primo owns all of the outstanding equity of
the Buyer.
(b) The Share Consideration will be duly authorized for issuance and sale to the
Seller pursuant to this Agreement and, when issued and delivered by Primo
pursuant to this Agreement against payment of the consideration set forth
herein, will be validly issued and fully paid and non-assessable. The shares of
Primo Stock underlying the Share Consideration conform in all respects with the
description of the Primo Stock contained Primo’s filings with the SEC. The
Seller will not be subject to personal liability by reason of being a holder of
the Primo Stock. The issuance of the Share Consideration is not subject to the
preemptive or other similar right of any securityholder of Primo. No further
approval or authority of the securityholders or board of directors of Promo will
be required for the issuance of the Share Consideration as contemplated herein.
5.3 Authority. Each Primo Party has full corporate or limited liability company
power and authority, as applicable, to execute and deliver this Agreement and
the other Transaction Documents to which such Primo Party is a party and to
perform its obligations hereunder and thereunder. The execution, delivery and
performance by each Primo Party of this Agreement and each other Transaction
Document to which such Primo Party is a party have been duly approved by all
requisite corporate or limited liability company action, as applicable, of the
respective Primo Parties. Except as such validity, binding effect or
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, receivership, conservatorship, fraudulent transfer, moratorium
(whether general or specific) or other Law now or hereafter in effect affecting
the enforceability of creditors’ rights generally, (a) this Agreement
constitutes the valid and legally binding obligation of such Primo Party,
enforceable against such Primo Party in accordance with the terms of this
Agreement and (b) upon the execution an delivery of each Transaction Document to
which each Primo Party is a party, such Transaction Document will constitute the
valid and legally binding obligation of such Primo Party, enforceable against
such Primo Party in accordance with the terms of such Transaction Document.

 

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5.4 No Conflicts. Except as set forth on Schedule 5.4, neither the execution and
delivery of this Agreement nor the performance of the Transactions will,
directly or indirectly, with or without notice or lapse of time: (a) violate any
Law to which any Primo Party is subject; (b) violate any Organizational Document
of any Primo Party; or (c) violate, conflict with, result in a breach of,
constitute a default under, result in the acceleration of or give any Person the
right to accelerate the maturity or performance of, or to cancel, terminate,
modify or exercise any remedy under, any Contract to which any Primo Party is a
party or by which any Primo Party is bound or the performance of which is
guaranteed by any Primo Party.
5.5 Litigation. Except as set forth on Schedule 5.5, there is no Proceeding
pending or, to the Knowledge of any Primo Party, threatened or anticipated
relating to or affecting (a) any Primo Party or any material asset owned or used
by it, or (b) the Transactions. To the Knowledge of the Primo Parties, no event
has occurred or circumstance exists that would reasonably be expected to give
rise to or serve as a basis for the commencement of any such Proceeding. There
is no outstanding Order to which the Buyer or any asset owned or used by it is
subject.
5.6 No Material Adverse Effect. Except as disclosed in the publicly-available
reports filed by Primo with the SEC, since September 30, 2010, no change has
occurred in the business, operations, properties or other assets, liabilities,
condition (financial or otherwise) or results of operations of any Primo Party
that could reasonably be expected, either alone or together with all other such
changes, to have a Material Adverse Effect on the Primo Parties taken as a
whole.
5.7 No Brokers’ Fees. No Primo Party has any Liability for any fee, commission
or payment to any broker, finder or agent with respect to the Transactions for
which the Seller could be liable.
5.8 Securities Laws.
(a) To the Knowledge of the Primo Parties, there exist no facts or circumstances
that reasonably could be expected to prohibit or delay the preparation and
filing of a Registration Statement on Form S-1 under the Securities Act that
will be available for the resale of the Share Consideration by the Seller and/or
the Members.
(b) The documents filed by Primo with the SEC, as of their respective filing
date, did not contain any untrue statement of material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein in light of the circumstances in which they were made not misleading.
(c) The documents filed by Primo with the SEC and the documents incorporated
therein by reference or attached as exhibits thereto, at the time they became
effective or were filed or furnished with the SEC, as the case may be, complied
in all material respects with the requirements of the Exchange Act. Primo has
been subject to the reporting requirements of Section 13 or 15(d) of the
Exchange Act since November 4, 2010. Since November 4, 2010, Primo has filed all
documents required to be filed by it with the SEC pursuant to Section 13 or
15(d) of the Exchange Act. Prior to November 4, 2010, Primo was not required to
file any documents with the SEC pursuant to Section 13 or 15(d) of the Exchange
Act

 

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(d) Primo is in compliance with the requirements of the NASDAQ Global Market for
continued listing of the Primo Stock. Primo has taken no action designed to, or
likely to have the effect of, terminating the listing of the Primo Stock on the
NASDAQ Global Market, nor has Primo received any written notification that the
NASDAQ is contemplating terminating such listing.
ARTICLE VI
PRE-CLOSING COVENANTS
The Parties agree as follows with respect to the period between the date hereof
and the Closing:
6.1 Best Efforts. Each Party will use its reasonable best efforts to take all
actions necessary, proper or advisable in order to perform the Transactions
(including satisfaction, but not waiver, of the closing conditions set forth in
Article VII).
6.2 Consents and Approvals. As promptly as practicable after the date hereof,
the Seller and the Members will make all filings required by Law to be made by
them in order to perform the Transactions contemplated to be performed on or
before the Closing Date. The Seller and the Members will cooperate with the
Buyer and its Representatives with respect to all filings that the Buyer makes
in connection with the Transactions. As promptly as practicable after the date
hereof, the Seller will solicit the Consents set forth on Schedule 4.4, but not
prior to the Buyer’s approval of the form and substance of each such Consent,
which approval will not be unreasonably withheld or delayed. The Seller will use
its reasonable best efforts (at the Seller’s expense), and the Buyer will
cooperate in all reasonable respects with the Seller to obtain prior to the
Closing all such Consents; provided, however, that such cooperation will not
include any requirement to pay any consideration, to agree to any undertaking or
modification to a Contract or Permit or to offer or grant any financial
accommodation not required by the terms of such Contract or Permit and the
Seller shall not be required to pay any such consideration or grant any such
financial accommodation in excess of $5,000. The Members will vote all of their
Equity of the Seller in favor of approving this Agreement and the Transactions.
6.3 Operation of Business. The Seller will: (a) conduct the Business only in the
ordinary course of business; (b) use its commercially reasonable efforts to
maintain the Business and the properties, physical facilities and operations of
the Seller, preserve intact the current business organization of the Seller,
keep available the services of the current officers, employees and agents of the
Seller, and maintain the relations and goodwill with suppliers, potential
customers, lessors, licensors, lenders, creditors, employees, agents and others
having business relationships with the Seller; (c) confer with the Buyer
concerning matters of a material nature to the Seller; (d) confer with the Buyer
with respect to, and provide the Buyer with copies of, Tax Returns before filing
and refrain from making any material new election with respect to Taxes; and
(e) deliver to the Buyer monthly financial statements of the Seller as they
become available to the Seller and otherwise report periodically to the Buyer
concerning the status of the Business and the operations and finances of the
Seller. Neither the Seller nor any Member will engage in any practice, take any
action, fail to take any action, or enter into any transaction as a result of
which any change or event listed in Section 4.6 is likely to or does occur.
6.4 Full Access. The Seller will: (a) permit the Buyer and its Representatives
to have full access to all premises, properties, personnel (including the
opportunity to discuss the affairs of the Seller with such personnel), books,
records, Contracts, documents and data of or pertaining to the Seller,
(b) furnish the Buyer and its Representatives with copies of all such books,
records, Tax Returns, Contracts, documents and data as the Buyer may reasonably
request and (c) furnish the Buyer and its Representatives with such additional
financial, operating, and other data and information (including compilations and
analyses thereof) as the Buyer may reasonably request.
6.5 Notice of Developments. The Seller and the Members will immediately notify
the Buyer in writing of (a) any fact or condition existing prior to or on the
date hereof that constitutes a breach of any representation or warranty of the
Seller or any Member in this Agreement and (b) any fact or condition developing
after the date hereof that would constitute a breach of any representation or
warranty of the Seller or any Member in this Agreement if such representation or
warranty were made on the date of the occurrence or discovery of such fact or
condition.

 

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6.6 Exclusivity. The Seller and each Member agree that it will not, and will
cause its Representatives not to, directly or indirectly: (a) solicit, initiate
or encourage any inquiry, proposal, offer or contact from any Person (other than
the Buyer and its Affiliates and Representatives) relating to any transaction
involving the sale of any equity interest or assets of the Seller or any
acquisition, divestiture, merger, share exchange, consolidation, business
combination, recapitalization, redemption, financing or similar transaction
involving the Seller (in each case, an “Acquisition Proposal”); or
(b) participate in any discussion or negotiation regarding, furnish any
information with respect to, assist or participate in, or facilitate in any
other manner any Acquisition Proposal. If any Person makes an Acquisition
Proposal, the Seller and the Members will immediately notify the Buyer of such
Acquisition Proposal and all related details. Each Member agrees not to vote its
Equity of the Seller in favor of any transaction associated with an Acquisition
Proposal.
6.7 Confidentiality, Press Releases and Public Announcements. Each Party will,
and will cause its respective Representatives to, maintain in confidence all
information received from another Party or a Representative of another Party in
connection with this Agreement or the Transactions (including the existence and
terms of this Agreement and the Transactions) and use such information solely to
evaluate the Transactions, unless (a) such information is already known to the
receiving Party or its Representatives, (b) such information is subsequently
disclosed to the receiving Party or its Representatives by a third party that,
to the Knowledge of the receiving Party, is not bound by a duty of
confidentiality, (c) such information becomes publicly available through no
fault of the receiving Party, (d) the receiving Party in good faith believes
that the use of such information is necessary or appropriate in making any
filing or obtaining any Consent required for the performance of the Transactions
(in which case the receiving Party will use its best efforts to advise the other
Parties prior to making the disclosure) or (e) the receiving Party in good faith
believes that the furnishing or use of such information is required by or
necessary or appropriate in connection with any Proceeding, Law or any listing
or trading agreement concerning its publicly-traded securities (in which case
the receiving Party will use its best efforts to advise the other Parties prior
to making the disclosure). The Seller will not issue any press release or make
any public announcement relating to the subject matter of this Agreement until
such time as the Buyer has issued a press release or public announcement
relating to the subject matter of this Agreement. The Seller and the Buyer will
consult with each other concerning the means by which any supplier or potential
customer of the Seller or any other Person having any business relationship with
the Seller will be informed of the Transactions, and the Buyer will have the
right to be present for any such communication.
6.8 No Equity Transfers. No Member will assign, pledge, sell or otherwise
transfer or encumber any Equity of the Seller or any options, warrants or other
Contract pursuant to which such Member is entitled to purchase any Equity of the
Seller without the prior written consent of the Buyer, which consent will not be
unreasonably withheld.
ARTICLE VII
CLOSING CONDITIONS
7.1 Conditions to the Buyer’s Obligations. The Buyer’s obligation to perform the
Transactions contemplated to be performed on or about the Closing Date is
subject to satisfaction, or written waiver by the Buyer, of each of the
following conditions:

 

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(a) (i) All of the representations and warranties of each Member in this
Agreement must have been accurate in all material respects as of the date hereof
and must be accurate in all material respects as if made on the Closing Date,
(ii) each Member must have performed and complied with all of its covenants and
agreements in this Agreement to be performed prior to or at the Closing, and
(iii) the Members’ Representative must deliver to the Buyer at the Closing a
certificate, in form and substance reasonably satisfactory to the Buyer,
confirming satisfaction, with respect to each Member, of the conditions in
clauses (i) and (ii) above;
(b) (i) All of the representations and warranties of the Seller in this
Agreement must have been accurate in all material respects as of the date hereof
and must be accurate in all material respects as if made on the Closing Date,
except in each case to the extent any such representation or warranty contains a
materiality qualification, in which case such representation or warranty must
have been and must be accurate in all respects, (ii) the Seller must have
performed and complied with all of its covenants and agreements in this
Agreement to be performed prior to or at the Closing; and (iii) the Seller must
deliver to the Buyer at the Closing a certificate, in form and substance
reasonably satisfactory to the Buyer, confirming satisfaction of the conditions
in clauses (i) and (ii) and in Section 7.1(e);
(c) Each of the following documents must have been delivered to the Buyer and
must be dated as of the Closing Date (unless otherwise indicated):
(i) a bill of sale and assignment and assumption agreement executed by the
Seller, in the form of Exhibit D (the “Bill of Sale”);
(ii) the Assignment of Intellectual Property executed by the Seller;
(iii) the Lock-Up Agreements, executed by the Seller;
(iv) the Quitclaim Assignment executed by the Seller and Rising Phoenix Company;
(v) the Registration Rights Agreement, executed by the Seller;
(vi) the Noncompetition Agreement, executed by the Seller, Carl Santoiemmo and
JoAnn Santoiemmo;
(vii) the Consulting Agreements, executed by Carl Santoiemmo;
(viii) payoff letters with respect to the Secured Debt, dated as of the Closing
Date or within a reasonable time prior to the Closing Date, and all
documentation necessary or desirable to obtain releases of all Encumbrances
related to such Secured Debt, including appropriate UCC termination statements,
in each case in form and substance reasonably satisfactory to the Buyer;
(ix) a certificate of the secretary of the Seller, in form and substance
reasonably satisfactory to the Buyer, certifying that (A) attached thereto is a
true, correct and complete copy of (1) the articles of organization of the
Seller, certified as of a recent date by the Secretary of State of the Seller’s
state of organization and the operating agreement of the Seller, (2) to the
extent applicable, resolutions duly adopted by the managers and members of the
Seller authorizing the performance of the Transactions and the execution and
delivery of the Transaction Documents to which it is a party and (3) a
certificate of existence or good standing as of a recent date of the Seller from
the Seller’s state of organization and a certificate of good standing as of a
recent date of the Seller from each state in which it is qualified to conduct
business, (B) the resolutions referenced in subsection (A)(2) are still in
effect and (C) nothing has occurred since the date of the issuance of the
certificate(s) referenced in subsection (A)(3) that would adversely affect the
Seller’s existence or good standing in any such jurisdiction;

 

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(x) such other bills of sale, assignments, certificates of title and other
instruments of transfer, all in form and substance reasonably satisfactory to
the Buyer, as are necessary or desirable to convey fully and effectively to the
Buyer all of the Purchased Assets in accordance with the terms of this
Agreement; and
(xi) such other documents as the Buyer may reasonably request for the purpose of
(A) evidencing the accuracy of the Seller’s and the Members’ representations and
warranties, (B) evidencing the Seller’s and the Members’ performance of, and
compliance with, any covenant or agreement required to be performed or complied
with by the Seller or the Members, (C) evidencing the satisfaction of any
condition referred to in this Section 7.1, (D) vesting in the Buyer legal and
beneficial title to the Purchased Assets or (E) otherwise facilitating the
performance of the Transactions.
(d) Each Consent listed in Schedule 5.4 must have been obtained, delivered to
the Buyer and be in full force and effect.
(e) Since the date hereof, there must not have been an event that has caused a
Material Adverse Effect or could reasonably be expected to result in a Material
Adverse Effect, in each case with respect to the Seller.
(f) The Seller must have taken all appropriate limited liability company action
to cause its name to be changed to a name that does not include “Omnifrio” or
any variation thereof, and the Seller must have delivered to the Buyer
certificates or other appropriate documentation that will be adequate to allow
the Seller’s name to be so changed in the Seller’s jurisdiction of organization
and to make corresponding filings reflecting such name change in each
jurisdiction in which the Seller is qualified to do business. The Seller hereby
authorizes the Buyer to file after the Closing such certificates or
documentation in any such jurisdiction to effect such name change and to make
such corresponding filings.
7.2 Conditions to the Seller’s Obligations. The Seller’s and the Members’
obligations to perform the Transactions contemplated to be performed on or
before the Closing Date are subject to satisfaction, or written waiver by the
Seller, of the following conditions:
(a) (i) All of the representations and warranties of the Buyer in this Agreement
must have been accurate in all material respects as of the date hereof and must
be accurate in all material respects as if made on the Closing Date, (ii) the
Buyer must have performed and complied with all of its covenants and agreements
in this Agreement to be performed prior to or at the Closing and (iii) the Buyer
must deliver to the Seller at the Closing a certificate, in form and substance
reasonably satisfactory to the Seller, confirming satisfaction of the conditions
in clauses (i) and (ii) above.
(b) Each of the following documents must have been delivered to the Seller and
must be dated as of the Closing Date (unless otherwise indicated):
(i) the Bill of Sale, executed by the Buyer;
(ii) the Noncompetition Agreement, executed by the Buyer;
(iii) the Registration Rights Agreement, executed by Primo; and

 

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(iv) the Consulting Agreement, executed by the Buyer.
(c) Since the date hereof, there must not have been an event that has caused a
Material Adverse Effect or could reasonably be expected to result in a Material
Adverse Effect, in each case with respect to the Primo Parties.
ARTICLE VIII
TERMINATION
8.1 Termination Events. This Agreement may, by written notice given to the
Seller or the Buyer, as applicable, prior to the Closing, be terminated:
(a) by (i) the Buyer, if any representation or warranty made by the Seller or
any Member is inaccurate in any material respect or the Seller or any Member has
breached any covenant or agreement in this Agreement in any material respect or
(ii) the Seller, if any representation or warranty made by the Buyer is
inaccurate in any material respect or the Buyer has breached any covenant or
agreement in this Agreement in any material respect;
(b) by (i) the Buyer, if any condition in Section 7.1 (other than the condition
set forth in Section 7.1(d)) has not been satisfied or waived in writing by
April 29, 2011 or if satisfaction of any such condition is or becomes impossible
(in either case, for reasons other than the failure of the Buyer to comply with
its obligations under this Agreement) or (ii) the Seller, if any condition in
Section 7.2 (or condition set forth in Section 7.1(d)) has not been satisfied or
waived in writing by April 29, 2011 or if satisfaction of any such condition is
or becomes impossible (in either case, for reasons other than the failure of the
Seller or any Member to comply with such Party’s obligations under this
Agreement); provided, however, that if either the Buyer or the Seller notifies
the other Party in writing that it is exercising its termination right pursuant
to this Section 8.1(b) on or before May 9, 2011, the non-terminating Party shall
pay $250,000 in cash to the terminating Party within 30 days of demand therefor
and such payment shall be the exclusive remedy of the terminating Party under
this Agreement;
(c) by (i) the Buyer, if any condition in Section 7.1 has not been satisfied or
waived in writing by September 7, 2011 or if satisfaction of any such condition
is or becomes impossible (in either case, for reasons other than the failure of
the Buyer to comply with its obligations under this Agreement) or (ii) the
Seller, if any condition in Section 7.2 has not been satisfied or waived in
writing by September 7, 2011 or if satisfaction of any such condition is or
becomes impossible (in either case, for reasons other than the failure of the
Seller or any Member to comply with such Party’s obligations under this
Agreement); or
(d) by mutual consent of the Buyer and the Seller.
8.2 Effect of Termination. If this Agreement is terminated pursuant to
Section 8.1, all further obligations of the Parties under this Agreement will
terminate; provided, however, that the obligations in Section 6.7
(confidentiality) and Article XI (miscellaneous) will survive the termination.
Nothing in this Article VIII will release any Party from any Liability for any
breach of any representation, warranty, covenant or agreement in this Agreement.
ARTICLE IX
POST-CLOSING COVENANTS
The Parties agree as follows with respect to the period following the Closing:

 

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9.1 Rule 144. For a period of one year from the Closing Date, Primo shall use
its commercially reasonable efforts to comply with the requirements of Rule 144,
including the requirements of Rule 144(c)(1) with respect to public information
of Primo and the timely filing of all reports required to be filed by Primo
under the Exchange Act.
9.2 Payment of Excluded Liabilities. The Seller will, and the Members will cause
the Seller to, pay, perform and discharge the Excluded Liabilities as and when
due.
9.3 Payment of Assumed Liabilities. The Buyer will pay, perform and discharge
the Assumed Liabilities as and when due.
9.4 Bulk Transfer Compliance. Inasmuch as the Buyer is to assume the Assumed
Liabilities and the Seller is to pay, perform and discharge the Excluded
Liabilities, the Buyer and the Seller hereby mutually agree to waive compliance
with the provisions of any bulk transfer or sales laws, to the extent applicable
to the Transactions.
9.5 Tax Covenants.
(a) Payment of Transfer Taxes. The Seller will, at its own expense, file when
due all necessary Tax Returns and other documentation with respect to all such
transfer, documentary, sales, use, stamp, registration and other Taxes and fees,
including interest and penalties thereon (the “Transfer Taxes”) and, if required
by applicable Law, the Buyer will, and will cause its Affiliates to, join in the
execution of any such properly completed Tax Returns and other documentation.
The Seller will pay all Transfer Taxes when due.
(b) Cooperation on Tax Matters. The Buyer and the Seller will cooperate, as and
to the extent reasonably requested by any other party, in connection with the
filing and preparation of Tax Returns related to the Purchased Assets and any
Proceeding related thereto.
(c) Allocation of Ad Valorem Taxes. Each of the Seller and the Buyer shall be
responsible for its pro rata share of the current year’s personal property, ad
valorem and similar Taxes with respect to the Purchased Assets, prorated on a
calendar year basis as of the Closing Date. Notwithstanding the foregoing, the
Seller shall be responsible for all such Taxes for all prior calendar years and
periods prior to and including the Closing Date and all real property Taxes.
9.6 Consents. This Agreement will not constitute an assignment, attempted
assignment or agreement to assign any Contract or Permit to the extent that any
attempted assignment or agreement to assign such Contract or Permit without the
Consent of any Person would constitute a breach thereof or would impair the
rights of the Seller or the Buyer thereunder and such Consent is not obtained.
If any Consent set forth or required to be set forth on Schedule 4.4 has not
been obtained prior to or at the Closing or if the Seller has not complied with
the second-to-last sentence of Section 6.2, then the Seller will, and the
Members will cause the Seller to, use its reasonable best efforts to obtain such
Consent in the manner set forth in Section 6.2. Until such Consent is obtained,
or the Contract or Permit to which such Consent relates is novated or
terminated, to the extent permissible under such Contract or Permit, the Buyer
will be entitled to receive all of the Seller’s benefits under such Contract or
Permit and, to the extent it receives such benefits, will perform all of the
obligations of the Seller under such Contract or Permit. The Seller will, at the
Buyer’s request, do all such acts and things as the Buyer may reasonably request
to enable due performance of such Contract or Permit and to provide for the
Buyer the benefits, subject to the obligations, of such Contract or Permit.
Without limiting the generality of the foregoing, the Seller will provide all
reasonable assistance to the Buyer (at the Buyer’s request) to enable the Buyer
to enforce its rights under such Contract or Permit.

 

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9.7 Mail and Receivables. The Seller hereby irrevocably authorizes the Buyer
after the Closing to receive and open all mail and other communications received
by the Buyer and addressed or directed to the Seller and, to the extent relating
to the Business, the Purchased Assets or the Assumed Liabilities, to act with
respect to such communications in such manner as the Buyer may elect. If any
such communication does not relate to the Business, the Purchased Assets or the
Assumed Liabilities, the Buyer will forward such communication to the Seller.
The Seller will, and the Members will cause the Seller to, promptly deliver to
the Buyer the original of any mail or other communication received by the Seller
after the Closing that relates to the Business, the Purchased Asset or the
Assumed Liabilities. The Seller hereby irrevocably authorizes the Buyer after
the Closing to endorse, without recourse, the name of the Seller on any check or
any other evidence of indebtedness received by the Buyer on account of any of
the Purchased Assets or the Business. After the Closing, the Seller will, and
the Members will cause the Seller to, promptly remit to the Buyer any payment
relating to the Business or the Purchased Assets that the Seller receives.
9.8 Litigation Support. If any Party is evaluating, pursuing, contesting or
defending against any Proceeding in connection with (a) any Transaction or
(b) any fact, situation, circumstance, status, condition, activity, practice,
plan, occurrence, event, incident, action, failure to act, or transaction on or
prior to the Closing Date involving the Seller, each other Party will cooperate
with such Party and such Party’s counsel in the evaluation, pursuit, contest or
defense, make available its personnel, and provide such testimony and access to
its books and records as may be necessary in connection therewith. The
evaluating, pursuing, contesting or defending Party will reimburse each other
Party for its out-of-pocket expenses related to such cooperation (unless the
contesting or defending Party is entitled to indemnification therefor under
Section 10.1 without regard to Section 10.4).
9.9 Transition. After the Closing, at the Buyer’s request, the Seller will
cooperate with the Buyer in its efforts to continue and maintain for the benefit
of the Buyer those business relationships of the Seller existing prior to the
Closing, including relationships with lessors, lessees, employees, Governmental
Bodies, licensors, licensees, customers, suppliers and others, and the Seller
will satisfy the Excluded Liabilities in a manner that is not detrimental to any
of such relationships; provided, however, that the Buyer will reimburse the
Seller for its out-of-pocket expenses related to such cooperation (unless the
Buyer is entitled to indemnification with respect to the matter for which the
Buyer is seeking the Seller’s cooperation under Section 10.1 without regard to
Section 10.4). The Seller will refer all inquiries relating to the Business to
the Buyer.
9.10 Confidentiality. The Seller and each Member will, and will cause their
respective Affiliates and Representatives to, maintain the confidentiality of
the Confidential Information at all times, and will not, directly or indirectly,
use any Confidential Information for its own benefit or for the benefit of any
other Person or reveal or disclose any Confidential Information to any Person
other than authorized Representatives of the Buyer, except in connection with
this Agreement or with the prior written consent of the Buyer. The covenants in
this Section 9.10 will not apply to Confidential Information that ii) is or
becomes available to the general public through no breach of this Agreement by
the Seller, any Member or any of their respective Affiliates or Representatives
or, to the Knowledge of the Seller or any Member, breach by any other Person of
a duty of confidentiality to the Buyer or iii) the Seller is required to
disclose by applicable Law; provided, however, that the Seller will notify the
Buyer in writing of such required disclosure as much in advance as practicable
in the circumstances and cooperate with the Buyer to limit the scope of such
disclosure. At any time that the Buyer may request, the Seller and each Member
will, and will cause their respective Affiliates and Representatives to, turn
over or return to the Buyer all Confidential Information in any form (including
all copies and reproductions thereof) in their respective possession or control.
9.11 Change and Use of Name. The Seller and the Members will cease to use and
will not grant any license to use any name containing the term “Omnifrio” or any
name, slogan, logo or trademark that is similar to any of the trademarks
acquired by the Buyer pursuant hereto and will take such actions as the Buyer
may reasonably request to enable the Buyer and its Affiliates to use such name,
slogan, logo or trademark. The Buyer may refer to its business as formerly being
the Seller’s.

 

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9.12 Retention of and Access to Books and Records. The Buyer will retain for a
period consistent with the Buyer’s record-retention policies and practices the
Books and Records delivered to the Buyer. The Buyer also will provide the Seller
and its Representatives reasonable access thereto, during normal business hours
and on at least three Business Days’ prior written notice, to enable them to
prepare financial statements or tax returns or deal with tax audits. The Seller
will provide the Buyer and its Representatives reasonable access to those books
and records that are Excluded Assets, during normal business hours and on at
least three Business Days’ prior written notice, for any reasonable business
purpose specified by the Buyer in such notice.
9.13 Seller Information. The Seller will provide all information concerning the
Seller and the Business as Primo may request in order for Primo to (a) comply
with its obligations under all applicable securities Laws, including all filings
pursuant to the Exchange Act, and (b) make all other filings that Primo elects
to make or is required by Law and Governmental Bodies to make, including the
Exchange Act.
9.14 GAAP Financial Statements. No later than 30 days after the Closing Date,
the Seller shall deliver to the Buyer Financial Statements which have been
prepared in accordance with GAAP.
ARTICLE X
INDEMNIFICATION
10.1 Indemnification by the Sellers. After the Closing, subject to the terms and
conditions of this Article X,
(a) each Member, severally and not jointly, will indemnify and hold harmless the
Buyer and its Affiliates and Representatives from, and pay and reimburse the
Buyer and its Affiliates and Representatives for, all Losses directly or
indirectly relating to or arising from: (i) any breach or inaccuracy of any
representation or warranty made by such Member in Article III or in the
certificate delivered by the Members’ Representative pursuant to Section 7.1(a);
(ii) any breach of any covenant or agreement of such Member in this Agreement.
(b) the Seller and Carl Santoiemmo, jointly and severally, will indemnify and
hold harmless the Buyer and its Affiliates and Representatives from, and pay and
reimburse the Buyer and its Affiliates and Representatives for, all Losses
directly or indirectly relating to or arising from: (i) any breach or inaccuracy
of any representation or warranty made by the Seller in this Agreement or in the
certificate delivered by the Seller pursuant to Section 7.1(b); (ii) any breach
of any covenant or agreement of the Seller in this Agreement; (iii) any failure
to pay, perform or otherwise discharge any Excluded Liability as and when due or
any Liability arising out of or in connection with non-compliance with any “bulk
sales,” “bulk transfer” or any similar Law other than as a result of any failure
by the Buyer to discharge any Assumed Liability; or (iv) any claim by the
Seller, any Member or any Person claiming through or on behalf of the Seller or
any Member arising out of or relating to any act or omission by the Buyer or any
other Person in reliance upon instructions from or notices given by the Members’
Representative.
10.2 Indemnification by the Buyer. After the Closing, subject to the terms and
conditions of this Article X, the Primo Parties will indemnify and hold harmless
the Seller from, and pay and reimburse the Seller for, all Losses, directly or
indirectly, relating to or arising from: (a) any breach or inaccuracy of any
representation or warranty made by any Primo Party in this Agreement or in the
certificate delivered by the Buyer pursuant to Section 7.2(a); (b) any breach of
any covenant or agreement of any Primo Party in this Agreement; or (c) any
failure to pay, perform or otherwise discharge any Assumed Liability as and when
due.

 

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10.3 Survival and Time Limitations. All representations, warranties, covenants
and agreements of the Parties in this Agreement or any other certificate or
document delivered pursuant to this Agreement will survive the Closing. If the
Closing occurs, the Seller will have no Liability with respect to any claim for
any breach or inaccuracy of any representation or warranty in this Agreement or
any other certificate or document delivered pursuant to this Agreement or any
covenant or agreement in this Agreement to be performed and complied with prior
to the Closing Date, unless the Buyer notifies the Seller of such a claim on or
before the date fifteen (15) months after the Closing Date; provided, however,
that (a) any claim relating to Section 4.18 (environmental) or 4.20 (employee
benefits) may be made at any time until the date three years after the Closing
Date, (b) any claim relating to Section 4.14 (taxes) or 4.24 (regulatory
matters) may be made at any time until the date 90 days after the expiration of
the applicable statute or period of limitations (including any extension of such
statute or period of limitations) and (c) any claim relating to Section 4.1
(organization), 4.3 (authority), 4.4 (conflicts) or 4.8 (title to assets),
fraud, or any covenant or agreement to be performed or complied with at or after
the Closing may be made at any time without any time limitation. If the Closing
occurs, the Buyer will have no Liability with respect to any claim for any
breach or inaccuracy of any representation or warranty in this Agreement or any
other certificate or document delivered pursuant to this Agreement or any
covenant or agreement in this Agreement to be performed and complied with prior
to the Closing Date, unless the Members’ Representative notifies the Buyer of
such a claim on or before the date fifteen (15) months after the Closing Date;
provided, however, that any claim relating to Section 5.1 (organization) 5.2
(capitalization) 5.3 (authority) or 5.4 (conflicts), fraud or any covenant or
agreement to be performed or complied with at or after the Closing may be made
at any time without any time limitation. If the Buyer or the Members’
Representative, as applicable, provides proper notice of a claim within the
applicable time period set forth above, Liability for such claim will continue
until such claim is resolved.
10.4 Limitations on Indemnification.
(a) The Seller and Carl Santoiemmo will have no Liability with respect to the
matters described in Section 10.1(b)(i) until the total of all Losses with
respect to such matters exceeds $50,000 (the “Basket”), at which point the
Seller and Carl Santoiemmo will be obligated to indemnify for all Losses in
excess of the Basket; provided, however, that any claim relating to Section 4.3
(authority), 4.4 (conflicts), 4.8 (title to assets), 4.14 (taxes), 4.18
(environmental), 4.20 (employee benefits) or 4.26 (brokers) will not be subject
to or counted towards the Basket. The Seller’s and Carl Santoiemmo’s maximum
aggregate Liability with respect to the matters described in Section 10.1(b)(i)
will be limited to an amount equal to $3,287,500 (the “Cap”); provided, however,
that any claim relating to Section 4.3 (authority), 4.4 (conflicts), 4.8 (title
to assets), 4.14 (taxes), 4.18 (environmental), 4.20 (employee benefits) or 4.26
(brokers) or any covenant or agreement will not be subject to or counted towards
the Cap, but will be limited to an amount equal to the Purchase Price.
(b) The Buyer will have no Liability with respect to the matters described in
Section 10.2(a) until the total of all Losses with respect to such matters
exceeds $50,000 (the “Buyer Basket”), at which point the Buyer will be obligated
to indemnify for all Losses in excess of the Buyer Basket; provided, however,
that any claim relating to Section 5.1 (organization), 5.2 (capitalization), 5.3
(authority), 5.4 (conflicts), 5.6 (no material adverse effect), 5.7 (brokers) or
5.8 (securities laws) will not be subject to or counted towards the Buyer
Basket. The Buyer’s maximum aggregate Liability with respect to the matters
described in Section 10.2(a) will be limited to an amount equal to $3,287,500
(the “Buyer Cap”); provided, however, that any claim relating to Section 5.1
(organization), 5.2 (capitalization), 5.3 (authority), 5.4 (conflicts), 5.6 (no
material adverse effect), 5.7 (brokers) or 5.8 (securities laws) or any covenant
or agreement will not be subject to or counted towards the Buyer Cap, but will
be limited to an amount equal to the Purchase Price.

 

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(c) This Section 10.4 will not apply to fraud, including any fraudulent or
intentional breach of any representation or warranty.
10.5 Manner of Payment.
(a) The Buyer may set off any amount to which it may be entitled under this
Article X against any amount otherwise payable by the Buyer or its Affiliates to
the Seller or any Member, including any amounts payable pursuant to
Section 2.5(a)(i)(C). The exercise of such set-off right in good faith will not
constitute a breach or event of default under any Contract relating to any
amount against which the set-off is applied. The Buyer shall pursue payment for
any Losses under this Article X in the following order:
(i) The Buyer must first set off any such Losses against the Deferred Cash
Consideration.
(ii) To the extent Buyer is not able to satisfy any Losses through the exercise
of its right of set-off in Section 10.5(a)(i), the Seller shall forfeit, and
shall assign and transfer to Primo, free and clear of all Encumbrances, that
number of shares of Primo Stock determined by dividing the amount of such
unsatisfied Losses by the Average Closing Price.
(iii) Finally, to the extent Buyer is not able to satisfy any Losses through the
forfeiture set forth in Section 10.5(a)(ii), the Buyer will then seek payment of
such Losses directly from the Seller and/or Carl Santoiemmo.
(b) Prior to exercising any right of set off under this Agreement, the Buyer
shall assert the claim giving rise to the right of set off by written notice to
the Members’ Representative. The Members’ Representative shall have a period of
fifteen (15) Business Days after receipt of such notice within which to respond
thereto. During such fifteen (15) Business Day period, the Members’
Representative shall have the right to cure any applicable breach of this
Agreement. If the Members’ Representative does not respond within such fifteen
(15) Business Day period and does not cure the applicable breach, the Members’
Representative shall be deemed to have accepted responsibility for the Losses
set forth in such notice and shall have no further right to contest the validity
of such notice and the Buyer may exercise its right of set off hereunder. If the
Members’ Representative responds within such fifteen (15) Business Day period
after the receipt of the notice and rejects such claim in whole or in part, the
Buyer shall be free to pursue such remedies as may be available to it under this
Agreement or applicable Law (other than the right of set off with respect to any
disputed amounts) subject, in each case, to the limitations set forth in this
Agreement.
(c) If Buyer provides proper notice of a claim within the applicable time period
set forth in Section 10.3, notwithstanding the payment date set forth in
Section 2.5(c), Buyer may continue to hold back such portion of the Deferred
Cash Consideration equal to the amount of the Losses set forth in such notice
(or such disputed amount if less), until such claim is resolved. Upon the
resolution of such claim, (i) Buyer may set off the amount of its Losses as
finally resolved (if any) and (ii) if the payment date set forth in
Section 2.5(c) has passed and all outstanding claims asserted by Buyer have been
finally resolved, Buyer shall pay the Deferred Cash Consideration, less any
amounts set off pursuant to this Agreement, to the Seller.

 

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10.6 Third-Party Claims.
(a) If a third party commences a lawsuit or arbitration (a “Third-Party Claim”)
against any Person (the “Indemnified Party”) with respect to any matter that the
Indemnified Party might make a claim for indemnification against any Party (the
“Indemnifying Party”) under this Article X, then the Indemnified Party must
notify the Indemnifying Party (or the Members’ Representative, in the case of
the Seller or the Members) thereof in writing of the existence of such
Third-Party Claim and must deliver copies of any documents served on the
Indemnified Party with respect to the Third-Party Claim; provided, however, that
any failure to notify the Indemnifying Party or deliver copies will not relieve
the Indemnifying Party from any obligation hereunder unless (and then solely to
the extent) the Indemnifying Party is materially prejudiced by such failure.
(b) Upon receipt of the notice described in Section 10.6(a), the Indemnifying
Party will have the right to defend the Indemnified Party against the
Third-Party Claim with counsel reasonably satisfactory to the Indemnified Party
so long as (i) within ten days after receipt of such notice, the Indemnifying
Party notifies the Indemnified Party in writing that the Indemnifying Party
will, subject to the limitations of Section 10.4, indemnify the Indemnified
Party from and against any Losses the Indemnified Party may incur relating to or
arising out of the Third-Party Claim, (ii) the Indemnifying Party provides the
Indemnified Party with evidence reasonably acceptable to the Indemnified Party
that the Indemnifying Party will have the financial resources to defend against
the Third-Party Claim and fulfill its indemnification obligations hereunder,
(iii) the Indemnifying Party is not a party to the Proceeding or the Indemnified
Party has determined in good faith that there would be no conflict of interest
or other inappropriate matter associated with joint representation, (iv) the
Third-Party Claim does not involve, and is not likely to involve, any claim by
any Governmental Body, (v) the Third-Party Claim involves only money damages and
does not seek an injunction or other equitable relief, (vi) settlement of, or an
adverse judgment with respect to, the Third-Party Claim is not, in the good
faith judgment of the Indemnified Party, likely to establish a precedential
custom or practice adverse to the continuing business interests of the
Indemnified Party, (vii) the Indemnifying Party conducts the defense of the
Third-Party Claim actively and diligently and (viii) the Indemnifying Party
keeps the Indemnified Party apprised of all developments, including settlement
offers, with respect to the Third-Party Claim and permits the Indemnified Party
to participate in the defense of the Third-Party Claim.
(c) So long as the Indemnifying Party is conducting the defense of the
Third-Party Claim in accordance with Section 10.6(b), (i) the Indemnifying Party
will not be responsible for any attorneys’ fees incurred by the Indemnified
Party regarding the Third-Party Claim (other than attorneys’ fees incurred prior
to the Indemnifying Party’s assumption of the defense pursuant to
Section 10.6(b)) and (ii) neither the Indemnified Party nor the Indemnifying
Party will consent to the entry of any judgment or enter into any settlement
with respect to the Third-Party Claim without the prior written consent of the
other party, which consent will not be withheld unreasonably. If the Indemnified
Party desires to consent to the entry of judgment with respect to or to settle a
Third-Party Claim but the Indemnifying Party refuses, then the Indemnifying
Party will be responsible for all Losses with respect to such Third-Party Claim,
without giving effect to the Basket, the Buyer Basket, the Cap or the Buyer Cap,
as applicable.
(d) If any condition in Section 10.6(b) is or becomes unsatisfied, (i) the
Indemnified Party may defend against, and consent to the entry of any judgment
or enter into any settlement with respect to, the Third-Party Claim in any
manner it may deem appropriate (and the Indemnified Party need not consult with,
or obtain any consent from, the Indemnifying Party in connection therewith),
(ii) the Indemnifying Party will reimburse the Indemnified Party promptly and
periodically (but no less often than monthly) for the costs of defending against
the Third-Party Claim, including attorneys’ fees and expenses, and (iii) the
Indemnifying Party will remain responsible for any Losses the Indemnified Party
may incur relating to or arising out of the Third-Party Claim to the fullest
extent provided in this Article X.

 

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10.7 Other Indemnification Matters. Any claim for indemnification under this
Article X must be asserted by providing written notice to the Members’
Representative (or the Buyer, in the case of a claim by the Seller) specifying
the factual basis of the claim in reasonable detail to the extent then known by
the Person asserting the claim. All indemnification payments under this
Article X will be deemed adjustments to the Purchase Price, including for Tax
purposes. The right to indemnification will not be affected by any investigation
conducted with respect to, or any Knowledge acquired (or capable of being
acquired) at any time, whether before or after the date hereof, with respect to
any representation, warranty, covenant or agreement in this Agreement. THE
INDEMNIFICATION PROVISIONS IN THIS ARTICLE X WILL BE ENFORCEABLE REGARDLESS OF
WHETHER ANY PERSON ALLEGES OR PROVES THE SOLE, CONCURRENT, CONTRIBUTORY OR
COMPARATIVE NEGLIGENCE OF THE PERSON SEEKING INDEMNIFICATION OR ITS AFFILIATES,
OR THE SOLE OR CONCURRENT STRICT LIABILITY IMPOSED ON THE PERSON SEEKING
INDEMNIFICATION OR ITS AFFILIATES. The waiver of any condition based on the
accuracy of any representation or warranty, or on the performance of or
compliance with any covenant or agreement, will not affect the right to
indemnification, payment of damages, or other remedy based on any such
representation, warranty, covenant or agreement.
10.8 Exclusive Remedy. After the Closing, this Article X will provide the
exclusive legal remedy for the matters covered by this Article X, except for
claims based upon fraud. This Article X will not affect any remedy any Party may
have under this Agreement prior to the closing or upon termination of this
Agreement or any equitable remedy available to any Party.
ARTICLE XI
MISCELLANEOUS
11.1 Further Assurances. Each Party agrees to furnish upon request to any other
Party such further information, to execute and deliver to any other Party such
other documents, and to do such other acts and things (including the execution
and delivery of such further instruments or documents as may be necessary or
convenient to transfer and convey any Purchased Asset to the Buyer), all as any
other Party may reasonably request for the purpose of carrying out the intent of
the Transaction Documents.
11.2 No Third-Party Beneficiaries. This Agreement does not confer any rights or
remedies upon any Person (including any employee of the Seller) other than the
Parties, their respective successors and permitted assigns and, as expressly set
forth in this Agreement, any Indemnified Party.
11.3 Entire Agreement. The Transaction Documents constitute the entire agreement
among the Parties with respect to the subject matter of the Transaction
Documents and supersede all prior agreements (whether written or oral and
whether express or implied) among any Parties to the extent related to the
subject matter of the Transaction Documents (including any letter of intent or
confidentiality agreement).
11.4 Successors and Assigns. This Agreement will be binding upon and inure to
the benefit of the Parties and their respective successors and permitted
assigns. Neither the Seller nor any Member may assign, delegate or otherwise
transfer (whether by operation of law or otherwise) any of its rights, interests
or obligations in this Agreement without the prior written approval of the
Buyer. The Buyer may assign any or all of its rights or interests, or delegate
any or all of its obligations, in this Agreement to (a) any successor to the
Buyer or any acquirer of a material portion of the business or assets of the
Buyer, (b) one or more of the Buyer’s Affiliates, or (c) any lender to the Buyer
or its Affiliates as security for obligations to such lender.

 

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11.5 Counterparts. This Agreement may be executed by the Parties in multiple
counterparts and shall be effective as of the date set forth above when each
Party shall have executed and delivered a counterpart hereof, whether or not the
same counterpart is executed and delivered by each Party. When so executed and
delivered, each such counterpart shall be deemed an original and all such
counterparts shall be deemed one and the same document. Transmission of images
of signed signature pages by facsimile, e-mail or other electronic means shall
have the same effect as the delivery of manually signed documents in person.
11.6 Notices. Any notice pursuant to this Agreement must be in writing and will
be deemed effectively given to another Party on the earliest of the date
(a) three Business Days after such notice is sent by registered or certified
U.S. mail, return receipt requested, (b) one Business Day after receipt of
confirmation if such notice is sent by facsimile, (c) one Business Day after
delivery of such notice into the custody and control of an overnight courier
service for next day delivery, (d) one Business Day after delivery of such
notice in person and (e) such notice is received by that Party; in each case to
the appropriate address below (or to such other address as a Party may designate
by notice to the other Parties):
If to the Seller or the Members’ Representative:

Omnifrio Beverage Company, LLC
93 Alpha Park Drive
Highland Heights, Ohio 44143
Fax: (216) 583-7125
Phone: (216) 561-7600
Attn: Lawrence Pollock
with a copy (which shall not constitute notice) to:
Ulmer & Berne LLP
1660 West 2nd Street, Suite 1100
Cleveland, Ohio 44113-1448
Fax: (216) 583-7125
Phone: (216) 583-7124
Attn: Peter Rome
If to any Primo Party:
Primo Water Corporation
104 Cambridge Plaza Drive
Winston-Salem, NC 27104
Fax: (336) 331-4247
Phone: (336) 331-4047
Attn: Mark Castaneda
with a copy (which shall not constitute notice) to:
K&L Gates LLP
4350 Lassiter at North Hills Avenue
Suite 300
Raleigh, NC 27619
Fax: (919) 516-2028
Phone: (919) 743-7328
Attn: D. Scott Coward

 

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11.7 JURISDICTION; SERVICE OF PROCESS. EACH PARTY (A) CONSENTS TO THE PERSONAL
JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED IN CHARLOTTE, NORTH CAROLINA
(AND ANY CORRESPONDING APPELLATE COURT) IN ANY PROCEEDING ARISING OUT OF OR
RELATING TO ANY TRANSACTION DOCUMENT, (B) WAIVES ANY VENUE OR INCONVENIENT FORUM
DEFENSE TO ANY PROCEEDING MAINTAINED IN SUCH COURTS, (C) EXCEPT AS OTHERWISE
PROVIDED IN THIS AGREEMENT, AGREES NOT TO INITIATE ANY PROCEEDING ARISING OUT OF
OR RELATING TO ANY TRANSACTION DOCUMENT IN ANY OTHER COURT OR FORUM, (D) AGREES
THAT PROCESS IN ANY SUCH PROCEEDING MAY BE SERVED ON ANY PARTY ANYWHERE IN THE
WORLD, (E) AGREES THAT SERVICE OF PROCESS WHICH IS SENT BY CERTIFIED MAIL TO
SUCH PARTY’S ADDRESS IN SECTION 11.6 SHALL BE DEEMED EFFECTIVE SERVICE AND
(F) WAIVES ANY DEFENSE BASED ON SERVICE OF PROCESS OTHER THAN AS PROVIDED
HEREIN.
11.8 Governing Law. This Agreement and all other Transaction Documents (unless
otherwise stated therein) will be governed by the laws of the State of North
Carolina without giving effect to any choice or conflict of law principles of
any jurisdiction.
11.9 Amendments and Waivers. Prior to the Closing, no amendment of any provision
of this Agreement will be valid unless the amendment is in writing and signed by
the Buyer and the Seller. After the Closing, no amendment of any provision of
this Agreement will be valid unless the amendment is in writing and signed by
the Buyer and the Members’ Representative. No waiver of any provision of this
Agreement will be valid unless the waiver is in writing and signed by the
waiving Party (or the Members’ Representative, in the case of a waiver by any or
all Members or in the case of a waiver by the Seller after the Closing). The
failure of a Party at any time to require performance of any provision of this
Agreement will not affect such Party’s rights at a later time to enforce such
provision. No waiver by any Party of any breach of this Agreement will be deemed
to extend to any other breach hereunder or affect in any way any rights arising
by virtue of any other breach.
11.10 Severability. Any provision of this Agreement that is determined by any
court of competent jurisdiction to be invalid or unenforceable will not affect
the validity or enforceability of any other provision hereof or the invalid or
unenforceable provision in any other situation or in any other jurisdiction. Any
provision of this Agreement held invalid or unenforceable only in part or degree
will remain in full force and effect to the extent not held invalid or
unenforceable.
11.11 Expenses. The Seller and the Members will bear all expenses incurred by
the Sellers or any Member or any of their respective Representatives in
connection with the Transactions contemplated to be performed before or on the
Closing Date. Except as otherwise expressly provided in this Agreement, the
Buyer will bear all expenses incurred by any Primo Party or any of their
respective Representatives in connection with the Transactions contemplated to
be performed before or on the Closing Date. If this Agreement is terminated, the
obligation of each Party to pay its own expenses will be subject to any rights
of such Party arising from a breach of this Agreement by another Party.
11.12 Interpretation. The article and section headings in this Agreement are
inserted for convenience only and are not intended to affect the interpretation
of this Agreement. Any reference in this Agreement to any Article or Section
refers to the corresponding Article or Section of this Agreement. Any reference
in this Agreement to any Schedule or Exhibit refers to the corresponding
Schedule or Exhibit attached to this Agreement and all such Schedules and
Exhibits are incorporated herein by reference. The word “including” in this
Agreement means “including without limitation.”

 

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This Agreement will be construed as if drafted jointly by the Parties and no
presumption or burden of proof will arise favoring or disfavoring any Party by
virtue of the authorship of any provision in this Agreement. Unless the context
requires otherwise, any reference to any Law will be deemed also to refer to all
amendments and successor provisions thereto and all rules and regulations
promulgated thereunder, in each case as in effect as of the date hereof and the
Closing Date. All accounting terms not specifically defined in this Agreement
will be construed in accordance with GAAP as in effect on the date hereof
(unless another effective date is specified herein). The word “or” in this
Agreement is disjunctive but not necessarily exclusive. All words in this
Agreement will be construed to be of such gender or number as the circumstances
require. References in this Agreement to time periods in terms of a certain
number of days mean calendar days unless expressly stated herein to be Business
Days. In interpreting and enforcing this Agreement, each representation and
warranty will be given independent significance of fact and will not be deemed
superseded or modified by any other such representation or warranty.
11.13 Specific Performance. Each Party acknowledges that the other Parties would
be damaged irreparably and would have no adequate remedy of law if any provision
of this Agreement is not performed in accordance with its specific terms or
otherwise is breached. Accordingly, each Party agrees that the other Parties
will be entitled to an injunction to prevent any breach of any provision of this
Agreement and to enforce specifically any provision of this Agreement, in
addition to any other remedy to which they may be entitled and without having to
prove the inadequacy of any other remedy they may have at law or in equity and
without being required to post bond or other security.
11.14 Time Is of the Essence. Time is of the essence with respect to all time
periods and dates set forth herein.
11.15 The Members’ Representative.
(a) The Seller, on its own behalf and on behalf of its successors and permitted
assigns, and each Member, on behalf of such Member and such Member’s successors,
heirs and permitted assigns, hereby appoint Lawrence Pollock as the “Members’
Representative” as the Seller’s and such Member’s agent and attorney-in-fact,
with full power of substitution, for all purposes set forth in this Agreement,
including the full power and authority (i) to perform the Transactions to be
performed by the Seller or such Member under this Agreement, (ii) to execute and
deliver on behalf of the Seller and each Member any amendment or waiver under
this Agreement and to agree to resolution of all claims hereunder, (iii) to
retain legal counsel and other professional services, at the expense of the
Seller and the Members, in connection with the performance by the Members’
Representative of this Agreement, and (iv) to do each and every act and exercise
all rights which the Seller or such Member is permitted or required to do or
exercise under this Agreement. If a Members’ Representative resigns or is
otherwise unable or unwilling to serve in such capacity, the Member that hold or
held a majority of all of the Equity of the Seller will appoint a new Person to
serve as the Members’ Representative and will provide prompt written notice
thereof to the Buyer. Until such notice is received, the Buyer will be entitled
to rely on the actions and statements of the previous Members’ Representative.
The power and authority granted hereunder will be exclusive with respect to each
Member and no Member will be entitled to exercise any right under this Agreement
except through the Members’ Representative. The power and authority granted
hereunder will be exclusive with respect to the Seller, and the Seller will not
be entitled to exercise any right under this Agreement except through the
Members’ Representative.

 

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(b) The appointment of the Members’ Representative as the attorney-in-fact for
the Seller and each Member as set forth in this Section 11.15 and all authority
hereby conferred are granted and conferred in consideration of the interest of
the other Members, is therefore coupled with an interest and is and will be
irrevocable and will neither be terminated nor otherwise affected by any act of
the Seller nor any Member or by operation of law, whether by the death,
dissolution, liquidation, incapacity or incompetence of the Seller or such
Member or by the occurrence of any other event. If, after the execution of this
Agreement, the Seller dissolves or liquidates or any Member dies, dissolves or
liquidates or becomes incapacitated or incompetent, the Members’ Representative
is nevertheless authorized, empowered and directed to act in accordance with
this Section 11.15 as if that death, dissolution, liquidation, incapacity or
incompetency had not occurred and regardless of notice thereof. Each Member
agrees to execute such wills and documents as may be necessary and to give such
instructions to his personal representatives as may be necessary so that its
successors will remain subject to this Agreement and carry out the full intent
and purposes. Without limiting the generality of the foregoing, pursuant to
Article 2 of Chapter 32A of the North Carolina General Statutes, this
Section 11.15 will not be affected by the subsequent incapacity or mental
incompetency of any Member.
[Signature pages follow]

 

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The Parties have executed and delivered this Asset Purchase Agreement as of the
date first written above.

           

PRIMO PARTIES:

PRIMO PRODUCTS, LLC
      By:   /s/ Mark Castaneda         Name:   Mark Castaneda         Title:  
Chief Financial Officer     

            PRIMO WATER CORPORATION
      By:   /s/ Mark Castaneda         Name:   Mark Castaneda         Title:  
Chief Financial Officer     

            SELLER:

OMNIFRIO BEVERAGE COMPANY, LLC
      By:   /s/ Carl V. Santoiemmo         Name:   Carl V. Santoiemmo        
Title:   Manager  

 

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            MEMBERS:
      /s/ Carl V. Santoiemmo       Carl Santoiemmo            /s/ Cathy Mangino
      Cathy Mangino            /s/ Gerald Forstner, Jr.       Gerald Forstner,
Jr.            /s/ Michael Roizen       Michael Roizen            LAWRENCE I.
POLLOCK DEFECTIVE IRREVOCABLE TRUST
      By:   /s/ Lawrence H. Hatch         Name:   Lawrence H. Hatch        
Title:   President        ECE CAPITAL, LLC
      By:   /s/ Steve Ross       Name:   Steve Ross       Title:   Sole
Shareholder        RISING PHOENIX COMPANY
      By:   /s/ Carl V. Santoiemmo         Name:   Carl V. Santoiemmo      
Title:   President  

 

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            SELLERS’ REPRESENTATIVE:
      /s/ Lawrence Pollock       Lawrence Pollock         

 

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SCHEDULE 2.8
Purchase Price Allocation
The parties will allocate the Purchase Price (and other relevant items for tax
purposes) in accordance with this allocation schedule.

      Assets   Methodology
Inventory
  Appraisal
Prepaid Expenses and other Current Assets
  Appraisal
Equipment
  Appraisal
Goodwill, Going Concern and Other Section 197 Assets
  Appraisal

Notes:
The Parties will modify the allocation herein to appropriately take into account
(i) any Assumed Liabilities, (ii) the Buyer’s acquisition costs or the Seller’s
selling costs, as applicable, and (iii) any adjustments to the Purchase Price as
set forth in the Agreement. Any such adjustments to the Purchase Price shall be
made in a manner consistent with the Agreement and the allocation set forth
herein.
The “Appraisal” amounts set forth above shall be determined based on an
appraisal of the Seller’s assets to be performed by the Buyer or the Buyer’s
accountants after the Closing Date.