Exhibit 10.4






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




 

 





 












 












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	 





 


i











 






	 	 	 	 	 	 	 
	 	 	 	 	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	 





 


ii









 






	 	 	 	 	 	 	 
	 	 	 	 	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	 





 


iii









 






	 	 	 
	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







 


iv











 





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.


 


 









 





“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.


 


2









 





“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.


 


3









 





“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.


 


4









 





“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.


 


5









 





“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).


 


6









 





“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.”
 


37









 







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.






 


38









 








(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

	 



 












 







	 	 	 	 	 
	 	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	 


 












 






	 	 	 	 	 



	 	 	 	 	 
	 	SELLERS’ REPRESENTATIVE:

 	 
	 	/s/ Lawrence Pollock
 	 
	 	Lawrence Pollock 	 
	 	 	 


 












 






	 	 	 	 	 



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.