Primo Water Corp (Form: 8-K, Received: 03/09/2011 16:58:26)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): March 8, 2011

PRIMO WATER CORPORATION
(Exact name of registrant as specified in its charter)

Delaware 001-34850 30-0278688

(State or other Jurisdiction of Incorporation) (Commission File Number) (IRS Employer Identification No.)

104 Cambridge Plaza Drive
Winston-Salem, NC
27104

(Address of Principal Executive Offices) (Zip Code)

Registrant’s telephone number, including area code: 336-331-4000

Not Applicable

(Former name or former address if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement.

Purchase of Culligan Bulk Water Exchange Business

On March 8, 2011, Primo Water Corporation (the “Company”) and its wholly-owned subsidiary Primo Refill Canada Corporation (“Primo Canada”) entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Culligan of Canada, Ltd. (the “Seller”) and Culligan International Company (“Culligan International” and together with the Seller, the “Culligan Parties”), pursuant to which Primo Canada purchased certain of the Seller’s assets related to its bulk water exchange business currently conducted in Canada (the “Culligan Bulk Water Exchange Business”). The purchase price for the Culligan Bulk Water Exchange Business was approximately U.S. $5,391,000, which consisted of a cash payment of approximately U.S. $1,575,000 and the issuance of 307,217 shares of the Company’s common stock having a value of approximately U.S. $3,816,000 (based upon a price per share equal to the average of the closing price of the Company’s common stock on The NASDAQ Global Select Market for the 20 most recent trading days prior to the closing date), and the assumption of certain specified liabilities (the “Culligan Bulk Water Transaction”). The Culligan Bulk Water Transaction is intended to be effective from an economic standpoint as of December 31, 2010 and, as a result, the cash portion of the purchase price was reduced by approximately U.S. $60,000, which the parties mutually agreed represented a reasonable approximation of the net earnings of the Culligan Bulk Water Exchange Business between January 1, 2011 and March 8, 2011. The shares of the Company’s common stock issued in the Culligan Bulk Water Transaction are subject to a lock-up agreement that restricts transfers through May 3, 2011 (subject to extension in certain circumstances). The Culligan Bulk Water Exchange Business provides refill and delivery of water in 18-liter containers to commercial retailers in Canada for resale to consumers. The Purchase Agreement contains customary representations and warranties, covenants and indemnification provisions.

As previously disclosed, on November 10, 2010, the Company acquired certain assets of Culligan Store Solutions, LLC and the Seller (the “Culligan Refill Business”) pursuant to an Asset Purchase Agreement dated June 1, 2010 (the “Asset Purchase Agreement”). The total purchase price for the Culligan Refill Business was comprised of approximately U.S. $74.3 million in cash and 2,587,500 shares of the Company’s common stock. The Culligan Refill Business provides reverse osmosis water filtration systems that generate filtered water for refill vending machines and store-use water services in the United States and Canada at approximately 4,500 retail locations. The Culligan Refill Business also sells empty reusable water bottles for use at refill vending machines.

In connection with the purchase of the Culligan Refill Business, the Company and Culligan International entered into a Registration Rights Agreement dated November 10, 2010 (the “Registration Rights Agreement”) pursuant to which the Company agreed, subject to certain exceptions, to prepare and file a registration statement to register the shares of its common stock issued to Culligan International in connection with the acquisition of the Culligan Refill Business. Such registration statement is required to be effective no later than May 10, 2011. In connection with the purchase of the Culligan Bulk Water Exchange Business, the Company and Culligan International entered into an amendment to the Registration Rights Agreement dated March 8, 2011 (the “Registration Rights Agreement Amendment”) pursuant to which the Company agreed to include the shares of common stock issued to Culligan International in connection with the purchase of the Culligan Bulk Water Exchange Business with the shares covered by the registration statement the Company has agreed to file pursuant to the Registration Rights Agreement.

The descriptions of the Purchase Agreement, the Registration Rights Agreement and the Registration Rights Agreement Amendment are not complete and are qualified in their entirety by reference to the Purchase Agreement, the Registration Rights Agreement and the Registration Rights Agreement Amendment, which are filed as exhibits to this Current Report on Form 8-K, and are incorporated herein by reference.

Agreement to Purchase Omnifrio Single-Serve Beverage Business

On March 8, 2011, the Company and its wholly-owned subsidiary Primo Products, LLC (“Primo Products”) entered into an Asset Purchase Agreement (the “Omnifrio Purchase Agreement”) with Omnifrio Beverage Company, LLC (“Omnifrio”) and the members named therein (the “Members”). The Omnifrio Purchase Agreement provides that, upon the terms and subject to the conditions therein, Primo Products will purchase certain of Omnifrio’s intellectual property and other assets (the “Omnifrio Single-Serve Beverage Business”) for a purchase price of up to U.S. $13,150,000, which consists of:

• a cash payment at closing of U.S. $2,000,000;

• the issuance at closing of 501,080 shares of the Company’s common stock having a value of U.S. $6,150,000 (based upon a price per share equal to the average of the closing price of the Company’s common stock on The NASDAQ Global Select Market for the 20 most recent trading days prior to the date of the Omnifrio Purchase Agreement);

• a cash payment of U.S. $2,000,000 on the 15-month anniversary of the closing date (subject to the Company’s setoff rights in the Omnifrio Purchase Agreement);

• up to U.S. $3,000,000 in cash milestone payments; and

• the assumption of certain specified liabilities relating to the Omnifrio Single-Serve Beverage Business (the “Omnifrio Transaction”).

The shares of the Company’s common stock to be issued in the Omnifrio Transaction will be subject to lock-up agreements, with all of the shares subject to a lock-up through May 3, 2011 (subject to extension in certain circumstances) and 256,651 of the shares subject to a lock-up that will expire two years after the closing date. The milestone payments described above consist of (a) a cash payment of U.S. $1,000,000 if, subject to certain conditions, prior to December 8, 2011, Primo Products achieves a pilot manufacturing run of 50 single-serve beverage dispensing appliances and (b) a cash payment of U.S. $2,000,000 if, prior to December 8, 2011, Omnifrio’s proprietary appliance is certified in writing by MET Laboratories for compliance to electrical safety standards. The Omnifrio Single-Serve Beverage Business consists primarily of technology related to single-serve cold carbonated beverage appliances and consumable flavor cups, or “S-cups”, and CO2 canisters used with the appliances to make a variety of cold beverages.

The Omnifrio Purchase Agreement contains customary representations and warranties, covenants by Omnifrio regarding the operation of the Omnifrio Single-Serve Beverage Business prior to the closing of the Omnifrio Transaction, and indemnification provisions whereby each party agrees to indemnify the other for breaches of representations and warranties, covenants and other matters.

The Omnifrio Transaction is subject to certain closing conditions, including:

• conditions relating to the accuracy of the parties’ respective representations and warranties;

• Primo Products’ receipt of certain consents; and

• delivery of certain ancillary agreements, including (i) a Consulting Agreement, (ii) Lock-Up Agreements, (iii) a Non-Competition Agreement, and (iv) a Registration Rights Agreement.

Either Primo Products or Omnifrio may terminate the Omnifrio Purchase Agreement if certain closing conditions have not been satisfied or waived by April 29, 2011. If certain conditions to the Company’s obligation to close are not satisfied by April 29, 2011, the Company may terminate the Omnifrio Purchase Agreement and Omnifrio would be required to pay the Company a fee of U.S. $250,000. If certain conditions to Omnifrio’s obligation to close, or if the Company fails to obtain necessary consents, Omnifrio may terminate the Omnifrio Purchase Agreement and the Company would be required to pay Omnifrio U.S. $250,000.

The description of the Omnifrio Purchase Agreement is qualified in its entirety by the contents of the Omnifrio Purchase Agreement which is filed as an exhibit to this Current Report on Form 8-K, and is incorporated herein by reference.

Item 2.02 Results of Operations and Financial Condition.

On March 9, 2011, the Company issued a press release announcing preliminary financial results for the fourth quarter and year ended December 31, 2010. A copy of the press release is furnished as Exhibit 99.1.

Item 3.02 Unregistered Sales of Equity Securities.

Issuance of Common Stock in Connection with Acquisition of Culligan Bulk Water Exchange Business

As described in Item 1.01 above, the Company issued 307,217 shares (the “Culligan Shares”) of common stock to Culligan International on March 8, 2011 as payment of a portion of the purchase price for the Culligan Bulk Water Exchange Business. The Culligan Shares are subject to the lock-up agreement Culligan International entered into in connection with the Company’s initial public offering pursuant to which it agreed, subject to certain exceptions contained therein, not to offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale or otherwise dispose of any shares of common stock, or any securities convertible into, exchangeable for or that represent the right to receive shares of common stock for a period continuing through May 3, 2011 (subject to extension in certain circumstances) without the prior written consent of Thomas Weisel Partners LLC (an affiliate of Stifel, Nicolaus & Company, Incorporated).

The issuance of the Culligan Shares was made in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933, as amended, and Rule 506 of Regulation D promulgated thereunder. Culligan International is an “accredited investor” as defined in Regulation D. In addition, the Company received customary “private placement” representations in the Purchase Agreement, including representations to the effect that the Culligan Shares were acquired for investment and not with a view to or in connection with an unlawful distribution thereof and that Culligan International received sufficient information about the Company or had access to such information in order to evaluate an investment in the Culligan Shares. No underwriters were involved in connection with the issuance of the Culligan Shares and no underwriting discounts or commissions were payable.

Proposed Issuance of Common Stock in Connection with Proposed Acquisition of Omnifrio Single-Serve Beverage Business

As described in Item 1.01 above, the Company proposes to issue 501,080 shares (the “Omnifrio Shares”) of common stock to Omnifrio at the closing of the Omnifrio Transaction as payment of a portion of the purchase price for the Omnifrio Single-Serve Beverage Business. The Omnifrio Shares will be subject to lock-up agreements pursuant to which Omnifrio will agree, subject to certain exceptions, not to offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale or otherwise dispose of any shares of common stock, or any securities convertible into, exchangeable for or that represent the right to receive shares of common stock for a period continuing through May 3, 2011 (subject to extension in certain circumstances) without the prior written consent of Stifel, Nicolaus & Company, Incorporated. Additionally, 256,651 of the Omnifrio Shares will be subject to additional lock-up restrictions that will expire two years after the closing date.

The Company expects that the issuance of the Omnifrio Shares will be made in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933, as amended, and Rule 506 of Regulation D promulgated thereunder. Omnifrio is an “accredited investor” as defined in Regulation D. In addition, the Company received customary “private placement” representations in the Omnifrio Purchase Agreement, including representations to the effect that the Omnfrio Shares are being acquired for investment and not with a view to or in connection with an unlawful distribution thereof and that Omnifrio received sufficient information about the Company or had access to such information in order to evaluate an investment in the Omnfrio Shares. No underwriters will be involved in connection with the issuance of the Omnifrio Shares and no underwriting discounts or commissions will be payable.

Item 7.01 Regulation FD Disclosure.

On March 9, 2011, the Company issued a press release announcing the various matters described in the Current Report on Form 8-K. A copy of the press release is furnished as Exhibit 99.1.

The Company will hold a conference call related to the information included in the press release to the financial community at 5:00 p.m. Eastern time on Wednesday, March 9, 2011. This call will be broadcast live over the Internet and will be available in the “Investor Relations” section of the Company’s website, www.primowater.com , along with accompanying slides. A replay of the conference call will be made available at the same location following the conclusion of the conference call and will be available through March 22, 2011. The accompanying slides to be discussed during the conference call are furnished as Exhibit 99.2.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

The following exhibits are filed herewith:


Exhibit No.		Exhibit Description
10.1		Asset Purchase Agreement dated March 8, 2011 by and among the Company, Primo Refill Canada Corporation, Culligan of Canada, Ltd. and Culligan International Company (filed herewith)
10.2		Registration Rights Agreement dated November 10, 2010 between the Company and Culligan International Company (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed November 16, 2010)
10.3		Registration Rights Agreement Amendment dated March 8, 2011 between the Company and Culligan International Company (filed herewith)
10.4		Asset Purchase Agreement dated March 8, 2011 by and among the Company, Omnifrio Beverage Company, LLC and the other parties thereto (filed herewith)
99.1		Press Release dated March 9, 2011 (filed herewith)
99.2		Slide presentation dated March 9, 2011 (filed herewith)

Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


		PRIMO WATER CORPORATION

Date: March 9, 2011		By: /s/ Mark Castaneda
		Name: Mark Castaneda
		Title: Chief Financial Officer and Secretary

SECURITIES AND EXCHANGE COMMISSION
Washington, DC

EXHIBITS

CURRENT REPORT
ON
FORM 8-K


Date of Event Reported:		Commission File No:
March 8, 2011		001-34850

PRIMO WATER CORPORATION

EXHIBIT INDEX


Exhibit No.		Exhibit Description
10.1		Asset Purchase Agreement dated March 8, 2011 by and among the Company, Primo Refill Canada Corporation, Culligan of Canada, Ltd. and Culligan International Company (filed herewith)
10.2		Registration Rights Agreement dated November 10, 2010 between the Company and Culligan International Company (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed November 16, 2010)
10.3		Registration Rights Agreement Amendment dated March 8, 2011 between the Company and Culligan International Company (filed herewith)
10.4		Asset Purchase Agreement dated March 8, 2011 by and among the Company, Omnifrio Beverage Company, LLC and the other parties thereto (filed herewith)
99.1		Press Release dated March 9, 2011 (filed herewith)
99.2		Slide presentation dated March 9, 2011 (filed herewith)

Exhibit 10.1

ASSET PURCHASE AGREEMENT

among

PRIMO REFILL CANADA CORPORATION,

PRIMO WATER CORPORATION,

CULLIGAN OF CANADA, LTD.

and

CULLIGAN INTERNATIONAL COMPANY

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		8
2.4	Excluded Liabilities		8
2.5	Purchase Price		9
2.6	Closing		10
2.7	Post-Closing Deliveries		10
2.8	Allocation of Purchase Price		10
2.9	Withholding		10
2.10	Certain Tax Matters.		11

ARTICLE III REPRESENTATIONS AND WARRANTIES REGARDING THE SELLER			12
3.1	Organization, Qualification and Corporate Power		12
3.2	Capitalization		13
3.3	Authority		13
3.4	No Conflicts		13
3.5	Financial Information		13
3.6	No Undisclosed Liabilities		14
3.7	Title to and Sufficiency of Assets		14
3.8	Tangible Personal Property; Condition of Purchased Assets		14
3.9	Accounts Receivable		14
3.10	Inventory		14
3.11	Real Property		14
3.12	Contracts		14
3.13	Tax		15
3.14	Legal Compliance		15
3.15	Permits		15
3.16	Litigation and Orders		15
3.17	Environmental		16
3.18	Customers		16
3.19	Solvency		16
3.20	No Brokers’ Fees		16
3.21	Securities Law		16
3.22	Disclosure		17
3.23	Retail Locations		17

ARTICLE IV REPRESENTATIONS AND WARRANTIES REGARDING THE PRIMO PARTIES			17
4.1	Organization		17
4.2	Capitalization		18
4.3	Authority		18
4.4	No Conflicts		18
4.5	Financial Statements.		19
4.6	No Undisclosed Liabilities		19
4.7	Intellectual Property		19
4.8	Taxation		20
4.9	Legal Compliance		20
4.10	Litigation and Orders		20

TABLE OF CONTENTS (cont’d)


		Page
4.11	Environmental		20
4.12	Employees		21
4.13	No Brokers’ Fees		21
4.14	SEC Reports		21
4.15	Conduct of Business		21

ARTICLE V CLOSING CONDITIONS			21
5.1	Conditions to the Primo Parties’ Obligations		21
5.2	Conditions to the Seller’s Obligations		23

ARTICLE VI POST-CLOSING COVENANTS			23
6.1	Payment of Excluded Liabilities		24
6.2	Payment of Assumed Liabilities		24
6.3	Bulk Transfer Compliance		24
6.4	Consents		24
6.5	Mail and Receivables		24
6.6	Litigation Support		24
6.7	Transition		25
6.8	Confidentiality		25
6.9	Seller Information		25
6.10	Personal Information		25
6.11	Regional Operator Agreements		26
6.12	Provision of Information Related to the Business		26
6.13	Additional Trademark Sublicense Agreements		26
6.14	Franchise Agreements		27
6.15	Transition Services		27

ARTICLE VII INDEMNIFICATION			27
7.1	Indemnification by the Seller		27
7.2	Indemnification by the Buyer		27
7.3	Survival and Time Limitations		27
7.4	Limitations on Indemnification		28
7.5	Third-Party Claims		29
7.6	Other Indemnification Matters		30
7.7	PST Clearance Certificates		30
7.8	Exclusive Remedy		30

ARTICLE VIII MISCELLANEOUS			30
8.1	Further Assurances		30
8.2	No Third-Party Beneficiaries		31
8.3	Entire Agreement		31
8.4	Successors and Assigns		31
8.5	Counterparts		31
8.6	Notices		31
8.7	JURISDICTION; SERVICE OF PROCESS		32
8.8	Governing Law		32
8.9	Amendments and Waivers		32
8.10	Severability		33
8.11	Expenses		33
8.12	Interpretation		33
8.13	Specific Performance		33
8.14	Waiver of Consequential Damages		33
8.15	Time Is of the Essence		33

TABLE OF CONTENTS (cont’d)


EXHIBIT
A		Standard RO Agreement

SCHEDULES
1.1(a)		Franchisees
1.1(b)		Seller’s Knowledge Persons
1.1(c)		Buyer’s Knowledge Persons
3.1		Organization
3.2		Capitalization
3.4		Seller’s Conflicts and Consents
3.5(a)		Financial Information
3.5(b)		Accounts Receivable
3.5(c)		Accounts Payable
3.12		Material Assigned Contracts
3.18		Customers
4.2		Primo Capitalization
4.4		Primo Conflicts and Consents
4.5(a)		Primo Financial Statements
4.7(b)		Primo Intellectual Property
4.7(c)		Primo Licenses
4.8		Primo Taxation
4.9		Primo Legal Compliance
4.10		Primo Litigation and Orders
4.11		Primo Environmental
6.15		Transition Services

iii

ASSET PURCHASE AGREEMENT

This Asset Purchase Agreement (this “ Agreement ”) is entered into as of March 8, 2011, by Primo Refill Canada Corporation, a British Columbia corporation (the “ Buyer ”), Primo Water Corporation, a Delaware corporation (“ Primo Parent ”), Culligan of Canada, Ltd., a corporation governed by the Canada Business Corporations Act (the “ Seller ”) and Culligan International Company, a Delaware corporation (“ Culligan Parent ”).

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 relating to the Business 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

“Accounts Payable” means all trade and other accounts payable of the Business.

“Accounts Receivable” means all trade and other accounts receivable generated by the Business and owing to the Seller and any claim, remedy or other right related to the foregoing.

“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 or (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.

“Agreement” is defined in the opening paragraph.

“Allocation Schedule” is defined in Section 2.8.

“Assigned Contracts” is defined in Section 2.1(d).

“Assumed Liabilities” is defined in Section 2.3.

“Average Closing Price” is defined in Section 2.5.

“Base Amount” is defined in Section 2.5.

“Bill of Sale” means the Bill of Sale and Assignment and Assumption Agreement to be executed by the Seller and the Buyer in the form agreed upon by the Seller and the Buyer.

“Business” means the bulk water exchange business currently conducted by the Seller in Canada consisting of accounts with retailers for (a) the delivery of water in 18 liter-sized containers to retailers for resale to consumers, (b) the pick-up of such containers for reuse and (c) the related services provided to such retailers, including the provision of display racking located at such retailers; provided , however , that the Business does not include the Seller’s water delivery, bottling and bottle refurbishment operations.

“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 Chicago, Illinois.

“Buyer” is defined in the opening paragraph.

“Buyer Cap” is defined in Section 7.4(b).

“Buyer Indemnitees” is defined in Section 7.1.

“Buyer Indemnity Threshold” is defined in Section 7.4(b).

“Buyer” is defined in the opening paragraph.

“Cash Consideration” is defined in Section 2.5.

“Closing” is defined in Section 2.6.

“Closing Adjustment Amount” means CDN$58,000.

“Closing Date” is defined in Section 2.6.

“Confidential Information” means information that is confidential 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, improvements, industrial designs, mask works, other Intellectual Property, compositions, devices, samples, plans, drawings and specifications, photographs and digital images, computer software and programming, business, employee and financial records, books, ledgers, files, correspondence, documents and lists of a Party, other confidential information and materials relating to the Business or any Party, and 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.

“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.

“Culligan Parent” is defined in the opening paragraph.

“Culligan Parties” means the Seller and Culligan Parent.

“Deposit Liabilities” means all Liabilities owed by the Seller to third parties with respect to deposits collected by the Seller from such third parties in the operation of the Business.

“Economic Closing Date” is defined in Section 2.5(c).

“Encumbrance” means any lien, mortgage, hypothec, 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, right of way, covenant, zoning, lease, sublease, right of possession, prior assignment or other restriction of any kind or nature.

“Environmental Law” means any Law regulating the protection of the environment, 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 hazardous material, substance or waste.

“ETA” means the Excise Tax Act (Canada).

“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.

“Existing Services Agreement” means that certain Canada Retail Bottled Water Services Agreement, dated as of November 10, 2010, between the Seller and the Buyer.

“Financial Information” is defined in Section 3.5(a) .

“Franchisees” means the Persons that are not Affiliates of the Seller that, as of the date hereof, have been licensed by the Seller to, among other things, provide services in support of the Business. A list of all Franchisees is set forth on Schedule 1.1(a) .

“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 (i) unless otherwise specified and other than with respect to financial statements, as in effect on the date hereof and (ii) with respect to any financial statements, the date such financial statements were prepared.

“Governmental Body” means any federal, state, provincial, territorial, municipal, local, foreign or other government or quasi-governmental authority or any department, ministry, central bank, bureau, agency, subdivision, court or other tribunal of any of the foregoing.

“GST/HST” means the goods and services tax and harmonized sales tax imposed under the ETA.

“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; (g) reimbursement obligations of such Person relating to letters of credit, bankers’ acceptances, surety or other bonds or similar instruments; (h) Liabilities of such Person relating to unfunded, vested benefits under any employee benefit plan (excluding obligations to deliver stock pursuant to stock options or stock ownership plans); and (i) net payment obligations incurred by such Person pursuant to any hedging agreement.

“Indemnified Party” is defined in Section 7.5.

“Indemnifying Party” is defined in Section 7.5.

“Intellectual Property” means all U.S., Canadian and foreign (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, and including goodwill associated therewith, and applications, registrations, and renewals in connection therewith; (c) copyrights, and applications, registrations and renewals in connection therewith; (d) mask works and applications, registrations and renewals in connection therewith; (e) trade secrets, discoveries, ideas, technologies, know-how, formulae and data; (f) domain names; and (g) other similar intellectual property rights.

“Inventory” is defined in Section 2.1.

“ITA” means the Income Tax Act (Canada).

“Knowledge” means (a) actual knowledge or (b) knowledge that would be expected to be obtained after a reasonable inquiry concerning the matter at issue. The Seller will be deemed to have Knowledge of a matter if any Person listed on Schedule 1.1(b) is deemed to have Knowledge of such matter, and the Buyer will be deemed to have Knowledge of a matter if any Person listed on Schedule 1.1(c) is deemed to have Knowledge of such matter.

“Law” means any federal, state, provincial, territorial, municipal, local, foreign or other law, statute, ordinance, regulation, rule, regulatory or binding administrative guidance, Order, constitution, treaty, principle of common law or other restriction of any Governmental Body.

“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.

“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 Assigned Contract” is defined in Section 3.12.

“Non-Competition Agreement” means the Non-Competition Agreement to be executed by the Seller and the Buyer, in the form agreed upon by the Seller and the Buyer.

“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.

“Organizational Documents” means (a) any articles of incorporation, organization or formation and any bylaws, operating agreement, shareholder 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 any of the Culligan Parties or any of the Primo Parties.

“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, (b) any lien for Taxes not yet due and (c) any Encumbrance related to the Secured Debt of the Primo Parties.

“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.

“Pre-Closing Tax Period” is defined in Section 2.2(e).

“Primo Financial Statements” is defined in Section 4.5.

“Primo Parent” is defined in the opening paragraph.

“Primo Parties” means the Buyer and Primo Parent.

“Primo Stock” means the shares of common stock, par value USD$0.001 per share, of Primo Parent.

“Primo Subsidiaries” is defined in Section 4.1.

“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.

“QST” means the Quebec sales tax imposed under the QSTA.

“QSTA” means An Act respecting the Quebec sales tax .

“Qualifying Loss” means any individual indemnifiable Loss or series of related Losses in excess of CDN$5,000.

“Registration Rights Agreement” means the Registration Rights Agreement, dated as of November 10, 2010, between Culligan Parent and Primo Parent, as amended, restated or otherwise modified from time to time.

“Registration Rights Agreement Amendment” means the amendment to the Registration Rights Agreement to be executed by Culligan Parent and Primo Parent, in the form agreed upon by Culligan Parent and Primo Parent.

“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).

“SEC” means the U.S. Securities and Exchange Commission.

“ Secured Debt ” means any Indebtedness that is secured by any Encumbrance.

“Securities Act” means the Securities Act of 1933.

“Seller” is defined in the opening paragraph.

“Seller Cap” is defined in Section 7.4(a).

“Seller Indemnitees” is defined in Section 7.2.

“Seller Indemnity Threshold” is defined in Section 7.4(a).

“ Services Agreement ” means the Services Agreement to be executed by the Seller and the Buyer, in the form agreed upon by the Seller and the Buyer.

“Share Consideration” is defined in Section 2.5.

“ Standard RO Agreement ” means an agreement substantially in the form of Exhibit A .

“Straddle Tax Period” is defined in Section 2.2(e).

“Tangible Personal Property” is defined in Section 2.1.

“Tax” means any federal, state, provincial, local, foreign or other income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental, payroll, employer health, land transfer, customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, goods and services, harmonized sales or other sales, use, transfer, registration, value added, general service, alternative or add-on minimum, estimated, or other tax (including Canada Pension Plan or other provincial plan contributions, employment insurance premiums and workers compensation premiums), including any interest, penalty, or addition thereto. Taxes shall not include any license, registration or permitting fees that arise as a result of the Transactions.

“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 7.5.

“Trademark Sublicense Agreement” means the Trademark Sublicense Agreement to be executed by the Seller and the Buyer, in the form agreed upon by the Seller and the Buyer.

“Transaction Documents” means this Agreement, the Non-Competition Agreement, the Trademark Sublicense Agreement, the Bill of Sale, the Services Agreement, the Registration Rights Agreement Amendment, the Waiver Agreement and all other written agreements, documents and certificates contemplated by any of the foregoing documents.

“Transaction Expenses” means all expenses (other than Taxes) 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.

“Transactions” means the transactions contemplated by the Transaction Documents.

“Transfer Taxes” is defined in Section 2.10(c).

“Transition Period” is defined in Section 6.15.

“Transition Services” is defined in Section 6.15.

“Waiver Agreement” means the Waiver Agreement to be executed by the Seller in the form agreed upon by the Seller and the Buyer.

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 hereby sells, assigns, transfers and conveys to the Buyer, and the Buyer hereby purchases, acquires and accepts from the Seller, free and clear of all Encumbrances other than Permitted Encumbrances, all of the Seller’s right, title and interest in the Seller’s assets exclusively used in the Business (other than the Excluded Assets) (the “Purchased Assets” ), including all assets that fall into the following categories to the extent that they are exclusively used in the Business:

(a) Approximately 450 racking units owned by the Seller and used in the Business (the “Tangible Personal Property” );

(b) Approximately 83,000 18 liter-sized containers owned by the Seller and used in the Business (the “Inventory” );

(d) All rights and interests in and to all Contracts of the Business with retailers (the “Assigned Contracts” );

(e) All customer lists, supplier lists, business and financial records regarding Accounts Receivable and Accounts Payable, and equipment repair, maintenance, service, and quality control records;

(f) All goodwill of the Business;

(g) All rights of the Seller to causes of action, lawsuits, judgments, claims and demands of any nature arising out of the operation of the Business and all counterclaims, rights of setoff, rights of indemnification and affirmative defenses to any claims arising out of the operation of the Business that may be brought against the Buyer by third parties;

(h) All rights to refunds from customers and suppliers of the Business and all prepaid expenses of the Business; and

(i) All other properties and assets of the Business not of a type falling within any of the categories of assets or properties described in clauses (a) through (h) above falling within the definition of Purchased Assets.

2.2 Excluded Assets . The Seller retains ownership and responsibility for the following assets and other matters of the Seller (collectively, the “Excluded Assets” ):

(a) All cash, cash equivalents and short-term investments;

(b) All Organizational Documents, share books, share ledgers, minute books and Tax Returns and records (including working papers) related thereto;

(c) 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 the Excluded Liabilities;

(d) All rights under any Transaction Document;

(e) Subject to Section 2.10(d), all Tax credits, prepaid Taxes and refunds of the Seller pertaining to the Business or the Purchased Assets that are attributable to any of the following tax periods (each, a “ Pre-Closing Tax Period ”): (i) any taxable period ending on or before the Closing Date and (ii) for a taxable period that includes (but does not end on) the Closing Date (a “ Straddle Tax Period ”), the portion of the Straddle Tax Period ending on the Closing Date;

(f) All employees of the Seller;

(g) All rights and interests in and to any Contracts of the Business other than the Assigned Contracts; and

(h) All assets of the Seller not used exclusively in the Business.

For purposes of clause (e), the term “Seller” shall include Culligan Parent.

2.3 Assumed Liabilities . The Buyer hereby assumes and agrees to pay, perform and discharge only the following Liabilities of the Seller (collectively, the “Assumed Liabilities” ):

(a) All Accounts Payable as of the Closing Date;

(b) All Deposit Liabilities as of the Closing Date; and

2.4 Excluded Liabilities . The Excluded Liabilities 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 all Liabilities of the Seller within the following categories to the extent they do not fall within the definition of Assumed Liabilities:

(a) All Liabilities under any Transaction Document;

(b) Except as provided in Section 2.10(c), all Liabilities and obligations for (i) Taxes pertaining to the Business or the Purchased Assets allocated to any Pre-Closing Tax Period as provided in Section 2.10 and (ii) franchise and income Taxes of the Seller for any taxable period;

(c) All Liabilities pertaining to 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 which are not Assigned Contracts;

(e) All Liabilities to indemnify any Person by reason of the fact that such Person was a director, officer, employee or agent of the Seller;

(f) All Liabilities in respect of any Excluded Asset;

(g) All Transaction Expenses;

(h) All Indebtedness, except as assumed by the Buyer pursuant to Section 2.3;

(i) All Liabilities pertaining to the Seller’s employees, including the employees of the Business, and including all Liabilities that are in any way related to the employment and the termination of employment of such employees as well as any Liabilities and other obligations related to any employee benefit plans;

(j) All Liabilities for infringement or misappropriation of any Intellectual Property 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;

(k) All product Liability claims for damages or injury to Person or property 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; and

(l) 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.

For purposes of clause (b), the term “Seller” shall include Culligan Parent.

2.5 Purchase Price .

(a) The purchase price for the Purchased Assets (the “Purchase Price” ) will be:

(i) an aggregate amount of CDN$5,300,000, as adjusted, composed of:

(A) CDN$1,590,000 (the “ Base Amount ”) in cash, less the Closing Adjustment Amount (the Base Amount as adjusted is the “ Cash Consideration ”),

plus

(B) that number of shares of Primo Stock having an aggregate value of CDN$3,710,000 (the “ Share Consideration ”), calculated based upon a price per share equal to the average of the closing price of Primo Stock on The NASDAQ Global Select Market for the 20 most recent trading days prior to the Closing Date, with each day’s closing price converted from U.S. dollars to Canadian dollars based on such day’s exchange rate as listed in The Wall Street Journal (the “ Average Closing Price ”); and

(ii) the assumption of the Assumed Liabilities.

For the avoidance of doubt, no Party shall be required to make a duplicative payment with respect to the same item under this Section 2.5, Article VII or otherwise under this Agreement.

(b) Subject to the terms and conditions of this Agreement, at the Closing, the Buyer will (i) pay the Cash Consideration to the Seller by wire transfer of immediately available funds to a bank account or accounts designated at least one Business Day prior to the Closing Date by the Seller and (ii) issue to Culligan Parent (on behalf, and upon the direction, of the Seller) the number of shares of Primo Stock equal to (1) the Share Consideration divided by (2) the Average Closing Price.

(c) The Parties intend for this Agreement to be effective from an economic standpoint as of 11:59 p.m. local time on December 31, 2010 (the “ Economic Closing Date ”). In order to accomplish this, the Parties have mutually agreed to deduct the Closing Adjustment Amount from the Base Amount and the resulting Cash Consideration shall be paid by the Buyer in accordance with Section 2.5(b).

2.6 Closing . Subject to the satisfaction or written waiver of the conditions in Article V, 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 10:30 a.m. local time on March 8 2011 (the “Closing Date” ). Subject to the consummation of the Closing on 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.

2.7 Post-Closing Deliveries. Within ten Business Days after the Closing Date, the Seller will deliver a detailed list of each of the Accounts Receivable and the Accounts Payable, in each case as of the Closing Date.

2.8 Allocation of Purchase Price . The Buyer shall use commercially reasonable efforts to prepare a schedule setting forth the fair market value of the Purchased Assets for purposes of allocating the Purchase Price and other relevant items among the Purchased Assets (the “Allocation Schedule” ) prior to the date which is sixty days following the Closing Date and shall deliver such Allocation Schedule to the Seller promptly after it is prepared. The allocation shall be reasonable and shall be based on appraisals conducted by an appraiser chosen by the Buyer. The Seller shall be provided with a reasonable opportunity to review and comment on the Allocation Schedule. If the Buyer and the Seller agree upon the Allocation Schedule after the Closing then (a) such allocation shall be the agreed allocation and (b) the Buyer and the Seller shall file any required Tax Returns in accordance with the Allocation Schedule and shall take no position inconsistent with the Allocation Schedule unless required by applicable Law or to reflect subsequent developments such as an adjustment to the Purchase Price. If the Buyer and the Seller cannot reach agreement on the Allocation Schedule, each shall be entitled to use its own allocation.

2.9 Withholding . Notwithstanding anything to the contrary in this Article II, the Buyer shall be permitted to deduct and withhold any amounts from the Purchase Price to the extent required by the ITA or applicable Law. As of the date hereof, to the Knowledge of the Buyer, no such deduction or withholding of any amounts from the Purchase Price is required by the ITA or applicable Law. Any amounts so deducted and withheld shall be treated as if paid to the Seller.

2.10 Certain Tax Matters.

(a) For purposes of this Agreement, all personal property, intangibles, and other similar Taxes, including, without limitation, any such Taxes paid or payable pursuant to the terms of any lease or other Contract (and excluding any Transfer Taxes, which shall be governed by Section 2.10(c)), paid or payable with respect to the Purchased Assets for any Straddle Tax Period shall be allocated to the Pre-Closing Tax Period and the period beginning on the day after the Closing Date on a per diem basis. For the avoidance of doubt, any license, registration and permitting fees that arise as a result of the Transactions shall be for the account of the Buyer.

(b) For purposes of this Agreement, except as provided in Section 2.10(a), Taxes paid or payable with respect to the Purchased Assets for any Straddle Tax Period (and excluding any Transfer Taxes, which shall be governed by Section 2.10(c)) shall be allocated to the Pre-Closing Tax Period and the period beginning on the day after the Closing Date on the basis of an interim closing of the books as of the completion of the Closing.

(c) Each of the Seller, on the one hand, and the Buyer, on the other hand, shall bear and pay 50% of the aggregate amount of all stamp, transfer, documentary, registration and other such similar Taxes (other than sales and use Taxes) (collectively, “Transfer Taxes” ) incurred in connection with the transfer of the Purchased Assets, except that the Buyer shall bear 100% of (i) any value added or similar tax to the extent such transfer tax is recoverable, including, without limitation, GST/HST and QST and ( ii ) any fees or Taxes related to any registration, application or recordation in respect of trademarks, trade names or similar intangible property arising in connection with assignment of such trademarks, trade names or similar intangible property pursuant to this Agreement. The Buyer shall be responsible for all sales and use Taxes incurred in connection with the transfer of the Purchased Assets. The Buyer shall file, or shall cause to be filed, to the extent permitted by applicable Law, all Tax Returns in respect of Transfer Taxes as may be required to comply with the provisions of the Tax Law of the relevant Tax jurisdictions. The Seller shall cooperate with the Buyer in connection with all such filings and shall file or cause to be filed those Tax Returns that the Buyer is not permitted to file. The Seller and the Buyer shall cooperate in obtaining all applicable certificates to reduce or eliminate Transfer Taxes and sales and use Taxes.

(d) If available, the Buyer and the Seller will complete and sign, within ten Business Days after the Closing Date, joint elections under Section 167(1) of the ETA and under Section 75 of the QSTA to permit the sale and purchase of the Purchased Assets to take place on a GST/HST-free basis under Part IX of the ETA and on a QST-free basis. The Buyer will file each election with the appropriate Governmental Authority within the time permitted under the ETA and QSTA. If at any time the Seller is assessed by a Governmental Authority on the basis that an election is not valid, the Buyer agrees to pay to the Seller any GST/HST and QST, interest and penalties assessed by the Governmental Authority. The Seller is registered for GST/HST purposes under the ETA (registration number 87049 4739 RT0001) and for QST purposes under the QSTA (registration number 1010347005 TQ0001). The Buyer is registered for GST/HST purposes under the ETA (registration number 803269455 RT0001) and for QST purposes under the QSTA (registration number 1216775755 TQ0001).

(e) If the Seller or the Buyer, as the case may be, shall receive and realize in cash (or cash equivalent) a refund of any Tax the liability for which was the subject of allocation under Section 2.10(a), (b) or (c), the amount of that refund shall be prorated between the parties in accordance with the manner in which the related Tax liability was allocated. In the case of a Tax that is not subject to apportionment under Section 2.10(a), (b) or (c), if the Seller on the one hand, or the Buyer on the other hand, shall receive and realize in cash (or cash equivalent) a refund of such Tax and such Tax has been paid or borne by the other party, the party receiving the refund shall promptly remit such refund to the other party less any costs or expenses incurred by the receiving party in connection therewith.

(f) The Buyer and the Seller shall 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.

(g) The Parties agree that, to the extent an amount of the Purchase Price is to be paid by the Buyer in respect of the Non-Competition Agreement to the Seller as consideration for its obligations thereunder, the Buyer and the Seller covenant to jointly elect in the prescribed form pursuant to proposed paragraph 56.4(3)(b) of the ITA in respect of the Non-Competition Agreement and to execute and file such joint election within the time specified in proposed subsection 56.4(14) of the ITA. If any provincial taxing authority proposes a similar provision, then the Buyer and the Seller shall make corresponding provincial elections. If no amount of the Purchase Price is allocated to or paid in respect of the Non-Competition Agreement, the Buyer and the Seller covenant to jointly elect in the prescribed form under Subsection 56.4(7) of the ITA to apply subsection 56.4(5) of the ITA in respect of the Non-Competition Agreement. The Buyer and the Seller will cooperate with one another in preparing, executing and filing the election form contemplated by this Section 2.11(g) with a view to ensure that (i) to the extent any amount of the Purchase Price is allocated to the Non-Competition Agreement, that amount is not treated as income of the Seller and is not subject to any withholding tax for Canadian tax purposes; and (ii) section 68 of the ITA does not apply to deem consideration to be received or receivable by the Seller for entering into the Non-Competition Agreement. The covenants in this Section 2.11(g) will survive the Closing and continue in effect for as long as necessary in order to achieve that purpose.

(h) To the extent that the Seller has received payments prior to the Closing Date from customers or any other persons in respect of those Liabilities to be performed after the Closing Date that are assumed under this Agreement, Purchased Assets having a fair market value equal to the amount of such payments are being transferred to the Buyer under this Agreement as payment for the Seller’s agreement to assume those Liabilities and the Seller and the Buyer will file an election pursuant to the provisions of subsections 20(24) and 20(25) of the ITA, and any corresponding provisions of any other applicable Tax Law, within the prescribed time period.

(i) The Buyer and the Seller will execute and file, within the prescribed time limits, a joint election under Section 22 of the ITA and Section 184 of the Taxation Act (Quebec), if applicable, with respect to the Accounts Receivable in respect of the Business and any corresponding provisions of any other applicable Tax Law and will designate in that joint election the portion of the Purchase Price allocated to those Accounts Receivable as the consideration paid by the Buyer and the Seller for such Accounts Receivable for the purpose of the election.

ARTICLE III
REPRESENTATIONS AND WARRANTIES REGARDING THE SELLER

The Seller (and, with respect to Sections 3.1, 3.2, 3.3, 3.4 and 3.21 only, Culligan Parent) represents and warrants as follows:

3.1 Organization, Qualification and Corporate Power . Schedule 3.1 sets forth the Seller’s jurisdiction of incorporation or organization, the other jurisdictions in which it is qualified to do business, and its directors and officers. The Seller is a corporation incorporated, organized and subsisting under the Law of its jurisdiction of incorporation. The Seller has delivered to the Buyer correct and complete copies of its Organizational Documents. Culligan Parent is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation.

3.2 Capitalization . Except as set forth on Schedule 3.2 , Culligan Parent owns all of the outstanding equity of the Seller. There are no outstanding securities convertible or exchangeable into equity of the Seller.

3.3 Authority . Each Culligan Party has full corporate power, authority and capacity to execute and deliver this Agreement and to perform its obligations hereunder. The execution, delivery and performance by the Seller of this Agreement have been approved by the equityholders of the Seller. The execution and delivery by each Culligan Party of each Transaction Document to which it is a party and the performance by such Culligan Party of the Transactions have been duly authorized by all requisite corporate action of such Culligan Party. 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 each Culligan Party, enforceable against such Culligan Party, respectively, in accordance with the terms of this Agreement and (b) each Transaction Document to which each Culligan Party is a party constitutes the valid and legally binding obligation of such Culligan Party, as applicable, enforceable against such Culligan Party in accordance with the terms of such Transaction Document.

3.4 No Conflicts . Except as set forth on Schedule 3.4 , 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 Culligan Party or any Purchased Asset is subject; (b) violate any Permit held by any Culligan Party and related to the Business or give any Governmental Body the right to terminate, revoke, suspend or modify any Permit held by any Culligan Party and related to the Business, except in each case with respect to Permits that individually or in the aggregate are not material; (c) violate any Organizational Document of any Culligan Party; (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 Assigned Contract or any Contract to which any Purchased Asset is subject; or (e) result in the imposition of any Encumbrance upon any Purchased Asset other than Permitted Encumbrances. Except as set forth on Schedule 3.4 , no Culligan Party is required to notify, make any filing with, or obtain any Consent of any Person in order to perform the Transactions.

3.5 Financial Information .

(a) Set forth on Schedule 3.5(a) is unaudited financial information for the Business for the 12-month periods ending December 31, 2008, 2009 and 2010 (the “Financial Information” ). The Financial Information presents fairly the performance of the Business for the respective dates presented.

(b) Set forth on Schedule 3.5(b) is a detailed list of the Accounts Receivable as of December 31, 2010, which list sets forth the aging of such Accounts Receivable.

(d) To the Knowledge of the Seller, the aggregate amount of the Deposit Liabilities as of December 31, 2010 was $608,000, which aggregate amount is fairly stated based upon the methodology used by the Seller to estimate the Deposit Liabilities.

(e) Since December 31, 2010, the Seller has operated the Business in the ordinary course of business, it being understood that the ordinary course of business includes the receipt of certain services from the Buyer (in its role as the service provider under the Existing Services Agreement).

3.6 No Undisclosed Liabilities . The Seller has no material Liability arising from the Business (and no basis exists for any such material Liability), except for (i) Liabilities under executory Contracts that are either listed on Schedule 3.12 or are not required to be listed thereon, excluding Liabilities for any breach of any executory Contract and (ii) current Liabilities incurred in the ordinary course of business (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).

3.7 Title to and Sufficiency of Assets . The Seller has good and marketable title to, or other right in, the Purchased Assets, free and clear of any Encumbrances except Permitted Encumbrances. The quantities of the Tangible Personal Property and the Inventory are reasonable in the present circumstances of the Business and are not materially more or less than normal levels necessary to conduct the Business in the ordinary course consistent with past practices. The Seller does not own or license any Intellectual Property that is included in the Purchased Assets.

3.8 Tangible Personal Property; Condition of Purchased Assets . Each item of Tangible Personal Property is free from material defects and adequate for the uses to which it is being put. Each item of Tangible Personal Property is in good operating condition and is not in need of maintenance or repairs, except for ordinary, routine maintenance and repairs that are not material in nature or cost.

3.9 Accounts Receivable . All Accounts Receivable that are reflected on the accounting records of the Seller as of the Closing Date represent or will represent valid obligations arising from products or services actually sold by the Seller in the ordinary course of business. There is no material contest, claim or right to set-off, other than returns in the ordinary course of business, under any Contract with any obligor of an Account Receivable relating to the amount or validity of such Account Receivable.

3.10 Inventory . The Inventory is in all material respects of a quality usable for its intended purpose in the ordinary course of business consistent with past practices.

3.11 Real Property . The Seller does not own or lease any real property that is exclusively used in the Business.

3.12 Contracts . Schedule 3.12 lists each Assigned Contract with the customers listed on Schedule 3.18 (the “Material Assigned Contracts” ). Each Material Assigned Contract, with respect to the Seller, is legal, valid, binding, enforceable, in full force and effect and, assuming compliance with the applicable matters referred to on Schedule 3.4, will continue to be so on identical terms following the Closing Date. Each Material Assigned Contract, with respect to the other parties to such Material Assigned Contract, to the Knowledge of the Seller, is legal, valid, binding, enforceable, in full force and effect and, assuming compliance with the applicable matters referred to on Schedule 3.4 , 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 Assigned 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 Assigned Contract. To the Knowledge of the Seller, no party to any Material Assigned Contract has repudiated any provision of any Material Assigned Contract.

3.13 Tax .

(a) (i) All material Tax Returns required to be filed with respect to the Business for all periods through and including the Closing Date have been duly and timely filed, and such Tax Returns are true, correct and complete in all material respects, (ii) all material Taxes required to be paid (or required to be withheld and paid) with respect to (x) the Business or the Purchased Assets or (y) any amounts owed by, or related to, the Business to any employee, creditor, independent contractor or other third party have been duly and timely paid (or withheld and paid), (iii) none of the Purchased Assets is subject to any Encumbrances (other than Permitted Encumbrances) as a result of a failure to pay any Tax, and (iv) no written claim has been made by a Governmental Body within the last three years in a jurisdiction where the Seller or any Affiliate of the Seller has not filed Tax Returns with respect to the Purchased Assets or the Business that the Seller or any Affiliate of the Seller is or may be subject to taxation in such jurisdiction with respect to the Purchased Assets or the Business.

(b) Since December 31, 2009 and as of the date hereof, the Seller has not incurred any Liability for Taxes in respect of any of the Purchased Assets or the Business outside the ordinary course of business.

(d) Notwithstanding any of the representations and warranties contained elsewhere in this Agreement, the representations and warranties contained in this Section 3.13 are the sole and exclusive representations and warranties made by the Seller relating to matters arising under Tax Law.

3.14 Legal Compliance . The Seller is, and since January 1, 2007, has been, in compliance in all material respects with all applicable Law and Permits related to the Business, and no Proceeding is pending, nor since January 1, 2007, has been filed or commenced, against the Seller alleging any failure to comply with any applicable Law or Permit related to the Business. To the Knowledge of the Seller, no event has occurred or circumstance exists that (with or without notice or lapse of time) may constitute or result in a violation by the Seller of any Law or Permit related to the Business. The Seller has not received any written notice or other written communication from any Person, or to the Knowledge of the Seller, any notice or other communication regarding any actual, alleged or potential violation by the Seller of any Law or Permit related to the Business or any cancellation, termination or failure to renew any Permit related to the Business held by the Seller.

3.15 Permits . The Seller does not hold any Permits that are exclusively used in the Business.

3.16 Litigation and Orders . There is no Proceeding pending or, to the Knowledge of the Seller, threatened or anticipated relating to or affecting (a) the Business, any Purchased Asset or any other asset owned or used by the Seller in connection with the Business or (b) the Transactions. There is no outstanding Order to which the Business or any Purchased Asset is subject. No Proceeding has been pending at any time since January 1, 2007, 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 since January 1, 2007, in which the Seller has been a plaintiff, in each case relating to the Business. No Order relating to the Business has been in effect at any time since January 1, 2007 to which any Purchased Asset is subject.

3.17 Environmental .

(a) With respect to the Business, the Seller has complied and is in compliance in all material respects with all Environmental Law, including obtaining and complying with all material Permits that are required pursuant to any Environmental Law;

(b) with respect to the Business, 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 under Environmental Law; and

(c) with respect to the Business, the Seller has not, either expressly or by operation of Law, assumed or undertaken any material Liability of any other Person under any Environmental Law.

3.18 Customers . With respect to each of the two fiscal years most recently completed prior to the date hereof, Schedule 3.18 lists the three largest (by dollar volume) customers of the Business during each such period (showing the approximate, unaudited dollar volume in descending order). Except as set forth on Schedule 3.18 , since October 1, 2010 no customer listed on Schedule 3.18 has notified the Seller of a likely material decrease in the volume of purchases from the Seller, or a material decrease in the price that any such customer is willing to pay for products or services of the Seller, or of the bankruptcy or liquidation of any such customer.

3.19 Solvency . The Seller is not an insolvent person within the meaning of the Bankruptcy and Insolvency Act (Canada) and will not become insolvent as a result of any of the Transactions. 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 and (c) 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.

3.20 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.

3.21 Securities Law .

(a) Culligan Parent 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 Law.

(b) Culligan Parent has been furnished all of the materials relating to Primo Parent and its purchase of the Share Consideration that have been requested and has been afforded an opportunity to ask questions of, and receive answers from, management of Primo Parent in connection with the Share Consideration. Culligan Parent has not been furnished with any oral or written representation in connection with the purchase of the Share Consideration by or on behalf of Primo Parent that it has relied on that is not contained in this Agreement.

(c) Culligan Parent: (i) is an “accredited investor” as defined in Rule 501 of Regulation D under the Securities Act; (ii) has obtained, in its judgment, sufficient information to evaluate the merits and risks of the purchase of the Share Consideration; (iii) has sufficient knowledge and experience in financial and business matters to evaluate the merits and risks associated with such purchase of 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 purchase of the Share Consideration.

(d) The Share Consideration is being acquired for Culligan Parent’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. Culligan Parent 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 Law of any states, and, therefore, the shares of such Share Consideration are “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 Law 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, Culligan Parent understands that Primo Parent is not under any obligation to register such Share Consideration on Culligan Parent’s behalf or to assist Culligan Parent in complying with any exemption from registration under the Securities Act or applicable state securities Law. Culligan Parent understands that Primo Parent may require, as a condition to registering the transfer of such Share Consideration, an opinion of counsel satisfactory to Primo Parent to the effect that such transfer does not violate such registration requirements.

(e) Culligan Parent intends that the state securities Law of Illinois alone (and not the securities Law of any other state) will apply to its acquisition of the Share Consideration. Culligan Parent meets all suitability standards imposed by the state of Illinois relating to the purchase of the Share Consideration hereunder without registering such Share Consideration under the securities Law of such state. For greater certainty, as the Share Consideration will be issued to Culligan Parent on behalf of and upon the direction of the Seller pursuant to Section 2.5(b) hereof, and not to the Seller, the issuance of the Share Consideration to Culligan Parent is not otherwise subject to the securities Law of any province of Canada.

3.22 Disclosure . To the Knowledge of the Seller, no representation or warranty contained in this Article III 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.

3.23 Retail Locations . The Business is currently conducted by the Seller at a minimum of 775 retail locations. As of the date hereof, to the Knowledge of the Seller, no such retail location intends to terminate Seller’s right to conduct the Business at such retail location.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES REGARDING THE PRIMO PARTIES

Except as disclosed in any report, schedule, form or other document filed with, or furnished to, the SEC by Primo Parent prior to the date hereof , the Primo Parties represent and warrant to the Seller as follows:

4.1 Organization . Primo Parent is a corporation duly organized, validly existing and in good standing under the Law of the jurisdiction of its incorporation. The Buyer is incorporated as a company under the laws of the Province of British Columbia, is a valid and existing company and is in good standing. Primo Parent has no direct or indirect subsidiaries other than Primo Refill, LLC, the Buyer, Primo Direct, LLC, Primo Ice, LLC and Primo Products, LLC (each a “Primo Subsidiary” and together the “Primo Subsidiaries” ), each of which is duly organized, validly existing and in good standing under the Law of the state of its organization. The Buyer has no subsidiaries. Each Primo Party has delivered to the Seller correct and complete copies of the Organizational Documents of such Primo Party.

4.2 Capitalization . The entire authorized capital stock of Primo Parent consists of (a) 70,000,000 shares of common stock, par value USD$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 USD$0.001 per share, none of which are outstanding. All of the outstanding capital stock of Primo Parent has been duly authorized and is validly issued, fully paid and nonassessable. Except as set forth on Schedule 4.2 or contemplated under this Agreement, there are no outstanding securities convertible or exchangeable into capital stock of the Primo Parent 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 Parent to issue, sell or otherwise cause to become outstanding or to acquire, repurchase or redeem capital stock of Primo Parent. The Share Consideration will be duly authorized and validly issued and, upon the issuance of the Share Consideration as set forth in Section 2.5, will be fully paid, nonassessable and free of preemptive rights. Primo Parent does not directly or indirectly own or control any direct or indirect equity interest in any Person other than the Primo Subsidiaries. Primo Parent owns all of the outstanding equity of the Buyer.

4.3 Authority . Each Primo Party has full corporate or limited liability company power, authority and capacity, as applicable, to execute and deliver this Agreement and to perform its obligations hereunder. The execution, delivery and performance by each Primo Party of this Agreement have been approved by the board of directors of such Primo Party. The execution and delivery by each Primo Party of each Transaction Document to which such Primo Party is a party and the performance by such Primo Party of the Transactions have been duly authorized by all requisite corporate action of such Primo Party. 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 each Primo Party, enforceable against such Primo Party, respectively, in accordance with the terms of this Agreement and (b) each Transaction Document to which each Primo Party is a party constitutes the valid and legally binding obligation of such Primo Party, as applicable, enforceable against such Primo Party in accordance with the terms of such Transaction Document.

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 any Primo Party is subject; (b) violate any Permit held by any Primo Party or give any Governmental Body the right to terminate, revoke, suspend or modify any Permit held by any Primo Party, except in each case with respect to Permits that individually or in the aggregate are not material; (c) violate any Organizational Document of any Primo Party; (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 material Contract to which any Primo Party is a party or by which any Primo Party is bound; or (e) result in the imposition of any Encumbrance upon any asset of any Primo Party other than Permitted Encumbrances. Except as set forth on Schedule 4.4 , no Primo Party is required to notify, make any filings 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 following financial statements (collectively, the “Primo Financial Statements” ): (i) audited balance sheet of Primo Parent as of December 31, 2008 and 2009, and statements of income, changes in stockholders’ equity, and cash flow for the fiscal years then ended, together with the notes thereto and the reports thereon of McGladrey & Pullen, LLP, independent certified public accountants; and (ii) an unaudited balance sheet of Primo Parent as of September 30 , 2010, and statements of income, changes in stockholders’ equity and cash flow for the nine-month period then ended. The Primo Financial Statements have been prepared in accordance with GAAP applied on a consistent basis throughout the periods covered thereby, and present fairly the financial condition and results of operations of Primo Parent as of and for their respective dates; provided , however , that the interim financial statements described in clause (ii) above are subject to normal, recurring year-end adjustments (which will not be, individually or in the aggregate, materially adverse) and lack notes (which, if presented, would not differ materially from the notes accompanying the balance sheet dated as of December 31, 2009).

(b) The books and records of Primo Parent (i) are complete and correct in all material respects and all transactions to which Primo Parent is or has been a party are accurately reflected therein in all material respects on an accrual basis, (ii) reflect all material discounts, returns and allowances by Primo Parent with respect to the periods covered thereby, (iii) have been maintained in accordance with customary and sound business practices in Primo Parent’s industry, (iv) form the basis for the Primo Financial Statements and (v) reflect in all material respects the assets, liabilities, financial position, results of operations and cash flows of Primo Parent on an accrual basis. All computer-generated reports and other computer output included in the books and records of Primo Parent are complete and correct in all material respects and were prepared in accordance with sound business practices based upon authentic data. Primo Parent’s management information systems are adequate for the preservation of relevant information and the preparation of accurate reports.

4.6 No Undisclosed Liabilities . Neither Primo Parent nor any Primo Subsidiary has any material Liability (and no basis exists for any such material Liability), except for (a) Liabilities under executory Contracts, excluding Liabilities for any breach of any executory Contract, (b) Liabilities to the extent reflected or reserved against on the Primo Parent interim balance sheet dated as of September 30, 2010, (c) current Liabilities incurred in the ordinary course of business since September 30, 2010 (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), and (d) Liabilities not required to be disclosed on a balance sheet of Primo Parent prepared in accordance with GAAP in a manner consistent with the Primo Parent balance sheet dated as of December 31, 2009.

4.7 Intellectual Property .

(a) Primo Parent owns or has the right to use all Intellectual Property necessary for the operation of its business as presently conducted. To the Knowledge of the Buyer, Primo Parent has taken all necessary action to maintain and protect each item of Intellectual Property that it owns that is used in its business.

(b) Neither the operation of its business nor the Intellectual Property owned by Primo Parent infringes the Intellectual Property of any third party. Except as set forth on Schedule 4.7(b) , to the Knowledge of the Buyer, Primo Parent is not aware of any Proceeding alleging any such infringement and has not received any notice alleging any such infringement. Except as set forth on Schedule 4.7(b) , to the Knowledge of the Buyer, no third party has infringed or is infringing upon any Intellectual Property owned by Primo Parent.

(c) Except as set forth on Schedule 4.7(c) , Primo Parent has not granted any license, agreement or other permission to any third party (whether active and in force or terminated, canceled or expired) with respect to any Intellectual Property owned by Primo Parent.

4.8 Taxation .

(a) Except as set forth in Schedule 4.8 , (i) all material Tax Returns required to be filed by Primo Parent and the Primo Subsidiaries for all periods through and including the Closing Date have been duly and timely filed, and such Tax Returns are true, correct and complete in all material respects, (ii) all material Taxes required to be paid (or required to be withheld and paid) with respect to (x) Primo Parent or any of the Primo Subsidiaries or (y) any amounts owed by Primo Parent or any of the Primo Subsidiaries to any employee, creditor, independent contractor or other third party have been duly and timely paid (or withheld and paid), (iii) none of the assets of Primo Parent or any of the Primo Subsidiaries is subject to any Encumbrance (other than Permitted Encumbrances) as a result of a failure to pay any Tax and (iv) no written claim has been made by a Governmental Body within the last three years in a jurisdiction where Primo Parent or any of the Primo Subsidiaries has not filed Tax Returns that Primo Parent or any of the Primo Subsidiaries is or may be subject to taxation in such jurisdiction.

(b) Except as set forth on Schedule 4.8 , since December 31, 2009 and as of the date hereof, neither Primo Parent nor any of the Primo Subsidiaries has incurred any Liability for Taxes outside the ordinary course of business.

(c) Notwithstanding any of the representations and warranties contained elsewhere in this Agreement, the representations and warranties contained in this Section 4.8 are the sole and exclusive representations and warranties made by the Primo Parties relating to matters arising under Tax Law.

4.9 Legal Compliance . Except as set forth on Schedule 4.9 , Primo Parent and all of the Primo Subsidiaries are, and since January 1, 2007, have been, in compliance in all material respects with all applicable Law and Permits. Except as set forth on Schedule 4.9 , no Proceeding is pending, nor since January 1, 2007, has been filed or commenced, against Primo Parent or any of the Primo Subsidiaries alleging any failure to comply with any applicable Law or Permit. To the Knowledge of the Buyer, no event has occurred or circumstance exists that (with or without notice or lapse of time) may constitute or result in a violation by Primo Parent or any of the Primo Subsidiaries of any Law or Permit. Except as set forth on Schedule 4.9 , neither Primo Parent nor any Primo Subsidiary has received any written notice or other written communication from any Person, or to the Knowledge of the Buyer, any notice or other communication regarding any actual, alleged or potential violation by Primo Parent or any of the Primo Subsidiaries of any Law or Permit or any cancellation, termination or failure to renew any Permit held by Primo Parent or any of the Primo Subsidiaries.

4.10 Litigation and Orders . There is no material Proceeding pending or, to the Knowledge of the Buyer, threatened or anticipated relating to or affecting (a) the business of Primo Parent or (b) the Transactions. There is no outstanding Order to which the business of Primo Parent is subject. Schedule 4.10 lists all material Proceedings pending at any time since January 1, 2007, in which Primo Parent or any Primo Subsidiary has been named as a defendant (whether directly, by counterclaim or as a third party defendant) and all material Proceedings pending at any time since January 1, 2007, in which Primo Parent or any Primo Subsidiary has been a plaintiff. There are no Orders relating to the business of Primo Parent in effect at any time since January 1, 2007 to which any asset owned by Primo Parent or any Primo Subsidiary is subject.

4.11 Environmental . Except as set forth on Schedule 4.11 :

(a) Primo Parent and each of the Primo Subsidiaries has complied and is in compliance in all material respects with all Environmental Law, including obtaining and complying with all material Permits that are required pursuant to any Environmental Law;

(b) Neither Primo Parent nor any of the Primo Subsidiaries has received any written notice, report or other information regarding any actual or alleged violation of any Environmental Law or any Liabilities or potential Liabilities under Environmental Law;

(c) Neither Primo Parent nor any of the Primo Subsidiaries has, either expressly or by operation of Law, assumed or undertaken any material Liability of any other Person under any Environmental Law.

4.12 Employees . Neither Primo Parent nor any of the Primo Subsidiares are, nor has Primo Parent or any of the Primo Subsidiaries been, a party to or bound by any collective bargaining agreement. Neither Primo Parent nor any of the Primo Subsidiaries has experienced any strike, slowdown, picketing, work stoppage, employee grievance process, claim of unfair labor practice or other collective bargaining dispute. There is no lockout of any employees by Primo Parent or any Primo Subsidiary, and no such action is contemplated by Primo Parent or any Primo Subsidiary. Neither Primo Parent nor any Primo Subsidiary has committed any unfair labor practice. To the Knowledge of the Primo Parties, (a) no event has occurred or circumstance exists that could provide the basis for any work stoppage or other labor dispute and (b) there is no organizational effort presently being made or threatened by or on behalf of any labor union with respect to employees of Primo Parent or any Primo Subsidiary.

4.13 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.

4.14 SEC Reports . Primo Parent has timely filed all forms, reports and documents required to be filed by it with the SEC, all of which have complied as of their respective filing dates or, if amended or superseded by a subsequent filing prior to the date hereof, the date of the last such amendment or superseding filing, in all material respects with all applicable requirements of the Securities Act and the Exchange Act. None of the forms, reports or documents filed by Primo Parent with the SEC, including any financial statements or schedules included or incorporated by reference therein, at the time filed (and, in the case of a registration statement, as of its effective date) or, if amended or superseded by a subsequent filing prior to the date hereof, as of the date of the last such amendment or superseding filing, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. Notwithstanding the foregoing, no representation or warranty is made by the Primo Parties with respect to statements made in the forms, reports or documents filed by Primo Parent with the SEC regarding any Culligan Party or any of their Affiliates, any business or former business of any Culligan Party or any of their Affiliates or any assets purchased from any Culligan Party or any of their Affiliates.

4.15 Conduct of Business. Since December 31, 2010, the Buyer (in its role as the service provider under the Existing Services Agreement) has operated the Business in the ordinary course of business.

ARTICLE V
CLOSING CONDITIONS

5.1 Conditions to the Primo Parties’ Obligations . Each Primo Party’s obligation to perform the Transactions contemplated to be performed on or about the Closing Date is subject to satisfaction, or written waiver by such Primo Party, of each of the following conditions:

(a) (i) All of the representations and warranties of the Culligan Parties in this Agreement must be accurate in all material respects as of the Closing Date (except for representations and warranties that are as of a specific date, which representations and warranties must be accurate in all material respects as of such 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 be accurate in all respects, and (ii) each Culligan Party must perform and comply in all material respects with all of its covenants and agreements in this Agreement to be performed prior to or at the Closing.

(b) Each of the following documents must be delivered to the Buyer and must be dated as of the Closing Date:

(i) the Bill of Sale, executed by the Seller;

(ii) the Non-Competition Agreement, executed by the Seller;

(iii) the Trademark Sublicense Agreement, executed by the Seller;

(iv) the Registration Rights Agreement Amendment, executed by the Seller;

(v) the Services Agreement, executed by the Seller;

(vi) the Waiver Agreement, executed by the Seller;

(vii) a certificate of the Seller, in form and substance reasonably satisfactory to the Buyer, certifying that (A) the transactions contemplated by this Agreement are in compliance with the Seller’s credit agreements and (B) all Encumbrances on the Purchased Assets related to Secured Debt will be automatically released upon the Closing;

(viii) a certificate of an officer of the Seller, in form and substance reasonably satisfactory to the Buyer, certifying that attached thereto is a true, correct and complete copy of resolutions duly adopted by the equityholders 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 that such resolutions are still in effect;

(ix) 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

(x) such other documents as the Buyer may reasonably request for the purpose of (A) evidencing the accuracy of the Seller’s representations and warranties, (B) evidencing the Seller’s performance of, and compliance with, any covenant or agreement required to be performed or complied with by the Seller, (C) evidencing the satisfaction of any condition referred to in this Section 5.1, (D) vesting in the Buyer legal and beneficial title to the Purchased Assets, (E) complying with all applicable securities Law or (F) otherwise facilitating the performance of the Transactions.

(c) There must not be any Proceeding pending or threatened against any of the Primo Parties or any of their respective Affiliates that (i) challenges or seeks damages or other relief in connection with any of the Transactions or (ii) may have the effect of making illegal or interfering with any of the Transactions.

5.2 Conditions to the Seller’s Obligations . The Seller’s 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 Primo Parties in this Agreement must be accurate in all material respects as of the Closing Date (except for representations and warranties that are as of a specific date, which representations and warranties must be accurate in all material respects as of such 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 be accurate in all respects, and (ii) the Primo Parties must perform and comply in all material respects with all of their respective covenants and agreements in this Agreement to be performed prior to or at the Closing.

(b) Each of the following documents must be delivered to the Seller and must be dated as of the Closing Date:

(i) the Bill of Sale, executed by the Buyer;

(ii) the Non-Competition Agreement, executed by the Buyer;

(iii) the Trademark Sublicense Agreement, executed by the Buyer;

(iv) the Registration Rights Agreement Amendment, executed by the Buyer;

(v) the Services Agreement, executed by the Buyer; and

(vi) a certificate of an officer of Primo Parent, in form and substance reasonably satisfactory to the Seller, certifying that attached thereto is a true, correct and complete copy of resolutions duly adopted by the board of directors of Primo Parent authorizing the performance of the Transactions and the execution and delivery of the Transaction Documents to which it is a party and that such resolutions are still in effect;

(vii) such other documents as the Seller may reasonably request for the purpose of (A) evidencing the accuracy of each Primo Party’s representations and warranties, (B) evidencing each Primo Party’s performance of, and compliance with, any covenant or agreement required to be performed or complied with by such Primo Party, (C) evidencing the satisfaction of any condition referred to in this Section 5.2, (D) complying with all applicable securities Law or (E) otherwise facilitating the performance of the Transactions.

(c) There must not be any Proceeding pending or threatened against any Culligan Party or any of their respective Affiliates that (i) challenges or seeks damages or other relief in connection with any of the Transactions or (ii) may have the effect of making illegal or interfering with any of the Transactions.

ARTICLE VI
POST-CLOSING COVENANTS

The Parties agree as follows with respect to the period following the Closing Date:

6.1 Payment of Excluded Liabilities . The Seller will pay, perform and discharge the Excluded Liabilities as and when due.

6.2 Payment of Assumed Liabilities . The Buyer will pay, perform and discharge the Assumed Liabilities as and when due.

6.3 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 Law, to the extent applicable to the Transactions, and any bulk sales legislation in the jurisdictions in which any of the Purchased Assets are located. Except for the Assumed Liabilities, which shall be paid by the Buyer as they become due, the Seller shall, after the Closing, pay its creditors as its debts to them become due.

6.4 Consents . This Agreement will not constitute an assignment, attempted assignment or agreement to assign any Contract to the extent that any attempted assignment or agreement to assign such Contract 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 3.4 has not been obtained prior to or at the Closing, then the Seller will use commercially reasonable efforts to obtain such Consent, 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 commercially reasonable efforts (at the Seller’s expense), and the Buyer will cooperate in all reasonable respects with the Seller to obtain 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 to offer or grant any financial accommodation not required by the terms of such Contract. Until such Consent is obtained, or the Contract to which such Consent relates is novated or terminated, to the extent permissible under such Contract, the Buyer will be entitled to receive all of such Seller’s benefits under such Contract and, to the extent it receives such benefits, will perform all of the obligations of the Seller under such Contract. 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 and to provide for the Buyer the benefits, subject to the obligations, of such Contract. 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.

6.5 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 such Seller. The Seller will promptly deliver to the Buyer the original of any mail or other communication received by the Seller after the Closing that directly relates to the Business and a copy of any such mail or other communication to the extent that a portion of such mail or communication relates to the Business. 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 if such check or evidence of indebtedness is in respect of a Purchased Asset. After the Closing, the Seller will promptly remit to the Buyer any payment that is in respect of a Purchased Asset that the Seller receives.

6.6 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 involving the Business, 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 7.1 without regard to Section 7.4).

6.7 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 Governmental Bodies, licensors, licensees, customers, suppliers and others, and the Seller will satisfy the Excluded Liabilities in a manner that is not materially 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 such Seller’s cooperation under Section 7.1 without regard to Section 7.4). The Seller will refer to the Buyer all inquiries relating to the Business.

6.8 Confidentiality . Each Party will, and will cause its Affiliates and Representatives to, maintain, for a period equal to the later of (a) three years following the Closing Date or (b) three years following termination of the information rights of Culligan Parent pursuant to Section 9.9 of that certain Asset Purchase Agreement, dated June 1, 2010, by and among the Culligan Parties, the Primo Parties and the other parties thereto, the confidentiality of the Confidential Information of any other Party (any party to whom Confidential Information belongs shall be referred to in this Section as the “disclosing Party” and any Party who receives Confidential Information of another Party shall be referred to in this Section as the “receiving Party”) at all times, and will not, directly or indirectly, use any Confidential Information of any disclosing Party for its own benefit or for the benefit of any other Person or reveal or disclose any Confidential Information of any disclosing Party to any Person other than authorized Representatives of the disclosing Party, except in connection with this Agreement or with the prior written consent of the disclosing Party. Notwithstanding the foregoing, each Party’s confidentiality obligations with respect to any trade secrets shall continue for so long as such Confidential Information constitutes a trade secret. The covenants in this Section 6.8 will not apply to Confidential Information that (i) is or becomes available to the general public through no breach of this Agreement by the receiving Party or any of their respective Affiliates or Representatives or, to the Knowledge of the receiving Party, breach by any other Person of a duty of confidentiality to the disclosing Party or (ii) a receiving Party is required to disclose by applicable Law; provided , however , that the receiving Party will, to the extent it is legally permitted to do so, notify the disclosing Party in writing of such required disclosure as much in advance as practicable in the circumstances and cooperate with the disclosing Party to limit the scope of such disclosure. At any time that a disclosing Party may request, each other receiving Party will, and will cause their respective Affiliates and Representatives to, turn over or return to the requesting disclosing Party all Confidential Information in any form (including all copies and reproductions thereof) in their respective possession or control. The Buyer may refer to the Business as formerly being owned by the Seller. The Seller will not issue any press release or make any public announcement relating to the subject matter of this Agreement until the earlier of (i) such time as the Buyer has issued a press release or public announcement relating to the subject matter of this Agreement or (ii) the second Business Day after the date hereof.

6.9 Seller Information . After the Closing, the Seller will provide all information concerning the Business as Primo Parent may reasonably request in order for Primo Parent to comply with its obligations under all applicable securities Law, including all filings pursuant to the Exchange Act.

6.10 Personal Information . After the Closing, the Primo Parties will use and disclose all individual personal information included in the Purchased Assets only for the purposes for which it was initially collected by the Seller.

6.11 Regional Operator Agreements . For a period of one year following the Closing Date, the Seller will cooperate with the Buyer in its efforts to enter into a Standard RO Agreement with each of the Franchisees. Neither the Buyer nor any Affiliate of the Buyer will enter into any agreement with respect to the Business with any Franchisee other than a Standard RO Agreement without the written consent of the Seller; provided , however , that the foregoing shall not prohibit the Buyer nor any Affiliate of the Buyer from amending, supplementing or otherwise modifying a Standard RO Agreement with a Franchisee in a manner that both (a) would not reasonably be expected to have a material adverse effect on the Seller and (b) would not, after giving effect to the Waiver Agreement, reasonably be expected to result in a material violation of the franchise agreement between the Seller and such Franchisee; provided , further , that the foregoing provision shall not apply to any Franchisee who is no longer a franchisee of the Seller. The Parties acknowledge and agree that if an amendment, supplement or other modification to a Standard RO Agreement would not reasonably be expected to result in a material violation of the form Culligan of Canada, Ltd. Franchise Agreement previously provided by the Seller to the Buyer, then such amendment, supplement or other modification shall be deemed to not result in a material violation of any franchise agreement between the Seller and any Franchisee, provided , that the Seller has not previously provided the Buyer with written notice to the contrary.

6.12 Provision of Information Related to the Business . For a period of six months following the end of the Transition Period, the Seller will use commercially reasonable efforts to provide the Buyer with all information within the possession of the Seller that the Buyer requests and that is reasonably necessary to be provided to the Buyer in order to allow the Buyer to operate the Business in the ordinary course and consistent with the Seller’s past practices.

6.13 Additional Trademark Sublicense Agreements .

(a) During the term of the Trademark Sublicense Agreement, if (x) the Buyer notifies the Seller that the Buyer intends to engage a third party to operate the Business under the Culligan brand in a territory that (a) is not then assigned to a franchisee of the Seller and (b) is not then being serviced by the Seller pursuant to the Services Agreement, then (y) Seller will enter into a trademark sublicense agreement with such third party, provided that such third party is reasonably satisfactory to the Seller.

(b) During the term of the Trademark Sublicense Agreement, if the franchise agreement between the Seller and any of Seller’s franchisees with whom the Buyer or one of its Affiliates has entered into a Standard RO Agreement is terminated by the Seller for any reason, the Seller shall (i) cooperate with the Buyer to locate a replacement third party service provider in the territory formerly serviced by the terminated franchisee and (ii) enter into a trademark sublicense agreement with such third party, provided that such third party is reasonably satisfactory to the Seller.

(c) Any such trademark sublicense agreement entered into pursuant to this Section 6.13 or Section 6.14 (i) shall grant such third party the right to use the Marks (as such term is defined in the Trademark Sublicense Agreement) on a royalty-free basis in the operation of the Business to the extent reasonably necessary for such third party to service the Business in the territory, (ii) shall not grant such third party any rights to use the Marks in any territory that is then assigned to a Franchisee pursuant to a franchise agreement with the Seller, (iii) shall terminate upon the earlier of (A) the termination of the Standard RO Agreement (as such agreement may be amended, supplemented or otherwise modifed pursuant to Section 6.11) between such third party and the Buyer and (B) the termination of the Trademark Sublicense Agreement and (iv) shall otherwise be in form and substance reasonably satisfactory to the Buyer and the Seller.

6.14 Franchise Agreements . For a period of three years following the Closing Date, the Seller shall not enter into any new franchise agreement unless the Seller uses commercially reasonable efforts to cause the new franchisee to provide the Buyer with a written offer to enter into a Standard RO Agreement with the Buyer, provided that the initial term of such Standard RO Agreement would expire on the fifth anniversary of the Closing Date. If such new franchisee and the Buyer enter into a Standard RO Agreement, the Seller shall (a) execute a waiver agreement substantially similar to the Waiver Agreement with respect to such new franchisee and (b) grant such new franchisee the right to use the Marks (as such term is defined in the Trademark Sublicense Agreement) on the terms set forth in Section 6.13(c).

6.15 Transition Services . For a period of 90 days following the Closing Date (the “ Transition Period ”), the Seller shall provide the services set forth on Schedule 6.15 (the “ Transition Services ”) to the Buyer at no cost. The Transition Services shall be provided in materially the same scope and manner as provided by the Seller to the Business prior to the Closing Date. No later than 30 days following the Closing Date, the Seller shall provide detailed Accounts Receivable and Accounts Payable information (by invoice), as well as all relevant billing information and contacts and payment information and contacts to enable the Buyer to begin to transition control of the Transition Services and to operate the Business.

ARTICLE VII
INDEMNIFICATION

7.1 Indemnification by the Seller . After the Closing and subject to the terms and conditions of this Article VII, the Seller will indemnify and hold harmless the Buyer and its Affiliates and Representatives (collectively, the “Buyer Indemnitees” ) from, and pay and reimburse the Buyer Indemnitees for, all Losses directly or indirectly relating to or arising from: (a) any breach or inaccuracy or any allegation of any third party that, if true, would be a breach or inaccuracy of any representation or warranty made by any Culligan Party in this Agreement or pursuant to the certificates delivered pursuant to Section 5.1; (b) any breach of any covenant or agreement of any Culligan Party in this Agreement; (c) 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 other bulk sales legislation in any jurisdiction where any of the Purchased Assets are located other than as a result of any failure by the Buyer to discharge any Assumed Liability; and (d) any Liability (other than Assumed Liabilities and other than Liabilities for Taxes (the allocation of which is governed by Article II)) arising out of the operation of the Business on or prior to the Closing Date.

7.2 Indemnification by the Buyer . After the Closing and subject to the terms and conditions of this Article VII, the Buyer will indemnify and hold harmless the Seller and its Affiliates and Representatives (collectively, the “Seller Indemnitees” ) from, and pay and reimburse the Seller Indemnitees for, all Losses directly or indirectly relating to or arising from: (a) any breach or inaccuracy or any allegation of any third party that, if true, would be a breach or inaccuracy of any representation or warranty made by any Primo Party in this Agreement or pursuant to the certificates delivered pursuant to Section 5.2; (b) any breach of any covenant or agreement of any Primo Party in this Agreement; (c) any failure to pay, perform or otherwise discharge any Assumed Liability as and when due and (d) any Liability (other than Excluded Liabilities) arising out of the operation of the Business after the Closing Date.

7.3 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. 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, unless the Buyer notifies the Seller of such a claim on or before the date eighteen (18) months after the Closing Date; provided , however , that (a) any claim relating to Section 3.17 (environmental) may be made

at any time until the date three years after the Closing Date, (b) any claim relating to Section 3.13 (taxes) may be made at any time until the date 30 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 3.1 (organization), 3.3 (authority), 3.4 (conflicts) or 3.7 (title to assets), the certificate delivered pursuant to Section 5.1(b)(vi), 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. 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, unless the Seller notifies the Buyer of such a claim on or before the date eighteen (18) months after the Closing Date; provided , however , that any claim relating to Section 4.8 (taxes) may be made at any time until the date 30 days after the expiration of the applicable statute or period of limitations (including any extension of such statute or period of limitations) and any claim relating to Section 4.1 (organization) 4.2 (capitalization) 4.3 (authority), or 4.4 (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 Seller, 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.

7.4 Limitations on Indemnification .

(a) The Seller will have no Liability with respect to the matters described in Section 7.1(a): (i) in respect of any Loss incurred or suffered by the Buyer Indemnitee that is not a Qualifying Loss and (ii) until such time as the aggregate of all Qualifying Losses that Buyer Indemnitees may have under Section 7.1(a) exceeds CDN$37,500 (the amount referred to in this clause (ii), the “Seller Indemnity Threshold” ), and then only for the aggregate amount of all Qualifying Losses in excess of the Seller Indemnity Threshold; provided , however , that any claim relating to Section 3.3 (authority), 3.4 (conflicts), 3.7 (title to assets), 3.13 (taxes), 3.17 (environmental) or 3.20 (brokers) or the certificate delivered pursuant to Section 5.1(b)(vi) will not be subject to or counted towards the Seller Indemnity Threshold. The Seller’s maximum aggregate Liability with respect to the matters described in Section 7.1(a) will be limited to an amount equal to CDN$1,000,000 (the “Seller Cap” ); provided , however , that any claim relating to Section 3.3 (authority), 3.4 (conflicts), 3.7 (title to assets), 3.13 (taxes), 3.17 (environmental) or 3.20 (brokers), the certificate delivered pursuant to Section 5.1(b)(vi) or any covenant or agreement will not be subject to or counted towards the Seller 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 7.2(a): (i) in respect of any Loss incurred or suffered by the Seller Indemnitee that is not a Qualifying Loss and (ii) until such time as the aggregate of all Qualifying Losses that Buyer Indemnitees may have under Section 7.2(a) exceeds CDN$37,500 (the amount referred to in this clause (ii), the “Buyer Indemnity Threshold” ), and then only for the aggregate amount of all Qualifying Losses in excess of the Buyer Indemnity Threshold; provided , however , that any claim relating to Section 4.1 (organization), 4.2 (capitalization), 4.3 (authority), 4.4 (conflicts), 4.8 (taxes) or 4.13 (brokers) will not be subject to or counted towards the Buyer Indemnity Threshold. The Buyer’s maximum aggregate Liability with respect to the matters described in Section 7.2(a) will be limited to an amount equal to CDN$1,000,000 (the “Buyer Cap” ); provided , however , that any claim relating to Section 4.1 (organization), 4.2 (capitalization), 4.3 (authority), 4.4 (conflicts), 4.8 (taxes) or 4.13 (brokers) 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.

(c) This Section 7.4 will not apply to fraud, including any fraudulent or intentional breach of any representation or warranty.

7.5 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 VII, then the Indemnified Party must notify the Indemnifying Party 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 7.5(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 7.4, 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 Indemnifying Party conducts the defense of the Third-Party Claim actively and diligently and (vi) 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 7.5(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 7.5(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, it being understood that any Party may withhold its consent to a settlement that provides for non-monetary relief. 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 Seller Indemnity Threshold, the Buyer Indemnity Threshold, the Seller Cap or the Buyer Cap, as applicable.

(d) If any condition in Section 7.5(b) is or becomes unsatisfied in any material respect, (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 VII.

(e) Notwithstanding anything to the contrary in this Agreement, each party shall have the sole right to control any audit, examination or Proceeding that relates to any Taxes of the Business for which such party is solely responsible and the parties shall jointly control, each at its own expense, any audit, examination or Proceeding that relates to any Taxes of the Business for which the parties are jointly responsible.

7.6 Other Indemnification Matters . Any claim for indemnification under this Article VII must be asserted by providing written notice to the Seller (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. Each Party agrees to treat all indemnification payments under this Article VII as adjustments to the Purchase Price, including for Tax purposes to the extent permitted by Law. The Seller shall have no obligation to make any indemnification payments under this Article VII prior to the third Business Day following the date upon which the registration statement to be filed by Primo Parent in respect of the Share Consideration pursuant to the Registration Rights Agreement is first declared effective by the SEC; provided , that the foregoing shall in no way limit the Seller’s indemnification obligations under this Article VII except with respect to the timing of such indemnification payment. 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 VII 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.

7.7 PST Clearance Certificates . In respect of the purchase and sale of the Purchased Assets under this Agreement, the Buyer shall not require the Seller to comply with the requirements of section 6 of the Retail Sales Tax Act (Ontario) or any equivalent or corresponding provisions under any other applicable legislation. Notwithstanding anything to the contrary in this Agreement, the Seller will indemnify and hold harmless the Buyer Indemnitees from and pay and reimburse the Buyer Indemnitees for, any provincial sales Tax, penalties and interest payable or assessed against the Seller, directly or indirectly, by reason of, or as a consequence of, any non-compliance with Section 6 of the Retail Sales Tax Act (Ontario) or similar legislation in those jurisdictions in which the Purchased Assets are located. For the avoidance of doubt, the indemnification obligations set forth in this Section 7.7 are not subject to the limitations set forth in Section 7.4.

7.8 Exclusive Remedy . After the Closing, this Article VII will provide the exclusive legal remedy for the matters covered by this Article VII, except for claims based upon fraud. This Article VII will not affect any equitable remedy available to any Party.

ARTICLE VIII
MISCELLANEOUS

8.1 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 in accordance with this Agreement), all as any other Party may reasonably request for the purpose of carrying out the intent of the Transaction Documents.

8.2 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.

8.3 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).

8.4 Successors and Assigns . This Agreement will be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns. No Party 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 other Parties; provided , that the Buyer may assign any or all of its rights or interests, or delegate any or all of their obligations, in this Agreement (a) to any successor to the Buyer or any acquirer of a material portion of the business or assets of the Buyer, (b) to one or more of the Buyer’s Affiliates or (c) to any lender to the Buyer or its Affiliates as security for obligations to such lender; and, provided , further , that no such assignment shall relieve the Buyer of any of its obligations under this Agreement; and, provided , further , that the Buyer shall be responsible for, and shall indemnify the Seller against, any Taxes that would not have arisen but for such assignment or delegation.

8.5 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.

8.6 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 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 any Culligan Party:

Culligan International Company
9399 West Higgins Road
Suite 1100
Rosemont, IL 60018
Fax: (847) 430-2365
Phone: (847) 430-1365
Attn: Susan E. Bennett

with a copy (which shall not constitute notice) to:

Debevoise & Plimpton LLP
919 Third Avenue
New York, NY 10022
Fax: (212) 521-7611
Phone: (212) 909-6611
Attn: John M. Allen, Jr.

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

8.7 JURISDICTION; SERVICE OF PROCESS . EACH PARTY (a) CONSENTS TO THE PERSONAL JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED IN CHICAGO, ILLINOIS (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 8.6 SHALL BE DEEMED EFFECTIVE SERVICE AND (f) WAIVES ANY DEFENSE BASED ON SERVICE OF PROCESS OTHER THAN AS PROVIDED HEREIN.

8.8 Governing Law . This Agreement and all other Transaction Documents (unless otherwise stated therein) will be governed by the Law of the State of Illinois without giving effect to any choice or conflict of law principles of any jurisdiction.

8.9 Amendments and Waivers . No amendment of any provision of this Agreement will be valid unless the amendment is in writing and signed by the Primo Parties and the Culligan Parties. No waiver of any provision of this Agreement will be valid unless the waiver is in writing and signed by the waiving Party. 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.

8.10 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.

8.11 Expenses . Except as otherwise expressly provided in this Agreement, the Culligan Parties will bear all expenses incurred by the Culligan Parties or any of their 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 Primo Parties 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. The Buyer shall be responsible for the payment of any license, registration or permitting fees that arise as a result of the Transactions.

8.12 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.” 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 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. All references to “USD$” refer to U.S. dollars and all references to “CDN$” refer to Canadian dollars.

8.13 Specific Performance . Each Party acknowledges that the other Parties would be damaged irreparably and would have no adequate remedy at 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.

8.14 Waiver of Consequential Damages . Each Party hereby (a) waives all rights to special, indirect, incidental or consequential damages of any kind or nature whatsoever, whether in contract, warranty, tort (including negligence or strict liability) or otherwise, in each case arising out of or related to the Transactions and (b) acknowledges that in no event shall any Party be liable to any other Party for such damages described in clause (a).

8.15 Time Is of the Essence . Time is of the essence with respect to all time periods and dates set forth herein.

[ Signature page follows ]

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


PRIMO REFILL CANADA CORPORATION
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

CULLIGAN OF CANADA, LTD.
By:	/s/ Susan E. Bennett
	Name:	Susan E. Bennett
	Title:	Senior Vice President, General Counsel
		and Secretary

CULLIGAN INTERNATIONAL COMPANY
By:	/s/ Susan E. Bennett
	Name:	Susan E. Bennett
	Title:	Senior Vice President, General Counsel
		and Secretary

Exhibit 10.3

FIRST AMENDMENT TO THE REGISTRATION RIGHTS AGREEMENT

This FIRST AMENDMENT (this “ Amendment ”), dated as of March 8, 2011, to the Registration Rights Agreement, dated as of November 10, 2010, between Primo Water Corporation, a Delaware corporation (the “ Company ”), and Culligan International Company, a Delaware corporation (“ Culligan ”) (the “ Registration Rights Agreement ”), is made between the Company and Culligan. Capitalized terms used in this Amendment without definition shall have the meanings ascribed to such terms in the Registration Rights Agreement.

A. On March 8, 2011, the Company, Primo Refill Canada Corporation (the “ Buyer ”), Culligan and Culligan of Canada, Ltd. (the “ Seller ”) entered into an Asset Purchase Agreement (the “ Second Purchase Agreement ”) pursuant to which the Buyer agreed to acquire certain assets in exchange for cash and equity securities of the Company, all as more fully described in the Second Purchase Agreement.

B. The Seller has designated that the equity securities of the Company to be issued to the Seller pursuant to the Second Purchase Agreement shall instead be issued directly to Culligan.

C. It is a condition to the Closing under the Second Purchase Agreement that this Agreement be executed by the parties and delivered to the Seller on the Closing Date (as such term is defined in the Second Purchase Agreement).

Now, therefore, the parties hereto agree as follows:

1. Definition of Registrable Securities . The definition of Registrable Securities in Section 8 of the Registration Rights Agreement shall be amended by deleting clause (i) and replacing it with the following clause (i):

( i ) any equity securities of the Company issued to Culligan as consideration under the Purchase Agreement or that certain Asset Purchase Agreement, dated as of March 8, 2011, among the Company, Primo Refill Canada Corporation, Culligan and Culligan of Canada, Ltd.

2. Confirmation of Registration Rights Agreement . Other than as expressly modified pursuant to this Amendment, all of the terms, covenants and other provisions of the Registration Rights Agreement are hereby ratified and confirmed and shall continue to be in full force and effect in accordance with their respective terms.

3. References . All references to the Registration Rights Agreement (including “hereof,” “herein,” “hereunder,” “hereby” and “this Agreement”) shall refer to the Registration Rights Agreement as amended by this Amendment.

4. Miscellaneous . The provisions of Section 9 of the Registration Rights Agreement shall apply to this Amendment mutatis mutandis .

[signature page follows]

IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date first written above.


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

CULLIGAN INTERNATIONAL COMPANY
By:	/s/ Susan E. Bennett
	Name:	Susan E. Bennett
	Title:	Senior Vice President, General Counsel
		and Secretary

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


		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


		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

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 .

“Deferred Cash Consideration” is defined in Section 2.5.

“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.

“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.

“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.

“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.

“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.

“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.

“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.

“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.

“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.

“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:

(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” );

(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;

(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;

(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 ”);

(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.

(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.

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.

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;

(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.

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.

(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.

(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.

(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.

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.

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.

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.

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.

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

(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.

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:

(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;

(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

(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:

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.

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.

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.

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.

(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.

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.

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.

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

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.”

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.

(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]

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.

Exhibit 99.1

PRIMO WATER LOGO

Contact:
Primo Water Corporation
Mark Castaneda, Chief Financial Officer
(336) 331-4000

ICR Inc.
John Mills
Katie Turner
(646) 277-1228

Primo Water Announces Two Strategic Acquisitions; Enters the Rapidly Growing Carbonated Home Beverage Market and Expands Retail Exchange Business into Canada

Company to Hold Conference Call on Wednesday, March 9, 2011 to Discuss Acquisitions, 2010 Preliminary Results and 2011 Guidance

Single-Serve Cold Carbonated Beverage Acquisition Is Expected To Expand Household Product Adoption & Penetration

Bottled Water Exchange Acquisition Will Expand Service to Over 600 Retail Exchange Locations in Canada

Company Provides Preliminary Fourth Quarter Results and Introduces First Quarter and Full Year 2011 Guidance

Company Increases 2011 Expected Retail Location Growth of 5,700 to 6,700

WINSTON-SALEM, N.C., March 9, 2011 — Primo Water Corporation (Nasdaq: PRMW), a rapidly growing provider of three-and five-gallon purified bottled water, self-serve filtered drinking water and water dispensers sold through major retailers nationwide, today announced it will enter the single-serve cold carbonated beverage market through the acquisition of certain assets from Omnifrio Beverage Company, LLC (www.omnifriobev.com). The Company also announced it has entered the Canadian 18-liter purified bottled water exchange market through the acquisition of certain assets of Culligan of Canada, Ltd. (“Culligan Canada”). The Canadian exchange acquisition represents Primo’s second transaction with Culligan following its acquisition of Culligan’s self-serve filtered drinking water refill business in November of 2010. In addition, the Company provided preliminary fourth quarter results and introduced fiscal 2011 guidance.

Single-Serve Cold Carbonated Beverage Market Entry

The Company entered into an agreement to acquire certain assets of Omnifrio, which consist primarily of appliance and intellectual property related to single-serve cold carbonated beverages and consumable flavor cups, or “S-cups”, and CO2 canisters used with the appliances to make a variety of cold beverages. The Omnifrio razor/razorblade (appliances/S-cups and CO2 canisters) business model is similar to the razor/razorblade business model utilized by Primo (dispensers/water).

The acquisition of Omnifrio positions Primo Water in the $39 billion U.S. market for carbonated beverages. The Company plans to integrate the Omnifrio carbonation and single-serve cold-beverage technology into certain of its water dispenser appliances to develop multi-beverage hydration stations for both household and office use. Omnifrio has several patent applications pending for its carbonated beverage makers. Omnifrio has developed about 30 flavors of single-serve packs or S-cups for 8 or 16 ounce beverages with three carbonation levels. The appliances utilize a CO2 cylinder that must be refilled periodically. Primo intends to leverage its existing distribution infrastructure and offer retailers a CO2 exchange program. Primo expects to begin selling cold carbonated beverage appliances and flavor cups to specialty and catalog retailers in the U.S. in the fourth quarter of 2011. The Company expects to sell the appliance at higher gross margins than its existing appliance business and to sell the S-cup and CO2 cylinder consumables at higher gross margins than its existing margins on water.

The purchase price for the Omnifrio assets will be approximately $13.1 million, consisting of approximately $7.0 million in cash and the issuance of 501,080 unregistered shares of the Company’s common stock with a value of approximately $6.1 million (calculated based on the trailing 20-day average closing price for the Company’s common stock preceding the date of the acquisition agreement). Omnifrio has not begun shipping product and therefore has no historical sales. The Primo shares issued in the acquisition will be subject to lockup agreements, with all of the shares subject to a lock-up that expires concurrent with the IPO lock-up that expires in May 2011 and 256,651 of the shares being subject to a lock-up that will expire two years after the closing date. Additionally, $2.0 million of the cash consideration will be paid fifteen months after the closing date and is subject to offset for indemnification claims. The acquisition is subject to customary conditions to closing and is expected to close within approximately 45 days.

Primo expects the Omnifrio business to generate $2.0 to $4.0 million in sales and negatively impact GAAP diluted earnings per share in the range of ($0.23) to ($0.29), non-GAAP pro forma fully-taxed diluted earnings per share in the range of ($0.14) to ($0.17), GAAP loss from operations in the range of ($4.6) to ($5.8) million, and non-GAAP EBITDA in the range of ($4.0) to ($5.0) million for 2011. The difference in the GAAP and non-GAAP measures represents an add-back for intangible amortization of approximately $0.4 million and application of the full tax effect. Primo expects the acquisition to be accretive to earnings and contribute to EBITDA in the range of $6.0 to 8.0 million in fiscal 2012.

Billy D. Prim, Primo’s President and CEO stated, “We are very excited about the acquisition of Omnifrio which should enhance our ability to add innovative beverage and hydration solutions to our line of water dispensers and should help convert more households into Primo consumers. This technology combines two of the fastest-growing beverage categories - carbonation systems and single serve beverages. Additionally, we plan to offer two add-on recurring-revenue consumables, single-serve flavors, or S-cups, and CO2 cylinders for exchange, which will further accelerate our revenue growth and margin expansion long-term.”

Canadian Market Entry for Exchange

Primo is continuing to expand its geography and number of locations for all of its products by acquiring the Culligan Canada exchange business. Primo completed the acquisition of certain assets relating to Culligan Canada’s 18-liter purified bottled water exchange business marketed to retailers for resale to consumers. Culligan Canada provides this service to over 600 retail locations in Canada, including Wal-Mart, Home Depot, Zellers and Sobey’s. The existing Culligan distribution network will continue to bottle and deliver water in the Canadian market for Primo. Primo intends to leverage its existing relationships and marketing expertise to increase market share and number of locations in Canada.

The purchase price for the acquired assets was approximately $5.4 million, consisting of approximately $1.6 million in cash and the issuance of 307,217 unregistered shares of the Company’s common stock with a value of approximately $3.8 million (calculated based on the trailing 20-day average closing price for the Company’s common stock preceding the date of the acquisition agreement). The shares are subject to a lockup agreement that expires concurrent with the existing IPO lockup that expires in May 2011. The 2010 revenues for the business were $3.0 million resulting in pro forma income from operations of approximately $0.3 million and EBITDA of approximately $0.6 million. The pro forma adjustment reflects operation of the business using the Primo US business model, with regional operators performing the bottling and delivery of water for a fixed fee. This model is different from Culligan’s historical vertically integrated business model. The difference between pro forma income from operations and EBITDA is due to depreciation and amortization. The acquisition is expected to be approximately $0.01 accretive to 2011 earnings per share on a fully-diluted, fully-taxed basis utilizing a 37% tax rate. We do not expect to pay taxes in the near term as we have sufficient net operating loss carryforwards to offset taxable income.

Mr. Prim, added, “The acquisition of Culligan Canada’s exchange business provides us access to an established network of regional operators and major retail customers. We believe we can expand the existing number of Canadian exchange locations and penetrate the Canadian market with our water dispenser line. Certain of our major customers in the U.S. have recently announced aggressive expansion plans in Canada. We are very pleased with the ability of our team to identify and execute the acquisition of the Culligan Canada retail exchange business and we believe our business model has us well positioned for many years of organic and acquired growth.”

Fourth Quarter 2010 Preliminary Results

For the fourth quarter of 2010, the Company expects to report a net sales increase of approximately 61% to $12.7 million, consistent with prior guidance. The fourth quarter results include the impact of the Culligan US acquisition from the acquisition date of November 10, 2010. The Company expects to achieve fourth quarter 2010 GAAP loss per share of ($0.95) to ($1.00), non-GAAP pro forma fully-taxed loss per share of ($0.12) to ($0.15), GAAP loss from operations of ($3.9) to ($4.2) million and Non-GAAP pro forma EBITDA in the range of break-even to $0.2 million. The pro forma adjustments, as described in our third quarter of 2010 earnings release, include the following non-cash and non-recurring charges related to our initial public offering and concurrent acquisition of the Culligan refill business:

•
Preferred stock beneficial conversion charge of approximately $5.4 million

•
Share based compensation charge of $0.3 million

•
Modification of warrants charge of $0.2 million

•
Acquisition related charges of $2.5 million

First Quarter and Full Year 2011 Guidance

The Company ended the year with approximately 12,600 combined exchange and refill locations, excluding the 600 locations acquired from Culligan Canada as described above. The Company had a major mass merchandise retailer that originally planned a slow regional rollout of exchange locations beginning in the fourth quarter of 2010; however, the retailer requested an aggressive national installation schedule in two phases beginning in the first quarter of 2011. This caused a substantial number of installations to move from the fourth quarter of 2010 to the first quarter of 2011. In addition, the Company expects to have substantially more mass merchant locations by the end of the first quarter of 2011 than originally planned and expects to end the quarter with total locations installed at or above plan. The shift in timing of installs from the fourth quarter of 2010 to the first quarter of 2011 is expected to reduce expected revenue growth for the first and second quarters of 2011. The larger number of mass merchant locations installed at the end of the first quarter is expected to have a positive impact on anticipated revenue growth in the second half of 2011. As a result, Primo expects full year 2011 revenues, income from operations, non-GAAP pro forma EBITDA, net income and pro forma earnings will be in line with expectations, excluding the impact of the acquisitions.

The Company expects net sales to increase 80% to 85%, or in the range of $15.9 to $16.3 million, in the first quarter of 2011 compared to the same period last year. Primo expects to end the first quarter with 14,500 to 14,900 combined exchange and refill locations. The Company expects to achieve first quarter GAAP loss per diluted share of ($0.07) to ($0.11), non-GAAP pro forma fully-taxed earnings (loss) per diluted share of ($0.04) to break-even, GAAP loss from operations of ($0.4) to ($1.2) million and Non-GAAP pro forma EBITDA in the range of $1.8 to $2.6 million. The adjustments from the GAAP to non-GAAP measures consist of adjustments related to stock-based compensation, non-recurring acquisition related costs and the impact of applying full tax.

For fiscal 2011, the Company expects net sales to increase 260% to 275%, or in the range of $116 to $123 million, which includes the impact of the two acquisitions. Primo expects to end the year with 18,700 to 19,700 retail locations which is the result of adding between 5,700 to 6,700 retail locations for the year. The Company also expects to achieve full year 2011 GAAP earnings per diluted share of $0.06 to $0.15, non-GAAP pro forma fully-taxed earnings per diluted share of $0.16 to $0.24, GAAP income from operations in the range of $5.3 to $7.5 million and Non-GAAP pro forma EBITDA in the range of $16.5 to $19.5 million. The adjustments from the GAAP to non-GAAP measures consist of adjustments related to stock-based compensation, non-recurring acquisition related costs and the impact of applying full tax.

Mr. Prim concluded, “We achieved record sales for the fourth quarter and are on track to deliver strong results in 2011. We are also accelerating exchange installations at high volume mass merchants, which gives us confidence in our ability to continue to gain share in the purified water market, execute on our growth plan and increase long-term profitability. Going forward, we intend to continue to execute on our three long-term strategies:

•
Increase retail locations to 40,000 — 50,000;

•
Increase same-store sales of water by selling innovative beverage dispensers, which we believe will lead to greater household penetration; and

•
Pursue strategic acquisitions. ”

Conference Call

The Company will hold conference call on Wednesday March 9, 2011 at 5:00 p.m. ET with additional comments and details. The call will be broadcast live over the Internet hosted at the Investor Relations section of Primo Water’s website at www.primowater.com, and will be archived online through March 22, 2011. In addition, listeners may dial (866) 712 – 2329 in North America, and international listeners may dial (253 ) 237 — 1244.

The Company will announce full results for the fourth quarter and fiscal year ended December 31, 2010 on Thursday, March 24. The earnings date had been moved to allow analysts to publish reports in compliance with FINRA guidelines.

About Primo Water Corporation

Primo Water Corporation is a rapidly growing provider of three-and five-gallon purified bottled water, self-serve filtered drinking water and water dispensers sold through major retailers throughout the United States and Canada. The Company’s products provide an environmentally friendly, economical, convenient and healthy solution for consuming purified water.

Forward-Looking Statements

Certain statements contained herein (including our first quarter and full year 2011 guidance) are not based on historical fact and are “forward-looking statements” within the meaning of the applicable securities laws and regulations. Generally, these statements can be identified by the use of words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “feel,” “forecast,” “intend,” “may,” “plan,” “potential,” “project,” “should,” “would,” and similar expressions intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Owing to the uncertainties inherent in forward-looking statements, actual results could differ materially from those stated here. Factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, the loss of major retail customers of the Company or the reduction in volume of purchases by major retail customers, lower than anticipated consumer and retailer acceptance of the Company’s water bottle exchange and water bottle refill services and its water dispensers, changes in the Company’s relationships with its independent bottlers, distributors and suppliers, the entry of a competitor with greater resources into the marketplace and competition and

other business conditions in the water and water dispenser industry in general, the Company experiencing product liability, product recall and higher than anticipated rates of warranty expense or sales returns associated with a product quality or safety issue, the loss of key Company personnel, changes in the regulatory framework governing the Company’s business, , the Company’s inability or failure to close the Omnifrio acquisition, the Company’s inability to efficiently and effectively integrate the Culligan and Omnifrio acquisitions with the Company’s historical business, the Company’s inability to efficiently expand operations and capacity to meet growth, the Company’s inability to introduce and produce new product offerings, and the failure of lenders to honor their commitments under the Company’s credit facility, as well as other risks described more fully in the Company’s Prospectus filed with the Securities and Exchange Commission on November 5, 2010. Forward-looking statements reflect management’s analysis as of the date of this press release. The Company does not undertake to revise these statements to reflect subsequent developments, other than in its regular, quarterly earnings releases.

Use of Non-GAAP Financial Measures

To supplement its financial statements, Primo also provides investors with non-GAAP pro forma net income (loss) per diluted share and pro forma EBITDA, which are non-GAAP financial measures. Primo believes that these non-GAAP measures provide useful information to management and investors regarding certain financial and business trends relating to its financial condition and results of operations. Primo management uses these non-GAAP measures to compare the Company’s performance to that of prior periods for trend analyses and planning purposes. These measures are also presented to the Primo’s board of directors.

EBITDA consists of net income plus depreciation and amortization, interest expense, interest income and income tax (benefit) expense. Pro forma EBITDA consists of EBITDA plus non-cash, share-based compensation expense and costs related to acquisitions. Primo uses pro forma EBITDA as a measure of operating performance because it assists the Company in comparing performance on a consistent basis, as it removes from operating results the impact of the Company’s capital structure and non-recurring charges related to acquisitions. Primo believes pro forma EBITDA is useful to an investor in evaluating the company’s operating performance because it is widely used to measure a Company’s operating performance without regard to items such as depreciation and amortization, which can vary depending upon accounting methods and the book value of assets, and presents a meaningful measure of corporate performance exclusive of the Company’s capital structure and the method by which assets were acquired. Primo also uses pro forma EBITDA for purposes of determining executive and senior management incentive compensation.

Non-GAAP pro forma net income (loss) per share consists of net income (loss) plus non-cash, share-based compensation expense, non-recurring acquisition related expense and amortization expense related to intangible assets less the pro forma effect of fully-taxed income divided by the weighted average number of shares of common stock outstanding during each period. Primo believes non-GAAP pro forma net income (loss) per share is useful to an investor because it is widely used to measure a Company’s operating performance.

These non-GAAP measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with generally accepted accounting principles in the United States. These non-GAAP financial measures exclude significant expenses and income that are required by GAAP to be recorded in the Company’s financial statements and are subject to inherent limitations.

Exhibit 99.2

Business Update March 9, 2011

Forward-Looking Statements Certain statements contained herein (including our first quarter and full year 2011 guidance) are not based on historical fact and are "forward-looking statements" within the meaning of the applicable securities laws and regulations. Generally, these statements can be identified by the use of words such as "anticipate," "believe," "could," "estimate," "expect," "feel," "forecast," "intend," "may," "plan," "potential," "project," "should," "would," and similar expressions intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Owing to the uncertainties inherent in forward-looking statements, actual results could differ materially from those stated here. Factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, the loss of major retail customers of the Company or the reduction in volume of purchases by major retail customers, lower than anticipated consumer and retailer acceptance of the Company's water bottle exchange and water bottle refill services and its water dispensers, changes in the Company's relationships with its independent bottlers, distributors and suppliers, the entry of a competitor with greater resources into the marketplace and competition and other business conditions in the water and water dispenser industry in general, the Company experiencing product liability, product recall and higher than anticipated rates of warranty expense or sales returns associated with a product quality or safety issue, the loss of key Company personnel, changes in the regulatory framework governing the Company's business, the Company's inability or failure to close the Omnifrio acquisition, the Company's inability to efficiently and effectively integrate the Culligan and Omnifrio acquisitions with the Company's historical business, the Company's inability to efficiently expand operations and capacity to meet growth, the Company's inability to introduce and produce new product offerings, and the failure of lenders to honor their commitments under the Company's credit facility, as well as other risks described more fully in the Company's Prospectus filed with the Securities and Exchange Commission on November 5, 2010. Forward-looking statements reflect management's analysis as of the date of this press release. The Company does not undertake to revise these statements to reflect subsequent developments, other than in its regular, quarterly earnings releases. 2 2

Use of Non-GAAP Financial Measures To supplement its financial statements, Primo also provides investors with non-GAAP pro forma net income (loss) per share and pro forma EBITDA, which are non-GAAP financial measures. Primo believes that these non-GAAP measures provide useful information to management and investors regarding certain financial and business trends relating to its financial condition and results of operations. Primo management uses these non-GAAP measures to compare the Company's performance to that of prior periods for trend analyses and planning purposes. These measures are also presented to the Primo's board of directors.EBITDA consists of net income plus depreciation and amortization, interest expense, interest income and income tax (benefit) expense. Pro forma EBITDA consists of EBITDA plus non-cash, share-based compensation expense and costs related to acquisitions. Primo uses pro forma EBITDA as a measure of operating performance because it assists the Company in comparing performance on a consistent basis, as it removes from operating results the impact of the Company's capital structure and non-recurring charges related to acquisitions. Primo believes pro forma EBITDA is useful to an investor in evaluating the Company's operating performance because it is widely used to measure a company's operating performance without regard to items such as depreciation and amortization, which can vary depending upon accounting methods and the book value of assets, and presents a meaningful measure of corporate performance exclusive of the Company's capital structure and the method by which assets were acquired. Primo also uses pro forma EBITDA for purposes of determining executive and senior management incentive compensation. Non-GAAP pro forma fully-diluted, fully-taxed net income (loss) per share consists of net income (loss) plus non-cash, share-based compensation expense, non-recurring acquisition related expense and amortization expense related to intangible assets less the pro forma effect of fully taxed income divided by the weighted average number of shares of common stock outstanding during each period. Primo believes non-GAAP pro forma net income (loss) per share is useful to an investor because it is widely used to measure a company's operating performance.These non-GAAP measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with generally accepted accounting principles in the United States. These non-GAAP financial measures exclude significant expenses and income that are required by GAAP to be recorded in the Company's financial statements and are subject to inherent limitations. 3

Executive Summary Highlights Fourth Quarter 2010 Preliminary ResultsFirst Quarter 2011 and Full-Year 2011 GuidanceAcquisitions:Culligan CanadaOmnifrio 4

Financial Guidance Q4 2010 net sales of $12.7 million, in line with prior guidanceMajor mass merchant retailer switched to more aggressive national installation scheduleShift of installs from Q4 2010 to Q1 2011Q1 2011 net sales expected to increase by 80% to 85% over prior yearFY 2011 net sales expected to increase by 260% to 275% over prior yearReaffirming annual location growth of 5,700 - 6,700, for a total of 18,700 - 19,700 by end of FY 2011 Highlights 5 (1) The pro forma adjustments include preferred stock beneficial conversion charge, shared based compensation charge, modification of warrants charge and acquisition related charges.(2) Includes impact of the Omnifrio and Culligan Canada acquisitions. The adjustments from the GAAP to non-GAAP measures consist of adjustments related to stock-based compensation, non-recurring acquisition related costs and the impact of applying full tax.

Proven Retail Solution For Rapid Expansion Total Location Growth 6

Business OverviewExchange Locations: 600Stores: Existing Culligan distribution network to serve as Primo distributorsProvides immediate network of regional operators and major retailers in CanadaLeverage acquired network to roll-out Canadian locations of existing U.S. customersExpected to be approximately $0.01 accretive in 2011 on a fully-diluted, fully-taxed basisTransaction OverviewTotal Purchase Price: $5.4 millionCash: $1.6 millionStock: $3.8 millionLock-up AgreementShares will be subject to current Culligan lock-up agreement and registration rights agreementLock-Up Expiration - May 2011 Culligan Canada 7 2010 Financial Performance (1) Revenue $3.0 million Pro Forma EBITDA $0.6 million Pro Forma Income from Operations $0.3 million (1) The pro forma adjustment reflects operation of the business using the Primo US business model, with regional operators performing the bottling and delivery of water for a fixed fee. The difference between pro forma income from operations and EBITDA is due to depreciation and amortization.

StrategyAttract more households for Primo WaterCapitalize on market demand for single-serve convenienceIntegrate with existing productsLeverage Primo retail relationships & exchange networkContinuation of Razor-Razorblade business modelRazor: Innovative single-serve carbonated beverage appliance Provides healthy drink options (approximately 30 flavors)Initial placement in specialty and catalog retailersBuilds on platform of reducing waste in landfillsRazorblade: Attractive consumer productsHigh margin / recurring revenue - S-Cups flavor businessHigh margin / recurring revenue - CO2 cylinder exchange businessSignificant IP developed (4 years in R&D)Financial Guidance:No historical sales - products expected to ship Q4 2011Expect acquisition to be accretive to earnings and contribute $6.0 - $8.0 million to EBITDA in FY 2012 Omnifrio Acquisition 8 Expected 2011 Financial Impact on Primo (1) Revenue $2.0 - $4.0 million Non-GAAP Pro Forma EBITDA ($4.0) - ($5.0) million GAAP Loss from Operations ($4.6) - ($5.8) million GAAP Fully-Diluted EPS ($0.23) - ($0.29) Non-GAAP Pro Forma Fully-Diluted Fully-Taxed EPS ($0.14) - ($0.17) (1) The difference in the GAAP and non-GAAP measures represents an add-back for intangible amortization of approximately $0.4 million and application of the full tax effect.

Omnifrio Business Model Consumables Razorblade Razorblade Products Razor Sparkling Flavor WatersVitamin Flavor WatersSport DrinksEnergy DrinksNatural Flavor TeasSugar Free SodasSugar Free Sodas w/ VitaminsSparkling SodasHerbal Gourmet SodasSpanish Sodas Appliance S-Cups CO2 Cylinders Razorblade Primo Water Exchange With future integration with Primo dispenser. 9

Total Purchase Price: Up to $13.1 millionCash: Up to $7.0 million ($2.0 million to be paid 15 months after closing)Stock: $6.1 million Consulting Agreement with Principal3 years at $150,000/yearLock-up agreement$3.0 million of stock expires - May 2011Remaining $3.1 million of stock expires two years after closing dateExpected to close within 45 days Omnifrio Terms 10

Primo's New Innovative Modular Dispenser Line Integrate cold / hot beverage systems with bottom-loading water dispensersModular snap-in integrationCoffee module will be available in Q4 2011Countertop Omnifrio units available at specialty and catalog retailers in Q4 2011Integrated unit (single-serve carbonated beverage) and water dispenser available in 2012Expand target market beyond households - officeCheck investor relations on the Primo website for additional video, press releases and other information 11

Primo's Expanding Market Opportunity Source: Company calculations from industry data. 12

Strategy 13 Single-Vendor Solution Razor - Products Exchange Refill Razorblades Geographic Reach Drive Consumer Adoption Pursue Strategic Acquisitions Increase Same Store Sales Rapidly Add Retail Locations Develop and Install Other Hydration Solutions Consumables Omnifrio Exchange Refill Culligan Canada


Delaware	001-34850	30-0278688
(State or other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)


104 Cambridge Plaza Drive Winston-Salem, NC		27104
(Address of Principal Executive Offices)		(Zip Code)