ASSET PURCHASE AGREEMENT among

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

ASSET PURCHASE AGREEMENT

This Asset Purchase Agreement (this “ Agreement ”) is entered into as of March 8, 2011, by Primo Water Corporation, a Delaware corporation (“ Primo ”), Primo Products, LLC, a North Carolina limited liability company (the “ Buyer ”, and together with Primo, the “ Primo Parties ”), Omnifrio Beverage Company, LLC, an Ohio limited liability company (the “ Seller ”), and those persons identified as “Members” on the signature pages hereto (collectively, the “ Members ”).

STATEMENT OF PURPOSE

The Buyer has agreed to purchase from the Seller, and the Seller has agreed to sell to the Buyer, substantially all of the Seller’s assets for the consideration, including the Buyer’s assumption of certain stated liabilities, and on the terms and subject to the conditions set forth in this Agreement.

ARTICLE I
DEFINITIONS

“Acquisition Proposal” is defined in Section 6.6.

“Affiliate” means, with respect to a specified Person, any other Person that directly or indirectly controls, is controlled by, or is under common control with, the specified Person. The term “control” means (a) the possession, directly or indirectly, of the power to vote 50% or more of the securities or other equity interests of a Person having ordinary voting power, (b) the possession, directly or indirectly, of the power to direct or cause the direction of the management policies of a Person, by contract or otherwise or (c) being a director, officer, executor, trustee or fiduciary (or their equivalents) of a Person or a Person that controls such Person.

“Agreement” is defined in the opening paragraph.

“Appliance” means the proprietary Omnifrio Single-Serve Beverage Creations appliance used to dispense custom-made single-serving beverages.

“Assignment of Intellectual Property” means the Assignment of Intellectual Property, in the form of Exhibit G .

“Assumed Liabilities” is defined in Section 2.3.

“Average Closing Price” means the average of the closing price of Primo Stock on The NASDAQ Global Select Market for the 20 most recent trading days prior to (a) the date hereof with respect to the calculation of the Share Consideration or (b) in the event of a forfeiture pursuant to Section 10.5 hereof, the date that the amount of Losses is definitively determined.

“Balance Sheet” means the unaudited balance sheet of the Seller as of December 31, 2010, which is attached to Schedule 4.5 .

“Balance Sheet Date” means the date of the Balance Sheet.

“Basket” is defined in Section 10.4.

“Books and Records” is defined in Section 2.1.

“Business” means the business conducted by the Seller, including the activities carried on by the Seller for the purpose of the production, sale and distribution of Appliances and the other products related thereto including the (a) flavors and formulations of the cups containing the flavor mixes and (b) the CO2 cylinders used in connection with such Appliances.

“Business Day” means any day that is not a Saturday, Sunday or any other day on which banks are required or authorized by law to be closed in Charlotte, North Carolina.

“Buyer” is defined in the opening paragraph.

“Buyer Basket” is defined in Section 10.4(b).

“Buyer Cap” is defined in Section 10.4(b).

“Cap” is defined in Section 10.4.

“Closing” is defined in Section 2.7.

“Closing Cash Consideration” is defined in Section 2.5.

“Closing Date” is defined in Section 2.7.

“Code” means the Internal Revenue Code of 1986.

“Confidential Information” means information concerning the business or affairs of any Party, including information relating to the Business, customers, clients, suppliers, distributors, investors, lenders, consultants, independent contractors or employees, customer and supplier lists, price lists and pricing policies, cost information, financial statements and information, budgets and projections, business plans, production costs, market research, marketing plans and proposals, sales and distribution strategies, manufacturing and production processes and techniques, processes and business methods, technical information, pending projects and proposals, new business plans and initiatives, research and development projects, inventions, discoveries, ideas, technologies, trade secrets, know-how, formulae, technical data, designs, patterns, marks, names, improvements, industrial designs, mask works, compositions, works of authorship and other Intellectual Property, devices, samples, plans, drawings and specifications, photographs and digital images, computer software and programming, all business, employee and financial records, books, ledgers, files, correspondence, documents and lists of a Party, all other confidential information and materials relating to the Business or any Party, and all notes, analyses, compilations, studies, summaries, reports, manuals, documents and other materials prepared by or for any Party containing or based in whole or in part on any of the foregoing, whether in verbal, written, graphic, electronic or any other form and whether or not conceived, developed or prepared in whole or in part by such Party.

“Consent” means any consent, approval, authorization, permission, waiver or clearance.

“Consulting Agreement” means the Consulting Agreement with Carl Santoiemmo, in the form of Exhibit A .

“Contract” means any contract, obligation, understanding, commitment, lease, license, purchase order, bid or other agreement, whether written or oral or whether express or implied, together with all amendments and other modifications thereto.

“Deferred Cash Consideration” is defined in Section 2.5.

“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.

“Liability” means any liability, obligation or commitment of any kind or nature, whether known or unknown, asserted or unasserted, absolute or contingent, accrued or unaccrued, liquidated or unliquidated, or due or to become due.

“License” is defined in Section 4.13.

“Lock-up Agreements” means, collectively, (a) the Lock-Up Agreement to be signed by the Seller with respect to the Share Consideration and (b) the Lock-Up Agreement to be signed by the Seller with respect to a portion of the Share Consideration equal to $3,150,000 divided by the Average Closing Price, in the form of Exhibit B-1 and Exhibit B-2 , respectively.

“Loss” means any loss, claim, demand, Order, damage, penalty, fine, cost, settlement payment, Liability, Tax, Encumbrance, diminution of value, expense, fee, court costs or attorneys’ fees and expenses.

“Material Adverse Effect” means any change, effect, event, occurrence or state of facts that has or would reasonably be expected to have or result in a material adverse effect or change on the business, assets, properties, operations, condition (financial or otherwise) or results of operations of the Seller or the Business, taken as a whole, (or Primo and the Primo Subsidiaries, taken as a whole), as the case may be. This definition shall exclude any material adverse effect or change to the extent arising out of, attributable to or resulting from: (a) changes in conditions generally affecting the industries in which the Seller (or Primo and the Primo Subsidiaries) conduct their business which do not disproportionately affect in any material respect the Seller (or Primo and the Primo Subsidiaries), in each case taken as a whole, as compared to other similarly situated participants in the industries in which the Seller (or Primo and the Primo Subsidiaries) operates, (b) general economic, political or financial market conditions which do not disproportionately affect in any material respect the Seller (or Primo and the Primo Subsidiaries), in each case taken as a whole, and (c) any outbreak or escalation of hostilities involving the United States (including any declaration of war by the U.S. Congress) or acts of terrorism.

“Material Contract” is defined in Section 4.12.

“Members” is defined in the opening paragraph.

“Members’ Representative” is defined in Section 11.15.

“Milestone Payments” is defined in Section 2.5.

“Multiemployer Plan” has the meaning set forth in ERISA § 3(37).

“Noncompetition Agreement” means the Noncompetition Agreement to be signed by the Seller, Carl Santoiemmo and JoAnn Santoiemmo, in the form of Exhibit C .

“Operating Agreement ” means that certain Operating Agreement of Omnifrio Beverage Company, LLC dated November 3, 2010.

“Order” means any order, award, decision, injunction, judgment, ruling, decree, charge, writ, subpoena or verdict entered, issued, made or rendered by any Governmental Body or arbitrator.

“Organizational Documents” means (a) any articles of incorporation, organization or formation and any bylaws, operating agreement or limited liability company agreement (b) any documents comparable to those described in clause (a) as may be applicable pursuant to any Law and (c) any amendment or modification to any of the foregoing.

“Party” means the Buyer, Primo, the Seller or any Member.

“Permit” means any permit, license, franchise or Consent issued by any Governmental Body or pursuant to any Law.

“Permitted Encumbrance” means (a) any mechanic’s, materialmen’s or similar statutory lien incurred in the ordinary course of business for monies not yet due and (b) any lien for Taxes not yet due.

“Person” means any individual, corporation, limited liability company, partnership, company, sole proprietorship, joint venture, trust, estate, association, organization, labor union, Governmental Body or other entity.

“Preferred Shares” is defined in Section 5.2.

“Primo” is defined in the opening paragraph.

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

“Primo Subsidiaries” is defined in Section 5.2.

“Proceeding” means any proceeding, charge, complaint, claim, demand, notice, action, suit, litigation, hearing, audit, investigation, arbitration or mediation (in each case, whether civil, criminal, administrative, investigative or informal) commenced, conducted, heard or pending by or before any Governmental Body, arbitrator or mediator.

“Purchase Price” is defined in Section 2.5.

“Purchased Assets” is defined in Section 2.1.

“Quitclaim Assignment” means the Quitclaim Assignment to be signed by the Seller and Rising Phoenix Company in the form of Exhibit E .

“Registration Rights Agreement ” means the Registration Rights Agreement to be signed by the Seller and Primo in the form of Exhibit F .

“Related Person” means (a) with respect to a specified individual, any member of such individual’s Family and any Affiliate of any member of such individual’s Family and (b) with respect to a specified Person other than an individual, any Affiliate of such Person and any member of the Family of any such Affiliates that are individuals. The “ Family ” of a specified individual means the individual, such individual’s spouse and former spouses, any other individual who is related to the specified individual or such individual’s spouse or former spouse within the third degree, and any other individual who resides with the specified individual. The Seller will not be deemed to be a Related Person of any Member.

“Representative” means, with respect to a particular Person, any director, officer, employee, agent, consultant, advisor or other representative of such Person, including legal counsel, accountants, financial advisors, lenders, financing sources and underwriters (including counsel for any such lenders, financing sources or underwriters).

“Safety Notices” is defined in Section 4.24(d).

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

“Secured Debt” means any Indebtedness that is secured by any Encumbrance other than a Permitted Encumbrance on any Purchased Asset.

“Securities Act” means the Securities Act of 1933.

“Seller” is defined in the opening paragraph.

“Share Consideration” is defined in Section 2.5.

“Tangible Personal Property” is defined in Section 2.1.

“Tax” means (a) any federal, state, local, foreign or other income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental (including taxes under Code § 59A), customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, general service, alternative or add-on minimum, estimated, or other tax of any kind whatsoever, however denominated or computed, and including any interest, penalty, or addition thereto, whether disputed or not and (b) Liability for the payment of any amounts of the type described in clause (a) as a transferee or successor, by Contract or from any express or implied obligation to indemnify or otherwise assume or succeed to the Liability of any other Person.

“Tax Return” means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any form, schedule or attachment thereto and any amendment or supplement thereof.

“Third-Party Claim” is defined in Section 10.6.

“Transaction Documents” means this Agreement, the Noncompetition Agreement, the Consulting Agreement, the Lock-up Agreements, the Registration Rights Agreement, the Quitclaim Assignment, the Assignment of Intellectual Property and all other written agreements, documents and certificates contemplated by any of the foregoing documents.

“Transaction Expenses” means all expenses incurred by the Seller in connection with this Agreement and the other Transaction Documents, for itself or on behalf of its equity holders, and the consummation of the Transactions, including any and all legal, accounting, financial, advisory or consulting fees and expenses incurred as of the Closing Date, whether or not paid as of the Closing Date and whether or not reflected in the Financial Statements.

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

“Transfer Taxes” is defined in Section 9.5.

ARTICLE II
SALE AND PURCHASE OF ASSETS

2.1 Sale and Purchase of Assets . Subject to the terms and conditions of this Agreement, the Seller will sell, assign, transfer and convey to the Buyer, and the Buyer will purchase, acquire and accept from the Seller, free and clear of all Encumbrances other than Permitted Encumbrances, all of the Seller’s assets of every kind and description (other than the Excluded Assets) on the Closing Date (the “ Purchased Assets ”), including:

(a) All machinery, equipment, parts, tools, computer hardware, supplies, samples, prototypes and other items of tangible personal property (other than Inventory) (the “Tangible Personal Property” );

(b) All inventories wherever located, including raw materials, goods consigned to vendors or subcontractors, works in process, finished goods, spare parts, goods in transit, products under research and development, demonstration equipment, samples, prototypes and inventory on consignment (the “Inventory” );

(c) All rights and interests in and to any Contracts;

(d) All Intellectual Property;

(e) All business and financial records, books, ledgers, files, correspondence, documents, lists, studies and reports (other than those related to employees, personnel and payroll), including customer lists, supplier lists and equipment repair, maintenance, service, quality control and insurance records, whether written, electronically stored or otherwise recorded (the “Books and Records” );

(f) All goodwill and all sales, advertising, promotional and marketing information and materials;

(g) All e-mail addresses assigned to the Seller;

(h) All Permits;

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

(j) All benefits under all insurance policies to which the Seller is a party, a named insured or otherwise the beneficiary of coverage (the “ Insurance Policies ”);

(k) All rights to refunds from suppliers and all prepaid expenses and deposits; and

(l) All other properties and assets to the extent the Seller has any rights thereto or interests therein, whether a present or future interest, an inchoate right or otherwise and whether such properties or assets are tangible or intangible and whether or not of a type falling within any of the categories of assets or properties described above.

2.2 Excluded Assets . The Seller will retain ownership of the following assets of the Seller (collectively, the “ Excluded Assets ”):

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

(b) Organizational Documents, stock books, stock ledgers, minute books and Tax Returns;

(c) Those Contracts, if any, listed on Schedule 2.2(c) ;

(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 ”);

(C) $2,000,000 in cash (the “ Deferred Cash Consideration ”); and

(D) up to $3,000,000 in cash (the “ Milestone Payments ”); and

(ii) the assumption of the Assumed Liabilities.

(b) Subject to the terms and conditions of this Agreement, on the Closing Date (i) Primo will issue to the Seller the Share Consideration and (ii) the Buyer will pay the Closing Cash Consideration to the Seller. Within five (5) Business Days after the Closing, Primo will deliver the certificate evidencing the Share Consideration to the Seller.

(c) Subject to the terms and conditions of this Agreement, the Buyer will pay (or in the event the Buyer is unable to pay, Primo will pay) (i) the Deferred Cash Consideration, subject to any amounts set off pursuant to this Agreement including under Section 10.5, to the Seller on the fifteen-month anniversary of the Closing Date and (ii) the Milestone Payments to the Seller in accordance with Section 2.6.

2.6 Milestone Payments .

(a) The Buyer shall pay the Seller $1,000,000 at such time, if within 9 months of the Closing Date, as the Buyer achieves a pilot manufacturing run of 50 sample Appliances, manufactured in accordance with design specifications approved by the Buyer and capable, in the reasonable determination of the Buyer, of being reproduced in commercial production, with all such sample Appliances functioning properly to the reasonable satisfaction of the Buyer.

(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 Gover