Asset Purchase Agreement among Fresh Acquisitions, LLC and its affiliates, BBQ Growth, LLC., and BBQ Holdings, Inc., dated October 4, 2021
EHIBIT 10.1
ASSET PURCHASE AGREEMENT
by and among
TAHOE JOE’S INC.,
Alamo Buffets Payroll, LLC,
Alamo Fresh Payroll, LLC,
Alamo Ovation, LLC,
Buffets, LLC
Fire Mountain Restaurants, LLC,
FMP-Fresh Payroll, LLC,
FMP-Ovation Payroll, LLC
FMP SA Management Group, LLC,
Food Management Partners, Inc.,
FRESH ACQUISITIONS, LLC
HOMETOWN BUFFET, INC.,
OCB Purchasing Co.,
OCB Restaurant Company, LLC, and
RYAN’S RESTAURANTS GROUP, LLC
and
BBQ GROWTH, LLC
October 4, 2021
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TABLE OF CONTENTS
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (as amended or modified, this “Agreement”) is entered into as of October 4, 2021, by and among Tahoe Joe’s Inc., a Minnesota corporation (“TJI”), Alamo Buffets Payroll, LLC, a Texas limited liability company (“Alamo Buffets”), Alamo Fresh Payroll, LLC, a Texas limited liability company (“Alamo Fresh”), Alamo Ovation, LLC, a Texas limited liability company (“Alamo Ovation”), Buffets, LLC, a Minnesota limited liability company (“Buffets”), Fire Mountain Restaurants, LLC, a Delaware limited liability company (“Fire Mountain”), FMP-Fresh Payroll, LLC, a Texas limited liability company (“FMP-Fresh”), FMP-Ovation Payroll, LLC, a Texas limited liability company (“FMP-Ovation”), FMP SA Management Group, LLC, a Texas limited liability company (“FMP SA”), Food Management Partners, Inc. (“FMP”), a Texas corporation, Fresh Acquisitions, LLC, a Delaware limited liability company (“FA”), HomeTown Buffet, Inc., a Minnesota corporation (“HTB”), OCB Purchasing Co., a Minnesota corporation (“OCB Purchasing”), OCB Restaurant Company, LLC, a Minnesota limited liability company (“OCB Restaurant”), and Ryan’s Restaurant Group, LLC, a South Carolina limited liability company (“Ryan’s” and, together with TJI, Alamo Fresh, Alamo Ovation, Buffets, Fire Mountain, FMP-Fresh, FMP-Ovation, FMP, FMP SA, FA, HTB, OCB Purchasing, and OCB Restaurant, the “Sellers”, and each are individually a “Seller”), and BBQ Growth, LLC, a California limited liability company (together with its permitted successors, designees and assigns, “Buyer”). Sellers and Buyer are referred to herein collectively as the “Parties”. Capitalized terms used but not otherwise defined herein shall have the meanings assigned to them in ARTICLE I.
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NOW, THEREFORE, in consideration of the mutual promises herein made, and in consideration of the representations, warranties and covenants herein contained, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the Parties, the Parties agree as follows:
AGREEMENT
DEFINITIONS
“401(k) Plan” means the TJI 401(k) Plan.
“Accounts Receivable” means (a) all accounts, accounts receivable, Credit Card Receivables, contractual rights to payment, notes, notes receivable, negotiable instruments, chattel paper, and vendor rebates of TJI, including (x) any such Accounts Receivable generated by TJI during the 3-day period immediately prior to the Closing Date (such accounts, the “Specified Accounts”) and (y) any amounts received by or payable to TJI with respect to the Specified Accounts, and (b) any security interest, claim, remedy or other right related to any of the foregoing.
“Affiliate” when used with reference to another Person means any Person, directly or indirectly, through one or more intermediaries, Controlling, Controlled by, or under common Control with, such other Person, including those Persons defined and described as an Affiliate or Insider in the Bankruptcy Code.
“Agreement” has the meaning set forth in the preamble.
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“Alternate Transaction” means a transaction or series of related transactions pursuant to which Sellers, pursuant to the Sale Procedures Order, (a) accept a Qualified Bid other than that of Buyer, as the highest and best offer, or (b) sell, transfer, lease or otherwise dispose of, directly or indirectly, including through an asset sale, stock sale, merger, reorganization or other similar transaction (by Sellers or otherwise), including pursuant to a Plan or refinancing, all or substantially all of the Purchased Assets (or agrees to do any of the foregoing) in a transaction or series of transactions to a Person or Persons other than Buyer.
“Assignment and Assumption Agreement” has the meaning set forth in Section 2.8(a)(ii).
“Assumed Contracts” means those Leases and other Contracts that have been assigned to and assumed by Buyer pursuant to Section 2.6 and section 365 of the Bankruptcy Code. For the avoidance of doubt, “Assumed Contracts” shall not include any Contract or Lease that is excluded and rejected pursuant to Section 2.6.
“Assumed Liabilities” has the meaning set forth in Section 2.3.
“Assumed Permits” means all Permits relating to the Business that are transferable in accordance with their terms, but excluding all Permits to the extent related to any Excluded Asset (including any Lease that is not an Assumed Contract).
“Auction” means the auction for the sale and assumption of the Purchased Assets.
“Bankruptcy Code” has the meaning set forth in the recitals.
“Bankruptcy Court” has the meaning set forth in the recitals.
“Bill of Sale” has the meaning set forth in Section 2.8(a)(i).
“Breakup Fee” has the meaning set forth in Section 5.3(b).
“Business” has the meaning set forth in the recitals.
“Business Day” means any day other than a Saturday, a Sunday or a day on which banks located in San Antonio, Texas shall be authorized or required by Law to close.
“Buyer” has the meaning set forth in the preamble.
“Cash Payment” has the meaning set forth in Section 2.5(a).
“Casualty” has the meaning set forth in Section 5.11(b).
“Casualty Proceeds” has the meaning set forth in Section 5.11(b).
“Chapter 11 Cases” has the meaning set forth in the Recitals.
“Claim” means a “claim” as defined in Section 101(5) of the Bankruptcy Code, whether arising before or after the Petition Date.
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“Closing” has the meaning set forth in Section 2.7.
“Closing Date” has the meaning set forth in Section 2.7.
“Closing Payment” means the Cash Payment and Cure Costs that Buyer shall pay at Closing in accordance with the terms of this Agreement.
“COBRA” means Part 6 of Subtitle B of Title I of ERISA, Section 4980B of the IRC, and any similar state Law.
“Committee” means the Official Unsecured Creditors’ Committee appointed in the Chapter 11 Cases.
“Condemnation” has the meaning set forth in Section 5.11(a).
“Condemnation Proceeds” has the meaning set forth in Section 5.11(a).
“Confidentiality Agreement” means that certain Confidentiality Agreement between Buyer and Sellers.
“Consent” means any approval, consent, ratification, permission, clearance, designation, qualification, waiver or authorization, or an order of the Bankruptcy Court that deems or renders unnecessary the same.
“Contemplated Transactions” means the sale by Sellers to Buyer, and the purchase by Buyer from Sellers, of the Purchased Assets.
“Continuing Restaurant” means any of TJI’s restaurant locations with respect to which the associated Leases are Assumed Contracts.
“Contract” means any written or oral agreement, contract, lease, sublease, indenture, mortgage, instrument, guaranty, loan or credit agreement, note, bond, customer order, purchase order, sales order, sales agent agreement, supply agreement, development agreement, joint venture agreement, promotion agreement, license agreement, contribution agreement, partnership agreement or other arrangement, understanding, permission or commitment that, in each case, is legally binding.
“Contract and Cure Schedule” has the meaning set forth in Section 2.6(a).
“Contract Designation Deadline” has the meaning set forth in Section 2.6(b).
“Control” means, when used with reference to any Person, the power to direct the management or policies of such Person, directly or indirectly, by or through stock or other equity ownership, agency or otherwise, or pursuant to or in connection with any Contract; and the terms “Controlling” and “Controlled” shall have meanings correlative to the foregoing.
“Credit Card Receivables” means all accounts receivable and other amounts owed to TJI (whether current or non-current) in connection with any customer purchases from any Continuing
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Restaurants operated by TJI that are made with credit cards or any other related amounts owing (including deposits or holdbacks to secure chargebacks, offsets or otherwise) from credit card processors to TJI, including all Credit Card Receivables generated with respect to sales occurring during the three days immediately prior to the Closing Date, including any amounts received by or payable to TJI with respect to such sales occurring during such three days immediately prior to the Closing Date.
“Cure Costs” means, for only the Assumed Contracts, all amounts that are determined by a final and nonappealable order of the Bankruptcy Court must be paid, pursuant to Sections 365(b)(1)(A) and (B) of the Bankruptcy Code, in connection with the assumption and/or assignment of the Assumed Contracts to Buyer as provided herein.
“Current Employees” means all employees of TJI employed as of the day before the Closing Date, whether active or not (including those on short-term disability, leave of absence, paid or unpaid, or long-term disability).
“Customer Programs” means those certain customer gift card programs, offered by each of the Sellers, respectively and as applicable, in the Ordinary Course of Business in conducting the operations of each such Seller’s Business.
“Debtors” means the Sellers and their Affiliates, as debtors and debtors in possession in the Chapter 11 Cases.
“Decree” means any judgment, decree, ruling, decision, opinion, injunction, assessment, attachment, undertaking, award, charge, writ, executive order, judicial order, administrative order or any other order of any Governmental Entity.
“DIP Account” means the segregated debtor-in-possession account opened by Sellers solely for the purpose of the sale of the Assets contemplated by this Agreement.
“DIP Indebtedness” means all “DIP Obligations” as defined in the DIP Order.
“DIP Lender” shall have the same meaning given such term in the DIP Order.
“DIP Loan Agreement” shall have the same meaning given such term in the DIP Order.
“DIP Order” means (a) the interim order entered by the Bankruptcy Court on or about April 23, 2021, approving the DIP Loan Agreement (Docket No. 71, the “Interim Order”); and (ii) the order of the Bankruptcy Court approving the DIP Loan Agreement on a final basis on or about May 12, 2021 (Docket No. 157, the “Final Order”).
“Disclosure Schedule” has the meaning set forth in ARTICLE III.
“Employee Benefit Plan” means any “employee benefit plan” (as such term is defined in Section 3(3) of ERISA) and any other material benefit or compensation plan, program, agreement or arrangement of any kind, in each case, maintained or contributed to by TJI or in which TJI participates or participated and that provides benefits to any Current Employee or Former Employee.
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“ERISA” means the United States Employee Retirement Income Security Act of 1974.
“Excluded Assets” has the meaning set forth in Section 2.2.
“Excluded Contract” means any Contract not listed in the Contract and Cure Schedule as an Assumed Contract, or is at any point excluded from being an Assumed Contract.
“Excluded Claims” means all rights (including rights of set-off and rights of recoupment), refunds, claims, counterclaims, demands, causes of action and rights to collect damages of Sellers against third parties to the extent related to any Excluded Asset or Excluded Liability, including all claims and causes of action of the Debtors under Sections 544 to 550 of the Bankruptcy Code, but expressly excluding the Purchased Actions.
“Excluded Employee” has the meaning set forth in Section 6.4(b).
“Excluded Liabilities” has the meaning set forth in Section 2.4.
“Excluded Restaurants” means any of TJI’s restaurant locations that are not Continuing Restaurants.
“Former Employees” means all individuals who have been employed by TJI who are not Current Employees.
“Governmental Entity” means any United States federal, state or local or non-United States governmental or regulatory authority, agency, commission, court, body or other governmental entity.
“Health Plans” means all health plans including, but not limited to, health, dental, life, disability and long-term care insurance.
“Insurance Policy” means each primary, excess and umbrella insurance policy, bond and other form of insurance owned or held by or on behalf of Sellers and their operations, properties and assets, or providing insurance coverage to the Business, including, without limitation, all stop- loss insurance policies with respect to TJI’s self-insured medical and/or dental insurance programs.
“Intellectual Property” means any and all rights, title and interest in or relating to intellectual property of any type, which may exist or be created under the Laws of any jurisdiction throughout the world (including, without limitation, all common-law rights, statutory rights snd contractual rights related to the following), including: (a) patents and patent applications, together with all reissues, continuations, continuations-in-part, divisionals, extensions and reexaminations in connection therewith; (b) trademarks, service marks, trade dress, logos, slogans, trade names, service names, brand names, Internet domain names and all other source or business identifiers and general intangibles of a like nature, along with all applications, registrations and renewals in connection therewith, and all goodwill associated with any of the foregoing; (c) rights associated with works of authorship, including exclusive exploitation rights, mask work rights, copyrights, database and design rights, whether or not registered or published, all registrations and recordations thereof and applications in connection therewith, along with all extensions and renewals thereof; (d) trade secrets and Recipes and menus; and (e) all other intellectual property
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rights related to the Business, and any of the operations of FA, including all social media accounts related to the Business and any of the operations of FA, owned by it or associated with the brand names used by Fire Mountain Restaurants, LLC, an Ohio limited liability company, Ryan’s Restaurant Group, LLC, a South Carolina limited liability company, OCB Restaurant Company, LLC, a Minnesota limited liability company and Buffets whether such intellectual property rights are owned by HTB, Buffets, Alamo Buffets, LLC, a Texas limited liability company and the parent company of Buffets (“Alamo Buffets”), or any of their respective Subsidiaries or Affiliates.
“Intellectual Property Assignments” has the meaning set forth in Section 2.8(a)(iii).
“Inventory” means all of TJI’s consumable food, alcoholic beverages, and other beverages and raw materials and work-in-process therefor and all of TJI’s tangible property used in the preparation of, serving, and cleaning up from, food and drinks, including napkins, silverware, plates and dining ware, cups, glassware, mugs, cooking and cleaning utensils, packaging materials, paper products, ingredients, miscellaneous consumables, materials, supplies, inventories and other related items or that are otherwise included in the Purchased Assets and are permitted to be sold and transferred under applicable Law.
“IRC” means the United States Internal Revenue Code of 1986, as amended.
“Law” means any federal, state, provincial, local, municipal, foreign or other law, statute, legislation, constitution, principle of common law, resolution, ordinance (including with respect to zoning or other land use matters), code, treaty, convention, rule, regulation, requirement, edict, directive, pronouncement, determination, proclamation or Decree of any Governmental Entity.
“Leased Real Property” means all leasehold or sub-leasehold estates and other rights to use or occupy any land, buildings, structures, improvements, fixtures or other interest in real property of TJI which is used in the Business.
“Leases” means all leases, subleases, unexpired leases, unexpired subleases, licenses, concessions and other Contracts, including all amendments, extensions, renewals, guaranties and other agreements with respect thereto, in each case pursuant to which TJI holds any Leased Real Property.
“Liability” means all indebtedness, losses, claims (including “claims” as defined in section 101(5) of the Bankruptcy Code), damages, expenses, fines or other penalties, costs, royalties, proceedings, deficiencies, duties, obligations, and other liabilities (including those arising out of any Litigation, such as any settlement or compromise thereof or judgment or award therein) of a Person (whether absolute, accrued, contingent, fixed, liquidated or unliquidated, or otherwise, and whether known or unknown, and whether due or to become due, and whether in contract, tort, strict liability, or otherwise, and whether or not resulting from third-party claims).
“Lien” means any mortgage, deed of trust, hypothecation, contractual restriction, pledge, lien (statutory or otherwise, including PACA/PASA Claims), encumbrance, interest, charge, security interest, put, call, other option, right of first refusal, right of first offer, servitude, right of way, easement, conditional sale or installment contract, finance lease involving substantially the same effect, security agreement or other encumbrance or restriction on the use, transfer or
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ownership of any property of any type (including real property, tangible property and intangible property and including any “Lien” as defined in the Bankruptcy Code).
“Liquor License Approvals” has the meaning set forth in Section 6.10(a).
“Liquor Licenses” has the meaning set forth in Section 3.11(b).
“Litigation” means any action, cause of action, suit, claim, investigation, mediation, audit, grievance, demand, hearing or proceeding, whether civil, criminal, administrative or arbitral, whether at law or in equity and whether before any Governmental Entity or arbitrator.
“Management Agreement” means an agreement in the form as shall be reasonably acceptable to Buyer and TJI, and which provides that all costs of operations of the Purchased Assets from and after the Closing Date shall be paid on a current basis by Buyer and the economic benefit of the operations of the Purchased Assets accrues to Buyer.
“Material Adverse Effect” means any change, event, effect, development, condition, circumstance or occurrence (when taken together with all other changes, events, effects, developments, conditions, circumstances or occurrences), that is materially adverse to the financial condition of Sellers or results of operations of the Purchased Assets (excluding the Excluded Assets and the Excluded Liabilities), in each case taken as a whole, but excluding (a) any change or effect to the extent that it results from or arises out of (i) the pendency of the Chapter 11 Case or the financial condition of Sellers; (ii) the execution and delivery of this Agreement or the announcement thereof or consummation of the transactions contemplated hereby; (iii) changes in (or proposals to change) law, generally accepted accounting principles, or other accounting regulations or principles, or (iv) any action contemplated by this Agreement or taken at the request of Buyer; (b) any change or effect generally applicable to (i) the industries and markets in which Sellers operate or (ii) economic or political conditions or the securities or financial markets in any country or region; (c) any outbreak or escalation of hostilities or war or any act of terrorism; (d) any occurrence, threat, or effects of a disease outbreak, epidemic, pandemic, or similar widespread public health concern, which results in recommendations or mandates from Governmental Authorities to reduce travel, avoid large gatherings, self-quarantine, or extended shutdown of certain businesses; (e) any objections in the Bankruptcy Court to (i) this Agreement, related documents and the transactions contemplated hereby and thereby, (ii) the reorganization of Sellers and any related plan of reorganization or disclosure statement, or (iii) the Sale Procedures Order or Sale Motion; (f) the assumption or rejection of any Assigned Contract or Assigned Lease; (g) any failure by the Business to meet any internal or published projections, forecasts or revenue or earnings predictions (provided that the underlying causes of such failures (subject to the other provisions of this definition) shall not be excluded); (h) any Order of the Bankruptcy Court or any actions or omissions of Sellers in compliance therewith; (i) any action taken by Sellers at the request of, or with the consent of, Buyer; and (j) any of the matters disclosed on any exhibit, annex or schedule to this Agreement.
“Material Contracts” has the meaning set forth in Section 3.6.
“Offeree” has the meaning set forth in Section 6.4(a).
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“Ordinary Course of Business” means the ordinary course of business of Sellers consistent with past custom and practice and subject to any modifications of such practice as a result of the filing of the Chapter 11 Cases.
“PACA/PASA Claims” means any valid claims against TJI under the Perishable Agricultural Commodities Act of 1930 or any similar state statutes of similar effect or the Packers and Stockyards Act of 1921, as amended, 7 U.S.C. § 181, et seq. timely filed and served pursuant to an order of the Bankruptcy Court issued in the Chapter 11 Cases.
“Parties” has the meaning set forth in the preamble.
“Permit” means any franchise, approval, permit, license, order, registration, certificate, variance, Consent, exemption or similar right issued, granted, given or otherwise obtained from or by any Governmental Entity, under the authority thereof or pursuant to any applicable Law.
“Permitted Liens” means: (a) Liens for Taxes not yet delinquent or which are being contested in good faith by appropriate proceedings; (b) with respect to leased or licensed personal property, the terms and conditions of the lease or license applicable thereto to the extent constituting an Assumed Contract; (c) mechanics liens and similar liens for labor, materials or supplies provided with respect to real property incurred in the Ordinary Course of Business or otherwise approved by the Bankruptcy Court for amounts which are not delinquent or which are being contested in good faith by appropriate proceedings in an aggregate amount not to exceed $100,000; (d) with respect to real property, zoning, building codes and other land use Laws regulating the use or occupancy of such real property or the activities conducted thereon which are imposed by any Governmental Entity having jurisdiction over such real property which are not violated by the current use or occupancy of such real property or the operation of the Business, except where any such violation would not, individually or in the aggregate, materially impair the use, operation or transfer of the affected property or the conduct of the Business thereon as it is currently being conducted; (e) with respect to Assumed Contracts for the Lease at each Continuing Restaurant, easements, covenants, conditions, restrictions and other similar matters affecting such real property and other encroachments that do not or would not materially impair the use or occupancy of such real property or materially interfere with the operation of the Business at such real property; and (f) matters that would be disclosed on an accurate survey or inspection of the real property but which do not interfere in any material respect with the right or ability to use the property as currently used or operated.
“Person” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization or any other entity, including any Governmental Entity or any group or syndicate of any of the foregoing.
“Petition Date” means the date of the filing of the Chapter 11 Cases.
“PII” has the meaning set forth in Section 6.11.
“Plan” means a plan of reorganization or liquidation proposed by Sellers and/or the Committee.
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“Potential Assumed Contract” means a Contract that is listed on the Contract and Cure Schedule.
“Potential Assumed Lease” means a Lease that is listed on the Contract and Cure Schedule.
“Potential Assumed Contracts and Leases” has the meaning set forth in Section 2.6(a).
“Professional Services” means any legal services, accounting services, financial advisory services, investment banking services or any other professional services provided by the Seller’s advisers obtained pursuant to any order of the Bankruptcy Court.
“Purchase Price” has the meaning set forth in Section 2.5.
“Purchased Assets” has the meaning set forth in Section 2.1; provided, however, that, notwithstanding the foregoing or anything contained in this Agreement to the contrary, the Purchased Assets shall not include any Excluded Assets.
“Purchased Actions” means solely in regard to TJI and the bankruptcy case of TJI, all causes of action, lawsuits, claims, rights of recovery and other similar rights on any grounds, at law or in in equity, of TJI and its bankruptcy estate, including without limitation any and all avoidance claims and other causes of action arising under Sections 544 to 550 of the Bankruptcy Code, under any applicable state law providing for the avoidance and recovery of preferential transfers or fraudulent claims, or both, against any party, but not including and expressly excepting all causes of action, lawsuits, claims, rights of recovery and other similar rights on any grounds, at law or in equity (including avoidance claims and other causes of action arising under Sections 544 to 550 of the Bankruptcy Code), held by any of the Debtors (including TJI) against any officer, member, manager, or director of any of the Debtors or against any Affiliate or Subsidiary of the Debtors.
“Qualified Bid” means competing qualified bids in accordance with the Sale Procedures Order.
“Qualified Bidder” has the meaning set forth in Sale Procedures Order.
“Recipes” has the meaning set forth in Section 2.1(h).
“Records” means the books, records, information, ledgers, files, invoices, documents, work papers, correspondence, lists (including customer lists, supplier lists and mailing lists), plans (whether written, electronic or in any other medium), drawings, designs, specifications, creative materials, advertising and promotional materials, marketing plans, studies, reports, data and similar materials related to the Business.
“Registered” means issued by, registered with, renewed by or the subject of a pending application before any Governmental Entity or domain name registrar.
“Related Agreements” means the Management Agreement, Bill of Sale, the Assignment and Assumption Agreement and the Intellectual Property Assignments and any other instruments
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of transfer and conveyance as may be required under applicable Law to convey valid title of the Purchased Assets to Buyer.
“Representative” of a Person means such Person’s Subsidiaries and the officers, directors, managers, employees, advisors, representatives (including its legal counsel and its accountants) and agents of such Person or its Subsidiaries.
“Restaurant Petty Cash” means any petty cash of TJI on the premises of any Continuing Restaurant.
“Sale Hearing” means the hearing scheduled with the Bankruptcy Court to consider the sale portion of the Sale Motion.
“Sale Motion” means a motion filed by Sellers and/or HTB, Buffets and/or Alamo Buffets with the Bankruptcy Court in connection with the Chapter 11 Cases requesting the entry of the Sale Procedures Order and the Sale Order.
“Sale Order” means an order of the Bankruptcy Court entered in the Chapter 11 Cases approving the sale to Buyer consistent with the terms of this Agreement and otherwise reasonably acceptable to Buyer and Sellers.
“Sale Order Deadline” means the later of (i) October 8, 2021 and (ii) three (3) Business Days after entry of the Sale Order, but in no event later than October 8, 2021, unless (a) such Sale Order has not been entered on or before October 7, 2021, (b) such Sale Order is stayed. or (c) the Buyer has agreed to fund payroll of the Business in an amount not to exceed $280,000 through and including the Closing Date, which extended Closing Date must occur on or before October 18, 2021 (unless the Sale Order has been stayed).
“Sale Procedures” means the procedures approved pursuant to the Sale Procedures Order, and satisfactory, in form and substance, to Buyer in its reasonable discretion.
“Sale Procedures Order” means an order of the Bankruptcy Court, entered at Docket No. 436, that, among other things, (a) approves and authorizes the payment of the Breakup Fee on the terms and conditions set forth in Section 5.3, (b) grants superpriority administrative expense status to the Breakup Fee (senior to any other superpriority administrative expense claims) pursuant to sections 363, 503(b), and 507(a)(2) of the Bankruptcy Code, (c) establishes a date for the Sale Hearing, and (d) establishes procedures for the bidding and Auction process, including: (i) the receipt by Sellers of a qualified bid by the applicable bid deadline; (ii) the amount of the cash bid required for a qualified bid; (iii) the nature of the financial information that potential bidders must submit to consummate a qualified bid; (iv) the requirement that for a qualified bid a duly authorized and fully executed purchase agreement must be included, with terms that are substantially the same as, not more burdensome in any material way than, and no more conditional than, the terms of Buyer’s proposed transaction under the terms of this Agreement; (v) the nature of the information that potential bidders must submit to demonstrate their ability to provide adequate assurance of future performance with respect to potential Contracts and Leases that may be assumed and assigned; (vi) the minimum bid required to start the Auction; and (vii) the subsequent bid increments for the Auction, which in any event shall be no less than $50,000.
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“Seller” or “Sellers” has the meaning set forth in the preamble.
“Sellers’ Knowledge” (or words of similar import) means the actual knowledge (after reasonable inquiry of current employees of the Sellers primarily responsible for the subject matter in question) of Mark Shapiro.
“Specified Accounts” has the meaning in the definition of Accounts Receivable set forth above.
“Subsidiary” means, with respect to any Person, any corporation, limited liability company, partnership, association or other business entity of which (a) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors thereof (or other persons performing similar functions with respect to such corporation) is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof, or (b) if a limited liability company, partnership, association or other business entity (other than a corporation), a majority of partnership or other similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more Subsidiaries of that Person or a combination thereof. A Person or Persons own a majority ownership interest in a business entity (other than a corporation) if such Person or Persons shall be allocated a majority of such business entity’s gains or losses or shall be or control any managing director, managing member, or general partner of such business entity (other than a corporation). The term “Subsidiary” shall include all direct or indirect Subsidiaries of such Person.
“Tax” or “Taxes” means any United States federal, state or local or non-United States income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental (including taxes under Section 59A of the IRC), customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, real property, personal property, ad valorem, escheat, sales, use, liquor, cigarette, transfer, value added, alternative or add-on minimum, estimated or other tax of any kind whatsoever, whether computed on a separate or consolidated, unitary or combined basis or in any other manner, including any interest, penalty or addition thereto, whether or not disputed.
“Tax Return” means any return, declaration, report, claim for refund or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.
“Transfer Tax” has the meaning set forth in Section 6.6.
“Transferred Employee” has the meaning set forth in Section 6.4(a).
PURCHASE AND SALE
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SELLERS’ REPRESENTATIONS AND WARRANTIES
Each of Sellers, jointly and severally, represents and warrants to Buyer that except as set forth in the disclosure schedule accompanying this Agreement (the “Disclosure Schedule”):
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Except as to matters, which would not reasonably be expected to have a Material Adverse Effect and except as set forth on Schedule 3.6 of the Disclosure Schedules, each of the Material Contracts is in full force and effect and is the legal, valid and binding obligation of the applicable Seller and of the other parties thereto, enforceable against each of them in accordance with its terms and upon consummation of the Contemplated Transaction, shall continue in full force and effect without penalty or other adverse consequences. Except as set forth on Schedule 3.6 of the Disclosure Schedules, no Seller is in material default under any Material Contract, nor, to the Knowledge of Sellers, is any other party to any Material Contract in breach of or default thereunder, and no event has occurred that with the lapse of time or the giving of notice or both would constitute a breach or default by any Seller or any other party thereunder. Except as set forth on Schedule 3.6 of the Disclosure Schedules, no party to any of the Material Contracts has exercised any termination rights with respect thereto, and no party has given notice of any significant dispute with respect to any Material Contract. Sellers have and will transfer to Buyer at the Closing, good and valid title to the Assumed Contracts, free and clear of all Liens (other than Permitted Liens) and Liabilities (other than Assumed Liabilities). Except as set forth on Schedule 3.6 of the Disclosure Schedules, Sellers have delivered to Buyer true, correct and complete copies of all of the Material Contracts, together with all amendments, modifications or supplements thereto.
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THE PROVISIONS OF THIS Section 3.13 SHALL SURVIVE THE CLOSING OR EARLIER TERMINATION OF THIS AGREEMENT AND SHALL BE INCORPORATED INTO THE CLOSING DOCUMENTS TO BE DELIVERED AT CLOSING.
BUYER’S REPRESENTATIONS AND WARRANTIES
Buyer represents and warrants to Sellers as follows:
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PRE-CLOSING COVENANTS
The Parties agree as follows with respect to the period between the execution of this Agreement and the Closing (except as otherwise expressly stated to apply to a different period):
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No Seller nor any of its Affiliates shall: (i) renew any Lease nor suffer any person other than such Seller, its employees, agents, servants and invitees to occupy or use the premises or any portion thereof, without in any case the express written consent of Buyer, which consent shall not be unreasonably withheld or (ii) terminate, amend, extend, renew, modify, breach, waive or allow any rights to lapse under any Lease. If Sellers request such a consent from Buyer, the request shall be in writing specifying the terms of the renewal, termination, amendment, extension, modification and/or waiver, the identity of the proposed third party, assignee or sub-lessee; the duration of said desired sublease or renewal, the date same is to occur, the exact location of the space affected thereby and the proposed rentals on a square foot basis chargeable thereunder. Such request for Buyer consent shall be submitted to Buyer at least five (5) days in advance of the date on which Sellers desire to make such event occur.
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OTHER COVENANTS
The Parties agree as follows with respect to the period from and after the Closing, provided that (i) Sellers shall not incur any costs, associated with the obligation hereunder, other than such ordinary and necessary professional fees as are required for Sellers to comply with the obligations hereunder and (ii) Sellers’ obligations hereunder shall only continue until the Chapter 11 Cases are closed or dismissed:
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CONDITIONS TO CLOSING
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TERMINATION
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Notwithstanding anything to the contrary contained herein, in no event may Buyer terminate this Agreement under Section 8.1(b) or Section 8.1(d) solely on account of Buyer’s failure to satisfy the conditions contained in Sections 365(b)(1)(C) and 365(f)(2)(B) of the Bankruptcy Code with respect to any proposed Assumed Contract or on account of Buyer’s failure to comply with the covenants set forth in this Agreement.
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MISCELLANEOUS
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If to any Seller, then to:
Chief Restructuring Officer
c/o B. Riley Advisory
3500 Maple Ave, Ste 420
Dallas, TX 7521
Attention: Mark Shapiro and Joe Pegnia
Email: ***@*** and ***@***
with a copy to:
Gray Reed & McGraw LLP
1601 Elm Street, Suite 4600
Dallas, Texas 75201
Attention: Jason S. Brookner and Aaron M. Kaufman
Email: ***@*** and ***@***
If to Buyer, then to:
BBQ Growth LLC
12701 Whitewater Drive, Suite 100
Minnetonka, MN 55343
Attn: Michael Medved
Email: ***@***
with copies (which shall not constitute notice) to:
Lathrop GPM LLP
500 IDS Center
80 S. 8th Street
Minneapolis, MN 55402
Attn: Ryan Palmer
Email: ***@***
Any Party may change the mailing address or email address to which notices, requests, demands, claims and other communications hereunder are to be delivered by giving the other Party notice in the manner set forth in this Section 9.7.
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[END OF PAGE]
[SIGNATURE PAGES FOLLOW]
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SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the date first above written.
SELLERS:
TAHOE JOE’S, INC.,
a Minnesota corporation
By:_/Mark Shapiro/_________________
Name:Mark Shapiro
Title:Chief Restructuring Officer
Alamo Buffets Payroll, LLC
a Texas limited liability company
By:_/Mark Shapiro/_________________
Name:Mark Shapiro
Title:Chief Restructuring Officer
Alamo fRESH Payroll, LLC
a Texas limited liability company
By:_/Mark Shapiro/_________________
Name:Mark Shapiro
Title:Chief Restructuring Officer
Buffets, LLC,
a Minnesota limited liability company
By:_/Mark Shapiro/_________________
Name:Mark Shapiro
Title:Chief Restructuring Officer
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Fire Mountain Restaurant, LLC
a Delaware limited liability company
By:_/Mark Shapiro/_________________
Name:Mark Shapiro
Title:Chief Restructuring Officer
FMP-Fresh Payroll, LLC,
a Texas limited liability company
By:_/Mark Shapiro/_________________
Name:Mark Shapiro
Title:Chief Restructuring Officer
FMP-Ovation Payroll, LLC,
a Texas limited liability company
By:_/Mark Shapiro/_________________
Name:Mark Shapiro
Title:Chief Restructuring Officer
FMP SA Management Group, LLC,
a Texas limited liability company
By:_/Mark Shapiro/_________________
Name:Mark Shapiro
Title:Chief Restructuring Officer
fOOD mANAGEMENT pARTNERS, iNC.,
a Texas corporation
By:_/Mark Shapiro/_________________
Name:Mark Shapiro
Title:Chief Restructuring Officer
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FRESH ACQUISITIONS, LLC,
a Delaware limited liability company
By:_/Mark Shapiro/_________________
Name:Mark Shapiro
Title:Chief Restructuring Officer
HomeTown Buffet, Inc.
a Minnesota corporation
By:_/Mark Shapiro/_________________
Name:Mark Shapiro
Title:Chief Restructuring Officer
OCB Purchasing Co.,
a Minnesota corporation
By:_/Mark Shapiro/_________________
Name:Mark Shapiro
Title:Chief Restructuring Officer
OCB Restaurant Company, LLC,
a Minnesota limited liability company
By:_/Mark Shapiro/_________________
Name:Mark Shapiro
Title:Chief Restructuring Officer
Ryan’s Restaurant Group, LLC,
a South Carolina limited liability company
By:_/Mark Shapiro/_________________
Name:Mark Shapiro
Title:Chief Restructuring Officer
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BUYER:
BBQ GROWTH, LLC
a California limited liability company
By:_/Jeff Crivello/____________
Name:Jeff Crivello
Title:CEO
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