Asset purchase agreement dated March 10, 2022
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this “Agreement”), dated as of March 10, 2022, is entered into between L & S CULINARY CONCEPTS, LLC, an Arizona limited liability company, BARRIO CULINARY CONCEPTS, LLC, an Arizona limited liability company, BCC DESERT RIDGE, LLC, an Arizona limited liability company, BCC TEMPE MARKET PLACE, LLC, an Arizona limited liability company, BCC QUEEN CREEK MARKET PLACE, LLC, an Arizona limited liability company, BCC HERITAGE MARKET PLACE, LLC, an Arizona limited liability company, BCC-GLENDALE, LLC, an Arizona limited liability company, BCC-AVONDALE PARK 10, LLC, an Arizona limited liability company, and BCC PRASADA WEST, LLC, an Arizona limited liability (collectively and severally, “Seller”), Linda Nash, an Arizona resident (“Nash”), Steve Rosenfield, an Arizona resident (“Rosenfield,” and together with Nash, “Principals”), and BQ CONCEPTS LLC, an Arizona limited liability company (“Buyer”).
WHEREAS, Seller owns and operates the restaurant business known as BARRIO QUEEN®, consisting of the seven (7) existing locations and one (1) location under development at the addresses listed in Schedule A (the “Business”);
WHEREAS, Seller wishes to sell and assign to Buyer, and Buyer wishes to purchase and assume from Seller, substantially all the assets, and certain specified liabilities, of the Business, subject to the terms and conditions set forth herein; and
NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
The following terms have the meanings specified or referred to in this ARTICLE I:
“Accounts Receivable” has the meaning set forth in Section 2.02(a).
“Acquisition Proposal” has the meaning set forth in Section 6.03(a).
“Action” means any claim, action, cause of action, demand, lawsuit, arbitration, inquiry, audit, notice of violation, proceeding, litigation, citation, summons, subpoena or investigation of any nature, civil, criminal, administrative, regulatory or otherwise, whether at law or in equity.
“Affiliate” of a Person means any other Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such Person. The term “control” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.
“Agreement” has the meaning set forth in the preamble.
“Allocation Schedule” has the meaning set forth in Section 2.07.
“Ancillary Documents” means, the Bill of Sale, the Assignment and Assumption Agreement, Intellectual Property Assignments, Assignment and Assumption of Leases, and the other agreements, instruments and documents required to be delivered at the Closing.
“Assigned Contracts” has the meaning set forth in Section 2.01(c).
“Assignment and Assumption Agreement” has the meaning set forth in Section 3.02(a)(ii).
“Assignment and Assumption of Lease” has the meaning set forth in Section 3.02(a)(iv).
“Assumed Liabilities” has the meaning set forth in Section 2.03.
“Balance Sheet” has the meaning set forth in Section 4.04.
“Balance Sheet Date” has the meaning set forth in Section 4.04.
“Basket” has the meaning set forth in Section 8.04(a).
“Bill of Sale” has the meaning set forth in Section 3.02(a)(i).
“Books and Records” has the meaning set forth in Section 2.01(k).
“Business” has the meaning set forth in the recitals.
“Business Day” means any day except Saturday, Sunday or any other day on which commercial banks located in Minneapolis, Minnesota are authorized or required by Law to be closed for business.
“Business IT Systems” means all Software, computer hardware, servers, networks, platforms, peripherals, and similar or related items of automated, computerized, or other information technology (IT) networks and systems (including telecommunications networks and systems for voice, data, and video) owned, leased, licensed, or used (including through cloud-based or other third-party service providers) in the conduct of the Business.
“Buyer” has the meaning set forth in the preamble.
“Buyer Closing Certificate” has the meaning set forth in Section 7.03(f).
“Buyer Indemnitees” has the meaning set forth in Section 8.02.
“Cap” has the meaning set forth in Section 8.04(a).
“CERCLA” means the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. §§ 9601 et seq.
“Closing” has the meaning set forth in Section 3.01.
“Closing Date” has the meaning set forth in Section 3.01.
“Code” means the Internal Revenue Code of 1986, as amended.
“Contracts” means all contracts, leases, deeds, mortgages, licenses, instruments, notes, commitments, undertakings, indentures, joint ventures and all other agreements, commitments and legally binding arrangements, whether written or oral.
“Direct Claim” has the meaning set forth in Section 8.05(c).
“Disclosure Schedules” means the Disclosure Schedules delivered by Seller and Buyer concurrently with the execution and delivery of this Agreement.
“Dollars or $” means the lawful currency of the United States.
“Encumbrance” means any charge, claim, community property interest, pledge, condition, equitable interest, lien (statutory or other), option, security interest, mortgage, easement, encroachment, right of way, right of first refusal, or restriction of any kind, including any restriction on use, voting, transfer, receipt of income or exercise of any other attribute of ownership.
“Environmental Claim” means any Action, Governmental Order, lien, fine, penalty, or, as to each, any settlement or judgment arising therefrom, by or from any Person alleging liability of whatever kind or nature (including liability or responsibility for the costs of enforcement proceedings, investigations, cleanup, governmental response, removal or remediation, natural resources damages, property damages, personal injuries, medical monitoring, penalties, contribution, indemnification and injunctive relief) arising out of, based on or resulting from: (a) the presence, Release of, or exposure to, any Hazardous Materials; or (b) any actual or alleged non-compliance with any Environmental Law or term or condition of any Environmental Permit.
“Environmental Law” means any applicable Law, and any Governmental Order or binding agreement with any Governmental Authority: (a) relating to pollution (or the cleanup thereof) or the protection of natural resources, endangered or threatened species, human health or safety, or the environment (including ambient air, soil, surface water or groundwater, or subsurface strata); or (b) concerning the presence of, exposure to, or the management, manufacture, use, containment, storage, recycling, reclamation, reuse, treatment, generation, discharge, transportation, processing, production, disposal or remediation of any Hazardous Materials. The term “Environmental Law” includes, without limitation, the following (including their implementing regulations and any state analogs): the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. §§ 9601 et seq.; the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976, as amended by the Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. §§ 6901 et seq.; the Federal Water Pollution Control Act of 1972, as amended by the Clean Water Act of 1977, 33 U.S.C. §§ 1251 et seq.; the Toxic Substances Control Act of 1976, as amended, 15 U.S.C. §§ 2601 et seq.; the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. §§ 11001 et seq.; the Clean Air Act of 1966, as amended by the Clean Air Act Amendments of 1990, 42 U.S.C. §§ 7401 et seq.; and the Occupational Safety and Health Act of 1970, as amended, 29 U.S.C. §§ 651 et seq.
“Environmental Notice” means any written directive, notice of violation or infraction, or notice respecting any Environmental Claim relating to actual or alleged non-compliance with any Environmental Law or any term or condition of any Environmental Permit.
“Environmental Permit” means any Permit, letter, clearance, consent, waiver, closure, exemption, decision or other action required under or issued, granted, given, authorized by or made pursuant to Environmental Law.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder.
“Excluded Assets” has the meaning set forth in Section 2.02.
“Excluded Contracts” has the meaning set forth in Section 2.02(c).
“Excluded Liabilities” has the meaning set forth in Section 2.04.
“Financial Statements” has the meaning set forth in Section 4.04.
“FIRPTA Certificate” has the meaning set forth in Section 7.02(o).
“GAAP” means United States generally accepted accounting principles in effect from time to time.
“Government Contracts” has the meaning set forth in Section 4.07(a)(viii)
“Governmental Authority” means any federal, state, local or foreign government or political subdivision thereof, or any agency or instrumentality of such government or political subdivision, or any self-regulated organization or other non-governmental regulatory authority or quasi-governmental authority (to the extent that the rules, regulations or orders of such organization or authority have the force of Law), or any arbitrator, court or tribunal of competent jurisdiction.
“Governmental Order” means any order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Authority.
“Hazardous Materials” means: (a) any material, substance, chemical, waste, product, derivative, compound, mixture, solid, liquid, mineral or gas, in each case, whether naturally occurring or manmade, that is hazardous, acutely hazardous, toxic, or words of similar import or regulatory effect under Environmental Laws; and (b) any petroleum or petroleum-derived products, radon, radioactive materials or wastes, asbestos in any form, lead or lead-containing materials, urea formaldehyde foam insulation and polychlorinated biphenyls.
“Indemnified Party” has the meaning set forth in Section 8.05.
“Indemnifying Party” has the meaning set forth in Section 8.05.
“Insurance Policies” has the meaning set forth in Section 4.15.
“Intellectual Property” means any and all rights in, arising out of, or associated with any of the following in any jurisdiction throughout the world: (a) issued patents and patent applications (whether provisional or non-provisional), including divisionals, continuations, continuations-in-part, substitutions, reissues, reexaminations, extensions, or restorations of any of the foregoing, and other Governmental Authority-issued indicia of invention ownership (including certificates of invention, petty patents, and patent utility models) (“Patents”); (b) trademarks, service marks, brands, certification marks, logos, trade dress, trade names, and other similar indicia of source or origin, together with the goodwill connected with the use of and symbolized by, and all registrations, applications for registration, and renewals of, any of the foregoing (“Trademarks”); (c) copyrights and original works of authorship, whether or not copyrightable, and all registrations, applications for registration, and renewals of any of the foregoing (“Copyrights”); (d) internet domain names and social media account or user names (including
“handles”), whether or not Trademarks, all associated web addresses, URLs, websites and web pages, social media sites and pages, and all content and data thereon or relating thereto; (e) industrial designs, and all Patents, registrations, applications for registration, and renewals thereof; (f) trade secrets as defined in the Arizona Uniform Trade Secrets Act (A.R.S. § 44-401) and the Defend Trade Secrets Act (18 U.S.C. § 1839(3))) (collectively, (“Trade Secrets”); (g) computer programs, operating systems, applications, firmware and other code, including all source code, object code, application programming interfaces, data files, databases, protocols, specifications, and other documentation thereof (“Software”); (h) rights of publicity; and (i) all other intellectual or industrial property and proprietary rights.
“Intellectual Property Agreements” means all written licenses, sublicenses, consent to use agreements, settlements, coexistence agreements, covenants not to sue, waivers, releases, permissions and other Contracts, relating to any Intellectual Property that is used or held for use in the conduct of the Business as currently conducted to which Seller is a party, beneficiary or otherwise bound.
“Intellectual Property Assets” means all Intellectual Property that is owned by Seller and used or held for use in the conduct of the Business as currently conducted, together with all (i) royalties, fees, income, payments, and other proceeds now or hereafter due or payable to Seller with respect to such Intellectual Property; and (ii) claims and causes of action with respect to such Intellectual Property, whether accruing before, on, or after the date hereof, including all rights to and claims for damages, restitution, and injunctive and other legal or equitable relief for past, present, or future infringement, misappropriation, or other violation thereof.
“Intellectual Property Assignments” has the meaning set forth in Section 3.02(a)(iii).
“Intellectual Property Registrations” means all Intellectual Property Assets that are subject to any issuance, registration, or application by or with any Governmental Authority or authorized private registrar in any jurisdiction, including issued Patents, registered Trademarks, domain names and Copyrights, and pending applications for any of the foregoing.
“Interim Balance Sheet” has the meaning set forth in Section 4.04.
“Interim Balance Sheet Date” has the meaning set forth in Section 4.04.
“Interim Financial Statements” has the meaning set forth in Section 4.04.
“Inventory” has the meaning set forth in Section 2.01(b).
“Knowledge of Seller or Seller’s Knowledge” or any other similar knowledge qualification, means the actual knowledge of any Principal, any director, or any officer of Seller, after due inquiry.
“Law” means any statute, law, ordinance, regulation, rule, code, order, constitution, treaty, common law, judgment, decree, other requirement or rule of law of any Governmental Authority.
“Leased Real Property” has the meaning set forth in Section 4.10(a).
“Leases” has the meaning set forth in Section 4.10(a).
“Liabilities” means liabilities, obligations or commitments of any nature whatsoever, asserted or unasserted, known or unknown, absolute or contingent, accrued or unaccrued, matured or unmatured or otherwise.
“Licensed Intellectual Property” means all Intellectual Property in which Seller holds any rights or interests granted by other Persons, including any of Seller’s Affiliates, that is used or held for use in the conduct of the Business as currently conducted.
“Losses” means losses, damages, liabilities, deficiencies, Actions, judgments, interest, awards, penalties, fines, costs or expenses of whatever kind, including reasonable attorneys’ fees and the cost of enforcing any right to indemnification hereunder and the cost of pursuing any insurance providers; provided, however, that “Losses” shall not include incidental, consequential, punitive, special or indirect damages (including loss of revenue, diminution in value or any damages based on any type of multiple), punitive damages, except to the extent actually awarded to a Governmental Authority or other third party.
“Material Adverse Effect” means any event, occurrence, fact, condition or change that is, or could reasonably be expected to become, individually or in the aggregate, materially adverse to (a) the business, results of operations, condition (financial or otherwise) or assets of the Business, (b) the value of the Purchased Assets, or (c) the ability of Seller to consummate the transactions contemplated hereby on a timely basis; provided, however, that “Material Adverse Effect” shall not include any event, occurrence, fact, condition or change, directly or indirectly, arising out of or attributable to: (i) general economic or political conditions; (ii) conditions generally affecting the industries in which the Business operates; (iii) any changes in financial or securities markets in general; (iv) acts of war (whether or not declared), armed hostilities or terrorism, or the escalation or worsening thereof; (v) any action required or permitted by this Agreement, except pursuant to Section 4.03 and Section 6.08; (vi) any changes in applicable Laws or accounting rules, including GAAP; or (vii) the public announcement, pendency or completion of the transactions contemplated by this Agreement; provided further, however, that any event, occurrence, fact, condition or change referred to in clauses (i) through (iv) immediately above shall be taken into account in determining whether a Material Adverse Effect has occurred or could reasonably be expected to occur to the extent that such event, occurrence, fact, condition or change has a materially disproportionate effect on the Business compared to other participants in the industries in which the Business operates.
“Material Contracts” has the meaning set forth in Section 4.07(a).
“Material Suppliers” has the meaning set forth in Section 4.14.
“New Lease and Pre-Opening Reimbursement Amount” means with respect to the Surprise, Arizona restaurant location all development, building, equipment, and store-level pre-opening expenses (including opening, staffing, training, marketing and other costs and expenses, whether or not capitalized) actually paid by the Sellers or the Business by no later than 11:59 P.M. Phoenix Time on the day immediately prior to the Closing Date; provided that the foregoing amounts must be costs and expenses which are customary in nature and consistent with costs and expenses incurred in any prior development of restaurants operated by the Sellers and/or the Business and, in the event that such fee, cost, expense or expenditure deviates from the budget delivered by Seller to Buyer for the buildout and opening of the Surprise restaurant, Buyer must consent in writing to such fee, cost, expense or expenditure.
“Permits” means all permits, licenses, approvals, authorizations, registrations, certificates, variances and similar rights obtained, or required to be obtained, from Governmental Authorities, including all liquor licenses for the Business.
“Permitted Encumbrances” has the meaning set forth in Section 4.08.
“Person” means an individual, corporation, partnership, joint venture, limited liability company, Governmental Authority, unincorporated organization, trust, association or other entity.
“Platform Agreements” has the meaning set forth in Section 4.11(h).
“Pre-Closing Tax Period” means any taxable period ending on or before the Closing Date and, with respect to any taxable period beginning before and ending after the Closing Date, the portion of such taxable period ending on and including the Closing Date.
“Purchase Price” has the meaning set forth in Section 2.05.
“Purchased Assets” has the meaning set forth in Section 2.01.
“Release” means any actual or threatened release, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, abandonment, disposing or allowing to escape or migrate into or through the environment (including, without limitation, ambient air (indoor or outdoor), surface water, groundwater, land surface or subsurface strata or within any building, structure, facility or fixture).
“Representative” means, with respect to any Person, any and all directors, officers, employees, consultants, financial advisors, counsel, accountants and other agents of such Person.
“Restricted Business” means a restaurant or bar business serving primarily Mexican food items or a drink menu primarily featuring tequila.
“Restricted Party” has the meaning set forth in Section 6.07.
“Restricted Period” has the meaning set forth in Section 6.07(a).
“Seller” has the meaning set forth in the preamble.
“Seller Closing Certificate” has the meaning set forth in Section 7.02(j).
“Seller Indemnitees” has the meaning set forth in Section 8.03.
“Seller Indemnifying Party” has the meaning set forth in Section 8.02.
“Tangible Personal Property” has the meaning set forth in Section 2.01(e).
“Tax Return” means any return, declaration, report, claim for refund, information return or statement or other document relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.
“Taxes” means all federal, state, local, foreign and other income, gross receipts, sales, use, production, ad valorem, transfer, documentary, franchise, registration, profits, license, lease, service, service use, withholding, payroll, employment, unemployment, estimated, excise, severance, environmental, stamp, occupation, premium, property (real or personal), real property gains, windfall profits, customs, duties or other taxes, fees, assessments or charges of any kind whatsoever, together with any interest, additions or penalties with respect thereto and any interest in respect of such additions or penalties.
“Territory” means the United States of America, its possessions and territories.
“Third Party Claim” has the meaning set forth in Section 8.05(a).
“Union” has the meaning set forth in Section 4.19(b).
“WARN Act” means the federal Worker Adjustment and Retraining Notification Act of 1988, and similar state, local and foreign laws related to plant closings, relocations, mass layoffs and employment losses.
Purchase and Sale
(a)At the Closing, the Buyer and Seller shall prorate the following obligations, expenses, prepayments and rebates (not including any shortfall, which shall remain with Seller) with respect to the Business and Purchased Assets (subject to true-up adjustment pursuant to Section 2.06(b), with all items of income and expense arising from the operation of the Business before the Closing to be for the account of Seller and thereafter to be for the account of Buyer:
(i)if arrangements cannot be made for separate billing as of the Closing, any apportionable utility charges and any other charges;
(ii)deposits (to the extent they are delivered to Buyer as a Purchased Asset), rebates (any volume deficiency which shall be treated as a reduction to the Purchase Price), prepaid items, deferred rent, and other deferred obligations, credits and accruals such as service charges, and other prepayments under the Contracts assumed by Buyer, and any other prepayments exclusively related to the Business;
(iii)obligations and expenses under Contracts and Leases, including, without limitation, any obligation or expense which may be payable on a date after the Closing such as common area maintenance charges, utilities, and taxes; and
(iv)personal property taxes levied or assessed with respect to the tax year in which the Closing occurs on the Purchased Assets.
(b)Not later than sixty (60) days following the Closing (or if such date is not a Business Day, the immediately following Business Day), Buyer shall prepare and furnish to Seller a reconciliation that shall set forth the (i) actual store operating cash located at each restaurant location of the Business as of the Closing and (ii) the proration of obligations, expenses, prepayments and rebates in respect of the Business as of the Closing that were made under Section 2.06(a) above. All expenses and charges relating to the ownership and/or occupancy, as applicable, of the Purchased Assets, shall be shared and paid on a pro rata basis in proportion to the period of ownership or occupancy of Seller, on the one hand, and Buyer, on the other hand. Seller shall review such reconciliation and shall notify Buyer of any objections to any amounts shown within fifteen (15) days after receipt. If such reconciliation provides that
Buyer owes Seller any amount, then Buyer shall pay such amount shown as owed to Seller within thirty (30) days after the later to occur of (i) receipt by Seller of the reconciliation, or (ii) the resolution of all objections timely raised by Seller to the reconciliation. If such reconciliation provides that Seller owes Buyer any amount, then Seller shall pay such amount shown as owed to Buyer within thirty (30) days after the later to occur of (A) receipt by Seller of the reconciliation, or (B) the resolution of all objections timely raised by Seller to the reconciliation.
(c)In addition to the adjustments and payments contemplated above, Seller and Buyer agree to make payments to each other on a timely basis with respect to amounts and adjustments not correctly ascertainable pursuant this Section 2.06 when the correct amount of any amounts to be adjusted or apportioned pursuant to this Section 2.06 are ascertained.
(d)Also, in addition to the adjustments and payments contemplated above, Seller and Buyer agree to make payments to each other on a timely basis with respect to any other funds that it receives that belong to other party hereto.
Representations and warranties of seller
Except as set forth in the correspondingly numbered Section of the Disclosure Schedules, Seller represents and warrants to Buyer that the statements contained in this ARTICLE IV are true and correct as of the date hereof.
Representations and warranties of buyer
Except as set forth in the correspondingly numbered Section of the Disclosure Schedules, Buyer represents and warrants to Seller that the statements contained in this ARTICLE V are true and correct as of the date hereof.
Conditions to closing
If to Seller or Principals:
Barrio Culinary Concepts, LLC
5220 N. Casa Blanca Dr.
Paradise Valley AZ, 85253
Attention: Steve Rosenfield, President
with a copy to:
Monroe Moxness Berg PA
7760 France Avenue South
Minneapolis, MN 55435
Attention:Dennis L. Monroe
If to Buyer:
BQ Concepts LLC
c/o BBQ Holdings, Inc.
12701 Whitewater Drive, Suite 100
Minnetonka, MN 545343
with a copy to:
Lathrop GPM LLP
500 IDS Center
80 S. 8th Street
Minneapolis, MN 55402
Attention:Ryan R. Palmer
[signature page follows]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.
L & S CULINARY CONCEPTS, LLC
BARRIO CULINARY CONCEPTS, LLC
Name: Steve Rosenfield
Name: Steve Rosenfield
BCC DESERT RIDGE, LLC
BCC TEMPE MARKET PLACE, LLC
Name: Steve Rosenfield
Name: Steve Rosenfield
BCC QUEEN CREEK MARKET PLACE, LLC
BCC HERITAGE MARKET PLACE, LLC
Name: Steve Rosenfield
Name: Steve Rosenfield
BCC-AVONDALE PARK 10, LLC
Name: Steve Rosenfield
Name: Steve Rosenfield
BCC-PRASADA WEST, LLC
Name: Steve Rosenfield
BQ CONCEPTS LLC
Name: Jeffery Crivello
10455 W McDowell Rd, Avondale, AZ 85392
Desert Ridge Market Place
21001 N Tatum Blvd, Suite 98, Phoenix, AZ 85050
7640 W Bell Rd, Glendale, AZ 85308
388 N Gilbert Rd, Gilbert, AZ 85234
7114 E Stetson Drive Ste 105, Scottsdale, AZ 85251
31 S McClintock Dr, Tempe, AZ 85281
21156 S Ellsworth Loop Rd, Queen Creek, AZ 85142
Surprise, AZ (under development)
Address available upon City’s approval of plans