Compass Coffee - Chapter 11 APA Summary

Asset Purchase Agreement Summary

Parties Involved

• Seller: Compass Coffee, LLC
• Buyer: Caffe Nero North America, Inc. (Stalking Horse Purchaser)
• Buyer Guarantor: Caffe Nero Americas, Inc.
• Key Member: Michael Haft (party to the Agreement for limited purposes)

Assets Being Sold

• The Buyer will acquire all of the Seller’s right, title, and interest in tangible and intangible assets, including:
  • Inventory and Equipment: All inventory, machinery, furniture, supplies, and equipment owned at Closing.
  • Intellectual Property and Digital Assets: All owned IP, goodwill, customer data (subject to privacy laws), e-commerce platforms, software, IT systems, social media accounts, URLs, and rights of publicity.
  • Contracts and Leases: All Assigned Contracts and Assumed Leases, including security deposits and leasehold improvements.
  • Receivables and Claims: Accounts receivable specifically related to product orders unfulfilled as of Closing, prepaid assets, and causes of action related to Acquired Assets (excluding Excluded Claims).
  • Permits and Records: Assumed permits and business records required for the operation of the Acquired Assets.

Excluded Assets

• Assets not being purchased include:
  • Cash and Financials: All cash and cash equivalents, and all accounts receivable existing as of the Closing (other than those specifically included above).
  • Corporate Items: Organizational documents, equity securities of the Seller, and tax records related to income taxes.
  • Contracts and Plans: Executory contracts and leases not designated as Assigned Contracts, rejected contracts, and all employee benefit plans.
  • Legal and Insurance: Avoidance actions, D&O insurance policies, and attorney-client privileged documents related to the Chapter 11 Case.

Stalking Horse Bid

• Purchase Price: The aggregate consideration consists of:
  • A cash payment of $2.9 million; and
  • The assumption of Assumed Liabilities.
• Purchase Price Cap: The cash payment shall not exceed $2.9 million, subject to potential increases via the auction process or adjustments for pro-rated rental costs.
• Allocation of Proceeds: The cash Purchase Price will be used to pay obligations in the following order:
  • First, to satisfy all Cure Amounts for Assigned Contracts and to pay off liens secured by Acquired Assets (excluding DIP financing obligations); and
  • Second, to pay down court-approved DIP financing obligations.

Good Faith Deposit

• Amount: $290,000 (10% of the cash Purchase Price).
• Terms: Payable within three business days of the Agreement's execution into a segregated debtor-in-possession account.
• Disposition: Credited toward the Purchase Price at Closing or returned within three business days if the Agreement is terminated (unless terminated due to Buyer's breach).

Assumed and Excluded Liabilities

• Assumed Liabilities: Limited strictly to liabilities regarding Acquired Assets arising on or after the Closing.
• Excluded Liabilities: The Buyer will not assume any other liabilities, including:
  • Financial Obligations: Cure amounts, lien payoff amounts, DIP payoff amounts, accounts payable, and indebtedness (including PPP/SBA loans).
  • Employee Liabilities: Obligations related to current/former employees, collective bargaining agreements, pension plans, WARN Act liabilities, and payroll taxes.
  • Operational Liabilities: Pre-closing rent, taxes, professional fees, and liabilities arising from pre-closing contract breaches or litigation.
  • Gift Cards: Liabilities related to honoring Gift Cards issued before Closing (unless part of an Assigned Contract).

Bid Protections

• Break-Up Fee: 4.0% of the cash portion of the Purchase Price.
• Trigger: Payable from the proceeds of an Alternate Transaction if the Agreement is terminated for any reason, other than a termination by Seller under Section 8.1(b) (i.e., failure to close by March 6, 2026).
• Priority: The Break-Up Fee constitutes an administrative expense under sections 503(b)(1)(A) and 507(a)(2) of the Bankruptcy Code.

Assumption and Assignment

• Designation: The Buyer may designate contracts to be assumed and assigned up to two business days prior to Closing.
• Cure Costs: The Buyer is responsible for paying the Closing Date Cure Amounts, which are funded directly out of the Purchase Price.
• Rent Proration: The Seller pays rent through the Closing Date; the Buyer reimburses the Seller for the pro-rated portion of March 2026 rent.

Sale Free and Clear & Successor Liability

• Free and Clear: Assets are sold free and clear of all liens, claims, and encumbrances pursuant to section 363(f) of the Bankruptcy Code.
• No Successor Liability: The Buyer is not deemed a successor employer (including for COBRA/ERISA purposes) and assumes no liability for the Seller's acts or omissions prior to Closing.

Non-Competition and Non-Solicitation

• Restricted Period: Two (2) years from the Closing Date.
• Territory: The Mid-Atlantic region of the United States.
• Non-Compete: Seller and the Key Member shall not, directly or indirectly, engage in, assist others in engaging in, or have an interest in any Person that engages in the Business within the Territory.
• Non-Solicitation: Seller and the Key Member shall not hire, solicit, or encourage any Person employed in or offered employment by Buyer at or after Closing to leave such employment, subject to limited exceptions (general solicitations, employees terminated by Buyer without cause, or former employees after one year following termination).
• Materiality: These covenants are described as a material inducement to Buyer to enter into the Agreement.

Key Dates

• Execution Date: January 23, 2026
• Gift Card Freeze: January 30, 2026 (Seller must cease issuing/reloading gift cards)
• Closing Deadline / Assignment Deadline: March 6, 2026