UNITED STATES BANKRUPTCY COURT WESTERN DISTRICT OF WASHINGTON

Transcription

1 Entered on Docket January 18, 2013 Below is the Order of the Court Karen A. Overstreet U.S. Bankruptcy Judge (Dated as of Entered on Docket date above) In re: TC GLOBAL, INC., UNITED STATES BANKRUPTCY COURT WESTERN DISTRICT OF WASHINGTON Debtor. Case No KAO ORDER (1) APPROVING SALE OF SUBSTANTIALLY ALL DEBTOR'S ASSETS FREE AND CLEAR OF LIENS AND ENCUMBRANCES, (2) AUTHORIZING ASSUMPTION AND ASSIGNMENT OF CERTAIN EXECUTORY CONTRACTS AND UNEXPIRED LEASES, AND (3) APPROVING AMOUNT AND PAYMENT OF CURE TO CONTRACTING PARTIES THIS MATTER came before the Court at a hearing held on January 11, 2013, on the Motion for Order Approving the Sale of Substantially All of the Debtor s Assets and Business Free and Clear of All Liens, Claims and Encumbrances; Approving the Assumption and Assignment by Buyer of Certain of the Debtor s Executory Contracts; and Granting Other Relief (the Sale Motion ) of TC Global, Inc., debtor in possession ( Debtor ), seeking entry of an order (the Sale Order ) 23 ORDER (1) APPROVING SALE OF SUBSTANTIALLY ALL DEBTOR'S ASSETS FREE AND CLEAR, (2) AUTHORIZING ASSUMPTION AND ASSIGNMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES, AND (3) PAYMENT OF CURE Page ya BUSH STROUT & KORNFELD LLP LAW OFFICES 5000 Two Union Square 601 Union Street Seattle, Washington Telephone (206) Facsimile (206) Case KAO Doc 573 Filed 01/18/13 Ent. 01/18/13 16:18:50 Pg. 1 of 241

2 1 2 pursuant to 11 U.S.C. 105(a), 363, and 365 and Fed. R. Bankr. P. 2002, 6004, 6006 and 9014, granting the following relief: Approving the sale (the Sale ) of substantially all the Debtor s assets free and clear of all liens, claims, interests and encumbrances to Global Baristas, LLC ( Global Baristas or Buyer ) upon the terms and conditions set forth herein and in the Asset Purchase Agreement attached hereto as Exhibit A (the Asset Purchase Agreement ), 1 with all such liens, claims, interests and encumbrances attaching to the proceeds of the Sale in the same amount, priority and enforceability as presently exists in the assets being conveyed to the Buyer; Approving the assumption by the Debtor and assignment to Buyer of certain of the Debtor s executory contracts and unexpired leases as set forth in Exhibit B hereto; and Approving the amount and payment of cures to the non-debtor parties to the contracts and leases set forth in Exhibit B hereto The Court, having reviewed the Notice of Conclusion of Auction and Determination of Successful Bid, Notice of Determination of Back-Up Bids, Memorandum in Support of Approval of Proposed Sale of Assets to Global Baristas, LLC filed by the Debtor, the Declaration of Robert A. Carringer, the Declaration of Scott Pearson, the Declaration of Matthew Farrell Re the Sale Process, Potential Creditor Recoveries and Debtor Liquidity, the Declaration of Michael Avenatti in Support of Sale to Successful Bidder Global Baristas, LLC, the Response of Successful Bidder Global Baristas, LLC in Support of Asset Sale, the Unsecured Creditors Committee Statement Regarding Auction and Sale Hearing, the Objection to Sale and Auction Procedures filed by Neon T Coffee Shops, LLC Stalking Horse Bidder, the Declaration of Shawn Hallinan in Support of Neon T Coffee Shops, LLC 1 Capitalized terms not defined in this Order shall have the meaning set forth in the Asset Purchase Agreement. ORDER (1) APPROVING SALE OF SUBSTANTIALLY ALL DEBTOR'S ASSETS FREE AND CLEAR, (2) AUTHORIZING ASSUMPTION AND ASSIGNMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES, AND (3) PAYMENT OF CURE Page ya BUSH STROUT & KORNFELD LLP LAW OFFICES 5000 Two Union Square 601 Union Street Seattle, Washington Telephone (206) Facsimile (206) Case KAO Doc 573 Filed 01/18/13 Ent. 01/18/13 16:18:50 Pg. 2 of 241

3 Stalking Horse Bidder Objection, the Declaration of Eric Weissmann, the Statement of Agrinurture, Inc. and Earthright Holdings USA, LLC re: Debtor s Notice of Conclusion of Auction and Determination of Successful Bid, the Declaration of Tom T. O Keefe, the Response of Tom T. O Keefe, the Clarifying Response of Starbucks Corporation to Debtor s Memorandum in Support of Approval of Proposed Sale of Assets to Global Baristas, LLC, the Declaration of Michael Malanga, the Response of Heartland Payment Systems, Inc. to Debtor s Notice of Determination of Back-Up Bids, and the Protective Objection filed by Green Mountain Coffee Roasters, Inc. ( Green Mountain ), and the files and records herein, and having considered the presentations of counsel at the January 11, 2013 hearing, and deeming itself fully advised, finds and concludes as follows: 2 A. The Court s oral ruling dated January 11, 2013, a transcript of which is attached hereto as Exhibit C hereto, is adopted in its entirety as Findings and Conclusions in support of this order. Additional Findings and Conclusions are set forth below. B. As evidenced by the affidavits of service previously filed with the Court, the Debtor provided proper, timely, adequate and sufficient notice of the Sale Motion, the hearing on the Sale Motion, the transactions contemplated under the Asset Purchase Agreement including without limitation, the Sale and the assumption and assignment of the Assumed Executory Contracts in accordance with 11 U.S.C. 102(1), 363 and 365 and Fed. R. Bankr. P and 6004, and to: (i) the Office of the United States Trustee; (ii) counsel for the Official Unsecured Creditors Committee; (iii) all entities known to have asserted any interests in or upon the Acquired Assets; (iv) all federal state, and local regulatory or taxing authorities or recording offices which have a reasonably known interest in the relief requested by the Sale Motion, (v) all parties to Assumed Findings of fact shall be construed as conclusions of law and conclusions of law shall be construed as findings of fact when appropriate. See Fed. R. Bankr. P ORDER (1) APPROVING SALE OF SUBSTANTIALLY ALL DEBTOR'S ASSETS FREE AND CLEAR, (2) AUTHORIZING ASSUMPTION AND ASSIGNMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES, AND (3) PAYMENT OF CURE Page ya BUSH STROUT & KORNFELD LLP LAW OFFICES 5000 Two Union Square 601 Union Street Seattle, Washington Telephone (206) Facsimile (206) Case KAO Doc 573 Filed 01/18/13 Ent. 01/18/13 16:18:50 Pg. 3 of 241

4 Executory Contracts; (vi) the United States Attorney s office; (vii) the Internal Revenue Service; and (viii) the official service list in this case. Such notice was good and sufficient, and afforded parties sent notice a reasonable opportunity to object or be heard with respect to the matters that are the subject of this Order, and no other or further notice is required. C. The Debtor (i) has full corporate power and authority to execute the Asset Purchase Agreement and all other documents contemplated thereby, and the sale of the Acquired Assets and assumption and assignment of the Assumed Executory Contracts by the Debtor have been duly and validly authorized by all necessary corporate action of the Debtor; (ii) has all of the corporate power and authority necessary to consummate the transactions contemplated by the Asset Purchase Agreement, (iii) has taken all corporate action necessary to authorize and approve the Asset Purchase Agreement and the consummation by the Debtor of the transactions contemplated therein, and (iv) requires no consents or approvals, other than those expressly provided for in the Asset Purchase Agreement, in order to consummate such transactions. Summary of Successful Bid and Back-up Bids D. Global Baristas Bid. In each of its submitted bids during the auction held January 3, 2013 (the Auction ) pursuant to the Bid Procedures Order entered December 10, 2012 [Docket No. 452], Global Baristas committed to acquire all of the Debtor s locations and to operate each location. Global Baristas committed to retain all of the Debtor s employees. Docket No. 527, p. 2, lines The final Global Baristas Bid for the assets was $9,150,000, as follows: ORDER (1) APPROVING SALE OF SUBSTANTIALLY ALL DEBTOR'S ASSETS FREE AND CLEAR, (2) AUTHORIZING ASSUMPTION AND ASSIGNMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES, AND (3) PAYMENT OF CURE Page ya BUSH STROUT & KORNFELD LLP LAW OFFICES 5000 Two Union Square 601 Union Street Seattle, Washington Telephone (206) Facsimile (206) Case KAO Doc 573 Filed 01/18/13 Ent. 01/18/13 16:18:50 Pg. 4 of 241

5 Cash $6,800,000 Cash in Escrow 150,000 Assumed Employee 200,000 Vacation Liability Assumed Gift Card 1,000,000 Liability Assumed Cure Costs 1,000,000 Total: $9,150,000 As set forth in the Declaration of Matthew Farrell, the Global Baristas bid was estimated to generate an amount sufficient to pay all creditors in full. Moreover and importantly, the final Global Baristas Bid was non-contingent on the assumption and assignment of any agreements with Green Mountain, including the License Agreement, Supply Agreement and Noncompetition Agreement, each dated March 27, 2009 (together, the Green Mountain Agreements ). Starbucks and ANI Bids E. Starbucks Bid. Starbucks Corporation ( Starbucks ) made three bids during the Auction. Its final bid was for 13 of the Debtor s 47 operating stores and the 12 Boeing locations (the Starbucks Bid Stores ). Starbucks did not propose to acquire the Green Mountain Agreements, as it indicated that it did not intend to operate the acquired locations as Tully s coffee shops, and would not assume Tully s outstanding gift card liabilities to its customers. Starbucks did not commit to retain the current employees at the stores it acquired. Starbucks bid also did specifically indentify the locations on which it was bidding, but also contained a provision (Section 2.2(a)) by which Starbucks had until the closing date of the Sale to amend its schedule of contracts to be assumed. F. In its third and final bid, Starbucks increased its proposed purchase price to $6,535,000 for the Starbucks Bid Stores as follows: ORDER (1) APPROVING SALE OF SUBSTANTIALLY ALL DEBTOR'S ASSETS FREE AND CLEAR, (2) AUTHORIZING ASSUMPTION AND ASSIGNMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES, AND (3) PAYMENT OF CURE Page ya BUSH STROUT & KORNFELD LLP LAW OFFICES 5000 Two Union Square 601 Union Street Seattle, Washington Telephone (206) Facsimile (206) Case KAO Doc 573 Filed 01/18/13 Ent. 01/18/13 16:18:50 Pg. 5 of 241

6 Cash $6,500,000 Assumed Employee N/A Vacation Liability Assumed Gift Card N/A Liability Assumed Cure Costs 35,000 Total: $6,535,000 G. ANI Bids. With the exception of its final bid, all bids submitted by Agrinurture, Inc. and Earthright Holdings USA, LLC (together, ANI ) contemplated the purchase and operation of all of the Debtor s stores. ANI s highest offer for all of the locations was $8,950,000. After Global Baristas made a higher bid for $9,150,000 and an Auction recess, ANI returned to the Auction and bid $4,000,000 for the stores that were not Starbucks Bid Stores, as follows: Cash $2,400,000 Assumed Employee 100,000 Vacation Liability Assumed Gift Card 1,000,000 Liability Assumed Cure Costs 500,000 Total: $4,000,000 H. Although ANI s bid provided that it would honor the Debtor s outstanding prepaid card liabilities if redeemed at Tully s stores, it also stated that it would reject the Debtor s contracts with Heartland Payment Systems ( Heartland Contracts ). Heartland is the entity that processes all transactions related to the Debtor s gift card program. The Debtor reasonably believed that ANI s proposed rejection of the Heartland Contracts, coupled with the lack of assumption of liability by Starbucks, raised substantial questions of whether ANI could perform on its assumption of Tully s pre-paid card liabilities. I. ANI confirmed at the Auction that its $4,000,000 bid was contingent on Green Mountain s approval. This contingency was critical to ANI s ability to close its proposed transaction. 23 ORDER (1) APPROVING SALE OF SUBSTANTIALLY ALL DEBTOR'S ASSETS FREE AND CLEAR, (2) AUTHORIZING ASSUMPTION AND ASSIGNMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES, AND (3) PAYMENT OF CURE Page ya BUSH STROUT & KORNFELD LLP LAW OFFICES 5000 Two Union Square 601 Union Street Seattle, Washington Telephone (206) Facsimile (206) Case KAO Doc 573 Filed 01/18/13 Ent. 01/18/13 16:18:50 Pg. 6 of 241

7 The Debtor s Determination of Global Baristas as the Successful Bidder J. At the Close of Bidding, pursuant to the Bid Procedures Order, the Debtor was required to determine the Successful Bid. Bid Procedures Order at 3(d)(8). After submission of the ANI $4,000,000 bid, there were no further bids. K. In determining the Successful Bid, the Debtor, in consultation with its professionals and the Official Committee of Unsecured Creditors and its professionals, was required to determine whether the bid met all of the qualifications set forth in the Bid Procedures Order and constituted the highest and/or best offer for the Acquired Assets. L. A key factor in the Debtor s selection of Global Baristas as the Successful Bid involved the Debtor s agreements with Green Mountain. ANI required the Debtor to assign the Green Mountain Agreements as a condition of its bid. At the Auction, Global Baristas expressly waived the closing condition of assignment of the Green Mountain Agreements, thus making Global Baristas bid non-contingent. M. At the conclusion of bidding, in the Debtor s best business judgment, the likelihood that the ANI sale would close was considered very low. Given the Debtor s precarious cash position, a failure of the ANI sale to close, regardless of a successful sale to Starbucks, would leave the Debtor without the ability to continue operating the remaining stores, leaving nominal recovery for creditors. N. Because the Global Baristas bid fit the criteria that Green Mountain had indicated that it favored, the Debtor viewed the Global Baristas bid as more likely to result in a consummated transaction. Green Mountain indicated to the Debtor that there was a good chance Green Mountain would consent to an assignment to Global Baristas. O. Other issues factored into the Debtor s decision to approve Global Baristas as the Successful Bidder: ORDER (1) APPROVING SALE OF SUBSTANTIALLY ALL DEBTOR'S ASSETS FREE AND CLEAR, (2) AUTHORIZING ASSUMPTION AND ASSIGNMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES, AND (3) PAYMENT OF CURE Page ya BUSH STROUT & KORNFELD LLP LAW OFFICES 5000 Two Union Square 601 Union Street Seattle, Washington Telephone (206) Facsimile (206) Case KAO Doc 573 Filed 01/18/13 Ent. 01/18/13 16:18:50 Pg. 7 of 241

8 Employment Issues. Global Baristas committed to employ all of the Debtor s employees. Conversely, Starbucks did not make a similar commitment. However, Starbucks did commit to provide applications and interviews to employees of the Starbuck Bid Stores. Under the Starbucks bid, the Debtor estimated that more than 250 Tully s employees were at some risk of losing their jobs. 2. Potential Card Holder Issues. The Debtor s total outstanding gift card liability is approximately $5,400,000, with approximately $1,000,000 of such liabilities attributable to cards with activity in the past 120 days. Assuming the stores are acquired and continue to be operated as Tully s stores, based upon historical usage, the Debtor estimates that a total of $1,800,000 of the outstanding $5,400,000 will actually be redeemed. However, if the cards are not honored at certain stores and purchasers of cards from those stores are denied redemption from the store in which the card was purchased, the Debtor believes the potential exists for a concerted consumer backlash that may dramatically increase the amount of estimated redemptions over the business-as-usual assumption. Unless the Auction produced a buyer that acquired all of the stores AND assumed the gift card liabilities, the resulting priority claims for the gift card liabilities could result in a lesser distribution to unsecured creditors. 3. Boeing Facilities Issues. Additional issues exist with operations at the Boeing facilities. Twelve of the Starbucks Bid Stores are located at Boeing facilities. Starbucks has declined to assume the Tully s gift card liabilities, and ANI would have no ability to do so within those stores. Debtor Submitted to the Bankruptcy Court Its Determination of Successful Bidder ORDER (1) APPROVING SALE OF SUBSTANTIALLY ALL DEBTOR'S ASSETS FREE AND CLEAR, (2) AUTHORIZING ASSUMPTION AND ASSIGNMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES, AND (3) PAYMENT OF CURE Page ya BUSH STROUT & KORNFELD LLP LAW OFFICES 5000 Two Union Square 601 Union Street Seattle, Washington Telephone (206) Facsimile (206) Case KAO Doc 573 Filed 01/18/13 Ent. 01/18/13 16:18:50 Pg. 8 of 241

9 P. In accordance with the Bid Procedures Order, on January 4, 2013, the Debtor filed a Notice of Conclusion of Auction and Determination of Successful Bid [Docket No. 493] identifying Global Baristas as the Successful Bidder. Q. The Debtor and Global Baristas reached agreement on the terms of an Asset Purchase Agreement that conformed to the final bid, and the Debtor now seeks approval of the Asset Purchase Agreement in the form attached hereto as Exhibit A. The Asset Purchase Agreement provides for sale of substantially all of the Debtor s assets. R. The agreement with Global Baristas represents the best overall transaction and meets the Debtor s objectives. Global Baristas offer provides not only the best overall value to the estate, but also allows the continued operations of all of the stores for which the leases are being assumed and anticipated jobs for the Debtor s employees in those locations. Buyer s offer additionally allows the stores to continue operations without disruption, providing stability to those stores as a whole. Buyer s operation of all of the stores and the assumption of the gift card liability increases the probability that unsecured creditors will receive a one hundred percent (100%) distribution on their allowed claims. Finally, Global Baristas assumption of the store leases precludes lease rejection claims against the estate for those leases. The Debtor believes that the offer submitted by Global Baristas represents the highest and best offer for the Acquired Assets (as defined below). Terms of Sale S. Following is a summary of the material terms of the Asset Purchase Agreement between Debtor and Global Baristas: 1. Assets to be Purchased. The assets to be purchased are specifically defined in the Asset Purchase Agreement (the Acquired Assets ). In summary, the Acquired Assets include, but are not limited to, all of Debtor s tangible and intangible assets with the exception ORDER (1) APPROVING SALE OF SUBSTANTIALLY ALL DEBTOR'S ASSETS FREE AND CLEAR, (2) AUTHORIZING ASSUMPTION AND ASSIGNMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES, AND (3) PAYMENT OF CURE Page ya BUSH STROUT & KORNFELD LLP LAW OFFICES 5000 Two Union Square 601 Union Street Seattle, Washington Telephone (206) Facsimile (206) Case KAO Doc 573 Filed 01/18/13 Ent. 01/18/13 16:18:50 Pg. 9 of 241

10 of (a) cash, except for $40,000 in change funds at the store locations; (b) security deposits and prepaid rents attributable to rejected leases; (c) accounts receivable from, and claims against JH Distribution; (d) causes of action under Chapter 5 of the Bankruptcy Code, but only to the extent such causes of action are not related to any persons or entities identified on Schedule 2.1(b) of the Asset Purchase Agreement, or to any Assumed Executory Contract (as defined below), or to any Acquired Asset; and (e) any tax refunds owed to the Debtor. 2. Contracts. The Acquired Assets include all rights existing under the Assumed Executory Contracts set forth on Exhibit B (together, the Assumed Executory Contracts ). The Green Mountain Agreements are not Assumed Executory Contracts because, as it has been represented to this Court, Green Mountain has entered into new license, supply and noncompetition agreements with Global Baristas that are being held in escrow pending the closing of the Sale and the terms of this Order. 3. Consideration. A total purchase price of $9,150,000, consisting of (a) $6,950,000 cash due at Closing (less the $150,000 deposit previously paid), subject to customary prorations and to adjustments at Closing related to changes in gift card balances, and assumed cure costs, as well as change funds balances and inventory levels that will be determined after Closing (which adjustments were contained in each whole-company bid the Debtor received); (b) assumption of employee vacation liability in the amount of $200,000; (c) assumption of gift card liability as provided in the Asset Purchase Agreement and valued at $1,000,000; and (d) assumption of cure costs related to Assumed Executory Contracts in the amount of $1,000, Conditions to Closing. Entry of an order approving the Sale, and execution and delivery of transaction documents, all in forms acceptable to Global Baristas. ORDER (1) APPROVING SALE OF SUBSTANTIALLY ALL DEBTOR'S ASSETS FREE AND CLEAR, (2) AUTHORIZING ASSUMPTION AND ASSIGNMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES, AND (3) PAYMENT OF CURE Page ya BUSH STROUT & KORNFELD LLP LAW OFFICES 5000 Two Union Square 601 Union Street Seattle, Washington Telephone (206) Facsimile (206) Case KAO Doc 573 Filed 01/18/13 Ent. 01/18/13 16:18:50 Pg. 10 of 241

11 T. The Court has jurisdiction over the Sale Motion pursuant to 28 U.S.C. 157 and 1334, and this matter is a core proceeding pursuant to 28 U.S.C. 157(b)(2)(A), (M), (N) and (O). Venue of this case and the Sale Motion in this District is proper under 28 U.S.C and U. The statutory predicates for the relief sought in the Sale Motion are Bankruptcy Code 105(a), 363(b), (f), (m), and (n), and 365, and Fed. R. Bankr. P. 2002, 6004, 6006, and V. The Debtor marketed its assets and conducted the sale process in full compliance with the Bidding Procedures Order and applicable law and rules. W. Approval of the Asset Purchase Agreement and consummation of the Sale at this time are in the best interests of the Debtor, its creditors, its estate, and other parties in interest. X. The Debtor has demonstrated both (i) good, sufficient, and sound business purpose and justification, and (ii) compelling circumstances for the Sale pursuant to 11 U.S.C. 363(b) prior to, and outside of, a plan of reorganization. The Debtor diligently and in good faith marketed the Acquired Assets to secure the highest and best offer therefore. Y. The terms and conditions set forth in the Asset Purchase Agreement, and the sale to Global Baristas represent a fair and reasonable purchase price and constitute the highest and best offer for the Acquired Assets. Z. The Asset Purchase Agreement was entered into by the Debtor and Global Baristas following the Auction without collusion or fraud, in good faith, and from arm's-length bargaining positions. Neither the Debtor nor Global Baristas has engaged in any conduct that would cause or permit the Asset Purchase Agreement to be avoided under 11 U.S.C. 363(n). Global Baristas has no connections to the Debtor or to insiders of the Debtor. At all times, Global Baristas has engaged in good faith in connection with the Auction and the Sale. 23 ORDER (1) APPROVING SALE OF SUBSTANTIALLY ALL DEBTOR'S ASSETS FREE AND CLEAR, (2) AUTHORIZING ASSUMPTION AND ASSIGNMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES, AND (3) PAYMENT OF CURE Page ya BUSH STROUT & KORNFELD LLP LAW OFFICES 5000 Two Union Square 601 Union Street Seattle, Washington Telephone (206) Facsimile (206) Case KAO Doc 573 Filed 01/18/13 Ent. 01/18/13 16:18:50 Pg. 11 of 241

12 1 AA. Global Baristas is a good faith purchaser under 11 U.S.C. 363(m) and, as such, is 2 entitled to all of the protections afforded thereby. 3 BB. The transfer of the Acquired Assets to Global Baristas will be a legal, valid, and effective transfer of the Acquired Assets, will vest Global Baristas with all right, title, and interest of the Debtor to the Acquired Assets free and clear of all interests in such property of a person or entity other than the Debtor of (i) all Liens of any kind or nature whatsoever arising under or out of, or in connection with, or in any way relating to the operation of the Debtor s business prior to the Closing, or any acts of the Debtor, and (ii) all claims as defined in 11 U.S.C. 101(5) (collectively, Interests ). 10 CC. The Debtor has demonstrated that it is an exercise of its sound business judgment to assume and assign the Assumed Executory Contracts to Buyer in connection with the consummation of the Sale, and the assumption and assignment of the Assumed Executory Contracts is in the best interests of the Debtor, its estate, and its creditors. The Assumed Executory Contracts being assigned to, and the liabilities being assumed by, Global Baristas are an integral part of the Acquired Assets and, accordingly, such assumption and assignment is reasonable. The Debtor has (i) provided adequate assurance of cure of any default existing prior to the date hereof under any of the Assumed Executory Contracts, within the meaning of 11 U.S.C. 365(b)(1)(A), and (ii) provided compensation or adequate assurance of compensation to any party for any actual pecuniary loss to such party resulting from a default prior to the date hereof under any of the Assumed Executory Contracts, within the meaning of 11 U.S.C. 365(b)(1)(B), and Global Baristas has provided adequate assurance of the future performance of and under the Assumed Executory Contracts, within the meaning of 11 U.S.C. 365(b)(1)(C) and (b)(3). Now, therefore, it is hereby ORDER (1) APPROVING SALE OF SUBSTANTIALLY ALL DEBTOR'S ASSETS FREE AND CLEAR, (2) AUTHORIZING ASSUMPTION AND ASSIGNMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES, AND (3) PAYMENT OF CURE Page ya BUSH STROUT & KORNFELD LLP LAW OFFICES 5000 Two Union Square 601 Union Street Seattle, Washington Telephone (206) Facsimile (206) Case KAO Doc 573 Filed 01/18/13 Ent. 01/18/13 16:18:50 Pg. 12 of 241

13 ORDERED as follows: 1. The Sale Motion is granted in its entirety, as further described herein and pursuant to the terms and conditions of this Order. 2. All objections to the Sale Motion or the relief requested therein that have not been withdrawn, waived, or settled, and all reservations of rights included therein, hereby are overruled on the merits. 3. The Asset Purchase Agreement, and all of the terms and conditions thereof, are hereby approved in all respects. Pursuant to 11 U.S.C. 363(b), the Debtor is authorized and directed to consummate the Sale, pursuant to and in accordance with the terms and conditions of the Asset Purchase Agreement and this Order. 4. The Debtor is authorized and directed to execute and deliver, and empowered to perform under, consummate and implement, the Asset Purchase Agreement, together with all additional instruments and documents that may be reasonably necessary or desirable to implement the Asset Purchase Agreement, and to take all further actions as may be reasonably requested by Global Baristas for the purpose of assigning, transferring, granting, conveying and conferring to Global Baristas or reducing to its possession, the Acquired Assets, or as may be necessary or appropriate to the performance of the obligations as contemplated by the Asset Purchase Agreement. 5. As of the Closing, each of the Debtor s creditors is authorized and directed to execute such documents and take all other actions as may be necessary to release such creditor s Interests in the Acquired Assets, if any, as such Interests may have been recorded or may otherwise exist. 6. Pursuant to 11 U.S.C. 105(a) and 363(f), the Acquired Assets shall be transferred at Closing to Global Baristas, or its assigns, free and clear of all Interests (except as set forth herein and in the Asset Purchase Agreement), with all such Interests to attach to the net proceeds of the Sale in ORDER (1) APPROVING SALE OF SUBSTANTIALLY ALL DEBTOR'S ASSETS FREE AND CLEAR, (2) AUTHORIZING ASSUMPTION AND ASSIGNMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES, AND (3) PAYMENT OF CURE Page ya BUSH STROUT & KORNFELD LLP LAW OFFICES 5000 Two Union Square 601 Union Street Seattle, Washington Telephone (206) Facsimile (206) Case KAO Doc 573 Filed 01/18/13 Ent. 01/18/13 16:18:50 Pg. 13 of 241

14 the order of their priority, with the same validity, force and effect which they now have as against the Acquired Assets, subject to any claims and defenses the Debtor may possess with respect thereto. 7. Except as expressly permitted, contractually assumed, or otherwise specifically provided by the Asset Purchase Agreement or this Order, all persons and entities holding claims and/or Interests against or in the Debtor or the Acquired Assets, including but not limited to, all debt security holders, equity security holders, governmental, tax, and regulatory authorities, lenders, landlords, trade and other unsecured creditors (whether legal or equitable, secured or unsecured, matured or unmatured, contingent or non-contingent, senior or subordinated) in any way relating to the Debtor, the Acquired Assets, the operation of the business of the Debtor prior to the Closing, or the transfer of the Acquired Assets to Global Baristas, hereby are forever barred, estopped, and permanently enjoined from asserting such persons or entities Interests against or in the Debtor or the Acquired Assets against Global Baristas, its successors or assigns, its property or interests or the Acquired Assets. 8. Global Baristas shall not be liable or responsible for any liability or other obligation of the Debtor arising under or related to the Acquired Assets, except as expressly provided for in the Asset Purchase Agreement and this Order. Without limiting the generality of the foregoing, and except as otherwise specifically provided herein or in the Asset Purchase Agreement, Global Baristas shall not be liable for any claims against the Debtor of any of its predecessors or affiliates, or as the transferee of the Acquired Assets, and Global Baristas shall have no successor or vicarious liabilities of any kind or character whether known or unknown as of the Closing, now existing or hereafter arising or accruing, whether fixed or contingent, with respect to the Debtor of any obligations of the Debtor arising prior to the Closing, including, without limitation, liabilities resulting from or relating to (i) errors or omissions claims, or (ii) taxes, in either case, arising, accruing, or payable under, out of, in connection with, or in any way relating to the operation of the Debtor s business or the Sale of the Acquired Assets. ORDER (1) APPROVING SALE OF SUBSTANTIALLY ALL DEBTOR'S ASSETS FREE AND CLEAR, (2) AUTHORIZING ASSUMPTION AND ASSIGNMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES, AND (3) PAYMENT OF CURE Page ya BUSH STROUT & KORNFELD LLP LAW OFFICES 5000 Two Union Square 601 Union Street Seattle, Washington Telephone (206) Facsimile (206) Case KAO Doc 573 Filed 01/18/13 Ent. 01/18/13 16:18:50 Pg. 14 of 241

15 Under no circumstances shall Global Baristas be deemed a successor of or to the Debtor for any Interest against or in the Debtor or the Acquired Assets of any kind or nature whatsoever. The sale, transfer, assignment and delivery of the Acquired Assets shall not be subject to any Interests, and Interests of any kind or nature whatsoever shall remain with, and continue to be obligations of, the Debtor. All persons hereby are forever barred, estopped, and permanently enjoined from asserting, prosecuting, or otherwise pursuing any action against the Buyer, any Affiliate of the Buyer or any successor or assign of the Buyer or such Affiliate, the Acquired Assets, or any other property of the Buyer or any Affiliate of the Buyer or any successor of assign of the Buyer or such Affiliate, in each case with respect to any Interest such person had, has, or may have against or in the Debtor, its estate, officers, directors, shareholders, or the Acquired Assets. Following the Closing, no holder of any Interest against the Debtor or the Acquired Assets (as such Acquired Assets existed prior to the Closing) shall interfere with the title to, or use and enjoyment of, the Acquired Assets based on or related to such Interest, or based upon actions taken or omissions that occurred in the Debtor s Chapter 11 case. 10. Pursuant to 11 U.S.C. 105(a) and 365, and subject to and conditioned upon the Closing of the Sale, the Debtor's assumption and assignment to Buyer of the Assumed Executory Contracts is hereby approved, and the requirements of 11 U.S.C. 365(b)(1) with respect thereto are hereby deemed satisfied. Effective as of the Closing Date (as defined in the Asset Purchase Agreement): (i) the license agreement dated as of March 27, 2009 by and among Green Mountain Coffee Roasters, Inc. and the Debtor (the License Agreement ); (ii) the supply agreement dated as of March 27, 2009 by and among Green Mountain and the Debtor (the Supply Agreement ); and (iii) the noncompetition agreement entered into as of March 27, 2009 between Green Mountain and the Debtor (the Noncompetition Agreement ) (collectively, the License Agreement, Supply Agreement and Noncompetition Agreement, the Green Mountain Agreements ) shall be terminated. Upon occurrence of the Closing Date, Green Mountain shall waive any claim arising under any of the Green ORDER (1) APPROVING SALE OF SUBSTANTIALLY ALL DEBTOR'S ASSETS FREE AND CLEAR, (2) AUTHORIZING ASSUMPTION AND ASSIGNMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES, AND (3) PAYMENT OF CURE Page ya BUSH STROUT & KORNFELD LLP LAW OFFICES 5000 Two Union Square 601 Union Street Seattle, Washington Telephone (206) Facsimile (206) Case KAO Doc 573 Filed 01/18/13 Ent. 01/18/13 16:18:50 Pg. 15 of 241

16 Mountain Agreements prior to the petition date, including without limitation its claim of approximately $398,000 arising under the Supply Agreement, and the Debtor and its estate and any of the Debtor s affiliates and assigns, and to the extent applicable, the Seller, shall have no claims against Green Mountain arising under or relating to the Green Mountain Agreements, including without limitation under 11 U.S.C. 547, on account of any payments made by the Debtor within any applicable preference period (which if had not been made would have increased the amount of the cure payment required in respect of the Green Mountain Agreements). The Debtors shall pay as an ordinary course of business administrative claim any amounts owing, if any, in respect of post-petition goods supplied by Green Mountain to the Debtor under the Supply Agreement. 11. The Debtor is hereby authorized and directed in accordance with 11 U.S.C. 105(a) and 365 to (a) assume and assign to Global Baristas, effective at Closing, the Assumed Executory Contracts free and clear of all Interests, and (b) execute and deliver to Buyer such documents or other instruments as may be necessary to assign and transfer the Assumed Executory Contracts to Buyer. The Assumed Executory Contracts shall be transferred to, and remain in full force and effect for the benefit of Buyer in accordance with their respective terms, notwithstanding any provision in any such Assumed Executory Contract, including those of the type described in 11 U.S.C 365, that prohibits, restricts, or conditions such assignment or transfer. 12. Notwithstanding the preceding paragraph, assumption and assignment to Global Baristas of the lease with FSP-City Center Plaza, LLC for Store No located at City Center in Bellevue, Washington, shall be subject to further order of this Court. 13. All defaults or other obligations of the Debtor under the Assumed Executory Contracts and Unexpired Leases arising or accruing prior to the date of this Order (without giving effect to any acceleration clauses or any default provisions of the kind specified in 11 U.S.C. 365(b)(2)) shall be ORDER (1) APPROVING SALE OF SUBSTANTIALLY ALL DEBTOR'S ASSETS FREE AND CLEAR, (2) AUTHORIZING ASSUMPTION AND ASSIGNMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES, AND (3) PAYMENT OF CURE Page ya BUSH STROUT & KORNFELD LLP LAW OFFICES 5000 Two Union Square 601 Union Street Seattle, Washington Telephone (206) Facsimile (206) Case KAO Doc 573 Filed 01/18/13 Ent. 01/18/13 16:18:50 Pg. 16 of 241

17 cured at Closing or as soon thereafter as practicable, and Global Baristas shall have no liability or obligation arising or accruing prior to the date of Closing, except as otherwise expressly provided in the Asset Purchase Agreement. The amount of any cure owed and payable with respect to the Assumed Executory Contracts shall be the amount set forth with respect to each Assumed Executory Contract, as set forth on Exhibit B hereto. 14. Each non-debtor party to an Assumed Executory Contract is forever barred, estopped, and permanently enjoined from asserting against the Debtor or Global Baristas, or the property of either of them, any default existing as of Closing; or, against Global Baristas, any counterclaim, defense, setoff or any other claim asserted or assertable against the Debtor. The failure of the Debtor or Global Baristas to enforce at any time one or more terms or conditions of any Assumed Executory Contract shall not be a waiver of such terms or conditions, or of Debtor s or Buyer s rights to enforce every term and condition of the Assumed Executory Contracts. 15. The consideration provided by Global Baristas for the Acquired Assets and the terms of the Asset Purchase Agreement (a) are fair and reasonable and (b) shall be deemed to constitute reasonably equivalent value and fair consideration under 11 U.S.C. 101 et seq. and under the laws of the United States, any state, territory, possession, or the State of Washington, and may not be avoided under 11 U.S.C. 363(n). 16. All entities that are presently, or on the Closing Date may be, in possession of some or all of the Acquired Assets are hereby directed to surrender possession of the Acquired Assets to Buyer at the Closing, and Buyer hereby is authorized to retrieve and take possession of all Acquired Assets in the possession of any third parties, including but not limited to any lessor or licensor. 17. If any person that has filed financing statements, mortgages, mechanic s liens, lis pendens, or other documents or agreements evidencing an Interest in the Debtor or the Acquired ORDER (1) APPROVING SALE OF SUBSTANTIALLY ALL DEBTOR'S ASSETS FREE AND CLEAR, (2) AUTHORIZING ASSUMPTION AND ASSIGNMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES, AND (3) PAYMENT OF CURE Page ya BUSH STROUT & KORNFELD LLP LAW OFFICES 5000 Two Union Square 601 Union Street Seattle, Washington Telephone (206) Facsimile (206) Case KAO Doc 573 Filed 01/18/13 Ent. 01/18/13 16:18:50 Pg. 17 of 241

18 Assets shall not have delivered to the Debtor prior to Closing, in proper form for filing and executed by the appropriate parties, termination statements, instruments of satisfaction, releases of such Interest which such person has or may hold with respect to the Debtor or the Acquired Assets or otherwise, then (a) the Debtor is hereby authorized and directed to execute and file such statements, instruments, releases and other documents on behalf of such person with respect to the Acquired Assets, and (b) Global Baristas is hereby authorized to file, register, or otherwise record a certified copy of this Order, which, once filed, registered, or otherwise recorded, shall constitute conclusive evidence of the release of all Interests in the Acquired Assets of any kind or nature whatsoever. 18. Each and every federal, state, and local governmental agency or department is hereby directed to accept any and all documents and instruments necessary and appropriate to consummate the transactions contemplated by the Asset Purchase Agreement. 19. This Court retains jurisdiction to enforce and implement the terms and provisions of this Order and the Asset Purchase Agreement, and of each of the agreements executed in connection therewith in all respects, including, but not limited to, retaining jurisdiction to (a) compel delivery of the Acquired Assets to the Buyer, (b) resolve any disputes arising under or related to the Asset Purchase Agreement, except as otherwise provided therein, (c) interpret, implement, and enforce the provisions of this Order, and (d) protect Buyer against (i) any of the liabilities not expressly assumed and assigned, or (ii) any Interests in the Debtor or the Acquired Assets, of any kind or nature whatsoever, attaching to the proceeds of the Sale. 20. The transactions contemplated by the Asset Purchase Agreement are undertaken by Global Baristas in good faith, as that term is used in section 363(m) of the Bankruptcy Code, and accordingly, the reversal or modification on appeal of the authorization provided herein to consummate the Sale shall not affect the validity of the Sale to Buyer, unless such authorization is duly stayed pending such appeal. Global Baristas is a purchaser in good faith of the Acquired Assets ORDER (1) APPROVING SALE OF SUBSTANTIALLY ALL DEBTOR'S ASSETS FREE AND CLEAR, (2) AUTHORIZING ASSUMPTION AND ASSIGNMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES, AND (3) PAYMENT OF CURE Page ya BUSH STROUT & KORNFELD LLP LAW OFFICES 5000 Two Union Square 601 Union Street Seattle, Washington Telephone (206) Facsimile (206) Case KAO Doc 573 Filed 01/18/13 Ent. 01/18/13 16:18:50 Pg. 18 of 241

19 and Assumed Executory Contracts, and is entitled to all of the protections afforded by 11 U.S.C. 363(m). 21. The terms and provisions of the Asset Purchase Agreement and this Sale Order shall be binding in all respects upon, and shall inure to the benefit of, the Debtor, its estate, and its creditors, Global Baristas, and their respective affiliates, successors and assigns, and any affected third parties including, but not limited to, all persons asserting Interests in the Acquired Assets to be sold to Buyer pursuant to the Asset Purchase Agreement, notwithstanding any subsequent appointment of any trustee(s) under any chapter of the Bankruptcy Code, as to which trustee(s) such terms and provisions likewise shall be binding. In no circumstance shall the Asset Purchase Agreement be subject to rejection or avoidance. 22. Nothing contained in any order entered in this bankruptcy case subsequent to the entry of this Order, nor in any plan of reorganization (or liquidation) confirmed in this case (or any other case involving the Debtor) or order of this Court confirming such plan shall conflict with or derogate from the provisions of the Asset Purchase Agreement or the terms of this Order. To the extent that there is such a conflict, the Asset Purchase Agreement and this Order control. Furthermore, to the extent that there is any conflict between the terms of the Asset Purchase Agreement and this Order, this Order controls. 23. Neither the Debtor nor Global Baristas is required to make any filing with or give any notice to, or to obtain any approval, consent, ratification, permission, waiver or authorization from, any person or any governmental authority in connection with the execution and delivery of the Asset Purchase Agreement of the consummation of the transactions contemplated therein (other than with respect to governmental licenses which do not constitute Acquired Assets), and the Debtor does not need to seek or obtain shareholder consent to consummate the transactions contemplated by the Asset Purchase Agreement. ORDER (1) APPROVING SALE OF SUBSTANTIALLY ALL DEBTOR'S ASSETS FREE AND CLEAR, (2) AUTHORIZING ASSUMPTION AND ASSIGNMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES, AND (3) PAYMENT OF CURE Page ya BUSH STROUT & KORNFELD LLP LAW OFFICES 5000 Two Union Square 601 Union Street Seattle, Washington Telephone (206) Facsimile (206) Case KAO Doc 573 Filed 01/18/13 Ent. 01/18/13 16:18:50 Pg. 19 of 241

20 The failure specifically to include any particular provisions of the Asset Purchase Agreement in this Order shall not diminish or impair the effectiveness of such provision, it being the intent of the Court that the Asset Purchase Agreement be authorized and approved in its entirety. 25. The Bid Procedures Order provided for selection and identification of a Back-Up Bid. At the Auction, the Debtor identified the bids of ANI and Starbucks as the Back-Up Bids. In the event that the transaction with Global Baristas is not closed, the Debtor may present an order on shortened time authorizing it to close the two transactions in a manner consistent with the material terms contained in the ANI and Starbucks bids. Creditors and parties in interest shall have a reasonable opportunity to object and be heard by the Court prior to entry of any order approving the Back-Up Bids. All rights of Green Mountain are reserved as to the form of any Order with respect to the Back-Up Bid. / / /END OF ORDER/ / / Presented by: BUSH STROUT & KORNFELD LLP By /s/ James L. Day James L. Day, WSBA #20474 Attorneys for TC Global, Inc. Approved: FOSTER PEPPER PLLC By /s/ Jane Pearson Jane Pearson, WSBA #12785 Jack Cullen, WSBA #7330 Attorneys for Global Baristas, LLC ORDER (1) APPROVING SALE OF SUBSTANTIALLY ALL DEBTOR'S ASSETS FREE AND CLEAR, (2) AUTHORIZING ASSUMPTION AND ASSIGNMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES, AND (3) PAYMENT OF CURE Page ya BUSH STROUT & KORNFELD LLP LAW OFFICES 5000 Two Union Square 601 Union Street Seattle, Washington Telephone (206) Facsimile (206) Case KAO Doc 573 Filed 01/18/13 Ent. 01/18/13 16:18:50 Pg. 20 of 241

21 Case KAO Doc 573 Filed 01/18/13 Ent. 01/18/13 16:18:50 Pg. 21 of 241

22 Case KAO Doc 573 Filed 01/18/13 Ent. 01/18/13 16:18:50 Pg. 22 of 241

23 Case KAO Doc 573 Filed 01/18/13 Ent. 01/18/13 16:18:50 Pg. 23 of 241

24 Case KAO Doc 573 Filed 01/18/13 Ent. 01/18/13 16:18:50 Pg. 24 of 241

25 Case KAO Doc 573 Filed 01/18/13 Ent. 01/18/13 16:18:50 Pg. 25 of 241

26 Case KAO Doc 573 Filed 01/18/13 Ent. 01/18/13 16:18:50 Pg. 26 of 241

27 Case KAO Doc 573 Filed 01/18/13 Ent. 01/18/13 16:18:50 Pg. 27 of 241

28 Case KAO Doc 573 Filed 01/18/13 Ent. 01/18/13 16:18:50 Pg. 28 of 241

29 Case KAO Doc 573 Filed 01/18/13 Ent. 01/18/13 16:18:50 Pg. 29 of 241

30 Case KAO Doc 573 Filed 01/18/13 Ent. 01/18/13 16:18:50 Pg. 30 of 241

31 Case KAO Doc 573 Filed 01/18/13 Ent. 01/18/13 16:18:50 Pg. 31 of 241

32 Case KAO Doc 573 Filed 01/18/13 Ent. 01/18/13 16:18:50 Pg. 32 of 241

33 Case KAO Doc 573 Filed 01/18/13 Ent. 01/18/13 16:18:50 Pg. 33 of 241

34 Case KAO Doc 573 Filed 01/18/13 Ent. 01/18/13 16:18:50 Pg. 34 of 241

35 Case KAO Doc 573 Filed 01/18/13 Ent. 01/18/13 16:18:50 Pg. 35 of 241

36 Case KAO Doc 573 Filed 01/18/13 Ent. 01/18/13 16:18:50 Pg. 36 of 241

37 Case KAO Doc 573 Filed 01/18/13 Ent. 01/18/13 16:18:50 Pg. 37 of 241

38 Case KAO Doc 573 Filed 01/18/13 Ent. 01/18/13 16:18:50 Pg. 38 of 241

39 Case KAO Doc 573 Filed 01/18/13 Ent. 01/18/13 16:18:50 Pg. 39 of 241

40 Case KAO Doc 573 Filed 01/18/13 Ent. 01/18/13 16:18:50 Pg. 40 of 241

41 Case KAO Doc 573 Filed 01/18/13 Ent. 01/18/13 16:18:50 Pg. 41 of 241

42 Case KAO Doc 573 Filed 01/18/13 Ent. 01/18/13 16:18:50 Pg. 42 of 241

43 Case KAO Doc 573 Filed 01/18/13 Ent. 01/18/13 16:18:50 Pg. 43 of 241

44 Case KAO Doc 573 Filed 01/18/13 Ent. 01/18/13 16:18:50 Pg. 44 of 241

45 Case KAO Doc 573 Filed 01/18/13 Ent. 01/18/13 16:18:50 Pg. 45 of 241

46 Case KAO Doc 573 Filed 01/18/13 Ent. 01/18/13 16:18:50 Pg. 46 of 241

47 Case KAO Doc 573 Filed 01/18/13 Ent. 01/18/13 16:18:50 Pg. 47 of 241

48 Case KAO Doc 573 Filed 01/18/13 Ent. 01/18/13 16:18:50 Pg. 48 of 241

49 Case KAO Doc 573 Filed 01/18/13 Ent. 01/18/13 16:18:50 Pg. 49 of 241

50 Case KAO Doc 573 Filed 01/18/13 Ent. 01/18/13 16:18:50 Pg. 50 of 241

51 Case KAO Doc 573 Filed 01/18/13 Ent. 01/18/13 16:18:50 Pg. 51 of 241

52 Case KAO Doc 573 Filed 01/18/13 Ent. 01/18/13 16:18:50 Pg. 52 of 241

53 Case KAO Doc 573 Filed 01/18/13 Ent. 01/18/13 16:18:50 Pg. 53 of 241

54 Case KAO Doc 573 Filed 01/18/13 Ent. 01/18/13 16:18:50 Pg. 54 of 241