Opinion ID: 2584287
Heading Depth: 3
Heading Rank: 2

Heading: Sale of CEI to the Ohs

Text: Subsequent to her arrest in April 2001, Batle sought to sell her interest in CEI and no longer work at the store. At this point, Myung Oh contacted Fong regarding purchase of the store. [6] At this time, CEI had the following assets: (1) a commercial lease for premises located at 152 North Pauahi Street in Honolulu; (2) a liquor license, issued by the Honolulu Liquor Commission, which allowed the sale of packaged liquor at the store; and (3) the food and liquor inventory located at the store. Fong offered to sell the business to Mrs. Oh for $228,000, the amount that was still owed to her on the promissory note signed by Batle. While negotiating the sale, Mrs. Oh asked Fong about the monthly income of the store. Fong referred Mrs. Oh to Harry Lee, the accountant employed by CEI, whom Mrs. Oh knew from prior business dealings. Mrs. Oh spoke with Mr. Lee, who confirmed the income of the store for the previous three months. Fong knew that Batle sold cigarettes from the store and that she had a wholesale cigarette business as well. Fong also knew that Batle had been arrested for selling cigarettes without the requisite stamps. On May 25, 2001, Mrs. Oh signed a Stock Purchase Agreement, in which she agreed to purchase 100% of the stock of CEI for herself and her husband Semin as the sole shareholders. Although Batle was the seller of the stock, payment would not be made directly to Batle. Under the agreement, Mrs. Oh agreed to pay $30,000 immediately as a non-refundable deposit and $50,000 at the time of closing, which funds were to be made to the Client's Trust Account of Kiuchi & Nakamato and disbursed according to a separate agreement between Batle and Fong. As part of the agreement, Mrs. Oh also signed a promissory note in favor of Fong in the amount of $148,000, payable at the rate of $5,000 per month. The Stock Purchase Agreement also provided for additional compensation for the food and liquor inventory in existence at closing of the stock transfer, the amount of which was negotiated after the closing. Under the agreement, Batle assumed responsibility for all of CEI's liabilities incurred during her ownership of the corporation, except for those specifically disclosed. On the date of closing for the stock sale, May 30, 2001, Fong and the Ohs also signed a document entitled Disclosure Re: Stock Purchase Agreement. Among the disclosures in this document were: (1) a statement acknowledging that Fong makes no representations or warranties regarding the condition of assets of CEI, which were to be accepted as is, and that the Ohs agreed to indemnify Fong for any claims arising out of the condition of the assets; (2) a disclosure that CEI had recently received a citation from the Honolulu Liquor Commission for selling liquor to a minor, for which Batle was deemed to be responsible, accompanied by an agreement to indemnify and hold Fong harmless for any claims arising out of the violation; and (3) an acknowledgment that Fong has not made any warranties regarding the success or failure of the business, accompanied by an agreement to indemnify and hold Fong harmless for any liability arising out of the success or failure of the business.