ROBERT J. FARIS, Bankruptcy Judge.
The Debtor's Motion for Order Approving and Confirming (I) Sale of Debtor's Personal Property Free and Clear of Liens, Pursuant to 11 U.S.C. § 363; and (II) Assumption and Assignment of Leases and Executory Contracts Pursuant to 11 U.S.C. § 365, filed herein on March 29, 2012 ("Motion"), came on for hearing on April 27, 2012. This Court, having reviewed and considered (i) the Motion, the Declarations of Earle S. Matsuda and Gabriel Kompkoff filed in support thereof, (ii) the record in the case; (iii) the Objections and Statements filed in response to the Motion; (iv) the representations of counsel made at the hearing, and it appearing that the relief requested in the Motion is in the best interest of the Debtor, its estate, and creditors and other parties in interest; and upon the record of the hearing; and after due deliberation thereon, adequate notice having been given and good cause appearing therefore, the Court hereby makes the following Findings of Fact and Conclusions of Law:
A. The Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and 1337, and this matter is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(A) and (N). Venue of these claims and the Motion in this district is proper under 28 U.S.C. §§ 1408 and 1409.
B. The statutory predicates for the relief sought in the Motion include sections 105, 363, and 365 of the United States Bankruptcy Code, 11 U.S.C. §§ 101 et seq., as amended ("Bankruptcy Code") and Fed.R.Bankr. P. 2002, 6004, 6006, and Local Bankruptcy Rules 6004-1 and 6006-1.
C. A reasonable opportunity to object or be heard with respect to the Motion and the relief requested therein has been afforded to all interested persons and entities.
D. Approval of the proposed sale of the Acquisition Assets, pursuant to the Purchase and Sale Agreement ("Sale") substantially in the form attached hereto as Exhibit "A" ("Agreement"), as modified by the parties as set forth herein, is in the best interest of the Debtor, its creditors, its estate, and other parties in interest.
E. The hearing on the assumption and assignment of that certain contract between the Debtor and Ralph S. Inouye Co., Ltd., dated November 16, 2007, Heide & Cook job no. 8064, HIA Sterile Corridor ("Inouye Contract") is continued for further hearing to May 14, 2012, at 10:30 a.m.
F. At the request of the Debtor and Buyer and with the consent of the affected lessors, the motion to assume and assign the leases respecting real property in Honolulu has been continued to May 14, 2012, at 10:30 a.m. In light of this, the Debtor and Buyer have agreed that Buyer shall remove all Acquisition Assets from any real property leased by Debtor under a lease that has not been assumed and assigned to Buyer not later than the date the lease is rejected, provided that Buyer reimburses Debtor for rent and other third-party charges arising under the lease and timely performs Debtor's obligations under the lease after Closing and before Buyer vacates the premises.
G. In the exercise of its rights under Section 2.B. of the Agreement, Buyer has:
1. added all uncompleted contracts/jobs identified by Seller in the ordinary course of its operations as "minor jobs;"
2. added and deleted certain Contracts from the Agreement as set forth in the Amendments to Schedule 2.A.6, attached hereto as Exhibit "B;" and
3. revised the list of vehicles covered by the Central Pacific Bank lease being assumed as shown on Exhibit "C," attached hereto.
H. The Agreement is further modified to provide that at Closing Debtor may reserve from its cash on hand sufficient funds to pay Debtor's gross accrued post-petition payroll outstanding as of the Closing Date, and to the extent necessary, make a final draw on the DIP Loan not to exceed $80,000, to cover any such payroll.
I. Section 3 of the Agreement, Shareholder Assignment of OMHI Lease, is amended to increase the OMHI Purchase Price to $12,000, and to provide that at Closing Kreative Kamaaina Enterprise, LLC ("KKE") will accept payment of $12,000, and the release of the Debtor's accounts receivable against KKE in the amount of $2,113.63, in complete satisfaction of all of KKE's claims against OMHI and the Debtor.
J. Pursuant to 11 U.S.C. § 363(b) and (f), Seller is authorized and directed to perform its obligations under and comply with the terms of the Agreement, and consummate the Sale, pursuant to and in accordance with the terms and conditions of the Agreement, as modified.
K. Pursuant to 11 U.S.C. § 365(d), the Debtor is authorized to assume and assign to Buyer each of the Contracts and Leases identified in the Agreement, as modified.
L. The Objection filed herein by the Official Committee of Unsecured Creditors on April 12, 2012, has been withdrawn.
M. The Objection filed herein by Castle & Cooke Commercial, Inc. on April 13, 2012, is without merit and is hereby overruled.
N. The Statement filed herein by Central Pacific Bank on April 13, 2012, has been resolved by the parties, subject only to the Debtor and/or Buyer making the required cure payments at Closing on the Sale transaction.
O. The Debtor has demonstrated good, sufficient, and sound business purpose and justification for the Sale, because the Debtor has determined that selling the Acquisition Assets to Buyer on the terms and conditions set forth in the Agreement is in the best interest of the Debtor's estate.
P. The Agreement was negotiated, proposed and entered into by Seller and Buyer without collusion, in good faith, and from arm's-length bargaining positions. Neither the Seller nor Buyer has engaged in any conduct that would cause or permit the Agreement or the sale to be avoided under 11 U.S.C. § 363(n).
Q. With respect to the Agreement, the Sale, and this Order, Buyer is acting as a good faith purchaser, as that term is used in the Bankruptcy Code and is, accordingly, entitled to the protections set forth in section 363(m) of the Bankruptcy Code. Buyer has not engaged in any conduct that would cause or permit the sale to be avoided under section 363(n) of the Bankruptcy Code.
R. The consideration provided by Buyer for the Acquisition Assets pursuant to the Agreement: (i) is fair and reasonable, (ii) is the highest and best price for the Acquisition Assets under all of the circumstances of this case, (iii) will provide a greater recovery for the Debtor's creditors than would be provided by any other practical available alternative, and (iv) constitutes reasonably equivalent value and fair consideration with respect to the Debtor in light of the financial wherewithal of the estate and the other findings set forth herein.
S. The transfer of Acquisition Assets to Buyer will be a legal, valid and effective transfer of Acquisition Assets, authorized pursuant to the Bankruptcy Code, and will vest Buyer will all right, title, and interest of the Debtor to the Acquisition Assets, free and clear of all liens (except the security interest of Chugach Commercial Holdings, Inc.), claims (as defined in the Bankruptcy Code), interests, and encumbrances, whether known or unknown, inchoate, unliquidated, or liquidated, contingent or otherwise,
T. Seller may sell the Acquisition Assets free and clear of all interests of any kind or nature whatsoever, except the security interest of Chugach Commercial Holdings, Inc., because, in each case, one or more of the standards set forth in 11 U.S.C. § 363(f)(1)-(5) has been satisfied. Chugach Commercial Holdings, Inc., the only holder of a security interest in the Acquisition Assets, has consented to the Sale.
U. With regard to each Contract and/or Lease being assumed and assigned pursuant to this Agreement, Buyer has satisfied the requirements of 11 U.S.C. 365(b)(1) and (f)(2). Based on the record in this case and the Declaration of Gabriel Kompkoff filed in support of the Motion, Buyer has sufficient wherewithal and financial resources to demonstrate adequate assurance of future performance of the financial obligations being assumed under the assigned Contracts and Leases. The agreement of Buyer to retain substantially all of the Debtor's employees and management satisfies the requirement that Buyer will have the requisite experience to perform the Contracts being assigned and assumed pursuant to the Agreement.
V. Upon Closing of the Sale, said Acquisition Assets shall no longer constitute property of the estate and the automatic stay imposed by 11 U.S.C. § 362 shall not apply to the collection or other disposition of such Acquisition Assets by Buyer.
THIS PURCHASE AND SALE AGREEMENT (this "Agreement") is entered into by and among Heide & Cook, Ltd., a Hawaii corporation ("Seller"), as debtor in possession; Hawaii HVAC, LLC ("Buyer"), and Opportunity Management Hawaii, Inc., a Hawaii corporation ("Shareholder").
THEREFORE, in consideration of the covenants, agreements, representations and warranties set forth below, the parties agree (subject to Bankruptcy Court approval) as follows:
This Agreement consolidates two transactions:
Provisions in this agreement respecting the purchase and sale agreement between Seller and Buyer are in section 2 and the general provisions. Provisions in this agreement respecting the assignment of the lease by Shareholder to Buyer are in section 3 and the general provisions. The general provisions applicable to all transactions are in sections 4-14.
Subject to the terms and conditions contained in this Agreement, as of the Closing, Buyer shall purchase from Seller and Seller shall sell to Buyer all of Seller's right, title and interest in and to all of the Acquisition Assets used or useful in the conduct of the Business, whether now owned or acquired at any time prior to Closing, whether owned, acquired or arising prepetition or postpetition. The Acquisition Assets include, without limitation, the following items:
1. All machinery, equipment, trade fixtures, tools, furniture, computers, computer servers and computer software, appliances, implements, spare parts, leasehold improvements, owned vehicles, whether or not evidenced by a certificate of title, and other tangible personal (the "Equipment"), including without limitation the Equipment listed on Schedule 2.A.1.
2. All office supplies and inventory used, consumed or sold in the Business and other similar items which exist on the Closing (the "Inventory").
3. All work in process, accounts receivable, chattel paper, and other receivables, any right to payment of a monetary obligation, whether or not earned by performance, and all accrued revenue from the operation of the Assets or Business ("Accounts Receivable").
4. All right, title and interest in, to and under the real property lease agreements listed on Schedule 2.A.4 (the "Real Property Leases").
5. All right, title and interest in, to and under the vehicle and equipment lease agreements listed on Schedule 2.A.5 (the "Vehicle and Equipment Leases"). (The Real Property Leases and Vehicle and Equipment Leases are collectively referred to as the "Leases.")
6. All right, title and interest in, to and under the contracts (including both construction and service), leases, agreements, and equipment or other leases or licenses to which Seller is a party on the Closing (other than the Leases) relating to the Business or by which any of the Acquisition Assets are then bound or necessary to operate the Business, as listed in Schedule 2.A.6 (the "Assigned Agreements").
7. All right, title and interest in, to and under outstanding bids, offers and solicitations listed in Schedule 2.A.7, and any bids made after the date of this Agreement and prior to Closing that Seller identifies to Buyer at the Closing and that Buyer accepts (the "Assigned Bids"). (The Assigned Agreements and the Assigned Bids are collectively referred to as the "Contracts.")
8. All deposits, prepaid accounts and letter of credit rights owned by Seller on the Closing associated with the Contracts or Leases (the "Deposits"), including without limitation those listed on Schedule 2.A.8.
9. All of Seller's active and inactive customer accounts and corresponding customer contracts and relationships and customer lists, set up forms, customer information, prospects list, and rights under existing contracts with customers (the "Accounts").
10. All cash on hand and in accounts of Seller on the Closing.
11. Seller's insurance policies, including any refunds, rebates or other amounts payable in connection with such insurance policies.
12. Seller's trade names "Heide & Cook," "H&C," "Air Reps," and any variations of those names, any other trade names used by Seller, telephone numbers and related local phone service, listings,
13. All logos, graphics, trademarks, service marks, copyrights and patents, whether or not registered, and trade secrets, proprietary information and intellectual property relating to the operation of the Business or the Acquisition Assets.
14. All general intangibles relating to the operation of the Business or the Acquisition Assets.
15. All goodwill and going concern value relating to the Business.
16. All rights under express or implied warranties from manufacturers, vendors and lessors with respect to the Acquisition Assets, to the extent assignable.
17. All claims against third parties and insurance benefits respecting Acquisition Assets arising prior to the Closing.
18. All avoidance actions, if any, based on Seller's bankruptcy avoiding powers.
19. All books, records, maintenance logs, documents, lists, files, ledgers, correspondence, lists, operating manuals, advertising, marketing and promotional materials (including historical materials), proposals, studies, reports, and other printed or written materials; records and correspondence, whether written or electronically stored or otherwise recorded in each case, that is used or held for use in connection with the Acquisition Assets.
20. All other or additional privileges, rights, interests, properties and assets of every kind and description, tangible or intangible, and wherever located, to the extent assignable, that are used or intended for use in connection with, or that are necessary to the continued conduct of, the Business as presently conducted or the Acquisition Assets.
If designated in writing by Buyer at or before Closing, Buyer may add one or more Incidental Agreements to the Assigned Agreements. If agreed to in writing by Seller and Buyer before Closing, the parties may specify that any contract, lease, agreement, license, bid, offer or solicitation of Seller not otherwise constituting a Contract or Lease be included in the schedules identifying the Contracts and Leases. At or prior to Closing, Buyer may strike any Contract or Lease from the appropriate schedule by giving Notice to Seller, in which case such contract or lease shall cease to be a Contract or Lease or an Acquisition Asset as if it never was listed on the schedule. Adding or deleting a Contract or Lease shall not affect the Cash Purchase Price.
As of Closing, Seller shall release and waive all claims it may have, if any, against Buyer, its direct or indirect parent companies, BOH (but only with respect to the Loans), or their shareholders, officers, directors, managers or agents, whether based on assertion of "lender liability," or otherwise.
Notwithstanding Section 2.A, Seller is not selling and Buyer is not purchasing any of the following, all of which shall be retained by Seller (the "Excluded Assets"):
1. Any contracts or agreements incidental to Seller's bankruptcy proceeding.
2. Any contracts or leases rejected by Seller under Bankruptcy Code § 365.
3. All deposits and prepaid accounts owned by Seller on the Closing not associated with the Contracts or Leases.
4. Personnel records.
5. Claims for refunds of taxes or other governmental charges.
6. Assets, rights and interests associated with any employee benefit plan.
7. Records relating to the Seller or the Business prior to Closing unrelated to the Acquisition Assets.
In consideration of the transfer of the Acquisition Assets to Buyer and the other agreements set forth in this Agreement:
1. Buyer shall release and waive personal liability of Seller for the Loans (both secured and unsecured), so that the Loans become nonrecourse obligations of Seller and secured by the Secured Assets as provided in the various guarantees and security documents between the parties and under the Bankruptcy Court's orders granting Buyer replacement liens. Buyer's release of Seller shall not be deemed to be a release of any other party to the Loan Documents. The parties acknowledge that the value of the Secured Assets is at least $1 million less than the outstanding balance of the Loans, so there is a deficiency of at least $1 million. However, Seller shall not have personal liability for that deficiency.
2. Buyer shall release and waive personal liability of Seller under the Debtor in Possession Loan Agreement, so that the loan becomes a nonrecourse obligation of Seller secured as provided in the that agreement and under the Bankruptcy Court's orders approving that agreement.
3. Buyer shall release and waive personal liability of Seller under Seller's Loan Agreement and Promissory Note dated January 26, 2012, for $100,000, having an outstanding principal amount of approximately $50,000.00, so that the note becomes a nonrecourse obligation of Seller.
4. Buyer shall release any claims arising from that certain Final Order Authorizing Debtor to Use Cash Collateral entered on March 14, 2012, in the Bankruptcy Case so that the claims become a nonrecourse obligation of Seller secured as provided under the Bankruptcy Court's order.
5. Buyer shall assume various obligations of Seller, as provided in section 2.G.
6. Buyer shall make a cash payment ("Cash Purchase Price") to Seller at Closing in an amount equal to $378,000.00.
In addition to the Purchase Price, Buyer shall assume the following liabilities at Closing:
1. The Contracts listed in Schedule 2.A.6 and Schedule 2.A.7, including warranty claims under such Contracts.
2. The Leases listed on Schedule 2.A.4 and Schedule 2.A.5, but excluding obligations the performance of which was due on or before the Closing.
3. Amounts owed to vendors (other than to Guarantors) (a) under any valid and enforceable joint check agreements pertaining to Contracts, and (b) to the extent that such vendors hold valid and unexpired mechanics' or materialmens' lien rights (not subject to defenses) arising in the ordinary course of Seller's business relating to good and services provided by the vendors in connection with Seller performing the Contracts. For illustration purposes, a current list of vendors providing goods or services in connection with the Contracts and the approximate amounts currently owed to them for such goods and services is attached as Schedule 2.G3.
4. Amounts owed to landlords under the Leases for rent and associated delinquency charges (interest, late fees, attorney fees, etc.) and amounts owed under the Leases to governmental agencies for property taxes. For illustration purposes, a current list of landlords owed rent and associated delinquency charges under the Leases and governmental agencies and the approximate amounts currently owed to them for such rent and associated delinquency charges and property taxes is attached as Schedule 2.G4.
Except as set forth in Section 2.G, Buyer does not assume or agree to pay, perform or discharge, and shall not be responsible for, any obligations or liabilities of Seller, including, without limitation, the following (the "Excluded Liabilities"):
1. Any contract, lease, agreement, license, bid, offer or solicitation that does not constitute a Real Property Lease, a Vehicle or Equipment Lease, Assigned Agreement or an Assigned Bid.
2. Any income, franchise, conveyance tax, general excise tax, or other tax or charge, if any, which may be imposed upon Seller by reason of receipt of the Purchase Price or relief from any liability pursuant to this Agreement, including without limitation any amount due under the Hawaii bulk sale or transfer act, HRS § 237-43, the Hawaii general excise tax law, HRS Chapter 237, or the Hawaii conveyance tax statute, HRS Chapter 247;
3. Any of the costs and expenses incurred in connection with the post-Closing business affairs of Seller;
4. The costs and expenses of Seller incurred in negotiating, entering into and carrying out its obligations pursuant to this Agreement;
5. Any indebtedness (whether short term or long term and excluding the Loans that are released hereunder) for money borrowed by Seller, together with all interest thereon, together with any prepayment penalties or other liabilities related to retiring or extinguishing any such indebtedness of Seller, except to the extent such indebtedness is assumed by Buyer in accordance with Section 2.G;
6. Any contractual commitments for which performance is required, payment is due, or liability arises prior to the Closing, except to the extent such contractual commitments are assumed by Buyer in accordance with Section 2.G;
7. Any taxes for which Seller, Seller's employees, or Seller's members are liable;
8. Any liability or obligation arising out of any employee benefit plan (as defined in ERISA) and all other similar benefit plans, programs, arrangements or commitments (whether written or oral) of Seller;
9. Any liabilities arising out of or in connection with periods or activity prior to the Closing related to OSHA, EEOC, EPA or any other governmental authority, or any violation of law;
10. Any liability or obligation, contingent or liquidated, known or unknown, arising from or related to any claim, litigation, protest or proceeding threatened, pending, or arising out of events occurring on or before the Closing, including, without limitation, any claim, litigation, protest or proceeding threatened or initiated after the Closing to the extent based on an act or omission of Seller or any representative of Seller, or the operation of the Business or Acquisition Assets occurring on or before the Closing.
11. Any claim for warranty work or repairs for work performed or goods provided by Seller except in connection with a Contract.
Subject to the terms and conditions contained in this Agreement, as of the Closing, Shareholder shall assign to Buyer all of Shareholder's right, title and interest as lessee under the State of Hawaii General Lease No. S-3595, dated January 16, 1961, for real property located at 11 Pookela Street, Hilo (the "OMHI Lease"), which has been subleased to Seller (which shall terminate at Closing), and Shareholder shall sell to Buyer the building existing on the real property. Seller and Shareholder shall be responsible for obtaining, at Seller's and Shareholder's cost and expense, the consent of the lessor to said assignment and sale, if required under the terms of the OMHI Lease.
To the extent Seller has any interest in the OMHI Lease and associated building, Seller shall assign the lease and building to Buyer at Closing on the same terms and conditions as apply to OMHI's assignment.
In consideration of the assignment of the OMHI Lease and sale of the building to Buyer and the other agreements set forth in this Agreement, Buyer shall pay to Shareholder $10,000.00 (the "OMHI Purchase Price") in immediately available funds at Closing in accordance with Section 5.
Seller and Buyer shall execute and file with the Bureau of Conveyances of the State of Hawaii a conveyance tax certificate for the assignment of the OMHI Lease, and Seller shall be responsible for payment of the applicable conveyance tax.
In addition to the OMHI Purchase Price, Buyer shall assume and agree to perform the OMHI Lease, but excluding obligations the performance of which was due on or before the Closing.
The closing of the transactions contemplated by this Agreement shall take place within two days after Seller has obtained authorization to consummate this Agreement, either by order of the Bankruptcy Court under Bankruptcy Code §§ 363 and 365 or pursuant to a confirmed plan of reorganization. The date on which Closing actually occurs shall be referred to as the "Closing." Subject to the provisions set forth below, the failure to consummate the transactions provided for in this Agreement on the date determined pursuant to this Section shall not result in the termination of this Agreement and shall not relieve any party to this Agreement of any obligation. The transactions contemplated by this Agreement shall be deemed effective as of 11:59 p.m. on the day of the Closing.
1. Either Seller or Buyer may postpone the Closing by up to three days for their convenience. Buyer may postpone the Closing so that the closing occurs as of the last day or first day of a calendar month.
2. If either Seller or Buyer has a good faith concern about closing prior to the Bankruptcy Court's order becoming final, either Seller or Buyer may postpone Closing until two days after the Bankruptcy Court's order becomes final. For purposes of this Agreement, the Bankruptcy Court's order shall be considered "final" when Seller's bankruptcy counsel has certified in writing to Buyer's counsel that the Bankruptcy Court's order approving the sale and this Agreement has become final and non-appealable.
3. The parties acknowledge that Buyer is not presently licensed in the State of Hawaii as a specialty contractor to perform mechanical contractor services, and therefore if the Closing occurs prior to the time Buyer obtains its specialty contractor license Buyer will not be able to perform certain of the Contracts. This would disrupt performance of the Contracts. Buyer shall use its best efforts to obtain the specialty contractor license. Buyer shall apply for a specialty contractor license so that the license can be issued as soon as possible after the conditions to closing have been satisfied. The Hawaii contractors license board meets monthly. Seller and Buyer shall identify the likely date of Closing, based on the likely date the conditions to closing will be satisfied (primarily, Bankruptcy Court approval). Buyer may postpone the Closing to immediately after it has been issued the necessary specialty contractor license. The goal is to have Seller continue to operate its Business until the contractor license has been issued to Buyer, and then immediately transfer the Acquisition Assets and OMHI Lease to Buyer so it can perform the Contracts and Leases without any gap in performance. Seller and Buyer shall use their best efforts to coordinate and schedule their activities to minimize, the greatest extent feasible, disruption to the parties and their customers and employees.
At the Closing, Seller and Shareholder shall deliver, or shall cause to be delivered, to Buyer the following:
1. Such assignments, bills of sale and other instruments of sale, transfer, conveyance, assignment and delivery covering the Acquisition Assets or any part thereof as Buyer may reasonably require to assure the full and effective sale, transfer, conveyance, assignment and delivery to Buyer of the Acquisition Assets free and clear of any rights and claims of third parties except the Loans (which shall survive Closing, and not merge into the Closing or the instruments executed at the Closing), including, but not limited to, the following:
a) A bill of sale and general assignment transferring to Buyer title to the Acquisition Assets in a form satisfactory to Buyer;
b) Certificates of title to titled vehicles, duly indorsed to Buyer;
c) A statement identifying all bids made after the date of this Agreement and prior to Closing;
d) All documents in a form satisfactory to Buyer required for the assignment of Seller's rights under the Contracts and Leases;
e) Originals of all of the Contracts and Leases, other agreements, certificates of occupancy, commitments, books, records, files and other data that are included in the Acquisition Assets or relate to or affect the Acquisition Assets or are reasonably necessary for the continued conduct of the Business; and
f) Such other instruments of transfer and assignment in respect of the Acquisition Assets as Buyer shall reasonably require and as shall be consistent with the terms and provisions of this Agreement.
g) A statement itemizing all vendor claims, landlord claims and taxes assumed by Buyer outstanding as of Closing.
2. Such assignments, bills of sale and other instruments of sale, transfer, conveyance, assignment and delivery covering the OMHI Lease and the building on that real property as Buyer may reasonably require to assure the full and effective sale, transfer, conveyance, assignment and delivery to Buyer of the OMHI Lease and the building on that real property free and clear of any rights and claims of third parties.
3. Such release and waiver of claims as Buyer may reasonably require to release and waive all claims Seller may have, if any, against Buyer, its direct or indirect parent companies, BOH with respect to the Loans, or their shareholders, officers, directors, managers or agents, whether based on assertion of "lender liability," avoidance actions based on Seller's bankruptcy avoiding powers, or otherwise.
4. A statement of vendor debts, as provided in section 2.F.
5. Resolutions duly adopted by Seller and Shareholder authorizing and approving the execution and delivery of this Agreement and the consummation of the contemplated transactions.
6. A certified copy of the Bankruptcy Court order authorizing Seller to consummate this Agreement under Bankruptcy Code §§ 363 and 365 or confirming a plan of organization providing for Seller to consummate this Agreement and, if requested by Buyer, a certificate by Seller's bankruptcy counsel confirming that such order has become final.
7. Certificates by Seller and Shareholder affirming the accuracy of their representations and warranties in Section 6 as of the Closing and as to their compliance with and performance of their covenants and obligations to be performed or complied with at or before the Closing.
8. An employment agreement with Earle Matsuda, signed by both Matsuda and Buyer.
9. All e-mail and other records, as described in section 2.A.17 (or Seller and Buyer may agree to delivery after Closing)
10. Any other document, certificate or instrument reasonably deemed necessary or desirable by Buyer or otherwise necessary to consummate the transaction contemplated by this Agreement.
11. Tax clearance certificates, reports and/or statements of taxes, penalties, and interest levied or accrued, as provided in sections 4.1. and 4.J.
12. Current good standing certificates for Seller and Shareholder.
At the Closing, Buyer shall deliver, or shall cause to be delivered, to Seller the following:
1. The purchase price payable to Seller in immediately available funds, subject to sections 2.E and 2.F.
2. A release and waiver of personal liability of Seller for the Loans, the Debtor in Possession Loan Agreement and Seller's promissory note dated January 26, 2012, in a form acceptable to Seller, so that all such loans become nonrecourse as to Seller.
3. The purchase price payable to Shareholder in immediately available funds, subject to section 3.
4. An employment agreement with Earle Matsuda, signed by both Matsuda and Buyer.
5. A statement identifying which bids made after the date of this Agreement and prior to Closing that Buyer accepts as part of the Assigned Bids;
6. A resolution duly adopted by Buyer authorizing and approving the execution and delivery of this Agreement and the consummation of the contemplated transactions.
7. A certificate by Buyer affirming the accuracy of their representations and warranties in Section 7 as of the Closing and as to its compliance with and performance of their covenants and obligations to be performed or complied with at or before the Closing.
8. Any other document, certificate or instrument reasonably deemed necessary or desirable by Seller or otherwise necessary to consummate the transaction contemplated by this Agreement.
The Debtor in Possession Loan Agreement between Seller and Buyer, as well as the Bankruptcy Court's order respecting cash collateral of Buyer, shall terminate as of Closing.
On the Closing, Seller shall deliver to Buyer physical possession of the Acquisition Assets at the locations at which they have been used in the Business and Shareholder shall deliver to Buyer physical possession of the premises covered by the OMHI Lease.
The Acquisition Assets and OMHI Lease shall be conveyed free and clear of any liens, encumbrances, charges, claims or rights asserted by any third party, except for the Loans. The Loans shall survive Closing, and not merge into the Closing or the instruments executed at the Closing.
Immediately before Closing, Seller shall file with the State of Hawaii articles of amendment changing Seller's name to HC Liquidation, Inc. and Buyer shall file with the State of Hawaii articles of amendment changing Buyer's name to" Heide & Cook." Seller and Buyer shall cooperate so as to make the filings and changes of name occur concurrently. If for any reason the Closing does not occur, Seller and Buyer shall upon request of the other file with the State of Hawaii articles of amendment changing their names to cancel the effect of this section 4.H.
Unless the Bankruptcy Court issues a final order that HRS § 237-43 does not apply to the transactions contemplated by this Agreement, at Closing Seller shall provide a certified copy of the filed Report of Bulk Sale or Transfer accepted by the Department under HRS 237-43 immediately before Closing and certify to Buyer the amount of taxes, penalties, and interest levied or accrued under HRS title 14 for taxes administered by the Department against Seller, or constituting a lien upon the Acquisition Assets. On behalf of Seller, Buyer shall pay to the State of Hawaii from the Cash Purchase Price an amount equal to the taxes, penalties, and interest certified by Seller and withhold from the Cash Purchase Price an additional amount Buyer reasonably deems to be appropriate to cover any shortfall. If additional taxes, penalties, and interest are owed, Buyer shall pay such amount from the withheld Cash Purchase Price. Within five days after Seller has obtained from the Department and provided to Buyer a certificate to the effect that all taxes, penalties, and interest levied or accrued under title 14 for taxes administered by the Department against Seller, or constituting a lien upon the Acquisition Assets, have been paid, Buyer shall pay to Seller any remaining unpaid Cash Purchase Price.
At Closing Shareholder shall provide a certified copy of the filed Report of Bulk Sale or Transfer accepted by the Department under HRS 237-43 immediately before Closing and certify to Buyer the amount of taxes, penalties, and interest levied or accrued under HRS title 14 for taxes administered by the Department against Shareholder, or constituting a lien upon the OMHI Lease and associated building. On behalf of Shareholder, Buyer shall pay to the State of Hawaii from the OMHI Purchase Price an amount equal to the taxes, penalties, and interest certified by Shareholder and withhold from the OMHI Purchase Price an additional amount Buyer reasonably deems to be appropriate to cover any shortfall, penalties, and interest. If additional taxes, penalties, and interest are owed, Buyer shall pay such amount from the withheld OMHI Purchase Price. Within five days after Shareholder has obtained from the Department and provided to Buyer a certificate to the effect that all taxes, penalties, and interest levied or accrued under title 14 for taxes administered by the Department against Shareholder, or constituting a lien upon the OMHI Lease and associated building, have been paid, Buyer shall pay to Shareholder any remaining unpaid OMHI Purchase Price.
Seller and Shareholder represent, warrant and covenant to Buyer that (a) the following statements are true and correct as of the date of this Agreement, or (b) except as may be qualified by Seller/Shareholder in writing prior to Closing based on knowledge gained or events occurring after the date of this Agreement, will be true and correct on the Closing as though made on such date. All representations and warranties by or respecting Seller are qualified by the requirement that Seller obtain authorization from the Bankruptcy Court pursuant to Bankruptcy Code §§ 363 and 365 or confirmation of a plan of reorganization to consummate this Agreement. For purposes of representations and warranties in this Agreement, the OMHI Lease shall be included in the Leases.
Seller and Shareholder are corporations duly organized, validly existing and in good standing under the laws of the State of Hawaii. Seller has the requisite power and authority to operate the Business as now conducted and own the Acquisition Assets and to consummate the transactions contemplated by this Agreement. Shareholder has the requisite power and authority to consummate the transactions contemplated by this Agreement.
Seller is a debtor in possession in In re Heide & Cooke, Ltd., Hawaii Bankruptcy Court, case no. 12-00314, and has all rights and powers of a debtor in possession under the Bankruptcy Code. Its rights and powers as a debtor in possession have not been limited by order of the Bankruptcy Court or the U.S. Trustee's Office, or agreement with any person, including the unsecured creditors committee.
Seller and Shareholder have taken all actions necessary to authorize it to execute, deliver and perform its obligations under this Agreement and all instruments and agreements delivered pursuant to this Agreement. Seller and Shareholder have taken all actions necessary to consummate the transactions contemplated under this Agreement, including any necessary approval by Seller's and Shareholder's board of directors and shareholders. This Agreement and all instruments and agreements to be delivered in connection with this Agreement by Seller and Shareholder constitute the legal, valid and binding obligations of Seller and Shareholder, enforceable against it and them in accordance with its terms.
1. Seller and Shareholder are not in default under or in violation of any provision of its articles of organization or other governing document, as amended to date.
2. Neither the execution and delivery of this Agreement or any other agreement or instrument to be delivered to Buyer in connection with this transaction, nor the consummation of the contemplated transactions by Seller and Shareholder shall: (i) result in the acceleration of, or the creation in any party of the right to accelerate, terminate, modify or cancel, or cause a payment obligation to arise under, any indenture, contract, lease, sublease, loan agreement, note or other obligation or liability to which Seller or Shareholder is a party or by which Seller or Shareholder is bound that could adversely affect the contemplated transactions, or Buyer's unencumbered possession or use of the Acquisition Assets or OMHI Lease; (ii) conflict with or result in a breach of or constitute a violation or default under, (A) any provision of Seller's or Shareholder's articles of organization, operating agreement, or other governing document, as amended to date, or (B) any restriction, lien, encumbrance, license, permit, indenture, contract, lease, loan agreement, note or other obligation or liability to which Seller or Shareholder is a party or by which Seller or Shareholder is bound, and that could adversely affect the Business, the contemplated transactions, or Buyer's unencumbered possession or use of the Acquisition Assets or OMHI Lease, or (C) any order, writ, injunction, decree, license or permit applicable to Seller or Shareholder or any state or local law, statute, rule or regulation applicable to Seller or Shareholder, or (iii) result in the creation of any lien or encumbrance upon any of the Acquisition Assets or OMHI Lease.
No approval, consent, order or authorization of, exemption by, or registration, declaration or filing with, any state governmental authority is required by or with respect to Seller or Shareholder in connection with the execution, delivery and performance of this Agreement by Seller or Shareholder or Guarantors or any other agreement or instrument to be delivered to Buyer in connection herewith or the consummation by Seller or Shareholder of the contemplated transactions or thereby, including but not limited to the transfer of the Acquisition Assets or OMHI Lease.
Shareholder owns 100% of Seller's outstanding shares and is the sole shareholder of Seller. Matsuda and Kekua own 100% of Shareholder's outstanding shares and are the sole shareholders of Seller with each owning 50% of the outstanding shares.
Seller (as to the Acquisition Assets) or Shareholder (as to the OMHI Lease) have good and clear title to (as to the Acquisition Assets, excluding the Leases), or leasehold interest in (as to the Leases), and possession of all of the Acquisition Assets and the OMHI Lease and shall transfer to Buyer all of the Acquisition Assets and OMHI Lease, free and clear of all restrictions, liens, encumbrances, rights, title and interests of others. No one other than Seller (as to the Acquisition Assets) or Shareholder (as to the OMHI Lease) has any right, title, interest, restriction, lien or encumbrance in, on or to any of the personal property or other assets used in or about the Business. The Acquisition Assets and OMHI Lease constitute all assets and resources used in the ordinary course of business by Seller. Within the past year Seller has not transferred or disposed of any material assets used in the ordinary course of business of its business.
Shareholder has good and clear title to the building on the OMHI Lease, and possession of all of the building and shall transfer to Buyer all of the building, free and clear of all restrictions, liens, encumbrances, rights, title and interests of others. No one other than Shareholder has any right, title, interest, restriction, lien or encumbrance in, on or to any of the personal property or other assets used in or about the building.
To Seller's and Shareholder's knowledge, the information Seller has provided and will provide to Buyer for purposes of Buyer's due diligence pursuant to Section 8.C shall be substantially true, complete and correct, shall fairly present the financial condition of Seller as of their respective dates, shall be prepared in accordance with Seller's usual accounting practices, consistently applied, and shall be free of material error. Except for liabilities that have arisen in the ordinary course of the Business, to Seller's, Shareholder's and Guarantors' knowledge Seller does not have any liabilities or obligations of any nature (absolute, accrued, contingent or otherwise) that are not reflected in the information provided to Buyer.
Schedule 6.J.1. sets forth a complete list of the following contracts, agreements, and commitments relating to the Business or the Acquisition Assets or OMHI Lease to which Seller or Shareholder is a party or by which Seller, Shareholder or any of the Acquisition Assets or OMHI Lease are bound as of the date of this Agreement, and which are not otherwise expressly disclosed in this Agreement (collectively, the" Incidental Agreements"):
a) Any contract, commitment or agreement that involves aggregate expenditures by Seller of more than $10,000 per year, other than the Contracts and the Leases;
b) Any contract, commitment or agreement that involves aggregate receipts by Seller of more than $10,000 per year, other than the Contracts;
c) Any contract, agreement, order or consent agreement that requires Seller to take any actions or incur expenses to remedy non-compliance with any law;
d) Any power purchase contract, service contract or other contract relating to the photovoltaic system;
e) Agreements regarding the uninstalled parking system; and
f) Any other contract material to the Business.
Schedule 2.A.7 sets forth a complete list of all outstanding bids, offers and solicitations that constitute Assigned Bids, and their status. All Assigned Bids were prepared, submitted, offered and/or solicited in the ordinary course of Seller's business, in accordance with Seller's usual practices for estimating.
True, correct and complete copies of each of the Contracts, and such of the Incidental Agreements as Buyer has requested, have been delivered to or will be made available for inspection by Buyer. All such Contracts and Incidental Agreements (i) were duly and validly executed and delivered by Seller and, to the best knowledge of Seller and Shareholder, the other parties to such Contracts and Incidental Agreements and (ii) are to Seller's and Shareholder's knowledge the legal, valid and binding obligations of Seller and the other party to the Contract or Incidental Agreement, enforceable in accordance with its terms. Seller has fulfilled all material obligations required of Seller under each such Contract or Incidental Agreement to have been performed by it prior to the date of this Agreement. To Seller's and Shareholder's knowledge no material warranty claims have been asserted under the Contracts. None of the Contracts or Incidental Agreements limit Seller or any assignee in any way from competing anywhere or in any business or from soliciting any person as a customer or require Seller to use any vendor or supplier for any of Seller's requirements for any goods or services. To Seller's and Shareholder's knowledge, no party under any of the Contracts or Incidental Agreements is in default, nor, to Seller's and Shareholder's knowledge, has any default been threatened related to the Contracts or Incidental Agreements.
True, correct and complete copies of each of the Leases have been delivered to Buyer. All such Leases (i) were duly and validly executed and delivered by Seller or Shareholder and, to the best knowledge of Seller and Shareholder, the other parties to such Leases and (ii) are to Seller's and Shareholder's knowledge valid and in full force and effect. Seller and Shareholder enjoy peaceful and undisturbed possession of the property and premises described in the Leases under the terms of the Leases. Seller and Shareholder have the right to use the leased premises and vehicles for the purposes for which they are being used currently in the Business. No business other than the Business is conducted by Seller and Shareholder at the leased premises or using the leased vehicles. Seller's and Shareholder's interests in the Leases are not encumbered by any prior transfer, assignment, mortgage or encumbrance other than the Loans. Seller and Shareholder have fulfilled all material obligations required of Seller and Shareholder under each Lease to have been performed by it prior to the date of this Agreement. To Seller's and Shareholder's knowledge, (i) no party under any of the Leases is in default, (ii) has any default been threatened nor are there any disputes related to the Leases, and (iii) there are no counterclaims or offsets under any of the Leases. To Seller's and Shareholder's knowledge, Schedule 2. G accurately sets forth the amounts currently owed to landlords under the Leases for rent and associated delinquency charges (interest, late fees, attorney fees, etc.) and the amounts owed under the Leases to governmental agencies for property taxes.
Schedule 2.A.8 reflects a true list of all prepaid expenses and deposits of Seller as of the date of this Agreement associated with the Contracts and Leases, all of which are being transferred to Buyer under this Agreement.
All Accounts Receivable represent valid obligations for sales actually made or services actually performed in the ordinary course of business and are collectible in the ordinary course of business, except as reflected in any reserve for doubtful accounts, which has been determined in accordance with Seller's normal and customary accounting methods, consistently applied and on a basis consistent with prior years; provided that no representation is made with respect to accounts receivable that are over 90 days old as of the Closing.
To Seller's and Shareholder's knowledge, all facilities on the Real Property Leases and OMHI Lease, and their use by Seller and Shareholder, comply with all applicable legal requirements, including those pertaining to zoning, building and the disabled, are in good repair and in good condition, ordinary wear and tear excepted, are free from latent and patent defects, and do not encroach on any other real property. Each parcel subject to the Real Property Leases and OMHI Lease abuts on and has direct vehicular access to a public road or has access to a public road via a permanent, irrevocable, appurtenant easement, is supplied with public or quasi-public utilities and other services appropriate for the operation of the facilities located on the property and, to Seller's and Shareholder's knowledge, is not located within any flood plain or area subject to wetlands regulation or any similar restriction. To Seller's and Shareholder's knowledge, there is no existing or proposed plan to modify or realign any street or highway or any existing or proposed eminent domain proceeding that would result in the taking of all or any part of any parcel subject to the Real Property Leases or OMHI Lease or that would prevent or hinder the continued use of any parcels as used in the conduct of the business of Seller.
Schedule 2.A.1 reflects a true list of all material equipment, trade fixtures, tools, furniture, computers, appliances, implements, spare parts, leasehold improvements, and other tangible personal property owned by Seller used in connection with the Business. The Equipment constitutes all of the equipment and operating assets held for use or used in connection with the Business, and is sufficient for the continued conduct of business after the Closing in substantially the same manner as the Business was conducted prior to the Closing.
All Inventory consists of a quality and quantity usable and, with respect to finished goods, saleable, in the ordinary course of business of Seller except for obsolete items and items of below-standard quality, all of which have been written off or written down to net realizable value in the accounting records of Seller. Seller is not in possession of any Inventory not owned by Seller, including goods already sold.
To Seller's knowledge, Seller owns all trade names, trademarks, service marks, patents, copyrights, trade secrets and other intellectual property, whether or not registered or applied for (collectively, "Intellectual Property") necessary to operate its Business in the ordinary course of business. Seller is unaware of any known or threatened infringement, interference with or challenge to the Company's Intellectual Property rights to use of Intellectual Property.
Except (a) as disclosed on Schedule 6.R., (b) the consequences of Seller filing a petition in bankruptcy, or (c) other transactions with Buyer or that have been approved by the Bankruptcy Court, since the date of the financial statements and other information provided by Seller and Shareholder to Buyer there has not been:
1. Any material adverse change in the business, financial condition, properties, value or results of operations of the Business or the Acquisition Assets or OMHI Lease;
2. Any material damage, destruction or loss suffered by Seller, whether or not covered by insurance;
3. Any sale, lease or other disposition of properties and assets of Seller related to the Business, other than those in the ordinary course of business;
4. Any merger or consolidation of Seller with any other business or any acquisition by Seller of the stock, other equity interest, or assets of another business;
5. Any cancellation of debt by Seller or release and waiver of any claim or right of substantial value to Seller (other than write-offs made in the ordinary course of business and Seller's usual practices);
6. . . . Any borrowing, agreement to borrow funds or guaranty by Seller or any termination or amendment of any evidence of indebtedness, contract, agreement, deed, mortgage, lease, license or other instrument to which Seller is bound or by which Seller or any of the Acquisition Assets are bound other than in the ordinary course of business;
7. Any increase in the compensation payable or to become payable by Seller to the employees of Seller, any increase in benefits or benefit plan costs or any increase in any bonus, insurance, compensation or other benefit plan made for or with or covering any employees of Seller outside of the ordinary course of business;
8. Any employment, consulting, severance or indemnification agreement entered into or made by Seller with any of its employees, or any collective bargaining agreement or other obligation to any labor organization incurred or entered into by Seller;
9. Any creation or imposition of any lien or encumbrance, other than a permitted encumbrance, on any of the Acquisition Assets;
10. Any making of any unpaid capital commitment in excess of $10,000 in the aggregate related to the Business; or
11. Any contract or commitment to do any of the foregoing.
Seller and Shareholder have disclosed all facts or transactions to Buyer in writing of which Seller and Shareholder are aware, or have made available to Buyer, Seller's and Shareholder's records that disclose all facts or transactions, that materially adversely affect or is likely to materially adversely affect the Business or the Acquisition Assets and OMHI Lease. To Seller's and Shareholder's knowledge, Seller and Shareholder have not made any material misstatement of fact in this Agreement or in any document delivered to Buyer pursuant to this Agreement or in connection with the contemplated transactions or omitted any material fact necessary or desirable to make materially complete, accurate and not misleading every representation, warranty and agreement set forth in this Agreement or in any document to be delivered pursuant to this Agreement or in connection with transactions contemplated by this Agreement.
To Seller's and Shareholder's knowledge, there is no existing, contingent or threatened liability, obligation, lien or claim of any nature that relates to the Business or the Acquisition Assets and OMHI Lease or has been asserted or threatened to be asserted against Seller, other than liabilities arising in the ordinary course of the Business.
Buyer represents, warrants and covenants to Seller that the following statements are true and correct as of the date of this Agreement and, except as may be qualified by Buyer in writing prior to Closing based on knowledge gained or events occurring after the date of this Agreement, will be true and correct on the Closing as though made on such date:
Buyer is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Hawaii. Buyer has, or will have after obtaining necessary licenses, the requisite power and authority to own and use the Acquisition Assets and to consummate the transactions contemplated by this Agreement.
Buyer has taken all actions necessary to authorize it to execute, deliver and perform its obligations under this Agreement and all instruments and agreements delivered pursuant to this Agreement. Buyer has taken all actions necessary to consummate the transactions contemplated under this Agreement, including any necessary approval by Buyer's managers and members, as the case may be. This Agreement and all instruments and agreements to be delivered in connection with this Agreement by Buyer constitute the legal, valid and binding obligations of Buyer, enforceable against it in accordance with its terms.
Buyer is not in default under or in violation of any provision of its articles of organization, operating agreement or other governing document, as amended to date. Buyer is not in default under or in violation of any provision of any material restriction, lien, encumbrance, indenture, contract, lease, loan agreement, note or other obligation or liability to which it is a party or by which it is bound and that could adversely affect the contemplated transactions, or Buyer's unencumbered possession or use of the Acquisition Assets. Neither the execution and delivery of this Agreement or any other agreement or instrument to be delivered to Seller in connection with this transaction, nor the consummation of the contemplated transactions by Buyer, shall: (i) result in the acceleration of, or the creation in any party of the right to accelerate, terminate, modify or cancel, or cause a payment obligation to arise under, any indenture, contract, lease, sublease, loan agreement, note or other obligation or liability to which Buyer is a party or by which Buyer is bound that could adversely affect the contemplated transactions, or Buyer's unencumbered possession or use of the Acquisition Assets; (ii) conflict with or result in a breach of or constitute a violation or default under, (A) any provision of Buyer's articles of organization, operating agreement, or other governing document, as amended to date, or (B) any restriction, lien, encumbrance, license, permit, indenture, contract, lease, loan agreement, note or other obligation or liability to which Buyer is a party or by which Buyer is bound, and that could adversely affect the contemplated transactions or Buyer's unencumbered possession or use of the Acquisition Assets, or (C) any order, writ, injunction, decree, license or permit applicable to Buyer or any state or local law, statute, rule or regulation applicable to Buyer, or (iii) result in the creation of any lien or encumbrance upon any of the Acquisition Assets.
Except for the specialty contractor license described in section4.B.3, no approval, consent, order or authorization of, exemption by, or registration, declaration or filing with, any state governmental authority is required by or with respect to Buyer in connection with the execution, delivery and performance of this Agreement by Buyer or any other agreement or instrument to be delivered to Seller in connection herewith or the consummation by Buyer of the contemplated transactions or thereby, including but not limited to the transfer of the Acquisition Assets.
Buyer has not made any material misstatement of fact in this Agreement or in any document delivered pursuant hereto or in connection with the transactions contemplated by this Agreement or omitted to state any material fact necessary or desirable to make complete, accurate and not misleading every representation, warranty and agreement set forth in this Agreement or in any document to be delivered pursuant hereto or in connection with transactions contemplated by this Agreement.
Neither Buyer nor any person acting on behalf of Buyer have employed any broker, agent or finder, or incurred any liability for any brokerage fees, agents' commissions or finders' fees in connection with the transactions contemplated in this Agreement.
There are no actions, suits or proceedings pending or, to the knowledge of Buyer, threatened against Buyer, at law or in equity that relate to the transactions contemplated by this Agreement.
The covenants in this Section 8 apply until Closing.
Seller shall terminate its employment relationship with all of Seller's employees effective as of the Closing. Buyer may, but shall not be obligated to, offer employment to any of the employees of Seller for an employment term commencing upon the Closing. Buyer shall have the sole right with respect to, and shall be solely responsible for, establishing all terms and conditions relating to the new hires and nothing in this Agreement or otherwise shall obligate Buyer after they have hired or engaged any employee or independent contractor to continue to employ or engage any employee or independent contractor for any length of time. Seller shall cooperate with Buyer in facilitating Buyer's hiring of any employee to whom Buyer offers employment. Seller understands and agrees that any and all employees or independent contractors employed or engaged by Buyer, who previously worked for Seller, will be considered "new hires" by Buyer. Seller has not made any representations or promises, oral or written, to any employee of Seller concerning employment by Buyer. Seller shall be liable for all wages and other compensation payable to Seller's employees through the Closing, including, without limitation, accrued sick leave, vacation, medical benefits and retirement plan contributions corresponding to the employment relationship between Seller and Seller's employees.
1. Seller shall conduct Seller's Business in such a manner that the representations and warranties of Seller contained in this Agreement shall continue to be true and correct on and as of the Closing as if made on and as of the Closing, and Seller and Buyer shall not take any action which would interfere with or prevent performance of this Agreement.
2. From the date of this Agreement through the Closing, Seller shall cause the Business to be conducted in the ordinary course in substantially the same manner as currently conducted (including without limitation, maintaining and, if necessary, replacing equipment and supplies in the ordinary course of business) and shall make commercially reasonable efforts consistent with past practice to preserve the relationship of Seller with customers, suppliers, consultants, employees and others with which or whom Seller deals.
3. Seller shall maintain the insurance policies Seller currently has in place in full force and effect at all times through the Closing.
4. From the date of this Agreement through the Closing, Seller and Buyer shall not take any action that would, or that could reasonably be expected to, result in any of the conditions set forth in Sections 9.A. and 9.B. not being satisfied.
5. From the date of this Agreement through the Closing, Seller shall not do any of the following without the prior written consent of Buyer:
a) Acquire by merging or consolidating with, or by purchasing a substantial portion of the assets of, or by any other manner, any business or any corporation, partnership, association or other business organization or divisions thereof or otherwise acquire any assets (other than inventory in the ordinary course of business consistent with past practice);
b) Sell, lease or otherwise dispose of any of the Acquisition Assets, other than in the ordinary course of business;
c) Permit any material adverse change in the Business, financial condition, properties, value or results of operations of the Business or the Acquisition Assets that would affect Buyer's ability or desire to complete the transactions contemplated by this Agreement;
d) Enter into any agreement or arrangement that could have a material adverse effect on the Business or modify, terminate or amend any such agreement;
e) Submit or withdraw a bid that would constitute an Assigned Bid in an amount exceeding $10,000.00;
f) Amend or terminate any Lease or Contract; or
g) Agree, whether in writing or otherwise, to do any of the foregoing.
6. Until Closing, H&C may continue to collect receivables and borrow under the Debtor in Possession Loan Agreement in accordance with the final orders relating to such actions and use such proceeds to pay post-petition expenses incurred in the ordinary course of Seller's business, but such proceeds shall not be used to pay: (i) postpetition expenses unrelated to business operations (e.g., professional, consulting, court fees), (ii) taxes, penalties, and interest levied or accrued under HRS title 14 for taxes administered by the Department against Seller, or constituting a lien upon the Acquisition Assets, or (iii) prepetition claims of creditors. (These described charges will be paid with Seller's funds available after Closing.)
Buyer shall have until Closing to complete its due diligence investigation of Seller and the Acquisition Assets. Such due diligence investigation shall be conducted in a manner that does not materially adversely affect the Business. Seller shall give Buyer and Buyer's legal counsel, accountants and other authorized representatives, reasonable access during business hours to the office, properties, books, records, software, and electronic data of Seller related to the Acquisition Assets in order that Buyer may have full opportunity to make such reasonable investigations of the Acquisition Assets and make such copies of the books, records, software, and electronic data as Buyer deem appropriate; provided, however, such investigation and copying shall be conducted in a manner as not to interfere unreasonably with the operation of the Business. Buyer and their representatives shall maintain the confidentiality of all books, records, software, electronic data and other information obtained during the course their due diligence investigation.
Seller and Shareholder shall use best efforts to procure all consents, approvals, releases or waivers in a form reasonably satisfactory to Buyer which must be obtained by Seller or Shareholder pursuant to this Agreement or which are necessary to assign the Contracts and Leases, other Acquisition Assets, and the OMHI Lease to Buyer, and to permit Buyer to own and use the Acquisition Assets and OMHI Lease after the Closing.
In the event of a casualty loss having a material adverse effect on the Acquisition Assets or OMHI Lease, whether by fire or other casualty, prior to the Closing, Buyer may, upon written notice to Seller and Shareholder within TO days of receipt of written notice of such event, terminate this Agreement. If Buyer does not elect to terminate, this Agreement shall remain in full force and effect, and the transaction contemplated by this Agreement shall close in accordance with the terms and conditions of this Agreement but with an assignment of insurance proceeds relating to such loss.
If schedules referred to in this Agreement have not been prepared by the time this Agreement is executed, Seller shall use its best efforts to prepare and deliver to Buyer such schedules as soon as possible and, in any event, by March 31, 2012. By Notice to Buyer, Seller may amend any schedule prior to Closing, provided that consent by Buyer is required for any amendment that materially diminishes the assets to be transferred to Buyer or that materially increases the obligations to be assumed by Buyer, or that materially alters any representation or warranty.
Buyer, Seller, and Shareholder shall cooperate and use their best efforts to permit both parties to perform their obligations under this Agreement prior to the Closing and to enable the parties to satisfy the conditions set forth in Sections 9.A. and 9.B.
If requested by Buyer, Seller and Shareholder shall use their best efforts to cause appropriate memoranda of the Leases and the OMHI Lease to be recorded. Buyer may, at its option and expense, obtain title insurance on any Lease or the OMHI Lease.
OMHI shall apply for a tax clearance certificate and endeavor to obtain one prior to Closing.
The obligations of Buyer to close are subject to satisfaction of the following conditions, any of which may be waived by Buyer:
1. Seller has obtained the authorization to consummate this Agreement and to transfer of the Acquisition Assets free and clear of liens and interests, except the Loans, either by order of the Bankruptcy Court under Bankruptcy Code § 363 or pursuant to a confirmed plan of reorganization, and the order has become final.
2. The Bankruptcy Code has authorized Seller to assume and assign the Contracts and Leases free and clear of liens and interests, except the Loans, to Buyer under Bankruptcy Code § 365 or pursuant to a confirmed plan of reorganization, and the order has become final.
3. The Hawaii contractors license board has issued to Buyer a specialty contractor license to perform mechanical contractor services.
4. Seller and Shareholder have complied in all material respects with all of their covenants and agreements contained in this Agreement and all of the representations and warranties contained in 6 are true and correct in all material respects as of the Closing.
5. Matsuda has entered into an employment agreement with Buyer, on such terms and conditions as those parties consider appropriate.
6. Buyer and Seller have filed articles of amendment with the State of Hawaii as described in Section 5.H. and the state has issued an appropriate certificate changing Buyer's name to "Heide & Cook."
7. No material adverse effect has occurred from the date of this Agreement or occurred as a result of the consummation of the transactions contemplated by this Agreement.
8. No action, suit or proceeding shall have been commenced or is pending or threatened, and no statute, rule, regulation or order has been enacted, promulgated, issued or deemed applicable to Seller, the Business, the Acquisition Assets or OMHI Lease or the transactions contemplated by this Agreement, by any governmental authority or court that reasonably could be expected to (i) materially impair Buyer's ownership or use of all or a material portion of the Acquisition Assets or OMHI Lease, or (ii) prohibit consummation of the transactions contemplated by this Agreement.
9. All consents and approvals required in connection with: (i) the execution, delivery and performance of this Agreement; and (ii) the assignment of the Contracts and Leases and the OMHI Lease and all other agreements necessary for Buyer to own and use the Acquisition Assets and OMHI Lease have been obtained in form satisfactory to Buyer.
10. Buyer has received written evidence from applicable governmental authorities and other third parties, if and as applicable, that consummation of the transactions contemplated in this Agreement, including but not limited to assignment of the Contracts and Leases by Seller and the OMHI Lease by Shareholder to Buyer, will not cause a default under any of the Contracts or Leases or the OMHI Lease.
11. There has not been any material adverse change in the financial condition of Seller (changes contemplated in Seller's current budget, Exhibit A to the Debtor in Possession Loan Agreement, shall not constitute material adverse changes).
12. Buyer has completed its due diligence investigation to its satisfaction, in its sole discretion. Buyer shall notify Seller by the Closing whether this condition has been satisfied. If Buyer timely notifies Seller that this condition has been satisfied or fails to notify Seller that this condition has not been satisfied, this condition shall be deemed waived at Closing. If Buyer timely notifies Seller that this condition has not been satisfied, Seller may terminate this Agreement without default or liability.
13. If and to the extent requested by Buyer, Seller and Shareholder shall have executed and delivered a covenant not to compete under which Seller and Shareholder are prohibited from providing mechanical contractor services in the State of Hawaii for a period of two years commencing on the Closing.
14. Any qualifications to representations and warranties made by Seller prior to Closing based on knowledge gained or events occurring after the date of this Agreement are acceptable to Buyer.
15. Seller has provided to Buyer by March 31, 2012, all schedules required by this Agreement, as provided in Section 2.
16. Buyer has confirmed to its satisfaction that it will not have liability under Hawaii's bulk sale or other tax law for obligations of Seller or Shareholder arising from the transactions contemplated by this Agreement.
The obligations of Seller to close are subject to satisfaction of the following conditions, any of which may be waived by Seller:
1. Seller has obtained the authorization to consummate this Agreement and to transfer of the Acquisition Assets free and clear of liens and interests, except the Loans, either by order of the Bankruptcy Court under Bankruptcy Code § 363 or pursuant to a confirmed plan of reorganization, and the order has become final.
2. The Bankruptcy Code has authorized Seller to assume and assign the Contracts and Leases free and clear of liens and interests, except the Loans, to Buyer under Bankruptcy Code § 365 or pursuant to a confirmed plan of reorganization, and the order has become final.
3. Buyer has complied with all of its covenants and agreements contained in this Agreement, and all of the representations and warranties contained in Section 7 shall be true and correct in all material respects on the date of this Agreement and as of the Closing.
4. Matsuda has entered into an employment agreement with Buyer, on such terms and conditions as those parties consider appropriate.
5. No action, suit or proceeding has been commenced or is pending or threatened, and no statute, rule, regulation or order shall have been enacted, promulgated, issued or deemed applicable to Seller, the Acquisition Assets or OMHI Lease or the transactions contemplated by this Agreement, by any governmental authority or court that reasonably could be expected to prohibit consummation of the transactions contemplated by this Agreement.
6. Buyer has executed and delivered any other instrument requested by Seller reasonably appropriate to consummate the transactions contemplated by this Agreement.
7. Buyer has delivered to Seller copies of any resolutions duly adopted by Buyer authorizing and approving the execution and delivery of this Agreement and the consummation of the contemplated transactions, and a certificate confirming its representations set forth in this Agreement.
8. All consents and approvals required in connection with: (i) the execution, delivery and performance of this Agreement; and (ii) the assignment of the Contracts and Leases and OMHI Lease and all other agreements necessary for Buyer to own and use the Acquisition Assets and OMHI Lease shall have been obtained in form satisfactory to Seller.
9. Buyer has assumed, in a manner acceptable to the other parties, the Contracts and Leases and the OMHI Lease.
10. Any qualifications to representations and warranties made by Buyer prior to Closing based on knowledge gained or events occurring after the date of this Agreement are acceptable to Seller.
The covenants in this Section 10 apply after Closing.
Following the Closing, Buyer may receive and open all mail addressed to Seller or Shareholder and, to the extent that such mail relate to the Acquisition Assets or OMHI Lease, deal with the contents consistent with the terms of this Agreement. Buyer shall notify Seller or Shareholder of (and provide Seller or Shareholder copies of the relevant portions of) any mail that obliges Seller or Shareholder to take any action or indicates that action may be taken against Seller or Shareholder. To the extent that such mail does not relate to the Acquisition Assets or OMHI Lease or relates exclusively to obligations of Seller, Shareholder or Guarantors, such mail shall be promptly forwarded to Seller at Seller's address for notices.
Buyer shall promptly send Seller any bills or other notices that payment is due that Buyer receives after Closing related to obligations of Seller or Shareholder not assumed by Buyer under this Agreement. Seller and Shareholder shall promptly send Buyer any bills or other notices that payment is due that Seller or shareholder receives after Closing related to obligations of Seller or Shareholder expressly assumed by Buyer under this Agreement. Seller shall promptly send to Buyer any payments received by Seller after the Closing that corresponds to any of the Acquisition Assets.
Buyer shall retain and preserve all records relating to the Acquisition Assets and OMHI Lease (including the building) prior to Closing for a period of at least six (6) months after Closing and thereafter shall not destroy or dispose of such records without at least 30 days' notice to Seller and allowing Seller to take possession of such records in lieu of destruction or disposition, and shall permit Seller and its attorney, accountant and other representatives at reasonable times to review and make copies of such records. If records are in electronic form, Buyer shall cooperate by providing such hardware and software as may be reasonably necessary to enable Seller to review and copy records. If Seller identifies to Buyer in writing specific records that should be kept confidential, Buyer shall adopt reasonable procedures to minimize or avoid accessing such records but Buyer shall not otherwise have any obligation to keep such records confidential.
Seller, Shareholder and Buyer shall cooperate as may be necessary to facilitate the transfer of the Acquisition Assets OMHI Lease to Buyer, including conversion of information and databases from Seller's computer systems to Buyer's computer systems. After Closing, Buyer shall cooperate with Seller and during the three months after Closing use its reasonable best efforts to provide Seller with access to former employees of Seller (not exceeding 20 hours per month) and Seller's records to assist Seller in the resolution of claims against Seller filed in the Bankruptcy Case. Any cost for the services of Seller's former employees shall be borne by Seller.
Seller and Shareholder shall not (1) use, (2) permit any person to use, or (3) be employed by, manage or have an equity interest in any business or person that uses; the trade name "Heide & Cook," "H&C," "Air Reps," and any variation of those names, within the State of Hawaii for a period of five years after Closing and so long thereafter as Buyer conducts business in the State of Hawaii using any such trade name or any variation.
Prior to Closing, this Agreement may be terminated and the transactions contemplated under this Agreement may be abandoned:
1. By mutual consent of Seller, Shareholder and Buyer;
2. By either Seller or Buyer, if this Agreement is not closed on or before May 15, 2012; provided, however, if either party has defaulted in any material respect with regard to its respective obligations under this Agreement on or before such date (Seller and Shareholder being considered a single party for purposes of this paragraph), such party may not terminate this Agreement pursuant to this Section, and the other party to this Agreement may at its option enforce its rights against the defaulting party and seek any remedies against such party as provided under this Agreement and by applicable law. The defaulting party shall be responsible for reimbursing all out of pocket expenses incurred by the other party in connection with the transactions contemplated by this Agreement in addition to any liability for any other remedies available to the non-defaulting party;
3. By Buyer, at its option, if as of the Closing any of the conditions specified in Section 9 have not been satisfied in any material respect or if Seller and Shareholder are otherwise in default in any material respect under this Agreement
4. By Seller, at its option, if as of the Closing any of the conditions specified in Section 9 has not been satisfied in any material respect, or if Buyer is otherwise in default in any material respect under this Agreement.
Termination of this Agreement and abandonment of the contemplated transactions shall be deemed effective on the date mutually agreed upon by the parties, or, in the event of termination by unilateral action, on the date specified in a written notice to the other party.
The representations and warranties set forth in this Agreement, the post-closing covenants set forth under Section 10 and in agreements delivered at Closing, shall be continuing and shall survive Closing.
The Loans shall survive Closing, and not merge into the Closing or the instruments executed at the Closing.
Except as otherwise expressly provided in this Agreement, each party shall bear its own respective expenses incurred in connection with the negotiation, preparation and execution of this Agreement and the transactions contemplated by this Agreement, including its legal, accounting, advisory, travel, finders and brokers and other professional fees and expenses.
If it shall be necessary for either Seller or Buyer to employ an attorney to enforce its rights pursuant to this Agreement because of the default of the other party, the defaulting party shall reimburse the non-defaulting party for reasonable attorneys' fees and expenses.
Any provision of this Agreement may be amended or waived prior to the Closing if, and only if, such amendment or waiver is in writing and signed, in the case of an amendment, by all parties hereto, or in the case of a waiver, by the party against whom the waiver is to be effective. No failure or delay by any party in exercising any right, power or privilege shall operate as a waiver nor shall any single or partial exercise of any right, power or privilege preclude any other or further exercise or the exercise of any other right, power or privilege. The rights and remedies provided in this Agreement shall be cumulative and not exclusive of any rights or remedies provided by law.
All notices, requests, demands and other communications required or permitted hereunder shall be in writing and shall be given by: (a) hand delivery; (b) first class registered or certified mail with postage prepaid, (c) overnight receipted courier service, or (d) telephonically confirmed facsimile transmission, which notice is addressed to the party at the address set forth below, or such other address as may hereafter be designated in writing by the party. Notices given in accordance with this Section shall be effective upon receipt or when receipt is refused.
Seller and Buyer may not assign its rights under this Agreement without the prior written consent of the other party. This Agreement and all of the provisions of this Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and permitted assigns.
This Agreement shall be governed, construed and enforced in accordance with the laws of the State of Hawaii.
This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
The section headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. All references to sections and articles are to sections and articles in this Agreement.
This Agreement, including the attached schedules and the documents, certificates and instruments referred to in this Agreement, embodies the entire agreement and understanding of the parties with respect to the transactions contemplated by this Agreement and supersedes all prior agreements, representations, warranties, promises, covenants, arrangements, communications and understandings, oral or written, express or implied, between the parties with respect to such transactions. There are no agreements, representations, warranties, promises, covenants, arrangements or understandings between the parties with respect to such transactions, other than those expressly set forth or referred to in this Agreement.
The following terms are defined in this Lease on the pages set forth below:
Chugach Commercial Holdings, Inc. ("CCHI") is the sole shareholder of Buyer. For convenience of the parties, this Agreement has been written as Buyer having certain obligations to perform regarding CCHI assets or claims when actually CCHI will perform the obligations. For example, the Seller's obligations under the Loans are owed to CCHI so at Closing CCHI must release Seller's obligations under the Loans in order for Buyer to perform at Closing. Buyer shall provide to Seller adequate assurance that at Closing CCHI will perform Buyer's obligations under this Agreement respecting CCHI's assets and claims.
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11. All Equipment including (1) 232 kW photovoltaic solar electric system including 1009 —Sun Power SPR-230-BLK-230 watt all-black contact monocrystaline solar modules (black frames, white backing); (1) Solectria PVI-95-95kW utility interactive DV to AV photovoltaic inverter, (1) Solectria PVI-82-82kW utility interactive DV to AV photovoltaic inverter; (1) Solectria PVI40-60kW utility interactive DV to AV photovoltaic inverter; (1) Solectria PVI-15-15kw utility Interactive DV to AV photovoltaic inverter, (1) Energy Recommerce RECtrack 3-PV energy production and building energy usage monitoring; (4) 200A, 240V 3 pole FV system disconnects (required by HECO); whether any of the foregoing is owned now or acquired later; all accessions, additions, replacements, and substitutions relating to any of the foregoing; all records of any kind relating to any of the foregoing; all proceeds relating to any of the foregoing (including insurance, general Intangibles and accounts proceeds).
12. 2008 Dodge Van, VIN#1GCHG356981214889
13. 2009 Dodge Van, VIN#1GCGG25C191122981
All of the Debtor's personal property and leasehold interests not identified on Exhibit "A" to this Agreement, including without limitation:
1. The Debtor's interest in the Real Property Leases identified on Schedule 2.A.4 to this Agreement.
2. The Vehicles identified on Schedule B-1 attached hereto and on Schedule 2.A.5, Vehicle and Equipment Leases.
3. The Debtor's interest in the Contracts — Assigned Agreements identified on Schedule 2.A.6 to this Agreement.
4. The Debtor's interest in the Bids identified on Schedule 2.A.7 to this Agreement.
