California Auto Dealer: BUY/SELL BASICS PART III

July 2016

Over 30 Years’ Experience Handling Buy/Sells And Automotive Law       July 2016
Buy/Sell Basics – Part III
Stock Purchase Agreements

By Erin K. Tenner, Partner, Gray·Duffy, LLP

This is Part III in a five-part series on buy/sell basics.  Part I examined the three different types of buy/sell agreements.  Part II discussed the basics of one of those: Asset Purchase and Sale Agreements.  This article discusses Stock Sale and Purchase Agreements.
What’s The Difference?
A Stock Sale and Purchase Agreement is different from an Asset Sale and Purchase Agreement in that it transfers an entire business, lock, stock and barrel, rather than just assets.  When buying stock of a business, the buyer buys all of the cash, all of the receivables, all of the payables, as well as all of the assets that would be purchased if you purchased just assets – and all the liabilities too.

Liabilities purchased include many things that could be very expensive, so it is important to really know what the liabilities are before buying capital stock.  A buyer will typically have an opportunity after signing a purchase agreement to examine all the liabilities, but only if the purchase agreement is drafted to allow it.  The purchase agreement also typically protects the buyer from things that should be disclosed but aren’t and from things that cannot be discovered through due diligence.
Los Angeles City Ordinance Updates
The City of Los Angeles has a new Municipal Code
section that doubles the paid sick leave to which employees are entitled. The code applies to employees who work at least two hours in the city in any week for an employer. The sick leave must accrue at the rate of 1 hour for each 30 hours worked up to 48 hours per year. The paid sick leave must be carried over each year if not used, but can be capped at 72 hours of paid sick leave. If you have a paid leave policy that meets the new leave requirements, no additional sick leave is required. 
New minimum wage of $10.50 per hour took effect for
the City of Los Angeles July 1, 2016, for any employer who employs 26 or more employees. Employees who are 14-17 years of age can be paid 85% of minimum wage rounded to the nearest nickle for the first 160 hours of employment. Thereafter they must be paid the full minimum wage. 
Please Note

These articles are necessarily general in nature and do not substitute for legal advice with respect to any particular case. Readers should consult with an attorney before taking any action affecting their interests.

California Auto Dealer is a registered trademark. The content of this Newsletter may not be duplicated without permission. 

Erin K. Tenner
(818) 907-4071

Alert: Update Your Employment Manual 
If you haven’t updated the employment policy manual recently, or even if you have, you may want to make sure your policy now includes harassment, discrimination and retaliation policies. Many dealers have updated only the discrimination policies, while the law requires an update to all three. 

The new regulations specifically provide provisions that have long been part of the law must now be specifically stated in the employment policy manual. For example, the policy must now include a complaint procedure that does not require an employee to complain to his or her immediate supervisor. 

Although having a written complaint procedure has always been a good practice, and frankly necessary to properly defend against a claim of harassment, discrimination or retaliation, now the law specifically requires that such a policy be in writing and delivered to all employees.

What Clients Say About Erin…

“Erin Tenner has always protected my interests. She helped me when I bought a minority interest in my first Toyota dealership and represented me as I built and ran the dealership, advising me on construction, employee, customer, compliance and factory issues. Then, she worked with me to get the best deal I could when I sold. She has always done a great job for me with my dealership and with other businesses as well. I highly recommend her.”

– Dan Atwood
President of Atwood & Andrews, Inc.

Please Note: This article is necessarily general in nature and is not a substitute for legal advice with respect to any particular case. Readers should consult with an attorney before taking any action affecting their interests.