Tag Archives: protection

rsz_university_center

Cushman & Wakefield Negotiates $23.5M Sale of University Center

 

Cushman & Wakefield of Arizona negotiated the $23.5M sale of the three-building University Center to the Arizona Board of Regents. This marks an acquisition for future expansion of Arizona State University.

University Center , located at Rural Rd. and University Dr., is situated across the street from ASU. The three buildings, 1100, 1130 and 1150 E. University Dr., contain a total of 169,997 SF of space. The 1130 and 1150 E. University Dr. buildings are three-story office structures, while the 1100 E. University Dr. is a single story flex building.

University Center was constructed in 1986/1987 and is occupied by major tenants that include Arizona State University, ACS Commercial Solutions, Nationwide Recovery and Laureate College.

The Arizona Board of Regents purchased the property from Travelers of St Paul, Minn., paying approximately $138.40 per SF.

“We have had the privilege to work with Travelers and Arizona Commercial Management on University Center for over 14 years,” says Karsten Peterson with Cushman & Wakefield of Arizona. “This project has, and will continue to be, a quality location for years to come. University Center has always enjoyed a great relationship with ASU as a Tenant and we are pleased to see ASU progress this relationship into ownership.”

Peterson, Dave Seeger and Mark Gustin of Cushman & Wakefield represented Travelers in the sale negotiations. Peter Lyons of Arizona Commercial Management also assisted in representation of the seller. Curtis Brown of Ross Brown Partners represented the buyer.

 

 

Using Personally Owned Life Insurance - AZ Business Magazine June 2010

Using Personally Owned Life Insurance (POLI) As A Sinking Fund

Affluent families and individuals, successful business owners, and those engaged in certain occupations, such as the medical or construction industry, all face similar challenges when choosing to invest: They have worked hard to accumulate wealth, and now they want to keep it.

Wealthy investors are driven by the same concerns:
Preservation: Given the choice between risky strategies or preserving what they have, most affluent investors will choose to preserve what they have.

Liquidity: Without access to your money, wealth may not be maximized.

Protection from creditors and frivolous lawsuits: The legal risk posed to affluent investors in today’s society is extraordinary.

Control: Affluent investors value the flexibility that allows them to respond to changes in their personal and business lives.

Taxes: Although we can’t be certain that taxes will go up, the odds suggest they will — perhaps significantly so. Mitigating the bite of the tax man is a top priority for wealthy investors.

To address these concerns, affluent investors and their advisers have many investments to choose from, such as IRA and Roth IRAs, equities and mutual funds, tax-advantaged bonds, annuities and personally owned life insurance (POLI), to name a few. Each of these investments has advantages and disadvantages when addressing the concerns of affluent investors. But what is POLI? To answer this question, we need to look at life insurance in an entirely different way.

Getting the most out of your investment type
What if instead of shopping for the most death benefit for our premium payment dollars, we sought out the federal minimum required death benefit in our policy to keep our insurance costs low and our investment value high? What if we created a “sinking fund” by investing in personally owned life insurance to create a tax-advantaged retirement supplement plan, and much more?

People often don’t recognize the value of permanent life insurance as an asset in their portfolios. Cash value life insurance offers much more than simple death protection.

Consider the following asset characteristics:
Qualified plan and annuity assets, in addition to being included in the taxable estate of an owner, are also subject to income in respect of decedent (IRD) at death. Seventy percent is an estimate of the combined impact of estate and IRD taxes, as well as credits given in the high net-worth decedent’s estate. The number can be higher or lower depending on the applicable marginal brackets.

Death benefits of a life insurance policy are generally received income tax-free by the owner of the policy. In order to avoid estate inclusion, the death benefit must be received outside the estate, often by designating the “B” Trust as the contingent owner and beneficiary of a policy owned by a decedent. Certain types of split dollar and loan transactions used in conjunction with an irrevocable life insurance trust (ILIT) also can be used to exclude the death benefit from estate inclusion. These techniques may involve gift tax implications, such as using a portion of the annual gift tax exclusions.

The benefits of POLI
Structured properly, POLI allow unlimited contributions, tax-deferred accumulation, tax-free redistribution, tax-free withdrawals, total liquidity, no income or estate tax at death, and the possibility of asset protection. This is an extraordinary combination of benefits.

Put simply, when structured properly the investor retains control of all the assets in a POLI account, including the right to terminate the account and withdrawal of the cash value. There is nothing “irrevocable” about a properly structured POLI contract. POLI, when properly structured, allows for nearly unlimited withdrawals after the first year at rates between 1 percent and 0 percent.

Using POLI, unlimited after-tax deposits may be made by the investor to be deployed in the equity and fixed income markets in almost any combination. An additional benefit is that in many states, the assets in POLIs are creditor protected. Asset protection against the creditors of an insurance-based contract owner is a matter of state law. Some states offer no protection for annuities life insurance cash value, some offer some protection for a portion, and others offer complete protection (check with local counsel to determine the applicability of asset protection in a given jurisdiction). Finally, assets invested in POLI are removed from the investor’s estate, while still providing the investor control of the assets.

Life insurance: A cautionary note
Of course, federal tax law definition of “life insurance” limits your ability to pay certain high levels of premiums. In addition, if the cumulative premium payments exceed certain amounts specified under the Internal Revenue Code (IRC), your policy will become a Modified Endowment Contract (MEC). If your policy is a MEC, many benefits of POLI are removed.

An “optimized” life insurance policy involves several elements. First, the contract should pass one of two tests for the definition of life insurance, thus avoiding status as a MEC under IRC 72, which generally limits the amount of cash value or contributions relative to the amount of death benefit. To exceed these limits causes distributions to be taxable. Second, in order to avoid estate inclusions, the death benefit must be owned outside the estate.

These are highly sophisticated and complex investments, and you should discuss whether a POLI is right for you with a knowledgeable team of financial, legal and tax professionals.

Arizona Business Magazine June 2010

Patent

Failing To File Patent For New Technology Could Cost Company More Than Money

It is arguably one of the most exciting moments for a technology entrepreneur — seeing that invention for the first time. Whether it’s a new software program, mechanical device or a breakthrough biotech discovery, the feeling is always the same, pure elation. If you’re a technology entrepreneur you know the feeling. You spend months, possibly years, working toward this moment. Now that you’re here, you’re ready to turn this exciting innovation into a business. But before you take that costly leap of putting together a company and going to market, consider one very important step that can save you, and your company, everything you’ve worked for — the elusive patent.

Who needs it?
Many technology companies and entrepreneurs initially think they don’t need, or just can’t afford, patent protection at the very initial stages of their business development. “No one else could develop this right now in the exact same way we have,” or “It’s already protected by trade secret laws,” or “It’s going to cost a lot of money right now, so we’ll wait until the product is making us a profit.” The truth is, not filing a patent to protect your proprietary technology could cost a great, great deal more in the end, and might even make your company less attractive to investors and business partners.

What kind of companies should file for patent protection?
Companies in a wide variety of technology fields increasingly rely on patents as a key tool to protect their technology. For example, companies in the high-tech industry (software, semiconductors, etc.), the low-tech industry (consumer gadgets, etc.) and the life sciences/biotechnology industry (pharmaceuticals, medical devices, etc.) are spending more and more money on research and development and, thus, are increasingly looking to patents as a mechanism for protecting this expensive investment.

If you’re a typical technology startup, you will likely need to find early-stage, mid-stage and, eventually, late-stage investors for capital to continue to fund your research and development, and pay the tremendous costs associated with commercializing your products and services. Every kind of investor, from angels to venture capitalists, will scrutinize the adequacy and strength of a company’s intellectual property assets as a part of the investor’s decision to invest in that company. More than ever, investors are expecting a company to have either filed for patent protection or already have some patents. Another significant ramification of failing to obtain adequate patent protection is that investors may place a significantly lower valuation on your company. Thus, taking steps to file for patents, and then eventually obtaining patents, is often a critical and significant step in proving credibility to any kind of investor.

Another major benefit of patent protection is using your patents as a legal mechanism to protect your company’s most critical proprietary technology from infringement by competitors and others. Competition is fierce in the technology and biotech/life sciences industries and your competition may knowingly, or inadvertently, use your technology to gain market share. Your patent is often the most valuable tool to combat these serious situations and could be a key factor that differentiates your company from your competition.

How patents pave the way to new markets?
Many technology companies, particularly startups, are not in a position to commercialize their technology in every country in the world and in every “field of use.” A solution to this problem is to find business partners who can be given a license to use these technologies in other markets, both here in the U.S., and globally. Taking steps to file for patent protection can increase your company’s ability to find proper licensees who will scrutinize the technology and opportunity as much as any investor. Patent protection can also increase your negotiating leverage when entering into contracts with licensees and could have a significant impact on the level of royalties and other compensation that licensees agree to pay you for the use of your technology. Indeed, potential licensees who still want rights to your technology very often negotiate significantly lower royalty payments if you have failed to obtain proper patent protection because the licensee deems your technology to simply be unprotected “trade secrets.” As a bottom line, taking steps to obtain proper patent protection can potentially increase the revenue stream to your company from others who want to use your technology.

construction companies

Construction Companies Can Be Exposed To Lawsuits When Assisting The Government During An Emergency

Imagine that you own a construction company and one of your employees comes in and tells you that the two largest buildings in town have collapsed. You receive a phone call a few days later from a government official who informs you that the police and fire department need your construction company to send heavy equipment and demolition crews to the site of the collapsed buildings to help remove large pieces of debris in order to save people’s lives.

Some large construction companies in New York were faced with that exact situation after the Sept. 11 attacks. The construction companies that helped clean up the World Trade Center disaster site were responsible for removing one-and-a-half-million tons of debris that covered many city blocks. Before long, the workers who were removing the debris started getting sick, as did police officers and firefighters who were stationed at the disaster site. Many of them have filed lawsuits against numerous entities, including the construction companies that were called upon to help with the debris removal effort.

The construction companies failed in a recent attempt to dismiss the lawsuits on grounds that they were immune from liability because they responded to an emergency situation.

Any business that decides to help in an emergency must protect itself, or face the legal consequences of the almost inevitable mistakes and accidents that will happen. With careful planning and prudent oversight, you can protect your business from lawsuits related to its help in an emergency or disaster situation in the state of Arizona.
Arizona’s immunity statute

The statute A.R.S. § 26-314(A) provides immunity for the state of Arizona and its political subdivisions (i.e., counties, cities and other local governments) for the actions or inactions of its “emergency workers.” The statute states that “emergency workers” shall have the same immunities as agents of the state of Arizona and its political subdivisions performing similar work. The term “emergency worker” is defined in part as “any person who is … an officer, agent, or employee of this state or a political subdivision of this state and who is called on to perform or support emergency management activities or perform emergency management functions.” Therefore, the only way to be sure your business is immune from lawsuits related to its assistance to the state or city government in a disaster or emergency situation is to wait until the government “calls on” your business to provide help.

Your business must always operate as an “agent” of the government to be considered an “emergency worker” and maintain its immunity. Your business will be considered an agent of the government if the government has the right to control the conduct of your business as it performs its work. Thus, you should determine who is in charge of the emergency site, and you should offer assistance to that person. You should seek detailed instructions from the person in charge and make sure it is clear that your business is operating under that person’s authority.

Should your business enter into a contract with the government to perform emergency services, then the rules change significantly. The provisions of the statute would still apply; however, a business that enters into a contract with the government would be considered an independent contractor. An independent contractor is an “agent” only if the government instructs the independent contractor on “what to do, not how to do it.” Therefore, when your business enters into a contract to help the government in an emergency situation, you must make sure the contract provides your business with control over the process and/or methods that it uses to do its work.

Of course, the Arizona Legislature can amend the statute to include immunity for any business entity that renders assistance during an emergency. If businesses were provided with clear protection under the statute, there would be no need for them to worry about being an “agent” of the government, and it would persuade more businesses to render assistance to the government in an emergency.

Do employees have a right of privacy in their e-mails and text messages?

Employers Should Learn Legal Rules On Employee E-Mails And Text Messages

Do employees have a right of privacy in their e-mails and text messages or may employers read them? May employers lawfully limit employee electronic communications? Are employees protected from retaliation for what they say in their e-mails? If so, can they lose protection if they go too far in what they say?

For several years, savvy employers wishing to monitor employee e-mails have issued policy statements to workers, putting them on notice that electronic communications they send on company equipment are subject to review by management. This notice is designed to preclude any reasonable expectation by an employee that his or her e-mails are confidential and may not be viewed by management, thereby shielding the employer from invasion of privacy claims.

A recent case from the Ninth Circuit Court of Appeals, with jurisdiction over Arizona, created quite a stir when the court concluded that an employer had invaded an employee’s privacy by reading the employee’s text messages, even though the employer had provided its employees with notice that their electronic communications were subject to monitoring by the employer. A careful look at the court’s decision, however, should dispel employer concerns.

The case doesn’t stand for the proposition that employer notice is no longer effective. A manager had undercut the employer’s policy statement when he told employees that their messages wouldn’t be reviewed as long as they paid for any monthly overage fees imposed because of excessive text messaging. When the employer was considering changing service plans because of recurring overage fees, it obtained employee text messages from the service provider to determine the extent to which non-work related messages accounted for the overages. The court concluded that employees had a reasonable expectation that the privacy of their messages would be protected because of the manager’s promise, despite the language in the official policy.

The lesson for businesses is that your employment policies are only as good as those who administer them. Managers and supervisors must be trained to properly administer your policies and not make statements inconsistent with those policies.

Employer restrictions on employee e-mail
Many employers have policies that prohibit use of their computer systems, including e-mail features, for personal communications. The difficulty with these policies lies in consistent enforcement. Non-union and union employers alike are subject to rulings by the National Labor Relations Board (NLRB), which has repeatedly held that such policies may not be enforced against employees who send e-mails pertaining to employment matters or unions if the employer does not consistently enforce its policy against other personal e-mails such as party announcements, solicitation of money for retirement or birthday gifts, offers to sell sports tickets, or sales, or others pertaining to non-business matters. Effectively policing such a policy is often a virtual impossibility.

The NLRB recently issued a new decision holding that employers may adopt policies that permit some kinds of e-mails, but not others, based on content. For example, policies may distinguish between charitable and non-charitable solicitations, offers to sell personal property (e.g., a used car) and offers to sell commercial products (e.g., Avon), and invitations to a personal party and invitations to attend an outside organization’s meeting. Distinctions, however, cannot be based on legally protected content such as complaints about wages and benefits or other terms of employment. In the new case, the NLRB held that an employer had lawfully disciplined an employee for sending e-mails that had solicited support for a union. The employer’s policy had prohibited solicitations for outside organizations, except charities, and the employer had not tolerated e-mail solicitations for other non-charitable organizations.

Employers, therefore, should consider adopting or rewriting their electronic communications policies to carefully draw the line between permitted and prohibited employee e-mails.

Protected e-mails and unlawful retaliation
The courts and the NLRB have broadly protected employee e-mails that pertain to wages, benefits and other terms and conditions of employment, even when those e-mails have criticized the employer, its officers or managers, and even when those e-mails have been addressed to customers, competitors orthe press. Employees may not be lawfully disciplined or discharged for sending such e-mails. Anotherwise protected e-mail, however, may lose its legal protection if the author attacks the employer’sproduct or service, encourages unlawful activity or otherwise crosses an often nebulous line between reasonable and unreasonable content. Note that the NLRB allows for some degree of employee indiscretion, without the loss of legal protection, because it recognizes that emotions often run high in this context.

Questions about the protected status of employee e-mails should be addressed to a competent labor attorney.

Jon E. Pettibone is chair of Quarles & Brady’s national labor and employment practice, where he advises management on labor and employment strategies. He can be reached at JEP@quarles.com.

Proxies

The SEC Catches Up On New Technology In Proxy Solicitations

A quick tutorial: Proxies are the means by which public shareholders vote. The Securities Exchange Act of 1934 governs the solicitation of those proxies. The act and the regulations adopted by the Securities and Exchange Commission under the act are designed to ensure a fair process with adequate disclosure to shareholders so they may make an informed voting decision in a timely manner.

In the past year, the SEC has adopted significant rules intended to simplify, clarify and modernize proxy solicitations by use of the Internet.

In July 2007, the SEC adopted amendments that modernize the proxy rules by requiring issuers and other soliciting persons to follow the “notice and access” model for proxy materials. Soliciting persons are now required to post a complete set of their proxy materials on an Internet site and furnish notice to shareholders of their electronic availability. The Internet site must be a site other than the EDGAR (Electronic Data Gathering, Analysis and Retrieval system) maintained by the SEC. The site must be publicly accessible, free of charge and maintain user confidentiality. In addition, the materials posted must be in a format convenient for printing and for reading online. Companies must provide paper or e-mail copies, as specified by the shareholder, within three business days of a shareholder’s request.

Notice to shareholders can be provided in one of two ways: the “notice-only” option, which is simply notice of electronic availability; or the “full-set delivery” option, which is a full set of paper proxy materials along with a notice of Internet availability. Under the “notice only” option, a notice must be sent at least 40 calendar days before the date that votes are counted. Under the “full-set delivery” option, notice need not be made separate and the 40-day period is not applicable, so the notice can be incorporated directly into the proxy materials.

Under both options, the notice must include certain specific information and must be filed with the SEC. The options are not mutually exclusive, so one option can be used to send notice to a particular class of shareholders, while the other option can be used to send notice to others. Intermediaries and other soliciting persons must also follow the “notice and access” model, with some exceptions. Specifically, intermediaries must tailor notice to beneficial owners, and soliciting persons other than the issuer need not solicit every shareholder. Most large public companies were required to follow the “notice and access” model for proxy materials as of Jan. 1, 2008. All others, including registered investment companies and soliciting persons other than an issuer, can voluntarily comply at any time, but must fully comply by Jan. 1, 2009.

Effective Feb. 25 of this year, the SEC adopted further amendments that encourage use of the Internet in the proxy solicitation process by facilitating the use of electronic shareholder forums. These amendments are intended to remove some of the legal ambiguity resulting from the use of electronic shareholder forums by clarifying that participation in an electronic shareholder forum is exempt from most of the proxy rules if specific conditions are met. The new rules also establish that shareholders, companies and other parties that establish, maintain or operate an electronic forum will not be liable under the federal securities laws for any statement or information provided by another person participating in the forum.

Specifically, any participant in an electronic shareholder forum is exempt from the proxy rules if the communication is made more than 60 days before the announced date of the company’s annual or special shareholder meeting, or if the meeting date was announced less than 60 days before it was scheduled to occur, within two days of the announcement, provided that the communicating party does not solicit proxy authority while relying on the exemption. Solicitations that fall outside these relevant dates continue to be subject to the proxy rules.

Further, if a solicitation was made within the relevant dates but remains electronically accessible thereafter, the solicitation could then become subject to the proxy rules. In this regard, the SEC suggests that forum operators give posting users a means of deleting their postings or having their postings “go dark” as of the applicable 60 day or two day cut off.

While the amendments exempt solicitations from the proxy rules, they do not exempt posting persons from liability for the content of their postings under traditional liability theories, including anti-fraud provisions that may require a participant to identify himself and which prohibit misstatements and omissions of material facts. Further, the amendments extend liability protection only to shareholders, companies and third parties who create, operate or maintain an electronic shareholder forum on behalf of a shareholder or company. These persons receive protection against liability for statements made or information provided by participants in the forum, so long as the forum complies with federal securities laws, relevant state law and the company’s charter and bylaws.

Karen C. McConnell is partner-in-charge of the mergers and acquisitions/private equity group; Adrienne W. Wilhoit is a partner; and Brooke T. Mickelson is an associate at Ballard Spahr Andrews & Ingersoll, www.ballardspahr.com.