The SS+D Connection : Summer 2010 | Sebaly Shillito + Dyer

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Welcome to Sebaly Shillito + Dyer’s inaugural edition of The SS+D Connection.

At SS+D we are excited about technology and its growing use as a communication tool. In creating this newsletter, our hope is to provide clients, colleagues and the general public with timely news both about our firm and the ever-changing legal landscape that affects us all. We also hope to highlight our and, consequently, our clients’ success.

With that, please take a look and let us know what you think. We look forward to our continuing relationship with each of you and hope that you continue to call on us when you are in need of legal services.

Mike Moloney
managing partner

In one word: very. The limited liability protection given to shareholders of a corporation and members of a limited liability company is one of the most important advantages of incorporating a business. However, to enjoy all of the rewards of incorporation it is critical to follow corporate formalities and properly maintain corporate records.

A key, but often overlooked corporate record is the minute book. An updated minute book is important for many reasons, including (1) providing a record of the decision making process in order to establish the company's authority to enter into a transaction, adopt a policy, or take other action, (2) serving as the record of share or membership unit ownership with respect to transfers and ownership, and (3) maintaining records for auditing purposes.

Additionally, it is important to maintain corporate records to protect against creditors who may attempt to pierce the corporate liability shield to try to impose personal liability against the owners of a corporation or limited liability company. Maintaining current and proper corporate records will also help the company comply with governmental reporting and filing requirements, which keeps the company in good standing, and avoids unintended consequences such as involuntary dissolution. Another terrific reason to keep your company's records current is the ability to keep or obtain a line of credit from a bank. Given the state of the economy and the reluctance of banks to extend credit, a corporate borrower must keep its corporate records up to date in order to qualify for credit or to maintain its existing credit.

For additional information or assistance in maintaining your company's records, contact Michael Booth at mbooth@ssdlaw.com or (937) 222-2056.

    Michael joined the firm in 1994 as a summer associate and started full time with the firm after graduating from the University of Cincinnati College of Law in 1995. He became a shareholder on January 1, 2002. Michael is a member of the firm's Management Team and chairs the Real Estate Law Practice Group. His areas of concentration are corporate law and mergers and acquisitions.

    Michael represents a diversified mix of clients ranging from start-ups to large public and closely-held businesses, including both profit and not-for-profit entities. His practice includes counseling businesses on formation, technology, and eBusiness issues, negotiating and drafting contracts, arranging financing, participating in all aspects of mergers and acquisitions, and assisting clients in employment law matters. Although Michael enjoys all aspects of his practice, he derives particular satisfaction from assisting his clients in divestitures, acquisitions, refinancings, and restructurings. Transactions Michael has participated in include the $400,000,000 refinancing of a national building company and the sale of assets of a division of a multinational corporation with a purchase price in excess of $45,000,000.

    Michael has served on the Board of Trustees for Life Essentials, Inc., and Daybreak, Inc. both local non-profit organizations.

    Recognitions: Martindale-Hubbell BV Peer Review Rated, Leadership Dayton 2002, Ohio Super Lawyer Rising Star, Dayton Business Journal 40 Under 40 honoree.

Client Spotlight: Sports Image

Eric Horstman decided to turn his love of sports into a career, and in 2002 he left his job as an engineer and founded Sports Image®, a sports marketing company that assists school athletic departments and other grassroots organizations to acquire state-of-the-art equipment and much needed revenue for athletic programs. Sports Image® is based in Franklin, Ohio and, through its unique sports marketing concepts, has provided over $600,000 in cash and over $7,500,000 in equipment to schools and other organizations in the United States and Canada.

Seeing an opportunity to grow its business, Sports Image® became licensed to award franchises in exclusive territories throughout the United States in the summer of 2009. Sports Image® recently awarded its fifth franchise in 10 months and now has franchise operations in Maryland, Florida, Georgia, Kentucky and Illinois.

According to Horstman, Sports Image® is on pace to have 15 franchises operating by the end of 2010. Horstman, President of Sports Image® and a menber of the Dayton Business Journal Forty Under 40 class of 2010, credits the entire Sports Image team with the business’ success. Horstman believes that, “an organization is only as good as its people” and explains that he intentionally staffed Sports Image® with administrative and sales teams with a wealth of knowledge and experience.

Horstman also believes in the importance of supporting the local community. Sports Image® founded and manages Flyin’ to the Hoop, a top-ranked national high school basketball competition that brings $1,300,000 to the Miami Valley annually. For more information about Sports Image®, visit www.sportsimageinc.com and for more information about Flyin’ to the Hoop, visit www.flyintothehoop.com.

Labor & employement: May I read my employees' email?

Employees do not have a reasonable expectation of privacy in their email messages so long as the employer takes steps to minimize that expectation. Under the federal Electronic Communications Privacy Act of 1986 (“ECPA”), employers have significant leeway in reviewing employee emails (sent and received) so long as: 1) the employer has a valid business reason for so doing, 2) the employee uses the company’s email system, and 3) the employee consents.

This holds true for emails sent internally, as well as those sent from the employee’s computer to another company, or from another company to the employee. This could include private email accounts on popular outside carriers such as Google, Yahoo!, AOL, or Verizon. Courts typically weigh the reasonableness of the employee’s expectation of privacy against the business interest of the employer in monitoring the communication. Unless there is an issue of attorney-client privileged communications (i.e., employee uses private email account “through” company computer to communicate with his or her personal attorney), most courts side with the employer when it comes to email privacy.

If you need assistance drafting an electronic monitoring and/or technology use policy, or evaluating one that you already have, please contact Karl Ulrich (Labor & Employment Practice Group Chair) at kulrich@ssdlaw.com, Danyelle Wright at dwright@ssdlaw.com or Sam Dowse at sdowse@ssdlaw.com or (937) 222-2500.

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Litigation: Are Your Trade Secrets Protected?

Trade secrets are not only scientific and technical data, but also business plans, client lists, and employee know-how. Because trade secrets may be a company’s most valuable assets, litigation seeking to protect trade secrets may arise in a variety of contexts. For example, a company might seek damages as a result of another company’s theft and use of its trade secrets. Or a company might try to require a former employee who had access to trade secrets to comply with the terms of a non-compete agreement. In either instance, and countless more, the company’s success will depend upon whether it reasonably protected its trade secrets. The reasonableness of efforts to protect trade secrets are determined on a case-by-case basis. Some examples of reasonableness are:

(1.) Marking confidential information as “confidential and proprietary;”

(2.) Requiring employees and contractors to sign confidentiality agreements;
(3.) Requiring vendors and suppliers to sign non-disclosure agreements;

(4.) Restricting access to confidential information to those who “need to know” (i.e., storing confidential information in password-protected files and locked filing cabinets);

(5.) Informing anyone who has access to confidential information of its confidential nature;

(6.) Holding exit interviews to determine if terminated employees possess trade secrets; and

(7.) Disposing of confidential information in an appropriate manner.

Because confidential information that has not been reasonably protected loses its status as a trade secret, it is critical that a company implement a trade secrets protection plan. SS+D is experienced in all facets of trade secret protection and the development of trade secrets protection plans. If you would like to discuss ways to protect you or your company’s trade secrets, or if you would like SS+D to review an existing trade secret protection plan, contact Toby Henderson at thenderson@ssdlaw.com or (937) 222-2500.

Estate Planning: Does Your Life Insurance Need a Check Up?

Are your life insurance policies in danger of terminating prematurely? If you have variable life policies, they may be. Many of these policies are running out of cash value, but life insurance companies aren’t telling policyholders about it until it’s too late.

In the 1990s, life insurance companies began offering variable life insurance policies as an alternative to traditional whole life products. Variable policies allowed policyholders to take control of their life insurance policies and invest them in the stock market. These policies were designed with the assumption that the mutual funds in the policies would produce traditional returns of 6% to 9%, resulting in cash value increases which would offset policy premiums as the insured grew older. In the past decade, however, market performance has been negative. As a result, cash values have not increased, premium expense has eroded cash value, and many variable policies soon will run out of money. Life insurance companies can’t control the stock market, but they could tell policyholders that these policies are in danger. Sadly, they don’t seem to be doing that.

Our Probate Litigation Practice Group represents heirs, trustees, executors,and fellow attorneys and financial advisors in the greater Dayton area, finding resolutions to issues relating to decedents’ estates.

If you have a variable life policy, don’t wait until it is too late. If you catch the problems soon enough, there are options that can help. For example, you could increase the premiums, reduce the policy’s face value, or terminate the policy and salvage what cash value is left before it is eaten away. If you wait too long, the life insurance company will finally notify you that the policy is about to be canceled. At that time, your options are grim–pay the extraordinarily large new premium or terminate the policy and get no cash value.

Mike Moloney, head of SS+D’s Estate Planning Department and a Certified Financial Planner, is a licensed registered insurance agent, and he has recently assisted several clients by reviewing the status of their life insurance policies. If it has been a while since you examined the performance of your policies, contact Mike Moloney at mmoloney@ssdlaw.com or (937) 222-2055 to get the process started. Mike doesn’t sell life insurance so you don’t have to worry about being pressured to buy something new or to take an action that isn’t in your best interests.

- Five of Sebaly Shillito + Dyer’s lawyers have been recognized as Ohio Super Lawyers 2010. They include: Jim Dyer, Dianne Marx, Mike Moloney, Bev Shillito and Karl Ulrich.

- Dianne Marx was named one of the Top 25 Women Super Lawyers in the Cincinnati area, indicating she received one of the highest point totals in the Ohio nomination, research and blue ribbon review process.

- Three SS+D lawyers have been selected for inclusion in Ohio Rising Stars 2010, and include: Toby Henderson, Jessica Kimes and Heather Welbaum.

- Senior Associate, Jessica Kimes, has been selected by the Dayton Business Journal as one of its Forty Under 40 Class of 2010.

- The Dayton Business Journal named SS+D one of their 2010 Best Places to Work in Dayton! This award was created to recognize companies that maintain an environment that their employees look forward to coming to every day. According to the Dayton Business Journal, "local companies are graded on the happiness of their employees." There were over 60 entries this year.

Questions or Comments? Email Jessica Kimes at jkimes@ssdlaw.com or call (937)222-2500
©2010 Sebaly Shillito + Dyer, a legal professional association.
This publication is intended for general information purposes only and does not constitute legal advice.

Sebaly, Shillito + Dyer is a full service firm with three main departments: Corporate Law, Litigation and Estate Planning and a number of established Practice Groups including Creditors' Rights & Commercial Law, Government Contract Law, Health Care Law, Probate Litigation, Real Estate Law and Workers' Compensation.

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