1. 9 - 1 Law & Ethics for the Entrepreneur McGraw-Hill/Irwin New Venture Creation, 7/e © 2007 The McGraw-Hill Companies, Inc., All Rights Reserved.

2. 9 - 2 Legal Issues Incorporation Legal Structure, Licenses Intellectual Property Contracts Suppliers Investors – banks, venture capitalists, others Leases – plant, property, equipment Material Employees Customers Confidentiality, liability Taxes, bankruptcy, inheritance, wills

3. 9 - 3 Ten BIGGEST Mistakes #1: Thinking any legal problems can be solved later. #2: Promising more in the business plan than can be delivered and failing to comply with state and federal securities laws. #3: Starting a business while employed by a potential competitor, or hiring employees without first checking their agreements with the current employer and their knowledge of trade secrets. #4: Disclosing inventions without a nondisclosure agreement, or before the patent application is filed. #5: Waiting to consider international intellectual property protection.

4. 9 - 4 Ten Mistakes Ctd. # 6: Negotiating venture capital financing based solely on the valuation #7: Failing to make a timely Section 83 (b) election. #8: Hiring a lawyer not experienced in dealing with entrepreneurs and venture capitalists. # 9: Issuing founder shares without vesting. # 10: Failing to incorporate early enough. Source: http://hbswk.hbs.edu/item/3348.html http://hbswk.hbs.edu/item/3348.html

5. 9 - 5 Dispute Resolution Court Myth of the rule of law Arbitration (binding or not) Mediation

6. 9 - 6 Exhibit 10.1 Utilitarian Instrumental to varying degrees -Punishment -Reward -Social reward Golden rule Rawls? Universalism

7. 9 - 7 Exhibit 10.3

8. 9 - 8 Ethics Exercise Undertake the ethical exercise on page 369 in groups of 3-4 Try to reach a consensus on each situation and report back your answers to the whole class

9. 9 - 9 Exhibit 10.4

10. 9 - 10 Case Allen Lane How many unethical practices did Allen Lane uncover? Was he too picky? How should he structure the Plas-Tek deal?