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Agenda

PART I! STRU"TURI#G U.S. OPERATIO#S

Reincor$orate Indian "o$an% as a U.S. Parent "o$an% Incor$orate a U.S. Su&sidiar% Incor$orate an entirel% inde$endent "o$an%

PART II! LEGAL ISSUES RELATI#G TO A STARTUP "OMPA#'

Incor$oration Process

E$lo%ent Issues( IP Owners)i$ Issues

E*uit% Structure

Financing O$tions

Strategic Transactions

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PART I! STRU"TURI#G U.S. OPERATIO#S

O$tion +! Reincor$orate Indian "o$an% as a U.S. Parent "o$an%

O$tion ,! Incor$orate a U.S. Su&sidiar%

O$tion -! Incor$orate an Inde$endent U.S. "o$an%

INVESTORS U.S. Parent

Indian Sub

Investment

100%

INVESTORS Indian Parent

U.S. Company

Founder Stock Investment

100%

Founder Stock

Option Plan

Option Plan

U.S.

"o$an%

Owners)i$Investent

and

Manageent

will &e

unclear

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Part II! Li1e "%cle o1 a Startu$

E7IT!

A"8UISITIO#

3RI5GE

ROU#5

FORMATIO#

I#ITIAL

PU3LI"

OFFERI#G

SERIES "

SERIES 3

SERIES A

3IG

"USTOMER

SMALL

"USTOMER

A#GEL ROU#5

SERIES 5

Incorporation

Founders Stock

Stock Incentie Plans Selectin! and Ne!otiatin! "it#VCs

$ebt s. E%uity

Employee &atters

IP Protection

'icensin! and ot#er IP&atters

Strate!icPartners#ips

T#e bi!%uestion("#en and

#o" toe)it****

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E*uit% Structure

Initial "a$ital Structure

Total Authorized: 10MM shares of "oon Stoc2

Difference beteen Aut)ori9ed! Issuedand Outstanding "a$ital

Founder Stoc2: "#$MM

Issue stoc% earl& to avoid ta' issues

(estin) *loo% bac% +eriod for vestin),

Acceleration: -in)le Tri))er versus Double Tri))er

$3*b, elections: file on time *ithin 30 da&s of +urchase,.

O$tion Pool: 2#3MM

(estin): -trai)ht 4 &ear vestin)! 1 &ear /cliff! ith monthl& vestin) thereafter

Acceleration: ould ham+er acuisition

Outside Investors!Pre1erred Stoc2

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Seed Financings!

Founders! Friends! Fail%! Angels! Earl%Stage:"s

Incu&ators! '" Idea la&s "itri0 Accelerator ;

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:enture Financing = Ter S)eet

T)ree Main Pur$oses o1 Ter S)eet

Pricing/:aluation

5ercenta)e of the om+an& to be sold *5re and 5ost Mone&,

iuidation 5references

Dividends

Anti#Dilution 5rotections

Manageent/"ontrols 7oard 8i)hts

5rotective 5rovisions

ovenants

Li*uidit% Rig)ts

o#-ale98i)ht of irst 8efusal

8e)istration 8i)hts

Dra)#Alon) 8i)hts

8edem+tion 8i)hts

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:enture Financing 4cont>d.6

:aluation

Met)odolog% 1or valuation!

Discounted ash lo

Multi+le of 8evenues9-ales! Multi+le of ot the onl& issue to thin% about

Tie Process and E0$ense

Tie: 2#3 months from start to finish

Process: I5 dili)ence! e)al dili)ence! -chedule of

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Privileges o1 Pre1erred Stoc2 :oting 43oard6 rig)ts

Protective Provisions

5ividends: umulative versus non#cumulative? should be non#cumulative and discretionar&! i@e@!/hen! as and if declared b& the 7oard

"onversion Rig)ts: 8i)ht to convert into ommon -toc%? +on reuisite +referred holdersB consentor u+on a /ualified I5C

Anti=dilution Protection: ull 8atchet is bad? 7road#based ei)hted avera)e is )ood and standard

Rede$tion: atch out! not a )ood si)n? ri)ht should be at least &ears out and s+read over a+eriod of time

Registration rig)ts: standard re)istration ri)hts CE! nothin) to fi)ht over

In1oration Rig)ts: standard information ri)hts CE! nothin) to fi)ht over? limit to /MaFor Investors

Rig)t o1 First O11er: maintain their +ro rata onershi+? ri)ht to /)obble u+? limit to /MaFor Investors

Rig)t o1 First Re1usal and "o=Sale Agreeent: CE! but understand ho it or%s

3oard O&server Rig)ts: CE! but need to be careful as (s donBt li%ethe distraction of too man& observers

:enture Financing 4cont>d.6

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Strategic Transactions

Licensing Arrangeents License Ters!

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Ters o1 Use and Privac% Polic%

?)% are t)ese $olicies i$ortantB "ontract wit) Users

-ubFect sers to terms and conditions

Ee& Terms: 8e)istration reuirements *8estrict use of site or a++ to users of a certain a)e,!I5 Cnershi+! Define fee structure! imit om+an&Bs liabilit&! Define +ublicit& ri)hts!Indemnification! Assi)nment! Gurisdiction! ustomer -u++ort and Huestions

"ontent License! imited license for use of &our site and content to users

sers assi)n their content onershi+ ri)hts to the com+an& om+liance ith Di)ital Millennium o+&ri)ht Act Restrict User Activit%

DonBt +ost hate s+eech >o s+am >o harassment of other users

5ata Securit% on#5II Inform users of the om+an&Bs use of their data 5rovide users ith the o++ortunit& to C+t#Cut of use of oo%ies

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Ters o1 Use and Privac% Polic%

Ris2s i1 %ou don>t )ave t)ese $olicies in $laceB

Unc)ec2ed lia&ilit% "ollecting User 5ata wit)out consent #o restrictions on User activit% Lost value

nclear onershi+ of content9contributions o+&ri)ht! +atent! and trademar% im+lications

")allenges wit) t)ese $oliciesB Acce$tance o1 t)e $olicies &% users

-hould Manifest onsentB Evolving Rules

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8CA

T)an2 %ouD