BL Fact Pattern

Part A. Tired of the lack of quality chocolates at international music festivals, Paul, John, George and Ringo decide to form a business specializing in the manufacture of delicious dark chocolate truffles. Paul, John, George and Ringo, each want to participate in the management and control of the business but also wants to limit his personal liability for any wrongdoing of the business. What type of business should they form and why? What filings, if any, should they make to form this business? What liabilities, if any, will each of them have if the company's dark chocolate truffles cause anyone to become seriously ill? If Paul, John, George and Ringo wanted to legally protect their recipe for the company's dark chocolate truffles, what should they do and why? What else can they do to protect their intellectual property assets? Give examples.

Part B. Assume that Paul, John, George and Ringo chose a business corporation as their choice of entity after consultation with their outside counsel. Their dark chocolate truffles business takes off and has become very successful. Paul, John, George and Ringo serve as the officers and directors of the corporation and each own 25% of the outstanding equity stock of the corporation. Assume you have been hired as a paralegal for their new legal department. The corporation currently has 275,000 shares of authorized capital stock and has issued all 275,000 shares to investors. You learn that the Paul, John, George and Ringo have decided to sell additional shares of stock to a group of private investors to raise money for the corporation to expand their truffle production. The General Counsel of the corporation comes to you and asks for your help with certain matters: What steps will the corporation have to do to enable the corporation to sell shares of stock to the new private investors? What characteristics or attributes should these new private investors have? If the corporation decides to "go public" (i.e., sells shares of stock to public investors) what federal and state securities laws will the company have to comply with and why?