1. DIVORCE BUSINESS STYLE: LITIGATION AMONGST CORPORATE SHAREHOLDERS OR LLC MEMBERS BY VINCE LOUWAGIE ANTHONY OSTLUND & BAER

2. COMMON SOURCES OF GOVERNANCE RULES Articles and By-laws Articles and By-laws Minn. Ch. 302A/322B Minn. Ch. 302A/322B Common Law Common Law Company Policy or Practice Company Policy or Practice Shareholder Voting or Control Agreements Shareholder Voting or Control Agreements Employment Agreements Employment Agreements Buy Sell Agreements Buy Sell Agreements

3. BUY-SELL AGREEMENT Can be found in bylaws, shareholder control agreement, or elsewhere Can be found in bylaws, shareholder control agreement, or elsewhere Provides for events that give rise to right or obligation to purchase or sell Provides for events that give rise to right or obligation to purchase or sell Provides mechanism for determining price Provides mechanism for determining price Provides payment terms Provides payment terms

4. FREEZE-OUT Terminating minority shareholders employment Terminating minority shareholders employment Terminating minority shareholders board or management participation Terminating minority shareholders board or management participation Terminating minority shareholders access to information Terminating minority shareholders access to information Terminating minority shareholders return on investment Terminating minority shareholders return on investment Other means as varied as the imagination Other means as varied as the imagination

5. SOURCES OF COURT AUTHORITY Broad equitable authority Broad equitable authority 302A.467 302A.467 302A.751 302A.751 Common Law Common Law

6. Buyout Under 302A.751 Deadlock Deadlock Fraud or illegality Fraud or illegality Unfairly prejudicial conduct – reasonable expectations Unfairly prejudicial conduct – reasonable expectations Corporate assets being misapplied or wasted – but see Wessin Corporate assets being misapplied or wasted – but see Wessin

7. DIRECT V. DERIVATIVE Derivative claims are those claims which belong directly to the corporation, but which can be asserted indirectly, by a shareholder, on behalf of the corporation under certain circumstances.

8. ASSESSING SHAREHOLDER EXPECTATIONS Written agreements not dispositive Written agreements not dispositive Controlling shareholder have a substantive obligation of fairness Controlling shareholder have a substantive obligation of fairness Obligation of complete candor in negotiations Obligation of complete candor in negotiations But see Berreman v. West Pub. But see Berreman v. West Pub. Associative bargaining Associative bargaining

9. REASONABLENESS OF EMPLOYMENT EXPECTATION Employment part of investment? Employment part of investment? Known and accepted by other shareholders? Known and accepted by other shareholders? Shareholder misconduct or incompetence? Shareholder misconduct or incompetence? Agreement specifically providing for termination? Agreement specifically providing for termination? Any capital investment? Or part of compensation package? Any capital investment? Or part of compensation package?

10. FAIR VALUE v. FAIR MARKET VALUE

11. DISCOUNTS Minority Discount Minority Discount Not allowed. MT Properties v. CMC Real Estate Corp. Not allowed. MT Properties v. CMC Real Estate Corp. Marketability Discount Marketability Discount Allowed to prevent an unfair wealth transfer Allowed to prevent an unfair wealth transfer

12. VALUATION DATE as of the date of the commencement of the action or as of another date found equitable by the court. as of the date of the commencement of the action or as of another date found equitable by the court.

13. Valuation Formula if the shares in question are then subject to sale and purchase pursuant to the bylaws of the corporation... unless the court determines that the price or terms are unreasonable under all the circumstances of the case. if the shares in question are then subject to sale and purchase pursuant to the bylaws of the corporation... unless the court determines that the price or terms are unreasonable under all the circumstances of the case.

14. Best Means of Avoiding Shareholder Disputes Clear agreements. Clear agreements. Exit strategy understood and accepted by all. Exit strategy understood and accepted by all. Clearly articulated expectations for sharing the benefits of ownership. Clearly articulated expectations for sharing the benefits of ownership. Avoid secrecy of compensation. Avoid secrecy of compensation.

15. BEWARE OF CONFLICT Evans v. Blesi Evans v. Blesi Miller Waste Mills v. Mackay Miller Waste Mills v. Mackay