| Assert Inspection Rights. This can result in some | | | | Initiate Involuntary Dissolution of the Corporation. Under |
| surprising revelations which, in turn, may lead to | | | | certain circumstances (such as fraud, mismanagement |
| interesting results. | | | | or abuse), a court may order the dissolution of a |
| Expand Board of Directors. Expanding a company's | | | | corporation against its will initiated by at least 1/2 of the |
| Board of Directors can avoid and/or eliminate a | | | | directors or 1/3 of the shareholders. (Depending on the |
| deadlock. It may also bring in a fresh point of view. | | | | facts, a shareholder with less than 1/3 can initiate this |
| Purchase Control. If the shareholders each own an | | | | action.) The corporation or 50% of the shareholders |
| equal number of shares one shareholder may wish to | | | | may elect to avoid this result by agreeing to buy out |
| consider paying a premium to buy a controlling interest | | | | the initiator's stock for fair market value. |
| in the company. | | | | Sell Company to Third Party. If the shareholders are |
| Seek Appointment of Provisional Director. If the | | | | unable to continue in business together, the |
| corporation has an even number of directors and the | | | | shareholders may wish to consider selling the |
| board is deadlocked, any director or holder of at least 1 | | | | company to a third party. |
| 3 of the voting shares can petition a court to appoint a | | | | Execute a Buy-Sell Agreement. Of course, one of the |
| provisional director to break the deadlock. If the | | | | best ways to avoid a shareholder dispute is to have all |
| corporation has an uneven number of directors and | | | | shareholders enter into a written agreement that sets |
| the shareholders are deadlocked, any shareholder of | | | | forth what rights the shareholders will have in the |
| at least ½ of the voting shares can petition a | | | | event of certain contingencies (such as death, disability |
| court to appoint a provisional director under certain | | | | or deadlock). This is ideally done when the company is |
| circumstances. | | | | first formed but can be done at any time, including |
| File for Bankruptcy Reorganization. Under certain | | | | when a dispute arises. |
| circumstances, a Chapter 11 bankruptcy reorganization | | | | These are just a few of the possible approaches that |
| can result in one shareholder, or a group of | | | | may be considered when faced with shareholder |
| shareholders, gaining control of the corporation. | | | | disputes in California. |