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Brian Bosworth

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Startup Corp.
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    Reprint from Banker & Tradesman: Know the Law Before... - [Cached Version]
    Published on: 7/2/2001    Last Visited: 11/4/2007  

    Some days later, Harry met with Brian Bosworth, the treasurer of a software company, and Sandra Sayles, a vice president of marketing for a manufacturer of electronic components.
    ...
    Bosworth recommended that Startup be incorporated under Delaware law, which offered greater protection to corporate management than Massachusetts.

    The directors elected Bosworth President of Startup because of his managerial experience and contacts in the financial world.
    ...
    Sayles drummed up sales and Bosworth tried to persuade venture capital companies to provide the financing that Startup needed to survive.
    ...
    One day, Bosworth reported that he had persuaded a group of VCs to invest $6 million in Startup.
    ...
    Then one day, three years after the refinancing of Startup, Bosworth fired Harry without warning or cause, giving no reason for Harry's sudden termination.Four days later Startup demanded that Harry sell his unvested stock to Startup for $10,000.

    Harry's attorney was sympathetic and advised him that Bosworth had breached the fiduciary duty of utmost good faith and loyalty that Bosworth and Sayles owed to Harry, a fellow founder and shareholder of a close corporation under Massachusetts law, by terminating him without cause in order to acquire his shares in Startup at less than fair value.Harry's attorney explained that his opinion was based on a long line of Massachusetts cases starting with Donahue v. Rodd Electrotype Co. of New England, 367 Mass. 578 (1975) and culminating in one of the DeMoulas cases (424 Mass. 501, 511 [1997]) which had held that Massachusetts law applies to Delaware corporations where none of the parties had any relationship to Delaware beyond Startup's incorporation there and all of the claims were based on events that occurred in Massachusetts.Based on the advice of his attorney, Harry refused to tender his unvested shares to Startup.

    Two months after his termination, Harry read that Startup had been acquired by a Big Board company for cash and that his unvested stock should be worth a million dollars as a result of said acquisition.And when he learned that Bosworth had reached an agreement in principle for the acquisition of Startup the day before he had fired him, Harry sued Bosworth, Sayles and Startup to recover what his stock would have been worth if he had not been fired.

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