Fully explain your answers, including any applicable legal rules. Discuss each side of any debatable issue. Reach a conclusion after defining and discussing each issue. Discuss any available remedies.

1. Gussie, a shareholder of Nitty, Inc., asks the board of directors to sue 10 of its 15 directors who she alleges have looted the corporation over the last 3 years. The board of directors would like not to sue the alleged wrongdoers. What specificprocedures should the board follow to ensure that Gussie may not successfully prosecute a derivative suit?

2. Warthen and Knettel owned an insurance agency in St. Cloud, Minnesota. Koltes, McMahill and Ketlin owned an insurance agency in Minnetonka, Minnesota. They agreed to transfer their business to a newly formed corporation, to be named the Midwest Consolidated Insurance Agencies, Inc. (MCIA), equally owned by the St. Cloud and Minnetonka groups. Articles of Incorporation were filed with the Minnesota secretary of state. The two groups had difficulty combining their operations. No shares of stock were issued and no formal shareholder or directors' meetings were held. Although bylaws were drafted, they were never approved. Has MCIA's existence begun?