[rsp1984]

To OP: Not sure why you deleted your reply but anyway:

Here's three more thoughts (I'm not a lawyer so please double-check this with one if you think it's relevant):

5) Could you get a loan to fund this? Do you have any valuable assets in the company you could use as mortgage? I don't know how it is in the US (I assume that's where you are based) but should you be victorious in court you can probably recover any legal fees from the ousted co-founder.

6) Depending on how you've set up the operating agreement there may also be the option of issuing more shares to the active members of management, thereby diluting down the ousted co-founder.

7) Depending on how much was invested so far and by whom and depending on whether the business is based on any jointly owned core IP or not, you may be able to shut down the company and re-incorporate later as a new company without the co-founder.

From experience I can also tell you that whatever you decide to do, you need to have a good gut feeling about it. If you settle it needs to be on terms that still make you feel proud of the business and about what you've achieved and you need to feel motivated to move forward.