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Business Organizations Keyed to Cox
Kahn v. Lynch Communication Systems, Inc.
Citation:
638 A.2d 1110 (1994)Facts
In 1981, Alcatel acquired 30.6 percent of Lynch’s common stock pursuant to a stock purchase agreement. As part of that agreement, Lynch amended its certificate of incorporation to require an 80 percent affirmative vote of its shareholders for approval of any business combination. In addition, Alcatel obtained proportional representation on the Lynch board of directors and the right to purchase 40 percent of Lynch equity securities in any offering that included third parties. To address the self-interest surrounding its acquisition of by Alcatel, Lynch created a three-person committee comprised of non-Alcatel directors to negotiate the terms of the acquisition. The merger occurred and unhappy Lynch shareholders sued.
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Topic Resources
Topic Outline
Shareholders’ RightsTopic Refresher Course
Breach: Major and MinorTopic Charts & Notes
Parties Chart