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IRC to * * * [Systems] on or before March 31, 1985.” At some
point, RIC became a party to an option agreement with Systems.
Under an agreement dated March 2, 1984, among IRC and its
shareholders, if Systems satisfied each of certain specified
conditions, then IRC’s shareholders were obligated to vote their
shares to approve the proposed merger or assets acquisition. The
specified conditions in the March 2, 1984, IRC shareholders
agreement are almost exactly the same as the specified conditions
in the above-described option agreement If Systems did not
satisfy the foregoing conditions, then the terms of any agreement
to merge or sell assets would be subject to negotiations.
On or about March 26, 1985, Systems’ president asked that
the option expiration date be extended from March 31, 1985, to
May 31, 1985. On or about March 29, 1985, the boards of
directors of IRC and RIC refused the request for extension.
D. Mergers of IRC and RIC Into Systems
Contentious merger negotiations between Systems, IRC, and
RIC ensued after Systems’ option to buy the stock of IRC and RIC
expired on March 31, 1985. The negotiations ultimately proved
successful and a merger occurred.
_____________________________________________
Both IRC and RIC were formed and operated primarily to
furnish investment capital to Systems. Neither IRC nor RIC spent
money in 1984 for the purpose of research or development in a
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