- 58 - shareholders. The remaining two directors were to be appointed by vote of the other four directors. The JAL and Lufthansa directors were each entitled to three votes; the Nissho Iwai director, one vote; the DHL shareholders’ director, five votes; and the resident directors, one-half vote each. Around the time the second phase of the transaction was being completed, DHL’s representatives became concerned about a tax-related issue denominated the “Alstores problem” because of the holding in Alstores Realty Corp. v. Commissioner, 46 T.C. 363 (1966). To avoid the problem, DHL’s representatives proposed several alternative approaches to conveyance of the DHL trademark. Each alternative involved the present conveyance of non-U.S. rights and the retention of U.S. rights to the trademark by DHL for 15 years with a mechanism that permitted DHLI to obtain ownership of U.S. rights if DHL did not maintain certain minimum net worth requirements or on the happening of certain other events. Each alternative contemplated payment of $20 million, even though complete transfer of U.S. rights was not to be for 15 years. One of the foreign investor’s representatives, responding in the negative to the proposal, explained that the transfer of the trademark was to protect the right and interest of the foreign investors from unexpected situations, such as a takeover of DHL by its competitors. He further advised that the foreign investors had no inclination to accept any of the alternatives proposed unless it not only satisfied the DHLPage: Previous 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 Next
Last modified: May 25, 2011