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In 1996, ADCS granted to ADCS-Korea a nonexclusive license
to manufacture and to sell in South Korea TEOS and other
chemicals over which ADCS had control, in return for which ADCS
was to receive a royalty of 10 percent of gross sales.
The activities and operations of ADCS-Korea were conducted
pursuant to a written joint venture agreement under which ADCS
retained control of the management of ADCS-Korea. The executives
of ADCS and, after July 9, 1996, the executives of petitioner,
were active on a daily basis in supervising and managing the
activities of ADCS-Korea. Senior executives of ADCS and of
petitioner frequently traveled to South Korea to participate in
the management of ADCS-Korea.
In July of 1995, ADCS moved its sales and executive offices
from San Jose, California, to Austin, Texas, near its new
manufacturing plant in Burnet, Texas.
During 1996, ADCS and petitioner considered and investigated
establishing a chemical manufacturing plant in Belgium or in
Scotland at an estimated cost of $3.5 million.
In January of 1996, ADCS adopted a plan of reorganization
involving, among other things, a transfer of all of ADCS’
operating assets to Advanced Delivery & Chemical Systems, Ltd.
(ADCS-Limited), a Texas business limited partnership. The
transfer to a Texas limited partnership of the operating assets
of a corporation doing business in Texas constituted, during the
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Last modified: May 25, 2011