As filed with the Securities and Exchange Commission on July 27, 1998
Registration Number 333-7242
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2/A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
TRB SYSTEMS INTERNATIONAL INC.
(Exact name of Registrant as specified in its charter)
Delaware __________________ 22-3522572
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification
Code Number)
TRB Systems International Inc. Byung Yim, Chairman
4 Becker Farm Road, Roseland, NJ 07068 TRB Systems International Inc.
(973) 994-4488 4 Becker Farm Road, Roseland,
NJ 07068 (973) 994-4488
(Address, including zip code, and
telephone number and including (Address, including zip code,
area code, of Registrants principal telephone number including
place of business) area code,executive principle,
or agent for service)
Approximate date of commencement of the proposed sale to the public:
The business day after the date on which this Registration Statement becomes
effective. If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, please check the following box: |_|
CALCULATION OF REGISTRATION FEE
============================================================================
Proposed Maximum
Title of Each Class Amount Offering Aggregate Amount
of Securities to be to be Price Offering of Regis-
to Registered Registered Per Unit Price tration Fee.
(,000's)
============================================================================
Common Stock, with par
value of $0.001(1)(3) 250 $0.1 $25,000 $ 100.00
Common Stock, with par
value of $0.001(2)(3) 594.009 $0.514 $305,816 $ 100.00
Totals 844.009 $330,816 $ 200.00
============================================================================
(1) Represents 250,000 shares of common stock issued to Alpha Bytes, Inc.
a Creditor of TRB Systems Inc., the sole subsidiary of the Registrant.
The said shares were distributed by Alpha Bytes, Inc. as a dividend to its
183 shareholders, and carry a 30 day right of rescission, commencing on the
effective date of this Registration Statement.
(2) Represents 594,009 shares of common stock of the Registrant issued on
October 2, 1997, to persons having invested funds in TRB Systems Inc., the
sole subsidiary of the Corporation.
(3) Presently, there is no market for these shares.
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
will file a further amendment which specifically states that this Registration
Statement will thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933. or until the Registration Statement becomes
effective on such date as the Commission, acting pursuant to Section 8(a), may
determine.
This registration statement is comprised of 235 consecutively
numbered pages, including exhibits. The exhibit index called for by Item 601
of Regulation SB is located at page 79.
<PAGE> 01
Pursuant to Item 601 of Regulation S-B showing location in the
Prospectus of information required by Items 101 through 510 of
Regulation SB-2.
Registration Statement
Item Number and Caption Prospectus Caption
101. Description of Business THE COMPANY
102. Description of Property THE COMPANY - PROPERTY
103. Legal Proceedings LITIGATION
201. Market for Common Stock and CERTAIN MARKET INFORMATION
Related Stockholder Matters
202. Description of Securities to DESCRIPTION OF SECURITIES
be Registered
303. Management's Discussion and MANAGEMENTS DISCUSSION AND ANALYSIS
Analysis or Plan of Operation OF OPERATIONS & CHANGES IN FINANCIAL
CONDITION
304. Changes in and Disagreements
With Accountants on Accounting
and Financial Disclosure. NOT APPLICABLE
310. Financial Statements FINANCIAL STATEMENTS
401. Directors, Executive MANAGEMENT;
Officers, Promoters and PRINCIPAL STOCKHOLDERS; CERTAIN
Control Persons TRANSACTIONS; CONFLICTS OF INTEREST
402. Executive Compensation MANAGEMENT
403. Security Ownership of Certain PRINCIPAL STOCKHOLDERS; CERTAIN
Beneficial Owners TRANSACTIONS
and Management
404. Certain Relationships and CERTAIN TRANSACTIONS; CONFLICTS OF
Related Transactions INTEREST
405. Compliance with Section
16(a) of the Exchange Act MANAGEMENT
501. Forepart of the Registration COVER PAGE
Statement and Outside Front
Cover Page of Prospectus
502. Inside Front Cover and Outside COVER PAGE; INSIDE FRONT COVER AND
Back Cover Pages of OUTSIDE BACK COVER PAGES
Prospectus
503. Summary Information SUMMARY OF THE PROSPECTUS;
& Risk Factors RISK FACTORS
504. Use of Proceeds USE OF PROCEEDS
505. Determination of Offering COVER PAGE; DILUTION; CERTAIN MARKET
Price INFORMATION
506. Dilution DILUTION
507. Selling Securities Holders PLAN OF DISTRIBUTION
508. Plan of Distribution COVER PAGE; INSIDE FRONT COVER; PLAN
OF DISTRIBUTION
509. Interests of Named Experts CERTAIN TRANSACTIONS
and Counsel
510. Disclosure of Commission INDEMNIFICATION ARRANGEMENTS
<PAGE> 02
TRB SYSTEMS INTERNATIONAL INC.
(a Delaware Corporation)
844,009 Shares of Common Stock, with a Par Value of $0.001
This offering involves the registration of 250,000 Shares issued to
Alpha Bytes, Inc., which were subsequently issued as a dividend for no
consideration to the 183 shareholders of Alpha Bytes, Inc., the Selling
Shareholders, on October 2, 1997, said shares having a 30 day right of
rescission attached to them commencing on the effective date of the
Registration Statement of which this Prospectus forms a part; and, the
registration of 594,009 shares issued to investors in TRB Systems Inc.
(TRB) on October 2, 1997. Presently, there is no market for these shares.
The Company is a holding corporation with one wholly owned operating
subsidiary, TRB Systems Inc., organized pursuant to the laws of Delaware
in 1994, and involved, worldwide, in the manufacture, sale, and distribution
of bicycles, exercise equipment, and motorized two-wheeled transportation
systems. TRB is a development stage company which commenced taking orders
for the sale of its bicycles in March of 1998, and anticipates to commence
shipping bicycles in the first quarter of 1998-1999 fiscal year.
It is anticipated that the shares being offered herein will be traded on the
NASDAQ OTC Bulletin Board within one month of the effective date of the
Registration Statement of which this Prospectus forms a part.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
============================================================================
TOTAL NUMBER PRICE PER AGGRAGATE PRICE EXPENSES & PROCEEDS TO
OF SHARES SHARE TO PUBLIC COMMISSIONS COMPANY
============================================================================
844,009 (1) UNKNOWN (1) Unknown (2) Unknown (3) None
============================================================================
(1) The price per Share to the public of the Selling Shareholder's Shares
will be based on the bid price for the Company's common stock on the dates of
specific sales, unless shares are sold in private transactions. Consequently,
no determination can be made as to actual pricing matters. The price per share
to Investors in TRB Systems Inc. was $0.514 per share.
(2) It is anticipated that normal brokerage commissions will be charged
by firms that sell any of the Selling Stockholders' Shares for the account of
the Selling Stockholders and that such commissions will be tied to a
percentage of the sales price; however, no specific information pertaining
thereto can be provided. The shares to investors in TRB Systems Inc. were
sold by the Registrant, and there are no anticipated expenses associated with
these shares. The Company estimates that it will pay approximately $50,000 in
fixed expenses pertaining to the offering, including accounting fees,
Securities and Exchange Commission, National Association of Securities
Dealers, Inc., printing expenses, transfer agent fees and expenses and
miscellaneous costs.
(3) The shares will be sold by the Selling Stockholders. Therefor, there
will be no direct proceeds to the Company. The shares sold to the investors
yielded, at $0.514 per share, $305,816.
<PAGE> 03
TRB SYSTEMS INTERNATIONAL INC.
(a Delaware Corporation)
TRB Systems International Inc.
4 Becker Farm Road, Roseland, NJ 07068
(973) 994-4488
The date of this Prospectus is July 17, 1998
ADDITIONAL INFORMATION
The Company has filed a Registration Statement on Form SB-2 (adopted
under authority of the Securities Act of 1933, as amended) with respect to
the securities offered hereby, with the United States Securities and Exchange
Commission (S. E. C.). This Prospectus does not contain all the information
set forth in the Registration Statement and the exhibits and schedules
thereto. For further information, reference is hereby made to the
Registration Statement. Statements contained in this Prospectus as to the
contents of any contract or other document are not necessarily complete, and
in each instance reference is made to the copy of such contract filed as an
exhibit to the Registration Statement, each such statement may be inspected
without charge at the Public Reference Section of the Commission in its
Washington, D.C. office and copies of all or any part thereof may be obtained
from the Commission at prescribed rates, and may be perused at the S. E. C.'s
Web Site, whose address is http://www.sec.gov. Copies of the Registration
Statement and the Exhibits appended thereto will be provided without charge
upon written or oral request addressed to Charles C. Khym, Esq., General
Counsel; TRB Systems International Inc., 39-01 Main Street, Suite 605,
Flushing, New York 11354, or by calling (718) 445-1300.
The Company currently does not furnish its stockholders with annual
reports containing financial statements certified by its independent public
accountants and quarterly reports containing unaudited financial information
for the first three quarters of each fiscal year. Prior to the sale of the
Registered Securities, the Company was not subject to the informational
requirements of the Securities Exchange Act of 1934 since its securities were
not registered with the Commission pursuant to the requirements of Sections
13 or 15(d) of the Securities Exchange Act of 1934, as amended.
Commission.
No dealer, salesman or any other person has been authorized to give
any information or to make any representations other than those contained in
this Prospectus. Any information or representation not contained herein, if
given or made, must not be relied upon as having been authorized by the
Company or by the Selling Stockholders. Neither the delivery of this
Prospectus nor any sale made hereunder shall under any circumstances create
any implication that there has been no change in the affairs of the Company
since the date hereof. This Prospectus does not constitute an offer or a
solicitation of any offer to buy any securities offered hereby in any
jurisdiction to any person to whom it is unlawful to make such an offer or
solicitation in such jurisdiction.
Until October 30, 1998, all dealers effecting transactions in the
registered securities, whether or not participating in this distribution, may
be required to deliver a Prospectus. This is in addition to the obligation
of dealers to deliver a Prospectus when acting as underwriters and with
respect to their unsold allotments or subscriptions.
None of the investors in TRB Systems Inc. to receive shares as a
result of this Registration statement are affiliates of the Registrant,
related to any shareholders in the Registrant, or hold any stock in the
Registrant or its affiliate.
<PAGE> 04
Introductory Page 1
"COLOR PLATE"
<PAGE> 05
Introductory Page 2
"COLOR PLATE"
<PAGE> 06
Introductory Page 3
GLOSSARY OF TERMS
AS USED HEREIN, THE FOLLOWING HAVE THE MEANINGS SET FORTH BELOW:
TRB. The collective and generic term for the Company's
subsidiary, TRB Systems Inc., organized in 1994, pursuant
to the laws of the State of Delaware.
Capital Stock. The generic term for the Company's Common Stock.
Common Stock. The shares of the Company's common stock, with a par value
of $0.001, of which 30,000,000 shares are authorized and
11,925,626 are issued and outstanding (see "DESCRIPTION OF
SECURITIES").
NASD. National Association of Securities Dealers, Inc. The
self-regulatory body registered under the Securities
Exchange Act of 1934, as amended, responsible for
regulation of securities brokers and dealers, and the
operator of the NASDAQ inter-dealer automated quotation
system's bulletin board over which Company securities are
traded.
Registered The generic and collective term for the 843,998 shares
Securities. held by the Selling Shareholders and investors in TRB
Systems International Inc. being registered.
Selling Alpha Bytes, Inc.
Shareholders.
The Company. TRB Systems International Inc., a Delaware Corporation and
the issuer of the securities registered hereby.
<PAGE> 07
Prospectus Page 1
PROSPECTUS SUMMARY
The following is a summary of certain information contained in this
Prospectus and is qualified in its entirety by the more detailed information
and financial statements (including notes thereto) appearing elsewhere herein.
THE COMPANY
The Company is a development stage company which commenced taking orders in
March 1998, and anticipates to commence shipping bicycles in the first quarter
of the 1998-1999 fiscal year. It was incorporated in the State of Delaware
on April 9,1997. It was organized as a purchaser of TRB Systems Inc., and
purchased the said company on April 18, 1997. Currently the Company is
a holding company with one operating subsidiary, TRB Systems Inc., organized
pursuant to the laws of the State of Delaware. TRB Systems Inc. (TRB)
has never been a party to any material reclassification, merger,
consolidation, or purchase or sale of a significant amount of assets not in
the ordinary course of business other than with respect to its acquisition
by the Company.
TRB Systems Inc., a Delaware corporation formed in April 1994,
to market, worldwide, the Transbar Power System (TPS) technology and
its applications to the bicycle, exercycle, electric bicycle and wheelchair.
These technology rights were licensed from ABL Properties Company, the owner
of the patent rights to the TPS technology, to TRB Systems Inc. (See
"Organization"; "Business").
Between 1983 and 1993, over $7.9 million was spent by Alenax
Corporation (TRB's predecessor), owned and operated by Mr. Byung Yim,
president of both TRB and TRB Systems International Inc., developing and
marketing a line of TPS bicycles, and in 1988 the company sold a total of
8,500 TPS bicycles. During a corporate relocation from Rochester, NY to
Piscataway, NJ, all inventory, consisting of 900 bicycles, office furniture,
and cad0cam computer equipment, as well as the blueprints for all models
of the bicycle and the TPS components, were lost. The loss was a result of
the negligence of the moving company, in that the goods were sold at auction
and the blueprints destroyed as the result of Byung Yim being in Korea and
China on a business trip, and the moving company, not realizing that delivery
was to be effected upon the return of Mr. Yim, treated the goods and
blueprints as abandoned. An ensuing lawsuit was initiated for $10,000,000
by Alenax. The transport company threatened bankruptcy immediately upon
any judgment being filed against them, and there was a settlement for
$100,000 (the transport company did subsequently become bankrupt).
Due to the capital loss, Alenax, while continuing development of
the TPS System, ceased active operations due to a lack of working capital.
In April, 1994, TRB Systems Inc. was incorporated to continue TPS
technology development, and to manufacture and market the finished product
lines.
TRB, having licensed from ABL Properties Corp. (ABL) the exclusive
rights to market and enhance the vehicles using the Transbar Power System
(TPS) (See, "Business") intends to create what management believes to be a
new generation of cycling and fitness products using the patented (by ABL)
Transbar Power System technology (See, "Business", "Patents"). Although TRB
is a new company, as can be seen from the foregoing, its TPS technology has
undergone considerable development over the years. The characteristic of the
TPS technology is similar, to that used in stepper machines, which is
currently one of the fastest growing segments of exercise equipment.
TRB's technology allows users to engage in biomechanically correct
exercise without the trauma associated with many alternate forms of exercise.
Orthopedic doctors and physical therapists have prescribed the TPS bike for
patients because of the variable stroke, non-impact motion it provides.
TRB's products are also, appealing to older consumers and TRB is well-
positioned to benefit from the aging of the U.S. population.
The TPS motion provides older consumers with an exercise that is
cardiovascular and anaerobic, while at the same time is safe and gentle.
<PAGE> 08
Prospectus Page 2
TRB's immediate goals are (i) to conduct product test marketing in
target market segments, (ii) to identify and establish strategic relationships
domestically and internationally, (iii) to develop initial sales/marketing
materials, literature and programs, (iv) to accomplish regional product
introduction in 1998, and (v) to license its technology internationally.
TRB intends to target four markets during its first year:
1) Alternative Transportation, Recreation & Leisure, Health & Fitness
2) Senior Citizens
3) Rehabilitation & Therapeutic
4) International
TRB already has over one million dollars worth of sales from licensing
agreements, as well as sales commitments by licensees (SEE "Selected Financial
Information")
The Company's current mailing address is 4 Becker Farm Road, Roseland,
NJ 07068; and its phone number is (973) 994-4488.
SELECTED FINANCIAL INFORMATION
Set forth below is selected financial information of the Company and
its consolidated subsidiary. The provided information is derived from the
more detailed audited consolidated financial statements as of September 30,
1997, and should be read in conjunction with the audited consolidated
financial statements included elsewhere in this Prospectus and are qualified
in their entirety by reference thereto (see "FINANCIAL STATEMENTS").
3 Months Annual Annual
Ended Ended Ended
Sept. 30 June 30 June 30
1997 1997 1996
OPERATING RESULTS*
(all data is in $US)
Continuing Operations
Sales $ 0 $ 0 $161,354
Cost of Sales 0 0 146,363
Gross Profit 0 0 14,982
Other Income 144 59 135
Total Income 144 59 15,117
Expenses:
Total Expenses 329,301 454,443 229,734
Net profit (loss)
before taxes (329,157) (454,384) (214,617)
Net Profit(Loss) (414,139) (454,384) (214,617)
Net Profit(Loss
per share $(0.0276) $(0.0381) $(0.0180)
FINANCIAL POSITION
Current Assets 17,828 20,000 7,200
Other Assets 739,822 628,038 89,729
Total Assets 757,650 648,038 96,929
<PAGE> 09
Prospectus Page 3
Current Liabilities 442,441 373,547 645,215
Other Liabilities 294,658 314,000 218,126
Total Liabilities 737,099 687,647 863,341
Stockholder's
Equity 20,551 (39,509) (766,412)
________
SECURITIES OUTSTANDING
As of the date of this Prospectus, 11,925,626 shares of Common stock
were issued and outstanding. (see "CAPITALIZATION", "PLAN OF DISTRIBUTION"
and "PRINCIPAL STOCKHOLDERS")
CURRENT STOCKHOLDERS
Approximately 278 persons own shares of the Company's Common Stock
(see "CERTAIN TRANSACTIONS" and "PRINCIPAL STOCKHOLDERS").
DEFINITION OF TERMS
Certain terms used in this Prospectus, usually identified by initial
capital letters, are defined in the section of this Prospectus captioned
"GLOSSARY OF TERMS."
RISK FACTORS
THE SECURITIES OFFERED HEREBY ARE SPECULATIVE IN NATURE AND INVOLVE A
DEGREE OF RISK. THEY SHOULD BE PURCHASED ONLY BY PERSONS WHO CAN AFFORD TO
LOSE THEIR INVESTMENT IN THE COMPANY WITHOUT A MATERIALLY ADVERSE IMPACT ON
THEIR STANDARD OF LIVING OR FINANCIAL SECURITY. THEREFORE, PRIOR TO PURCHASE
EACH PROSPECTIVE INVESTOR SHOULD CONSIDER THE FOLLOWING RISK FACTORS, AS WELL
AS ALL OTHER INFORMATION SET FORTH ELSEWHERE IN THIS PROSPECTUS.
RISKS OF THE OFFERING
Possible Loss of Entire Investment
Prospective investors should be aware that if the Company is not
successful in its endeavors, their entire investment in the Company could
become worthless. Even if the Company is successful in its programs there
can be no assurances that investors will derive a profit from their investment.
The Company has only one operating subsidiary, and as of yet no sales
of product has taken place. It is possible that there will never be any sales
of products, in which case the total investment of investors may be lost.
Adverse Claims by Shareholders of Alpha Bytes
Alpha Bytes distributed its 250,000 shares in the Company to its 183
shareholders on October 2, 1997, which distribution may have been in violation
of Section 5 of the Securities Act of 1933, as well as the Securities
legislation of the States where the said shareholders reside. As a result,
the distribution may be subject to a right of rescission. As a result of the
forgoing Alpha Bytes decided to grant a 30-day right of rescission to its
stockholders with respect to the distribution of the said shares. (SEE:
"SELLING SHAREHOLDERS", at page 28 for complete disclosure of the Alpha
Bytes distribution of Shares).
<PAGE> 10
Prospectus Page 4
Potential Future Sales Pursuant To Rule 144
Generally, under Rule 144, a person (or persons whose shares are
aggregated) who has satisfied a one year holding period may, under certain
circumstances, sell within any three month period a number of shares which
does not exceed the greater of one percent (1%) of the then outstanding
Common Stock or the average weekly trading volume during the four calendar
weeks prior to such sale. Rule 144 also permits, under certain circumstances,
the sale of shares without any quantity limitation by a person who has not
been an affiliate of the Company for at least 90 days and who has satisfied a
one year holding period.
The one year holding period for all the Company's currently
outstanding restricted shares required by Rule 144 will expire during October
of 1998 and thereafter, the holders may periodically sell their Company
securities, subject to applicable volume limitations, restrictions on the
manner of sale and applicable reporting requirements (see "CERTAIN
TRANSACTIONS").
Absence of a Trading Market
At present, there is no market for the securities of the Company,
and there can be no assurance that an established trading market or any
public market will develop in the future, or that if developed, it could be
sustained, or the securities of the Company resold at any price. Any market
the Company may develop will, in all likelihood, be a substantially limited
one.
Adverse effects of Penny Stock Regulations
Securities, generally, with a price $5.00 per share or less are
referred to as penny stock. These securities are unsuitable for investors
with low fixed incomes and limited net worth, or for accounts held in a
fiduciary or custodial capacity. As well, they are not suitable for investors
who are risk aversive or have income as their sole investment objective.
Investment broker/dealers must satisfy special sales practice requirements,
including making written suitability determinations regarding any persons
wishing to invest in penny stock; written consent of the purchaser prior to
purchasing penny stock; delivery of a disclosure statement outlining the
risks associated with penny stock prior to any transaction; a written current
bid and ask quotation and commissions to be earned by the broker/dealer in the
transaction; and monthly statements stating the market value of any penny
stock held in a portfolio. These requirements, if applicable to the Company,
may adversely effect any market for the Registrant's shares.
Absence of Underwriter
The Selling Stockholders' Shares will be sold directly by the Selling
Stockholders, consequently, no underwriter is expected to be involved
therewith. The absence of an underwriter means that there will be less due
diligence in conjunction with this offering than would be performed in an
underwritten offering, and furthermore, that there are no brokers committed
to stabilizing the market for the Company's securities.
Concentration of Share Ownership
Where approximately 86% of the shares in the Company are currently
held by Motion Plus International Corporation, a corporation 98% of whose
stock are owned by Byung Yim and his two children, the effective control of
the Registrant rests with these parties. Byung Yim is also the President and
sole director of the Company. Thus Mr. Yim, and his two children will be in
a position to substantially control the election of the Board of Directors
of the Company and the management and policies of the Company.
<PAGE> 11
Prospectus Page 5
Financial Risks
No assurance can be given that the Company's future sales will meet
the Company's expectations or that the Company will be able to operate
profitably. The Company has a history of operating losses, and lacking future
profitable operations, will need additional capital, which the Company has no
assurance whatsoever of being able to obtain. The inability to obtain such
financing would have a material adverse effect on the Company's results of
operations. (See "Financial Statements", "MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION, CHANGES IN FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.")
BUSINESS RISKS
No Dividends
The Company has never paid dividends on its Common Stock. The
Company does not anticipate paying dividends for the foreseeable future and
intends to devote earnings, if any, to the development of the Company's
business. The payment of dividends in the future rests within the discretion
of the Company's Board of Directors and will depend on the existence of
substantial earnings, the Company's financial requirements and other factors.
TRB has paid no substantial dividends in the past; and earnings for the
foreseeable future are expected to be retained to finance corporate business
expansion.
Material Reliance Upon Officers
The Company is wholly dependent upon the personal efforts and
abilities of its officers and directors, especially Mr. Byung Yim. The loss
of or unavailability to the Company of the services of any of its officers or
directors would have a materially adverse effect on the Company's business
prospects and potential earning capacity. The Company does not carry any
insurance to compensate for any such loss, nor does it intend to obtain "key
man" life insurance covering its officers or directors.
FOR ALL OF THE AFORESAID REASONS, AND OTHERS SET FORTH HEREIN, THESE
SECURITIES INVOLVE A HIGH DEGREE OF RISK. ANY PERSON CONSIDERING AN
INVESTMENT IN THE SECURITIES OFFERED HEREBY SHOULD BE AWARE OF THESE AND
OTHER FACTORS SET FORTH IN THIS PROSPECTUS. THESE SECURITIES SHOULD ONLY BE
PURCHASED BY PERSONS WHO CAN AFFORD A TOTAL LOSS OF THEIR INVESTMENT IN THE
COMPANY AND HAVE NO IMMEDIATE NEED FOR A RETURN ON THEIR INVESTMENT.
SELLING SHAREHOLDERS
Alpha Bytes, Inc., a Colorado public corporation presently traded on
the NASDAQ Bulletin Board market, provided consulting services to the Company
regarding software development for the inventory control and Management
Information Systems to be used by the Company for which it received 250,000
shares that were issued as a dividend by Alpha Bytes to its 183 shareholders
(representing 2.2% of the Companys's outstanding shares), on whose behalf
the said shares are being registered. Alpha Bytes, Inc., its subsidiaries,
and shareholders had no interest in the Company, its subsidiary, or any
business or personal relationship with any shareholder of the Company or its
subsidiary or affiliates, prior to the above described transaction (See "SELLING
SHAREHOLDERS" at page 28 of this Prospectus).
The Company is also registering 594,009 shares held by 54
shareholders of the Company (See "SELLING SHAREHOLDERS" at page 28 of
this Prospectus).
<PAGE> 12
Prospectus Page 6
CERTAIN MARKET INFORMATION
MARKET FOR COMMON EQUITY
At present, there is no market, public or private, for the trading of
the Company's common stock. The Company anticipates registering its shares
on the NASDAQ Bulletin Board System by July 1, 1998.
SECURITY HOLDERS
As of March 31, 1998, the latest practicable date for which
information is available, the Company had approximately 278 common stock
holders. Of these, 183 were shareholders of Alpha Bytes, Inc. (See "Selling
Shareholders"), who received 250,000 shares in the Company as a dividend from
Alpha Bytes, Inc., which received the said shares as payment for consulting
services rendered to the Company with respect to computer software systems.
The shareholders of Alpha Bytes, Inc. received their shares in the Company
based on the number of shares each shareholder held in Alpha Bytes, Inc.
divided by the total number of outstanding shares in Alpha Bytes, Inc.
There are 44 shareholders holding 11,081,628 restricted shares, and
54 shareholders holding 594,009 shares issued on October 2, 1997, which
shares are part of the securities to which this Prospectus refers (See
"Certain Transactions", Principal Stockholders").
DIVIDENDS
There have been no cash dividends declared or paid since the
inception the Company and no dividends are contemplated to be paid in the
foreseeable future. No dividends were paid by the Company's subsidiaries,
prior to their acquisition by the Company; however, it is anticipated that
for the foreseeable future, the Company's profits (if any) will be reinvested
in the Company rather than distributed as dividends.
OFFERING PRICE
No offering price has been pre-established for the shares registered
by the Selling Shareholders. Rather, it is anticipated that the Selling
Stockholders will sell them into the public market at such times as the price
is deemed favorable, when considered in light of the recipients' capital
requirements. The recipients will be the sole determiners of appropriate
pricing, on a case by case basis.
CAPITALIZATION
The following table sets forth the capitalization of the Company as
of March 31, 1998.
March 31,
Title of Class 1998
Stockholders' Equity $20,551
Debt
Total Liabilities $737,099
<PAGE> 13
Prospectus Page 7
THE COMPANY
BUSINESS (GENERAL)
TRB Systems International Inc., organized under the laws of the State
of Delaware in 1997, is a holding company for TRB Systems Inc., a Delaware
corporation formed in April 1994, formed to market, Worldwide, the Transbar
Power System (TPS) technology and its applications to the bicycle, exercycle,
electric bicycle and wheelchair. These technology rights were assigned from
ABL Properties, the owner of the patent rights to the TPS technology, to TRB
Systems Inc.
BUSINESS DEVELOPMENT
TRB, a corporation organized under a Delaware corporation, was
organized in April 1997. It has never been a party to any material
reclassification, merger, consolidation, or purchase or sale of a significant
amount of assets not in the ordinary course of business.
Background Information
The Company was incorporated in the State of Delaware on April 9,
1997. The Company was organized as a purchaser of TRB Systems Inc., and
purchased the said company on April 18, 1997.
The Company is currently a holding company with one operating
subsidiaries, TRB Systems Inc., organized pursuant to the laws of the State
of Delaware. TRB Systems Inc. has never been a party to any material
reclassification, merger, consolidation, or purchase or sale of a significant
amount of assets not in the ordinary course of business other than with
respect to its acquisition by the Company. For purposes of this prospectus,
the Company's subsidiary are sometimes referred to as "TRB".
TRB Systems Inc., a Delaware corporation formed in April 1994, was
formed to market, Worldwide, the Transbar Power System (TPS) technology and
its applications to the bicycle, exercycle, electric bicycle and wheelchair.
These technology rights were Licenses from ABL Properties, the owner of the
patent rights to the TPS technology, by TRB Systems Inc. (See "Organization").
The rights licensed to TRB by ABL Properties Company call for a payment of
$200,000 during the first year of active sales, a 1% royalty on annual sales
to $10,000,000, 0.75% on sales over $10,000,000 but under $20,000,000, and
0.5% on all sales thereafter, and all profits gleaned from international
sales to an aggregate limit of $3,325,000. ABL is 100% owned by Byung Yim,
President & CEO of TRB Systems International Inc.
Between 1983 and 1993, over $7.9 million was spent by Alenax
Corporation (TRB's predecessor), owned and operated by Mr. Byung Yim,
president of both TRB and TRB Systems International Inc., developing and
marketing a line of TPS bicycles, and in 1988 the company sold a total of
8,500 TPS bicycles. This experience has given rise to the new product line
that TRB is ready to market. To date 1,060 bicycles have been produced and
sold.
BUSINESS
The Company's primary focus is to manufacture, through agreements
with manufacturers, and, eventually in its own facilities, all of its
products. The Company plans to distribute and sell its products to the public
through distributors and licensees. All sales and promotional material will
be provided to the distributors and licensees by the Company.
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Prospectus Page 8
Principal Products or Services and Their Market
Product Development
Preliminary market research indicates that the therapeutic market is
driven primarily by product performance, while non-therapeutic markets are
more sensitive to price. The Company intends to focus its product development
and production efforts for the first year on three lines of products:
bicycles, electric bicycles, and ergometers. TRB's introductory bicycle
line, propelled exclusively by the TPS, will consist of models with multiple
sizes for men and women. This initial line will closely resemble the current
popular cruiser and mountain bikes that offer a comfortable upright riding.
Product development will continue with the introduction of an adult
tricycle. Lightweight, higher performance bicycles will eventually also be
introduced to appeal to the performance biking community. Other term
products will be developed to meet the dynamic and continually changing needs
of the market.
Patent Protection
Patents covering the speed change and/or propulsion mechanism of the
Transbar Power System have been obtained and are owned by ABL in the U.S.,
China, India, Australia, Taiwan, Japan, and Korea, and a patents are pending
in Europe and Canada. TRB has the exclusive worldwide licensing rights under
all TPS patents, except for Taiwan and South Korea.
TRB Products and Technology
The TPS technology has many applications. TRB will initially focus
on three main product groups; a select line of bicycles, electric bicycles,
and two types of ergometers. Other new product lines and licensing
opportunities will be pursued through third party alliances.
TPS Bicycle
TPS bicycles are high quality, sophisticated products that closely
resemble conventional bicycles. The TPS bicycle's unique design provides a
smooth, up and down pumping, or stepping action which closely resembles the
body's natural walking and running motion. This is the most powerful
movement a leg can make, reaching a maximum when almost fully extended.
TRB's system takes advantage of these biomechanical facts.
The bicycle's operating principles are relatively simple. The pedal
levers travel up and down through the maximum power range that has an arc of
135 degrees. As the lever on one side is depressed, the opposing lever is
raised. A full lever stroke or a partial stroke may be applied to propel the
bicycle. Lever strokes require far less leg motion than the 360 degree
movement required with a conventional bicycle.
Research conducted by TRB leads management to believe that the TPS
bicycle provides a significant increase in propulsion power versus
conventional circular pedaling models. The propelling force of the TPS lever
is constant, as opposed to the variable, circular ascending and descending
crank motion of conventional bicycles. The levers which drive the transbar
system do not revolve, and their length can therefore be increased to take
advantage of the power of leverage. Since the levers do not revolve, the TPS
bike permits greater ground pedal clearance over rough terrain and around
turns. Propulsion of a bicycle using the TPS results in significantly
greater distance traveled, for a given expenditure of effort, than on the
same bicycle using conventional bicycle technology.
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Prospectus Page 9
The overall appearance of the TRB bicycle closely resembles that of
the conventional bicycle. The major difference between TRB's bike and
conventional bikes is the TPS, which has three main components:
TRANSBAR Two opposing bars that are attached directly to the pedal
levers. Each Transbar is interconnected by a chain cable to
the hub assembly.
REAR HUB A dual ratcheting sprocket which is engaged by chains that
connect the two opposing Transbars.
SEE-SAW IDLER The component allowing for the opposing movement of
the two Transbars.
TPS gear changes are always sequential, and the chain is always in
line with the drive sprockets making it virtually impossible to "throw a
chain," as with conventional bicycles. Changing gears is accomplished by a
single, positive shift control as compared to dual levers on a conventional
21 or 24 speed. The pedal lever is attached to the Transbar at a precise
angle to allow maximum power transfer from rider to machine.
The TRB BIKE is offered in five (5) models; Mountain Bike(MTB), Leisure Bike,
BMX(Children), ATB(all-terrain), and CROSS-BIKE. In mass production, TRB
will offer a pedal arm in lengths of either 225mm or 250mm. This will
increase the force of each stroke and increase speed considerably compared to
the conventional pedal length of 170mm. TRB plans to focus initially on the
single action, natural stepping motion in all the bikes with the exception of
a 20" JUVENILE BIKE that will be introduced with our proprietary
multifunctional pedal action within a 9-12 months train after the TRB rollout.
Our tricycle will follow within one (1) year.
TRB's in house research, consisting of trials on the bicycle and
questionnaires responded to by over 100 people indicates that first time
riders or the older population like the feel of the TRB BIKE better than a
conventional bike. Women like the fact they can wear a skirt with comfort
while riding, and those with stiff joints, limited range of motion will
attest to the ease of natural motion of TRB BIKE's pedal action compared to
that of the conventional bike. The most conventional bikes are not
structurally or functionally designed specifically for rehabilitation per se.
The "transbar technology" fills a large void in this huge untapped market,
especially in the "middle-aged" population. It also is an easier motion for
the beginner.
The transbar configuration in TRB's bike allows the rehabilitating person
(a market with growth of 430,000 annually in the US) who uses TRB's bike in a
stationary mode (sitting on a stand) to transfer the natural gait motion of
135 degrees from the inside to the outdoor with the same bike (without the
stand). TRB will attack the high-end professional rider market in the second
phase of our business plan. TRB is conducting care research to verify the
speed and efficiency of our racing prototype (i.e., longer pedal arm,
therefore greater force stroke).
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Prospectus Page 10
Fitness/ Home Trainer
TRB's fitness and home trainer was an outgrowth of the Company's experience
with physical therapists who used our "outdoor bike" concept of the natural
gait motion for their patients. They wanted a graded capability of ROM
(Range of Motion) in the stationary bike, as the patient moved from a narrow
range of motion to a wider and eventually to the 360 degree, circular motion
that they were accustomed to, in typical rehabilitative procedure. TRB's
VersiTraniner meets that demand with a training and rehabilitative device
that provides six (6) different sets of exercises.
Lever Propulsion-Action
1. Alternate up and down pumping motion
2. Simultaneous with both feet parallel to each other
3. Bilateral-One foot pumps while the other foot rests motionless
4. One foot pumps 360 degrees while the other foot rest motionless
Conventional Motion-Conventional Rotary Pedal Action
5. 360 degree rotation-conventional bike pedaling-opposed pedals
6. Parallel pedaling-360 degree rotation
The Versi-Trainer allows an individual to exercise their abdominals,
hips (lateral rotators), quadriceps, hamstrings, and gluteus (butt) muscles.
All actions are performed in the correct biomechanical positions.
Electric Bike
POWER+BIKE is an outdoor bike that uses the same natural "up-down" motion of
all the TRB bicycles but with the ability to, with the twist of the handle,
become an electric bike with speed capability of 23mph. TRB's POWER+BIKE is
strategically positioned, not specifically for the luxury market, which has
three new entries this year Bricklin, Mercedes, and Porsche. All three are
designed similar to a moped, are heavy (50lbs or more), and costly, at prices
between $1400-$5000. By comparison, TRB's POWER+BIKE is 23lbs, light and
efficient enough for the senior citizen and women's market (can be pedaled
comfortably in a business skirt or suit) and sleek enough for the
"Generation X" market appeal, sophisticated enough for the urban businessman,
cool and convenience for the outdoor family and RV enthusiasts, and safe and
practical for the recovering heart attack patient who wants to exercise but
does not want to be struck too far from home. With a retail cost of $600 and
manufacturing costs at $200, along with the added capabilities of folding the
POWER+BIKE into a POWER PACK so it can be hung upon the back of a door, TRB's
management believes the POWER+BIKE can capture a major market share within
this emerging market.
The marketing strategy for this product is as follows:
Senior Market over the age of 55: TRB will focus on the Sunbelt
States: Florida, Arizona, New Mexico, Nevada, California, Texas as well as
North Carolina, South Carolina, and Virginia. Organization such as AARP
(American Association of Retired Persons) with over 5 million members will
be a main target. This market will be cross-prospected by other major
pyschographics such Recreational Vehicle and TimeShare enthusiasts.
Recreation Vehicle Enthusiasts: Reports by the Recreational Vehicle
International Association (RVIA) have shown that there are 9 million RVs with
2 1/2 users per RV, making a total of 22.5 million RV enthusiasts. TRB has
targeted RV camps in Palms Desert (California), Lake Conroe (Houston), as well
as KOA (Campgrounds of America) and Coast-to-Coast Florida, two of the larger
leaders in RV and Campgrounds.
<PAGE> 17
Prospectus Page 11
TimeShare Market: There are 2,500 TimeShare Properties. TRB has
contacted key sales personnel in a new site and are currently involved in
preliminary negotiations to have the TRB POWER PLUS BIKE be a promotional
premium when buying a TimeShare unit.
Universities/Colleges: Nationally, there are 14 million university/
college students. Alenax had set-up a College Campus Student Leader Program
in the past with the TPS outdoor bicycle (Alenax), and TRB intends to mimic
the same marketing and sales campaign to colleges and universities. TRB will
roll-out a similar campaign at a later date to the Prep School market, a
market with close to 1 million students.
TRB will also select large specialty stores, as well as a consortium
that sell Health Clubs in over 19 Western States. TRB plans to develop a
campaign with International Spa, a professional Spa organization and will
exhibit at their international trade show. There are over 2,500 Spas in this
organization.
Future Product Development
The TPS technology has many applications for future products. Some
products under consideration include:
1. wheelchair
2. adult tricycles
3. outdoor recumbent (reclining) bicycles
4. arm/shoulder ergometers
The outdoor recumbent bicycle has been extremely well received by
several Fortune 500 companies, based on a working prototype presented to such
companies by Dr. Dennis Colacino, COO of the Ergometer Division of TRB. (See
"Management").
The Market
TRB will focus on four markets in its first year of operation.
Alternative Transportation, Recreation & Leisure, Health & Fitness
This market is made up of more than 60 million individuals who
currently exercise regularly. The TRB products that will appeal to this
market are the Versi-Trainer and the outdoor TPS bicycle.
Retail Market
From 1985 to 1995, the U.S. bike market grew at close to a 6% annual
rate. The retail industry has averaged approximately $3 billion annually
through the 1980's and is expected to reach $5 billion by 2000. According to
the National Sporting Goods Association ("NSGA"), the retail market for home
exercise and fitness equipment grew at a compound annual growth rate of
10.5%, from approximately $1.2 billion in 1987 to an estimated $2.5 billion
in 1997. The sale of aerobic conditioning equipment, including stair
climbing equipment, treadmills, cross country ski exercisers, etc., accounted
for $2.0 billion in 1995, or 73.7% of this total. In this industry, the
stepper market is the fastest growing segment. The TPS bicycle will be
attractive to this segment because it allows the stepper motion and muscle
conditioning to be taken outdoors.
<PAGE> 18
Prospectus Page 12
Health and Fitness Facilities
To stay competitive, commercial health and fitness facilities
have generally found that they must continue to offer their members state-of-
the-art equipment and programs. As a consequence, health and fitness
facilities typically will spend increasingly more on equipment just to keep
pace. With the number of health and fitness facilities in the U.S. estimated
at 12,500 (IRSA estimate), there is significant competition among
neighboring clubs that are facing a saturated market. These facilities find
they must offer their members every possible means of motivation to keep them
coming back. Consequently, health and fitness facilities are driven by the
market to respond very quickly to new products. TRB's recumbent ergometer
(Versi-Trainer) will offer health club goers the opportunity to combine
conventional circular motion with the TPS stepper motion in a single machine.
Senior Citizens
The senior market is the segment of the population over the age of
50, which includes approximately 64 million Americans (25.6% of the U.S.
population). With the aging of the Baby Boomers, this number is going to
change markedly over the next two decades. By 2010, it is projected that 96
million Americans (32.1% of the population) will be over the age of 50.
The aging of the U.S. population, combined with the rapidly
escalating cost of health care services, has resulted in an intensifying
concern about the efficiency and effectiveness of the U.S. health care
system. As a result, there is a growing need for individuals, particularly
older adults, to participate regularly in safe, functional and efficient
exercise which combines aerobic conditioning and resistance training.
Historical and Projected U.S. Population Demographics
(in millions)
1970 1992 2000 2005 2010
Total Population 204.0 254.8 274.2 286.3 298.9
Population Age 50 & Over 49.9 65.2 75.6 85.0 95.8
% of Total 24.5 25.6 27.6 29.7 32.1
Population Age 65 & Over 20.0 32.1 34.4 35.8 38.8
% of Total 9.8 12.6 12.5 12.5 13.0
Historical data from U.S. Department of Commerce. Projected data
from Woods & Poole Economics.
Only recently has the medical community begun seriously to evaluate
and appreciate the importance of exercise for older adults. Properly
prescribed, exercise can combat the muscular atrophy associated with aging,
improve cardiovascular conditioning, and strengthen and protect the body
against injury. In addition, exercise can preserve and extend an
individual's level of physical independence and quality of life.
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Prospectus Page 13
To date, walking has been the number one form of exercise for
seniors. Walking is practiced more than twice as much as any other activity,
and almost 50% of all seniors walk for exercise on a regular basis. TRB's
TPS technology offers these individuals an alternative form of exercise,
comparable to walking, that generates better cardiovascular results while
using similar muscles with less joint impact.
Rehabilitation & Therapeutic
The Rehabilitation & Therapeutic market consists of four segments: 1) post
surgical (i.e. hip and knee), 2) acute injury, 3) individuals with a
restrictive ROM (range of motion), and 4) other (i.e. arthritic,
biomechanical). There are approximately 500,000 surgeries and 1.5 million hip
and knee injuries every year. According to a recent survey conducted by the
American Hospital Association, there are approximately 6,600 registered
hospitals in the U.S. The following table sets forth, by type of facility,
the percentage of hospitals which make use of therapeutic exercise as a form
of treatment:
Percentage of
Facility U.S. Hospitals(1)
Physical Therapy Services 78.4%
Orthopedic Surgery 66.0
Occupational Therapy Service 54.3
Outpatient Rehabilitation Unit 48.2
Cardiac Rehabilitation Program 39.0
Comprehensive Geriatric Assessment 20.3
Sports Medical Clinic 18.2
Fitness Center 14.6
Inpatient Rehabilitation Unit 13.4
Geriatric Clinic 8.1
(1) AHA, 1992 Annual Survey.
In addition, according to statistics compiled by the U.S. Department
of Health and Human Services, there were approximately 16,000 nursing homes
in the U.S. in 1995, with an aggregate total of approximately 1.7 million
beds. This market segment, including all categories, exceeds 8 million
people. To be successful in this market requires that exercise equipment be
both medically sound and appropriate for a wide array of therapeutic
applications. Medical institutions are acutely aware of the need for
accurate and reliable feedback from the exercise equipment used in the
therapeutic process. Product characteristics such as restrictive ROM,
precise variable resistance, and the accurate control and measurement of
workout intensity are of critical importance.
The TRB product that will address the needs of this market is the
Fitness Versi-Trainer and the TPS bike. Today the major form of therapy for
post hip and knee surgery is the conventional stationary bike. The 360
degree fixed stroke is limiting because initial therapy methods limit ROM to
less than 120 degrees. This causes a time lag before the conventional 360
degree bike can be implemented.
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Prospectus Page 14
The ROM of the TPS is variable and can accommodate all ROM
restrictions, which allows patients to begin rehabilitation sooner. The
biomechanical design of the TPS also puts less strain on limbs and joints by
generating a force along the muscle belly, rather than at the insertion
(joints). This enables patients to recover from surgery faster than with
current techniques, while reducing the probability of reinjury.
International
In 1995, worldwide bicycle sales were over $15 billion, equating to
over 120 million bicycles sold. Based on historical trends, worldwide sales
are expected to grow at a rate of 5% annually over the next five years. The
two largest international markets, in units, are China and India, with the
U.S. placing third.
40 million bicycles were sold in China in 1995. Because of China's
population and its use of the bicycle as a primary source of transportation,
compound five year growth has been over 6%. India's market growth is similar
to China. In 1995, 20 million bicycles were sold in India.
Japan, with approximately 7 million units sold in 1995, represents a
market that is skewed toward higher priced bicycles. Europe, if looked at as
one market, is similar in both dollars and units to the U.S.; however, the
number of bicycles per capita is double that of the U.S. (55 bikes per 1,000
people in Europe versus 25 in the U.S.)
The international market offers TRB a tremendous opportunity in
producing short term and long term revenue with its TPS products.
Distribution Methods of the Products or Services
Marketing Plans & Products
Currently, bicycles are sold mainly through retail outlets and
specialty bike shops; while institutional exercise equipment is sold through
trade shows, magazines and direct mail. The bicycle industry has seen many
significant changes over the past decade in how products are distributed.
TRB intends to take advantage of the newest techniques. The Company's
long-term strategy is to sell through a network of specialized bike and
sporting goods shops.
In the near term, however, the Company, plans to hire The Sawtooth
Group, a privately held advertising and new products consulting company
established in 1988, having over 80 employees, and having as some of its
major clients Sandoz, Tetly USA, AT&T and Radisson- Seven Seas, to begin to
promote ergometers, electric bicycles, and bicycles through a variety of
media, i.e. infomercials on cable television and general television
commercials. TRB will establish market awareness through such direct
marketing and will generate cash flow. For the line of ergometers, TRB plans
to investigate possible alliances with existing sporting goods manufacturers.
The Company anticipates that after brand awareness and an established
corporate image have been achieved, TRB will be able to market its bicycles,
ergometers and electric bicycles through a network of bike retailers,
in accordance with the Company's long term strategy.
<PAGE> 21
Prospectus Page 15
Manufacturing/Technology Licensing Agreements
In order to gain access to international and domestic markets, TRB's
products will be manufactured through contracts with existing manufacturers
around the world. Licensing and marketing agreements will be established
with capable individuals and enterprises in selected markets. Ongoing royalty
fees will also be received from licensees. These royalties are 6% in the
first year, 5% in the second year, and 4% thereafter, with a minimum royalty
payment per year (see table below) TRB's licensing agreement requires the
licensees to meet minimum volume and quality standards. The quality standards
refer to obligatory training in the products and their maintenance as well as
customer service, which TRB shall monitor through comment sheets, and
tracking complaints.
The royalty/volume requirements are presented below:
1st Year 2nd Year 3rd Year
Min. Royalties Min. Royalties Min. Royalties
Country
India $100,000 $220,000 $350,000
Benin/Nigeria $15,000 $25,000 $40,000
Ivory Coast & $10,000 $10,000 $10,000
5 other countries
Tanzania $10,000 $20,000 $30,000
Vietnam $10,000 $20,000 $30,000
Moreover, the agreement also provides that any product enhancement
developed by TRB's licensees becomes the property of TRB.
TRB is manufacturing its proprietary parts through a non-exclusive
relationship with Kun Teng Industries (Taiwan) to produce medium and high\end
bicycles, and plans to use Sino-Danish Enterprises Co., Ltd.(China) as a
supplier of proprietary parts and assembled bicycles in the lower price
ranges. Sino-Danish is now ready to begin mass production and TRB has
received a line of credit in China for $2 million to support these production
plans.
International licensing and marketing agreements have been reached
with licensees for a total of $1,125,000 from the Ivory Coast Tanzania,
Benin/Nigeria, Vietnam and India, and payments totaling $210,000 have
already been received, as well as $10,000 for the right of first refusal to
be the licensee in Canada. In addition, TRB is negotiating agreements with a
potential licensee in China. Under the terms of the Chinese license proposal,
Sino-Danish Enterprises Co., Ltd. will sell a minimum of 100,000 bicycles in
the first year. Sino-Danish intends to achieve its sales goals by advertising
the product throughout China on television during prime time hours, for one
full year. TRB expects to sign this agreement, thereby granting Sino-Danish
with an exclusive sales and marketing right for China.
TRB's ergometers are currently ready for mass production by Pretty
Wheel Ind. Co., Ltd., a leading sports equipment manufacturer based in Taiwan.
<PAGE> 22
Prospectus Page 16
Competitive Business Conditions and Competitive Position in the Industry and
Methods of Competition
There is no direct competition for the products offered by TRB. The general
competition is the bicycle industry, which is, as aforementioned,
differentiable from the TRB product line.
Sources and Availability of Raw Materials and the Names of Principal Suppliers
TRB uses commercially available raw materials, and does not foresee any
shortage in supply. No Supplier accounts for greater than 5% of the raw
material needs of TRB.
Dependence on One or a Few Major Customers
No customer of the Company accounts for more than 5% of its business.
Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements or
Labor Contracts, Including Duration
Licenses
TRB has an exclusive license, as aforementioned, for the worldwide
distribution, manufacture, and sale of the TPS system from ABL, the patent
holder.
Other Intellectual Rights
No other patents, trademarks, licenses, franchises, concessions,
royalty agreements or labor contracts are used by the Company.
Need for Any Government Approval of Principal Products or Services
To the best of the Company's knowledge, there are no special
requirements for government approval of its principal products or services,
not generally applicable to normal business operations.
Effect of Existing or Probable Governmental Regulations on the Business
The Company is unaware of any probable regulation of its business,
other than as will apply to businesses in general.
Estimate of the Amount Spent During Each of the Last Two Fiscal Years on
Research and Development Activities, and if Applicable the Extent to Which
the Cost of Such Activities are Borne Directly by Customers
During the past two years TRB spent approximately $111,100 on R&D,
all of which will be borne by the customer as reflected in the price of the
products of TRB.
Costs and Effects of Compliance with Federal, State and Local Environmental
Laws
The Company, is not aware of any expenses directly attributable to
compliance with federal, state or local environment laws or regulations.
<PAGE> 23
Prospectus Page 17
Number of Total Employees and Number of Full Time Employee
The Company has 4 full time employees, and no part time employees.
Description of Real Estate and Operating Data
The Company currently rents approximately 500 square feet for its
staff, at 4 Becker Farm Road, in New Jersey. As well the company has 2,500
square foot R&D facility in Taiwan, with a rent of $12,864 per anum.
Management is of the opinion that its current facilities are adequate
for its immediate needs. As the Company's business increases, additional
facilities will be required, however the current facilities are expected to
suffice until after December 31, 1998.
Equipment
The fixed assets of the Company as valued for accounting purposes
have a depreciated book value of $667,365, and an non-depreciated book value
of $758,275. The assets are principally comprised of tools and dies for the
manufacture of the components for the TPS system.
Investment Policies
The Company has no investment policies with respect to investments in
real estate or interests in real estate or investments in real estate
mortgages.
Litigation
The Company is not a party to any material litigation.
Operating Subsidiaries of the Company
The subsidiary of the Company generates all revenue for the Company,
and the discussions and tables referring to operations in this prospectus
refer to the revenues generated by the subsidiary.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION,
CHANGES IN FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis relate to factors which have
affected the financial condition and results of operations of the Company for
the nine months ended March 31, 1998 and the two fiscal years ending
June 30, 1997, and 1996.
On April 18, 1997 the Company purchased 100% of all the outstanding
shares of TRB, as fully described in Material Events, below. As a result of
the aforementioned transaction, the Company gained TRB, whose activities are
fully described herein.
Discussion of Financial Information
TRB is the active operating entity, producing, marketing,
manufacturing, and supporting the products of the Company. The Company has no
active income save for the activities of TRB. Therefore, the financial
information regarding the parent company and its subsidiary are presented on
a consolidated basis. The comparative data (pro-forma) for the period ending
March 31, 1997 is sole that of the Subsidiary.
<PAGE> 24
Prospectus Page 18
TRB is a development stage company, anticipating active production
of bicycles to commence in the fourth quarter of the current fiscal year
which ends on June 30, 1998, and sales to commence in the first quarter of
the next fiscal period. International licenses for marketing TRB's products
totaling $1,125,000 have been granted to the Ivory Coast, Tanzania,
Benin/Nigeria, Vietnam and India, and payments totaling $210,000 have already
been received, as well as $10,000 for the right of first refusal to be the
licensee in Canada (the details of the license agreements, as well as the
payment and royalty arrangements are fully discussed in "Manufacturing/
Technology Licensing Agreements" at page 15 of this Prospectus). Management
felt that until bicycles were shipped to the licensees and active production
and sales commenced, the sale of licenses could not be deemed a source of
revenue, and the money collected to date is a liability of the company until
bicycles are actually shipped. (See Financial Statements, Balance Sheet,
Liabilities, and the associated footnote).
For the fiscal year ended June 30, 1997, the nine month period
ended March 31, 1998, and the 9 month period ending March 31, 1997, there
were no revenues. During the fiscal year ending on June 30,1996, revenues
were $161,354, cost of goods sold was $146,363, and gross profit was
$14,982 from the sale of 1060 bicycles at an average price of $152. These
bicycles were a limited production run sold in Korea as a test market for
the products to measure market acceptance and performance. To date, none of
the bicycles have had any major component damage or been returned to
TRB.
The overall loss during the development period to the end of
March 31, 1998 was $1,560,193, with losses during the 9 month period ending
March 31, 1998 being $329,157 as compared to $370,802 for the nine months
ending March 31, 1997. Losses for the fiscal year ended June 30, 1997
were $454,384, and a loss of $214,617 was reported for the fiscal year
ended June 30, 1996. Expenses were $329,301 for the nine month period
ending March 31, 1998 as compared to $371,302 for the same period during
the previous fiscal year, and $454,443 for the fiscal year ended June 30,
1997 as compared to $229,734 for the year ended June 30, 1996. For the
development period to March 31, 1998, expenses were $1,575,632, with
the major costs were consulting fees, R&D, and professional fees. In the
nine month period ended March 31, 1998, depreciation, show expenses, and
promotion accounted for approximately 1/3 of the expenses of the Company.
The show expenses were incurred at the Atlanta Supershow, where the TRB
product line was publicly introduced. The expenses were in line with those
for the same period during the previous fiscal year. Generally, the expenses
from the fiscal period ended June 30,1997 and the nine month period ended
March 31, 1998 remained relatively constant, with the travel expense being
the only key variance. This variance was due to travel to Taiwan and China
to set up the manufacturing facilities and terms of the manufacturing
agreements. The key variances between the development period to March 31,
1998 and the fiscal year ended June 30, 1997 were the consulting expenses,
commissions, officers salary and depreciation. These were, except for
consulting fees, indicative of the Company preparations for emerging from
the development stage in the coming fiscal year, and reflect the anticipated
future expenses that the company should approximate from year to year.
The cash and investment certificate position of the company was
$828 on March 31, 1998 as compared to $8,091 on March 31, 1997. On June 30,
1997 the cash position was ($0) as compared to $206 on June 30, 1996.
Current assets, as a whole, decreased from $20,000 on June 30, 1997 to
$17,828 on March 31, 1998.
Material Events
Acquisition of TRB
On April 18, 1997, in exchange for 9,750,000 shares in the common
stock of Company, 100% of the stock in TRB was sold by Motion Plus
International, a Delaware Corporation, its owner, to the Company.
<PAGE> 25
Prospectus Page 19
Liquidity
Management believes that the Company has the cash funds and necessary
liquidity to meet the needs of the company over the next year, assuming sales
and development efforts conform to the standards historically set (See table
on page 15 for minimum royalty payments). Primarily, as TRB is now ready to
deliver bicycles, liquidity needs will be met through the sale of bicycles
internationally. This will be done on a letter of credit basis, and through
credit arrangements with the manufacturers in China, who have given TRB a
$2,000,000 line of credit to apply against orders for bicycles. As well,
royalty payments will become due from the distributors and licensees. On
March 1, 1998 American distributors will be given all material necessary to
commence domestic sales.
However, to fully maximize the potential presented by the TPS
technology, management believes that approximately $10,000,000 will need to
be raised. The funds will be primarily used to increase the marketing effort
and for the production of marketing material, maintain domestic inventory
levels, as well as the continued development of the TPS technology. It is
felt that the money will be utilized over a three year period. In the event
only part of the funds are raised, then it will be allocated to marketing and
inventory stockpiled to meet anticipated domestic demand. The money will
likely be raised through private placements of shares. In the event the
funds are not raised, TRB will continue with its sales activities, and,
management believes, meet its liquidity demands. The funds, as noted above,
are for increased activity and sales, not for primary liquidity demands.
Current Plans
The key events that are anticipated by management to occur over the
next year are the aggressive marketing of TPS based bicycles by the licensees
and through active infomercial campaigns, as well as the aggressive sales of
licenses for territorial exclusivity in the sale of TRB products. As well,
TRB is ready to deliver its bicycles to the current licensees, and plans to
aggressively market its products through its licensees.
Accounting Policies and Procedures
The Company follows generally accepted accounting principles in
preparing its financial statements, and has audited statements produced
annually, with its quarterly statements produced by its management and
accountants.
Revenue Recognition
Revenue is recognized using the accrual method of accounting.
Statements of Cash Flows
Statements of Cash Flow are prepared quarterly, on a consolidated
basis, using generally accepted accounting principles and guidelines.
Inventory
The Company keeps minimal inventory, manufacturing goods in response
to orders.
<PAGE> 26
Prospectus Page 20
Fixed Assets
Fixed assets are valued based on their depreciated value. Depreciation
is calculated using the straight line method.
Production Inventory
Low levels are kept, and ordered as manufacturing orders are received.
Principles of Consolidation
All Financial Statements are produced on a consolidated basis, as the
subsidiary, TRB, accounts for all operating revenue of the Company.
Income/Loss Per Share
The Computation of loss per share of common stock is based on the
weighted average number of shares outstanding during the periods presented.
Statement Re Computation of Earnings Per Share
The Company has a simple capital structure as defined by APB Opinion
Number 15. Accordingly, earnings per share is calculated by dividing net
income by the weighted average shares outstanding.
Provision for Income Taxes
Provisions for income tax are computed quarterly using the guidelines
as defined in the Federal and State Statutes.
The Company's Immediate Capital Requirements
The Company requires about $10,000,000 to continue the growth and
market penetration of its TPS products and its R&D (For discussion, See
"Liquidity").
CONFLICTS OF INTEREST
Byung Yim is the sole Executive Officer and director of the Company,
and as such has a majority of the votes on all matters which the Board will
vote upon the next annual meeting of the Company's Stockholders. He, and
members of his immediate family also hold or control a majority of the
Company's outstanding common stock. Because the Company's sole officer and
director will be voting upon matters of personal interest to him (e.g.,
salaries, bonuses and other benefits), the outcome of such votes will not be
based on arm's length negotiations. While the Company's current officer
intends to exercise fairness in determining their compensation and all other
matters, there can be no assurance that the Company would not have negotiated
more favorable arrangements had persons other than its current officer been
responsible for ultimate determinations.
<PAGE> 27
Prospectus Page 21
MANAGEMENT
Directors and Executive Officers
The following sets forth the names and ages of all the Directors and
Executive Officers of the Company, positions held by such person, length of
service, when first elected or appointed and term of office.
First Elected
Name Age or Appointed/Term Position
Byung D. Yim 55 April 18, 1997 President
Biographies of Directors, Officers and Director Nominees
Byung D. Yim, Chairman/CEO
Mr. Yim's responsibilities include long term vision and international
development. He was the founder of both ProMaster Corp. and Alenax Corp.
He directly managed the development and prototype manufacturing, market
research and business planning for Transbar Power System products in the past.
Mr. Yim has experience with the U.S. import/export business, marketing and
distribution of products from the Far East. He was the exclusive Middle
Eastern distributor of perma stamp lines of Johnson Wax products. Mr. Yim's
experience in the bicycle industry is extensive, including having been the
exclusive sales and distribution agent for Upstate New York and Eastern
Pennsylvania for H.J. Sports, Inc., the exclusive agent for the third
largest bicycle manufacturer in Japan. Mr. Yim is a graduate of Han Yang
University with a B.A. in Nuclear Engineering and Electronics. For the last
five years Mr. Yim served as president of TRB Systems, Inc., and its
predecessor, Alenax Corp., devoting his full time to the bicycle industry
and developing and bringing the TPS technology to market.
Augustine Rheem, Chief Operating Officer, Bicycle Division
Mr. Rheem's duties include the overseeing of all day to day
operations, design and manufacturing projects, quality control, and overall
marketing and sales strategy and implementation of the bicycle division.
Mr. Rheem holds a graduate degree in Business Administration, and
brings to the Company a wealth of experience in the Bicycle marketing field.
He has been directly involved in the manufacture of bicycles, having owned
and operated his own bicycle assembly plant in New Jersey. Mr. Rheem was also
the exclusive sales and marketing distributor for Maruish Cycle Co., the
third largest Japanese manufacturer of bicycles. Overall Mr. Rheem has over
25 years of national and international experience in all facets of the
bicycle and sporting goods industry, including sales/marketing, general
management, and product development. For the last five years Mr. Rheem has
been with Leisure Dynamics Corp., a New Jersey company, involved in the sale
of sporting goods. He is 61 years of age.
Dr. Dennis Colacino, Chief Operating Officer, Ergometer and Exercise
Equipment Division
Dr. Colacino's duties include the day to day running of the ergometer
and exercise equipment division, with full responsibility for the performance
of this division, including overall sales and marketing strategies and
implementation.
<PAGE> 28
Prospectus Page 22
Dr. Colacino has over 25 years working in the preventive medicine,
rehabilitation, and fitness field. His earlier work focused on cardiac
rehabilitation, as Executive Director of Life Clinic (Brandon, FL) and
designer and Executive Director of HEART, a cardiac rehabilitation and
physical therapy facility of New York Medical. He remains a professor of
Preventive Medicine at New York Medical.
For 12 years, Dr. Colacino designed and managed the Cardiovascular
Programs at Texaco and PepsiCo., overseeing the health and fitness for
150,000 employees at PepsiCo. From 1986 to the present, he has been
President of the Colacino Group which helps companies with start-ups,
marketing and sales. During this time, he has developed proformas and
strategic planning, negotiated contracts, and developed products and
equipment with the major companies in the sports and fitness industry.
As a founder and member of the Board of Trustees of the Association
of Fitness in Business, Dr. Colacino remains active in the health care field.
Presently, he serves on many boards.
Dr. Colacino is a graduate of Western Washington State College.
He has a Masters degree from the University of Mexico in Physical Education,
and a Ph.D. from the University of Wisconsin in Physiology. He is 53 years
old, and for the last five years has acted as an independent consultant in
the fitness and health field.
Amelia B. Eclavia, Chief Financial Officer
Ms. Eclavia's responsibility is to oversee the financial health ofTRB.
Ms. Eclavia is a CPA, holding a Bachelor of Science Degree in
Business Administration. She was Senior Accountant at Thompson Professional
Publishing and Information Technology from 1973 to 1996. In late 1966 she
formed her own consulting company and joined TRB in May of 1997. This company
is the operating unit in the United States of Thompson Corporation, a
multi-billion dollar, multi-national corporation. Her duties involved the
preparation of financial statements for the company president, management of
the royalty system, accounting for short term investments, supervision of
Accounts Payable, and the analysis and control of Accounts Receivable. Prior
to this position, from 1971 to 1973 Ms. Eclavia was Assistant Controller of
Genesee Management Corporation, managers, owners, and developers of
multi-million dollar real estate projects. Her tasks included the preparation
of financial statements, budgets, cash flow analyses, and the supervision of
the staff accounting clerks.
Ms. Eclavia has a wealth of experience in managing the finances of
major corporations, as well as in leveraged buy-outs, acquisitions, and
divestitures, and will bring a useful insight to TRB. She is 57 years old.
Marn T. Seol, Vice-president, R&D
Mr. Seol is 59 years old and is the inventor of both "propulsion
mechanisms for lever propelled bicycles", and "multi purpose transmission
mechanisms for bicycles". Mr. Seol began pursuing his interest in designing
bicycles in 1976 by opening Dong Yang Industrial Co., Ltd. in Korea. In 1983
he joined forces with Mr. Yim, and since that time has worked for Mr. Yim in
developing the research and development division of his companies, and has
worked for TRB since its inception.
Mr. Seol will be responsible for overseeing the design and
technological advancements in all TRB product lines, as well as directly
involved in developing new products and product lines.
Family Relationships
Augustine Rheem and Byung Yim are brothers.
<PAGE> 29
Prospectus Page 23
Involvement in Certain Legal Proceedings
During the past five years no current director, person nominated to
become a director, executive officer, promoter or control person of the
Company has been a party to or the subject of:
(1) Any bankruptcy petition filed by or against any business of which
such person was a general partner or executive officer either at the time of
the bankruptcy or within two years prior to that time;
(2) Any conviction in a criminal proceeding or has been subject to a
pending criminal proceeding (excluding traffic violations and other minor
offenses);
(3) Any order, judgment, or decree, not subsequently reversed, suspended
or vacated, of any court of competent jurisdiction, permanently or
temporarily enjoying, barring suspending or otherwise limiting his
involvement in any type of business, securities or banking activities; and
(4) Been found by a court of competent jurisdiction (in a civil action),
the Commission or the Commodity Futures Trading Commission to have violated a
federal or state securities or commodities law, and the judgement has not
been reversed, suspended, or vacated.
Compensation
Compensation of Directors
Standard Arrangements
All members of the Company's board of directors are paid a per diem
fee of for attendance at meetings of the board of directors and committees
thereof. In addition, if required, they are reimbursed for travel expenses
and lodging is arranged for them, at the Company's expense. At such time as
adequate funds are available, all director (and officers) of the Company will
be covered by liability insurance. Directors are reimbursed for all out of
pocket expenses incurred in the performance of their roles, subject to
provision of receipts in form and substance adequate to satisfy Internal
Revenue Service audit requirements (e.g., long distance telephone, postage,
etc.).
Other Arrangements
Neither the Company nor any of its subsidiaries have any other
arrangements to compensate its directors.
Employment contracts, termination of employment & change-in-control
arrangements
The Company does not have any compensatory plan or arrangement,
including payments to be received from the Company, with respect to a named
executive officer that results or will result from the resignation,
retirement or any other termination of such executive officer's employment
with the Company and its subsidiaries or from a change-in-control of the
Company or a change in the name executive officer's responsibilities
following a chance-in-control, which, including all periodic payments or
installments, exceeds $100,000.
Mr. Yim was entitled to a salary of $50,000 during the fiscal year
ending June 30, 1997. As well, he was provided with an automobile and
operating expenses for the said automobile were paid on his behalf. The
value of this was $4,370.
<PAGE> 30
Prospectus Page 24
It is anticipated that Mr. Yim will draw a salary of $50,000
during the fiscal year ending June 30, 1998, although no salary was drawn
in the first three quarters of the fiscal year. Automobile expenses for
the car provided to Mr. Yim by the Company were $3,482.
Prior to the 1996 fiscal year, Mr. Yim took no salaries, and infused
$163,126 into the TRB. In lieu of the repayment of the loan, and charging
the company for salaries not claimed in previous years, Mr. Yim was issued
500,000 shares in the capital stock of the Company.
SUMMARY, COMPENSATION TABLE
Annual Compensation Awards Payouts
Other Rest-
Annual ricted
Compen Stock Aw- SU SA
Name and sation ards OP RS LTIP Other
Position Year* Salary ($) Bonus ($) (#) ($) __ ($) __($)
Byung YIM** 1998+ 0++ 0 3,482*** **** 0 0 0 0 0
Byung YIM** 1997 50,000 0 4,370*** **** 0 0 0 0 0
Byung YIM** 1996 0 0 11,302*** 0 0 0 0 0 0
+ Three Quarters ended March 31, 1998
++ It is anticipated that $50,000 will be drawn by the end of the fiscal
year, dependent upon the cash position of the company.
* Fiscal Year Ending
** President, CEO, and Sole Director
*** Automobile Expenses
**** Received 500,000 shares of common stock in the Company in lieu of
$163,126 loaned to the Company as Operating Expenses in 1994-1996, and
in lieu of Executive Compensation for the same years, during which he
did not draw a salary.
Resignations of Officers and Directors
In conjunction with the acquisition of TRB, the Company's then
serving officers and directors agreed to resign in favor of persons
designated by Mr. Byung Yim. In conjunction therewith, all of the Company's
officers and directors resigned during April, 1997.
CERTAIN TRANSACTIONS
The following information pertains to all transaction during the
last two year, or proposed transactions, to which the Company was or is to be
a party, in which any of the following persons had or is to have a direct or
indirect material interest: any director or executive officer of the
Company: any nominee for election as a director; any principal security
holder listed below; and, any member of the immediate family (including
spouse, parents, children, siblings, and in-laws) of any of the foregoing
persons.
Relationship Nature of Interest Amount of Fiscal
Name to Company in the Transaction Interest Year Ending
Byung Yim* President and Conversion of 500,000 1997
Sole Director loan to equity * Shares
Byung Yim* President and Salary and funds $55,000** 1997
Sole Director advanced to TRB
<PAGE> 31
Prospectus Page 25
* Mr. Yim was owed $163,126 for monies advanced to TRB, and drew no salary
during the development period. The 500,000 shares represent the retirement of
the liability and recognition of salary for the years 1994-1997.
** Mr. Yim did not draw his salary during the fiscal period ended June 30,
1997 or the quarter ended September 30, 1997, and the director's loan (See
"Financial Statements") reflects the company's indebtedness to Mr. Yim for
$13,128 advanced to TRB and for his salary.
Parents of the Company
The following table discloses all persons who are parent of the
Company (as such term is defined in Securities and Exchange Commission
Regulation C), showing the basis of control and as to each parent, the
percentage of voting securities owned or other basis of control by its
immediate parent if any.
Percentage Other
of Voting Basis
Basis for Securities For
Name Control Owned Control
Motion Plus Int'l.
Corporation(MPI) Share Ownership 86% None
NOTE: Motion Plus International Corporation is controlled by Byung Yim, the
president of the Company, and his children. Mr. Yim's children, Alexander B.
Yim (age-21)and Lena B. Yim (age-19), hold 39% interest in MPI each. Mr. Yim
has a 20% interest in the Corporation, and the remaining 2% is held by Hee J.
Yim. Alexander and Lena Yim reside at 595 Windflower Court, Morganville, NJ
07751.
Transaction with Promoters, if Organized Within the Past Five Years
There have been no transactions with Promoters over the past five
years.
PRINCIPAL STOCKHOLDERS
The following sets forth the security ownership of Management of the
Company and any holders of the Company's common stock known to own 5% or more
of the Company's issued and outstanding common stock, as of September 30,
1997.
PRINCIPAL STOCKHOLDERS
As of the date of this Prospectus, the following persons (including
any "group" are, based on information available to the Company, beneficial
owners of more than five percent of the Company's common stock (its only
class of voting securities):
Name and Amount and
Title Address of Nature of Percent
of Beneficial Beneficial of
Class Owner Owner Class
Common Byung Yim 2,450,000 Shares* 20.9
Stock 21 Hutton Ave., Apt. 3
West Orange, NJ 07025
Common Alexander B. Yim 3,802,500 Shares* 33.5
Stock 595 Windflower Court
Morganville, NJ 07751
Common Lena B. Yim 3,802,500 Shares* 33.5
Stock Address as for A.B. Yim
* Motion Plus International Corporation (MPI), 4 Becker Farm Road, Roseland,
NJ 07068 owns 9,750,000 shares of the company. Byung Yim, the
President of the company, owns 20% in MPI. Mr. Yim's children,
Alexander B. Yim (age-21) and Lena B. Yim (age-19), each hold 39%
interest in MPI. Mr. Yim recieved a further 500,000 shares from the Company
(SEE,"Security Ownership of Managment", at page 26).
<PAGE> 32
Prospectus Page 26
SECURITY OWNERSHIP OF MANAGEMENT
As of the date of this Prospectus, the following table discloses, as
to each class of equity securities of the registrant or any of its parents
or subsidiaries other than directors' qualifying shares, beneficially owned
by all directors and nominees, the names of each executive officer (as
defined in Item 402[a][2] of Securities and Exchange Commission regulation
S-B), and directors and executive officers of the registrant as a group, the
total number of shares beneficially owned and the percent of class so owned.
Of the number of shares shown, the associated footnotes indicate the amount
of shares with respect to which such persons have the right to acquire
beneficial ownership as specified in Securities and Exchange Commission Rule
13(d)(1).
Name and Amount and
Title Address of Nature of Percent
of Beneficial Beneficial of
Class Owner Owner Class
Common
Stock Byung Yim 9,750,000* 86%*
Common
Stock Byung Yim 500,000** 4.3
* Motion Plus International Corporation, 4 Becker Farm Road, Roseland, NJ,
07068 owns 86% of the stock on the Company and Byung Yim, the president and
sole director of the Company who resides at 21 Hutton Ave., Apt. 3, West
Orange, NJ 07025, has a 20% interest in MPI.
** Mr. Yim Received the shares as compensation for funds loaned to the
Company between 1994-1996 and in lieu of salary which he did not draw during
those years ( See "CERTAIN TRANSACTIONS", at Prospectus page 24.)
COMMON STOCK
The Company is authorized to issue 30,000,000 shares of Common Stock,
with a par value of $.001. Immediately prior to this offering 11,925,626
shares of Common Stock were outstanding and held of record by more than 274
persons as of March 31, 1998. The holders of Common Stock have one vote
per share on all matters (including election of directors) without provision
for cumulative voting. Thus, holders of more than fifty percent (50%) of the
shares voting for the election of directors can elect all of the directors,
if they choose to do so. The Common Stock currently is not redeemable and
has no conversion or pre-emptive rights. The Common Stock currently
outstanding is (and the Shares being issued pursuant to this prospectus will
be) validly issued, fully paid and non-assessable.
In the event of liquidation of the Company's assets available for
Common Stock will share equally in any balance of the Company's assets
available for distribution to them after satisfaction of creditors and the
holders of the Company's senior securities. The Company may pay dividends,
in cash or in securities or other property when and as declared by the board
of directors from funds legally available therefor, but has paid no cash
dividends on its Common Stock.
TRANSFER AGENT
The transfer agent for the Company's Capital Stock is Continental
Stock Transfer Company of New York.
<PAGE> 33
Prospectus Page 27
SHARES ELIGIBLE FOR FUTURE SALE
Generally, under Rule 144, a person (or persons whose shares are
aggregated) who has satisfied a one year holding period may, under certain
circumstances, sell within any three month period a number of shares which
does not exceed the greater of one percent (1%) of the then outstanding
Common Stock or the average weekly trading volume during the four calendar
weeks prior to such sale. Rule 144 also permits, under certain circumstances,
the sale of shares without any quantity limitation by a person who has not
been an affiliate of the Company for at least 90 days and who has satisfied a
one year holding period.
There are 44 shareholders holding 11,081,628 shares which will be
eligible for sale in October of 1998, pursuant to fulfilling the terms as set
down in Rule 144.
ADDITIONAL INFORMATION
The foregoing statement is a summary of the rights and privileges of
the holders of the Company's Stock. It does not purport to be complete and
is subject to the provisions of the Delaware General Corporation Act, the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, and, the rules, regulations and bylaws of the National Association
of Securities Dealers, Inc.. The foregoing statements are qualified in
their entirely by such references.
PLAN OF DISTRIBUTION
GENERAL
The Shares registered by the Registration Statement of which this
Prospectus is a part are being registered as a result of demand registration
rights granted by the Company to the Selling Stockholders. at the time that
Selling Stockholders subscribed for the subject securities. (For a complete
discussion of the Selling Shareholders, SEE: "SELLING SHAREHOLDERS" at
page 28).
The Selling Shareholders will sell their stock from time to time in
the public forum, at the prices then prevailing. The Shares will be sold
through broker/dealers, at market prices with customary commissions being
charged. It is anticipated that the broker/dealers will sell the shares
based on a "bid" price for the said shares in the public forum, and the
broker/dealers will not act in an active manner soliciting parties to
purchase the shares, either in the public forum or privately. It is
anticipated that this will be the sole manner in which the shares will be
sold.
The Company undertakes to file a post effective amendment to the Registration
Statement identifying any underwriter who may agree to sell any shares of
any Selling Stockholder, and to set forth the terms of any underwriting
agreement or arrangement. The said underwriter shall also deliver a market
making prospectus. As far as the Company is aware, there exists no past,
present, or future plans, proposals, or undertakings with respect to any
underwriter and any selling stockholder.
Although there is no current market for the shares, and they are
not currently traded in the public market, it is anticipated that the
shares will be registered and sold on the NASDAQ Bulletin Board System
within 1 month of the effective date of the Registration Statement of
which this Prospectus forms a part.
It is also anticipated that the shares may be sold on a trading
forum for the shares of small emerging companies owned and operated by
NIPHIX INVESTMENTS INC., within 30 days of the effective date of the
Registration Statement of which this Prospectus forms a part.
<PAGE> 34
Prospectus Page 28
SELLING STOCKHOLDERS
Alpha Bytes, Inc. 7050 Woodbine Ave., Suite 205 Markham, Ont., Canada L3R
4G8, a Colorado public corporation presently traded on the NASDAQ Bulletin
Board market, provided consulting services to the Company regarding software
development for the inventory control and Management Information Systems
to be used by the Company for consideration in the sum of $25,000. It was
agreed that Alpha Bytes, Inc. would recieve 250,000 shares for its services,
which were acquired April 18, 1997. The $25,000 was an investment in TRB,
and the shares issued were exempt from registration pursuant to Rule 504
of Regulation D of the SEC, in the total investment in TRB for the year
was less than the maximum allowed by the rule. The holdings accounted
for less than 0.5% of the outstanding shares of the Company ( See table
and footnotes on page 48, et seq.)
Alpha Bytes subsequently issued the shares as a dividend to its shareholders
on October 2, 1997. As the shares are free trading and fully paid for, and the
distribution was to its own shareholders for no consideration, Alpha Bytes
felt that the shares were exempt from registration as free trading shares.
However, the Company feels that there was a potential violation of Section 5
of the Securities Act of 1933 as well as the various State rules for the sale
of shares, and it was decided that Alpha Bytes would treat the transaction as
if the violations had occurred. For this reason, Alpha Bytes will offer
its Shareholders a 30 day right of rescission (the maximum period required
by any of the states in which shareholders of Alpha Bytes reside (see table
on page 48 for States)), commencing on the date of the filing of the
Registration Statement of which this prospectus forms a part. Alpha Bytes
has informed the Company that it will retain any shares that are returned.
Both Alpha Bytes and the Company feel that as there was no consideration
for the said shares, none of the shares will be returned, and the right of
rescission is more one of strict compliance and form, rather than a right
which will be relied on by any shareholder of Alpha Bytes. In the event no
shares are returned, the returned, the Selling Shareholders are those
parties listed in the Table on page 48. In the event any shares are returned,
Alpha Bytes has indicated that it will be the Selling Shareholder for the
said shares, and the Company will file any documents necessary to give
effect to the registration of the said shares.
Alpha Bytes, Inc., its subsidiaries, and shareholders had no
interest in the Company, its subsidiary, or any business or personal
relationship with any shareholder of the Company or its subsidiary or
affiliates, prior to the above described transaction. The shares given
to Alpha Bytes represented 2.5% of the Company's outstanding shares,
and if sold, will leave Alpha Bytes, Inc. with no interest in the Company.
Alpha Bytes, Inc.'s principals are Anton Stephens and his spouse Christine
Stephens, who together control 75.5% of Alpha Bytes, Inc. voting shares.
Mr. Stephens is the president of Alpha Bytes, Inc.
The Company is registering the 594,009 shares held by 54 shareholders who
invested funds in TRB. The average price per share was $0.514 with a total
investment equaling $305,816. These shares were exempt from registration
in reliance of Rule 504 of Regulation D of the Commision, in that the
total investment (including the investment made by Alpha Bytes, described
in the preceeding paragraphs and in the Financial Statements) total less than
the maximum permissible amount, none of the shares issued were to any related
party, and the sum of the shares issued is less than 1% of the outstanding
shares of the Company, and were less than one per cent on the date of issue
(October 2, 1997). For full disclosure pursuant to Item 507 of Regulation SB,
see table and footnotes on page 48, "TABLE OF SELLING STOCKHOLDERS".
INDEMNIFICATION ARRANGEMENTS
The Company's articles of incorporation and bylaws provide for
indemnification of the Company's officers, directors and agents to the fullest
extent permitted by law. The Company's articles of incorporation also
limit the right of stockholders to sue Company officers, directors and agents.
<PAGE> 35
Prospectus Page 29
In addition, the Company's employment agreements with its officers
all require the Company to defend the contracting parties against all
liabilities resulting from their association with the Company, to the
greatest extent legally permitted.
Insofar as indemnification for liabilities arising under the
Securities Act Of 1933, as amended, may be permitted to directors, officers
or persons controlling the Company pursuant to the foregoing provisions, the
Company has been informed that in the opinion of the United States Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is therefore unenforceable.
LITIGATION
The Company is not a party to any material pending legal proceedings.
LEGAL OPINIONS
Charles C. Khym, Esquire, attorney at law, has rendered his opinion
that the shares of Common Stock reserved as described herein when issued
will be validly issued, fully paid and non-assessable, and that future
purchasers thereof will not be subject to personal liability as a result of
their ownership thereof.
EXPERTS
The audited financial statements of the Company appearing in this
Prospectus and in the Registration Statement have been examined by independent
public accountants, as set forth in their report appearing elsewhere herein,
and are included in reliance upon such report the authority of such firm as
expert in auditing and accounting.
FINANCIAL STATEMENTS
(See following pages)
<PAGE> 36
Prospectus Page 30
TRB SYSTEMS INTERNATIONAL INC.
Consolidated Financial Statements and
Accountant's Audit Report
For the Fiscal Years Ended June 30, 1997, June 30, 1996,
and for the Fiscal Quarters ended March 31, 1997, and March 31, 1998
<PAGE> 37
Prospectus Page 31
TRB SYSTEMS INTERNATIONAL INC.
CONSOLIDATED FINANCIAL STATEMENTS
TABLE OF CONTENTS
______________________________________________________________________
Prospectus
Page
Accountant's Audit Report 32
Financial Statements:
Balance Sheet 33
Statements of Operations and Retained Earning 34
Statement of Stockholder's Equity 36
Statements of Cash Flows 39
Notes to Financial Statements 41
______________________________________________________________________
<PAGE> 38
Prospectus Page 32
Stan J.H. Lee & Co. , CPA, CMA Tel) 201-944-7246
440 West St. 3rd Fl. Fax) 201-944-7759
Fort Lee, N.J. 07024-5058 E-Mail) [email protected]
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and
Shareholders of
TRB Systems International Inc.
Roseland, New Jersey
We have audited the accompanying consolidated balance sheet of TRB Systems
International Inc. as of March 31, 1998, March 31, 1997, June 30, l997, and
June 30, 1996, and the related consolidated and pro-forma statement of
operations and retained earnings, statement of stockholders'
equity and statement of cash flows for the periods then ended,as well as the
cumulative totals from inception to March 31, 1998 Statement of Operations
retained earnings, stockholders equity, and statements of cash flows. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with United States generally accepted
auditing standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the consolidated financial statements referred
to above present fairly, in all material respects, the financial position
of TRB International Inc. as at March 31, 1998, June 30, 1997, June 30, 1996,
the pro-forma position as at March 31, 1997, and the cumulative totals
from the inception of the company to March 31, 1998, and the results of its
operations and its cash flow for the periods then ended in conformity
with United States generally accepted accounting principles.
/s/Stan J.H. Lee/s/
_______________________
Stan J.H. Lee, CPA
June 1, 1998
Fort Lee, N.J.
<PAGE> 39
Prospectus Page 33
TRB SYSTEMS INTERNATIONAL INC.
CONSOLIDATED BALANCE SHEET
NINE MONTH PERIOD ENDING MARCH 31, 1998, MARCH 31, 1997
AND FISCAL YEARS ENDING JUNE 30, 1997, JUNE 30, 1996
(Notes 1,2,3,4)
PRO-
FORMA
3/31/98 3/31/97 6/30/97 6/30/96
ASSETS
CURRENT ASSETS:
Cash $828 $8,091 ($0) $206
Accounts recievable- other 9,500 12,500 12,500 0
Inventory 7,500 6,994 7,500 6,994
17,828 27,585 20,000 7,200
OTHER ASSETS:
Prepaid expenses (Note 5) 27,267 14,547 24,407 14,547
Property & equipment- (Note 6) 667,365 0 539,561 0
Organization costs, net of
accumulated amortization-
(Note 7) 44,147 63,027 63,027 75,182
Security deposits 1,043 1,043 1,043 0
739,822 78,617 628,038 89,729
TOTAL ASSETS $757,650 $106,202 $648,038 $96,929
LIABILITIES:
CURRENT LIABILITIES:
Accounts payable and accrued
expenses (Note 8) 222,441 179,000 195,192 455,215
Bank Overdraft 0 0 18,106 0
Accrued corporation income
tax payable 0 0 249 0
Obligation Payable to
distributors 220,000 220,000 160,000 190,000
Loans from individuals (Note 9) 190,530 259,000 259,000 0
Director's loan (Note 9) 104,128 55,000 55,000 218,126
TOTAL LIABILITIES 737,099 713,000 687,547 863,341
SHAREHOLDER'S EQUITY:
Common stock, $.001 par
value (Note 10) $11,926 $11,841 $11,863 $9,750
Additional paid-in-capital 1,568,818 528,815 1,179,664 490
Retained earnings (Deficit) (1,560,193) (1,147,454)(1,231,036) (776,652)
Total shareholders equity
(Deficit) $20,551 ($606,798) ($39,509) ($766,412)
TOTAL LIABILITIES AND
SHAREHOLDERS EQUITY $757,650 $106,202 $648,038 $96,929
See accompanying notes which are an integral part of the Financial Statements.
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TRB SYSTEMS INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
NINE MONTH PERIOD ENDING MARCH 31, 1998, MARCH 31, 1997
AND FISCAL YEARS ENDING JUNE 30, 1997 AND JUNE 30, 1996
CUMULATIVE PRO-
INCEPTION- FORMA
TO 3/31/98 3/31/98 3/31/97 6/30/97 6/30/96
SALES $161,354 $0 $0 $0 $161,354
COST OF SALES 146,363 0 0 0 146,363
GROSS PROFIT 14,982 0 0 0 14,982
OPERATING EXPENSES:
Promotion expense 29,275 25,000 0 0 1,484
Consulting 236,633 4,163 76,600 97,000 38,000
Commission 56,780 12,198 36,782 29,582 15,000
Research & Development (Note 11) 355,338 0 29,600 29,600 81,494
Professional fees
Stock issuance and transfer 114,227 18,063 27,164 46,164 0
service 6,285 6,285 0 0 0
Show and Exhibition 55,375 55,375 0 0 0
Travel 45,135 19,643 1,790 13,979 4,511
Business gifts 2,329 0 0 0 1,791
Meals & entertainment 53,948 10,764 0 6,918 6,086
Auto expense (Note 12) 52,681 3,482 3,840 4,370 11,302
Corporation taxes 366 0 0 0 366
Officer's salaries 50,000 0 50,000 50,000 0
Payroll taxes 5,857 0 5,857 5,857 0
Leasing expense 24,155 7,330 16,825 16,825 0
Rent (Note 13) 20,898 4,837 4,810 5,395 5,249
Telephone 35,183 7,643 5,304 7,298 6,062
Office 81,393 7,721 16,282 17,795 14,270
Supplies 3,345 3,345 0 0 0
Insurance expense 8,364 2,638 2,925 2,925 1,289
Bank charges 9,675 2,917 2,041 2,611 1,827
Postage 5,766 1,934 1,350 1,798 580
Miscellaneous 6,697 0 0 2,762 5,504
Sample charges 2,866 0 0 0 0
Interest expense 19,468 0 0 0 12,672
Shipping & Delivery 460 0 0 0 460
Dues & Fees 1,896 0 0 0 1,896
Contributions 100 0 0 0 100
Advertising 66,136 2,657 63,000 63,479 0
Sponsorship 24,500 24,500 0 0 0
Depreciation 90,910 70,926 0 19,984 0
Amortization 81,718 18,880 23,990 23,990 19,791
Oversea operating expense 17,400 12,400 0 5,000 0
Other operating expense 10,473 6,600 3,142 3,873 0
Total operating expenses $1,575,632 $329,301 $371,302 $454,443 $229,734
See accompanying notes which are an integral part of the Financial Statements.
<PAGE> 41
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TRB SYSTEMS INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(CONTINUED)
CUMULATIVE
FROM PRO-
INCEPTION- FORMA
TO 3/31/98 3/31/98 3/31/97 6/30/97 6/30/96
INCOME (LOSS) FROM
OPERATIONS BEFORE
OTHER INCOME AND INCOME
TAX EXPENSE (1,560,650) (329,301) (371,302) (454,443)(214,752)
Dividend income 457 144 5 59 135
INCOME (LOSS) BEFORE
TAX EXPENSE (1,560,193) (329,157) (370,802) (454,384)(214,617)
Net Income (Loss) (1,560,193) (329,157) (370,802) (454,384)(214,617)
RETAINED EARNINGS or
DEFICIT at beginning 0 (1,231,036) (776,652) (776,652)(562,035)
RETAINED EARNINGS or
DEFICIT at end (1,560,193)(1,560,193)(1,147,454)(1,231,036)(776,652)
Earnings (Loss) per share
(Note 14) (0.1308) (0.0276) (0.0311) (0.0381) (0.0180)
See accompanying notes which are an integral part of the Financial Statements.
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TRB SYSTEMS INTERNATIONAL INC.
CONSOLIDATED STATEMENT OF
STOCKHOLDERS' EQUITY
NINE MONTH PERIOD ENDED-MARCH 31, 1998 AND MARCH 31, 1997
CAPITAL STOCKS RETAINED
NUMBER OF SHARES AMOUNT EARNINGS TOTAL
BEGINNING BALANCE
AS OF 7/01/96 ($776,652)($776,652)
Net earnings for
the nine-month
period ended
3/31/97 (370,802) (370,802)
Restated value of authorized
capital of TRB Systems
Inc. (Note 10) 9,750,000 9,750 0 540,656
Additional Paid in Capital 530,906
Balance as of
3/31/97 9,750,000 540,656 (1,147,454) (606,798)
Beginning Balance
as of 7/01/97 11,863,363 1,191,527) (1,231,036) (39,509)
NET LOSS FOR THE
PERIOD (329,157) (329,157)
Additional Paid in Capital
SHARES ISSUED
TO VARIOUS
INDIVIDUALS 62,263 389,217 389,217
Balance as of
3/31/98 11,925,626 $1,580,744 (1,560,193) $20,551
See accompanying notes which are an integral part of the Financial Statements.
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TRB SYSTEMS INTERNATIONAL INC.
CONSOLIDATED STATEMENT OF
STOCKHOLDERS' EQUITY
FOR THE FISCAL YEAR ENDED JUNE 30, 1997
CAPITAL STOCKS RETAINED
NUMBER OF SHARES AMOUNT EARNINGS TOTAL
Retained earnings
as of 6/30/97 (1,231,036)(1,231,036)
Shares issued as
compensation for
consulting services
(Note 15) 250,000 $25,000 25,000
Shares issued as
repayment of
director's Loans 500,000 163,126 163,126
Shares issued for
purchase of
property and
equipment 500,000 559,545 559,545
Shares issued in
exchange for 100%
of TRB Systems
Inc's voting shares 9,750,000 9,750 9,750
Shares issued to
various individuals 863,363 434,106 434,106
(Note 16)
11,863,363 1,191,527 (1,231,036) (39,509)
See accompanying notes which are an integral part of the Financial Statements.
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TRB SYSTEMS INTERNATIONAL INC.
CONSOLIDATED STATEMENT OF
STOCKHOLDERS' EQUITY
FOR THE FISCAL YEAR ENDED JUNE 30, 1996
CAPITAL STOCKS RETAINED
NUMBER OF SHARES AMOUNT EARNINGS TOTAL
Common stocks
and paid-in-capital
as of 7/1/95 (Note 10) 9,750,000 10,240 10,240
Deficit as of 7/1/95 (562,035) (562,035)
Net loss for the
fiscal year ended
6/30/96 (214,617) (214,617)
No shares are
issued during the
period 9,750,000 10,240 (776,652) (766,412)
See accompanying notes which are an integral part of the Financial Statements.
<PAGE> 45
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CUMULATIVE STATEMENTS OF CASH FLOW
FOR NINE MONTH PERIOD ENDING MARCH 31, 1998, MARCH 31, 1997 AND
FISCAL YEARS ENDING JUNE 30, 1997, JUNE 30, 1996
CUMULATIVE
FROM PRO-
INCEPTION- FORMA
TO3/31/98 3/31/98 3/31/97 6/30/97 6/30/96
CASH FLOWS FROM
OPERATING ACTIVITIES:
(Net Loss) Earnings ($998,158) ($329,157)(370,802)($454,384)($214,617)
Noncash item includ. in (Net
Loss) Earnings 153,571 89,806 23,990 43,974 19,791
Increase (Decrease) in acct's
recievable- other (9,500) 3,000 (12,500) (12,500) 0
Increase in inventory (506) 0 0 (506) 0
Increase in prepaid expense (10,214) (2,860) 0 (9,860) 2,506
Increase in obligation payable
to distributors 95,000 60,000 30,000 (30,000) 65,000
(Decrease) Increase in acct's
payable and accrued expense 130,699 27,249 (276,215) (260,023) 102,075
Increase in accrued corporate
income taxes 0 (249) 0 249 0
(900,506) (152,211)(605,527) (723,050) (25,245)
CASH FLOWS FROM
INVESTING ACTIVITIES:
Purchase of property and
equipment ($758,275) ($198,730) $0 ($559,545) $0
Increase in security deposits (1,043) 0 (1,043) (1,043) 0
Expenditure for organization
cost (41,424) 0 (11,831) (11,835) (29,589)
(800,742) (198,730) (12,878) (572,423) (29,589)
CASH FLOW FROM
FINANCING ACTIVITIES:
Bank Overdraft $0 ($18,106) $0 $18,106 $0
Loans from Director (59,446) 49,128 (163,126) (163,126) 54,552
Loans from individuals 190,530 (68,470) 259,000 259,000 0
Issuance of Common Stock 1,570,504 389,217 530,416 1,181,287 0
1,701,588 351,769 626,290 1,295,267 54,552
Net increase in balance of cash 828 828 7,885 0 0
Net decrease in balance of cash (488) 0 206 206 (282)
Cash at beginning of period 488 0 206 206 488
Cash at end of period $828 $828 $8,091 $0 $206
See accompanying notes which are an integral part of the Financial Statements.
<PAGE> 46
Prospectus Page 40
CUMULATIVE STATEMENTS OF CASH FLOW
FOR NINE MONTH PERIOD ENDING MARCH 31, 1998, MARCH 31, 1997 AND
FISCAL YEARS ENDING JUNE 30, 1997, JUNE 30, 1996
(CONTINUED)
CUMULATIVE
FROM PRO-
INCEPTION- FORMA
TO3/31/98 3/31/98 3/31/97 6/30/97 6/30/96
CASH FLOWS FROM FINAN-
CING ACTIVITIES:
Proceeds from Loans 7,658 7,658 0 0 0
Cash as of July 1,1997 & 1996 (18,106) (18,106) 206 0 0
Cash as of March 31, 1998
& 1997 $828 $828 $8,091 0 0
SUPPLEMENTAL DISCLOSURES:
Conversion of director's
loans to equity shares (163,126) 0 0 (163,126) 0
Acquisition of property and
equipment in exchange for
equity shares (559,545) 0 0 (559,545) 0
Issuance of common stocks 722,671 0 0 722,671 0
NET 0 0 0 0 0
See accompanying notes which are an integral part of the Financial Statements.
<PAGE> 47
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TRB SYSTEMS INTERNATIONAL INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
1. Incorporation and Business Activity
TRB Systems International Inc. (the "Company"), a Delaware Corporation
incorporated on April 9, 1997, is a holding company whose only asset is
100 % of voting common stocks in TRB Systems Inc. TRB Systems Inc. was
incorporated under the laws of Delaware on April 7, 1994, on which day
it merged with TRB Systems Inc., a Corporation incorporated under the
laws of New York on July 12, 1993, to form TRB Systems Inc., a Delaware
Corporation.
TRB Systems Inc. is in the business of manufacturing, distributing, and
selling bicycle, fitness, and motorized two wheel transportation products.
Currently all operations are run from the head office facilities in
Roseland, New Jersey.
2. Summary of Significant Accounting Policies
a) Principles of Consolidation
TRB Systems Inc., the only subsidiary of TRB Systems International Inc.
has been included in the consolidated financial statements, as it is the
operating entity, with TRB Systems International Inc., a non-operating
holding company.
In accordance with the reverse takeover method of accounting, as referred
to in Note 3 these consolidated financial statements of the Company include
the accounts of TRB Systems International Inc. together with the results of
TRB Systems Inc. for the nine-month period ended March 30, 1998.
b) Revenue and Expense Recognition
The Company prepares its financial statements on the accrual accounting
basis. Consequently, certain revenue and related assets are recognized when
earned rather than when received, and certain expenses are recognized when
the obligation is incurred or the asset consumed, rather than when paid.
c) Accounting Method
The Company recognizes income and expenses on accrual basis.
d) Depreciation
Depreciation is computed by using the straight-line method for financial
reporting purposes and the modified accelerated cost recovery method for
federal income tax purposes.
<PAGE> 48
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TRB SYSTEMS INTERNATIONAL INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
e) Income Taxes
Income taxes are provided for the tax effects of transactions reported in
the financial statements and consist of taxes currently due plus deferred
taxes related primarily to differences between the bases of certain assets
and liabilities for financial and tax reporting. The deferred taxes
represent the future tax return consequences of those differences, which
will either be taxable when the assets and liabilities are recovered or
settled.
f) Net Operating Loss Carryforward
Income taxes are provided for the tax effects of transactions reported in
the financial statements and consist of taxes currently due plus deferred
taxes for operating losses that are available to offset future taxable
income.
g) Intangible Assets
Intangible assets subject to amortization include organization costs, loan
closing costs, and in-force leasehold costs. Organization costs and
in-force leasehold costs are being amortized using the interest method
over the life of the related loan.
h) Reclassifications
Certain accounts in the prior-year financial statements have been
reclassified for comparative purposes to conform with the presentation in
the current-year financial statements.
i) Property and Equipment
Property and equipment are carried at cost. Depreciation of property and
equipment is provided using the straight-line method for financial reporting
purposes at rates based on the following estimated useful lives:
Machinery and equipment 3-10
Furniture and fixtures 3-10
Engineering equipment 3-10
For federal income tax purposes, depreciation is computed using the
modified accelerated cost recovery system. Expenditures for major renewals
and betterments that extend the useful lives of property and equipment are
capitalized. Expenditures for maintenance and repairs are charged to expense
as incurred.
<PAGE> 49
Prospectus Page 43
TRB SYSTEMS INTERNATIONAL INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
j) Inventories
Inventories are stated at the lower of cost (determined on the first-in,
first-out basis) or market.
3. Business Combination
Pursuant to an Agreement dated April 18, 1997, and effective on that date,
TRB Systems International Inc. issued 9,750,000 common shares in exchange
for all outstanding shares in the capital of TRB Systems Inc. As a result
of this transaction, control of the combined companies passed to the former
shareholders of TRB Systems Inc.
This business combination situation is referred to as a "Reverse Takeover".
Legally, TRB Systems International Inc. is the parent or continuing
corporation; however, Generally Accepted Accounting Principles require
that the former shareholders of TRB Systems Inc. be identified as the
acquirer and that TRB Systems International Inc. and be treated as the
acquired company. Accordingly, control of the assets and business of TRB
Systems International Inc. has been acquired by TRB Systems Inc. in
consideration for the issuance of common shares.
4. Proforma Statements
The proforma are the audited statements of TRB Systems Inc.,
the sole subsidiary of the parent company, with shareholders
equity having been restated, based on the number of shares received
by the shareholders of TRB Systems Inc. on the sale of the company.
The parent company is a non-operating holding company with its sole
asset being TRB Systems.
5. Prepaid Expenses
ABL Properties, wholly owned by Byung Yim, President and CEO of the
Company, and under common control with the Company, owns the patents which
are exclusively licensed to TRB Systems Inc. (TRB) for the worldwide
manufacture and sale of the Transbar Power System (TPS). The timing,
methodology and general details of the manufacture and sales are left to
TRB, as is the design and utilization of the goods employing the technology.
The rights licensed to TRB by ABL Properties Company call for a payment of
$200,000 during the first year of active sales, a 1% royalty on annual sales
to $10,000,000, 0.75% on sales over $10,000,000 but under $20,000,000, and
0.5% on all sales thereafter, and all profits gleaned from international
sales to an aggregate limit of $3,325,000. It was agreed between ABL and
the Company that the $200,000 would be deferred until the Company had
suitable cash flow to meet its current needs, or March 1, 1999, whichever
date was later.
<PAGE> 50
Prospectus Page 44
TRB SYSTEMS INTERNATIONAL INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
Effective the third quarter of the current fiscal year TRB has
commenced taking orders for bicycles, and management feels active
manufacture is expected to commence in the next quarter, with delivery to
commence in the first or second quarter of the next fiscal year.
Any cost incurred by TRB Systems Inc. to maintain the patents is
reimbursable by ABL and is credited toward the $ 200,000 license fees due
to ABL on the first anniversary following the commencement of active
bicycle sales.
6. Property and Equipment Cost
Office equipment $ 6,275
Tools and machinery 30,000
Automobile 10,000
Moldings 597,000
Booth for Shows 65,000
Informercial tape and other
promotional materials 50,000
758,275
Less accumulated depreciation (90,910)
$ 667,365
The purchase of the property and equipment except the office
equipment, booth, $39,000 in molds and automobile were from Marn Seol,
a long time employee of TRB in Taiwan and was thus non arms length.
As a result the property was purchased for book value in the sum of
$545,000, which was paid for by the issuance of 500,000 shares of the
Company to Marn Seol, said shares restricted and subject to Rule 144.
7. Accounts Payable and Accrued Expenses
The accounts payable and accrued expenses also include the capitalized
portion of legal and consulting expenses incurred in the development of
standardized contracts, promotional materials and the filing and
registration of patents, and are amortized over a sixty-month period.
For the fiscal year ended March 31, l998, such capitalized expenditure
amounts to $ 11,835.
Payable for legal and other professional expenses $ 141,000
Other various accrued expenses 54,192 $ 195,192
8. Obligations payable to distributors
Licensing and Distributorship agreements have been reached for a
total of $1,125,000 from the Ivory Coast, Tanzania, Benin/Nigeria,
Vietnam, India, Massachusetts, and Orange County, California, and payments
totaling $210,000 have been received, as well as $10,000 for the right of
first refusal to be the licensee in Canada. The funds received are a
liability of the Company's until products are shipped to the licensees,
at which time the basic consideration will have been provided and the
value of the contracts taken into income.
<PAGE> 51
Prospectus Page 45
TRB SYSTEMS INTERNATIONAL INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
The licenses are for three years duration with automatic renewals
so long as minimum royalties are paid; and by agreement with all licensees,
the effective date of each contract was January 1, 1998. The contracts call
for an ongoing royalty payment of 6% in the first year, 5% in the second
year, and 4% thereafter, with a minimum royalty payment per year as set out
in the following table:
1st Year 2nd Year 3rd Year
Min. Royalties Min. Royalties Min. Royalties
Country
India $100,000 $220,000 $350,000
Benin/Nigeria $15,000 $25,000 $40,000
Ivory Coast & $10,000 $10,000 $10,000
5 other countries
Tanzania $10,000 $20,000 $30,000
Vietnam $10,000 $20,000 $30,000
9. Director's Loans and Loans From Individuals
The loans payable to a director are unsecured, non-interest bearing with
no set terms of repayment. On April 19, l997, balance of director's loans
in the amount of $ 163,126 has been converted into equity in exchange for
500,000 shares in the TRB Systems International, Inc. On April 19, 1997,
$259,000 of loans from individuals have been converted from current
liabilities into long-term liabilities. The conversion was made to properly
reflect the status of the loans, namely that they are outstanding
liabilities with no set repayment schedule, to be paid as TRB had the
funds to pay for them.
10. Common Stocks
The Company is authorized to issue 30,000,000 at $ 0.001 par value share,
and, as of March 31, 1998, 11,925,626 voting common shares are issued and
outstanding. TRB had authorized capital of 200 shares, of which 100 were
outstanding to Motion Plus International Corp'n. (MPI) the sole owner of
TRB. Based on the principals of accounting for a reverse takeover See note
3,4 above), this was restated based on the 9,750,000 shares with a par value
of $.001 that was paid by the Company to MPI for 100% of the outstanding
stock of TRB when the Company purchased TRB from MPI.
<PAGE> 52
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TRB SYSTEMS INTERNATIONAL INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
11. Research and Development Cost
SFAS No.2 - Accounting for research and development costs, generally,
requires all research and development costs to be charged to expenses
when incurred, rather than recording them as inventory or elements of
overhead. Costs that are expensed as research and development are as
follows; a) intangibles purchased from others, and materials and equipment
b) salaries and related costs of personnel engaged in research and
development activities c) services performed by others in connection with
research and development activities and d) reasonable allocation of indirect
costs except general and administrative costs not clearly related to
research and development activities.
Amount of research and development costs charged to expenses are as follows;
Fiscal year ended Amount
June 30, l994 $ 87,359
June 30, l995 156,885
June 30, l996 81,494
June 30, l997 29,600
March31, 1998 0
12. Related Party Transaction
The Company has a policy of providing an executive with a Company-leased
automobile for business purposes and the amount of such expense for the
fiscal year ended June 30, l997 was $ 4,370.
There were no other significant non arm's-length basis transactions
between the Company and any related party during the fiscal period ended
March 31, 1998, except for conversion of director's loan to equity and
purchase of property (see Note 6 and 9).
13 Description of Leasing Arrangements
The Company leases its executive office facilities under non-cancelable
short-term operating leases. The future minimum lease payments required
under the leases is minimal and immaterial in amount.
<PAGE> 53
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TRB SYSTEMS INTERNATIONAL INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
14. Earnings Per Shares
Earnings (loss) per share is calculated using the weighted average number
of common shares outstanding and common shares equivalents. For periods
prior to the purchase of TRB by the Company, the number of shares has been
restated utilizing the 9,750,000 shares paid by the Company to MPI for the
purchase of TRB. The average number of shares outstanding under these
assumptions would be 11,863,363 shares as of June 30, l997, 11,925,626 as
of March 31, 1998, and 9,750,000 as of March 31, 1997 and June 30, 1996
(See note 10, above).
15. Payments In Shares Of Common Stock
A contract was signed on April 18, 1997 in which Alpha Bytes Inc. accepted
250,000 shares, to be issued directly to its shareholders, as payment for
consulting services valued at $25,000 and rendered to TRB Systems, Inc.
Alpha Bytes subsequently issued the shares as a dividend to its shareholders
on October 2, 1997. As the shares were free trading and fully paid for,
and the distribution was to its own shareholders for no consideration,
Alpha Bytes felt that the shares were exempt from registration as free
trading shares. However, the Company feels that there was a potential
violation of Section 5 of the Securities Act of 1933 as well as the
various State rules for the sale of shares, and it was decided that Alpha
Bytes would treat the transaction as if the violations had occurred. For
this reason, Alpha Bytes will offer its shareholders a 30 day right of
rescission (the maximum period required by any of the states in which
shareholders of Alpha Bytes reside), commencing on the date of the filing
of the Registration Statement on Form SB-2. Alpha Bytes has informed the
Company that it will retain any shares that are returned. Both Alpha Bytes
and the Company feel that as there was no consideration for the said
shares, none of the shares will be returned, and the right of rescission is
more one of strict compliance and form, rather than a right which will be
relied on by any shareholder of Alpha Bytes. In the event any shares are
returned, Alpha Bytes has indicated that it will be the Selling Shareholder
for the said shares, and the Company will file any documents necessary to
give effect to the registration of the said shares.
16. Conversion of Investment into Equity
$305,816 of investments in TRB were converted into Equity by the issue of
594,009 shares to 45 individuals, at the rate of $0.51 per share. These
shares are free trading pursuant to Rule 504 of Regulation D of the SEC
and have been registered with the SEC on Form SB-2 (amended).
<PAGE> 53
Prospectus Page 48
SECURITY OWNERSHIP OF SELLING SECURITY HOLDERS
SHAREHOLDERS NAME NO. OF SHARES CONSIDERATION
JEAN & MARC ADOURIAN
300 GOLDFINCH DRIVE #331
COVENTRY, RI 02816 13 $0*
WILLIAM J. ALEXANDER
548 SOUTH DUDLEY COURT
LAKEWOOD, CO. 80232 17 0*
ALPHABYTES MANAGEMENT INC.
7050 WOODBINE AVE.
MARKHAM, ONTARIO CANADA
L3R4G8 92,618 0*
LARRY ANDERSON
6882 SOUTH LAMAR STREET
LITTLETON, CO 80123 18 0*
MARVIN R. ARNOLD
835 TIMBER DELL LANE
DALLAS, TX 75232 14 0*
ED ARRANDALE
P O BOX 189
WEST CAMP, NY 12490 20 0*
MICHAIL A. AURILIO & GENE BOND
13 IRVING ROAD
NATICK, MA. 01760 13 0*
RAYMOND E. BAIR
4630 WEST LAKE ROAD
CANODAIQUA, NY 14424 24 0*
JOSEPH A. BARBARA & A.
CORRINE BARBARA
3064 LINK ROAD
LYNCHBURG, VA 24503 13 0*
PETE BASIANO
4311 OKEECHOBBE BLVD #53,
WEST PALM BEACH, FL. 33409 53 0*
CARL BELLEGIA
C/O ALPHABYTES 521 BUFFALO AVE.
NIAGARA FALLS, NY 14303 34 0*
JAMES E BERG
1214 BAKER AVE.,#2
BALTIMORE, MD. 21207 34 0*
<PAGE> 55
Prospectus Page 49
SECURITY OWNERSHIP OF SELLING SECURITY HOLDERS, CONTINUED
SHAREHOLDERS NAME NO. OF SHARES CONSIDERATION
JOHN BERUBE
78 WINTER STREET #2
LEWISTON, ERIE, IL. 61250 7 $0*
EUGENE BEYER & KATHRYN BEYER
PO BOX 213, ERIE, IL. 61250 15 0*
E. ARLENE BIASI & ROBERT BIASI
7726 SOUTH CROCKER COURT
LITTLETOWN, CO. 80120 3 0*
CHARLES E. BLACK
5647 SOUTH GREEN STREET
CHICAGO, IL.60621 13 0*
DOUGLAS BLEAM
RD1-BOX 147
COOPERSBERG, PA 18036 17 0*
JEROME BOLRIN
20606 S E 147TH.
RENTEN, WA 98056 67 0*
BERT J. BONAR & IDUN J. BONAR
13708 N E 29TH AVENUE
VANCOUVER, WA 98686 17 0*
ANTONIA BRACERO
253 COURT STREET
ELIZABETH, NJ 07206 15 0*
JAY BRAMER
1315 LONGS PEAK AVENUE
LONGMONT, CO. 80501 3 0*
JUNE BRAZZELL & ELEANOR GILBERT
7485 WEST 81ST STREET
ARVADA, CO. 80003 34 0*
ROBERT E. BRIGHT & CLARA E. BRIGHT
5525 SOUTH ELMWOOD ST.
LITTLETON, CO 80120 20 0*
MARGARET CARRATURE & GERALD
CARRATURE
121 WELLINGTON COURT #211
STATEN ISLAND, NY 10314 67 0*
DONALD G. CEARLEY & DEBRA L.
CEARLEY
2961 KECOUGHTAM ROAD
PFAFFTOWN, NC 27046 4 0*
<PAGE> 56
Prospectus Page 50
SECURITY OWNERSHIP OF SELLING SECURITY HOLDERS, CONTINUED
SHAREHOLDERS NAME NO. OF SHARES CONSIDERATION
CEDE & CO
BOX #20, BOWLING
GREEN STATION
NEW YORK, NY 10004 43,859 $0*
JUNG YONG CHA
96 A GRACE ROAD
LAKE HIAWATHA, NJ 07034 13 0*
WALLACE E. CHAMBERS
127 SUNNYBROOK CIRCLES
ORMOND BEACH, FL. 32174 13 0*
CARL D. CHANDLER
608 N W 13TH ST #36
BOCA RATON, FL. 33431 54 0*
PAUL MICHAEL CHENELL
1608-4TH AVENUE S W
DECTUR, AL 35601 236 0*
FRANCES CHIARELLO & SALVATORE
PROVENZANO
175 BAY 25TH STREET
BROOKLYN, NY 11214 62 0*
MIRABELL CIESLIK & BENJAMIN
CIESLIK
368 WILLOW TREE LANE
ROCHESTER, MI 48064 13 0*
LYNN A. CLARK
801 E. STAUNTON AVENUE
STERLING, VA. 22170 27 0*
ANDRE & NORMA COMPAGNA
74 YORK STREET
YORK, ME 03801 13 0*
JAMES J. COREY & DONNA L. COREY
244 WORCHESTER
NORTH GRAFTON, MA. 01536 7 0*
ANNE H. COURSEN
9225 W JEWELL PL #114
LAKEWOOD, CO. 80227 13 0*
GERALD W. DAILY
146 SAND BAR DRIVE
JUPITER, FL. 33477 17 0*
<PAGE> 57
Prospectus Page 51
SECURITY OWNERSHIP OF SELLING SECURITY HOLDERS, CONTINUED
SHAREHOLDERS NAME NO. OF SHARES CONSIDERATION
DONNA DAUTEL
1342 NORMANDY DRIVE
PORTSMOUTH, OH. 45662 5 $0*
ROY DAVENPORT
4952 SHIRLEY ROAD
GAINSVILLE, PA. 30506 20 0*
WILLIAM DAY
207 N MAIN STREET
ROMEO, MI. 48065 13 0*
KEVIN D. DELPRINCE
3475 GENESSEE ST.
CHEEKTONGA, NY. 14225 13 0*
HERMAN K. DICKAU & MELBA DICKAU
8 LYNN RD.
POUGHKEEPSIE, NY. 12603 17 0*
ARNOLD J. DIETZEL
& WILMETTA D. DIETZEL
1910 NORTH MAIN ST. RR 2
NEWTON, KS 67114 67 0*
JAMES E. DILIETO
530 N TERRACE AVENUE
MT. VERNON, NY 10552 5 0*
DONALD DEAN DIMIG
4735 E 129TH CT
THORNTON, CO. 80241 28 0*
PHILIP T. DIXON & CHARLOTTE D. DIXON
1640A OCEAN PINES
BERLIN, MD. 21811 10 0*
JAMES DOERFLER
6876 BRENTWOOD ST.
ARVADA, CO. 80004 34 0*
BERTRAM DUBIN
115 DOWNING ST.
LAKEWOOD, NJ 08701 18 0*
HAROLD DUBINSKI & PATTY THORN
1366 FAIRFAX STREET
DENVER, CO. 80220 17 0*
<PAGE> 58
Prospectus Page 52
SECURITY OWNERSHIP OF SELLING SECURITY HOLDERS, CONTINUED
SHAREHOLDERS NAME NO. OF SHARES CONSIDERATION
ORVIN S. ECKERT & ANNE E. ECKERT
14 ROAN LANE
NEWBURGH, NY. 12550 13 $0*
MARTIN J. EDWARDS III
1802 S WINONA CT.
DENVER, CO. 80219 3 0*
HASSAN B. ENSANI
394 OCEAN AVENUE
REVERE, MA. 02151 40 0*
VINCENT D. FAZIO
2789 W 104TH PL.
WESTMINSTER, CO. 80234 20 0*
STANLEY FINEBERG
C/O ALPHABYTES
7050 WOODBINE AVE. SUITE 205
MARKHAM, ONTARIO CANADA
L3R4G8 535 0*
FIRST NATIONAL BANK OF
SPRINGFIELD
F80 ERMA DONELAN
205 S FIFTH ST BOX 19264
SPRINGFIELD, IL. 62794 27 0*
JERRY H. FISHER & ROSE M.
FISHER
146 PROSPECT ST.
GLASSENBURY, CT. 06033 11 0*
JOHN R.FLEMING & BETTY L. FLEMING
10122 ALABAMA
SUN CITY, AZ. 85351-3619 7 0*
FAYE J. FLOREA & MARY E. FLOREA
837 JUDSON ST.
LONGMONT, CO. 80501 13 0*
ERIC D. FONG
204 HAMPSHIRE ST.
CAMBRIDGE, MA. 02189 20 0*
GEORGE KENDRICK FRANCIS
3203 MILL RUN
RALEIGH, NC. 27612 34 0*
JOAN C. FRANCIS
30 MELISSA RD.
KINGSTON, NY 12401 77 0*
<PAGE> 59
Prospectus Page 53
SECURITY OWNERSHIP OF SELLING SECURITY HOLDERS, CONTINUED
SHAREHOLDERS NAME NO. OF SHARES CONSIDERATION
MARY L. FRISCH
121 MADISON CT.
MAYS LANDING, NJ. 08330 34 $0*
FRANK V. GACNICK & PATRICIA A.
GACNICK
6047 QUAIL CT.
ARVADA, CO 80004 34 0*
TONY E. GALLEGOS SR
5675 W LEAWOOD DR.
LITTLETON, CO. 80123 18 0*
JOYE GASSER
464 S CARR ST.
LAKEWOOD, CO. 80226 51 0*
TONY GERMAINI
360 CHESTNUT ST.
SOUTH HACKENSACK, NJ. 07606 25 0*
AMLETO A. GIAROLD
20 HARRISON ST.
CROTON-ON-THE-HUDSON, NY.
07606 17 0*
BERNICE E. GOLDSMITH
306 S NEWPORT WAY
DENVER, CO. 80224 20 0*
FRED A. GOLDSMITH
306 S. NEWPORT WAY
DENVER, CO 80224 17 0*
JORGE GONZALES
10611 ABERCORN
SAVANNAH, GA 31419 35 0*
RICHARD GRENIER
270 BURGANDY HILL LANE
MIDDLETON, CT 06457 17 0*
KATHRINE & RONALD GRUMME
3230 DIJON AVE.
OCEAN SPRINGS, MS
39564-8598 17 0*
RAJENDRA K GUPTA
275 CRANES ROOST BLVD. #1022
ALTAMONTE SPRINGS, FL.
32701 34 0*
<PAGE> 60
Prospectus Page 54
SECURITY OWNERSHIP OF SELLING SECURITY HOLDERS, CONTINUED
SHAREHOLDERS NAME NO. OF SHARES CONSIDERATION
DONALD & SANDRA HAAN
4794 S LEWISTON WAY
AUROAR, CO 80015 1 $0*
ROBERT E HALL
BOX 490
LAKE CITY, CO 81235 522 0*
BOB HANEY
6072 S. MARSHALL
LITTLETON, CO. 90123 13 0*
RUDOLF HARDING
71 CHERRY LANE
DURHAM, CT 06422 13 0*
FRANK THOMAS HASTINGS
RD 2 BOX 274 SO ST
ROSENDALE, NY.12472 17 0*
BETTY JO HEDGES
PO BOX 1431
MARTINVILLE, IN. 46151 13 0*
JOHN R. HEINEMANN & LYNEEN
HEINEMANN
9221 W 68TH ST.
ARVADA, CO. 80004 35 0*
WALTER C. HESS
3171 BANJO DR.
COLORADO SPRINGS, CO. 80918 54 0*
ANTHONY HIBL
3297 COUNTRY RD.
14-1/2, ERIE, CO. 80516-9414 8 0*
MATHEW M. HODDY
7944 S GAYLORD CT.
LITTLETON, CO 80122 135 0*
BARBARA HOENER
175 PRUITT DR.
ALPHARETTA, GA. 54 0*
LARRY D. HUBNER & ROSEMARY L.
HUBNER
524 E 116TH ST.
NORTHGLENN, CO 80233 12 0*
<PAGE> 61
Prospectus Page 55
SECURITY OWNERSHIP OF SELLING SECURITY HOLDERS, CONTINUED
SHAREHOLDERS NAME NO. OF SHARES CONSIDERATION
SHRI C. JAIN
38 BLACKWELL LANE
HENRIETTA, NY 14467 17 $0*
MICHAEL H. JORDAN
823 SE 8TH AVE.
DEERFIELD BEACH, FL. 33441 842 0*
VANCE KANE
15602 POWELL AVE.
BOWIE, MD. 20716 17 0*
GEORGE M. KANUCH & LAURA L.
KANUCH
4566 DEVONSHIRE BLVD.
PALM HARBOR, FL. 34685 13 0*
WILLIAM J. KEATING
214 N COLUMBUS ST.
ARLINGTON, VA 22203 34 0*
JOHN H.KEENAN
4952 GLENWAY AVE.
CINCINNATI, OH 45238 13 0*
PATRICK KELLY
171 REGENT DR.
LONG BEACH, NY 11561 15 0*
JAMES KIDDER
2942 S FILLMORE WAY
DENVER, CO 80210 15 0*
KRAY & CO.
C/O ALPHABYTES
7050 WOODBINE AVE. SUITE 205
MARKHAM, ONTARIO CANADA
L3R4G8 295 0*
BETTY KITZMAN
1460 COUNTRY FARM RD.
ROCKFORD, IL. 61109 54 0*
RUSSELL W. KLICKER &
PATRICIA M. KLICKER
3519 WOODLAKE DR.
ALLISON PARK, PA 15101 17 0*
EDWARD S. KOELLING
1936 SW 29TH DR.
GRESHAM, OR.97080 17 0*
<PAGE> 62
Prospectus Page 56
SECURITY OWNERSHIP OF SELLING SECURITY HOLDERS, CONTINUED
SHAREHOLDERS NAME NO. OF SHARES CONSIDERATION
ARTHUR J. KREIKEMEIR
RFD 2 BOX 428
DODGE, NE. 68633 10 $0*
HENRY P. KROEGER
216 ERIE BLVD. E
ROME, NY. 13440 67 0*
WALTER KROUS & ROSE KROUS
12606-112TH AVE., E #31
PUYALLUP, WA 98374 67 0*
DOUGLAS J. KRUG
870 S ESTES
LAKEWOOD, CO. 80226 741 0*
RONALD KRYSZAK & AUDREY KRYSZAK
21 ROYAL PALM
OKEETOWREA, NY. 14225 13 0*
BOB KULYK
1434 WISE RD.
SCHAUMBURG, IL. 60193 13 0*
MARK A. LANDRY
1607 SPANISH TRACE DR.
SARALAND, AL 36571 10 0*
CLAUDE LARIMER
515 ROBINS ST.
CAMBRIDGE, MD. 21613 7 0*
THOMAS L. LEE
238 CONTINENTAL
STATEN ISLAND, NY 10303 101 0*
GEORGE S. LENSING SR.
P O BOX 32
PROVIDENCE, LA 71254 17 0*
JOHN G.LESCH & ANTOINETTE H.LESCH
P O BOX 211
SANTA CLARA, CA. 95052 7 0*
LARRIE LOBSINGER
1195 BROOKLINE ST.
CANTON, MI 48187-3233 11 0*
<PAGE> 63
Prospectus Page 57
SECURITY OWNERSHIP OF SELLING SECURITY HOLDERS, CONTINUED
SHAREHOLDERS NAME NO. OF SHARES CONSIDERATION
CHARLES LUNETTA
45 GOLDEN HILL
DANBURY, CT 06811 13 $0*
STEVE MACALUSO &
EILEEN MACALUSO
1794 STABLE TRAIL
PALM HARBOR, FL. 34685 8 0*
DAVID W. MARION
885 W JEFFERSON LOT 194
BRAND LAKE, MI 48837 34 0*
PETER MARKUS
39-01 MAIN STREET # 605
FLUSHING, NY 11355 1,684 0*
JERROLD W. MAYFIELD &
COLLETTE E. MAYFIELD
11031 WINSPRING DR.
TOMBALL, TX. 77375 24 0*
JOHN MCKELVIE
322 N COMMERCIAL ST.
BELLINGHAM, WA. 98225 17 0*
RITA A. MCNELLIS
416 N VAN BRUNT
KANSAN CITY, MO. 64123 5 0*
TERRY MILQUIST & COLLEEN
MILQUIST
20 CENTER ST.
SHEFFIELD, PA. 16347 13 0*
REINHOLD MUELLER
P O BOX 267
NEWLEIPZIG, ND. 58562 34 0*
IVAN B. MUNCH
3311 GAINSVILLE ST SE
WASHINGTON, DC. 20020 104 0*
NATIONAL FINANCIAL SERVICES CORP.
C/O ALPHABYTES
7050 WOODBINE AVE. SUITE 205
MARKHAM, ONTARIO CANADA
L3R4G8 13 0*
ELMER NEFF JR. & RUTH M. NEFF
10425 FRANKLIN WAY
NORTHGLENN, CO. 80233 135 0*
<PAGE> 64
Prospectus Page 58
SECURITY OWNERSHIP OF SELLING SECURITY HOLDERS, CONTINUED
SHAREHOLDERS NAME NO. OF SHARES CONSIDERATION
GILMER NELSON
3208 SAN JOSE ST.
TAMPA, FL. 33629 47 $0*
ARLO L. NIELSON
4700 S. CHEROKEE
ENGLEWOOD, CO. 80110 13 0*
C F NISSEL CUST MORDY NISSEL
UNDER THE NY UNIF GIFT MIN ACT
10 RALPH BLVD.
MONSEY, NY 10952 13 0*
STEVEN MICHAEL ODDEN
7 MERRITT AVE.
HIGHLAND, NY. 12528 57 0*
JANE E. OLSEN
3174 SAUNDERS SETTLEMENT ROAD
SANBORN, NY. 14132 7 0*
WILLIAM O'MALLY
P O BOX 775
WEST SPRINGFIELD, MA. 01090 13 0*
NATHANIEL ORME
P O BOX 305
MT PLEASANT, MI. 48804 57 0*
OTRA CLEARING INC.
C/O ALPHABYTES
7050 WOODBINE AVE. SUITE 205
MARKHAM, ONTARIO CANADA
L3R4G8 121 0*
JAMES OWEN
PO BOX 305
MT. PLEASANT, MI 48804 13 0*
DEBBIE PAONESSA
41 BAMBI TRAIL
BOLTON ON K73 2G4, CANADA 17 0*
GERALD PARTIAS
11629 E WALSH PLACE
AURORA, CO. 80012 168 0*
LOTTIE J. PASCASIO
3670 MYRTZ AVE.
PITT, PA. 15234 11 0*
<PAGE> 65
Prospectus Page 59
SECURITY OWNERSHIP OF SELLING SECURITY HOLDERS, CONTINUED
SHAREHOLDERS NAME NO. OF SHARES CONSIDERATION
PHILADEP & CO.
C/O ALPHABYTES
7050 WOODBINE AVE. SUITE 205
MARKHAM, ONTARIO CANADA
L3R4G8 9,113 $0*
PITTCO
C/O ALPHABYTES
7050 WOODBINE AVE. SUITE 205
MARKHAM, ONTARIO CANADA
L3R4G8 47 0*
DARRIN PLYS
C/O ALPHABYTES
7050 WOODBINE AVE. SUITE 205
MARKHAM, ONTARIO CANADA
L3R4G8 11 0*
EUGENE POOLE & CECIL POOLE
2005 POOLE RD.
SUMTER, SC. 29154 34 0*
ROBERT PROVOST
C/O ALPHABYTES
7050 WOODBINE AVE. SUITE 205
MARKHAM, ONTARIO CANADA
L3R4G8 71 0*
JACK T. RANDALL
440 BIRDKEY DR.
SARASOTA, FL. 33617 67 0*
RAUCH SALES CO.INC.
7628 N. 56TH STREET #7
TAMPA, FL. 33617 67 0*
CLARENCE E. REED
6094 ALLIANCE RD.
NW, MALVERN, OH. 44644 36 0*
E. RICHARD REINS
22585 HIDDEN MESA RD.
MONTEREY, CA. 93940 101 0*
G RAY RICHARD & MARGARET E.
RICHARD
56 RIVER BREEZE DRIVE
MILLSBORO, DE. 19966 3 0*
CHERI L. ROSENBOROUGH
CUST SHERWOOD ROSENBOROUGH UT
UNIF GIFT MIN ACT
1090 W 1ST NORTH
TOOELE, UT. 84074 13 0*
<PAGE> 66
Prospectus Page 60
SECURITY OWNERSHIP OF SELLING SECURITY HOLDERS, CONTINUED
SHAREHOLDERS NAME NO. OF SHARES CONSIDERATION
DANIEL H. ROUSE
35 SPRING LAKE CC
QUINCY, IL. 62301 34 $0*
RUSSELL RUBENSTEIN
7507 188TH ST.
FRESHWATER, NY 11366 189 0*
ELIZABETH MARY RUDOLF
214 S CASPER CIRCLE # 19306
AURORA, CO. 80017 11 0*
CAROL L. RUPP
4178D S MOBILE CIRCLE
AURORA, CO. 80013 9 0*
ELLSWORTH RUPP
12954 VERSAILLES RD.
IRVING, NY. 14081 17 0*
NAT RUSSO & BARBARA RUSSO
455 ARGOS CIRCLE
WATSONVILLE, CA. 95076 17 0*
DENNIS C.RYAN & JANE C. RYAN
17TH ST.
E HAMPTON, NY. 11937 13 0*
CHESTER J. SALKIND
P O BOX 6308
FALLS CHURCH, VA. 22040 10 0*
ISRAEL SCHNEIDER
802 BROUGHTON CIR.
BOYNTON BEACH, FL.
33436-2545 13 0*
MICHAEL SERLIN
3391 NW TERRACE #405
LAUDERDALE, FL. 33319 116 0*
ALFRED J. SIEBERT
3121 W 94TH.
WESTMINSTER, CO. 80030 28 0*
MICHAEL J. SEIBERT
8450 SCARSDALE DR.
INDIANAPOLIS, IN. 46256 74 0*
<PAGE> 67
Prospectus Page 61
SECURITY OWNERSHIP OF SELLING SECURITY HOLDERS, CONTINUED
SHAREHOLDERS NAME NO. OF SHARES CONSIDERATION
DONALD L. SMITH
922 N GRIGG
GREENVILLE, IL. 62246 17 $0*
JAMES W. SMITH
1315 PARK AVE.
WINTHROP HARBOR, IL. 60096 13 0*
ROBERT E. SMITH
1800 AUGUSTINE DRIVE
TITUSVILLE, FL. 32796 13 0*
JACK A. SMYTH
1530 W 34TH AVE.
DENVER, CO. 80211 44 0*
CHARLES SOCIENSKI
7156 NEWHALL DR.
HIGHLANDS RANCH, CO. 80126 17 0*
DANIEL R. SPISTAK JR.
& SANDRA J.SPISTAK
109 MAY ST.
ELMHURST, IL 60126 20 0*
PAULETTE STREEVAL
21131 NE 24TH CT.
MIAMI, FL 33180 51 0*
STEPHANIE STREEVAL
& PAULETTE STREEVAL
21131 NE 24TH CT.
MIAMI, FL. 33180 17 0*
ANTON STEPHENS
C/O ALPHABYTES
7050 WOODBINE AVE. SUITE 205
MARKHAM,ONTARIO CANADA
L3R4G8 46,309 0*
CHRISTINE STEPHENS
C/O ALPHABYTES
7050 WOODBINE AVE. SUITE 205
MARKHAM,ONTARIO CANADA
L3R4G8 46,309 0*
EDWARD H. SUH & ASSOCIATES
136-26 37TH AVE. #500
FLUSHING, NY 11354 247 0*
JOHN FRANK SYMOLON
& JEAN MAY SYMOLON
7 SYCAMORE DRIVE
HYDE PARK, NY 17538 37 0*
<PAGE> 68
Prospectus Page 62
SECURITY OWNERSHIP OF SELLING SECURITY HOLDERS, CONTINUED
SHAREHOLDERS NAME NO. OF SHARES CONSIDERATION
TEXAS STATE TREASURER
UNCLAIMED MONEY FUND
200 EAST 10TH ST.
AUSTIN, TX. 78701 17 $0*
MARY H. THAREL
5520 E 86TH STREET
TULSA, OK. 74137 7 0*
PAMELA K. TONONI
& RAYMOND H. TONONI
RT 1 BOX 268
HUNNINGTON, PA. 16652 13 0*
WEBSTER P TRUE
2184 D AMBERGATE LANE
WEST PALM BEACH, FL 33415 44 0*
RICHARD R. TUKA
& MARY S. TUKA
12055 W 53RD PLACE
ARVADA, CO. 80002 30 0*
ROBERT C. ULLRICH
& HARRIETTE J. ULLRICH
15415 NORTH 95TH ST.
LONGMONT, CO 80501 17 0*
MARTHA E. UPTON
5201 ATLANTIC BLVD. #173
JACKSONVILLE, FL. 32207 13 0*
JAMES C. WALKER
& CARMA F. WALKER
101 HAMPTON COVE
JACKSONVILLE, AR 72076 13 0*
STEVE WEINER
242 E 80TH STREET #3A
NEW YORK, NY. 10021 12 0*
GENE B. WELLS & EVELYN WELLS
20513 LITTLE ROAD
MATOACA, VA. 23803 34 0*
ROBERT W. WESTPAUL
P O BOX 8099
OMAHA, NE. 68108 16 0*
VINCENT R. WILLIAMS
430 BROADWAY
ULSTERPARK, NY. 12487 38 0*
<PAGE> 69
Prospectus Page 63
SECURITY OWNERSHIP OF SELLING SECURITY HOLDERS, CONTINUED
SHAREHOLDERS NAME NO. OF SHARES CONSIDERATION
ROBERT D. WITTERS
2037 CRESTVUE CIR.
GOLDEN, CO. 80401 110 $0*
WILLIAM D. WONCOBA
68 MAPLE DR.
NEWARK, DE. 19713 7 0*
RICHARD D. ZERZAN
& RUTH A. ZERZAN
4530 S. VERBENA ST. #327
DENVER, CO. 80237-2525 1,684 0*
TASSO APOSTOLOPOULOS
196 KINGSTON RD.
PARSIPPANY, NJ 07054 5,129 2,636.31**
AMY BUSKE
140 LINDEN DR.
BASKING RIDGE, NJ 07920 6,480 3,331**
SUNNY EUN MI MOON
165-20 72ND AVE
FRESH MEADOWS, NY 11365 2,000 1,028**
YOGESH N. GANDHI
KISHORI Y. GANDHI
1110 WESTVIEW DR.
CRESTON, IA 50801 9,000 4,626**
CINDY & ALAN
15 REDCOAT DRIVE
LICHTBROUN
EAST BRUNSWICK, NJ 08816 2,957 1,520**
JOONG B. LEE
133 MARION DR
PLAINSBORO, NJ 08536 3,479 1,788**
KISHOR M. DATTANI
GIRA K. DATTANI
25401 CLASSIC DRIVE
MISSION VIEJO, CA 92691 16,000 8,224**
ALESSANDRO VARELA
530 PARK AVE. APT. NO. K6
ORANGE, NJ 07050 2,934 1,508**
<PAGE> 70
Prospectus Page 64
SECURITY OWNERSHIP OF SELLING SECURITY HOLDERS, CONTINUED
SHAREHOLDERS NAME NO. OF SHARES CONSIDERATION
GREG D. SALERNO II
3 RIDGEWAY CT.
WEST ORANGE, NJ 07052 827 425**
HUTTON ARMS, LLC
4 FOREST AVE.
SPRINGFIELD , NJ 07081 1,266 651**
JOHN W. COLLINS
1450 LIMBORGER AVE.
PLAINFIELD, NJ 1,501 772**
DONALD R. CONWAY
425 SEROUND ST.
ORADELL, NJ 07649 3,751 1,928**
KRISTY TARR
13124 VENETIAN RD.
SILVER SPRING, MD 20904 12,375 6,361**
BYUNG MUN LEE
11 CHERRY HILL RD.
LIVINGSTON, NJ 07039 3,751 1,928**
OK SOOK LEE
1289 16TH ST.
FORT LEE, NJ 07024 6,875 3,534**
KETAN VAKIL
ALKA VAKIL
43-70 KISSENA BLVD.
FLUSHING, NY 11355 1,500 771**
UMESH SHAH
NEENA SHAH
143-30 SANFORD AVE. APT 4-H
FLUSHING, NY 11355 1,500 771**
PETER MARKUS
39-01 MAIN STREET, SUITE 605
FLUSHING, NY 11355 11,300 5,808**
BERNARD E. KOFF
70 MAYHEW DR.
SOUTH ORANGE, NJ 07079 56,000 28,784**
ANDREW M. CHAVKIN
6 KENWOOD COURT
NORTH CALDWELL, NJ 07006 1,599 822**
<PAGE> 71
Prospectus Page 65
SECURITY OWNERSHIP OF SELLING SECURITY HOLDERS, CONTINUED
SHAREHOLDERS NAME NO. OF SHARES CONSIDERATION
STEVEN N. NAPPEN
39 TROY RD.
WHIPPANY, NJ 07981 1,599 822**
JEFFREY D. ZUDECK
10 BURLINGTON RD.
LIVINGSTON, NJ 1,599 822**
PANTHER PRODUCTIONS INC.*
512 MEANS ST. N.W. SUITE 408
ATLANTA, GA 30318 17,392 8,939**
EDWARD H. SUH
C/O PETER MARKUS
39-01 MAIN STREET, SUITE 605
FLUSHING, NY 11355 2,500 1,285**
JAN GREENHALGH
C/O PETER MARKUS
39-01 MAIN STREET, SUITE 605
FLUSHING, NY 11355 4,300 2,210**
PETER MARKUS
39-01 MAIN STREET, SUITE 605
FLUSHING, NY 11355 2,000 1,028**
CHARLES C. KHYM
C/O PETER MARKUS
39-01 MAIN STREET, SUITE 605
FLUSHING, NY 11355 2,700 1,388**
LACI LAKATOS
135 DINISON CREST
KITCHENER, ONTARIO
CANADA N2E256 1,500 771**
RON JAMESON
C/O PETER MARKUS
39-01 MAIN STREET, SUITE 605
FLUSHING, NY 11355 700 360**
PETER MARKUS
39-01 MAIN STREET, SUITE 605
FLUSHING, NY 11355 2,000 1,028**
SUN HWAN YOO
2500 VICTORY BLVD.
STATEN ISLAND, NY 10314 3,125 1,606**
<PAGE> 72
Prospectus Page 66
SECURITY OWNERSHIP OF SELLING SECURITY HOLDERS, CONTINUED
SHAREHOLDERS NAME NO. OF SHARES CONSIDERATION
DOO BOK PARK
24 COUNTRY CLUB LANE
LIVINGSTON, NJ 07039 3,125 1,606**
KYUNG WON KIM
U.S. TAE KWON DO CENTRAL
1192 PARKER ST.
SPRINGFIELD, MA 01129 15,625 8,031**
JIN SUK KIM
P.O. BOX 60023
POTOMAC MD 20859 11,252 5,784**
JOON M. NAM
119 KENSINGTON MANOR BLD-15-7
MIDDLETOWN, NY 10314 3,125 1,606**
SOON JAE KWON
40-40 79TH ST. #C-408
ELMHURST, NY 11373 1,000 514**
JAE HYEONG JEOUNG
U.S. TAE KWON DO CENTER
1141 MAIN ST.
WORCHESTER, MA 01603 15,625 8,032**
MRS. CHUN JA KIM
U.S. TAE KWON CENTER
1192 PARKER ST.
SPRINGFIELD, NH 01129 9,375 4,819**
MRS. CHUN SA KIM
25 GLENOAK DR.
SPRINGFIELD, MA 01129 12,500 6,425**
JUNG EUN KIM
C/O KRISTY TARR
13124 VENETIAN ROAD
SILVER SPRING, MA 20904 2,778 1,428**
NARASHIMHARAO KANAMARLAPUDI
LAKSHMIDEVI KANAMARLAPUDI
28471 DELMAR
LAGUNANIGUEL, CA 92677 3,125 1,606**
HAENG SOON PARK
77 SUNSET STRIP
SUCCASUNNA, NJ 07876 2,778 1,428**
<PAGE> 73
Prospectus Page 67
SECURITY OWNERSHIP OF SELLING SECURITY HOLDERS, CONTINUED
SHAREHOLDERS NAME NO. OF SHARES CONSIDERATION
GALE SCHULMAN
27 GATE HOUSE CT.
CONVENT STATION, NJ 07960 1,071 550**
JONG GOO WON
C/O TRB
4 BECKER FARM ROAD
ROSELAND,NJ 07068 102,500 52,685**
AE JA LEE
C/O TRB
4 BECKER FARM ROAD
ROSELAND,NJ 07068 100,000 51,400**
BYUNG KON CHO
801 WINDOVER CT.
GREEN BAY, WI 54314 5,556 2,856**
MYUNG HAE PARK
835-G MAIN STREET
BELLEVILLE, NJ 07109 1,500 771**
SUN HWAN YOO
HAPPY FARM
2500A VICTORIA BLVD.
STATEN ISLAND, NY
10309-4271 6,250 3,212**
CEDE & CO.
BOX #20
BOWLING GREEN STATION
NEW YORK, NY 10004 79,704 41,462.18**
DHIREN PATEL
2 PINYON DR.
OLD BRIDGE, NJ 08857 480 247**
HYUN KIM
1628 S. HEATHER HILL RD.
HACIENDA HEIGHTS, CA 91745 20,000 10,280**
MRS. HYANG KEUM KIM
C/O TRB
4 BECKER FARM ROAD
ROSELAND, NY 07068 2,500 1,285**
<PAGE> 74
Prospectus Page 68
SECURITY OWNERSHIP OF SELLING SECURITY HOLDERS, CONTINUED
SHAREHOLDERS NAME NO. OF SHARES CONSIDERATION
CHUL YONG PARK
1010 E. MAPLE ST.
APT 4
GLENDALE, CALIFORNIA 91205 4,500 2,313**
JAMES C. FOSTER
C/O TRB
4 BECKER FARM ROAD
ROSELAND, NJ 07068 1 .51**
* Shareholders of Alpha Bytes, Inc. who received their shares on October 2,
1997. These shares were acquired by Alpha Bytes on April 18, 1997 and exempt
from registration pursuant to Rule 504 of Regulation D of the Commission
(SEE: "SELLING SHAREHOLDERS", at page 28 of this Prospectus). Subsequently,
the shares were distributed as a dividend declared on September 30, 1997,
and issued on October 2, 1997. All shareholders of Alpha Bytes, Inc. are
not related parties to the company, and the maximum beneficial holding of
any shareholder of Alpha Bytes is less than 1% of the outstanding shares
in the Company. These shares carry a 30 day right of rescission from the
effective date of the Registration Statement of which this Prospectus forms
a part, as their issue by Alpha Bytes may have been in violation of Section
5 of the Securities Act of 1933 (SEE: "SELLING SHAREHOLDERS"). No security
holder held any shares before the offering. The amount to be offered is
the full amount in the security holder's account, and the security holder
will hold no shares after the offering is complete.
** Shareholders who had invested in TRB between 1994-1997 in the aggregate
sum of $305,816, and acquired their shares on October 2, 1997 at the rate
of one share for every $0.514 invested. The shares were exempt from
registration pursuant to Rule 504 of Regulation D of the Commission. No
shareholder holds more than 1% of the total outstanding shares in the
Company, and no shareholder is related to the Company, or has been for the
past 3 years. Within the past 3 years no shareholder has held any position
or office or had any material relationship with the Company.
The Aggregate sum paid for the shares by both Alpha Bytes and these
shareholders is less than the maximum permitted by Rule 504. (SEE, also:
"SELLING SHAREHOLDERS"). No security holder held any shares before the
offering. The amount to be offered is the full amount in the security
holder's account, and the security holder will hold no shares after
the offering is complete.
*** Shareholders who had invested in TRB and are employees of the Law of
of Charles C. Khym, the attorneys engaged to prepare this Prospectus, and
the Registration Statement of which it is a part. The shares were exempt from
registration pursuant to Rule 504 of Regulation D of the Commision. No
shareholders holds more than .05% of the total outstanding shares in the
Company, and no shareholders is related to the Company, or has been for the
past 3 years. Within the past 3 years no shareholder has held any position
or office with the Company. The Aggregate sum paid for the shares all
shareholders in the above table is less than the maximum permitted by Rule
504. (SEE, also: "SELLING SHAREHOLDERS"). No security holder held any shares
before the offering. The amount to be offered is the full amount in the
security holder's account, and the security holder will hold no shares
after the offering is complete.
<PAGE> 75
TABLE OF CONTENTS
ITEM PAGE
Prospectus Summary 1
The Company 1,7
The Offering Front Cover
Stockholders 3
Securities Outstanding 3 TRB Systems International
Definition of Terms I-3,3 Inc.
Selected Financial Information 2
Risk Factors 3 844,009 Shares of
Certain Market Information 6 Common Stock
Capitalization 6
Management's Discussion & Analysis 17
Conflicts of Interest 20
Management 21
Directors and Executive
Officers 21
Biographies of the Company's
Executive Officers and Directors 21
Certain Transactions 24
Principal Stockholders 25 =====================
Securities' Description(Common Stock) 26
Common Stock 26 PROSPECTUS
Dividend Policy 5,6
Transfer Agent 26 =====================
Shares Eligible for Future Sale 27
Additional Information Inside Front Cover, 27
Plan of Distribution 27
Indemnification Arrangements 28
Litigation 29
Legal Opinions 29
Experts 29
Financial Statements 30
Selling Shareholders 12,28,48
TRB Systems International Inc.
4 Becker Farm Road
Roseland, NJ 07068
(973) 994-4488
<PAGE> 76
Part II, Page I
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24: INDEMNIFICATION OF OFFICERS AND DIRECTORS
In accordance with the General Corporation Laws of the State of
Delaware which were in effect at the time the Registrant was incorporated,
the Registrant's Board of Directors adopted by resolution, as further set
forth in the Registrant's by laws, provisions relative to indemnification
of its Officers and Directors against expenses, judgments, fines,
settlements, and other amounts actually and reasonably incurred in connection
with the defense of any proceeding or threatened proceeding to which such
person was or is a party, or is threatened to be made a party by reason of
the fact that such person was or is an officer or director, provided that,
(i) such director or officers acted in good faith or in a manner reasonably
believed by him to be in the best interests of the corporation to procure a
judgment in its favor. In the latter case, the power to indemnify extends
to expenses actually or reasonably incurred in connection with the defense
or settlement of any proceeding if such person (i) acted
in good faith, and (ii) the manner such officer and director believed to
be in the best interest of the corporation and with such care, including
reasonable inquiry, as an ordinary prudent person would use under similar
circumstances. No indemnification will be made in respect of any claim,
issue or matter, as to which such person shall have been adjudged to be
liable for negligence or misconduct in the performance of his duty to the
corporation unless, and only to the extent that the court in which such
action or suit was brought shall determine upon an application of that,
despite the adjudication of liability, but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnity for
such expenses which the court shall deem proper. Otherwise, indemnification
for an officer and director meeting the applicable standards of conduct is
determined by a majority of the disinterested directors or shareholders or
upon application by the corporation, such officer or director or his
attorney, to the court in which such proceeding was pending.
The Securities & Exchange Commission is of the opinion that
Indemnification of Company officers or directors for matters involving
violation of securities laws is against public policy and that agreements
therefor are consequently unenforceable.
ITEM 25: OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses in connection with distribution of the securities of
the Company being Registered hereby, other than commissions and
non-accountable expense allowances, will be borne directly by the
Company rather than by the selling stockholder. Such expenses are
estimated to be $50,000.
Item Amount
United States Securities and Exchange Commission filing fee $ 700
Printing Expenses 4,000
Fees and expenses of counsel for the Company 22,000
Accounting fees and expenses 20,000
Transfer agent fees and expenses 3,000
Miscellaneous 300
TOTAL $50,000
<PAGE> 77
Part II, Page 2
ITEM 26 RECENT SALES OF UNREGISTERED SECURITIES
Acquisition of TRB Systems Inc.
On April 18, 1997, in exchange for 9,750,000 shares in the common
stock of Company, 100% of the stock in TRB was sold by Motion Plus
International Corporation, a Delaware Corporation, its owner, to the
Company. Byung Yim, the president of the Company, owns 20% of the shares
in MPI. Mr. Yim's children, Alexander B. Yim (age-21) and Lena B. Yim
(age-19), each hold 39% interest in MPI. (SEE, "Security Ownership
of Management", at page 33; "Parents of the Company" at page 32; and,
"PRINCIPAL STOCKHOLDERS" at page 32. These shares were restricted, subject
to Rule 144, and exempt from registration through reliance on Section 4 (2)
of the Securities Act of 1933 as Byung Yim and his children are deemed
sophisticated purchasers.
Sales to Investors in TRB
The Company issued 594,009 shares to 54 individuals who had
invested in TRB and were unrelated parties on October 2, 1997. These
persons had invested money between 1994-1997 in TRB, in the sum of $305,814,
and their investment was converted into equity at the rate of $.514 per
share. This is reflected in the financial statements, and described in Note
16 of the said statements. The issue was exempt from registration, reliance
being placed on Rule 504 of Regulation D of the Commission, in that the
total investment was less than the maximum permitted by the said Rule
(inclusive of the shares issued to Alpha Bytes, Inc., discussed below,
the total investment since the inception of TRB being $330,814), and
accounted for 4.5% of the outstanding shares, with no single investor
receiving shares greater than 1% of the outstanding shares in the Company
(SEE: "SELLING SHAREHOLDERS" at page 35 and the table beginning on page 55
of this Registration Statement. The aforementioned table discloses each
of the investors and such information about each as is requires to be
disclosed in this Item 26 additionally to the disclosure in this paragraph).
Sales to former Employees and Consultants
44 employees and consultants of TRB who had worked with TRB since
1994 in developing the TPS system were issued 376,617 shares, said
shares were restricted from sale subject to Rule 144. The issuance of shares
to the employees was exempt from registration through reliance on Rule 701
of the Commission. The Consultants were Certified Public
Accountants who had provided financial consulting services to TRB.
The consultants are Andy Chapkin, Stephen Nappen, and Jeffrey Zudack
of 4 Becker Farm Road, Roseland, New Jersey, and each received 1,599
shares at a price of $0.50 per share. The issuance of shares to these
consultants was exempt from registration through reliance on Section 4
(2) of the Securities Act of 1933, in that these were each sophisticated
purchasers.
Sale to Byung Yim
500,000 shares were issued to Byung Yim, the Company president,
the said shares were restricted, exempt from Registration through reliance
on Section 4 (2) of the Securities Act of 1933, in that Mr. Yim was a
sophisticated purchaser, and subject to Rule 144. The shares were to retire
$218,162 in debt owed to Mr. Yim, and in lieu of salaries not drawn
(See: "SECURITY OWNERSHIP OF MANAGEMENT" at page 33 of this Registration
Statement).
Purchase of Equipment from M. T. Seol
500,000 shares were issued to M. T. Seol for the purchase of
property and equipment valued at $559,545. This equipment consisted of
office equipment for $5,000, tools and machinery for $30,000, an automobile
for $10,000, moldings for $464,545, and informercial tape and other
promotional materials for $50,000. The purchase took place in April of 1997.
The said shares were restricted and issued subject to Rule 144, and exempt
from registration through reliance on Section 4 (2) of the Securities Act
of 1933, in that Mr. Seol was a sophisticated purchaser.
<PAGE> 78
Part II, Page 3
The equipment value was strictly based on book value of the goods, as this was
a non-arms length transaction in that Mr. Seol is an employee of the
Company (SEE: FINANCIAL STATEMENTS, BALANCE SHEET< ASSETS and the
accompanying footnote).
Sale of Shares to Alpha Bytes, Inc.
Alpha Bytes, Inc., 7050 Woodbine Ave., Suite 205, Markham, Ont.,
Canada L3R 4G8, a Colorado public corporation presently traded on the NASDAQ
Bulletin Board market, provided consulting services to the Company regarding
software development for the inventory control and Management Information
Systems to be used by the Company for consideration in the sum of $25,000,
which sum Alpha Bytes invested in the Company for 250,000 shares acquired
on April 18, 1997. The shares issued were exempt from registration pursuant
to Rule 504 of Regulation D of the SEC, in that the total investment in TRB
for the year was less than the maximum allowed by the rule. The holdings
accounted for less than 2.2% of the outstanding shares of the Company
(See table and footnotes at page 55 of this Registration Statement).
Alpha Bytes subsequently issued the shares as a dividend to its
shareholders on October 2, 1997. As the shares were free trading and fully
paid for, and the distribution was to its own shareholders for no
consideration, Alpha Bytes felt that the shares were exempt from registration
as free trading shares. However, the Company feels that there was a potential
violation of Section 5 of the Securities Act of 1933 as well as the various
State rules for the sale of shares, and it was decided that Alpha Bytes would
treat the transaction as if the violations had occurred. For this reason,
Alpha Bytes will offer its shareholders a 30 day right of rescission (the
maximum period required by any of the States in which shareholders of Alpha
Bytes reside (see table at page 55 for States), commencing on the date of the
filing of the Registration Statement of which this Prospectus forms a part.
Alpha Bytes has informed the Company that it will retain any shares that are
returned. Both Alpha Bytes and the Company feel that as there was no
consideration for the said shares, none of the shares will be returned, and
the right of rescission is more one of strict compliance and form, rather
than a right which will be relied on by any shareholder of Alpha Bytes. In
the event no shares are returned, the Selling Shareholders are those parties
listed in the Table found at page 55 of this registration. In the event any
shares are returned, Alpha Bytes has indicated that it will be the Selling
Shareholder for the said shares, and the Company undertakes to file any
documents necessary to give effect to the registration of the said shares.
ITEM 27: EXHIBITS
Exhibit
Number Description Page
1. Constituent Document:
.1 Original Article of Incorporation 87
.2 Bylaws 88
5.1 Opinion of Counsel 84
10. Material Contracts:
.1 Lease of Taiwan Office 98
.2 Exclusive Licensing Agreement between TRB
Systems Inc. and ABL Properties Company. 99
.3 Patent Registration and Assignment to ABL. 106
<PAGE> 79
Part II, Page 4
.4 Financing Agreement between TRB Systems Inc.,
and Tianjin Worldwide, Inc. for $2,000,000. 121
.5 License and Marketing Agreement between TRB
Systems Inc. and Mr. Konan Kouadio Simeon
for Ivory Coast. 124
.6 Joint Venture Agreement between TRB Systems
Inc., and Mr. Janak Shah for India. 139
.7 License and Marketing Agreement between TRB
Systems Inc. and Mr. Abbas R. Datoo for
Tanzania. 158
.8 Distributorship Agreement between TRB Systems
Inc. and Mr. Kishor M. And Gira K. Dattani for
Counties in California. 173
.9 Licensing and Marketing Agreement between
TRB Systems Inc. and Stella Kujembola for
Benin and Nigeria. 184
.10 Sino-Danish Manufacturing Agreement. 203
.11 Agreement with Kun Teng Industries. 197
.12 Motion Plus-TRB-Purchase of Subsidiary. 211
.13 Pretty Wheel Contract. 234
22. Subsidiaries of the Registrant 85
24.6 Consent of Auditors 86
ITEM 28: UNDERTAKINGS
A. Certificates
The Company hereby undertakes to provide its transfer agent with
certificates in such denominations and registered in such names as
required to permit delivery thereof to each purchaser of the Selling
Stockholders' stock offered hereby, from time to time, as required,
starting as of the close of business on the day immediately following
the date of this Registration Statement.
B. Liabilities
Insofar as indemnification of liabilities arising under the
securities Act of 1933, as amended, may be permitted to directors,
officers and controlling persons of the Company pursuant to the
foregoing provisions or otherwise, the Company has been advised that
in the opinion of the Securities and Exchange Commission such
otherwise, the Company has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is therefore unenforceable.
In the event that a claim for indemnification against such
liabilities (other than payment by the Company of expenses incurred
or paid by a director, officer or controlling person of the Company
in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the Company will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction
the question of whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final
adjudication of such issue.
C. Further Undertakings
The Company undertakes to file a post effective amendment to the
Registration Statement identifying any underwriter who may agree to sell any
shares of any Selling Stockholder, and to set forth the terms of any
underwriting agreement or arrangement. The said underwriter shall also
deliver a market making prospectus. As far as the Company is aware, there
exists no past, present or future plans, proposals, or undertakings with
respect to any underwriter and any selling stockholder.
<PAGE> 80
Part II, Page 5
The Company further undertakes to:
1. File during any period in which it offers or sells securities, a post
effective amendment to this Registration Statement to:
a) Include any prospectus required by Section 10 (a)(3) of the
Securities Act;
b) Reflect in the prospectus any facts or events which,
individually or together represent a fundamental change
in the information in the registration statement; and,
c) Include any additional or changed material information
on the plan of distribution.
2. For determining liability under the Securities Act of 1933, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial
bona fide offering.
3. File a post effective amendment to remove from registration any securities
that remain unsold at the end of the offering.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Company has duly caused this Registration Statement to
be signed on its behalf by the undersigned in the City of New York,
State of New York on June 9, 1998.
TRB SYSTEMS INTERNATIONAL INC.
By: /s/Byung Yim/s/
Byung Yim*
President and Chairman of the Board
of Directors
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed by the
following persons in the capacities and on the dates indicated.
Date: June 9, 1998.
TRB SYSTEMS INTERNATIONAL INC.
By: /s/Byung Yim/s
Byung Yim*
Chairman, Chief Executive Officer & Director
___________
* Mr. Yim is currently the sole member of the Company's Board of Directors.
<PAGE> 81
<PAGE> 82 BLANK PAGE
Registration Number 333-7242
SECURITIES & EXCHANGE COMMISSION
Washington, D.C 20549
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933, AS AMENDED
TRB Systems International Inc.
EXHIBITS
July 2, 1997
<PAGE> 83
EXHIBIT 5
Opinion of Selling Stockholders' Counsel
June 9, 1998
Securities and Exchange Commission
Washington, DC 20549
RE: TRB Systems International Inc.
Gentlemen:
This opinion is given in connection with the filing of registration number
333-7242 (the "Registration Statement") filed with the United States
Securities and Exchange Commission, as amended on June 9, 1998, as it
pertains to 844,009 currently outstanding or reserved shares of TRB Systems
International Inc.'s (the "Company") Common Stock, with par value of $0.001
per share held by Selling Stockholders or issuable at the discretion of the
Board of Director as described in the Registration Statement.
Certain terms used in this opinion characterized by initial capital letters
have the meaning set forth in the Prospectus which constitutes a portion of
the Registration.
We have examined the originals and copies of corporate instruments,
certificates and other documents of the Company and interviewed
representatives of the Company to the extent we deemed it necessary, in
order to form the basis for the opinion hereinafter set forth.
In such examination we have assumed the genuineness of all signatures and
authenticity of all documents submitted to us as certified or Photostat
copies. As to all questions of fact material to this opinion which have not
been independently established, we have relied upon statements or
certificates of officers or representatives of the Company.
According to the records maintained by the Company, there were, as of the
date of this opinion, 30,000,000 shares of common stock authorized, with a
par value of $0.001 each of which 11,925,626 shares of Common Stock were
issued.
Based upon the foregoing, we are of the opinion that:
The 11,925,626 shares of Common Stock of the Company heretofore issued are
fully paid and non-assessable and there is no personal liability to the
owners thereof.
This law firm hereby consents to the filing of this opinion as an exhibit to
the Registration Statement; however, this opinion is limited to the facts
set forth herein and is not to be interpreted as an opinion that the
Registration Statement has been properly prepared, or provides all required
disclosure.
Very truly yours
/s/ Charles C. Khym /s/
Charles C. Khym, Esq.
Corporate Counsel for the Company
39-01 Main Street, Suite 605
Flushing, NY 11354
<PAGE> 84
EXHIBIT 21
Subsidiaries of the Registrant
TRB Systems Inc.
4 Becker Farm Road, Roseland,
NJ 07068
(973) 994-4488
Incorporated in the State of Delaware in 1994, Wholly owned by the Registrant.
<PAGE> 85
EXHIBIT 24.6
Consent of Registrant's Auditors
June 9, 1998
Securities and Exchange Commission
Washington, DC 20549
RE. TRB Systems International Inc.
Gentlemen:
We have audited the balance sheet and accompanying statements of the
Registrant, as found in the Prospectus which forms part of this Registration
Statement, for the 9 month periods ending March 31, 1998 and March 31, 1997,
and the 1996 and 1997 fiscal years, ending on June 30, and consent to the
Auditor's reports, statements, and notes being filed with the SB2 Registration
Statement of which this exhibit forms a part, and with any amendment thereto.
This accounting firm hereby consents to the filing of this consent as an
exhibit to the Registration Statement.
/s/ Stan Lee /s/
Stan J. H. Lee, CPA
440 West St., 3rd Fl.
Fort Lee, NJ 07024-5058
<PAGE> 86
/stamp/
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
Filed 09:00 AM 04/09/1997
971115054 - 2739860/stamp/
CERTIFICATE OF INCORPORATION
TRB SYSTEM INTERNATIONAL INC.
FIRST: The name of the corporation is TRB SYSTEMS INTERNATIONAL
INC.
SECOND: It Registered Office is to be located at 1013 Centre Road,
Wilmington, Delaware 19805 in the county of New Castle - The Registered
Agent in charge thereof is W/K Corporate Services (DEL), INC.
THIRD: The purpose of the corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation law of Delaware.
FOURTH: The amount of the total authorized capital stock of this
corporation is Thirty Million (30,000,000), common shares all of which shall
have a par value of ($,0001).
FIFTH: The name and mailing address of the incorporator is as
follows:
Lawrence A. Kirsch
90 State Street
Albany, New York 12207
I, The UNDERSIGNED, for the purpose of forming a corporation under the law
of the State of Delaware, do make, file and record this Certificate, and do
certify that the facts herein are true, and I have accordingly hereunto set
my hand this 3rd day of April, 1997.
/s/ Lawrence A. Kirsch /s/
Incorporator
LAWRENCE A. KIRSCH
90 State Street
Albany, New York
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BY-LAWS
ARTICLE I
OFFICES
SECTION 1.1. REGISTERED OFFICE. The registered office of the
Corporation within the State of Delaware shall be located at the principal
place of business in such state of the corporation or individual acting as
the Corporation's registered agent in Delaware.
SECTION 1.2. OTHER OFFICES. The Corporation may also have other offices
and places of business, either within or without the State of Delaware, at
such place or places as the Board of Directors may from time to time appoint
or the business of the Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 2.1. PLACE. The annual meeting of the stockholders for the
election of directors and for any other proper business, and all special
meetings of stockholders for that or for any other purpose, may be held at
such time(subject to Section 2.2 hereof) and place within or without the
State of Delaware as shall be stated in the notice of the meeting, or in a
duly executed waiver of notice thereof.
SECTION 2.2. ANNUAL MEETINGS. The annual meeting of stockholders
shall be held on the first Tuesday of March of each year, or at such time in
March or April as may be fixed from time to time by the Board of Directors,
the first such meeting to be held in 1995.
SECTION 2.3. SPECIAL MEETINGS. Special meetings of the stockholders,
for any purpose or purposes, may be called at any time by a majority of the
Board of Directors or by the Chairman of the Board or by the President, and
shall be called by the President or the Secretary at the request in writing
of a majority of the Board or at the request in writing of stockholders owning
not less than thirty percent (30%) of all shares of common stock issued and
outstanding. Any such request shall state the purpose or purposes of the
proposed meeting. Whenever a special meeting shall be called by request of
the stockholders as described above,
such meeting must be held not more than fifteen (15) days after the making
of the request. Business transacted at a special meeting shall be confined
to the purposes stated in the notice, except upon the unanimous consent of
all the stockholders entitled to such notice.
SECTION 2.4. NOTICE. Written notice of the place, date and hour of any
annual or special meeting of the stockholders shall be given in accordance
with Article V hereof to each stockholder entitled to vote thereat, not less
than ten (10) nor more than sixty (60) days prior to the meeting except that
when the matter to be acted on is a merger or consolidation of the Corporation
or a sale, lease or exchange of all or substantially all of its assets, such
notice shall be given not less than twenty (20) nor more than sixty (60) days
prior to such meeting.
The notice of any meeting shall state, in addition, the purpose or purposes
for which the meeting is called and, if a special meeting, by or at whose
direction it is being called.
When a meeting is adjourned to another time or place, for any reason other
than because of the absence of a quorum, it shall not be necessary to give
any notice of the adjourned meeting if the time and place of adjourned
meeting are announced at the meeting at which the adjournment is taken, and
at the adjourned meeting any business may be transacted that might have been
transacted at the original meeting. However,
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if the adjournment is for more than thirty (30) days, or if after adjournment
the Board of Directors fixes a new record date for the adjourned meeting, a
notice of the adjourned meeting shall be given to each stockholder of record
entitled to vote at the meeting.
SECTION 2.5. STOCKHOLDERS LIST. The officer who has charge of the stock
ledger of the Corporation shall prepare and make, at least ten days before
every meeting of stockholders, a complete list of the stockholders entitled
to vote at the meeting, arranged in alphabetical order, and showing the
address of each stockholder and the number of shares registered in the name
of each stockholder. Such list shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary business
hours, for a period of at least ten days prior to the meeting, either at a
place within the city where the meeting is to be held, which place shall be
specified in the notice of the meeting, or, if not so specified, at the
place where the meeting is to be held. The list shall also be produced and
kept at the time and place of the meeting during the whole time thereof, and
may be inspected by any stockholder who is present.
SECTION 2.6. QUORUM. The presence, in person or by proxy, of
stockholders holding a majority of the shares of the Corporation entitled to
vote shall constitute a quorum at all meetings of the stockholders for the
transaction of business. In case a quorum shall not be present at any meeting,
a majority in interest of the stockholders entitled to vote thereat, present
in person or by proxy, shall have power to adjourn the meeting to some future
time not less than six nor more than twenty days later, and the Secretary shall
thereupon give at least three days' notice by mail to each stockholder
entitled to vote who was absent from such meeting. At any
such adjourned meeting at which the requisite amount of shares entitled to
vote shall be represented, any business may be transacted which might have
been transacted at the meeting as originally noticed. When a quorum is once
present to organize a meeting, it is not broken by the subsequent withdrawal
of any stockholders.
SECTION 2.7. VOTING. Each stockholder entitled to vote shall be
entitled to one vote, in person or by proxy, for each share entitled to vote
held by such stockholder. All elections for directors and, except as
otherwise provided by law or by the Certificate of Incorporation or these
By-Laws, all other matters shall be determined by vote of a majority of the
shares present or represented at such meeting and voting on such question.
No vote on any questions upon which a vote of the stockholders may be taken
need be by ballot, unless the Chairman of the Meeting shall order that such
vote be taken by ballot.
SECTION 2.8. PROXIES. Every proxy must be executed in writing, dated
and signed by the stockholder or by his attorney-in-fact and filed with the
Secretary. No proxy shall be valid after the expiration of three (3) years
from the date thereof, unless otherwise provided in the proxy. Every proxy
shall be revocable at the pleasure of the stockholder executing it or of his
legal representatives or assigns, except in those cases where an irrevocable
proxy is permitted by law.
SECTION 2.9. ACTION WITHOUT MEETING. Whenever a vote of stockholders
at a meeting thereof is required or permitted to be taken in connection with
any corporate action by any provision of law or of the Certificate of
Incorporation or these By-laws, the meeting, prior notice thereof and vote
of stockholders may be dispensed with if the holders of all outstanding
shares entitled to vote thereon shall consent in writing to the taking of
such action.
ARTICLE III
DIRECTORS
SECTION 3.1. NUMBER AND TERM. The number of directors which shall
constitute the whole Board shall initially be one and may be changed from
time to time by vote of the stockholders. No decrease shall have the effect
of shortening the term of any incumbent director. Directors need not be
stockholders of the Corporation. Except as provided in Section 3.4, the
directors shall be elected at the
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annual meeting of the stockholders and each director shall be elected to
serve until their successor has been elected and shall qualify or until their
prior resignation or removal.
SECTION 3.2. RESIGNATIONS. Any director, member of a committee or
other officer may resign at any time. Such resignation shall be made in
writing, and shall take effect
at the time specified therein, and if no time be specified, at the time of
its receipt by the President or Secretary. The acceptance of a resignation
shall not be necessary to make it effective.
SECTION 3.3. REMOVAL OF DIRECTORS. Any or all of the directors may be
removed for cause by vote of the stockholders or by action of the Board of
Directors. Directors may be removed without cause only by vote of all the
stockholders holding a majority of the shares then outstanding at any special
meeting called for that purpose or at any annual meeting.
SECTION 3.4. NEWLY CREATED DIRECTORSHIPS AND VACANCIES.
Newly created directorships resulting from an increase in the number of
directors and vacancies occurring in the Board for any reason except the
removal of directors may be filled by a vote of a majority of the directors
then in office, although less than a quorum exists. Vacancies occurring by
reason of the removal of directors shall be filled by vote of the
stockholders. A director elected to fill a vacancy caused by resignation
death or removal shall be elected to hold office for the unexpired term of
his predecessor.
SECTION 3.5. POWERS. The affairs, property and business of the
Corporation shall be managed by or under the direction of the Board of
Directors which may exercise all such powers of the Corporation and do all
such lawful acts and things as are not by statute, by the Certificate of
Incorporation or by these By-laws directed or required to be exercised or
done by or reserved to the stockholders.
ARTICLE IV
MEETINGS OF THE BOARD
SECTION 4.1. PLACE. The Board of Directors of the Corporation may hold
meetings, both regular and special, either within or without the State of
Delaware.
SECTION 4.2. MEETINGS OF THE BOARD.
4.2.1. The annual meeting of the Board shall be held within ten (10) days
of each annual meeting of stockholders at such time and place as shall be
fixed from time to time by resolution of the Board of Directors. Other
regular meetings of the Board of Directors shall be held at such time and
place and upon such notice as the Board shall from time to time by resolution
prescribe.
4.2.2. Special meetings of the Board may be called by the President or
Chairman of the Board at any time. Upon the written request of two directors,
the President, Chairman of the Board or Secretary must call a special
meeting to be held not more than ten
days after receipt of such request. Notice of a special meeting shall be
served upon each director at least three days before the day therein
designated for such meeting. The notice of meeting need not set forth the
purpose or purposes of the meeting.
4.2.3. A majority of directors present whether or not a quorum is present
may adjourn any meeting to another time and place. Notice of the adjournment
shall be given to all directors who were absent at the time of the
adjournment and, unless such time and place are announced at the meeting,
to the other directors.
SECTION 4.3. QUORUM: ACT OF THE BOARD OF DIRECTORS. At all
meetings of the Board of Directors a majority of the entire Board shall
be necessary to be and constitute a quorum for the transaction of business.
Except as otherwise required by law or the Certificate of
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Incorporation, the vote of a majority of the directors present at a meeting
at which a quorum is present shall be the act of the Board of Directors. If a
quorum shall not be present at any meeting of the Board of Directors, the
directors present thereat may adjourn the meeting from time to time, until a
quorum shall be present. Notice of any such adjournment shall be given to
any directors who were not present and, unless announced at the meeting, to
the other directors. For purposes of the foregoing, any director who
participates in any meeting of the Board of Directors by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other shall be deemed to be
present in person at such meeting.
SECTION 4.4. EXECUTIVE, FINANCE AND OTHER COMMITTEES. The
Board of Directors, by resolution adopted by a majority of the entire
Board, may designate from among its members an Executive Committee, a
Finance and Administration Committee and such other committees as the Board
may from time to time determine, each committee to consist of three or more
directors, and each of which Committees shall, to the extent provided in the
applicable resolution, have all the authority of the Board to the fullest
extent permitted by law. The Board may designate one or more directors as
alternate members of any such Committee who may replace any absent member or
members at any meeting of any such Committee. Each such Committee or any
member thereof shall serve at the pleasure of the Board. For purposes of the
foregoing, any member who participates in any meeting of the committee
concerned by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can
hear each other shall be deemed to be present in person at suchmeeting.
SECTION 4.5. COMPENSATION. Directors, as such, shall not receive any
stated salary for their services. However, by resolution of the Board of
Directors a fixed fee and expenses of attendance, if any, may be allowed for
attendance at each regular or special meeting of the Board of Directors or of
any committee of the Board of Directors, provided that nothing herein contained
shall be construed to preclude any director from serving the Corporation in
any other capacity and receiving compensation therefor.
SECTION 4.6. ACTION WITHOUT MEETING. Whenever any action is required or
permitted to be taken at a meeting of the Board of Directors, such action
may be taken without a meeting if, prior or subsequent to the taking of such
action, all members of the Board of Directors consent thereto in writing
and such written consent or consents are filed with the minutes of the
proceedings of the Board; and such written consent or consents shall have
the same effect as a unanimous vote at a meeting of the Board of Directors
at which all members thereof were present and voted.
ARTICLE V
NOTICES
SECTION 5.1. FORM; DELIVERY. Notices to directors and stockholders
shall be in writing and may be delivered personally or by mail (airmail if
over 200 kilometers distance) or by fax. Notice by mail shall be deemed to
be given at the time when deposited in the mail, postage prepaid, and
directed to directors or stockholders at their addresses appearing on the
records of the Corporation.
SECTION 5.2. WAIVER. Whenever a notice is required to be given by any
law or these By-laws, a waiver thereof in writing, signed by the person or
persons entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent to such notice. Attendance of a person at
a meeting of stockholders, directors or any committee of directors, as the
case may be, shall constitute a waiver of notice of such meeting, except
where the person is attending for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of
stockholders, directors or committee of directors need be specified in any
written waiver of notice.
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ARTICLE VI
OFFICERS
SECTION 6.1. OFFICERS. The officers of the Corporation shall include a
President and a Secretary, who shall be appointed by the Board of Directors
and shall hold office until their successors are appointed. In addition, the
Board of Directors may elect a Chairman of the Board of Directors, a Vice
Chairman of the Board, one or more Executive Vice Presidents, one or more
Senior Vice Presidents, one or more Vice Presidents, one or more Assistant
Vice Presidents, a Treasurer, and such Assistant Secretaries, Assistant
Treasurers and Assistant Controllers as they may deem proper. None of the
officers of the Corporation (other than the Chairman and Vice-Chairman of
the Board) need be directors. Except as otherwise provided in
these By-laws or by resolution of the Board of Directors, all officers
having the same general title shall be equal to each other in rank and
authority. The officers shall be elected at the meeting of the Board of
Directors following each annual meeting of stockholders. Should more than
two persons be nominated for the same office, and on the first vote no
nominee shall receive a vote of a majority of the entire Board, then a
second vote shall be taken, with only the two nominees who received the
first and second highest number of votes on the first voting remaining as
candidates for such office. Any number of offices may be held by the same
person, except that the offices of President and Secretary shall be held by
different persons. Any officer elected or appointed by the Board of Directors
may be removed with or without cause at any time by the Board of Directors.
SECTION 6.2. OTHER OFFICERS AND AGENTS. The Board of Directors may
appoint such other officers, agents and holders of powers of attorney as it
may deem advisable, who shall hold their offices for such terms and shall
exercise such powers and perform such duties as shall be determined from
time to time by the Board of Directors.
SECTION 6.3. COMPENSATION. The compensation of Senior Vice Presidents
and above shall be fixed by the Board of Directors, and the compensation of
other officers and agents shall either be so fixed or shall be fixed by
officers thereunto duly authorized. The fact that any officer is a director
shall not preclude him from receiving a salary or from being present and
being counted to make up a quorum in voting upon a resolution by which such
salary is fixed.
SECTION 6.4. VACANCIES. If an office becomes vacant for any reason,
the Board of Directors may fill such vacancy. Any officer so appointed or
elected by the Board of Directors shall serve only until such time as the
unexpired term of his predecessor shall have expired, unless reappointed by
the Board of Directors.
SECTION 6.5. TRANSFER OF PROPERTY POSSESSED BY OFFICER ON RESIGNATION
OR REMOVAL. In case any officer shall resign or be removed from office as
provided by these By-laws, or in the event his term of office otherwise
expires, such officer shall forthwith deliver all property of the Corporation
in his possession or under his control to some person to be designated by
the Board of Directors or by the President of the Corporation.
SECTION 6.6. CHAIRMAN OF THE BOARD. The Chairman of the Board of
Directors (if any) shall preside at all meetings of the stockholders and of
the Board of Directors and he shall have and perform such other duties as
from time to time may be assigned to him by the Board of Directors.
SECTION 6.7. VICE-CHAIRMAN OF THE BOARD. In the absence or incapacity
of the Chairman (if any), the Vice-Chairman of the Board of Directors shall
preside at all meetings of the stockholders and of the Board of Directors
and he shall have and perform
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such other duties as from time to time may be assigned to him by the Board
of Directors or the Chairman of the Board.
SECTION 6.8. PRESIDENT. The President shall be chief executive
officer of the Corporation and shall have general and active management of
the Corporation and shall see that all orders and resolutions of the Board
of Directors are carried into effect. In the absence of the Chairman or
Vice-Chairman of the Board (if any), the President shall preside at all
meetings of the stockholders and the Board of Directors. The President shall
cause to be called regular and special meetings of the stockholders and
directors in accordance with the requirements of law and of these By-laws.
He shall present at each annual meeting of the stockholders and directors a
report of the condition of the business of the Corporation.
SECTION 6.9. EXECUTIVE VICE PRESIDENT(S). The Executive Vice
President(s), acting under the direction of the President, shall manage the
business and affairs of the Corporation and shall have such other powers and
duties as may from time to time be assigned to him or them by the Board of
Directors or the President.
SECTION 6.10. SENIOR VICE PRESIDENT(S); VICE PRESIDENT(S);
ASSISTANT VICE PRESIDENT(S). Each Senior Vice President, Vice President,
and Assistant Vice President shall be the head of such group or unit as the
Board of Directors shall from time to time determine and shall have such
powers, duties and responsibilities as the Board of Directors or the
President may prescribe.
SECTION 6.11. THE SECRETARY AND ASSISTANT SECRETARY(IES).
The Secretary shall attend all meetings of the Board of Directors and all
meetings of the stock-holders and record all the proceedings of the meetings
of the Corporation and of the Board of Directors in a book to be kept for
that purpose and shall perform like duties for any committees, if required.
He shall give, or cause to be given, notice of all meetings of the
stockholders and meetings of the Board of Directors, and shall perform such
other duties as may be prescribed by the Board of Directors or the President,
under whose supervision he shall be. He shall have custody of the Seal of the
Corporation and he or an Assistant Secretary shall have authority to affix the
same to any instrument requiring it and when so affixed, it may be attested
by his signature or by the signature of such Assistant Secretary. The Board
of Directors may give general authority to any other officer to affix the
Seal of the Corporation and to attest the affixing by his signature. He
shall keep in safe custody the certificate books and stockholder records and
such other books and records as the Board of Directors may direct and
shall perform all other duties incident to the office of Secretary.
The Assistant Secretary, or if there be more than one, the Assistant
Secretaries in the order determined by the Board of Directors (or if there
be no such determination, then in the order of their election), shall in the
absence of the Secretary or in the event of his inability or refusal to act,
perform the duties and exercise the powers of the Secretary and shall
perform such other duties and have such other powers as the Board of
Directors or the President may from time to time prescribe.
SECTION 6.12. THE TREASURER OR SENIOR FINANCIAL OFFICER; AND
ASSISTANT TREASURER(S). The Treasurer, or the senior financial officer of
the Corporation if there be no Treasurer, shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit
of the Corporation in such depositories as may be designated by the Board of
Directors. He shall disburse the funds of the Corporation as may be ordered
by the President or Board of Directors, taking proper vouchers for such
disbursements, and shall render to the President and the Board of Directors,
at its regular meetings, or when the Board of Directors so requires, an
account of all his transactions as Treasurer (or as senior financial
officer) and of the financial condition of the Corporation. If required by
the Board of Directors, he shall give the Corporation a bond (which shall be
renewed from time to time) in such sum and with such surety or
sureties as shall be
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satisfactory to the Board of Directors for the faithful
performance of the duties of his office and for the restoration to the
Corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the Corporation.
He shall exhibit his books of account to any director of the Corporation
upon application at the office of the Corporation during business hours and
shall further perform all other duties incident to the office of Treasurer.
The Assistant Treasurer, or if there shall be more than one, the
Assistant Treasurers in the order determined by the Board of Directors (or
if there be no such determination, then in the order of their election),
shall, in the absence of the Treasurer or in the event of his inability or
refusal to act, perform the duties and exercise the powers of the Treasurer
and shall perform such other duties and have such other powers as the Board
of Directors or the President may from time to time prescribe.
SECTION 6.13. THE CONTROLLER AND ASSISTANT CONTROLLER(S).
The Controller shall be one of the principal accounting officers having
supervision over the accounting books, accounting records and forms of the
Corporation. The Controller shall have such duties as the President or the
Board of Directors may from time to time determine or assign to him, which
duties may include the signing of checks, drafts and orders for the payment
of money when so authorized by the Board of Directors.
The Assistant Controller, or if there shall be more than one, the Assistant
Controllers in the order determined by the Board of Directors (or if there be
no such determination, then in the order of their election), shall, in the
absence of the Controller or in the event of his inability or refusal to act,
perform the duties and exercise the powers of the Controller and shall
perform such other duties and have such other powers as the Board of
Directors or the President may from time to time prescribe.
ARTICLE VII
CERTIFICATES OF STOCK
SECTION 7.1. FORM; SIGNATURE. The certificates for shares of stock of
the Corporation shall be in such form as shall be determined by the Board of
Directors and shall be numbered consecutively and entered in the books of
the Corporation as they are issued. Each certificate shall exhibit the
registered holder's name and the number and class of shares, the designation
of the series, if any, the date of issue and shall be signed by, or in the
name of the Corporation by, (i) the Chairman of the Board of Directors, the
President or an Executive Vice President and (ii) the Treasurer, an Assistant
Treasurer, the Secretary or an Assistant Secretary of the Corporation,
certifying the number of shares owned by him in the Corporation. Each
certificate shall be sealed with the Seal of the Corporation, which may be
affixed by any of the above named officers after the same has been signed,
as above provided. All certificates exchanged or returned to the Corporation
shall be marked "Canceled" with the date of the cancellation by the Secretary
and shall be immediately affixed in the certificate book opposite the
memorandum of their issue.
SECTION 7.2. LOST CERTIFICATES. The Board of Directors may direct a
new certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Corporation alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming the certificate to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates, the Board of
Directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or his legal representative, to advertise the same in such
manner as it shall require and/or to give the Corporation a bond in such
sum as it may direct as indemnity against any claim that may be made against
the Corporation with respect to the certificate alleged to have been lost,
stolen or destroyed.
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SECTION 7.3. TRANSFER OF SHARES. The shares of the Corporation shall
be assignable and transferable on the books of the Corporation only by the
person in whose name they appear on said books or by his legal
representative, upon surrender of the certificate properly endorsed. In case
of transfer by power of attorney, the power of attorney, duly executed and
acknowledged, shall be deposited with the Secretary. In all cases of
transfer the former certificate must be surrendered and canceled before a
new certificate will be issued. No share shall be transferred until all
previous calls thereon shall have been fully paid in. No transfer shall be
made upon the books of the Corporation within ten days next preceding the
annual meeting of the stockholders.
SECTION 7.4. REGISTERED STOCKHOLDERS. The Corporation shall be
entitled to recognize the exclusive right of a person registered on its
books as the owner of
shares, and to hold liable for calls and assessments a person registered on
its books as such owner, and shall not be bound to recognize any equitable
or other claim to or interest in such share or shares on the part of any
other person, whether or not it shall have express or other notice thereof,
except as otherwise provided by the laws of Delaware.
SECTION 7.5. RECORD DATE. For the purpose of determining the
stockholders entitled to notice of or to vote at any meeting of stockholders
or any adjournment thereof, or to express consent to or dissent from any
proposal without a meeting, or for the purpose of determining stockholders
entitled to receive payment of any dividend or the allotment of any rights,
or for the purpose of any other action affecting the interests of
stockholders, the Board of Directors may fix, in advance, a record date.
Such date shall not be more than sixty (60) nor less than ten (10) days
before the date of any such meeting, nor more than sixty (60) days prior
to any other action.
In each such case, except as otherwise provided by law, only such
persons as shall be stockholders of record on the date so fixed shall be
entitled to notice of, and to vote at, such meeting and any adjournment
thereof, or to express such consent or dissent, or to receive payment of
such dividend, or such allotment of rights, or otherwise to be recognized as
stockholders for the purpose of any other action, notwithstanding any
registration of transfer of stock on the books of the Corporation after
any such record date so fixed.
If no record date is fixed: (1) the record date for determining the
stockholders entitled to notice of or to vote at a meeting shall be at the
close of business on the day next preceding the date on which notice is
given, or, if no notice is given, the day next preceding the day on which
the meeting is held; (2) the record date for determining the stockholders
entitled to express written consent to the taking of any corporate action
without a meeting, when no prior action of the Board of Directors is
necessary, shall be the day on which the first written consent is expressed;
and (3) the record date for determining stockholders for any purpose other
than those specified in subparagraphs (1) and (2) shall be at the close of
business on the day on which the resolution of the Board of Directors
relating thereto is adopted.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.1. DIVIDENDS. Dividends upon the shares of stock of the
Corporation may be declared by the Board of Directors at any regular or
special meeting pursuant to law. Dividends may be paid in cash, in property,
or in shares of stock, subject to the provisions of the Certificate of
Incorporation and the provisions of the Delaware General Corporation Law.
SECTION 8.2. RESERVES. Before payment of any dividend, there may be
set aside out of any funds of the Corporation available for dividends such
sum or sums as the Board of Directors, in its absolute discretion, thinks
proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the Corporation,
or for such other purpose as
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the directors shall think conducive to the interests of the Corporation, and
the directors may modify or abolish any such reserve in the manner in which
it was created.
SECTION 8.3. CHECKS. All checks, drafts or other orders for the
payment of money, notes or other evidence of indebtedness of the Corporation
shall be signed by such officer or officers or such other person or persons
as the Board of Directors may from time to time designate.
SECTION 8.4. EXECUTION OF INSTRUMENTS All corporate instruments and
documents shall be signed or countersigned, executed, verified or
acknowledged by the President or a Vice President, or by such other officer
or officers as the Board of Directors or the President may from time to time
designate.
SECTION 8.5. CERTAIN RESTRICTIONS ON AUTHORITY OF OFFICERS.
In addition to any provisions of these By-laws regarding the authority of the
various officers of the Corporation, the stockholders, or the Board of
Directors subject to the control of the stockholders, may by resolution
impose monetary or other restrictions on the authority of various officers
of the Corporation to enter into contracts or other transactions on behalf
of the Corporation.
SECTION 8.6. FISCAL YEAR. The fiscal year of the Corporation shall
be the calendar year.
SECTION 8.7. SEAL. The Seal of the Corporation shall be circular in
form and bear the name of the Corporation, and the year of its incorporation.
The Seal may be used by causing it to be impressed directly on the instrument
or writing to be sealed or upon adhesive substance affixed thereto. The Seal
of the certificates for shares or on any corporate obligation for the payment
of money may be a facsimile, engraved or printed.
ARTICLE IX
INDEMNIFICATION AND INSURANCE
SECTION 9.1. INDEMNIFICATION. The Corporation shall (a) indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
Corporation to procure a judgment in its favor by reason of the fact that
such person is or was a director or officer of the Corporation, or
is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection
with the defense or settlement of such action or suit, and (b) indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Corporation), by reason of the fact that such person is or was a
director or officer of the Corporation, or served at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by such person in
connection with any such action, suit or proceeding, in each case to the
fullest extent permissible under Section 145(a) through (e) of the Delaware
General Corporation Law or the indemnification provisions of any successor
statute. Expenses incurred by a director or officer in defending a civil or
criminal action, suit or proceeding shall be paid by the Corporation in
advance of the final disposition of such action, suit or proceeding upon
receipt of an undertaking by or on behalf of such director or officer to
repay such amount if it shall ultimately be determined that he is not
entitled to be indemnified by the Corporation as authorized in Section
145 of the Delaware General Corporation Law. The foregoing rights of
indemnification and advancement of expenses shall in no way be exclusive
of any other rights of indemnification or advancement of expenses to which
any such person may be entitled
<PAGE> 96
under any By-law, agreement, vote of
stockholders or disinterested directors or otherwise, and shall inure to the
benefit of the heirs, executors and administrators of such a person.
SECTION 9.2. INSURANCE The Corporation shall have power to purchase
and maintain insurance on behalf of any person who is or was a director,
officer, employee or agent of the Corporation or is or was serving at the
request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against any liability asserted against him and incurred by him in any
such capacity, or arising out of his status as such, to the full extent
allowable under Section 145(g) of the Delaware General Corporation Law.
ARTICLE X
AMENDMENTS
SECTION 10.1. POWER OF STOCKHOLDERS TO AMEND. These By-laws may be
altered, amended, repealed or added to by the affirmative vote of
stockholders representing a majority of the entire outstanding capital stock
having voting power at an annual meeting or at a special meeting called for
that purpose, provided that a written notice shall have been given to each
stockholder of record entitled to vote at such meeting, which notice shall
state the alterations, amendments or changes which are proposed to be made
in such By-laws. Only such changes shall be made as have been specified in
the notice. If, however, all the stockholders shall be present at any annual
or special meeting, these By-laws may be amended by a unanimous vote,
without any previous notice.
<PAGE> 97
EXHIBIT 10.1
Summary of Lease between TRB Systems Inc. and Jong Hwa Lee Inc.
The lease found at page 105 of the Exhibits filed as part of the SB2
Filing on July 9, 1997 bearing registration Number 333-7242 (the "Exhibits")
is a lease for the premises occupied by TRB Systems Inc. in Taiwan and is
written in Chinese. A summary is presented below:
The premises are at 8 Floor-10, 231-2 Ching Hai Road, Section 3
Taijung, Taiwan; and occupy about 2500 square feet.
The landlord is Jong Hwa Lee Inc.
The term of the lease is June 1, 1996 to May 31, 1999
The monthly rental is $1,072 for the term of the lease.
The term of renewal are that the Company may renew the lease
on terms to be negotiated, notice of renewal to be supplied 90 days
prior to the expiry of the lease.
The monthly rental is net of all expenses, and TRB pays for all
heating, electricity and any other expenses, including business
and occupancy taxes, as billed by the landlord.
<PAGE> 98
EXCLUSIVE LICENSING AGREEMENT
AGREEMENT, dated as of March 22, 1994, by and between ABL PROPERTIES
COMPANY, a New Jersey partnership, with an address at 21 Hutton Avenue, No.6,
West Orange, New Jersey 07052 (hereafter called "Licensor"), and TRB SYSTEMS
INC., a New York corporation, having a place of business at 354 Eisenhower
Parkway, Suite #26, Livingston, New Jersey 07039 (hereafter called
"Licensee"). The parties agree as follows:
Part I. Background
1.1 Licensor has conducted research and experimental work relating to
Foot Operated Lever or Oscillating Pedal Propelled Bicycles and
Tricycles (hereafter called the "Technology") and is the owner of
certain patents and/or patent applications relating thereto which
are listed in Exhibit A to this Agreement and further including all
reissues, continuations, extensions, renewals, and divisions thereof
together with all priority rights therein (hereafter called "Patent
Rights") and is also the owner of unpatented know-how and trade
secrets relating to the Technology ("hereafter called "Know-How").
1.2 Licensee proposes to engage in the business of manufacturing and
selling Bicycles and Tricycles embodying the Technology and which
may be covered by the Patent Rights and Know-How (hereafter called
"Products" or "Licensed Products") and wishes to obtain a license to
use the Technology and information concerning the Technology from
the Licensor in the manufacture of such Products.
1.3 Licensor is willing to provide information concerning the Technology
and to grant licenses to the Licensee for the payments specified
hereafter to enable Licensee to manufacture and sell Licensed
Products.
03/25/94RRI/09152/001/LIC-AGRE/19123.1
ABL Properties/TRB License Agreement
1.4 Licensee has, for the ease of accountancy, requested Licensor to
grant license rights at flat rates for Licensed Products utilizing
the Technology or embodying the Patent Rights and Know-How.
Part II. Grant and Grant-Back
2.1 Subject to the conditions hereafter set forth, Licensor hereby
grants to Licensee an exclusive license to use the Know-How
concerning the Technology and to make, have made, use and sell
Licensed Products within the scope of the Patent Rights in all
countries world-wide except Taiwan and Korea. The license granted
herein includes the right to sublicense, subject to the same
conditions, including payment of royalties and confidentiality.
Any sublicenses shall terminate or expire with the termination or
expiration of Licensee's license.
2.2 In the event that Licensee or any of Licensee's employees shall make
or acquire any invention or improvement relating to inventions
licensed under this Agreement, then Licensee shall disclose and
<PAGE> 99
communicate such invention or improvement to Licensor and shall aid
and assist Licensor in acquiring patent protection thereof at the
expense of Licensor. Any such invention or improvement shall be
assigned to Licensor, together with all patent rights thereunder,
so that Licensee and all other licensees of Licensor shall have a
noncancellable royalty-free license as to any such inventions or
improvements during the life of this Agreement.
03/25/94/RRI/09152/001/LIC-AGRE/19123.1
ABL Properties/TRB License Agreement
Part III. Assistance
3.1 Licensor shall promptly after the date this Agreement becomes
effective, provide Licensee with all drawings, disclosures,
technical reports, tests and other documents relating to the
manufacture, use and/or sale of the Technology as have been prepared
by the Licensor.
3.2 Licensor shall provide to Licensee, at Licensor's expense, upon
request and during a period ending 90 days following the
transmittal of information under Part 3.1, up to 5 man days of
technical assistance of an engineer in the employ of Licensor
having knowledge of the transmitted information, for the purpose
of explaining and answering questions with respect to the
Technology. Such technical assistance shall be provided as soon as
it is practicable to do so after the request for assistance is
received.
Part IV. Payments and Reports
4.1 Licensee shall pay to Licensor the sum of TWO HUNDRED THOUSAND
DOLLARS ($200,000) as an initial license fee upon the execution of
this Agreement. Thereafter during the term of this Agreement,
Licensee shall pay to the Licensor royalties in accordance with the
rates specified in the following schedule on the net selling price
or fair market value ("Sales Value") of each Licensed Product sold
by it or its sublicensees.
03/25/94/RRI/09152/001/LIC-AGRE/19123.1
ABL Properties/TRB License Agreement
Schedule of Royalty Rates
per Calendar Year Starting with
the Calendar Year During Which
the Effective Date of This Agreement Occurred
Sales Value Royalty Rate
First $10 million of Sales Value One Percent (1.0%)
Second $10 million of Sales Value Quarters of One Percent (0.75%)
More than $20 million of Sales Value One-Half of One Percent (0.5%)
<PAGE> 100
4.2 The net selling price means the sum which is billed to customers
in the usual course of business less quantity and cash discounts
actually allowed and less sales, use, and other similar taxes
and any transportation, installation, or delivery charges borne
by the Licensee. When royalties shall have been paid on Licensed
Products not accepted or returned and not paid for by the
customer, such royalties shall be credited against future
royalties to be paid hereunder.
In the event that any Licensed Product is put into use or
otherwise disposed of, or if sales are made otherwise than by an
arms-length transaction, the net selling price shall not be less
than the fair market value (which shall not be less than the
complete cost of the product plus the Licensee's usual profit
factor).
Licensed Products shall be regarded as sold upon the earliest of
(i) date shipment is billed, (ii) date shipment is delivered or
(iii) date payment is made.
4.3 In the case of sublicenses or distributorships granted by
Licensee to sublicensees or distributors for territories other
than the United States of America (hereinafter collectively
called "International Sublicensees"), the following special
provisions shall apply:
03/25/94/RRI/09152/001/LIC-AGRE/19123.1
ABL Properties/TRB License Agreement
4.3.1 Licensee shall pay to Licensor or cause the International
Sublicensees to pay directly to Licensor, all license fees payable
to Licensee by International Sublicensees under the respective
sublicense or distributorship agreements between Licensee and the
International Sublicensees, subject to the Aggregate Limit defined
in 4.3.3 below.
4.3.2 Licensee shall pay to Licensor all profit earned on the sale of
Licensed Products to International Sublicensees, subject to the
Aggregate Limit.
4.3.3 Once the amounts paid by or on behalf of Licensee under
Sections 4.3.1 and 4.3.2, together with royalties paid to Licensor
on account of sales of Licensed Products by International
Sublicensees (or their distributors or subdistributors) in
accordance with Section 4.1, equal in the aggregate THREE MILLION
THREE HUNDRED TWENTY-FIVE THOUSAND DOLLARS ($3,325,000)
(herein called the "Aggregate Limit"), Licensee shall have no further
obligation with respect to the payment of license fees and profit
specified in Sections 4.3.1 and 4.3.2., but Licensee shall remain
obligated to pay royalties in accordance with Section 4.1.
4.3.4 It is understood that Licensee may decide to conduct its business
through a holding company structure involving the establishment of
separate subsidiaries for international operations and domestic US
operations. In such case, the international subsidiary shall assume
any existing license or distributorship agreements with International
Sublicensees and shall conduct all future licensing and other
contracting with International Sublicensees. and such subsidiary
shall be responsible for fulfilling the obligations of
03/25/94/RRI/09152/001/LIC-AGRE/19123.1
ABL Properties/TRB License Agreement
Licensee under this Section 4.3 (and under Section
4.1 with respect to royalties on account of sales by
International Sublicensees or their distributors or
subdistributors); provided, however, that Licensee
shall remain fully liable for ensuring the
fulfillment of such obligations by its subsidiary.
<PAGE> 101
4.4 Royalties shall be paid within 30 days after the end of each
semiannual period ending on June 30 or December 31, commencing with
the semiannual period during which the effective date of this
Agreement occurred. Together with such payment, Licensee shall
furnish the Licensor a statement, certified by a responsible official
of the Licensee, showing all Licensed Products which were sold or
put into use during such semiannual period, the net selling price,
or where applicable, the fair market values thereof, and the amount
of royalty payable thereon. If no Licensed Product has been sold or
put into use, the statement shall show that fact.
4.5 Royalty payments provided for in this Agreement shall, when overdue,
bear interest at an annual rate of 1 % over the rate quoted by the
head office of Citibank, NA in New York City as its "prime rate"
from time to time during delinquency.
4.6 Licensee shall bear all taxes imposed as a result of the existence
for operation of this Agreement.
4.7 Licensee shall keep full and accurate and complete books of account
and records of its development, manufacturing, and marketing
activities respecting Licensed Products in sufficient detail to
enable the determination and verification of the payments of
royalties and other obligations of the Licensee hereunder. Licensee
further agrees to permit Licensor's representatives to inspect
Licensee's books and records at all reasonable times during usual
business hours. Such records shall be kept for the term of this
Agreement and at least three years thereafter.
03/25/94/RRI/09152/001/LIC-AGRE/19123.1
ABL Properties/TRB License Agreement
Part V Production and Marketing
5.1 Licensee shall allocate sufficient quantities of its resources,
capital equipment, material, and labor so as to manufacture Licensed
Products and make them available to customers.
5.2 If in any calendar year starting 1994 the royalty payable hereunder
for that year, does not amount to One Hundred Thousand dollars
($100,000.00) and Licensee does not make up the deficiency within
60 days of the end of such year, the Licensor may by 30 days notice
in writing terminate the licenses granted by this Agreement to
Licensee.
Part VI. Warranty Disclaimer and Confidentiality
6.1 Each party represents and warrants that it has the right to grant
the rights and licenses granted by this Agreement and undertake the
obligations provided for in this Agreement.
6.2 Nothing in this Licensing Agreement shall be construed as:
(a) a warranty or representation by either party as to the
validity or scope of any patent;
(b) a warranty or representation that anything made or used
under any license granted herein is or will be free from infringement
of patents or other intellectual property rights of third persons;
(c) a requirement that either party shall file any patent
application. secure any patent, or maintain any patent in force;
(d) an obligation to bring or prosecute actions or suits against
third persons for infringement of any patent or for violation of any
proprietary rights;
03/25/94/RRI/09152/001/LIC-AGRE/19123.1
<PAGE> 102
ABL Properties/TRB License Agreement
(e) a granting by implication, estoppel, or otherwise any
licenses or rights under any technology or patents other than
expressly licensed by this Agreement; or
(f) a warranty or representation as to the accuracy, sufficiency,
or suitability for any use of any information furnished hereunder.
6.3 Licensor extends no warranty of any kind, express or implied, or
assumes any responsibility whatsoever with respect to the commercial
utility and profitability of the license to Licensee.
6.4 Licensee hereby agrees to indemnify and hold Licensor, his agents,
and employees harmless from any loss or expense or any claims arising
out of injury, disability, property damage, or death of Licensee's
employees, agents or representatives, or other parties acting on
Licensee's behalf who may visit Licensor's facilities, whether or
not such injury, disability, property damage. or death is due to the
negligence of Licensor, his agents, or employees.
6.5 The Licensee covenants to employ best efforts to protect the
Technology and Know-How, in particular not to make it accessible to
third parties, and to maintain the secrecy of documentary materials
set forth in Article 3.1., except as may be reasonably necessary for
the sale of Licensed Products or their commercial application after
sale.
6.6 The obligations set forth in Article 6.5 shall not apply to (a)
information which is disclosed notwithstanding Licensee's use of the
same precautions which it uses to protect its own confidential
Information; and (b) information which is confidential hereunder
but which comes into the public domain without breach of the
obligation of confidence as set forth herein, or is known to Licensee
prior to receipt, or is received by Licensee from a third party
without restriction. This Article and Article 6.5 shall survive the
expiration or termination of this Agreement.
03/25/94/RRI/09152/001/LIC-AGRE19123.1
ABL Properties/TRB Licensing Agreement
6.7 Should either party learn or believe that the Licensor's Patent
Rights or Know-How licensed hereunder is being infringed upon by a
third party, that party shall inform the other party of all facts
known to it concerning the infringement thereof without delay as soon
as such infringement shall become known. The parties will consult
with respect to the advisability of legal proceedings against the
infringer. Should the Licensor elect to undertake no legal procedures
in enforcement of such rights, the Licensee is empowered to initiate
such action in the Licensor's name and place, and Licensor shall
cooperate with the Licensee without charge, but upon payment of
Licensor's reasonable expenses.
6.8 Licensor will promptly notify licensee of any and all Issue Fees or
Maintenance Fees required to secure any patent or maintain any patent
in force and in the event the Licensor chooses not to pay such fees,
the Licensee shall have the right to make such payments in the
Licensor's name and Licensor shall cooperate with the Licensee
without charge, but upon payment of Licensor's reasonable expenses.
6.9 Should the Licensor elect not to file foreign patent applications,
which he has the right to file, Licensee shall have the right to
file such patent applications in any country except Taiwan and Korea
corresponding to any patent or patent application included in the
Patent Rights. Licensor shall permit the use of his name on any such
applications and shall cooperate with the Licensee without charge,
but upon payment of Licensor's reasonable expenses.
03/25/94/RRI/09152/001/LIC-AGRE/19123.1
<PAGE> 103
ABL Properties/TRB License Agreement
Part VII. Termination
7.1 Unless earlier terminated as provided for herein, this Agreement shall
continue until the expiration of the last to expire patent included
in the Patent Rights.
7.2 If at any time either party shall fail any of its obligations and
where such failure, if remediable, is not remedied within 30 days of
the notice of the other party to do so, then the other party may
give a written notice declaring that this Agreement is terminated.
7.3 This Agreement shall terminate, upon occurrence of any of the
following events unless Licensor otherwise elects upon notice of
occurrence of the event:
(i) Licensee makes an assignment for the benefit of creditors, commences
(as the debtor) a case in Bankruptcy, or commences (as the debtor)
any proceeding under any other insolvency law;
(ii) A case in Bankruptcy or any proceeding under any other insolvency
law is commenced against Licensee (as the debtor) and is consented
to by Licensee or remains undismissed for 40 days, or Licensee
consents to or admits the material allegations against it in any
such case or proceeding; or
(iii) A trustee, receiver, or agent (however named) is appointed or
authorized to take charge of substantially all of the property of
Licensee for the purpose of enforcing a lien against such property
or for the purpose of general administration of such property for
the benefit of creditors.
03/25/94/RRI/09152/001/LIC-AGRE/19123.1
ABL Properties/TRB License Agreement
Part VII. Miscellaneous
8.1 Neither this Agreement nor any licenses or right hereunder, in whole
or in part, which are granted by Licensor to Licensee shall be
assignable or otherwise transferable without the written consent of
Licensor; provided, however, that this provision shall not be
construed to restrict Licensee from transferring its rights and
obligations hereunder to a newly formed Delaware corporation into
which Licensee may be merged or from sublicensing to wholly-owned
subsidiary corporations for the purpose of further sublicensing the
rights granted hereunder.
8.2 Any notice, request, or information shall be deemed to be
sufficiently given by one party when sent by certified mail
addressed to the other party and to the attention of the individual
executing this Agreement at its office above specified or at such
address and to the attention of such specified individual as the
other party shall have designated by written notice.
8.3 In the event that any provision of this Agreement shall be rendered
invalid or otherwise unenforceable by any competent or judicial
government authority, such invalidity or unenforceability shall not
affect the validity or enforceability of any other provision of this
Agreement unless such invalidity or unenforceability does substantial
violence to the Agreement as a whole.
8.4 The construction or performance of this Agreement shall be governed
by the law of the State of New York.
8.5 This Agreement sets forth the entire agreement and understanding
between the parties as to the subject matter hereof and merges all
prior understandings, discussions, and negotiations between them. It
amends and supersedes the Exclusive Licensing Agreement between the
parties dated October 19, 1993. Neither of the parties shall be
bound by any conditions, definitions, warranties, understandings,
or representations with respect to such subject
03/25/94/RRI/09152/001/LIC-AGRE/19123.1
<PAGE> 104
ABL Properties/TRB License Agreement
matter other than as expressly provided herein or as duly
set forth on or subsequent to the dates hereof in writing
and signed by a proper and duly authorized representative of
the parties to be bound thereby.
IN WITNESS WHEREOF, each of the parties have caused this Agreement
to be executed in duplicate originals by its duly authorized
representative on the respective dates entered below.
TRB SYSTEMS INC. ABL PROPERTIES COMPANY
(Licensee) (Licensor)
By: /s/Byung D.Yim/s/ By: /s/Byung D.Yim/s/
Byung D. Yim
President
Date: March 31, 1997 Date: March 31, 1997
<PAGE> 105
REID & PRIEST
40 WEST 57TH STREET
NEW YORK, N.Y. 10019-4097
212/603-2000
WASHINGTON OFFICE NEW YORK OFFICE
MARKET SQUARE CABLE ADDRESS: "REIDAPT"
701 PENNSYLVANIA AVENUE N.W. TELEX: 710 581 6721 RDPT NYK
WASHINGT0N, D.C. 20004 220 534 RDPT UR
202 508-4000 FACSIMILE: 212 603 2298
TELEX: 440 630 RP WASH DIRECT DIAL NUMBER
FACSIMILE: 202 508-4321 212 603 2212
REF. 9152.001
9 December 1993
By FedEx
Mr. Byung Yim
21 Hutton Ave., No.6
West Orange, NJ 07052
Dear Mr. Yim:
Enclosed per our discussion of today is the original official filing receipt
issued by the U.S. Patent and Trademark Office confirming that Patent
4,630,839 has been assigned from Alenax Corporation to you as of 4 October
1993.
With best regards,
Sincerely,
/s / Marvin G. Goldman /s/
Marvin G. Goldman
cc: Pamela A. Curran Esq., R&P
<PAGE> 106
The Commissioner of Patents
and Trademarks
//Seal of Patent
Office //
Has received an application for a patent for a new and
useful invention. The title and description of the invention
are enclosed. The requirements of law have been complied
with, and it has been determined that a patent on the
invention shall be granted under the law.
Therefore, this
United States Patent
Grants to the person or persons having title to this patent
the right to exclude others from making, using or selling
the invention throughout the United States of America for
the term of seventeen years from the date of this patent,
subject to the payment of maintenance fees as provided by
law.
Commissioner of Parents and Trademarks
Attest
/s/Melvina Gary/s/
<PAGE> 107
UNITED STATES DEPARTMENT OF COMMERCE
Patent and Trademark Office
ASSISTANT SECRETARY AND COMMISSIONER
OF PATENTS AND TRADEMARKS
Washington, D C 2O231
DATE: 11/05/93
TO:
PAMELA A. CURRAN, ESQ.
REID & PRIEST
40 WEST 57TH STREET
NEW YORK, NY 10019
UNITED STATES PATENT AND TRADEMARK OFFICE
NOTICE OF RECORDATION OF ASSIGNMENT DOCUMENT
THE ENCLOSED DOCUMENT HAS BEEN RECORDED BY THE ASSIGNMENT BRANCH OF
THE U.S. PATENT AND TRADEMARK OFFICE. A COMPLETE MICROFILM COPY IS
AVAILABLE AT THE U.S. PATENT AND TRADEMARK OFFICE ON THE REEL AND FRAME
NUMBER REFERENCED BELOW.
PLEASE REVIEW ALL INFORMATION CONTAINED ON THIS NOTICE. THE INFORMATION
CONTAINED ON THIS RECORDATION NOTICE REFLECTS THE DATA PRESENT IN THE
PATENT ASSIGNMENT PROCESSING SYSTEM. IF YOU SHOULD FIND ANY ERRORS OR
QUESTIONS CONCERNING THIS NOTICE, YOU MAY CONTACT THE EMPLOYEE WHOSE
NAME APPEARS ON THIS NOTICE AT 703-308-9723. PLEASE SEND REQUEST FOR
CORRECTION TO: U.S. PATENT AND TRADEMARK OFFICE, ASSIGNMENT BRANCH,
NORTH TOWER BUILDING, SUITE 10C35, WASHINGTON, DC 20231
ASSIGNOR: DOC DATE: 09/29/93
ALENAX CORPORATION
RECORDATION DATE: 10/04/93 NUMBER OF PAGES 003 REEL/FRAME 6714/0668
DIGEST : ASSIGNMENT OF ASSIGNORS INTEREST
ASSIGNEE:
YIM, BYUNG D.
21 HUTTON AVENUE # 6
WEST ORANGE, NJ 07052
SERIAL NUMBER 6-759995 FILING DATE 07/29/85
PATENT NUMBER 4,630,839 ISSUE DATE 12/23/86
<PAGE> 108
/s/ Ruby Stevenson /s/
EXAMINER PARALEGAL
ASSIGNMENT BRANCH
ASSIGNMENT/CERTIFICATION SERVICES DIVISION
<PAGE> 109
Summary of Patents in Foreign Languages
A Japanese patent written in the Japanese language was granted
in Japan on February 20, 1992 for a 15 year duration. The patent granted
is described on page 88, and 91-92 herein.
A Korean patent written in the Korean language was granted with
respect to the Patent for Propulsion and Speed Change Mechanism as
described at pages 88, 91-92 herein, and was filed in Korea on
July 10, 1995. The patent renewal date is August 8, 2004.
A Chinese patent written in the Chinese language was granted with
respect to the Patent for Propulsion and Speed Change Mechanism as
described at pages 88, 91-92 herein, and was filed in China (Mainland) on
May 20, 1996. The patent is effective for 20 years.
<PAGE> 110
United States Patent [19] [11] Patent Number: 4,630,839
Seol [45] Date of Patent: Dec.23, 1986
[54] PROPULSION MECHANISM FOR Primary Examiner-John J. Love
LEVER PROPELED BICYCLES Assistant Examiner-Donn McGiehan
[75] Inventor: Marn T. Seol, Attorney, Agent, or Firm-Martin LuKacher
Rochester, N.Y.
[73] Assignee: Alenax Corp., [57] ABSTRACT
Rochester, N.Y.
[21] Appl. No.: 759,995 A bicycle having pivoted
lever pedal system (1,2,45)
[22] Filed: JUL29,1985 and lever arm length or
gear ratio (speed) change
[51] Int. CL.4 B62M 1/04 devices (3,4,5,6).
Propulsion forces from the
lever pedals (1) are
[52] U.S. CL 280/255; 280/236 transferred via the lever
arm length change device (3)
through a flexible
interconnecting cable and
pulley system (7, 8, 9, 10,
11, 12, 13) to a rear drive
hub assembly 14 having a pair
of one-way clutches which
allow the transfer of
forward driving forces and
enable the bicycle to be
rolled back.
[58] Field of Search 280/253,255,258,236
280/238, 74/138
[56] References cited
U.S. PATENT DOCUMENTS
3,759,534 9/1973 Clark 280/236
4,421,334 12/1983 Efros 280/236 34 claims, 9 Drawing Figures
(PICTURE OF BICYCLE)
<PAGE> 111
UNITED STATES DEPARTMENT OF COMMERCE
Patent and Trademark Office
ASSISTANT SECRETARY AND COMMISIONER
OF PATENTS AND TRADEMARKS
Washington, DC 20231
DATE: 12/06/93
TO:
NO9A
BYUNG D. YIM
350 FIFTH AVENUE, SUITE 7720
NEW YORK, NY 10118
UNITED STATES PATENT AND TRADEMARK OFFICE
NOTICE OF RECORDATION OF ASSIGNMENT DOCUMENT
THE ENCLOSED DOCUMENT HAS BEEN RECORDED BY THE ASSIGNMENT BRANCH OF
THE U.S. PATENT AND TRADEMARK OFFICE. A COMPLETE MICROFILM COPY IS
AVAILABLE AT THE U.S. PATENT AND TRADEMARK OFFICE ON THE REEL AND FRAME
NUMBER REFERENCED BELOW.
PLEASE REVIEW ALL INFORMATION CONTAINED ON THIS NOTICE. THE INFORMATION
CONTAINED ON THIS RECORDATION NOTICE REFLECTS THE DATA PRESENT IN THE
PATENT ASSIGNMENT PROCESSING SYSTEM. IF YOU SHOULD FIND ANY ERRORS OR
QUESTIONS CONCERNING THIS NOTICE, YOU MAY CONTACT THE EMPLOYEE WHOSE
NAME APPEARS ON THIS NOTICE AT 703-308-9723. PLEASE SEND REQUEST FOR
CORRECTION TO: U.S. PATENT AND TRADEMARK OFFICE, ASSIGNMENT BRANCH,
NORTH TOWER BUILDING, SUITE 10C35, WASHINGTON, DC 20231
ASSIGNOR: DOC DATE: 10/25/93
SEOL, MARN T.
RECORDATION DATE: 11/12/93 NUMBER OF PAGES 004 REEL/FRAME 6757/0296
DIGEST : ASSIGNMENT OF ASSIGNORS INTEREST
ASSIGNEE:
ALENAX CORPORATION
350 FIFTH AVENUE, SUITE 7720
NEW YORK, NY 10118
SERIAL NUNBER 7-675812 FILING DATE 03/27/91
PATENT NUMBER 5, 088,340 ISSUE DATE 02/18/92
/s/ /s/
EXAMINER/ PARALEGAL
<PAGE> 112
ASSIGNMENT BRANCH
ASSIGNMENT/CERTIFICATION SERVICES DIVISION
United States Patent [19]
<PAGE> 113
K. NAKAMATSU
NEW TOKYO BUILDING
31.MARUNOUCHI
3-CHOME
CHIYODA-KU. TOKYO
100 JAPAN
PATENT, TRADEMARK & LEGAL AFFAIRS
Formerly
NAKAMATSU
International Patent & Law Office
TELEPHONE: (03) 3211-9741-5
TELEX: 02225631 NAKPAT
FACSIMILE: 03-3214-6358 (G-II & G-III)
03-3214-6359 (G-II G-III)
CABLE:NAKAPATENT
ALENAX AMERICA CORPORATION
561 Route 1
South Edison, New Jersey 08817
U.S.A. -
December 6, 1991
FEB 20,1992
Re: Japanese Patent Application No. 62 - 270062
PROPULSION AND SPEED CHANGE MECHANISM
Byung D. Yim
Your Ref
Our File: XR-0739
(Div of Pat.App1n. No. 38105/1983)
Dear Sirs:
We are sending you the Letters Patent issued on the above identified
application:
<PAGE> 114
The particulars of this patent are as follows:
Title of Invention PROPULSION AND SPEED CHANGE MECHANISM
Inventor M.T. SEOL
Patentee: Byung D. Yim
Application No. 62-270062
Filing Date March 8, 1983
Publication No. 2-046436
Publication Date October 16, 1990
Patent No. 1622184
Date of Issue October 9, 1991
Term 15 years from the publication date, but not
exceeding 20 years from the filing date
Expiration Date Please see the attached sheet
Next Annuity Please see the attached sheet
Please refer to the Remarks mentioned in the attached sheet.
Yours faithfully,
/s/ /s/
Encls.
<PAGE> 115
REMFRY & SAGER
Attorneys-at-Law
Remfry House
8, Nangal Raya Business Centre, New Delhi- 110046
Fax:(011)559 4437, 559 8013 Tel(011)559 8024, 559 8073, 559 8074
Tix(031)76076, 76278 LEXD IN
E-Mail REMFRY [email protected]
PKY/IP/LPD
21st February, 1996
TRB SYSTEMS INC. REGISTERED AIR MAIL
354 Eisenhower Parkway
Suite 26
Livingston,
NEW JERSEY 07039
U.S.A.
Dear Sirs,
Attention : Mr. Byung D. Yim
re: ALENAX CORPORATION
Indian Patent No.175,131
Formerly Application No. 65/DEL/86
Dated 22nd January,1986
Your ref: Do. ML-0166
We have pleasure in enclosing herewith the sealed letters patent document in
respect of the above mentioned patent which has just been received from the
Indian Patent Office Please note the following important particulars:
PATENT NUMBER 175,131 (to be used for future reference)
DATE OF PATENT 22nd January,1986
TERM OF PATENT 14 years from 22nd January, 1986
DATE OF SEALING 17th November, 1995
DATE OF RECORDAL 27th December, 1995
RENEWALS In accordance with your instructions, we are paying
the accumulated 3rd to 11th annuities on this patent.
You will be advised separately by our Renewal
Department in this regard.
Kindly acknowledge safe receipt of this letter and its enclosure.
Yours faithfully,
/s/ /s/
Enclosure:
Letters Patent Document
Bombay Office Gresham Assurance House, 1 Sir PM Road, Bombay-400 001.
Tel-Fax. (022)2660907 Tix (011)82764 REFY IN
E-Mail REMFRY [email protected]
<PAGE> 116
GOVERNMENT OF INDIA
THE PATENT OFFICE
A NO 16508
No. 175131 of 22-01- 1986
WHEREAS ALENAX CORPORATION, A CORPORATION ORGANISED
UNDER THE LAWS OF THE STATE OF NEW YORK, U.S.A., OD 50 SPENCERPORT
ROAD, ROCHESTER, NEW YORK 14606. U.S.A
has/have declared that he/they are in possession of an invention for a lever
propelled bicycle
and that he is/they are the true and first inventor(s) thereof [or the legal
representatives(s) or assignee(s) of the true and first inventor thereof] and
that he is/they are entitled to a patent for the said invention, having
regard to the provision of the Patent Act. 1970 and that there is no
objection to the grant of a patent to him/them;
And whereas he has/they have by an application requested that a patent
may be granted to him/them for the said invention
And whereas he has/they have by and in his/their complete specification
particularly described and ascertained the nature of the said invention and
the manner in which the same is to be performed;
Now these presents that the abovesaid applicant(s) (including his/their
legal
representative(s) and assignee(s) or any of them) shall, subject to the
provisions of the Patents Act. 1970 and the conditions specified in Section
47 of the said Act and to the conditions and provisions specified by any
other law for the time being in force, have the exclusive privilege of
making, using, exercising, selling or distributing, their bicycle
in India
in India, for a term of fourteen
year from the twenty-second day of January 1986 and of authorizing any other
person to do so subject to the conditions that the validity of this patent
is not guaranteed and that the fees prescribed for the continuance of this
patent are duly paid.
In witness whereof. the Controller has caused this patent to be sealed as of
the twenty-second day of January 1986
/s/ /s/
Controller of Patents
17-11-95/26th Kartika 1917 ( Saka
Date of Sealing
Note: The fees for removal of this patent, if it is to be maintained, will
fall due on__________ day of __________________19 , and on the same day in
every year thereafter.
<PAGE> 117
NOTICE
The renewal fees payable to keep a patent in force under Section 53
of the Patents Act, 1970 (39 of 1970) are as follows:
Before expiration of 2nd year in respect of the 3rd year Rs. 100
" 3rd " 4th do Rs. 200
" 4th " 5th do Rs. 400
" 5th " 6th do Rs. 500
" 6th " 7th do Rs. 600
" 7th " 8th do Rs. 1000
" 8th " 9th do Rs. 1200
" 9th " 10th do Rs. 1400
" 10th " 11th do Rs. 2000
" 11th " 12th do Rs. 2200
" 12th " 13th do Rs. 2500
" 13th " 14th do Rs. 3000
(i) The above Schedule of renewal fees has came into force for all patents
NOTE l Sealed on or after 26, 6.1992
(ii) The fees for two or more years may be paid in advance.
When tendering the renewal fee full particulars regarding the number and
date of the patent and the name of the guarantee should be given.
(2)
If the renewel fee is not paid within the prescribed time an extension of
time up to 6 months can be obtained on payment of and additional fee of Rs.
100/- per month,
Application for extension of time should be made on Form 5.
(3)
Deeds of assignments of patents and other documents affecting the
proprietorship of patents such as licenses mortgages, etc. should be
entered in the Register of Patients as otherwise the rights or interests
created by such documents may not be recognized.
(4)
It is obligatory on the part of the patentee to supply information under
l46(2) read with Rule's 117(1) & 117(2). failure of which. will attract
the penalty provisions under the Patent's Act, 1970 You are, therefore,
requested to file the said information within the prescribed every year.
<PAGE> 118
632979
STANDARD PATENT
I, Andrew Addison Bain, Commissioner of Patents, grant a Standard Patent
with the following particulars:
Name and Address of Patentee:
Marn T. Seol, No 4-1 Lane 312 Min Chuan Road West District Taichung Taiwan,
Province Of China
Name at Actual Inventor: Marn T. Seol
Title of Invention: Multipurpose transmission mechanism for bicycles
Application Number: 85620/91
Term of Letters Patent: Sixteen years commencing on 8 October 1991
Priority Details:
Number Date Country
67581227 March 1991 UNITED STATES OF AMERICA
Dated this 11 day of May 1993
/s/ A.A.BAIN /s/
A.A.BAIN
COMMISSIONER OF PATENTS
<PAGE> 119
ASSIGNMENT
I/We Marn T. Seol
(name (s) of assignor (s))
in consideration of One Dollar ($1.00) and other good and valuable
consideration, the receipt of which is hereby acknowledged, do hereby sell
and assign to
ABL PROPERTIES COMPANY of 354 Eisenhower Parkway, Suite 26, Livingston,
New Jersey 07039 United States of America
(name and address of assignee)
all my/our right, title and interest in Canada in and to my/our invention
relating to Canadian Application No.2,052,997 MULTIPURPOSE TRANSMISSION
MECHANISM FOR BICYCLES
(title of invention)
as fully described and claimed in my/our application for a patent for such
invention and to all my/our corresponding right, title and interest in and
to any patent which may issue therefor.
SIGNED at LOTTE HOTEL, 1 SOGONG-DONG, CHUNG-KU, SEOUL, KOREA
this 23 day of Sept.1995.
/s/ Marn T. Seol /s/ /s/ Chang Kyu Chun /s/
(signature of the inventor) (signature of witness)
Marn T. Seol Chang Kyu Chun
<PAGE> 120
FINANCING AGREEMENT
THIS AGREEMENT is made and entered into as of December 15, 1993 by and
between TRB SYSTEMS INC., a New York corporation ("TRB"), and TIANJIN
WORLDWIDE INC., a New York corporation ("TWI").
W I T N E S S E T H:
WHEREAS, TRB and SINO-DANISH ENTERPRISES CO. LTD., a [nature of legal entity]
partially owned by the Municipalities of Tianjin, China ("Licensee"), have
entered into a licensing agreement on or around December 15, 1993 (the
"Licensing Agreement"), whereby Licensee is granted a license to manufacture
the TRB Patent Bicycles (as defined in the Licensing Agreement) for the
purpose of selling them back to TRB; and
WHEREAS, in order for TRB to purchase the TRB Patent Bicycles from Licensee
pursuant to the Licensing Agreement, TWI desires to provide certain financing
to TRB up to $2,000,000 under the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants and promises set forth herein, the parties hereto agree as follows:
Section 1. Letters of Credit.
1.1. TWI agrees to seek the issuance of one or more irrevocable documentary
letters of credit acceptable to TRB (each such documentary letter of credit
being an "LC"), in respect of TRB Patent Bicycles purchased by TRB from
Licensee, on the terms and conditions hereinafter set forth.
1.2. Within 5 working days after receipt by TWI of a written request from
TRB in substantially the form of Exhibit A hereto (the "LC Request"), TWI
shall cause an LC to be issued in accordance with each LC Request; provided,
however, that TWI has a right to refuse each LC Request under Section 1.6
below, in which event TWI shall notify TRB of such refusal within 2 working
days after receipt of such request. If TWI fails to so notify, it is deemed
that the LC Request concerned is accepted by TWI.
1.3. TRB shall pay TWI a financing charge of $11 per unit of the TRB Patent
Bicycles shipped under each LC (the "Financing Charge"), payable on or before
the 60th day after the date the TRB Patent Bicycles covered by such LC are
delivered to a warehouse in the United States jointly designated by TRB and
TWI (such 60th day after the delivery date being the "Payment Due Date").
1.4. On the Payment Due Date for each LC, Licensor shall reimburse Licensee
for all amounts, including all banking charges
except late payment charges, reimbursed to a bank on account of payments made
of any proper draft duly presented against such LC.
1.5. In the event that TRB pays the purchase price for any shipment of TRB
Patent Bicycles without obtaining financing from TWI, TRB shall not pay any
Financing Charge to TWI but shall pay to TWI $1 per unit for TWI's
cooperation with Licensee.
1.6. TWI shall not be obligated to seek the LC's for the benefit of TRB
in an aggregate amount exceeding at any time outstanding $2,000,000 (two
million dollars).
Section 2. Repayment by Sales Proceeds- Upon receipt by TRB of any sales
proceeds of the TRB Patent Bicycles, TRB shall, to the extent there exists
outstanding indebtedness by TRB to TWI, utilize at least 50 percent of the
sales proceeds so as to reduce such indebtedness. Any outstanding balance
indebtedness shall be paid by TRB on or before the Payment Due Date.
<PAGE> 121
Section 3. Security Interest. TRB hereby grants to TWI a security interest
in the TRB Patent Bicycles shipped to TRB under the foregoing financing
furnished by TWI, together with any proceeds thereof, to secure the payment
by TRB to TWI of any outstanding indebtedness hereunder.
Section 4. Term and Termination This Agreement shall continue in force for
a period of five years from the date of this Agreement, and thereafter shall
be renewed on mutually agreeable terms and conditions for additional
successive one-year periods unless one party gives the other notice of its
intention to terminate no later than 90 days prior to the expiration of the
term hereof or of any renewal period.
Section 5. Notices. All notices and other communications provided for
hereunder shall be in writing and mailed or delivered, if to TRB, at TRB
Systems Inc., 351 Eisenhower Parkway, Suite 26, Livingston, New Jersey
07039, Attention: Byung D. Yim; if to TWI, at its address at 26-30 West
28th Street, 3rd Floor, New York, New York 10001, Attention of Mr. Zong Yu
Tao, Chairman; or as to either party at such other address as is designated
by such party in a written notice to the other party. All such notices and
other communications shall, when mailed or delivered, respectively, be
effective when deposited in the mails by registered or certified mail,
postage prepaid, or delivered by commercial courier, addressed as aforesaid.
Section 6. Amendments. This Agreement may not be changed, amended or
modified except by a writing signed by the parties hereto.
12/14/93/PPV/09152/OO1/AGREE-11/27189.1
Section 7. Waiver. The waiver by either party hereto of any right
hereunder, or of the failure to perform or breach by the other party,
shall not be deemed a waiver of any other right hereunder or of any other
breach or failure by said other party, whether of a similar nature or
otherwise.
Section 8. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.
Section 9. Entire Agreement. This Agreement (together with the Exhibits
hereto) constitutes the entire agreement and understanding by the parties
hereto as to the subject matter of this Agreement, and merges all prior
discussions by and between them.
Section 10. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, but shall not be assignable or delegable
by any party without the prior written consent of the other party.
Section 11. Execution in Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their respective officers thereunto duly authorized, as of the
date first above written.
TRB SYSTEMS INC. TIANJIN WORLDWIDE INC.
By: /s/ Byung D. Yim /s/ By: /s/ Tao Zong-Yu /s/
Name: Byung D. Yim Name: Tao Zong-Yu
Title: President Title: Chairman and President
12/15/93/PPV/09152/001/AGREE-11/27189.1
<PAGE> 122
STATE OF NEW YORK)
)SS.
COUNTY OF NEW YORK)
On this 15th day of December 1993, before me came Byung D. Yim, who
presented evidence to me of his identity and who executed the
foregoing instrument on behalf of TRB Systems, Inc. and who acknowledged
that he executed the same.
/s/ Pamela Vorillas /s/
Notary Public
Pamela Vorillas
Notary Public, State of New York
No.31-4781703
Qualified in New York County
Commission Expires September 30, 1995
STATE OF NEW YORK)
)SS.
COUNTY OF NEW YORK)
On this 15th day of December 1993, before me came Zong Yu Tao, who presented
evidence to me of his identity and who executed the foregoing instrument on
behalf of Tianjin Worldwide Inc. and who acknowledged that he executed the
same.
/s/ Pamela Vorillas /s/
Notary Public
Pamela Vorillas
Notary Public, State of New York
No. 31-4781703
Qualified in New York County
Commission Expires
September 30, 1995
12/15/93/PPV/09152.001/AGREE-11/27189.1
<PAGE> 123
LICENSE AND MARKETING AGREEMENT
Agreement dated as of Sep.,13, 1994 by and between TRB SYSTEMS INC., a Delaware
corporation with its registered office at 201 North Walnut Street,
Wilmington, Delaware 19801 (hereinafter called "LICENSOR"), and Mr.
Konan Kouadio Simeon (hereinafter called "LICENSEE").
WHEREAS, LICENSOR owns or controls patents, trademarks, tradenames and
know-how relating to bicycles with variable speed lever action drive and
their manufacture; and
WHEREAS, LICENSEE desires to obtain from LICENSOR (i) licenses under
tradenames, trademarks and proprietary know-how of LICENSOR applicable to
such bicycles, (ii) to the extent LICENSOR has or controls patents applicable
to such bicycles in the relevant territory described in this Agreement,
licenses undo such patents, and (iii) technical assistance related to such
bicycles, together with the exclusive right to assemble, use, import, self,
and distribute such bicycles within the relevant territory in conformity with
the standard quality control and design requirements established by LICENSOR.
In consideration of the mutual covenants, terms and conditions hereinafter
set forth, the parties hereto mutually agree as follows:
ARTICLE I - DEFINITIONS
For the purposes of this Agreement, the terms listed below are defined,
whether in the singular or in the plural, as follows:
1.1 Affiliate - Any corporation or other business entity in which a
party hereto, directly or through one or more affiliates (i) owns more than
fifty percent (50%) of the stock entitled to vote for the election of
directors, or (ii) otherwise exercises a controlling interest in the
management in such corporation or entity, LICENSOR to determine, in its sole
judgment, whether such controlling interest exists.
1.2 Agreement - This License and Marketing Agreement, including the
Appendices and Exhibits hereto, as the same may be amended from time to time.
1.3 Anniversary Date - The date which occurs one (1) year from the date
of this Agreement and each succeeding anniversary thereof.
1.4 Gross Sales - For any period controlled by this Agreement, the total
of all sales of units of Licensed Product during the period at invoiced
prices, not reduced by discounts
05/03/94/MHN/09152/001AGREE-11/85561.1
allowances or other adjustments other than defective returns. For purposes
of this definition, a transfer of a completed unit will be deemed a sale
hereunder and the invoice price will be the amount actually billed but
will be no less than the LICENSEE's wholesale list price for such a unit
of the Licensed Products as published and distributed to the trade.
1.5 Know-How - All of the ideas, concepts, technical information,
inventions, materials (including, without limitation, drawings and
specifications) and processes used in the Licensed Products and the assembly
and servicing thereof.
1.6 Licensed Products - Invention(s) covered by the patents and know-how
relating to a bicycle with a variable lever action drive and components or
parts thereof, including but not limited to those listed in Appendix I
attached hereto.
<PAGE> 124
1.7 Patents - Any and all patents and patent applications in the
Territory covering the Licensed Products or any component part thereof
either now or hereinafter during the duration of the patent or the term of
this Agreement, whichever is longer, owned or controlled by LICENSOR or any
Affiliate thereof, as listed in Appendix m attached hereto and/or to be
listed and added in the future.
1.8 Territory - The geographic area listed in Appendix II attached hereto.
1.9 Trademarks - The trademark, logo, and tradename "TRB" and those
included in Appendix IV attached hereto, and any and all other trademarks,
logos and tradenames to be used, developed and obtained by LICENSOR or any
Affiliate thereof and as may be added to Appendix IV by LICENSOR during the
term of this Agreement.
ARTICLE II- LICENSE GRANTS
2.1 Patents - LICENSOR hereby grants to LICENSEE the exclusive right and
license in the Territory to assemble, use, import, sell and distribute
bicycles containing the inventions and improvements covered by the Patents
in the Territory.
2.2 Trademarks - LICENSOR hereby grants to LICENSEE the exclusive right
and license to use, and LICENSEE hereby undertakes to use, the Trademarks in
the Territory in connection with the Licensed Product.
2.3 Know-How - LICENSOR hereby grants to LICENSEE the exclusive right
and license in the Territory to use the Know-How that is now in the
possession of LICENSOR or that will be developed or acquired by LICENSOR
during the term of this Agreement.
2.4 Limitation - The licenses granted under Sections 2.1, 2.2 and 2.3
hereunder shall not include the right to manufacture Licensed Products in
or out of the Territory or export
03/09/94RRI/09152/001AGREE-11/71484.1
Licensed Products, directly or indirectly, from the Territory. The limitation
contained herein shall apply to LICENSEE and its Affiliates.
ARTICLE III- LICENSE AND ROYALTY FEES
3.1 License Fees - LICENSEE shall pay LICENSOR a license fee of Twenty
five thousand United States dollars (US$ 25,000) payable as specified in
Appendix V attached hereto.
3.2 Royalties - In addition to the license fee payable under Section 3.1
above, LICENSEE shall pay to LICENSOR royalties for each of LICENSEE's fiscal
years during the term of this Agreement, in amounts as specified in Appendix
VI attached hereto.
3.3 Payment Terms - All payments due to LICENSOR under Sections 3.1 and
3.2 shall be made in United States dollars, when due, and via wire transfer
to the bank account in the U.S. specified by LICENSOR. The only deduction
to be made shall be for taxes imposed by the applicable taxing authorities
in the Territory on royalty payments, if any. In calculating royalty amounts
based on Gross Sales, the conversion into United States dollars shall be at
the average official rate of exchange prevailing in the United States during
the period for which Gross Sales have been calculated. All royalty payments
shall be due and payable thirty (30) days after the close of each of the
LICENSEE's quarterly accounting periods commencing with the date on which
Gross Sales begin. The amount of each estimated quarterly
<PAGE> 125
payment shall be equal to the greater of (i) twenty-five percent (25%) of the
applicable minimum annual royalty or (ii) the applicable percentage of
Gross Sales for that quarter. Each quarterly and final annual payment
of royalty shall be accompanied by a statement signed by LICENSEE
stating in detail satisfactory to LICENSOR the amount of Gross
Sales for the preceding quarter and in the case of the statement
accompanying each final payment, for the preceding year. LICENSEE
shall pay interest to LICENSOR upon any and all amounts overdue and payable
hereunder to LICENSOR at the rate charged to LICENSOR
by its principal commercial bank in New Jersey, plus one percent (1%) per
annum, for the due date to the date of payment. Such right to payment of
interest shall be without prejudice to any other remedies LICENSOR may have
under this Agreement or by law.
3.4 Maintenance of Books and Records - LICENSEE shall keep true and
accurate records, files and books of account, in accordance with generally
accepted accounting principles in the Territory, containing all data required
to determine the amounts to be paid hereunder and the information to be
given in statements provided herein. LICENSEE shall permit LICENSOR and
LICENSOR's representatives to inspect and examine such records, files, books
of account and facilities of LICENSEE for the purpose of determining or
verifying the amount payable LICENSOR and to conduct or have conducted an
annual audit thereof, including, without limitation, inspection of all
inventory of any kind. Any expenses incurred at the request and under the
direction of
03/09/94/RRI/09152/001/AGREE-11/71484.1
LICENSOR shall be paid by LICENSOR; provided, however, that in the event any
such audit reveals an error in any statement provided by LICENSEE, the cost
of the audit shall be borne by LICENSEE if the error equals or exceeds five
percent (5%) of the royalty amount reported due in such statement.
ARTICLE IV - TECHNICAL ASSISTANCE
4.1 Documents - As soon as practicable after the date of this Agreement
and commensurate with LICENSOR's production schedule, LICENSOR shall deliver
to LICENSEE sufficient written data and information for the assembly and
service of the Licensed Products by LICENSEE as deemed necessary by LICENSOR.
LICENSEE shall provide to its retailers, information sufficient to assemble
and service Licensed Products to LICENSOR's agreed standards.
4.2 Training - As a further means of disclosing LICENSOR's Know-How to
LICENSEE, LICENSOR shall arrange, on a schedule to be mutually agreed upon,
for training of a reasonable number, to be determined by LICENSOR, of
personnel employed by LICENSEE. All salaries, traveling and living expenses
and any other remuneration and expenses to which such trainees may be
entitled, and all expenses incurred by LICENSOR in the operation of such
training program, shall be paid by LICENSEE at LICENSOR's actual cost.
4.3 Other Technical Assistance - LICENSOR agrees to provide technical
assistance upon the written request of LICENSEE. The cost of such assistance
shall be borne by LICENSEE and shall be approved by LICENSEE in writing prior
to such technical assistance being provided.
ARTICLE V - TRADEMARKS AND GOODWILL
5.1 Use of Trademarks - All Licensed Products assembled or sold by
LICENSEE shall bear the Trademarks. The permitted use by LICENSEE of the
Trademarks shall be made only on Licensed Products that conform strictly
to the standards, quality and specifications furnished by LICENSOR to
<PAGE> 126
LICENSEE. Component parts of the Licensed Products shall be purchased by
LICENSEE only from LICENSOR or suppliers approved by LICENSOR in writing to
LICENSEE.
5.2 Inspection - LICENSEE shall at all reasonable times permit LICENSOR,
by representatives designated by LICENSOR, to inspect all of LICENSEE's
facilities and properties relating to the Licensed Products, at LICENSOR's
cost.
03/09/94/RRI/09152/001/AGREE-11/71484.1
53 Labels - All labels and promotional materials used by LICENSEE shall
be submitted to and approved by LICENSOR prior to use. Such approval will
not be unreasonably withheld or delayed. All labels shall have to meet the
legal requirements applicable in the Territory.
5.4 Title to Trademarks - LICENSEE shall refrain from any act or acts
that may prejudice the validity of the title of LICENSOR to the Trademarks.
After termination of this Agreement LICENSEE will not use at any time for
bicycles or bicycle parts any trademark, tradename or label bearing any
resemblance to the Trademarks. LICENSOR shall retain ownership and the
exclusive right to Trademarks except as permitted to LICENSEE pursuant to
the conditions of this Agreement during the term of this Agreement.
5.5 Promotional Activities - LICENSEE will use its best efforts and
means to meet the needs of the Territory for the Licensed Products, to
promote, advertise and otherwise further the sale and distribution of the
Licensed Products in the Territory, particularly in population centers, and
to further and preserve the goodwill and reputation of the Licensed Products
sold under the Trademarks and meet the standards and conditions as set forth
in Appendix VII attached hereto. LICENSOR shall make available to LICENSEE,
at prices equal to LICENSOR's actual cost, promotional materials used by
LICENSOR in the United States in connection with the sale of Licensed
Products sold under the Trademarks. LICENSEE shall submit to LICENSOR all
advertising materials proposed to be used by LICENSEE in connection with the
Licensed Products for LICENSEE's prior written approval, such approval not
to be unreasonably withheld or delayed.
5.6 Customer Service - LICENSEE shall inform and forward to LICENSOR
all correspondence or communications with customers relating to the quality
of or defects or malfunction in the Licensed Products and shall handle all
inquiries or complaints expeditiously and courteously. LICENSEE and its
distribution chain shall at all times maintain adequate facilities for the
repair, service and storage of the Licensed Products and components and any
parts thereof.
LICENSEE shall at all times maintain a staff of adequately trained personnel
to properly insure the mechanical integrity of the Licensed Products, service
the Licensed Products when necessary and to train service personnel in the
LICENSEE's distribution chain. LICENSEE shall provide literature and parts
to properly support the sale and service of the Licensed Products and shall
provide LICENSOR with service reports on a quarterly basis. Such reports
shall be on a form provided by LICENSOR and shall specify models requiring
service during the period, the type of service, parts found defective,
reason service is required, date service is performed, bicycle serial
number and name and address of consumer.
03/09/94/RRI/09152/001/AGREE-11/71484.1
5.7 Distributor and Dealer network - LICENSEE shall provide to LICENSOR
an updated list of subdistributors and dealers constituting LICENSEE's
distribution chain in the Territory on the first day of each calendar
year quarter. The list will include company name, address, principals,
and fax, telex, and telephone numbers.
<PAGE> 127
ARTICLE VI - IMPROVEMENTS
6.1 Inventions Improvement - LICENSEE shall require each of its
employees and consultants having access to technical information, data and
Know-How relating to the Licensed Products or component parts thereof to
enter into an agreement with LICENSEE, in form and substance satisfactory to
LICENSOR, whereby each such employee or consultant agrees to assign to
LICENSEE the entire right, title and interest: in and to any and all
inventions relating to the Licensed Products, or relating to or useful
in the manufacture thereof, made by him whether during or after the course
of his employment or engagement by LICENSEE. If during the term of this
Agreement, LICENSEE, or any of its Affiliates or employees makes or acquires
any invention or claim in any patent that in use would infringe any Patent
or that constitutes an improvement of a Licensed Product, LICENSEE shall
promptly assign to LICENSOR such invention or claim. LICENSOR shall have
the exclusive right and option to file and perfect any and all patent
applications embodying or arising out of such invention or claim, in the
Territory and elsewhere, in the name of LICENSOR and to that end shall have
the right to receive and/or inspect all drawings, plans, models,
specifications and worksheets relating thereto and to interview any and
all of LICENSEE's employees and associated personnel and organizations
having knowledge thereof. LICENSEE shall retain an exclusive license in the
Territory to use such invention or claim on the Licensed Product, free of
additional royalty charges.
6.2 Know-How Improvements - During the term of this Agreement, each
party shall promptly inform and transfer to the other Know-How that is
developed or acquired by such party. The method of such transfer shall be
such as the transferor, acting in good faith and with due diligence, deems
appropriate. LICENSOR shall have the right to receive and/or inspect all
drawings, plans, models, specifications and worksheets relating thereto and
to interview any and all of LICENSEE's employees and associated personnel
and organizations having knowledge thereof. LICENSEE shall retain an
exclusive license in the Territory to use such Know-How, in connection
with Licensed Products, free of additional royalty charges.
ARTICLE VII - CONFIDENTIALITY AND COMPETITION
7.1 Confidentiality Obligation - LICENSEE shall hold, and shall cause
its Affiliates to hold, all Know-How disclosed to it under this Agreement
in confidence at all times during and after the term of this Agreement and
each party shall require each of its employees and
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consultants, and the employees and consultants of its Affiliates, having
access to Know-How relating to the Licensed Products or component parts
thereof to enter into an agreement whereby each such employee or consultant
agrees to hold such Know-How in confidence at all times, and agrees not to
compete with LICENSOR or LICENSEE either during his employment or engagement
and for a three (3) year period thereafter, or, in the event such time period
is not enforceable, then a reasonable period as agreed by a judicial body
within the Territory. Other measures to be taken by LICENSEE and its
Affiliates to hold Know-How in confidence shall be subject to the review
and approval of LICENSOR. LICENSOR shall have the right, in the event of a
violation or breach of this Section 7.1 by LICENSEE, its Affiliates,
employees, or consultants, to seek and obtain specific enforcement of the
provisions of this Section; and to commence an action, in LICENSEE's name
and stead. against any party with whom LICENSEE has a confidentiality
agreement as required by this Section if such party breaches any
provision of such agreement and if LICENSEE for any reason elects not to
enforce such provision. The obligations regarding confidentiality contained
hereinabove shall not apply to any Know-How that;
(i) is at the time of disclosure generally available to the public;
<PAGE> 128
(ii) becomes generally available to the public through no breach of
confidentiality obligations by the party to whom the disclosure is
made or by any of its Affiliates or the employees or consultants of
any of them; or
(iii) is disclosed to the receiving party by another party not bound by any
confidentiality obligation.
An individual feature of Know-How shall not be considered within the above
exceptions merely because the feature is embraced by more general information
within the exceptions. A combination of features of Know-How shall not be
considered within the above exceptions unless the combination itself and its
principle of operation are within the exceptions.
7.2 Restriction on competition by LICENSEE - In consideration of
LICENSEE's receiving the exclusive rights conferred under this
Agreement, LICENSEE shall not, during the term of this Agreement,
sell or deal in any manner in bicycles or parts or components thereof
not constituting Licensed Products, but may deal in bicycle
accessories approved by LICENSOR. In addition, for a period of three
(3) years after the termination of this Agreement, LICENSEE shall not
become involved or associated with any other person or business entity engaged
in the manufacture or sale of lever propelled bicycles; provided, that if such
time period is held to be unenforceable, then the restrictive period shall be
such reasonable period as may be agreed by judicial body within the Territory.
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ARTICLE VIII- TERM AND TERMINATION
8.1 Term - Except to the extent provided herein with respect to the
survival of certain provisions following the term of ties Agreement, and
unless earlier terminated pursuant to Sections 8.2 and 8.3 hereof, the term
of this Agreement shall commence on the date of this Agreement and shall upon
the mutual consent of the parties be renewed at the third year Anniversary
Date, and renewed at each Anniversary Date thereafter without the payment of
any additional licensing fees, unless either party breaches any material term
of this Agreement.
8.2 Termination by LICENSEE - LICENSEE may terminate this Agreement on
any Anniversary Date hereof by giving ninety (90) days prior written notice
of termination.
8.3 Termination by LICENSOR - LICENSOR may terminate this Agreement at
any time:
(i) by giving LICENSEE thirty (30) days prior written notice if LICENSEE
shall have coordinated a material breach of any of its obligations hereunder,
including without limitation, the prompt and timely payment of license fee
and royalties hereunder and failure to fill customers orders for Licensed
Products, or to perform service orders, in a timely fashion; provided that
LICENSEE shall have been previously advised of the alleged material breach
and has been given fifteen (15) days to cure such breach. It is further
provided that no such breach shall be deemed to have occurred or be
continuing (as applicable) if and to the extent LICENSEE's failure to
perform its obligations is due to acts beyond the reasonable control of
LICENSEE, including but not limited to strikes, lock-outs or civil
insurrection or lack of material including component or part supplied by
LICENSOR, any of its Affiliates or suppliers generally.
(ii) upon (a) the filing of a petition in bankruptcy by or against LICENSEE;
(b) the appointment of a referee, trustee or receiver for a substantial
portion of the property or assets of the LICENSEE; (c) the insolvency of
LICENSEE; (d) the consolidation, merger or other business combination of
the LICENSCE or its Affiliates with, or the sale of a substantial portion
of the LICENSEE'S assets to, another corporation, business entity or person,
or the execution of an agreement by LICENSEE to that effect, or a change
<PAGE> 129
in control of LICENSEE or its Affiliates without the prior written consent
of the LICENSOR, such consent not to be unreasonable withheld; or (e) if
LICENSEE is an individual, the death or incapacity of LICENSEE.
8.4 Termination - Should a termination of this Agreement occur:
(i) LICENSEE shall cease all use of Trademarks and return to LICENSOR all
materials supplied by LICENSOR and deliver to LICENSOR all materials tide
to which has been acquired by LICENSOR pursuant to this Agreement; and
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(ii) any agreements entered into by LICENSEE with third parties in the
Territory, including but not limited to subdistributors and dealers, shall
be assignable to LICENSOR and LICENSEE shall assign to LICENSOR all such
agreements and other documents regarding such subdistributors and dealers
and will do all that is reasonable to have them continue as LICENSOR's
subdistributors and dealers. In the event of Termination, LICENSEE shall
submit a full inventory (including costs) of parts and stock on hand,
within five (5) days. LICENSOR shall have the option to purchase within
thirty (30) days all or part thereof at LICENSEE's cost or market value,
whichever is less. Any such purchase shall be F.O.B. LICENSEE's warehouse.
ARTICLE IX - INFRINGEMENT ACTIONS
9.1 Trademark Claims Against LICENSEE - On Licensed Products, LICENSOR
shall defend, indemnify and hold LICENSEE harmless against claims of
trademark infringement brought against LICENSEE pursuant to this Agreement;
provided, nothing hereunder shall be construed to obligate LICENSOR to
defend, indemnify or hold LICENSEE harmless against claims of trademark
infringement brought against LICENSEE arising out of acts taken by LICENSEE
not required by this Agreement or approved by LICENSOR in writing.
LICENSOR may, however, elect to defend any such action at its own expense.
If LICENSOR elects not to so defend, LICENSEE may, with the consent of
LICENSOR, defend such action at its own expense. LICENSEE shall not settle
any such action without the consent of LICENSOR.
9.2 Patent Infringement & Wrongfu1 Use Claims Against LICENSEE -
LICENSOR will assume the defense of any suit brought against LICENSEE for
infringement of any patent or for wrongful use of proprietary information
of any third party insofar as such suit is based upon a claim that the
infringement or wrongful use is attributable to LICENSEE's application
without substantial modification of technology supplied under this Agreement.
In any such suit, LICENSOR will indemnify LICENSEE against any money damages
or costs awarded in such suit in respect to such a claim.
The obligations of LICENSOR stated in this Section 9.2 apply only if (i)
LICENSEE promptly informs LICENSOR in writing of any claim within the scope
of this Section 9.2; (ii) LICENSOR is given exclusive control of the defense
of such claim and all negotiations relating to its settlement; and (iii)
LICENSEE provides all reasonable assistance to LICENSOR in all necessary
respects in conduct of the suit.
LICENSOR's total liability in out-of-pocket costs in the defense of any
suit or suits and to pay damages awarded in any suit or suits shall be
limited to the amount theretofore paid to LICENSOR by LICENSEE under
this Agreement, and LICENSEE will advance to LICENSOR any amount required
to be expended by LICENSOR in excess of that
<PAGE> 130
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limit. Amounts so advanced shall be credited to future payments due
from LICENSEE to LICENSOR as a result of LICENSEE's operations under
this Agreement.
The provisions of this Section 9.2 state the entire liability of LICENSOR
to LICENSEE in respect of LICENSEE's use of the technology granted herein,
and, except as specifically provided in this Section, LICENSOR shall not be
liable either directly or as indemnity of LICENSEE for or on account of any
claim arising in any way from LICENSEE's use of the technology.
9.3 Claims by LICENSEE or LICENSOR - In case Trademarks or any of the
Patents are infringed by any third party in the Territory, LICENSEE shall
notify LICENSOR, and LICENSOR may, if it chooses, bring suit to enjoin such
infringement. In the event LICENSOR elects not to bring such suit, LICENSEE
may bring such suit upon advice to, and with the consent of, LICENSOR.
Neither party shall settle any such suit without the consent of the other,
which consent shall not be unreasonably withheld. Since actions by LICENSEE
or LICENSOR hereunder are for the protection of LICENSEE's rights within the
Territory, the costs of any actions brought under this Section 9.2 shall be
borne equally by LICENSEE and LICENSOR.
9.4 Indemnification of LICENSOR - Except as otherwise provided in this
Article IX, LICENSEE will hold LICENSOR harmless against all liabilities,
demands, damage's, expenses, or losses arising (i) out of use by LICENSEE
or its transferees of inventions licensed or information furnished under
this Agreement or (ii) out of any use, sale or other disposition by LICENSEE
of its inventions or information.
ARTICLE X - SUPPLY AGREEMENT
10.1 Ordering of Licensed Products - LICENSOR agrees to provide the
Licensed Products to LICENSEE. LICENSEE shall be entitled to order and
receive Licensed Products, provided that LICENSEE shall give written notice
of such order to the LICENSOR within the mutually agreed upon lead time as
stated on order acknowledgments. Payment for goods ordered shall be a
confirmed irrevocable (transferable and divisible) letter of credit
(allowing partial shipments and transshipments) confirmed by the LICENSOR's
U.S. Bank, payable upon the presentation of shipping documents.
10.2 Terms and Conditions of Sale - LICENSEE agrees to assemble, use,
import, sell and distribute such components, parts, and/or completely
assembled items of the Licensed Products and other products as may be
necessary for the LICENSEE's use and/or distribution, from LICENSOR, its
Affiliates and/or LICENSOR's suppliers as may be agreed upon in accordance
with such of LICENSOR's forms of Purchase and Terms and Conditions of Sales
as LICENSOR may from time to time establish. Such Terms and Conditions of
Sale shall include provisions relating to price, limited warranty, delivery,
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title of goods, freight and insurance charges, subrogation of claims and
such other items as are customarily expressed in such documents.
10.3 Force Majeure - LICENSOR shall not be liable for any damage or
penalty for delays in delivery, or complying with the warranty provisions
hereunder, due to acts of God, acts or omissions of LICENSEE, acts of civil
or military authorities, government regulations, or priorities, fire,
floods, epidemics, quarantine restrictions, war, riots, strikes,
differences with suppliers, inability of suppliers to perform, accidents to
machinery, inability to obtain material, delays in transportation,
failure or delay in furnishing complete or correct information by LICENSEE,
impossibility or impracticability of
<PAGE> 131
performance or any other cause or causes beyond the control of LICENSOR,
whether or not similar to the foregoing.
LICENSOR SHALL UNDER NO CIRCUMSTANCES BE LIABLE FOR SPECIAL OR
CONSEQUENTIAL DAMAGES FOR DELAYS OR FAILURE TO GIVE NOTICE OF
DELAY.
ARTICLE XI - DOCUMENTS DELIVERED UPON
CONTRACT EXECUTION
11.1 On the signing of this Agreement, LICENSOR shall deliver to
LICENSEE an affidavit of LICENSOR stating that it has full power and
authority to confer the rights being granted hereunder and no encumbrances
of any nature exist therein, nor are there any agreements of options in
existence which would in any way prohibit the written granting of rights
described in this Agreement.
11.2 The parties agree to do or execute or cause to be done or executed
all such further acts, deeds, instruments or transfer as may be reasonably
required from time to time to effect the rights between the parties hereto.
ARTICLE XII- MISCELLANEOUS
12.1 Survival of Provisions - The provisions of Sections 3.4, 5.4, 7.1, 7.2,
8.4, 9.1, 9.2, 9.4, 12.1 and 12.8 shall survive any termination of this
Agreement.
12.2 Assignment and Sublicensing - LICENSEE may not sublicense, assign
or transfer this Agreement or any license granted hereunder; provided, that
LICENSEE shall sublicense the Trademarks to any of its subdistributors and
dealers selling the Licensed Products, the sublicense agreements to contain
provisions substantially similar to the provisions of Article V of this
Agreement relating to the protection of Trademarks and to be in form and
substance satisfactory to LICENSOR.
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12.3 No Agency - Nothing contained in this Agreement shall be construed
so as to make either LICENSOR or LICENSEE the agent or partner of the other,
it being the intention of the parties to deal as principals with one another.
12.4 Entire Agreement - This Agreement sets forth the entire Agreement
between the parties as to the subject matter hereof and merges all prior
discussions and writings between them. This Agreement may be amended only
by written instrument duly signed by both parties hereto.
12.5 No implied Right - Nothing in this Agreement shall be construed as
conferring any right by implication, estoppel or under any patent, patent
applications or trademarks, except as herein expressly provided.
12.6 Notices - All notices, communications, and correspondence required
under this Agreement, or pursuant to the activities which it governs, or
associated with it shall be in writing, shall use United States English
only and shall become effective either when served by personal delivery or
by certified mail addressed as follows (or to such other address for a party
as that party may designate by notice to the other party):
If to LICENSOR: TRB Systems Inc.
354 Eisenhower Parkway
Suite No.26
<PAGE> 132
Livingston, New Jersey 07039
U.S.A.
Fax: (201) 992-5577
If to LICENSEE: Mr. Konan Kouadio Simeon
18 B.P. 89 Abidjan 18
Ivory Coast
FAX: (011)-225-45-47-22
12.7 Severability - Should any provision of this Agreement or the
application thereof, to any extent, be held invalid or unenforceable,
the remainder of this Agreement and the application thereof shall not be
affected thereby and shall continue valid and enforceable to the fullest
extent permitted by law or equity.
12.8 Arbitration - Any controversy or claim arising out of or relating
to this Agreement, or the breach thereof, shall be settled by arbitration
before one or more arbitrators in New York City, in accordance with the
Commercial Arbitration Rules of the American Arbitration Association.
Furthermore, if any controversy or claim arises out of the provisions of
Section 7.1 of this Agreement, LICENSOR may apply to the federal or state
courts located in the State and County of New York for injunctive or
interim relief in aid of arbitration. Judgment upon the award rendered by
the arbitrator(s) in
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accordance with the aforesaid rules may be entered in any court having
jurisdiction thereof. LICENSEE hereby consents to the non-exclusive
jurisdiction of the federal and state courts located in the State and
County of New York for the sole purpose of the issuance of any injunctive
or interim relief or for the entry of any award as hereinabove provided.
All trade terms used herein shall have the meaning defined in the
International Chamber of Commerce publication "International Rules for
Interpretation of Trade Terms".
ARTICLE XIII - GOVERNING LAW
13.1 This Agreement shall be governed by and construed in accordance with
the substantive law of the State of New York and the United States without
regard to principles of conflicts of laws.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of
the date first above written.
LICENSEE: LICENSOR:
TRB SYSTEMS INC.
/s/ Konan Kouadio Simeon /s/ By: /s/ Byung D. Yim /s/
WITNESS: WITNESS:
/s/ Timite Soualio /s/ /s/ J.E. Osborne /s/
Name:Timite Soualio Name:J.E. Osborne
Company or Address Company or Address
J.E. Osborne
Notary Public of New Jersey
Notary 2054646
<PAGE> 133
My Commission Expires Dec. 27, 1998
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APPENDIX I
Licensed Products
All Transbar Bicycles including but not limited to those listed below:
(1) TRB 190
(2) TRB 240
(3) TRB 250
(4) TRB 500
(5) TRB 1000
(6) TRB 100 (BMX)
(7) TRB 300 (Cruiser)
Also includes but not limited to all special parts listed below:
(a) Rear hub assembly
(b) See-saw idler assembly
(c) Lever and Transbar assembly
(d) Gearshift lever
(e) Special chain connecting cable
(f) All service parts of above assemblies
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APPENDIX II
Territory
IVORY COAST
A patent application in the Territory for an improvement in the
Licensed Products is in the course of preparation
APPENDIX IV
Trademarks
09152\001\552600\9061TA\3473.1\ 10/21/93
<PAGE> 134
APPENDIX V
License Fees
Twenty Five Thousand United States dollars (US$25,000), of which Twenty Five
Thousand United States dollars (US$25,000) shall be paid upon execution
of this Agreement and the balance of which shall be payable in installments
according to the following schedule:
APPENDIX VI
Royalties
Year 1- Six percent (6%) of Gross Sales, but not less than US$10,000-
Year 2- Five percent (5%) of Gross Sales, but not less than US$10,000-
Year 3 and every year thereafter - Four percent (4%) of Gross Sales, but
not less than US$10,000-
APPENDIX VII
Promotional Activities
LICENSEE must provide and participate in such promotional activities and
production of materials to support, promote, and generate full sales
potential of Licensed Product.
LICENSOR will make available to LICENSEE at its cost all promotional and
advertising materials and printed service literature.
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APPENDIX VIII
Terms and Conditions of Sale
Payment - By irrevocable (transferable and devisable) letter of credit
allowing partial shipments and transshipments in favor of LICENSOR,
payable upon presentation of shipping documents to LICENSOR's bank.
Remarks - All orders are subject to final confirmation by LICENSOR.
Sales Forecast - LICENSEE will provide LICENSOR twelve (12) month sales
forecast by month by model with sixty (60) day lead time updated by month.
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<PAGE> 135
EXHIBIT 1 CONFIDENTIALITY AGREEMENT- PROPRIETARY INFORMATION
PRODUCT IMPROVEMENT AND CONFIDENTIALITY AGREEMENT
Gentlemen:
The following confirms an agreement between me and K.K.Simeon hereinafter
referred to as "LICENSEE" which is a material part of the consideration for
my employment or affiliation with LICENSEE:
1. I recognize that the LICENSEE has entered into an agreement with TRB
Systems Inc., hereinafter referred to as the "Company", which Company is
engaged in a continuous program of research, development and production
respecting its products, patents and know-how, hereinafter referred to as
"Proprietary Information".
2. I understand that my employment or affiliation with LICENSEE creates
a relationship of confidence and trust between me and the LICENSEE with
respect to any Proprietary Information.
3. In consideration of my employment or affiliation with the LICENSEE,
I hereby agree as follows:
(a) I understand and agree that I have no rights in any Proprietary
Information of the Company or the LICENSEE. At all times, both during my
employment or affiliation with the years, I will keep in confidence and
trust all Proprietary Information, and I will not use or disclose any
Proprietary Information, and I will not use or disclose any Proprietary
Information or anything relating to it without the written consent of the
LICENSEE and the Company, except as may be necessary in the ordinary course
of performing my duties with the LICENSEE. I will at all times fully and
accurately document any Proprietary Information or Inventions (as
hereinafter defined) developed by me so that at all times the LICENSEE
shall have in its possession descriptions and directions with respect
thereto that will enable the LICENSEE and its assigns to utilize such
Proprietary Information and Inventions to their full benefit.
(b) All documents, records, apparatus, equipment and other physical
property, whether or not pertaining to Proprietary Information, furnished
to me by the LICENSEE or produced by myself or others in connection with my
employment or affiliation shall be and remain the sole property of the
LICENSEE or its assigns and shall be returned to it immediately as and
when requested by the LICENSEE. Even if the LICENSEE does not so request,
I shall return and deliver all such property upon termination of my
employment or affiliation by
05/03/94/MHM/09152/001/AGREE-11/85561.1
me or by the LICENSEE for any reason and I will not take with me any such
property or any reproduction of such termination. I will keep all
information relating to the Proprietary Information confidential during
my employment or affiliation and for three years thereafter.
(c) I will promptly disclose to the LICENSEE or any persons designated
by it, all improvements, inventions, ideas, formulas, processes,
techniques, know-how and data, whether or not patentable, made or conceived
or reduced to practice or learned by me, either alone or jointly with
others, during the term of my employment or affiliation (all said
improvements, inventions, formulas, processes, techniques, know-how and
data shall be hereinafter collectively called "Inventions").
(d) I agree that all Inventions which I developed in whole or in part,
either alone or jointly with others utilizing equipment, supplies,
facilities or Proprietary In formation of the LICENSEE or its assigns or
during my periods of employment or affiliation with the LICENSEE shall be
the sole property of the LICENSEE and its assigns, and the LICENSEE and its
assigns shall be the sole owner of all patents and
<PAGE> 136
other rights in connection therewith. I hereby assign to the LICENSEE and
its assigns any rights I may have to acquire in such Inventions.
I further agree as to all such Inventions to assist the LICENSEE
and its assigns in every proper way but shall not bear the
expenses involved) to obtain and from time to time enforce patents on
said Inventions in any and all countries, and to
that end I will execute all documents for use in applying for and obtaining
such patents thereon and enforcing same, as the LICENSEE or its assigns may
desire, together with any assignments thereof to the LICENSEE or persons
designated by it.
My obligations to assist the LICENSEE or its assigns in obtaining of and
enforcing patents for such inventions in any and all countries shall
continue beyond the termination of my employment or affiliation for a period
of three years, but the LICENSEE or its assigns shall compensate me at a
reasonable rate after such termination for time actually spent by me on such
assistance.
In the event that the LICENSEE is unable for any reason whatsoever to
secure my signature to any lawful and necessary document required to apply
for or execute any patent applications with respect to such an Invention
(including renewals, extensions, continuations, divisions or continuations
in part thereof), I hereby irrevocably designate and appoint the LICENSEE
and its duly authorized officers and agents, to its assigns, as my agents
and attorneys-in-fact to act for and in my behalf and instead of me, to
execute and file any such application and to do all other lawfully permitted
acts to further the prosecution and issuance of patents thereon with the
same legal force and effect as if executed by me.
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(e) I represent that my performance of all terms of this Agreement will
not breach any agreement to keep in confidence any proprietary information
acquired by me in confidence or in trust prior to my employment or
affiliation with the LICENSEE. I have not entered into, and agree I will
not enter into, any agreement either written or oral in conflict with the
obligations set forth in this Agreement.
(f) I represent that I did not learn during my prior employment or
affiliation any ideas or information which the LICENSEE indicated were
considered confidential and proprietary or which were disclosed to me in
a manner which should have made me realize they were so considered.
(g) If I cannot make the representation provided in (f) I approve, I
will check the following box:
( ) I cannot make the representation in paragraph (f) above.
If I checked the above box, I hereby represent that I will not make use of
any such confidence and proprietary information or ideas during my
employment or affiliation with the LICENSEE unless such information or
ideas during my employment by the LICENSEE or become publicly available
for reasons other than actions on my part.
4. This Agreement shall be effective as of the first day of my
employment or affiliation with the LICENSEE.
5. This Agreement shall be binding upon me, my heirs, executors,
assigns, and administrators and shall insure to the benefit of the
Company, its successors.
Accepted and Agreed to (date): Sep 13, 1994
SIGNED: /s/ Konan Kouadio Simeon /s/
NAME AND TITLE: KONAN KOUADIO SIMEON
COMPANY NAME: TRB SIMCO INTERNATIONAL
<PAGE> 137
WITNESS
LICENSEE: KONAN KOUADIO SIMEON
05/03/94/MHM/09152/001/AGREE-11/85561.1
<PAGE> 138
JOINT VENTURE AGREEMENT
AGREEMENT, made as December 23, 1995 by and between TRB Systems, Inc.
("TRB"), a Delaware corporation with a business Address at 354 Eisenhower
Parkway, Suite No.26, Livingston, New Jersey 07039, and Mr. Janak Shah
("Indian Partner") with a business address at 43-32 Kissena Blvd..
Suite #14G. Flushing, N.Y. 11355.
WHEREAS, Indian Partner desires to enter into an exclusive contractual
arrangement with TRB for the exclusive right to assemble, market and sell
bicycles and other products of TRB ("Covered Products") in the Territory
(defined below);
WHEREAS, TRB desires to have Covered Products assembled, marketed and sold
in the Territory in conjunction with Indian Partner; and
WHEREAS, TRB and Indian Partner wish to establish, and work together
through, a joint venture to achieve the foregoing.
NOW, THEREFORE, the parties agree as follows:
1. Formation of Joint Venture
For the purposes of implementing the joint venture, the parties shall
form a new entity, to be a corporation, limited liability company or
partnership, as the parties deem appropriate for purposes of tax and
business planning (the "Joint Venture Company"). The parties shall
enter into such further agreements (such as a shareholder, partnership
or other similar agreement) and documents as may be necessary or desirable
to implement the purposes of this Agreement and shall incorporate the
applicable provisions contained herein.
2. Purpose of Joint Venture
The Joint Venture Company (or hereinafter called JVC) shall be established
for the purpose of engaging in the assembly, marketing, distribution and
sale of the Covered Products throughout the Territory. It is intended that
this will include without limitation, the establishment of assembling,
office and other facilities, staff, labor, machinery, equipment,
distribution, network, advertising and such other resources as are necessary
to assemble, market, distribute and sell the Covered Products in the
Territory. The parties shall use their best efforts to cause this Joint
Venture Company to go public in India within 3-5 years from the date of
this Agreement. The "Territory" shall mean India.
TRB shall provide orders received from Continental Africa to the Joint
Venture Company for fulfillment to the fullest extent possible considering
price and quality of products produced by the Joint Venture Company.
After satisfactory production is achieved, TRB will place order with JYC
for exports in the first year for a minimum amount of $2 million.
3. TRB License
(i) Promptly after its formation, the Joint Venture Company shall enter
into a License and Marketing Agreement with TRB in substantially the form
attached hereto as Exhibit A. TRB hereby covenants to enter into such
License and Marketing Agreement with the Joint Venture Company.
(ii) Payment of the $750,000 (seven hundred and fifty thousand U.S.
dollar) License Fee set forth in the License and Marketing Agreement shall
he made by Indian Partner on behalf of the Joint Venture Company as follows:
<PAGE> 139
$100,000 (One hundred thousand U.S. dollars) is due upon the execution of
this Agreement;
$75,000 (seventy-five thousand U.S. dollars) is due by January 15,1996.
$75,000 (seventy-five thousand U.S. dollars) is due by February 15, 1996.
$500,000 (five hundred thousand U.S. dollars) is due by December 22,1996
or before Indian domestic marketing and sales is ready whichever comes first.
(iii) In addition to the License Fee, the Joint Venture Company shall
pay to TRB the royalties set forth in the Licensing and Marketing Agreement
which shall be paid to TRB's account (or MOTION PLUS INT'L Corporation) in
the United States or as otherwise instructed in writing by TRB from time to
time.
4. Capitalization of the Joint Venture
The Joint Venture Company shall be owned 50% by Indian Partner, 50% by TRB,
with profit sharing rights of 60% by Indian Partner and 40% by TRB. The
contributions of the parties in consideration of their respective interest
in the Joint Venture Company shall be as follows:
(i) Indian Partner
(a) Capitalization of the License Fees to be paid by Indian Partner on
behalf of the Joint Venture Company as set forth in Section 3(ii) above;
(b) arrangement for and provision to the Joint Venture Company at JVC's
cost and expense of all assembling, office and other facilities, staff,
labor, machinery, equipment, distribution networks, advertising and all
other resources necessary to assemble, market, distribute and sell the
Covered Products in the Territory; and
(c) Besides licensing fee, contribution of such working capital and
domestic sales/marketing expenses at list, One million for the first year
as may be necessary from time to time to ensure the operation of the Joint
Venture Company and the development of its business will be the
responsibility of the Indian partner.
(ii) TRB
(a) in addition to granting the Joint Venture Company the license of
TRB technology, know-how, intellectual property and technical assistance
provided under the license and Marketing Agreement, TRB shall supply
reasonable technical expertise and production know-how to enable the
Joint Venture Company to assemble products of a quality satisfactory to
TRB;
(b) Services of one TRB technician to be on location at the Joint
Venture company's production site for up to three months; provided that
TRB shall pay airfare to and from India and salary of the technician while
on location but the Joint Venture Company shall pay for the technicians
accommodations, meals and other reasonable incidental and travel expenses
while in India.
(iii) TRB will invest $500,000 (five hundred thousand U.S. dollars) in
JVC upon receipt of 100% of the license fee. Additional capital
contributions or loans by Indian Partner to the Joint Venture Company shall
not dilute the 40% profit share and 50% voting rights of TRB as provided
herein.
<PAGE> 140
(iv) Distributions (whether as dividends or equivalent payments
depending on the form of the Joint Venture Company) to the owners in respect
of their interests in the Joint Venture Company shall be made in accordance
with their percentage profit sharing interest.
5. Management of the Joint Venture
(i) The Joint Venture Company shall be managed by a Board of Directors
(or equivalent management board depending upon the form of the organization
finally chosen).
The Board shall be comprised of two representatives from TRB and two
representatives from Indian Partner. All decisions of the board shall be
made by a majority vote; however, the Board shall delegate to TRB exclusive
authority to supervise, inspect and approve the quality of all Covered
Products in TRB's sole discretion along with export policies to Africa.
TRB and Indian Partner shall each have full and free access to the books and
records of the Joint Venture Company at all times;
In the event of any future incidents regarding dilution of promoters' equity
such as primary or secondary public issues, TRB retains the exclusive
authority to make company policy and to supervise, inspect and approve the
quality of all "covered products". However, TRB will not be responsible for
claims made by customers, any returns for any reason, and after market
defects except TRB's proprietary parts.
(ii) Notwithstanding their respective profit sharing interest in the Joint
Venture Company, Indian Partner and TRB shall each have a 50% and 50% vote,
respectively, on all issues to be decided by them as owners;
(iii) Notwithstanding any other provision of this Agreement, neither Indian
Partner nor the Joint Venture Company shall cause the Joint Venture Company
to incur any debt resulting in recourse to TRB, without the prior written
consent of TRB
6. Exclusivity
(i) Indian Partner hereby covenants and agrees that neither it nor its
affiliates nor any party in which it has an economic interest will assemble
or distribute or otherwise engage in any economic venture involving products
similar in form or function to those products of TRB, during the term of
this agreement and for a five year period following termination of the
Agreement.
7. Transfer of Interest: Registration of Shares
(i) Either party may sell its interest in the Joint Venture Company by
first offering its interest to the other party in writing at a price and on
terms not less favorable than offered to the selling party in a bona fide
written offer from a third party in an arm's 5 length transaction. In the
event the other party does not accept such offer in writing within thirty
(30) days, the selling party shall have the right to sell its interest at a
price, and on terms, set forth in the bona fide third party offer described
above.
(ii) Notwithstanding the foregoing, during the initial three year period
from the date of this Agreement, the purchasing party shall have the right
to purchase the selling party's interest as the lower of (a) the price set
forth in the bona fide third party offer or b) the current market value.
(iii) In the event the Joint Venture Company shall offer its shares (or
comparable interests) to the public in an offering in India, TRB and
Indian Partner shall have the right to have their shares (or comparable
interests) included in any registration of such shares or interests at the
Joint Venture Company's expense.
<PAGE> 141
(iv) Either party can not sell or transfer their shares, rights or
interests to any of TRB's competitor (or competitors) without the other
party's written consent.
8. Term of Joint Venture
This Joint Venture Agreement shall continue in effect;
(i) for so long as the Joint Venture company shall remain a party to the
Licensing and Marketing Agreement; or
(ii) until terminated by agreement of the parties;
provided, that in the event of the termination of this Agreement for any
reason while the Licensing and Marketing Agreement remains in force with
the Joint Venture Company, the parties shall cause the Joint Venture
Company to assign the License and Marketing Agreement to TRB and TRB
shall assume such agreement.
9. Further Agreements
The parties shall cooperate to negotiate and execute such additional or
other definitive agreements, such as a shareholder or similar agreement,
as may be deemed necessary or appropriate to achieve the purposes of this
Agreement.
10. This agreement supersedes any and all other agreements, either
oral or in writing between the parties hereto with respect to the engagement
of "TRB" and "Indian Partner" or between "TRB" (and/or Byung Yim) and
"Indian Partner" (and/or Janak Shah or Janak Shah with any of his associates).
11. Applicable law
This Joint Venture Agreement shall be interpreted in accordance with and
governed by the laws of the State of New Jersey without regard to principles
of conflicts of laws.
IN WITNESS WHEREOF; the parties have entered into this Agreement as of the
date first written above.
By Indian Partner By TRB Systems Inc.
By: /s/ Janak Shah /s/ /s/ Byung D. Yim /s/ President
Witness Witness:
By: By:
wp\10006\jvs296
<PAGE> 142
LICENSE AND MARKETING AGREEMENT
Agreement dated as of December 23, 1995 by and between TRB SYSTEMS, INC., a
Delaware corporation with its registered office at 201 North Walnut Street,
Wilmington, Delaware 19801 hereinafter called "LICENSOR"), and
representative for JVC. Mr. Janak Shah. and/or "Indian Partner and TRB.
and/or Joint Venture Company( hereinafter called "Licensee") at temporary
business address 43-32 Kissena Blvd. Suite #14G. Flushing, NY 11355.
WHEREAS, LICENSOR owns or controls patents, trademarks, tradenames and
know-how relating to bicycles with variable speed lever action drive and
their manufacture; and
WHEREAS, LICENSEE desires to obtain from LICENSOR (i) licenses under
tradenames, trademarks and proprietary know-how of LICENSOR applicable
to such bicycles, (ii) to the extent LICENSOR has or controls patents
applicable to such bicycles in the relevant territory described in this
Agreement, licenses under such patents, and (iii) technical assistance
related to such bicycles, together with the exclusive right to assemble,
use, import, sell, and distribute such bicycles within the relevant
territory in conformity with the standard quality control and design
requirements established by LICENSOR.
In consideration of the mutual covenants, terms and conditions hereinafter
set forth, the parties hereto mutually agree as follows:
ARTICLE I - DEFINITIONS
For the purposes of this Agreement, the terms listed below are defined,
whether in the singular or in the plural, as follows:
1.1 Affiliate - Any corporation or other business entity in which a party
hereto, directly or through one or more affiliates, (i) owns more than fifty
percent (50%) of the stock entitled to vote for the election of directors,
or (ii) otherwise exercises a controlling interest in the management in such
corporation or entity, LICENSOR to determine, in its sole judgment, whether
such controlling interest exists.
1.2 Agreement - This License and Marketing Agreement, including the
Appendices and Exhibits hereto, as the same may be amended from time to time.
1.3 Anniversary Date - the date which occurs one (1) year from the
date of this Agreement and each succeeding anniversary thereof.
1.4 Gross Sales - For any period controlled by this Agreement, the
total of all sales of units of Licensed Product during the period at
invoiced prices, not reduced by discounts allowances or other
adjustments other than defective returns. For purposes of this
definition, a transfer of a completed unit will be deemed a sale
hereunder and the invoice price will be the amount actually billed
but will be no less than the LICENSEE's wholesale list price for
such a unit of the Licensed Products as published and distributed
to the trade.
1.5 Know-How - All of the ideas, concepts. technical information,
inventions, materials (including. without limitation. drawings and
specifications) and processes used in the Licensed Products and the
assembly and servicing thereof.
1.6 Licensed Products - Invention(s) covered by the patents and
know-how relating to a bicycle with a variable lever action drive and
components or parts thereof, including but not limited to those listed
in Appendix I attached hereto.
<PAGE> 143
1.7 Patents - Any and all patents and patent applications in the
Territory covering the Licensed Products or any component part thereof
either now or hereinafter during the duration of the patent or the term
of this Agreement, whichever is longer, owned or controlled by LICENSOR
or any Affiliate thereof, as listed in Appendix III attached hereto and/
or to be listed and added in the future.
1.8 Territory - The geographic area listed in Appendix II attached
hereto.
1.9 Trademarks - The trademark, logo, and trade name "TRB" and those
included in Appendix IV attached hereto, and any and all other trademarks,
logos and tradenames to be used, developed and obtained by LICENSOR or any
Affiliate thereof and as may be added to Appendix IV by LICENSOR during the
term of this Agreement.
ARTICLE II - LICENSE GRANTS
2.1 Patents - LICENSOR hereby grants to LICENSEE the exclusive right
and license in the Territory to assemble, use, import, sell and distribute
bicycles containing the inventions and improvements covered by the Patents
in the Territory.
2.2 Trademarks - LICENSOR hereby grants to LICENSEE the exclusive right
and license to use, and LICENSEE hereby undertakes to use, the Trademarks
in the Territory in connection with the Licensed Product.
2.3 Know-How - LICENSOR hereby grants to LICENSEE the exclusive right
and license in the Territory to use the Know-How that is now in the
possession of LICENSOR or that will be developed or acquired by LICENSOR
during the term of this Agreement.
2.4 Limitation - The licenses granted under Sections 2.1 2.2 and 2.3
hereunder shall not include the right to manufacture Licensed Products in
or out of the Territory or export
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Licensed Products, directly or indirectly, from the Territory. The
limitation contained herein shall apply to LICENSEE and its Affiliates.
ARTICLE III - LICENSE AND ROYALTY FEES
3.1 License Fees - LICENSEE shall pay LICENSOR a license fee of seven
hundred and fifty thousand United States dollars (U.S.$750,000), payable
as specified in Appendix V attached hereto.
3.2 Royalties - In addition to the license fee payable under Section
3.1 above. LICENSEE shall pay to LICENSOR royalties for each of LICENSEE's
fiscal years during the term of this Agreement, in amounts as specified in
Appendix VI attached hereto.
3.3 Payment Terms - All payments due to LICENSOR under Sections 3.1 and
3.2 shall be made in United States dollars, when due, and via wire transfer
to the bank account in the U.S. specified by LICENSOR. The only deduction to
be made shall be for taxes imposed by the applicable taxing authorities in
the Territory on royalty payments, if any. In calculating royalty amounts
based on Gross Sales, the conversion into United States dollars shall be at
the average official rate of exchange prevailing in the
<PAGE> 144
United States during the period for which Gross Sales have been calculated.
All royalty payments shall be due and payable thirty (30) days
after the close of each of the LICENSEE'S quarterly accounting periods
commencing with the date on which Gross Sales begin. The amount
of each estimated quarterly payment shallbe equal to the greater of
(i) the applicable percentage of Gross Sales for
that quarter. Each quarterly and final annual payment of royalty shall be
accompanied by a statement signed by LICENSEE stating in detail satisfactory
to LICENSOR the amount of Gross Sales for the preceding year. LICENSEE shall
pay interest to LICENSOR upon any and all amounts overdue and payable
hereunder to LICENSOR at the rate charged to LICENSOR by its principal
commercial bank in New Jersey, plus one percent (1 %) per annum, for the
due date to the date of payment. Such right to payment of interest shall be
without prejudice to any other remedies LICENSOR may have under this
Agreement or by law.
3.4 Maintenance of Books and Records - LICENSEE shall keep true and
accurate records, files and books of account, in accordance with generally
accepted accounting principles in the Territory, containing all data
required to determine the amounts to be paid hereunder and the information
to be given in statements provided herein. LICENSEE shall permit LICENSOR
and LICENSOR'S representatives to inspect and examine such records, files,
books of account and facilities of LICENSEE for the purpose of determining
or verifying the amount payable to LICENSOR and to conduct or have conducted
in an annual audit thereof, including, without limitation, inspection of all
inventory of any kind. Any expenses incurred at the request and under the
direction of LICENSOR shall be paid by LICENSOR. provided, however. that in
the event any such audit reveals an error in any statement provided by
LICENSEE, the cost of the audit shall be borne by LICENSEE if the error
equals or exceeds five percent (5) of the royalty amount reported due in
such statement.
ARTICLE IV - TECHNICAL ASSISTANCE
4.1 Documents - As soon as practicable after the date of this Agreement
and commensurate with LICENSOR's production schedule, LICENSOR shall deliver
to LICENSEE sufficient written data and information for the assembly and
service of the Licensed Products by LICENSEE as deemed necessary by LICENSOR.
LICENSEE shall provide to its retailers, information sufficient to assemble
and service Licensed Products to LICENSOR's agreed standards.
4.2 Training - As a further means of disclosing LICENSOR's Know-How to
LICENSEE, LICENSOR shall arrange, on a schedule to be mutually agreed upon,
for training of a reasonable number, to be determined by LICENSOR, of
personnel employed by LICENSEE. All salaries, traveling and living expenses
and any other remuneration and expenses to which such trainees may be
entitled, and all expenses incurred by LICENSOR in the operation of such
training program, shall be paid by LICENSEE at LICENSOR's actual cost.
4.3 Other Technical Assistance - LICENSOR agrees to provide technical
assistance upon the written request of LICENSEE. The cost of such assistance
shall be borne by LICENSEE and shall be approved by LICENSEE in writing
prior to such technical assistance being provided.
ARTICLE V - TRADEMARKS AND GOODWILL
5.1 Use of Trademarks - All Licensed Products assembled or sold by
LICENSEE shall bear the Trademarks. The permitted use by LICENSEE of the
Trademarks shall be made only on Licensed Products that conform strictly to
the standards, quality and specifications furnished by LICENSOR to LICENSEE.
Component parts of the Licensed Products shall be purchased by LICENSEE only
from LICENSOR or suppliers approved by LICENSOR in writing to LICENSEE.
<PAGE> 145
5.2 Inspection - LICENSEE shall at all reasonable times permit LICENSOR,
by representatives designated by LICENSOR, to inspect all of LICENSEE's
facilities and properties relating to the Licensed Products, at LICENSOR's
cost.
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5.3 Labels - All labels and promotional materials used by LICENSEE shall
be submitted to and approved by LICENSOR prior to use. Such approval will
not be unreasonably withheld or delayed. All labels shall have to meet the
legal requirements applicable in the Territory.
5.4 Title to Trademarks - LICENSEE shall refrain from any act or acts
that may prejudice the validity of the title of LICENSOR to the Trademarks.
After termination of this Agreement. LICENSEE will not use at any time for
bicycles or bicycle parts any trademark., tradename or label bearing any
resemblance to the Trademarks. LICENSOR shall retain ownership and the
exclusive right to Trademarks except as permitted to LICENSEE pursuant
to the conditions of this Agreement during the term of this Agreement.
5.5 Promotional Activities - LICENSEE will use its best efforts and
means to meet the needs of the Territory for the Licensed Products, to
promote, advertise and otherwise further the sale and distribution of
the Licensed Products in the Territory, particularly in population centers,
and to further and preserve the goodwill and reputation of the Licensed
Products sold under the Trademarks and meet the standards and conditions as
set forth in Appendix VII attached hereto. LICENSOR shall make available to
LICENSEE, at prices equal to LICENSOR's actual cost, promotional materials
used by LICENSOR in the United States in connection with the sale of
Licensed Products sold under the Trademarks. LICENSEE shall submit to
LICENSOR all advertising materials proposed to be used by LICENSEE in
connection with the Licensed Products for LICENSEE's prior written approval,
such approval not to be unreasonably withheld or delayed.
5.6 Customer Service - LICENSEE shall inform and forward to LICENSOR all
correspondence or communications with customers relating to the quality of
or defects or malfunction in the Licensed Products and shall handle all
inquiries or complaints expeditiously and courteously. LICENSEE and its
distribution chain shall at all times maintain adequate facilities for the
repair, service and storage of the Licensed Products and components and any
parts thereof.
LICENSEE shall at all times maintain a staff of adequately trained personnel
to properly insure the mechanical integrity of the Licensed Products,
service the Licensed Products when necessary and to train service personnel
in the LICENSEE's distribution chain. LICENSEE shall provide literature and
parts to properly support the sale and service of the Licensed Products and
shall provide LICENSOR with service reports on a quarterly basis. Such
reports shall be on a form provided by LICENSOR and shall specify models
requiring service during the period, the type of service, parts found
defective, reason service is required, date service is performed, bicycle
serial number and name and address of consumer.
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5.7 Distributor and Dealer network LICENSEE shall provide to LICENSOR
an updated list of subdistributors and dealers constituting LICENSEE's
distribution chain in the Territory on the first day of each calendar
year quarter. The list will include company name. address. principals. and
fax. telex, and telephone numbers.
ARTICLE VI - IMPROVEMENTS
<PAGE> 146
6.1 Inventions Improvement - LICENSEE shall require each of its
employees and consultants having access to technical information, data and
Know-How relating to the Licensed Products or component parts thereof to
enter into an agreement with LICENSEE, in form and substance satisfactory to
LICENSOR, whereby each such employee or consultant agrees to assign to
LICENSEE the entire right, title and interest in and to any and all
inventions relating to the Licensed Products, or relating to or useful in
the manufacture thereof. made by him whether during or after the course of
his employment or engagement by LICENSEE. If during the term of this
Agreement, LICENSEE, or any of its Affiliates or employees makes or acquires
any invention or claim in any patent that in use would infringe any Patent
or that constitutes an improvement of a Licensed Product, LICENSEE shall
promptly assign to LICENSOR such invention or claim. LICENSOR shall have
the exclusive right and option to file and perfect any and all patent
applications embodying or arising out of such invention or claim, in the
Territory, and elsewhere, in the name of LICENSOR and to that end shall
have the right to receive and/or inspect all drawings, plans, models,
specifications and worksheets relating thereto and to interview any and
all of LICENSEE's employees and associated personnel and organizations
having knowledge thereof. LICENSEE shall retain an exclusive license in
the Territory to use such invention or claim on the Licensed Product,
free of additional royalty charges.
6.2 Know-How Improvements - During the term of this Agreement, each
party shall promptly inform and transfer to the other Know-How that is
developed or acquired by such party. The method of such transfer shall
be such as the transferor, acting in good faith and with due diligence,
deems appropriate. LICENSOR shall have the right to receive and/or
inspect all drawings, plans, models, specifications and worksheets relating
thereto and to interview any and all of LICENSEE's employees and
associated personnel and organizations having knowledge thereof.
LICENSEE shall retain an exclusive license in the Territory to use such
Know-How, in connection with Licensed Products. free of additional royalty
charges.
ARTICLE VII - CONFIDENTIALITY AND COMPETITION
7.1 Confidentiality Obligation - LICENSEE shall hold, and shall cause
its Affiliates to hold. all Know-How disclosed to it under this Agreement
in confidence at all times during and after the term of this Agreement
and each party shall require each of its employees and
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consultants. and the employees and consultants of its Affiliates, having
access to Know-How relating to the Licensed Products or component parts
thereof to enter into an agreement whereby each such employee or consultant
agrees to hold such Know-How in confidence at all times, and agrees not to
compete with LICENSOR or LICENSEE either during his employment or engagement
and for a three (3) year period thereafter, or. in the event such time
period is not enforceable, then a reasonable period as agreed by a judicial
body within the Territory. Other measures to be taken by LICENSEE and its
Affiliates to hold Know-How in confidence shall be subject to the review and
approval of LICENSOR. LICENSOR shall have the right, in the event of a
violation or breach of this Section 7.1 by LICENSEE, its Affiliates,
employees, or consultants, to seek and obtain specific enforcement of the
provisions of this Section; and to commence an action, in LICENSEE's name
and stead, against any party with whom LICENSEE has a confidentiality agreement
as required by this Section if such party breaches any
provision of such agreement and if LICENSEE for any reason elects not to
enforce such provision. The obligations regarding confidentiality contained
hereinabove shall not apply to any Know-How that;
(i) is at the time of disclosure generally available to the public;
<PAGE> 147
(ii) becomes generally available to the public through no breach of
confidentiality obligations by the party to whom the disclosure is made or
by any of its Affiliates or the employees or consultants of any of them;
or
(iii) is disclosed to the receiving party by another party not bound by any
confidentiality obligation.
An individual feature of Know-How shall not be considered within the above
exceptions merely because the feature is embraced by more general
information within the exceptions. A combination of features of Know-How
shall not be considered within the above exceptions unless the combination
itself and its principle of operation are within the exceptions.
7.2 Restriction on Competition by LICENSEE - In consideration of
LICENSEE's receiving the exclusive rights conferred under this Agreement,
LICENSEE shall not, during the term of this Agreement, sell or deal in any
manner in bicycles or parts or components thereof not constituting Licensed
Products, but may deal in bicycle accessories approved by LICENSOR. In
addition, for a period of three (3) years after the termination of this
Agreement. LICENSEE shall not become involved or associated with any other
person or business entity engaged in the manufacture or sale of lever
propelled bicycles; provided, that if such time period is held to be
unenforceable, then the restrictive period shall be such reasonable
period as may be agreed by a judicial body within the Territory.
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ARTICLE VIII- TERM AND TERMINATION
8.1 Term - Except to the extent provided herein with respect to the
survival of certain provisions following the term of this Agreement, and
unless earlier terminated pursuant to Sections 8.2 and 8.3 hereof. the
term of this Agreement shall commence on the date of this Agreement and
shall upon the mutual consent of the parties be renewed at the third year
anniversary Date, and renewed at each Anniversary Date thereafter without
the payment of any additional licensing fees, unless either party breaches
any material term of this Agreement.
8.2 Termination by LICENSEE - LICENSEE may terminate this Agreement on
any Anniversary Date hereof by giving ninety (90) days prior written notice
of termination.
8.3 Termination by LICENSOR - LICENSOR may terminate this Agreement
at any time:
(i) by giving LICENSEE thirty (30) days prior written notice if
LICENSEE'shall have committed a material breach of any of its obligations
hereunder, including without limitation, the prompt and timely payment of
license fee and royalties hereunder and failure to fill customers orders
for Licensed Products, or to perform service orders, in a timely fashion;
provided that LICENSEE shall have been previously advised of the alleged
material breach and has been given fifteen (15) days to cure such breach.
It is further provided that no such breach shall be deemed to have occurred
or be continuing (as applicable) if and to the extent LICENSEE's failure to
perform its obligations is due to acts beyond the reasonable control of
LICENSEE, including but not limited to strikes, lock-outs or civil
insurrection or lack of material including component or part supplied
by LICENSOR, any of its Affiliates or suppliers generally.
(ii) upon (a) the filing of a petition in bankruptcy by or against
LICENSEE; (b) the appointment of a referee, trustee or receiver for a
substantial portion of the property or assets of the LICENSEE; (c) the
insolvency of LICENSEE; (d) the consolidation, merger or other business
combination of the LICENSEE or its Affiliates with, or the sale of a
substantial portion of the LICENSEE'S assets to, another corporation,
business entity or person. or the execution of an agreement by LICENSEE
to that effect, or a change in control of LICENSEE or its Affiliates
without the prior written consent of the LICENSOR such consent
<PAGE> 148
not to be unreasonable withheld; or (e) if LICENSEE is an individual, the
death or incapacity of LICENSEE.
8.4 Termination - Should a termination of this Agreement occur:
(i) LICENSEE shall cease all use of Trademarks and return to LICENSOR
all materials supplied by LICENSOR and deliver to LICENSOR all materials
title to which has been acquired by LICENSOR pursuant to this Agreement;
and
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(ii) any agreements entered into by LICENSEE with third parties in the
Territory, including but not limited to subdistributors and dealers, shall
be assignable to LICENSOR and LICENSEE shall assign to LICENSOR all such
agreements and other documents regarding such subdistributors and dealers
and will do all that is reasonable to have them continue as LICENSOR's
subdistributors and dealers In the event of Termination. LICENSEE shall
submit a full inventory (including costs of parts and stock on hand,
within five (5) days. LICENSOR shall have the option to purchase within
thirty (30) days all or part thereof at LICENSEE's cost or market value,
whichever is less. Any such purchase shall be F.O.B. LICENSEE's warehouse.
ARTICLE IX - INFRINGEMENT ACTIONS
9.1 Trademark Claims Against LICENSEE - On Licensed Products, LICENSOR
shall defend. indemnify and hold LICENSEE harmless against claims of
trademark infringement brought against LICENSEE pursuant to this Agreement;
provided, nothing hereunder shall be construed to obligate LICENSOR to
defend, indemnify or hold LICENSEE harmless against claims of trademark i
nfringement brought against LICENSEE arising out of acts taken by LICENSEE
not required by this Agreement or approved by LICENSOR in writing.
LICENSOR may, however, elect to defend any such action at its own expense.
If LICENSOR elects not to so defend, LICENSEE may, with the consent of
LICENSOR, defend such action at its own expense. LICENSEE shall not
settle any such action without the consent of LICENSOR.
9.2 Patent Infringement & Wrongful Use Claims Against LICENSEE -
LICENSOR will assume the defense of any suit brought against LICENSEE
for infringement of any patent or for wrongful use of proprietary
information of any third party insofar as such suit is based upon a
claim that the infringement or wrongful use is attributable to LICENSEE's
application without substantial modification of technology supplied under
this Agreement. In any such suit, LICENSOR will indemnify LICENSEE against
any money damages or costs awarded in such suit in respect to such a claim.
The obligations of LICENSOR stated in this Section 9.2 apply only if (i)
LICENSEE promptly informs LICENSOR in writing of any claim within the
scope of this Section 9.2; (ii) LICENSOR is given exclusive control of the
defense of such claim and all negotiations relating to its settlement; and
(iii) LICENSEE provides all reasonable assistance to LICENSOR in all
necessary respects in conduct of the suit.
LICENSOR's total liability in out-of-pocket costs in the defense of any
suit or suits and to pay damages awarded in any suit or suits shall be
limited to the amount theretofore paid to LICENSOR by LICENSEE under this
Agreement, and LICENSEE will advance to LICENSOR any amount required to be
expended by LICENSOR in excess of that
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<PAGE> 149
limit. Amounts so advanced shall be credited to future payments due from
LICENSEE to LICENSOR as a result of LICENSEE's operations under this
Agreement.
The provisions of this Section 9.2 state the entire liability of LICENSOR
to LICENSEE in respect of LICENSEE's use of the technology granted herein,
and. except as specifically provided in this Section, LICENSOR shall not be
liable either directly or as indemnity of LICENSEE for or on account of any
claim arising in any way from LICENSEE's use of the technology.
9.3 Claims by LICENSEE or LICENSOR - In case Trademarks or any of the
Patents are infringed by any third party in the Territory. LICENSEE shall
notify LICENSOR and LICENSOR may, if it chooses, bring suit to enjoin such
infringement. In the event LICENSOR elects not to bring such suit, LICENSEE
may bring such suit upon advice to, and with the consent of, LICENSOR.
Neither party shall settle any such suit without the consent of the other,
which consent shall not be unreasonably withheld. Since actions by LICENSEE
or LICENSOR hereunder are for the protection of LICENSEE's rights within the
Territory, the costs of any actions brought under this Section 9.2 shall be
borne equally by LICENSEE and LICENSOR.
9.4 Indemnification of LICENSOR - Except as otherwise provided in this
Article IX, LICENSEE will hold LICENSOR harmless against all liabilities,
demands. damages, expenses, or losses arising (i) out of use by LICENSEE or
its transferees of inventions licensed or information furnished under this
Agreement or (ii) out of any use, sale or other disposition by LICENSEE of
its inventions or information.
ARTICLE X - SUPPLY AGREEMENT
10.1 Ordering of Licensed Products - LICENSOR agrees to provide the
Licensed Products to LICENSEE. LICENSEE shall be entitled to order and
receive Licensed Products, provided that LICENSEE shall give written notice
of such order to the LICENSOR within the mutually agreed upon lead time as
stated on order acknowledgments. Payment for goods ordered shall be a
confirmed irrevocable (transferable and divisible) letter of credit
(allowing partial shipments and transshipments) confirmed by the LICENSOR's
U.S. Bank, payable upon the presentation of shipping documents.
10.2 Terms and Conditions of Sale - LICENSEE agrees to assemble, use,
import, sell and distribute such components, parts, and/or completely
assembled items of the Licensed Products and other products as may be
necessary for the LICENSEE's use and/or distribution, from LICENSOR, its
Affiliates and/or LICENSOR's suppliers as may be agreed upon in accordance
with such of LICENSOR's forms of Purchase and Terms and Conditions of Sales
as LICENSOR may from time to time establish. Such Terms and Conditions of
Sale shall include provisions relating to price, limited warranty,
delivery,
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title of goods, freight and insurance charges. subrogation of claims and such
other items as are customarily expressed in such documents.
10.3 Force Majeure - LICENSOR shall not be liable for any damage or
penalty for delays in delivery, or complying with the warranty provisions
hereunder, due to acts of God, acts or omissions of LICENSEE, acts of civil
or military authorities, government regulations, or priorities, fire,
floods, epidemics, quarantine restrictions. war, riots, strikes,
differences with suppliers, inability of suppliers to perform, accidents
to machinery, inability to obtain material, delays in transportation,
failure or delay in furnishing complete or correct information by LICENSEE,
impossibility or impracticability of performance or any other cause or
causes beyond the control of LICENSOR, whether or not similar to the
foregoing.
LICENSOR SHALL UNDER NO CIRCUMSTANCES BE LIABLE FOR SPECIAL OR
<PAGE> 150
CONSEQUENTIAL DAMAGES FOR DELAYS OR FAILURE TO GIVE NOTICE OF
DELAY.
ARTICLE XI - DOCUMENTS DELIVERED UPON CONTRACT EXECUTION
11.1 On the signing of this Agreement, LICENSOR shall deliver to LICENSEE
an affidavit of LICENSOR stating that it has full power and authority to
confer the rights being granted hereunder and no encumbrances of any
nature exist therein, nor are there any agreements of options in existence
which would in any way prohibit the written granting of rights described
in this Agreement.
11.2 The parties agree to do or execute or cause to be done or executed
all such further acts, deeds, instruments or transfer as may be reasonably
required from time to time to effect the rights between the parties hereto.
ARTICLE XII- MISCELLANEOUS
12.1 Survival of Provisions - The provisions of Sections 3.4,5.4, 7.1,
7.2. 8.4,9.1, 9.2, 9.4. 12.1 and 12.8 shall survive any termination of this
Agreement.
12.2 Assignment and Sublicensing - LICENSEE may not sublicense, assign
or transfer this Agreement or any license granted hereunder: provided, that
LICENSEE shall sublicense the Trademarks to any of its subdistributors and
dealers selling the Licensed Products, the sublicense agreements to contain
provisions substantially similar to the provisions of Article V of this
Agreement relating to the protection of Trademarks and to be in form and
substance satisfactory to LICENSOR.
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12.3 No Agency - Nothing contained in this Agreement shall be construed
so as to make either LICENSOR or LICENSEE the agent or partner of the other,
it being the intention of the parties to deal as principals with one another.
12.4 Entire Agreement - This Agreement sets forth the entire Agreement
between the parties as to the subject matter hereof and merges all prior
discussions and writings between them. This Agreement may be amended only
by written instrument duly signed by both parties hereto.
12.5 No Implied Right - Nothing in this Agreement shall be construed
as conferring any right by implication, estoppel or under any patent,
patent applications or trademarks, except as herein expressly provided.
12.6 Notices - All notices, communications, and correspondence required
under this Agreement, or pursuant to the activities which it governs, or
associated with it shall be in writing, shall use United States English only
and shall become effective either when served by personal delivery or by
certified mail addressed as follows (or to such other address for a party
as that party may designate by notice to the other party):
If to LICENSOR: TRB Systems Inc.
354 Eisenhower Parkway
Suite No.26
Livingston, New Jersey 07039
U.S.A.
<PAGE> 151
Fax: (201) 992-5577
If to LICENSEE: Representative of JYC, Mr. Janak Shah, and/or
Indian Partner and TRB, and/or JVC
43-32 Kissena Blvd., Suite #14G
Flushing, NY 11355
Fax: (718) 961-5011
12.7 Severability - Should any provision of this Agreement or the
application thereof, to any extent, be held invalid or unenforceable,
the remainder of this Agreement and the application thereof shall not
be affected thereby and shall continue valid and enforceable to the fullest
extent permitted by law or equity.
12.8 Arbitration - Any controversy or claim arising out of or relating
to this Agreement, or the breach thereof, shall be settled by arbitration
before one or more arbitrators in New York City, in accordance with the
Commercial Arbitration rules of the American Arbitration Association.
Furthermore, if any controversy or claim arises out of the provisions of
Section 7.1 of this Agreement, LICENSOR may apply to the federal or state
courts located in the State and County of New York for injunctive or interim
relief in aid of arbitration. Judgment upon the award rendered by the
arbitrator(s) in accordance with the aforesaid rules may be entered in
any court having jurisdiction thereof. LICENSEE hereby consents to the
non-exclusive jurisdiction of the federal and state courts located in the
State and County of New York for the sole purpose of the issuance of any
injunctive or interim relief or for the entry of any award as hereinabove
provided.
All trade terms used herein shall have the meaning defined in the
International Chamber of Commerce publication "International Rules for
Interpretation of Trade Terms".
12.9 This agreement supersedes any and all other agreements either
oral or in writing between the parties hereto with respect to the engagement
of "TRB" and "Indian Partner" or between TRB (and/or Byung Yim) and
"Indian Partner" (and/or Janak Shah or Janak Shah with his associates).
ARTICLE XIII - GOVERNING LAW
13.1 This Agreement shall be governed by and construed in accordance with
the substantive law of the State of New York and the United States without
regard to principles of conflicts of laws.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of
the date first above written.
LICENSEE: LICENSOR:
TRB SYSTEMS, INC.
/s/ Janak Shah /s/ /s/ Byung D. Yim /s/
Janak Shah, Representative of JVC Byung D. Yim, President
WITNESS: WITNESS:
<PAGE> 152
Name: Name:
Company or Address: Company or Address:
w:\data\client\10006\WP\licagree.208
APPENDIX I
Licensed Products
All Transbar Bicycles including but not limited to those listed below:
(1) TRB 190
(2) TRE 240
(3) TRB 250
(4) TRB 500
(5) TRE 1000
(6) TRB 100 (BMX)
(7) TRB 300 (Cruiser)
Also includes but not limited to all special parts listed below:
(a) Rear hub assembly
(b) See-saw idler assembly
(c) Lever and Transbar assembly
(d) Gearshift lever
(e) Special chain connecting cable
(f) All service parts of above assemblies
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APPENDIX II
Territory
THE ENTIRE COUNTRY OF INDIA
APPENDIX III
<PAGE> 153
Patents
A patent application in the Territory for an improvement in the
Licensed Products is in the course of preparation
APPENDIX IV
Trademarks
09152\001\SS2600\9061TA\3473.1/10/21/93
APPENDIX V
License Fees
(i) Payment of the $750,000 (seven hundred seventy five thousand U.S.
dollars) License Fee set forth in the License and marketing Agreement
shall be made by Indian Partner on behalf of the Joint Venture Company as
follows:
$100,000 (one hundred thousand U.S. dollars) is due upon execution of this
Agreement;
$75,000 (seventy-five thousand U.S. dollars) is due by January 15, 1996.
$75,000 (seventy-five thousand U.S. dollars) is due by February 15,1996.
$500,000 (five-hundred thousand U.S. dollars) is due by December 22,1996
or before Indian domestic marketing and sales is ready, whichever comes
first.
(ii) In addition to the License Fee, the Joint Venture Company shall
pay to TRB the royalties set forth in the Licensing and Marketing Agreement
which shall be paid to TRB's account (or MOTIONPLUS INT'L Corporation) in
the United States or as otherwise instructed in writing by TRB from time
to time.
Royalties
Year 1- Five percent (5%) of Gross Sales, but not less than U.S.$100,000
(one hundred thousand U.S. dollars)
Year 2- Five percent (5%) of Gross Sales, but not less than U.S.$220,000
(two hundred twenty thousand U.S. dollars)
Year 3 and every year thereafter - Four percent (4%) of Gross Sales, but
not less than U.S.$350,000 (three hundred and fifty thousand U.S. dollars)
<PAGE> 154
APPENDIX VII
Promotional Activities
LICENSEE must provide and participate in such promotional activities and
production of materials to support, promote, and generate full sales
potential of Licensed Product.
LICENSOR will make available to LICENSEE at its cost all promotional
and advertising materials and printed service literature.
APPENDIX VIII
Terms and Conditions of Sale
Payment - By irrevocable (transferable and devisable) letter of credit
allowing partial shipments and transshipments in favor of LICENSOR,
payable upon presentation of shipping documents to LICENSOR's bank.
Remarks - All orders are subject to final confirmation by LICENSOR
Sales Forecast - LICENSEE will provide LICENSOR twelve (12) month sales
forecast by month by model with sixty (60) day lead time updated by month.
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EXHIBIT I CONFIDENTIALITY AGREEMENT- PR0PRIETARY INFORMATION
PRODUCT IMPROVEMENT AND CONFIDENTIALITY AGREEMENT
Gentlemen:
The following confirms an agreement between me and ____________ hereinafter
referred to as "LICENSEE" which is a material part of the consideration for
my employment or affiliation with
LICENSEE:
1. I recognize that the LICENSEE has entered into an agreement with
TRB Systems Inc. hereinafter referred to as the "Company", which Company
is engaged in a continuous program of research, development and production
respecting its products, patents and know-how, hereinafter referred to as
"Proprietary Information."
2. I understand that my employment or affiliation with LICENSEE
creates a relationship of confidence and trust between me and the
LICENSEE with respect to any Proprietary Information.
3. In consideration of my employment or affiliation with the
LICENSEE, I hereby agree as follows:
(a) I understand and agree that I have no rights in any Proprietary
Information of the Company or the LICENSEE. At all times, both during my
employment or affiliation with the years, I will keep in confidence and
trust all Proprietary Information, and I will not use or disclose any
Proprietary Information, and I will not use or disclose any Proprietary
Information or anything relating to it without the written consent of the
LICENSEE and the Company, except as may be necessary in the ordinary course
<PAGE> 155
of performing my duties with the LICENSEE. I will at all times fully and
accurately document any Proprietary Information or Inventions (as
hereinafter defined) developed by me so that at all times the LICENSEE
shall have in its possession descriptions and directions with respect
thereto that will enable the LICENSEE and its assigns to utilize such
Proprietary Information and Inventions to their full benefit.
b) All documents, records, apparatus, equipment and other physical
property, whether or not pertaining to Proprietary Information, furnished
to me by the LICENSEE or produced by myself or others in connection with my
employment or affiliation shall be and remain the sole property of the
LICENSEE or its assigns and shall be returned to it immediately as and when
requested by the LICENSEE. Even if the LICENSEE does not so request,
I shall return and deliver all such property upon termination of my
employment or affiliation by
05/03/94/MHN/09152/001/AGREE-11/85561.1
me or by the LICENSEE for any reason and I will not take with me any such
property or any reproduction of such termination. I will keep all
information relating to the Proprietary Information confidential during
my empIoyment or affiliation and for three years thereafter.
(c) I will promptly disclose to the LICENSEE or any persons
designated by it, all improvements, inventions, ideas, formulas, processes,
techniques, know-how and data, whether or not patentable, made or
conceived or reduced to practice or learned by me, either alone or jointly
with others, during the term of my employment or affiliation (all said
improvements, inventions, formulas, processes. techniques, know-how
and data shall be hereinafter collectively called "Inventions").
(d) I agree that all Inventions which I developed in whole or in part,
either alone or jointly with others utilizing equipment, supplies,
facilities or Proprietary Information of the LICENSEE or its assigns or
during my periods of employment or affiliation with the LICENSEE shall be
the sole property of the LICENSEE and its assigns, and the LICENSEE and its
assigns shall be the sole owner of all patents and other rights in connection
therewith. I hereby assign to the LICENSEE and its assigns any rights I may
have to acquire in such Inventions. I further agree as to all such
Inventions to assist the LICENSEE and its assigns in every proper way
but shall not bear the expenses involved) to obtain and from time to time
enforce patents on said Inventions in any and all countries, and to that end
I will execute all documents for use in applying for and obtaining such
patents thereon and enforcing same, as the LICENSEE or its assigns may
desire, together with any assignments thereof to the LICENSEE or persons
designated by it.
My obligations to assist the LICENSEE or its assigns in obtaining of and
enforcing patents for such inventions in any and all countries shall
continue beyond the termination of my employment or affiliation for a
period of three years, but the LICENSEE or its assigns shall compensate
me at a reasonable rate after such termination for time actually spent by
me on such assistance.
In the event that the LICENSEE is unable for any reason whatsoever to
secure my signature to any lawful and necessary document required to
apply for or execute any patent applications with respect to such an
Invention (including renewals, extensions, continuations, divisions or
continuations in part thereof), I hereby irrevocably designate and
appoint the LICENSEE and its duly authorized officers and agents, to its
assigns, as my agents and attorneys-in-fact to act for and in my behalf
and instead of me, to execute and file any such application and to do
all other lawfully permitted acts to further the prosecution and issuance
of patents thereon with the same legal force and effect as if executed by me.
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(e) I represent that my performance of all terms of this Agreement will
not breach any agreement to keep in confidence any proprietary
information acquired by me in confidence or in trust prior to my
<PAGE> 156
employment or affiliation with the LICENSEE. I have not entered
into, and agree I will not enter into, any agreement either written
or oral in conflict with the obligations set forth in this Agreement.
(f) I represent that I did not learn during my prior employment or
affiliation any ideas or information which the LICENSEE indicated were
considered confidential and proprietary or which were disclosed to me in
a manner which should have made me realize they were so considered.
(g) If I cannot make the representation provided in (f) I approve,
I will check the following box:
( ) I cannot make the representation in paragraph (f) above.
If I checked the above box, I hereby represent that I will not make use of
any such confidence and proprietary information or ideas during my
employment or affiliation with the LICENSEE unless such information or
ideas during my employment by the LICENSEE or become publicly available
for reasons other than actions on my part.
4. This Agreement shall be effective as of the first day of my
employment or affiliation with the LICENSEE.
5. This Agreement shall be binding upon me, my heirs, executors,
assigns, and administrators and shall insure to the benefit of the
Company, its successors.
Accepted and Agreed to (date):
SIGNED:
NAME AND TITLE:
COMPANY NAME:
WITNESS:
LICENSEE:
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<PAGE> 157
LICENSE AND MARKETING AGREEMENT
Agreement dated as of July 17,1996 by and between TRB SYSTEMS INC., a
Delaware corporation with its business address at 354 Eisenhower Parkway,
Livingston, New Jersey 07039 (hereinafter called "LICENSOR"), and
Mr. Abbas R. Datoo, 14 Limolite Road Hackettstown, New Jersey ("hereinafter
called Licensee").
WHEREAS, LICENSOR owns or controls patents, trademarks, tradenames and
know-how relating to bicycles with variable speed lever action drive and
their manufacture; and
WHEREAS, LICENSEE desires to obtain from LICENSOR (i) licenses under
tradenames, trademarks and proprietary know-how of LICENSOR applicable
to such bicycles, (ii) to the extent LICENSOR has or controls patents
applicable to such bicycles in the relevant territory described in this
Agreement, licenses under such patents, and (iii) technical assistance
related to such bicycles, together with the exclusive right to assemble,
use, import, sell, and distribute such bicycles within the relevant
territory in conformity with the standard quality control and design
requirements established by LICENSOR.
In consideration of the mutual covenants, terms and conditions hereinafter
set forth, the parties hereto mutually agree as follows:
ARTICLE I- DEFINITIONS
For the purposes of this Agreement, the terms listed below are defined,
whether in the singular or in the plural, as follows:
1.1 Affiliate - Any corporation or other business entity in which a
party hereto, directly or through one or more affiliates, (i) owns more
than fifty percent (50%) of the stock entitled to vote for the election
of directors, or (ii) otherwise exercises a controlling interest in the
management in such corporation or entity, LICENSOR to determine, in its
sole judgment, whether such controlling interest exists.
1.2 Agreement - This License and Marketing Agreement, including the
Appendices and Exhibits hereto, as the same may be amended from time to
time.
1.3 Anniversary Date - the date which occurs one (1) year from the
date of this Agreement and each succeeding anniversary thereof.
1.4 Gross Sales - For any period controlled by this Agreement,
the total of all sales of units of Licensed Product during the period
at invoiced prices, not reduced by discounts, allowances or other adjustments
other than defective returns. For purposes of this definition, a
transfer of a completed unit will be deemed a sale
hereunder and the invoice price will be the amount actually billed but will
be no less than the LICENSEE's wholesale list price for such a unit of the
Licensed Products as published and distributed to the trade.
1.5 Know-How - All of the ideas, concepts, technical information,
inventions. materials (including without limitation, drawings and
specifications) and processes used in the Licensed Products and the
assembly and servicing thereof.
1.6 Licensed Products - Invention(s) covered by the patents and
know-how relating to a bicycle with a variable lever action drive and
components or parts thereof. including but not limited to those listed
in Appendix I attached hereto.
<PAGE> 158
1.7 Patents - Any and all patents and patent applications in the
territory covering the Licensed Products or any component part thereof
either now or hereinafter during the duration of the patent or the term
of this Agreement, whichever is longer, owned or controlled by LICENSOR
or any Affiliate thereof, as listed in Appendix III attached hereto and/or
to be listed and added in the future.
1.8 Territory - The geographic area listed in Appendix II attached
hereto.
1.9 Trademarks - The trademark, logo, and tradename "TRB" and those
included in Appendix IV attached hereto, and any and all other trademarks,
logos and tradenames to be used, developed and obtained by LICENSOR or any
Affiliate thereof and as may be added to Appendix IV by LICENSOR during the
term of this Agreement.
ARTICLE II- LICENSE GRANTS
2.1 Patents - LICENSOR hereby grants to LICENSEE the exclusive right
and license in the Territory to assemble, use, import, sell and distribute
bicycles containing the inventions and improvements covered by the Patents
in the Territory.
2.2 Trademarks - LICENSOR hereby grants to LICENSEE the exclusive
right and license to use, and LICENSEE hereby undertakes to use, the
Trademarks in the Territory in connection with the Licensed Product.
2.3 Know-How - LICENSOR hereby grants to LICENSEE the exclusive
right and license in the Territory to use the Know-How that is now in
the possession of LICENSOR or that will be developed or acquired by
LICENSOR during the term of this Agreement.
2.4 Limitation - The licenses granted under Sections 2.1, 2.2 and
2.3 hereunder shall not include the right to manufacture Licensed
Products in or out of the Territory or export
O3/09/94IRRI/09152/OO1/AGREE-11/71484.1
Licensed Products, directly or indirectly, from the Territory. The
limitation contained herein shall apply to LICENSEE and its Affiliates.
ARTICLE III- LICENSE AND ROYALTY FEES
3.1 License Fees - LICENSEE shall pay LICENSOR a license fee of seventy
five thousand United States dollars( US$75,000), payable as specified
in Appendix V attached hereto.
3.2 Royalties - In addition to the license fee payable under Section
3.1 above. LICENSEE shall pay to LICENSOR royalties for each of LICENSEE's
fiscal years during the term of this Agreement, in amounts as specified
in Appendix VI attached hereto.
3.3 Payment Terms - All payments due to LICENSOR under Sections 3.1
and 3.2 shall be made in United States dollars, when due, and via wire
transfer to the bank account in the U.S. specified by LICENSOR. The only
deduction to be made shall be for taxes imposed by the applicable taxing
authorities in the Territory on royalty payments, if any. In calculating
royalty amounts based on Gross Sales, the conversion into United States
dollars shall be at the average official rate of exchange prevailing in
<PAGE> 159
the United States during the period for which Gross Sales have been
calculated. All royalty payments shall be due and payable thirty (30)
days after the close of each of the LICENSEE'S quarterly accounting
periods commencing with the date on which Gross Sales begin. The amount
of each estimated quarterly payment shall be equal to the greater of (i)
the applicable percentage of Gross Sales for that quarter. The quarterly
and final annual payment of royalty shall be accompanied by a statement
signed by LICENSEE stating in detail satisfactory to LICENSOR the amount
of Gross Sales for the preceding year. LICENSEE shall pay interest to
LICENSOR upon any and all amounts overdue and payable hereunder to
LICENSOR at the rate charged to LICENSOR by its principal commercial
bank in New Jersey, plus one percent (1 %) per annum, for the due date
to the date of payment. Such right to payment of interest shall be without
prejudice to any other remedies LICENSOR may have under this Agreement or
by law.
3.4 Maintenance of Books and Records - LICENSEE shall keep true and
accurate records, files and books of account, in accordance with generally
accepted accounting principles in the Territory, containing all data
required to determine the amounts to be paid hereunder and the information
to be given in statements provided herein. LICENSEE shall permit LICENSOR
and LICENSOR'S representatives to inspect and examine such records, files,
books of account and facilities of LICENSEE for the purpose of determining
or verifying the amount payable to LICENSOR and to conduct or have conducted
in an annual audit thereof, including, without limitation, inspection of
all inventory of any kind. Any expenses incurred at the request and under
the direction of LICENSOR shall be paid by LICENSOR; provided, however, that
in the event any such audit reveals an error in any statement
provided by LICENSEE, the cost of the audit shall be borne by LICENSEE
if the error equals or exceeds five percent (5%) of the royalty
amount reported due in such statement.
ARTICLE IV - TECHNICAL ASSISTANCE
4.1 Documents - As soon as practicable after the date of this Agreement
and commensurate with LICENSOR's production schedule, LICENSOR shall deliver
to LICENSEE sufficient written data and information for the assembly and
service of the Licensed Products by LICENSEE as deemed necessary by LICENSOR.
LICENSEE shall provide to its retailers, information sufficient to assemble
and service Licensed Products to LICENSOR's agreed standards.
4.2 Training - As a further means of disclosing LICENSOR's Know-How to
LICENSEE, LICENSOR shall arrange, on a schedule to be mutually agreed upon,
for training of a reasonable number, to be determined by LICENSOR, of
personnel employed by LICENSEE. All salaries, traveling and living expenses
and any other remuneration and expenses to which such trainees may be
entitled, and all expenses incurred by LICENSOR in the operation of such
training program, shall be paid by LICENSEE at LICENSOR's actual cost.
4.3 Other Technical Assistance - LICENSOR agrees to provide technical
assistance upon the written request of LICENSEE. The cost of such assistance
shall be borne by LICENSEE and shall be approved by LICENSEE in writing
prior to such technical assistance being provided.
ARTICLE V - TRADEMARKS AND GOODWILL
5.1 Use of Trademarks - All Licensed Products assembled or sold by
LICENSEE shall bear the Trademarks. The permitted use by LICENSEE of the
Trademarks shall be made only on Licensed Products that conform strictly
to the standards, quality and specifications furnished by LICENSOR to
LICENSEE. Component parts of the Licensed Products shall be purchased by
LICENSEE only from LICENSOR or suppliers approved by LICENSOR in writing
to LICENSEE.
<PAGE> 160
5.2 Inspection - LICENSEE shall at all reasonable times permit LICENSOR,
by representatives designated by LICENSOR, to inspect all of LICENSEE's
facilities and properties relating to the Licensed Products, at LICENSOR's
cost.
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5.3 Labels - All labels and promotional materials used by LICENSEE shall
be submitted to and approved by LICENSOR prior to use. Such approval will
not be unreasonably withheld or delayed. All labels shall have to meet the
legal requirements applicable in the Territory
5.4 Title to Trademarks - LICENSEE shall refrain from any act or acts
that may prejudice the validity of the title of LICENSOR to the Trademarks.
After termination of this Agreement, LICENSEE will not use at any time for
bicycles or bicycle parts any trademark, tradename or label bearing any
resemblance to the Trademarks. LICENSOR shall retain ownership and the
exclusive right to Trademarks except as permitted to LICENSEE pursuant
to the conditions of this Agreement during the term of this Agreement.
5.5 Promotional Activities - LICENSEE will use its best efforts and
means to meet the needs of the Territory for the Licensed Products, to
promote, advertise and otherwise further the sale and distribution of the
Licensed Products in the Territory, particularly in population centers, and
to further and preserve the goodwill and reputation of the Licensed Products
sold under the Trademarks and meet the standards and conditions as set forth
in Appendix VII attached hereto. LICENSOR shall make available to LICENSEE,
at prices equal to LICENSOR's actual cost, promotional materials used by
LICENSOR in the United States in connection with the sale of Licensed
Products sold under the Trademarks. LICENSEE shall submit to LICENSOR all
advertising materials proposed to be used by LICENSEE in connection with
the Licensed Products for LICENSEE's prior written approval, such approval
not to be unreasonably withheld or delayed.
5.6 Customer Service - LICENSEE shall inform and forward to LICENSOR all
correspondence or communications with customers relating to the quality of
or defects or malfunction in the Licensed Products and shall handle all
inquiries or complaints expeditiously and courteously. LICENSEE and its
distribution chain shall at all times maintain adequate facilities for the
repair, service and storage of the Licensed Products and components and any
parts thereof.
LICENSEE shall at all times maintain a staff of adequately trained personnel
to properly insure the mechanical integrity of the Licensed Products,
service the Licensed Products when necessary and to train service personnel
in the LICENSEE's distribution chain. LICENSEE shall provide literature and
parts to properly support the sale and service of the Licensed Products and
shall provide LICENSOR with service reports on a quarterly basis. Such
reports shall be on a form provided by LICENSOR and shall specify models
requiring service during the period, the type of service, parts found
defective, reason service is required, date service is performed, bicycle
serial number and name and address of consumer.
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5.7 Distributor and Dealer network - LICENSEE shall provide to LICENSOR
an updated list of subdistributors and dealers constituting LICENSEE's
distribution chain in the Territory on the first day of each calendar year
quarter. The list will include company name, address. principals, and fax,
telex, and telephone numbers.
ARTICLE VI - IMPROVEMENTS
<PAGE> 161
6.1 Inventions Improvement - LICENSEE shall require each of its
employees and consultants having access to technical information, data and
Know-How relating to the Licensed Products or component parts thereof to
enter into an agreement with LICENSEE, in form and substance satisfactory
to LICENSOR, whereby each such employee or consultant agrees to assign to
LICENSEE the entire right. title and interest in and to any and all
inventions relating to the Licensed Products, or relating to or useful
in the manufacture thereof, made by him whether during or after the
course of his employment or engagement by LICENSEE. If during the term
of this Agreement, LICENSEE, or any of its Affiliates or employees makes
or acquires any invention or claim in any patent that in use would
infringe any Patent or that constitutes an improvement of a Licensed
Product, LICENSEE shall promptly assign to LICENSOR such invention or
claim. LICENSOR shall have the exclusive right and option to file and
perfect any and all patent applications embodying or arising out of such
invention or claim, in the Territory and elsewhere, in the name of
LICENSOR and to that end shall have the right to receive and/or
inspect all drawings, plans, models, specifications and worksheets
relating thereto and to interview any and all of LICENSEE's employees
and associated personnel and organizations having knowledge thereof.
LICENSEE shall retain an exclusive license in the Territory to use such
invention or claim on the Licensed Product, free of additional royalty
charges.
6.2 Know-How Improvements - During the term of this Agreement,
each party shall promptly inform and transfer to the other Know-How
that is developed or acquired by such party. The method of such transfer
shall be such as the transferor, acting in good faith and with due
diligence, deems appropriate. LICENSOR shall have the right to receive
and/or inspect all drawings, plans, models, specifications and worksheets
relating thereto and to interview any and all of LICENSEE's employees and
associated personnel and organizations having knowledge thereof. LICENSEE
shall retain an exclusive license in the Territory to use such Know-How,
in connection with Licensed Products, free of additional royalty charges.
ARTICLE VII - CONFIDENTIALITY AND COMPETITION
7.1 Confidentiality Obligation - LICENSEE shall hold, and shall cause
its Affiliates to hold, all Know-How disclosed to it under this Agreement
in confidence at all times during and after the term of this Agreement and
each party shall require each of its employees and
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consultants, and the employees and consultants of its Affiliates, having
access to Know-How relating to the Licensed Products or component parts
thereof to enter into an agreement whereby each such employee or consultant
agrees to hold such Know-How in confidence at all times, and agrees not to
compete with LICENSOR or LICENSEE either during his employment or engagement
and for a three (3) year period thereafter, or, in the event such time
period is not enforceable, then a reasonable period as agreed by a judicial
body within the Territory. Other measures to be taken by LICENSEE and its
Affiliates to hold Know-How in confidence shall be subject to the review
and approval of LICENSOR. LICENSOR shall have the right, in the event of a
violation or breach of this Section 7.1 by LICENSEE, its Affiliates,
employees, or consultants, to seek and obtain specific enforcement of
the provisions of this Section; and to commence an action, in LICENSEE's
name and stead. against any party with whom LICENSEE has a confidentiality
agreement as required by this Section if such party breaches any provision
of such agreement and if LICENSEE for any reason elects not to enforce such
provision. The obligations regarding confidentiality contained hereinabove
shall not apply to any Know-How that;
(i) is at the time of disclosure generally available to the public;
<PAGE> 162
(ii) becomes generally available to the public through no breach of
confidentiality obligations by the party to whom the disclosure is made
or by any of its Affiliates or the employees or consultants of any of them;
or
(iii) is disclosed to the receiving party by another party not bound by
any confidentiality obligation.
An individual feature of Know-How shall not be considered within the above
exceptions merely because the feature is embraced by more general
information within the exceptions. A combination of features of Know-How
shall not be considered within the above exceptions unless the combination
itself and its principle of operation are within the exceptions.
7.2 Restriction on Competition by LICENSEE - In consideration of
LICENSEE's receiving the exclusive rights conferred under this Agreement,
LICENSEE shall not, during the term of this Agreement, sell or deal in any
manner in bicycles or parts or components thereof not constituting Licensed
Products, but may deal in bicycle accessories approved by LICENSOR. In
addition, for a period of three (3) years after the termination of this
Agreement, LICENSEE shall not become involved or associated with any other
person or business entity engaged in the manufacture or sale of lever
propelled bicycles; provided, that if such time period is held to be
unenforceable, then the restrictive period shall be such reasonable period
as may be agreed by a judicial body within the Territory.
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ARTICLE VIII- TERMS AND TERMINATION
8.1 Term - Except to the extent provided herein with respect to the
survival of certain provisions following the term of this Agreement, and
unless earlier terminated pursuant to Sections 8.2 and 8.3 hereof,
the term of this Agreement shall commence on the date of this Agreement
and shall upon the mutual consent of the parties be renewed at the
third year Anniversary' Date, and renewed at each Anniversary Date
thereafter without the payment of any additional licensing fees, unless
either party' breaches any material term of this Agreement.
8.2 Termination by LICENSEE - LICENSEE may terminate this Agreement
on any Anniversary Date hereof by giving ninety (90) days prior written
notice of termination.
8.3 Termination by LICENSOR - LICENSOR may terminate this Agreement
at any time:
(i) by giving LICENSEE thirty (30) days prior written notice if
LICENSEE shall have committed a material breach of any of its obligations
hereunder, including without limitation, the prompt and timely payment of
license fee and royalties hereunder and failure to fill customers orders
for Licensed Products, or to perform service orders, in a timely fashion;
provided that LICENSEE shall have been previously advised of the alleged
material breach and has been given fifteen (15) days to cure such breach.
It is further provided that no such breach shall be deemed to have occurred
or be continuing (as applicable) if and to the extent LICENSEE's failure to
perform its obligations is due to acts beyond the reasonable control of
LICENSEE, including but not limited to strikes, lock-outs or civil
insurrection or lack of material including component or part supplied by
LICENSOR, any of its Affiliates or suppliers generally.
(ii) upon (a) the filing of a petition in bankruptcy by or against
LICENSEE; (b) the appointment of a referee, trustee or receiver for a
substantial portion of the property or assets of the LICENSEE; (c) the
insolvency of LICENSEE; (d) the consolidation, merger or other business
combination of the LICENSEE or its Affiliates with. or the sale of a
substantial portion of the LICENSEE'S assets to, another corporation,
business entity or person, or the execution of an agreement by LICENSEE
to that effect, or a change in control of LICENSEE or its Affiliates
without the prior written consent of the LICENSOR, such consent not to
<PAGE> 163
be unreasonable withheld; or (e) if LICENSEE is an individual, the death
or incapacity of LICENSEE.
8.4 Termination - Should a termination of this Agreement occur:
(i) LICENSEE shall cease all use of Trademarks and return to
LICENSOR all materials supplied by LICENSOR and deliver to LICENSOR
all materials title to which has been acquired by LICENSOR pursuant
to this Agreement; and
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(ii) any agreements entered into by LICENSEE with third parties in the
Territory, including but not limited to subdistributors and dealers, shall
be assignable to LICENSOR and LICENSEE shall assign to LICENSOR all such
agreements and other documents regarding such subdistributors and dealers
and will do all that is reasonable to have them continue as LICENSOR's
subdistributors and dealers. In the event of Termination, LICENSEE shall
submit a full inventory (including costs) of parts and stock on hand, within
five (5) days. LICENSOR shall have the option to purchase within thirty
(30) days all or part thereof at LICENSEE's cost or market value, whichever
is less. Any such purchase shall be F.O.B. LICENSEE's warehouse.
ARTICLE IX - INFRINGEMENT ACTIONS
9.1 Trademark Claims Against LICENSEE - On Licensed Products, LICENSOR
shall defend, indemnify and hold LICENSEE harmless against claims of
trademark infringement brought against LICENSEE pursuant to this Agreement;
provided, nothing hereunder shall be construed to obligate LICENSOR to
defend, indemnify or hold LICENSEE harmless against claims of trademark
infringement brought against LICENSEE arising out of acts taken by LICENSEE
not required by this Agreement or approved by LICENSOR in writing.
LICENSOR may, however, elect to defend any such action at its own expense. If
LICENSOR elects not to so defend, LICENSEE may, with the consent of
LICENSOR, defend such action at its own expense. LICENSEE shall not settle a
ny such action without the consent of LICENSOR.
9.2 Patent Infringement & Wrongful Use Claims Against LICENSEE -
LICENSOR will assume the defense of any suit brought against LICENSEE
for infringement of any patent or for wrongful use of proprietary
information of any third party insofar as such suit is based upon a
claim that the infringement or wrongful use is attributable to LICENSEE's
application without substantial modification of technology supplied under
this Agreement. In any such suit, LICENSOR will indemnify LICENSEE against
any money damages or costs awarded in such suit in respect to such a claim.
The obligations of LICENSOR stated in this Section 9.2 apply only if (i)
LICENSEE promptly informs LICENSOR in writing of any claim within the
scope of this Section 9.2; (ii) LICENSOR is given exclusive control of
the defense of such claim and all negotiations relating to its settlement;
and (iii) LICENSEE provides all reasonable assistance to LICENSOR in all
necessary respects in conduct of the suit.
LICENSOR's total liability in out-of-pocket costs in the defense of
any suit or suits and to pay damages awarded in any suit or suits shall
be limited to the amount theretofore paid to LICENSOR by LICENSEE under
this Agreement, and LICENSEE will advance to LICENSOR any amount required
to be expended by LICENSOR in excess of that
<PAGE> 164
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limit. Amounts So advanced shall be credited to future payments due from
LICENSEE to LICENSOR as a result of LICENSEE's operations under this
Agreement.
The provisions of this Section 9.2 state the entire liability of LICENSOR
to LICENSEE in respect of LICENSEE's use of the technology granted herein,
and, except as specifically provided in this Section, LICENSOR shall not be
liable either directly or as indemnitor of LICENSEE for or on account of any
claim arising in any way' from LICENSEE's use of the technology.
9.3 Claims by LICENSEE or LICENSOR - In case Trademarks or any of the
Patents are infringed by any third party in the Territory, LICENSEE shall
notify LICENSOR, and LICENSOR may, if it chooses, bring suit to enjoin such
infringement. In the event LICENSOR elects not to bring such suit. LICENSEE
may bring such suit upon advice to, and with the consent of, LICENSOR.
Neither party shall settle any such suit without the consent of the other,
which consent shall not be unreasonably withheld. Since actions by LICENSEE
or LICENSOR hereunder are for the protection of LICENSEE's rights within the
Territory, the costs of any actions brought under this Section 9.2 shall be
borne equally by LICENSEE and LICENSOR.
9.4 Indemnification of LICENSOR - Except as otherwise provided in this
Article IX, LICENSEE will hold LICENSOR harmless against all liabilities,
demands, damages, expenses, or losses arising (i) out of use by LICENSEE
or its transferees of inventions licensed or information furnished under
this Agreement or (ii) out of any use, sale or other disposition by LICENSEE
of its inventions or information.
ARTICLE X - SUPPLY AGREEMENT
10.1 Ordering of Licensed Products - LICENSOR agrees to provide the
Licensed Products to LICENSEE. LICENSEE shall be entitled to order and
receive Licensed Products, provided that LICENSEE shall give written
notice of such order to the LICENSOR within the mutually agreed upon lead
time as stated on order acknowledgments. Payment for goods ordered shall
be a confirmed Irrevocable (transferable and divisible) letter of credit
(allowing partial shipments and transshipments) confirmed by the LICENSOR's
U.S. Bank, payable upon the presentation of shipping documents.
10.2 Terms and Conditions of Sale - LICENSEE agrees to assemble, use,
import, sell and distribute such components, parts, and/or completely
assembled items of the Licensed Products and other products as may be
necessary for the LICENSEE's use and/or distribution, from LICENSOR, its
Affiliates and/or LICENSOR's suppliers as may be agreed upon in accordance
with such of LICENSOR's forms of Purchase and Terms and Conditions of Sales
as LICENSOR may from time to time establish. Such Terms and Conditions of
Sale shall include provisions relating to price, limited warranty,
delivery,
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title of goods, freight and insurance charges, subrogation of claims and
such other items as are customarily expressed in such documents.
10.3 Force Majeure - LICENSOR shall not be liable for any damage or
penalty for delays in delivery, or complying with the warranty provisions
hereunder, due to acts of God, acts or omissions of LICENSEE, acts of
civil or military authorities, government regulations, or priorities, fire,
floods, epidemics, quarantine restrictions, war, riots, strikes, differences
with suppliers, inability of suppliers to perform, accidents to machinery,
inability to obtain material, delays in transportation, failure or delay in
furnishing complete or correct information by LICENSEE, impossibility or
impracticability of
<PAGE> 165
performance or any other cause or causes beyond the
control of LICENSOR, whether or not similar to the foregoing.
LICENSOR SHALL UNDER NO CIRCUMSTANCES BE LIABLE FOR SPECIAL OR
CONSEQUENTIAL DAMAGES FOR DELAYS OR FMLURE TO GIVE NOTICE OF
DELAY.
ARTICLE XI- DOCUMENTS DELIVERED UPON
CONTRACT EXECUTION
11.1 On the signing of this Agreement, LICENSOR shall deliver to LICENSEE
an affidavit of LICENSOR stating that it has full power and authority to
confer the rights being granted hereunder and no encumbrances of any nature
exist therein, nor are there any agreements of options in existence which
would in any way prohibit the written granting of rights described in this
Agreement.
11.2 The parties agree to do or execute or cause to be done or executed
all such further acts, deeds, instruments or transfer as may be reasonably
required from time to time to effect the rights between the parties hereto.
ARTICLE XII- MISCELLANEOUS
12.1 Survival of Provisions - The provisions of Sections 3.4,5.4,7.1,7.2,
8.4,9.1, 9.2, 9.4, and 12.8 shall survive any termination of this
Agreement.
12.2 Assignment and Sublicensing - LICENSEE may not sublicense, assign or
transfer this Agreement or any license granted hereunder; provided, that
LICENSEE shall sublicense the Trademarks to any of its subdistributors and
dealers selling the Licensed Products, the sublicense agreements to contain
provisions substantially similar to the provisions of Article V of this
Agreement relating to the protection of Trademarks and to be in form and
substance satisfactory to LICENSOR.
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12.3 No Agency - Nothing contained in this Agreement shall be construed
so as to make either LICENSOR or LICENSEE the agent or partner of the other,
it being the intention of the parties to deal as principals with one
another.
12.4 Entire Agreement - This Agreement sets forth the entire Agreement
between the parties as to the subject matter hereof and merges all prior
discussions and writings between them. This Agreement may be amended only
by written instrument duly signed by both parties hereto.
12.5 No Implied Right - Nothing in this Agreement shall be construed
as conferring any right by implication, estoppel or under any patent, patent
applications or trademarks, except as herein expressly provided.
12.6 All notices, communications, and correspondence required under
this Agreement, or pursuant to the activities which it governs, or
associated with it shall be in writing, shall use United States English
only and shall become effective either when served by personal delivery or
by certified mall addressed as follows (or to such other address for a party
as that party may designate by notice to the other party):
If to LICENSOR: TRB Systems, Inc.
<PAGE> 166
354 Eisenhower Parkway
Suite No.26
Livingston, New Jersey 07039
U.S.A.
Fax: (201) 992-5577
If to LICENSEE: MR. ABBAS R. DATOO
14 Limolite Road
Hackettstown, New Jersey 07840
12.7 Severability - Should any provision of this Agreement or the
application thereof, to any extent, be held invalid or unenforceable,
the remainder of this Agreement and the application thereof shall not be
affected thereby and shall continue valid and enforceable to the fullest
extent permitted by law or equity.
12.8 Arbitration - Any controversy or claim arising out of or relating to
this Agreement, or the breach thereof, shall be settled by arbitration
before one or more arbitrators in New York City, in accordance with the
Commercial Arbitration rules of the American Arbitration Association.
Furthermore, if any controversy or claim arises out of the provisions of
Section 7.1 of this Agreement, LICENSOR may apply to the federal or state
courts located in the State and County of New York for injunctive or interim
relief in aid of arbitration. Judgment upon the award rendered by the
arbitrator(s) in accordance with the aforesaid rules may be entered in
any court having jurisdiction thereof. LICENSEE hereby consents to the
nonexclusive jurisdiction of the federal and state courts located in the
State and County of New York for the sole purpose of the issuance of any
injunctive or interim relief or for the entry of any award as hereinabove
provided.
All trade terms used herein shall have the meaning defined in the International
Chamber of Commerce publication "International Rules for Interpretation of
Trade Terms".
12.9 This agreement supercedes any and all other agreements either oral
or in writing between the parties hereto with respect to the engagement of
"TRB" and "LICENCEE".
ARTICLE XIII - GOVERNING LAW
13.1 This Agreement shall be governed by and construed in accordance with
the substantive law of the State of New York and the United States without
regard to principles of conflicts of laws.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the
date first above written.
LICENSEE: LICENSOR:
TRB SYSTEMS INC.
/s/ Byung D. Yim /s/
/s/ Abbas Datto /s/
Abbas Datoo Byung D. Yim, President
WITNESS: WITNESS:
<PAGE> 167
/s/ J.E. Osborne /s/ /s/ J.E. Osborne /s/
Name: Name:
Company or Address: Company or Address:
Sterling Nappen Chavkin and Co. Sterling Nappen Chavkin and Co.
Livingston, N.J. Livingston, N.J.
J.E. Osborne J.E. Osborne
Notary Public of New Jersey Notary Public of New Jersey
Notary No.2054646 Notary No. 205464
My Commission Expires Dec.27, 1998 My Commission Expires Dec.27,1998
APPENDIX I
Licensed Products
All Transbar Bicycles including but not limited to those listed below:
(1) TRB 190
(2) TRE 240
(3) TRE 250
(4) TRE 500
(5) TRE 1000
(6) TRE 100 (BMX)
(7) TRE 300 (Cruiser)
Also includes but not limited to all special parts listed below:
(a) Rear hub assembly
(b) See-saw idler assembly
(c) Lever and Transbar assembly
(d) Gearshift lever
(e) Special chain connecting cable
(f) All service parts of above assemblies
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APPENDIX II
<PAGE> 168
TERRITORY
THE COUNTRY OF TANZANIA
APPENDIX III
PATENTS
A patent application in the Territory for an improvement in the Licensed
Products is in the course of preparation.
APPENDIX IV
TRADEMARKS
APPENDIX V
License Fees
(i) Payment of the $75,000 (Seventy five thousand U.S. dollars) License
Fee set forth in the License and marketing Agreement shall be made by
LICENSEE on behalf of LICENSOR:
$10,000 (ten thousand U.S. dollars) is due upon execution of this
Agreement;
$10,000 (ten thousand U.S. dollars) is due by November 17,1996.
$15,000 (fifteen thousand U.S. dollars) is due by March 17, 1997.
$40,000 (forty thousand U.S. dollars) is due by July 17, 1997 or before
Indian domestic marketing and sales is ready, whichever comes
first.
(ii) In addition to the License Fee, the Joint Venture Company shall
pay to TRB the royalties set forth in the Licensing and Marketing Agreement
which shall be paid to TRB's account (or MOTIONPLUS INT'L Corporation)
in the United States or as otherwise instructed in writing by TRB from time
to time.
Royalties
Year 1- Five percent (5%) of Gross Sales or minimum
U.S. $10,000 (Ten thousand U.S. dollars)
whichever is greater.
Year 2- Five percent (5%) of Gross Sales or minimum
U.S. $20,000 (Twenty thousand U.S. dollars)
whichever is greater.
<PAGE> 169
Year 3-and every year -Four percent (4%) of Gross Sales or minimum
thereafter U.S. $30,000 (Thirty thousand U.S. dollars)
whichever is greater.
APPENDIX VII
Promotional Activities
LICENSEE must provide and participate in such promotional activities and
production of materials to support, promote, and generate full sales
potential of Licensed Product.
LUCENSOR will make available to LICENSEE at its cost all promotional and
advertising materials and printed service literature.
APPENDIX V
Terms and Conditions of Sale
Payment- By irrevocable (transferable and devisable) letter of credit
allowing partial shipments and transshipment in favor of
LICENSOR, payable upon presentation of shipping documents to
LICENSOR'S bank.
Remarks- All orders are subject to final confirmation of LICENSOR.
Sales Forecast- LICENSEE will provide LICENSOR twelve (12) month sales
forecast by month by model with sixty (60) day lead time
updated by month.
MINIMUM PURCHASE PER YEAR:
Year 1: 1,000 Bicycles
Year 2: 2,000 Bicycles
Year 3:
every year thereafter: 3,000 Bicycles
EXHIBIT 1 CONFIDENTIALITY AGREEMENT-PROPIETARY INFORMATION
PRODUCT IMPROVEMENT AND CONFIDENTIALITY AGREEMENT
Gentlemen:
The following confirms an agreement between me and ____________ hereinafter
referred to as "LICENSEE" which is a material part of the consideration for
my employment or affiliation with LICENSEE:
1. I recognize that the LICENSEE has entered into an agreement with TRB
Systems Inc., hereinafter referred to as the "Company", which
Company is engaged in a continuous program of
<PAGE> 170
research, development
and production respecting its products, patents and know-how,
hereinafter referred to as "Proprietary Information."
2. I understand that my employment or affiliation with LICENSEE
creates a relationship of confidence and trust between me and the
LICENSEE with respect to any Proprietary Information.
3. In consideration of my employment or affiliation with the
LICENSEE, I hereby agree as follows:
(a) I understand and agree that I have no rights in any Proprietary
Information of the Company or the LICENSEE. At all times, both
during my employment or affiliation with the years, I will keep
in confidence and trust all Proprietary Information, and I will
not use or disclose any Proprietary Information, and I will not
use or disclose any Proprietary Information or anything relating
to it without the written consent of the LICENSEE and the Company,
except as may be necessary in the ordinary course of performing
my duties with the LICENSEE. I will at all times fully and
accurately document any Proprietary Information or Inventions
(as hereinafter defined) developed by me so that at all times
the LICENSEE shall have in its possession descriptions and
directions with respect thereto that will enable the LICENSEE
and its assigns to utilize such Proprietary Information and
Inventions to their full benefit.
(b) All documents, records, apparatus, equipment and other physical
property, whether or not pertaining to Proprietary Information,
furnished to me by the LICENSEE or produced by myself or others
in connection with my employment or affiliation shall be and
remain the sole property of the LICENSEE or its assigns and shall
be returned to it immediately as and when requested by the LICENSEE.
Even if the LICENSEE does not so request, I shall return and
deliver all such property upon termination of my employment or
affiliation by
05/03/94/MHM/09152/001/AGREE-11/8556.1
me or by the LICENSEE for any reason and I will not take with me any such
property or any reproduction of such termination. I will keep all
information relating to the Proprietary Information confidential during
my employment or affiliation and for three years thereafter.
(c) I will promptly disclose to the LICENSEE or any persons designated
by it, all improvements, inventions, ideas, formulas, processes,
techniques, know-how and data, whether or not patentable, made or
conceived or reduced to practice or learned by me, either alone or jointly
with others, during the term of my employment or affiliation (all said
improvements, inventions, formulas, processes, techniques, know-how and
data shall be hereinafter collectively called "Inventions").
(d) I agree that all Inventions which I developed in whole or in part,
either alone or jointly with others utilizing equipment, supplies,
facilities or Proprietary In formation of the LICENSEE or its assigns
or during my periods of employment or affiliation with the LICENSEE
shall be the sole property of the LICENSEE and its assigns, and the
LICENSEE and its assigns shall be the sole owner of all patents and
other rights in connection therewith. I hereby assign to the LICENSEE
and its assigns any rights I may have to acquire in such Inventions.
I further agree as to all such Inventions to assist the LICENSEE and
its assigns in every proper way but shall not bear the expenses involved)
to obtain and from time to time enforce patents on said Inventions in
any and all countries, and to that end I will execute all documents
for use in applying for and obtaining such patents thereon and enforcing
same, as the LICENSEE or its assigns may desire, together with any
assignments thereof to the LICENSEE or persons designated by it.
My obligations to assist the LICENSEE or its assigns in obtaining of and
enforcing patents for such inventions in any and all countries shall
continue beyond the termination of my employment or affiliation for
a period of three years, but the LICENSEE or its assigns shall compensate
me at a reasonable rate after such termination for time actually spent by
me on such assistance.
<PAGE> 171
In the event that the LICENSEE is unable for any reason whatsoever to
secure my signature to any lawful and necessary document required to apply
for or execute any patent applications with respect to such an Invention
(including renewals, extensions, continuations, divisions or continuations
in part thereof), I hereby irrevocably designate and appoint the LICENSEE
and its duly authorized officers and agents, to its assigns, as my agents
and attorneys-in-fact to act for and in my behalf and instead of me,
to execute and file any such application and to do all other lawfully
permitted acts to further the prosecution and issuance of patents thereon
with the same legal force and effect as if executed by me.
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(e) I represent that my performance of all terms of this Agreement will
not breach any agreement to keep in confidence any proprietary information
acquired by me in confidence or in trust prior to my employment or
affiliation with the LICENSEE. I have not entered into, and agree I will
not enter into, any agreement either written or oral in conflict with the
obligations set forth in this Agreement.
(f) I represent that I did not learn during my prior employment or
affiliation any ideas or information which the LICENSEE indicated were
considered confidential and proprietary or which were disclosed to me in
a manner which should have made me realize they were so considered.
(g) If I cannot make the representation provided in (f) I approve,
I will check the following box:
( ) I cannot make the representation in paragraph (f) above.
If I checked the above box, I hereby represent that I will not make use of
any such confidence and proprietary information or ideas during my
employment or affiliation with the LICENSEE unless such information or
ideas during my employment by the LICENSEE or become publicly available for
reasons other than actions on my part.
4. This Agreement shall be effective as of the first day of my
employment or affiliation with the LICENSEE.
5. This Agreement shall be binding upon me, my heirs, executors,
assigns, and administrators and shall insure to the benefit of the Company,
its successors.
Accepted and Agreed to (date):
SIGNED:
NAME AND TITLE:
COMPANY NAME:
WITNESS:
LICENSEE:
O5/O3/94MHM/091152/001/AGREE-1l/85561.1
<PAGE> 172
DISTRIBUTORSHIP AGREEMENT
This agreement made as of the 28th day of Dec. 1995, by and between TRB
Systems Inc., having its principal offices at 354 Eisenhower Parkway,
Livingston, New Jersey (hereinafter called "TRB") and Mr. Kishor M. and
Gira K. Dattani with their address at 25401 Classic Rd. Mission Viejo,
CA 92691 hereinafter called DISTRIBUTOR).
The parties acknowledge that TRB owns or controls patents, trademarks,
tradenames and known-how relating to bicycles with variable speed lever
action drive and their manufacture in a variety of lines of lever drive
bicycles utilizing proprietary designs, such items hereinafter known as
the "Products" or "Bicycles". The parties further acknowledge that the
DISTRIBUTOR will be a part of a distribution system selling the Products,
and that a quality uniform program for the Product, including sales
procedures, and other business practices are necessary for the development
of the persons involved in the distribution and sales for development of
the Product. The DISTRIBUTOR acknowledges that a failure of performance
on its part might damage the total good will and development of the
Product.
In consideration of the foregoing, and of the mutual covenants, terms and
conditions hereinafter set forth, the parties hereto mutually agree as
follows:
ARTICLE ONE - PRODUCTS AND PRODUCTS BY APPOINTMENT
1.01 PRODUCTS: The products covered in this Agreement are all bicycle,
bicycle related and accessory products marketed by TRB, now and hereafter,
all products that TRB has and will develop in the future.
1.02 NATURE OF APPOINTMENT: The appointment of the DISTRIBUTOR shall
be exclusive as to the right to make sales of the Product of any type
in his Territory, subject to the right of TRB to make sales in the
Territory as follows:
a. Sales made by TRB to Dealers or Customers for delivery in the
Territory shall obligate TRB to pay the DISTRIBUTOR (if the DISTRIBUTOR
is not in default) an amount equal to the difference between the Product
Unit Price and the amount charged by TRB as the product Unit Price to
the Customer (i.e. the invoice amount less Service Cost and Taxes)
except infomercial sales by TRB. It is the intention that in such a
situation the DISTRIBUTOR will receive the same net profit as if he
had actually sold the Product himself except infomercial sales by
TRB.
b. If TRB makes a sale in the Territory for delivery outside of the
Territory there shall be no compensation due the DISTRIBUTOR.
c. In the event notice of termination is given to the DISTRIBUTOR
pursuant to the terms hereinafter provided, TRB or its agent may
sell any of the Product within the Territory without any financial
obligation to make payment to the DISTRIBUTOR after termination.
1.03 TERRITORY: The territory included in this Agreement will be those
geographic areas specified in Exhibit I.
ARTICLE TWO - PERFORMANCE
2.01 DISTRUBUTOR COMMITMENT: DISTRIBUTOR agrees to use its best efforts
to develop and expand the market for the Products within the Territory
and is required to purchase a minimum number of units of the product which
shall he sold only in the Territory during each twelve month period during
the term of this Agreement, as specified in Exhibit II.
2.02 DISTRIBUTOR PERFORMANCE REQUIREMENTS: The DISTRIBUTOR agrees to meet
or exceed the "Minimums" established in Exhibit II for the number of units
sold on a quarterly and yearly
<PAGE> 173
basis for the term of this Agreement. These "minimum" requirements are
computed by TRB based on current statistical market data on the U.S.A.
domestic bicycle market.
Failure to meet these requirements may he construed by TRB as a breach by
the DISTRIBUTOR of a material part of this Agreement and result in one or
more of the following:
(a) The DISTRIBUTOR may lose all its rights and privileges under this
Agreement (see Termination, article 8.01).
(b) The DISTRIBUTOR, may lose its "exclusivity" to the territory and
all its rights and privileges under this Agreement as a result of
this exclusivity.
(c) The DISTRIBUTOR may he required to pay in full and in advance a
"security" deposit equal to as much as 25% of the total cost to the
DISTRIBUTOR for the yearly minimum number of units established in
Exhibit II. This deposit will he used by TRB to partially offset
any balance due the company if the minimum is not met.
(d) The DISTRIBUTOR may he required to apply in full up to 100% of the
"unsold" minimum units established in Exhibit II on a quarterly
basis.
2.03 PLAN OF DEVELOPMENT: Simultaneously with the execution of this
Agreement, and with 120 days advanced notice each year thereafter,
the DISTRIBUTOR agrees to prepare and deliver to TRB a proposed sales
forecast by quarter for the twelve month period which sets forth an
estimate of a number of units of the Products which will be sold in
each area of the Territory.
Such sales forecast shall he used by the parties to determine the
number of units that will be ordered by the DISTRIBUTOR for such
period. Contrary wording not withstanding, TRB will not he obligated
to provide more units than expressed by the projection for the time
periods shown. It is acknowledged that in the event the DISTRIBUTOR
orders substantially less of the Product than shown by the projected
sales, TRB may consider it a substantial breach of this agreement.
In the event TRB fails to provide the "minimum" established in
Exhibit II, then the DISTRIBUTOR shall not he in breach if the minimum
requirements are not met.
ARTICLE THREE- TERM OF AGREEMENT
3.01 TERM: The appointment of the DISTRIBUTOR under this agreement
shall be effective
on the date first written above, and shall continue for a period of three
years unless previously terminated. This Agreement shall be renewable at
the option of the DISTRIBUTOR for another three year period provided the
DISTRIBUTOR has met all the requirements of the Agreement. Thereafter
this Agreement shall remain in force from year to year unless either
party shall give the other written notice of termination for cause,
of at least 90 days or unless either party breaches any material term
of this Agreement.
3.02 SURRENDER OF DISTRIBUTORSHIP: The first year of business is the
time period starting from the first date TRB launches the products by
infomercial or delivery of samples, brochures to distributor whichever
is earlier.
During the period of the first year of business the distributor reserves t
he right to surrender the distributorship to TRB, in return TRB agrees to
unconditionally refund entire sum of payment paid by the distributor
towards distributorship.
3.03 PAYMENT FOR DISTRIBUTORSHIP: Total price of distributorship of the
County of Orange, California is U.S. $100,000 (one hundred thousand dollars).
Terms of payment is as follows:
$40,000 First installment upon execution of agreement.
$30,000 Second installment within 180 days of the first installment.
<PAGE> 174
$40,000 Third installment within 120 days of the second installment. This
payment includes the $10,000 for samples inventory and brochures.
ARTICLE FOUR - SALE AND PROMOTION OF PRODUCT
4.01 SUPPLY OF PRODUCTS: Subject to the terms of this Agreement, TRB agrees
to hold available and ship pursuant to DISTRIBUTOR'S purchase orders as
confirmed by TRB during the term of this Agreement, a sufficient quantity
of the Products to meet the DISTRIBUTOR'S requirements for the distribution
and resale thereof as specified in Exhibit II; provided, however, that in
the event that TRB is unable to fill any orders, or any part thereof,
within normal delivery dates because of strikes, walkouts, riots, civil
insurrection, interruption of service of usual shipping media, inability
to obtain materials or interruption of manufacturing processes within the
plant due to the destruction of, or damage to, TRB's facilities or the
facilities of any manufacturer from whom TRB subcontracts, or in the
event of unexpectedly heavy orders from the DISTRIBUTOR, or others,
or should TRB be unable to fill the order for any other reason, then TRB
shall be relieved of such obligation, subject to its good faith efforts
to complete the said orders as soon as is reasonable. It is expressly
agreed that TRB shall not be obligated to ship any orders if the
DISTRIBUTOR is in default, or if notice of termination of this
Distributorship for cause, has been given.
4.02 SAMPLES: TRB agrees to supply, at the DISTRIBUTOR'S expense, samples
of the Product in such quantity that the DISTRIBUTOR might reasonably
request to supply its own needs. TRB also agreed from time to time to
supplement such samples of Products.
4.03 MODELS AND SPECIFICATION: TRB agrees to advise the DISTRIBUTOR at
least 60 days prior to the discontinuance or substantial modification of
any specific design, specification and/or model, but it is expressly
understood that TRB shall have no liability under any circumstances
for any damages resulting from the discontinuance or modification of any
Products.
4.04 PRICES: The word price, as used herein, shall be made up of two
factors. First shall be the Product Unit Price, which shall be the
amount charged for the Bicycles or Products themselves. This shall
be as set forth on Exhibit II, attached. The second part shall be the
Service Fee which will be made up of shipping costs, charges for other
such expenses as TRB may have to pay or become obligated for as a
result of the DISTRIBUTOR'S order. The amount of the Service Fees will
be negotiated in good faith. The total of the two items will represent
the price. TRB reserves the right to thereafter alter or change the
total price, but agrees that the Product Unit Price will be consistent
with the Product Unit Prices charged other Distributors of similar
quantity on similar terms. TRB agrees to notify the DISTRIBUTOR thirty
(30) days in advance of any price change.
4.05 TERMS OF PAYMENT: Payment for good ordered by the DISTRIBUTOR shallbe
a confirmed irrevocable letter of credit, confirmed by a TRB designated U.S.
prime bank, payable upon presentation of documents (at sight L/C) or other
advanced payments acceptable to TRB. The letters of credit shall be
delivered with the orders.
4.06 SALES: The DISTRIBUTOR will actively solicit business and promote
the sales of TRB's Products within the Territory and provide the needed
personnel and facilities to accomplish this purpose. The DISTRIBUTOR
will be obligated to set up a Dealer Network to adequately serve his
Territory. Sales of the
<PAGE> 175
Products within the Territory may be made in the DISTRIBUTOR'S name
but in any event, the DISTRIBUTOR shall be solely responsible
for all sales costs and handling charges incident
to such sales. The DISTRIBUTOR shall mall to TRB a copy of all
Sub-distributor and Dealer Agreements with the DISTRIBUTOR as soon as
the same date that they are signed. All such agreements must be in
writing and get approval from TRB.
4.07 PROMOTIONAL MATERIALS: The DISTRIBUTOR agrees to submit to TRB copies
of all promotional materials to be used by the DISTRIBUTOR in
connection with the resale of the Product in advance for approval by TRB.
TRB shall also supply DISTRIBUTOR promotional materials with TRB actual
cost.
ARTICLE FIVE - INFRINGEMENT AND TRADEMARKS
5.01 TRADEMARKS: The DISTRIBUTOR hereby acknowledges that TRB is the owner
of certain trademarks and patents and agrees that it shall not,
directly or indirectly, use such trademarks, or any marks confusingly
similar thereto, without prior written consent of TRB, except in
connection with the promotion, marketing and sales of the Products.
5.02 PRODUCT REGISTRATION: The DISTRIBUTOR shall promptly notify TRB of
any and all infringements of TRB's trademarks and patents of the Product
in the Territory that may assist TRB in taking such action against the
infringements as TRB in its discretion may decide, all expenses and costs
incident thereto being paid by TRB.
5.03 TITLE TO TRADEMARKS: The DISTRIBUTOR shall refrain from any act
or acts that may prejudice the validity of the title of TRB to the
trademarks. Upon termination of the Agreement, the DISTRIBUTOR will
not use at any time any bicycle, bicycle parts or any product or service,
of TRB or Trademarks, Tradenames or labels bearing any resemblance to the
Trademarks, Tradenames or Labels of TRB.
5.04 LABELS: All labels and promotional materials used by Distributor
shall be submitted to and approved by TRB prior to use. Such approval
will not be unreasonably withheld or delayed. All labels shall have to
meet the legal requirements of the Territory.
5.05 TRB warrants that it has legal title to the products and is
authorized to sell such products to DISTRIBUTORS.
ARTICIE SIX - PRODUCT IMPROVEMENT AND CONFIDENTIALITY
6.01 IMPROVEMENTS: The DISTIUBUTOR shall require each of his employees,
affiliates and or sub-distributors having access to technical information
and data relating to the Products or component parts thereof to enter
into an agreement with the DISTRIBUTOR (attached as Exhibit IV) whereby
such employees, affiliates and or sub-distributors agree to assign to the
DISTRIBUTOR the entire right, tide and interest in and to any and all
inventions relating to the Products, or relating to or useful in the
manufacture thereof, made by him whether during or within three years
after the course of his employment of engagement with the DISTRIBUTOR.
The DISTRIBUTOR shall promptly assign to TRB any invention or claim in
any patent or patent application covering the Products or any component
part thereof owned by TRB which is made or acquired by the DISTRIBUTOR,
its affiliates, employees or sub-distributors during the term of this
Agreement. TRB shall have the exclusive right and option to file and
perfect any and all patent applications embodying or arising out of such
invention or claim, in the Territory and elsewhere, in the name of TRB
and to that end shall have the right to receive and/or inspect all drawings,
plans, models, specifications and work sheets relating thereto and to
interview any and all of the DISTRIBUTOR'S employees or affiliates
having knowledge thereof.
6.02 CONFIDENTIALITY MEASURES: DISTRIBUTOR and its affiliates (or its
consultant) shall hold all proprietary information disclosed to it
under this Agreement in confidence at all times during and for
<PAGE> 176
three years after the term of this Agreement and each party shall require
each of its employees and affiliates (or its consultant) having
access to know-how relating to the Product or component parts thereof
to enter into an Agreement (Exhibit IV) whereby each individual agrees
to hold such proprietary information in confidence at all times, and
agrees not to compete with TRB or the DISTRIBUTOR either during their
employment or engagement and for a three year period thereafter.
Other measures to be taken by the
DISTRIBUTOR to hold proprietary information in confidence shall be subject
to the review and approval of TRB. TRB shall have the specific right,
in the event of a violation or breach of this Section 6.02 by any of
the DISTRIBUTOR'S employees and/or affiliates (or its consultant) to
enforce the provisions of this Section; and to commence an action with
respect thereto, in the DISTRIBUTOR'S name and stead, if the DISTRIBUTOR
for any reason elects not to enforce such provision.
ARTICLE SEVEN - PRODUCT WARRANTIES
7.01 PRODUCT WARRANTY: TRB does not guarantee the sales of the Product
in the Territory and shall not accept any returns thereof except under the
following conditions:
(a) The DISTRIBUTOR shall notify 'I'RB in writing of any alleged
defects rendering Product unsaleable not later than 45 days from date of
discovery of the defect or from date when such defect should have
reasonable been discovered whichever is earlier, provided that in the
DISTRIBUTOR'S judgment the defect resulted from Company's processing
or packaging of the Product and not from mishandling in transport from
the Company's FOB point.
b) With TRB'S approval and at TRB's cost, the DISTRIBUTOR shall
promptly send TRB either one alleged defective unit or all the alleged
defective units and, or some other type of obvious evidence of deficiency
that TRB can examine and determine the DISTRIBUTOR'S complaint.
If the product is determined to be defective, TRB shall either replace
the Product found to be defective with the same quantity of Product in
good, saleable condition or supply replacement parts at a mutually agreed
upon cost to be borne by TRB, or issue a credit to the DISTRIBUTOR for
the invoice amount, within 60 days of receipt of evidence of defect.
Also, TRB reserves the right of requiring that the DISTRIBUTOR return
to TRB all of the unsaleable Products at TRB's expense as more fully
described in paragraph 8.01.
THIS WARRANTY SHALL BE IN LIEU OF ALL OTHER WARRANTIES EXPRESS OR
IMPLIED AND TRB MAKES NO WARRANTY OF FITNESS FOR A PARTICULAR
PURPOSE OR MERCHANTABILITY AND IN NO EVENT SHALL BE LIABLE FOR
SPECIAL OR CONSEQUENTIAL DAMAGES.
The provisions of the TRB Limited Warranty are attached as Exhibit V,
and incorporated in this agreement.
ARTICLE ElGHT - TERMINATION
8.01 TERMINATlON: This Agreement may be terminated by the written
notice of TRB should the DISTRIBUTOR cease to function as an ongoing
concern or to conduct its operation in normal course of business as a
DISTRIBUTOR without any proper reason, or should the DISTRIBUTOR
breach any material part of this Agreement, provided DISTRIBUTOR
has not cured said breach within 30 days of TRB sending written
notice to DISTRIBUTOR by express mail or other form of "next day"
delivery specifying the nature of the breach, the action required
to cure the breach and that distributor has 30 days from the sending
of said written notice to cure the breach. The termination of this
Agreement due to a breach does not relieve either party of any claims at
law which a party may have as result of such breach.
8.02 Upon the termination or expiration of this Agreement, as
provided herein, the DISTRIBUTOR shall cease all use of the name,
trademarks and labels of TRB. on termination, the DISTRlBUTOR's
customers, dealers and sub-distributors will become TRB's customers,
dealers and sub-distributors; and that "TRB" will automatically be
subrogated in place of DISTRIBUTOR in sub-distributor agreement, as
<PAGE> 177
filed with TRB as provided in paragraph 4.06. Such substitution and
subordination shall exclude any liability of the DISTRIBUTOR to such
dealers or sub-distributors, which liability arose out of conduct
prior to the effective date of such termination or subrogation.
8.03 In the event of termination the DISTRIBUTOR will supply an
inventory of parts (including catalog numbers) of Bicycles and product,
to TRB within 15 days of such termination. TRB shall have 15 days
thereafter to notify the DISTRIBUTOR, which (if any) of such items
it will purchase. TRB may arrange to have a shipper or agent pick
up such material within 20 days thereafter. Payment will be due the
DISTRIBUTOR 20 days after such pick up. In the event that any of the
items previously purchased are not in their original unopened
containers of if they are in any way damaged, scratched or otherwise
not in condition to he immediately resold as new inventory, then
may deduct from the sums due the invoice price of such items or the
difference between the actual value of the items at such time and
the invoice value, whichever be the lower.
ARTICLE NINE - SERVICE
9.01 RESPONSIBILITY OF DISTRIBUTOR: The DISTRIBUTOR shall at all times
maintain a staff of adequately trained personnel to properly maintain the
mechanical integrity of the Product, service the Product when necessary
and to train service personnel in the DISTRIBUTOR's distribution chain.
The DISTRIBUTOR shall provide literature and maintain in adequate supply
of parts to properly support the sale and service of the Products and
shall conform to the sales and service policies of TRB and DISTRIBUTOR
shall provide TRB with service reports on a quarterly basis, such
reports shall be on a form provided by TRB and shall specify models
requiring service during the period, type of service, parts found
defective, reason service was required, date service was required,
date service was performed, product serial number, and name and address
of customer.
The DISTRIBITOR will be obligated to enforce, for the benefit of
all Dealer standard operational procedures and Dealer and Sub-Distributor
Agreements. All such agreements will reserve the right of TRB to
inspect the Dealer premises during regular business hours.
The DISTRIBUTOR will be responsible for answering customer and dealer
complaints, to make reasonable investigations, and where appropriate
to file reports thereof with TRB. The DISTRIBUTOR will establish and
enforce procedure to make sure its Dealers are adequately recording
to customer needs, complaints, and warranty work.
The DISTRIBUTOR will also file and maintain an up-to-do list of all
retail outlets and service facilities for the TRB Bicycle within
their Territory, together with such consents as may be necessary so
that TRB may use the same in its advertising.
The DISTRIBUTOR will cooperate in any product liability claim by keeping
full and accurate repair records, making reasonable investigations of
claim product defects, cooperating with TRB and its insurance carriers,
making a full disclosure to TRB and making available its records and
employees in the event of an investigation of claim and otherwise
reasonably aiding TRB in the defense of any product liability claims.
ARTICLE TEN - MISCELLANEOUS
10.01 ASSIGNMENT AND SUBLICENSING: The DISTRIBUTOR may not assign or
transfer this Agreement or any rights granted hereunder without the
written consent of, which consents shall not be unreasonable withheld.
However, it is contemplated under the terms of this Agreement that the
DISTRIBUTOR shall have the right to sell the products to TRB approved
sub-distributors and retail bicycle dealers within the DISTRIBUTOR's
territory.
10.02 INDEMNIFICATION AGREEMENT: The DISTRIBUTOR agrees to indemnify and
hold TRB harmless against any and all claims, losses, damages, or expenses,
including reasonable attorney's fees
<PAGE> 178
incurred by TRB, which result from or arise out of any unauthorized
representation, warranty or guarantee made in connection with the sale,
resale or other disposition of the Products by the DISTRIBUTOR.
The DISTRIBUTOR shall carry product liability insurance
in the limits of $1,000,000.00, naming TRB as its interest may appear.
The DISTRIBUTOR shall deposit true copies of such insurance, together with
proof of payment of the premiums with TRB. In the event of a default by
the DISTRIBUTOR, TRB may give the DISTRIBUTOR 10 days notice to place such
insurance and deliver such policy. If it fails to do so TRB may apply as
the DISTRIBUTOR's agent, for such insurance and the DISTRIBUTOR shall pay
to TRB the premium due thereby, within 5 days of service of notice and
demand, or in the alternative TRB may treat failure to proceed such insurance
as a termination of the DISTRIBUTOR's rights under this agreement.
10.03 NO AGENCY: Nothing contained in this Agreement shall be construed
so far as to make either the DISTRIBUTOR or TRB the agent or partner to
the other, it being the intention of the parties that the DISTRIBUTOR will
act as an independent contractor.
10.04 ENTIRE AGREEMENT: This Agreement sets forth the entire Agreement
between the parties as to the subject mater hereof and merges all prior
discussions and writing between them. This Agreement may only be amended
by a writing signed by all parties hereto.
10.05 GOVERNING LAW: This Agreement shall be deemed executed in and
construed in accordance with the laws of the State of New Jersey, United
States of America.
10.06 NOTICES: Any notices or demand required by this Agreement
shall be in writing and delivered personally or mailed by certified
or registered mail, return receipt requested to the party entitled to
such notice or demand at the address set forth in this Agreement or
such other address as such party may notify the other in writing.
Such notice shall be deemed given on the earlier of receipt of five days
after posting.
10.07 The rights and benefits of this agreement shall accrue to the
DISTRIBUTOR and to TRB and to no other parties. It is the intention
that the execution of this agreement will create no third party
beneficiary rights or any other rights in any other party.
10.08 NO IMPLIED RIGHT: Nothing in this Agreement shall be construed
as conferring any right by implication, estoppel or under any patent,
patent applications or Trademarks, except as herein expressly provided.
10.09 SEVERABILTY: Should any provision of this Agreement or the
application thereof, to any extent, be held invalid or unenforceable,
the remainder of this Agreement and the application thereof shall not
be affected thereby and shall continue valid and enforceable to the
fullest extent permitted by law or equity.
10.10 ARBITRATION: In the event of a dispute of any kind or nature
arising under this agreement or the performance thereof, the party
claiming the dispute shall notify the other, by cable or by the next
day delivery service such as Express Mail, FEDEX, Airborne, UPS, and
etc. of the full details of the claim or dispute. In the event the
parties cannot settle the same within fifteen (15) days thereafter,
either party may demand arbitration. In the event of arbitration,
the arbitration will be conducted under the rules of the American
Arbitration Association of Essex County, New Jersey. Each party
agrees that the decision of the arbitrator will be binding and that
there will be no independent right to bring legal proceeding, except
the right to bring an action upon the arbitrator's award. The cost of
arbitration will be split equally between the parties and the arbitrator
will have the right to demand that a bond or deposit be posted to
cover the same. In the event that either party refuses or fails to cooperate
with the arbitration, the arbitrator shall proceed based upon such
information as the arbitrator may have, and his judgment shall be
binding as stated herein. The Agreement will be interpreted under
New Jersey State law and deemed executed there.
<PAGE> 179
10.11 All terms used herein shall have meaning defined in the State of
New Jersey Chamber of Commerce publication "The Rules for New Jersey State
"Interpretation of Trade Terms."
10.12 The parties expressly agree that TRB will not be deemed doing
business in any jurisdiction other than New Jersey State, and nothing in this
agreement will be deemed to contravene that intention. Parties
acknowledge that the DISTRIBUTOR will have an ongoing relationship
and be part of a uniform sales procedure operating on a nationwide
basis. Parties acknowledge this agreement was negotiated and executed
in New Jersey, it shall only be enforceable in the courts of that state.
In addition they acknowledge that all payments called for hereunder will
be made in U.S. Dollars in New Jersey, United States of America.
IN WITNESS WHEREOF, the parties have duly executed this Agreement on the
date or dates hereinabove set forth.
DISTRIBUTOR TRB SYSTEMS INC.
By: /s/ Kishor Dattani /s/ By: /s/ Byung Yim /s/
Mr. Kishor Dattani Mr. Byung Yim, President
Witnessed: Witnessed:
By: /s/ Janak N. Shah /s/ By: /s/ Janak N. Shah /s/
Mr. Janak N. Shah Mr. Janak N. Shah
EXHIBIT I
Territory : The Orange County of The State of California
EXHIBIT II
YEARLY MINIMUM UNIT QUANTITIES REQUIRED: Subject to be reviewed after three
months after TRB launches products by infomercial or delivery of samples
and brochures whichever is first.
Year 1 : 1,500 TRB Bicycles
Year 2 : 3,000 TRB Bicycles
Year 3 and thereafter: 5,000 TRB bicycles
EXHIBIT III
DISTRIBUTOR PRICES
MODEL NO. F.O.B. TRB's warehouse in U.S.A.
These prices are for 1996 models only
<PAGE> 180
And above prices are subject to currency fluctuation
APPENDIX IV
CONFIDENTIALITY AGREEMENT- PROPRIETARY INFORMATION
PRODUCT IMPROVEMENT AND CONFEDENTIALITY AGREEMENT
Gentlemen:
The following confirms an agreement between me and hereinafter referred to
as "Distributor" which is a material part of the consideration for my
employment or affiliation with Distributor:
1. I recognize that the distributor has entered into an agreement with
TRB SYSTEMS, hereinafter referred to as the "Company", which Company is
engaged in a continuous program of research, development and production
respecting its products, patents and know-how, hereinafter referred to as
"Proprietary Information".
2. I understand that my employment or affiliation with Distributor
creates a relationship of confidence and trust between me and the
Distributor with respect to any Proprietary Information.
3. In consideration of my employment or affiliation with the
Distributor from time to time, I hereby agree as follows:
(a) I understand and agree that I have no rights in any Proprietary
Information of the Company or the Distributor. At all times, both
during my employment or affiliation with the years, I will keep in
confidence and trust all Proprietary Information, and I will not use
or disclose any Proprietary Information or anything relating to it
without the written consent of the Distributor and the Company, except
as may be necessary in the ordinary course of performing my duties
with the Distributor. I will at all times fully and accurately document
any Proprietary Information or Inventions (as hereinafter defined)
developed by me so that at all times the Distributor shall have in
its possession descriptions and directions with respect thereto that
will enable the Distributor and its assigns to utilize such Proprietary
Information and Inventions to their full benefit.
(b) All documents, records, apparatus, equipment and other physical
property, whether or not pertaining to Proprietary Information,
furnished to me by the Distributor or produced by myself or others
in connection with my employment or affiliation shall be and remain
the sole property of the Distributor or its assigns and shall be returned
to it immediately as and when requested by the Distributor. Even if the
Distributor does not so request, I shall return and deliver all such
property upon termination of my employment or affiliation by me or by the
Distributor for any reason and I will not take with me any such property or
any reproduction of such termination. I will keep all information relating
to the Proprietary
Information confidential during my employment or affiliation and for three
years thereafter.
(c) I will promptly disclose to the Distributor or any persons
designated by it, all improvements, inventions, ideas, formulas,
processes, techniques, know-how and data, whether or not patentable,
made or conceived or reduced to practice or learned by me, either
alone or jointly with others during the term of
<PAGE> 181
my employment or affiliation (all said improvements inventions, formulas,
processes, techniques, how-how and data shall be hereinafter collectively
called "Inventions").
(d) I agree that all Inventions which I developed in whole or in part,
either alone or jointly with others utilizing equipment, supplies,
facilities or Proprietary Information of the Distributor or its
assigns or during my period of employment or affiliation with the
Distributor shall be the sole property of the Distributor and its
assigns, and the Distributor and its assigns shall be the sole owner of
all patents and other rights in connection therewith. I hereby assign to
the Distributor and its assigns any rights I may have or acquire in such
Inventions. I further agree as to all such Inventions to assist the
Distributor and its assigns in every proper way (but shall not bear
the expenses involved) to obtain and from time to time enforce patents
on said Inventions in any and all countries, and to that end I will
execute all documents for use in applying for and obtaining such
patents thereon and enforcing same, as the Distributor or its assigns
may desire, together with any assignments thereof to the Distributor or
person designated by it.
My obligations to assist the Distributor or its assigns in obtaining of
and enforcing patents for such Inventions in any and all countries
shall continue beyond the termination of my employment or affiliation
for a period of three years, but the Distributor or its assigns shall
compensate me at a reasonable rate after such termination for time
actually spent by me on such assistance.
In the event that the Distributor is unable for any reason whatsoever
to secure my signature to any lawful and necessary document required
to apply for or execute any patent applications with respect to such
an Invention (including renewals, extension, continuations, divisions
or continuations in part thereof), I hereby irrevocable designate and
appoint the Distributor and its duly authorized officers and agents,
to its assigns, as my agents and attorneys-in-fact to act for and in
my behalf and instead of me, to execute and file any such application
and to do all other lawfully permitted acts to further the prosecution
and issuance of patents thereon with the same legal force and effect as
if executed by me.
(e) I represent that my performance of all the terms of this Agreement
will not breach any agreement to keep in confidence any proprietary
information acquired by me in confidence any proprietary information
acquired by me in confidence or in trust prior to my employment or
affiliation with the Distributor. I have not entered into, and agree
I will not enter into any agreement either written or oral in conflict
with the obligations set for in this Agreement.
(f) I represent that I did not learn during my prior employment of
affiliation any ideas or information which the Distributor indicated
were considered confidential and proprietary or which were disclosed
to me in a manner which should have made me realize they were so
considered.
If I cannot make the representation provided in (f) I approve, I will
check the following box:
() I cannot make the representation in paragraph (f) above.
If I checked the above box, I hereby represent that I will not make use of
any such confidence and proprietary information or ideas during my
employment or affiliation with the Distributor unless such information or
ideas during my employment by the Distributor are or become publicly
available for reasons other than actions on my part.
4. This Agreement shall be effective as of the first day of my
employment or affiliation with the Distributor.
5. This Agreement shall be binding upon me, my heirs, executors,
assigns, and administrators and shall insure to the benefit of the
Company, its successors and assigns.
Date this 28 day of December, 1995
<PAGE> 182
Accepted and Agreed to:
/s/ Kishor M. Dattani /s/
Kishor M. Dattani
wp\10006\disagree
APPENDIX V
TRB TRANSBAR-POWER BICYCIE
TRB SYSTEMS INC. (TRB) warrants its bicycle to be free of any defects in
workmanship or material under normal use (excluding organized competitive
events, stunt riding, bicycle motocross or any similar activities) as
expressly provided under this warranty.
Each TRB Bicycle will be fully assembled by the selling Authorized
TRB Dealer at the time of purchase. Your TRB Dealer will provide a free
checkup within 30 days of the date of original purchase. This checkup
does not entitle the purchaser to rights other than those otherwise granted
by the terms of this warranty.
TRB warrants the replacement of any frame or fork due to defects and/or
workmanship. This warranty shall remain in effect for the duration of the
original ownership.
All other components are warranted against failure or defects arising
from normal use for l year from the date of purchase. (Tires, Tubes, Brake
Shoes and ales are excluded from this warranty.)
All warranty claims should be presented through the-dealer from whom the
bicycle was purchased or to any other authorized TRB dealer. Shipping and
labor charges are not included in this warranty.
NOTICE: This warranty does not cover deterioration, damage, failure due
to normal wear and tear, exposure, mis-use, abuse, alteration, negligence,
improper assembly, improper maintenance or defects or damage caused by
improper repair or by the installation of parts other than genuine TRB
parts or equivalents.
TRB's obligation under this warranty is in lieu of all other warranties
express or implied, including the implied warranty of fitness of particular
purpose and merchantability. In no event shall TRB be liable to the
purchaser of its bicycles or to third parties for incidental or
consequential damage including but not limited to personal injury.
TRB does not assume or authorize any person to assume on its behalf any
other obligation other than those included in this warranty.
TRB SYSTEMS INC. - CUSTOMER SERVICE DIVISION
354 EISENHOWER PARKWAY, LIVINGSTON, NEW JERSEY 07039
<PAGE> 183
LICENSE AND MARKETING AGREEMENT
This agreement made as of the 9th day of March, 1994 by and between TRB
SYSTEMS INC., a New York corporation with a business address at 354
Eisenhower Parkway, Suite No. 26. Livingston, New Jersey 07039 (hereinafter
called "LICENSOR"), and STELLA KUJEMBOLA, an individual with a business
address at 303 George Street, Suite G-7, New Brunswick, New Jersey 08901
(hereinafter called to as "LICENSEE").
WHEREAS, LICENSOR owns or controls patents, trademarks, tradenames and
know-how relating to bicycles with variable speed lever action drive
and their manufacture; and
WHEREAS, LICENSEE desires to obtain from LICENSOR (i) licenses under
tradenames, trademarks and proprietary know-how of LICENSOR applicable
to such bicycles, (ii) to the extent LICENSOR has or controls patents
applicable to such bicycles in the relevant territory described in
this Agreement, licenses under such patents, and (iii) technical
assistance related to such bicycles, together with the exclusive right to
assemble, use, import, sell, and distribute such bicycles within the
relevant territory in conformity with the standard quality control and
design requirements established by LICENSOR.
In consideration of the mutual covenants, terms and conditions
hereinafter set forth, the parties hereto mutually agree as follows
herein:
ARTICLE I - DEFINITIONS
For the purposes of this Agreement, the terms listed below shall be defined,
whether in the singular or in the plural, as follows:
1.1 Affiliate - Any corporation or other business entity in which a
party hereto, directly or through one or more affiliates, (i) owns more
than fifty percent (50%) of the stock entitled to vote for the election
of directors, or (ii) otherwise exercises a controlling interest in the
management in such corporation or entity, LICENSOR to determine, in its
sole judgment, whether such controlling interest exists.
1.2 Agreement - This License and Marketing Agreement, including the
Appendices and Exhibits hereto, as the same may be amended from time to
time.
1.3 Anniversary Date - The date which occurs one (1) year from the
date of this Agreement and each succeeding anniversary thereof.
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1.4 Gross Sales - For any period controlled by this Agreement, the total
of all sales of units of Licensed Product during the period at invoiced
prices, not reduced by discounts allowances or other adjustments other
than defective returns. For purposes of this definition, a transfer of
a completed unit will be deemed a sale hereunder and the invoice price
will be the amount actually billed but will be no less than the LICENSEE's
wholesale list price for such a unit of the Licensed Products as published
and distributed to the trade.
1.5 Know-How - All of the ideas, concepts, technical information,
inventions, materials (including, without limitation, drawings and
specifications) and processes used in the Licensed Products and the
assembly and servicing thereof.
<PAGE> 184
1.6 Licensed Products - Invention(s) covered by the patents and
know-how relating to a bicycle with a variable lever action drive
and components or parts thereof, including but not limited to those
listed in Appendix I attached hereto.
1.7 Patents - Any and all patents and patent applications in the
Territory covering the Licensed Products or any component part thereof
either now or hereinafter during the duration of the patent or the
term of this Agreement, whichever is longer, owned or controlled by
LICENSOR or any Affiliate thereof, as listed in Appendix III attached
hereto and/or to be listed and added in the future.
1.8 Territory - The geographic area listed in Appendix II attached
hereto.
1.9 Trademarks The trademark, logo, and tradename "TRB" and
those included in Appendix IV attached hereto, and any and all other
trademarks, logos and tradenames to be used, developed and obtained
by LICENSOR or any Affiliate thereof and as may be added to Appendix
IV by LICENSOR during the term of this Agreement.
ARTICLE II- LICENSE GRANTS
2.1 Patents - LICENSOR hereby grants to LICENSEE the exclusive right
and license in the Territory to assemble, use, import, sell and distribute
bicycles containing the inventions and improvements covered by the
Patents in the Territory.
2.2 Trademarks - LICENSOR hereby grants to LICENSEE the exclusive
right and license to use, and LICENSEE hereby undertakes to use, the
Trademarks in the Territory in connection with the Licensed Product.
2.3 Know-How - LICENSOR hereby grants to LICENSEE the exclusive
right and license in the Territory to use the Know-How that is now
in the possession of LICENSOR or that will be developed or acquired
by LICENSOR during the term of this Agreement.
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2.4 Limitation - The licenses granted under Sections 2.1, 2.2 and 2.3
hereunder shall not include the right to manufacture Licensed Products in
or out of the Territory or export Licensed Products, directly or indirectly,
from the Territory. The limitation contained herein shall apply to LICENSEE
and its Affiliates.
ARTICLE III- LICENSE AND ROYALTY FEES
3.1 License Fees - LICENSEE shall pay LICENSOR a license fee of One
Hundred Thousand United States dollars (US$100,000.00), payable as specified
in Appendix V attached hereto.
3.2 Royalties In addition to the license fee payable under Section
3.1 above, LICENSEE shall pay to LICENSOR royalties for each of LICENSEE's
fiscal years during the term of this Agreement, in amounts as specified
in Appendix VI attached hereto.
3.3 Payment Terms - All payments due to LICENSOR under Sections 3.1
and 3.2 shall be made in United States dollars, when due, and via wire
transfer to the bank account in the U.S. specified by LICENSOR. The
only deduction to be made shall be for taxes imposed by the applicable
taxing authorities in the Territory on royalty payments, if any. In
calculating royalty amounts based on Gross Sales, the conversion into
United States dollars shall be at the average official rate of exchange
prevailing in the United States during the period for which Gross Sales
have been calculated. All royalty payments shall be
<PAGE> 185
due and payable thirty (30) days after the close of each of the LICENSEE's
quarterly accounting periods commencing with the date on which Gross Sales
begin. The amount of each estimated quarterly payment shall be equal to the
greater of (i) twenty-five percent (25%) of the applicable minimum
annual royalty or (ii) the applicable percentage of Gross Sales for that
quarter. Each quarterly and final annual payment of royalty
shall be accompanied by a statement signed by LICENSEE stating
in detail satisfactory to LICENSOR the amount of Gross Sales for the
preceding quarter and in the case of the statement accompanying
each final payment, for the preceding year. LICENSEE shall pay
interest to LICENSOR upon any and all amounts overdue
and payable hereunder to LICENSOR at the rate charged to LICENSOR by its
principal commercial bank in New Jersey, plus one percent (1%) per annum,
for the due date to the date of payment. Such right to payment of interest
shall be without prejudice to any other remedies LICENSOR may have under
this Agreement or by law.
3.4 Maintenance of Books and Records - LICENSEE shall keep true and
accurate records, files and books of account, in accordance with generally
accepted accounting principles in the Territory, containing all data
required to determine the amounts to be paid hereunder and the information
to be given in statements provided herein. LICENSEE shall permit LICENSOR
and LICENSOR's representatives to inspect and examine such records, files,
books of account and facilities of LICENSEE for the purpose of determining
or verifying the amount payable to LICENSOR and to conduct or have
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conducted an annual audit thereof, including, without limitation,
inspection of all inventory of any kind. Any expenses incurred at
the request and under the direction of LICENSOR shall be paid by
LICENSOR, provided. However, that in the event any such audit reveals
an error in any statement provided by LICENSEE, the cost of the audit
shall be borne by LICENSEE if the error equals or exceeds five percent
(5%) of the royalty amount reported due in such statement.
ARTICLE IV - TECHNICAL ASSISTANCE
4.1 Documents - As soon as practicable after the date of this Agreement
and commensurate with LICENSOR's production schedule, LICENSOR shall
deliver to LICENSEE sufficient written data and information for the
assembly and service of the Licensed Products by LICENSEE as deemed
necessary by LICENSOR.
LICENSEE shall provide to its retailers, information sufficient to
assemble and service Licensed Products to LICENSOR's agreed standards.
4.2 Training - As a further means of disclosing LICENSOR1s Know-How
to LICENSEE, LICENSOR shall arrange, on a schedule to be mutually agreed
upon, for training of a reasonable number, to be determined by LICENSOR,
of personnel employed by LICENSEE. All salaries, traveling and living
expenses and any other remuneration and expenses to which such trainees
may be entitled, and all expenses incurred by LICENSOR in the operation
of such training program, shall be paid by LICENSEE at LICENSOR's actual
cost.
4.3 Other Technical Assistance - LICENSOR agrees to provide technical
assistance upon the written request of LICENSEE. The cost of such
assistance shall be borne by LICENSEE and shall be approved by LICENSEE
in writing prior to such technical assistance being provided.
ARTICLE V - TRADEMARKS AND GOODWILL
<PAGE> 186
5.1 Use of Trademarks - All Licensed Products assembled or sold by
LICENSEE shall bear the Trademarks. The permitted use by LICENSEE of the
Trademarks shall be made only on Licensed Products that conform strictly
to the standards, quality and specifications furnished by LICENSOR to
LICENSEE. Component parts of the Licensed Products shall be purchased
by LICENSEE only from LICENSOR or suppliers approved by LICENSOR in
writing to LICENSEE.
5.2 Inspection - LICENSEE shall at all reasonable times permit LICENSOR,
by representatives designated by LICENSOR, to inspect all of LICENSEE's
facilities and properties relating to the Licensed Products, at LICENSOR's
cost.
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5.3 Labels - All labels and promotional materials used by LICENSEE
shall be submitted to and approved by LICENSOR prior to use.
Such approval will not be unreasonably withheld or delayed. All
labels shall have to meet the legal requirements applicable in the
Territory.
5.4 Title to Trademarks - LICENSEE shall refrain from any act or
acts that may prejudice the validity of the title of LICENSOR to the
Trademarks. After termination of this Agreement, LICENSEE will not
use at any time for bicycles or bicycle parts any trademark, tradename
or label bearing any resemblance to the Trademarks. LICENSOR shall
retain ownership and the exclusive right to Trademarks except as
permitted to LICENSEE pursuant to the conditions of this Agreement
during the term of this Agreement.
5.5 Promotional Activities - LICENSEE will use its best efforts and
means to meet the needs of the Territory for the Licensed Products, to
promote, advertise and otherwise further the sale and distribution of
the Licensed Products in the Territory, particularly in population
centers, and to further and preserve the goodwill and reputation of
the Licensed Products sold under the Trademarks and meet the standards
and conditions as set forth in Appendix VII attached hereto. LICENSOR
shall make available to LICENSEE, at prices equal to LICENSOR's actual
cost, promotional materials used by LICENSOR in the United States in
connection with the sale of Licensed Products sold under the Trademarks.
LICENSEE shall submit to LICENSOR all advertising materials proposed to
be used by LICENSEE in connection with the Licensed Products for
LICENSEE's prior written approval, such approval not to be
unreasonably withheld or delayed.
5.6 Customer Service - LICENSEE shall inform and forward to LICENSOR
all correspondence or communications with customers relating to the
quality of or defects or malfunction in the Licensed Products and shall
handle all inquiries or complaints expeditiously and courteously.
LICENSEE and its distribution chain shall at all times maintain adequate
facilities for the repair, service and storage of the Licensed Products
and components and any parts thereof.
LICENSEE shall at all times maintain a staff of adequately trained
personnel to properly insure the mechanical integrity of the Licensed
Products, service the Licensed Products when necessary and to train
service personnel in the LICENSEE's distribution chain. LICENSEE shall
provide literature and parts to properly support the sale and service
of the Licensed Products and shall provide LICENSOR with service reports
on a quarterly basis. Such reports shall be on a form provided by LICENSOR
and shall specify models requiring service during the period, the type
of service, parts found defective, reason service is required, date
service is performed, bicycle serial number and name and address of
consumer.
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5.7 Distributor and Dealer network - LICENSEE shall provide to LICENSOR
an updated list of subdistributors and dealers constituting LICENSEE's
distribution chain in the Territory on the first day of
<PAGE> 187
each calendar year quarter. The list will include company name, address,
principals, and fax, telex, and telephone numbers.
ARTICLE VI- IMPROVEMENTS
6.1 Inventions Improvement - LICENSEE shall require each of its
employees and consultants having access to technical information, data
and Know-How relating to the Licensed Products or component parts thereof
to enter into an agreement with LICENSEE in form and substance satisfactory
to LICENSOR, whereby each such employee or consultant agrees to assign to
LICENSEE the entire right, title and interest in and to any and all
inventions relating to the Licensed Products, or relating to or useful
in the manufacture thereof, made by him whether during or after the
course of his employment or engagement by LICENSEE. If during the term
of this Agreement, LICENSEE, or any of its Affiliates or employees makes
or acquires any invention or claim in any patent that in use would infringe
any Patent or that constitutes an improvement of a Licensed Product,
LICENSEE shall promptly assign to LICENSOR such invention or claim.
LICENSOR shall have the exclusive right and option to file and perfect
any and all patent applications embodying or arising out of such
invention or claim, in the Territory and elsewhere, in the name of
LICENSOR and to that end shall have the right to receive and/or
inspect all drawings, plans, models, specifications and worksheets
relating thereto and to interview any and all of LICENSEE's employees
and associated personnel and organizations having knowledge thereof.
LICENSEE shall retain an exclusive license in the Territory to use
such invention or claim on the Licensed Product, free of additional
royalty charges.
6.2 Know-How Improvements - During the term of this Agreement, each
party shall promptly inform and transfer to the other Know-How that is
developed or acquired by such party. The method of such transfer shall
be such as the transferor, acting in good faith and with due diligence,
deems appropriate. LICENSOR shall have the right to receive and/or
inspect all drawings, plans, models, specifications and worksheets relating
thereto and to interview any and all of LICENSEE's employees and associated
personnel and organizations having knowledge thereof. LICENSEE shall
retain an exclusive license in the Territory to use such Know-How, in
connection with Licensed Products, free of additional royalty
charges.
ARTICLE VII- CONFIDENTIALITY AND COMPETITION
7.1 Confidentiality Obligation - LICENSEE shall hold, and shall
cause its Affiliates to hold, all Know-How disclosed to it under this
Agreement in confidence at all times during and after the term of this
Agreement and each party shall require each of its employees and
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consultants, and the employees and consultants of its Affiliates, having
access to Know-How relating to the Licensed Products or component parts
thereof to enter into an agreement whereby each such employee or
consultant agrees to hold such Know-How in confidence at all times, and
agrees not to compete with LICENSOR or LICENSEE either during his
employment or engagement and for a three (3) year period thereafter, or,
in the event such time period is not enforceable, then a reasonable period
as agreed by a judicial body within the Territory. Other measures to be
taken by LICENSEE and its Affiliates to hold Know-How in confidence shall
be subject to the review and approval of LICENSOR. LICENSOR shall have the
right, in the event of a violation or breach of this Section 7.1 by
LICENSEE, its Affiliates, employees, or consultants, to seek and obtain
specific enforcement of the provisions of this Section; and to commence
an action, in LICENSEE's name and stead, against any party with whom
LICENSEE has a confidentiality agreement as required by this Section
if such party breaches any provision of such
<PAGE> 188
agreement and if LICENSEE for any reason elects not to enforce such
provision. The obligations regarding confidentiality contained hereinabove
shall not apply to any Know-How that;
(i) is at the time of disclosure generally available to the public;
(ii) becomes generally available to the public through no breach of
confidentiality obligations by the party to whom the disclosure is made
or by any of its Affiliates or the employees or consultants of any of them;
or
(iii) is disclosed to the receiving party by another party not bound by
any confidentiality obligation.
An individual feature of Know-How shall not be considered within the
above exceptions merely because the feature is embraced by more
general information within the exceptions. A combination of features
of Know-How shall not be considered within the above exceptions unless
the combination itself and its principle of operation are within the
exceptions.
7.2 Restriction on Competition by LICENSEE - In consideration of
LICENSEE's receiving the exclusive rights conferred under this Agreement,
LICENSEE shall not, during the term of this Agreement, sell or deal in
any manner in bicycles or parts or components thereof not constituting
Licensed Products, but may deal in bicycle accessories approved by
LICENSOR. In addition, for a period of three (3) years after the
termination of this Agreement, LICENSEE shall not become involved
or associated with any other person or business entity engaged in
the manufacture or sale of lever propelled bicycles; provided, that
if such time period is held to be unenforceable, then the restrictive
period shall be such reasonable period as may be agreed by a judicial
body within the Territory.
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ARTICLE VIII- TERM AND TERMINATION
8.1 Term - Except to the extent provided herein with respect to the
survival of certain provisions following the term of this Agreement,
and unless earlier terminated pursuant to Sections 8.2 and 8.3 hereof,
the term of this Agreement shall commence on the date of this Agreement
and shall upon the mutual consent of the parties be renewed at the third
year Anniversary Date, and renewed at each Anniversary Date thereafter
without the payment of any additional licensing fees, unless either
party breaches any material term of this Agreement.
8.2 Termination by LICENSEE LICENSEE may terminate this Agreement
on any Anniversary Date hereof by giving ninety (90) days prior written
notice of termination.
8.3 Termination by LICENSOR - LICENSOR may terminate this Agreement
at any time:
(i) by giving LICENSEE thirty (30) days prior written notice if
LICENSEE shall have committed a material breach of any of its obligations
hereunder, including without limitation, the prompt and timely payment of
license fee and royalties hereunder and failure to fill customers orders
for Licensed Products, or to perform service orders, in a timely fashion;
provided that LICENSEE shall have been previously advised of the alleged
material breach and has been given fifteen (15) days to cure such breach.
It is further provided that no such breach shall be deemed to have occurred
or be continuing (as applicable) if and to the extent LICENSEE's failure to
perform its obligations is due to acts beyond the reasonable control of
LICENSEE, including but not limited to strikes, lock-outs or civil
insurrection or lack of material including component or part supplied
by LICENSOR, any of its Affiliates or suppliers generally.
<PAGE> 189
(ii) upon (a) the filing of a petition in bankruptcy by or against
LICENSEE; (b) the appointment of a referee, trustee or receiver for a
substantial portion of the property or assets of the LICENSEE; (c) the
insolvency of LICENSEE; (d) the consolidation, merger or other business
combination of the LICENSEE or its Affiliates with, or the sale of a
substantial portion of the LICENSEE'S assets to, another corporation,
business entity or person, or the execution of an agreement by LICENSEE
to that effect, or a change in control of LICENSEE or its Affiliates w
ithout the prior written consent of the LICENSOR, such consent not to
be unreasonable withheld; or (e) if LICENSEE is an individual, the death
or incapacity of LICENSEE.
8.4 Termination - Should a termination of this Agreement occur:
(i) LICENSEE shall cease all use of Trademarks and return to LICENSOR
all materials supplied by LICENSOR and deliver to LICENSOR all materials
title to which has been acquired by LICENSOR pursuant to this Agreement;
and
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(ii) any agreements entered into by LICENSEE with third parties in the
Territory, including but not limited to subdistributors and dealers,
shall be assignable to LICENSOR and LICENSEE shall assign to LICENSOR
all such agreements and other documents regarding such subdistributors
and dealers and will do all that is reasonable to have them continue as
LICENSOR's subdistributors and dealers. In the event of Termination,
LICENSEE shall submit a full inventory (including costs) of parts and
stock on hand, within five (5) days LICENSOR shall have the option to
purchase within thirty (30) days all or part thereof at LICENSEE's cost
or market value, whichever is less. Any such purchase shall be F.O.B.
LICENSEE's warehouse.
ARTICLE IX - INFRINGEMENT ACTIONS
9.1 Trademark Claims Against LICENSEE - On Licensed Products,
LICENSOR shall defend, indemnify and hold LICENSEE harmless against
claims of trademark infringement brought against LICENSEE pursuant to t
his Agreement; provided, nothing hereunder shall be construed to obligate
LICENSOR to defend, indemnify or hold LICENSEE harmless against claims of
trademark infringement brought against LICENSEE arising out of acts taken
by LICENSEE not required by this Agreement or approved by LICENSOR in
writing.
LICENSOR may, however, elect to defend any such action at its own expense.
If LICENSOR elects not to so defend, LICENSEE may, with the consent of
LICENSOR, defend such action at its own expense. LICENSEE shall not
settle any such action without the consent of LICENSOR.
9.2 Patent Infringement & Wrongful Use Claims Against LICENSEE -
LICENSOR will assume the defense of any suit brought against LICENSEE
for infringement of any patent or for wrongful use of proprietary
information of any third party insofar as such suit is based upon a
claim that the infringement or wrongful use is attributable to LICENSEE's
application without substantial modification of technology supplied under
this Agreement. In any such suit, LICENSOR will indemnify LICENSEE against
any money damages or costs awarded in such suit in respect to such a claim.
The obligations of LICENSOR stated in this Section 9.2 apply only if (i)
LICENSEE promptly informs LICENSOR in writing of any claim within the
scope of this Section 9.2; (ii) LICENSOR is given exclusive control of the
defense of such claim and all negotiations relating to its settlement; and
(iii) LICENSEE provides all reasonable assistance to LICENSOR in all
necessary respects in conduct of the suit.
<PAGE> 190
LICENSOR's total liability in out-of-pocket costs in the defense of any
suit or suits and to pay damages awarded in any suit or suits shall be
limited to the amount theretofore paid to LICENSOR by LICENSEE under
this Agreement, and LICENSEE will advance to LICENSOR any amount
required to be expended by LICENSOR in excess of that
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limit. Amounts so advanced shall be credited to future payments due from
LICENSEE to LICENSOR as a result of LICENSEE's operations under this
Agreement.
The provisions of this Section 9.2 state the entire liability of
LICENSOR to LICENSEE in respect of LICENSEE's use of the technology
granted herein, and, except as specifically provided in this Section,
LICENSOR shall not be liable either directly or as indemnitor of
LICENSEE for or on account of any claim arising in any way from LICENSEE's
use of the technology.
9.3 Claims by LICENSEE or LICENSOR - In case Trademarks or any of
the Patents are infringed by any third party in the Territory, LICENSEE
shall notify LICENSOR, and LICENSOR may, if it chooses, bring suit to
enjoin such infringement. In the event LICENSOR elects not to bring
such suit, LICENSEE may bring such suit upon advice to, and with the
consent of, LICENSOR. Neither party shall settle any such suit without
the consent of the other, which consent shall not be unreasonably withheld.
Since actions by LICENSEE or LICENSOR hereunder are for the protection of
LICENSEE's rights within the Territory, the costs of any actions brought
under this Section 9.2 shall be borne equally by LICENSEE and LICENSOR.
9.4 Indemnification of LICENSOR - Except as otherwise provided in this
Article IX, LICENSEE will hold LICENSOR harmless against all liabilities,
demands, damages, expenses, or losses arising (i) out of use by LICENSEE
or its transferees of inventions licensed or information furnished under
this Agreement or (ii) out of any use, sale or other disposition by
LICENSEE of its inventions or information.
ARTICLE X - SUPPLY AGREEMENT
10.1 Ordering of Licensed Products - LICENSEE agrees to purchase from
LICENSOR, and LICENSOR agrees to supply to LICENSEE, Licensed Products
in the minimum amounts set forth in Appendix VIII attached hereto.
LICENSEE shall be entitled to order and receive Licensed Products,
provided that LICENSEE shall give written notice of such order to the
LICENSOR within the mutually agreed upon lead time as stated on order
acknowledgments. Payment for goods ordered shall be a confirmed
irrevocable (transferable and divisible) letter of credit (allowing
partial shipments and transshipments) confirmed by the LICENSOR's U.S.
Bank, payable upon the presentation of shipping documents.
10.2 Terms and Conditions of Sale - LICENSEE agrees to assemble,
use, import, sell and distribute such components, parts, and/or
completely assembled items of the Licensed Products and other
products as may be necessary for the LICENSEE's use and/or distribution,
from LICENSOR, its Affiliates and/or LICENSOR's suppliers as may be
agreed upon in accordance with such of LICENSOR's forms of Purchase
and Terms and Conditions of Sales as LICENSOR may from time to time
establish. Such Terms and
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Conditions of Sale shall include provisions relating to price, limited
warranty, delivery, title of goods, freight and insurance charges,
subrogation of claims and such other items as are customarily
expressed in
<PAGE> 191
such documents. The price for Licensed Products and components thereof
shall be the invoiced factory cost to LICENSOR plus fifteen percent (15%).
10.3 Force Majeure - LICENSOR shall not be liable for any
damage or penalty for delays in delivery, or complying with the
warranty provisions hereunder, due to acts of God, acts or omissions
of LICENSEE, acts of civil or military authorities, government
regulations, or priorities, fire, floods, epidemics, quarantine
restrictions, war, riots, strikes, differences with suppliers,
inability of suppliers to perform, accidents to machinery,
inability to obtain material, delays in transportation, failure or
delay in furnishing complete or correct information by LICENSEE,
impossibility or impracticability of performance or any other
cause or causes beyond the control of LICENSOR, whether or not
similar to the foregoing.
LICENSOR SHALL UNDER NO CIRCUMSTANCES BE LIABLE FOR SPECIAL OR
CONSEQUENTIAL DAMAGES FOR DELAYS OR FAILURE TO GIVE NOTICE OF
DELAY.
ARTICLE XI - DOCUMENTS DELIVERED UPON
CONTRACT EXECUTION
11.1 On the signing of this Agreement, LICENSOR shall deliver to
LICENSEE an affidavit of LICENSOR stating that it has full power and
authority to confer the rights being granted hereunder and no
encumbrances of any nature exist therein, nor are there any agreements
of options in existence which would in any way prohibit the written
granting of rights described in this Agreement.
11.2 The parties agree to do or execute or cause to be done or
executed all such further acts, deeds, instruments or transfer as may be
reasonably required from time to time to effect the rights between the
parties hereto.
ARTICLE XII- MISCELLANEOUS
12.1 Survival of Provisions-The provisions of Sections 3.4, 5.4,7.1,7.2,
8.4,9.1,9.2,9.4, 12.1 and 12.8 shall survive any termination of this
Agreement.
12.2 Assignment and Sublicensing - LICENSEE may not sublicense,
assign or transfer this Agreement or any license granted hereunder;
provided, that LICENSEE shall sublicense the Trademarks to any of
its subdistributors and dealers selling the Licensed Products, the
sublicense agreements to contain provisions substantially similar
to the provisions of
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Article V of this Agreement relating to the protection of Trademarks and
to be in form and substance satisfactory to LICENSOR.
12.3 No Agency- Nothing contained in this Agreement shall be construed
so as to make either LICENSOR or LICENSEE the agent or partner of the
other, it being the intention of the parties to deal as principals with
one another.
12.4 Entire Agreement - This Agreement sets forth the entire
Agreement between the parties as to the subject matter hereof and
merges all prior discussions and writings between them. This Agreement
may be amended only by written instrument duly signed by both parties
hereto.
<PAGE> 192
12.5 No Implied Right - Nothing in this Agreement shall be
construed as conferring any right by implication, estoppel or under
any patent, patent applications or trademarks, except as herein
expressly provided.
12.6 Notices - All notices, communications, and correspondence
required under this Agreement, or pursuant to the activities which
it governs, or associated with it shall be in writing, shall use
United States English only and shall become effective either when
served by personal delivery or by certified mail addressed as
follows (or to such other address for a party as that party may
designate by notice to the other party):
If to LICENSOR: TRB Systems Inc.
354 Eisenhower Parkway
Suite No.26
Livingston, New Jersey 07039
U.S.A.
Fax: (201) 992-5577
If to LICENSEE: Stella Kujembola
c/o New Brunswick Physical Therapy
303 George Street, Suite G-7
New Brunswick, New Jersey 08901
Fax: (908) 828-3288
12.7 Severability - Should any provision of this Agreement or the
application thereof, to any extent, be held invalid or unenforceable,
the remainder of this Agreement and the application thereof shall not
be affected thereby and shall continue valid and enforceable to the
fullest extent permitted by law or equity.
12.8 Arbitration - Any controversy or claim arising out of or
relating to this Agreement, or the breach thereof, shall be settled
by arbitration before one or more arbitrators in New York City, in
accordance with the Commercial Arbitration Rules of the American
Arbitration Association. Furthermore, if any controversy or claim
arises out of the
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provisions of Section 7.1 of this Agreement, LICENSOR may apply to the
federal or state courts located in the State and County of New York for
injunctive or interim relief in aid of arbitration. Judgment upon the
award rendered by the arbitrator(s) in accordance with the aforesaid
rules may be entered in any court having jurisdiction thereof. LICENSEE
hereby consents to the non-exclusive jurisdiction of the federal and
state courts located in the State and County of New York for the sole
purpose of the issuance of any injunctive or interim relief or for the
entry of any award as hereinabove provided.
All trade terms used herein shall have the meaning defined in the
International Chamber of Commerce publication "International Rules
for Interpretation of Trade Terms".
ARTICLE XIII- GOVERNING LAW
13.1 This Agreement shall be governed by and construed in accordance
with the substansive law of the State of New York and the United States
without regard to principles of conflicts of laws.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of
the date first above written.
<PAGE> 193
LICENSEE: LICENSOR:
TRB SYSTEMS INC.
/s/ STELLA KUJEMBOLA /s/ By /s/ Byung Yim /s/
STELLA KUJEMBOLA Byung Yim, President
WITNESS:
/s/ Garrett K. Smith /s/ /s/Garrett K. Smith /s/
Name: Garrett K. Smith Name: Garrett K. Smith
Reid & Priest Reid & Priest
New York, New York New York, New York
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APPENDIX I
Licensed Products
All Transbar Bicycles including but not limited to those listed below:
(1) TRE 190
(2) TRE 240
(3) TRE 250
(4) TRE 500
(5) TRE 1000
(6) TRE 100 (BMX)
(7) TRE 300 (Cruiser)
Also includes but not limited to all special parts listed below:
(a) Rear hub assembly
(b) See-saw idler assembly
(c) Lever and transbar assembly
(d) Gearshift lever
(e) Special chain connecting cable
<PAGE> 194
(f) All service parts of above assemblies
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APPENDIX II
Territory
Benin and Nigeria
APPENDIX III
Patents
A patent application in the Territory for an improvement in the
Licensed Products is in the course of preparation
APPENDIX-IV
Trademarks
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APPENDIX V
License Fees
One Hundred Thousand United States dollars (US$100,000.00), of which Ten
Thousand United States dollars (US$10,000.00) shall be paid upon
execution of this Agreement and the balance of which shall be
payable in installments according to the following schedule:
(i) the first installment shall take the form of an automobile (to
be selected by LICENSOR) having a purchase cost (including applicable
sales and excise taxes) from the dealer of up to Forty Thousand United
States dollars (US$40,000.00) to be purchased in LICENSOR's name on
LICENSEE's account and available for delivery to LICENSOR at the dealer's
lot by April 15, 1994;
(ii) Twenty-five Thousand United States dollars (US$25,000.00) shall
be due and payable nine (9) months after the date of this Agreement; and
(ii) Twenty-five Thousand United States dollars (US$25,000.00) shall
be due and payable one (1) year after the date of this Agreement.
<PAGE> 195
APPENDIX VI
Royalties
Year 1- Four percent (4%) of Gross Sales, but not less than
US$15,000.00
Year 2 Four percent (4%) of Gross Sales, but not less than
US$25,000.00
Year 3 Four percent (4%) of Gross Sales, but not less than
year thereafter - US$40,000.00
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APPENDIX VII
Promotional Activities
LICENSEE must provide and participate in such promotional activities and
production of materials to support, promote, and generate full sales
potential of Licensed Product.
LICENSOR will make available to LICENSEE at its cost all promotional
and advertising materials and printed service literature.
APPENDIX VIII
Terms and Conditions of Sale
Payment - By irrevocable (transferable and devisable) letter of credit
allowing partial shipments and transshipments in favor of LICENSOR,
payable upon presentation of shipping documents to LICENSOR's
bank.
Remarks - All orders are subject to final confirmation by LICENSOR.
Sales Forecast - LICENSEE will provide LICENSOR twelve (12) month sales
forecast by month by model with sixty (60) day lead time updated by
month.
Minimum Purchase Amounts-
Year 1 - 5,000 Units
Year 2 - 9,000 Units
Year 3 - 10,000 Units
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<PAGE> 196
This Agreement made the THIRTIETH (30) day of JULY 1984, by and
between ALENAX CORPORATION of 50 Spencerport Road, Rochester. New York
14606, U.S.A. (ALENAX), and KUN TENG INDUSTRY CO., LTD. of
399 Min Sheng Road, TAYA TAICHUNG, Taiwan, R.O.C. (KUN TENG).
WHEREAS, KUN TENG is engaged in the manufacture and sale of bicycle parts
and other specially designed and engineered machine products, and
WHEREAS, ALENAX is engaged in the development and sale of bicycles and
the parties wish to enter into an agreement in which KUN TENG will supply
certain bicycle parts for ALENAX as specified in Exhibit 1:
NOW IN CONSIDERATION of the promises hereinafter expressed, the parties
do agree as follows:
1. Sale of Goods - KUN TENG is to manufacture and se11 to ALENAX,
and ALENAX shall purchase from them bicycle parts, in the quantities
according to the production schedule listed upon the attached Exhibit 2.
KUN TENG acknowledges that the parts it will manufacture are essential
to the assembly of the bicycle and that unless manufactured in strict
conformity with the plans and specifications, and delivered promptly
according to the scheduled delivery dates, ALENAX may be unable not
only to fulfill its orders, but also may incur liability from other
suppliers for failure to meet their schedules, and from its dealers
for failure to meet their orders and schedules). KUN TENG agrees to
strictly comply with its obligations to prevent such liability and
indemnify ALENAX for any liability incurred.
2. Price - The price shall be as specified for the quantities on
Exhibit 2. The price shall be paid in U.S. Dollars by irrevocable
letters of credit supplied by ALENAX'S bank, or by such other method
as the parties may agree upon. The letters of credit will cover
shipments pursuant to purchase orders for one season, three (3)
months. It is recognized that the quantities listed in Exhibit 2
are forecasts only and a commitment to purchase shall only be made
by purchase order.
The prices as quoted shall remain fixed for a period of twelve
(12) months from the date of this Agreement. Thereafter, KUN TENG
may adjust the price by so notifying ALENAX of the changes at least
sixty (60) days for the hub, transbar and see-saw, and ninety (90)
days for crank and lever before such change will go into effect.
Any orders placed shall be filled at the price in effect at the time
the purchase order is received.
3. Delivery - Delivery shall be made by KUN TENG in accordance
with the instructions in Exhibit 3. ALENAX may direct shipment of the
parts to various other assemblers or other companies. KUN TENG agrees
to honor such requests. It shall be KUN TENG'S duty to arrange for
delivery to such designees and to make arrangements for and payment
of any custom duties that may be due. The parties agree that any
increased shipping costs, because of a change of shipping place based
upon normal commercial rates, actually charged to and paid by KUN TENG
and any duties that it is obligated to pay shall be billed to ALENAX,
with proof of the amount within thirty (30) days after billing.
4. Manufacturing - KUN TENG agrees to manufacture the parts in
strict
<PAGE> 197
conformity with the plans and specifications as submitted, a
copy of which is attached and indexed as Exhibit 4 to this contract.
ALENAX reserves the right to make changes and modifications in said
plans and specifications by telex or cable and KUN TENG agrees that
in such event it will promptly change its tools so that production
can be continued. It will reserve the right to delay delivery to a
minimum period as discussed and agreed with ALENAX by telex or cable
for each change made by ALENAX. Any price adjustment in the cost of
the product caused by the change in the plans shall be telexed to
ALENAX within three (3) business days of receipt of change order.
The failure to so notify ALENAX shall be an absolute waiver of any
right to increase the price because of such change. ALENAX acknowledges
that if KUN TENG meets all production schedules, specifications and
quality requirements as established by ALENAX, there will be no liability
to KUN TENG.
KUN TENG acknowledges that it has a competent engineering staff and is
fully capable of testing the parts to make sure that its production
strictly conforms to the plans and specifications. Such tests and the
test results will be made in such form and to such degree of accuracy
according to standards of the American Society of Mechanical Engineers
or other similar American professional group as may fully establish the
quality of the product. ALENAX shall have the right to have representatives
present at the testing and during production. Upon request KUN TENG will
notify ALENAX of the production and testing dates, places and times.
KUN TENG will certify the test results to ALENAX with the shipments.
KUN TENG agrees to be solely responsible for any defect of manufacture
insofar as the parts fail to strictly conform to the plans and specifications.
5. Insurance - KUN TENG agrees to provide product liability insurance
for the parts in amounts shown on the attached Exhibit 5. Such insurance
will be placed with companies authorized to do business and have offices
in United States of America. In the event of a claim arising out of or
relating to the manufacture of parts by KUN TENG or arising as a result of
this contract, KUN TENG agrees its insurance carrier's U.S. office is agent
to accept service of process in U.S.A.
6. Title - Title to the goods shall pass to ALENAX upon delivery to
the carrier to ship the goods to the destination. KUN TENG will be
responsible at its cost for placing insurance in an amount sufficient to
fully protect ALENAX in the event of any loss or damage by the carrier or
for defective delivery. Proof of shipment shall be promptly forwarded to
ALENAX by KUN TENG.
7. Cancellation - In the event of any substantial breach by KUN TENG,
in the event that the delivery schedules are not being strictly met, in the
event of a changed policy with respect to exports or otherwise by the
Taiwan government, ALENAX may cancel this Agreement on three (3) days
notice. In such event, any wholly or partially undrawn upon letters of
credit at the date notice is received will be returned. If not otherwise
cancelled1 this Agreement shall extend for a period of one (1) year and be
subject to renewal by the parties thereafter. Unless otherwise indicated,
termination shall not affect orders already placed.
8. Assignment - KUN TENG shall not assign its rights nor delegate the
performance of its duties under this Agreement without the prior written
consent of ALENAX, which may be withheld without reason.
9. Order Procedure - ALENAX shall order parts by telex and use its
standard purchase order forms to confirm orders to KUN TENG. KUN TENG
agrees that it will confirm the orders by telex within forty-eight (48)
hours or within two (2) business days of receipt. Any purchase order not
so confirmed shall be deemed accepted. Each purchase order shall specify
price, quantity, delivery dates, and consignee.
<PAGE> 198
ALENAX shall give ninety (90) days notice to KUN TENG in setting schedules
or for changes and amendments to such schedules.
10. Tools & Dies - KUN TENG will engineer and build the tools and dies
sufficient to manufacture the parts and any modifications thereof. The
tools and dies and the plans and drawings will at all times. belong to
ALENAX. KUN TENG agrees to keep the tools and dies in a good workable
state of repair and to deliver them to ALENAX upon request. KUN TENG
acknowledges it has received the sum of sixty thousand ($60,000) United
States Dollars as payment for the full cost of the same. It further agrees
that such sum will include all costs, inclusive of the maintenance that may
thereafter be needed. KUN TENG will not permit any use of the tools and
dies except for ALENAX approved work, nor will it reveal the tools and
dies nor their plans or designs to any other person or corporation without
the prior written consent of ALENAX.
KUN TENG further acknowledges that when a total of fifty thousand (50,000)
of the parts described in this contract are ordered, it will apply the sum
of fifty thousand ($50,000) United States Dollars (this excludes ten
thousand ($10,000) United States Dollars paid by KUN TENG to Matuo for
crank mold] tooling cost to reduce the amounts due on the order of parts,
in lieu of any letter of credit or other payment method.
11. Patents - KUN TENG acknowledges that the parts and all improvements
or modifications (called Developments) of the parts are deemed property of
ALENAX. In the event a patentable Development in the parts or any equipment
reasonably related to them, is made or designed by KUN TENG, its servants,
agents, subcontractors, or suppliers then such Development will be the
exclusive property of ALENAX. KUN TENG agrees, on behalf of itself and its
employees, it will make a full disclosure to ALENAX of any such Development
and to apply for a patent in ALENAX's name (at ALENAX's cost) to fully
assist ALENAX in its efforts to patent the Development anywhere in the
world the world, and to otherwise aid and assist ALENAX in perfecting and
protecting its rights to the Development. It will impose a similar
requirement on those that deal with it.
12. No Oral Statements Are Binding - The parties agree that no requests
to change or modify the product or its design, nor to change, modify or
terminate this Agreement shall be valid unless they be in writing and
signed by the parties or their agents who are authorized in writing to
execute the same.
13. Default - In the event of a failure of KUN TENG to fully perform,
to manufacture to ALENAX designs, standards or if manufacturing and/or
material defects exist, ALENAX may cancel or suspend the contract upon
two (2) days written notice; it may return the parts for correction at
KUN TENG's expense; or it may exercise any other right it may have. In
the event of notification of cancellation or suspension of the contract,
KUN TENG shall not thereafter draw against any letter of credit supplied
by ALENAX and the letter of credit shall be returned to ALENAX's bank.
KUN TENG agrees that it will not draw against any such letter of credit
until the ordered goods are actually manufactured appropriate to this
contract, and delivered to the shipper as described in Paragraph 18.
The failure of ALENAX to enforce any right shall not be deemed a waiver
preventing later enforcement of the same, or other right.
14. Contract Period - The contract shall continue for a period of one
(1) year, and may be renewed thereafter by ALENAX. In the event either
party desires to terminate the contract, after the first year, they may
do so by giving the other party ninety (90) days advanced written notice
of intention to terminate. All orders placed up to the actual date of
will be honored.
15. Arbitration - In the event of a dispute of any kind or nature
arising under this Agreement or pertaining to the validity of this Agreement
or the performance thereof the party claiming the dispute shall notify the
other1 by telex, of the full details of the claim or dispute. In the event
the parties can not settle the same within thirty (30) days thereafter,
either party may demand arbitration. In the event of
<PAGE> 199
arbitration, the arbitration will be conducted in English under the
rules of the International Chamber of Commerce publication
"International Rules for Interpretation of Trade Terms" in Rochester,
New York, by an arbitrator appointed under these rules. Each party
agrees that the decision of the arbitrator will be binding and that there
will be no independent right to bring a legal proceeding except the right to
bring an action upon the arbitrator's award. The cost of arbitration will be
split equally between the parties and the arbitrator will have the right
to demand that a bond or deposit be posted to cover the same. In the event
either party refuses or fails to cooperate with the arbitration, the
arbitrator shall proceed based upon such information as the arbitrator
may have, and his judgment shall be binding as stated herein. The
Agreement will be interpreted under New York State law and deemed executed
there.
16. Representations - The parties agree that no oral representation
or statement not reduced to writing and initialed by the parties, shall
have any binding effect. It is the intention of the parties to disregard
any representation not incorporated in writing into this contract.
17. Export License - If required, KUN TENG agrees to obtain and pay
for any export license or any charges, duties or expenses in relation
thereto or required to manufacture and export the product, that may be
required by Taiwan government of Taiwan or others.
18. Letters of Credit- The non-transferable Letters of Credit described
herein shall be issued to cover 100% of the purchase order value for the
products to be manufactured and shipped. Before drawing on the letter1
KUN TENG shall supply to the bank issuing the letter of credit a set of
bills of lading showing delivery to a common carrier of the completed
goods described in the purchase order, for delivery to the assembly
company or such other company as ALENAX or its authorized agent may
designate, together with all risks insurance coverage, certification of
the goods according to contract requirements, and such other proof of full
performance as may be reasonably required. In the event shipment of the
completed product is to be made outside of Taiwan, then KUN TENG shall also
supply the following documents, plus such other documents as may be required
to establish full performance:
(a) Marine and war risk insurance covering all risks for the full
amount of the invoice value, for the benefit of ALENAX placed in an
insurance company licensed to do business in U.S.A.
(b) A commercial invoice not to exceed the amount of the purchase
order;
(c) A customs invoice;
(d) A full set of on board bills of lading marked "Freight Collect"
evidencing shipment from Taiwan to the designated receiver of the order;
(e) Any export permit required;
(f) Certification of testing of the goods, according to contract
requirements.
(g) FORM 'A' CERTIFICATE OF COUNTRY OF ORIGIN.
19. Non-Disclosure and Non-Competition - KUN TENG acknowledges that
the plans and specifications, the methods of manufacture, and the tools
dies and information about the same are trade secrets. The release of the
same to competitors of ALENAX would cause great damage. KUN TENG
agrees that it will not release or disclose the same to anyone without
the prior written consent of ALENAX. KUN TENG agrees not to use or
disclose drawings, specifications, technical information or other data
furnished by ALENAX except in furnishing supplies to ALENAX under this
Agreement. KUN TENG agrees that any use or disclosure of ALENAX'S plans,
specifications, technical information, other data, tools and dies, will be
difficult or impossible to verify. Accordingly, KUN TENG shall not
undertake to manufacture for itself or any third party, any lever
<PAGE> 200
propelled bicycles or tricycles or any parts therefor. Any breach of
this obligation shall entitle ALENAX to both an immediate injunction
and liquidated damages in the amount of one (1) million United States
Dollars. ALENAX will agree not to place business for any of its
special parts made by KUN TENG with other manufacturers without prior
notice being given to KUN TENG.
20. Notice - Any notice permitted or required may be personally
served, sent by telex, or served in any other method that will provide
delivery. It will be given on the earlier of actual receipt or two (2)
business days after telex.
21. Miscellaneous
(a) This Agreement shall bind the parties and their successor:;
(b) It may not be changed nor terminated orally, but only by an in
writing signed by the parties;
(c) The paragraph headings are for description and shall not intent of
the paragraphs.
(d) All terms used herein shall have the meaning defined in the
International Chamber of Commerce publication "International Rules
for Interpretation of Trade Terms".
IN WITNESS WHEREOF, the parties have set their hands and seals.
ALENAX CORPORATION
/s/Byung Yim/s/
By Byung Yim
KUN TENG INDUSTRY CO., LTD.
/s/Charles Tzeng/s/
By Charles Tzeng
EXHIBIT 1
LIST OF SPECIAL ALENAX BICYCLE PARTS
TRANSBAR AND LEVER.
SEE-SAW IDLER.
REAR HUB ASSEMBLEY.
SERVICE PARTS FOR ALL ITEMS ABOVE.
ALL ABOVE AS PER DRAWINGS IN EXHIBIT 4.
<PAGE> 201
TRB SYSTEMS INC.
Ratification and Consent to Assignment
Reference is made to the Agreement dated 30 July, 1994 between Alenax
Corporation and Kun Teng Industry Co., LTD. (the Agreement).
The parties hereto acknowledge that TRB Systems, Inc., a Delaware
corporation under common control with Alenax Corporation, is flow
engaged in the development and eventual sale of bicycles, utilizing
bicycle parts of the type referred to in the Agreement, in place of its
affiliate Alenax Corporation.
It is therefore agreed that the Agreement and all the rights and
obligations of Alenax thereunder are hereby assigned to TRB Systems,
Inc., that the Agreement is now in effect between Kun Teng Industry Co.,
LTD. and TRB Systems, inc. that the date this assignment becomes effective
is April 15, l994,and that Kun Teng and TRB Systems Inc. shall negotiate in
good faith the production schedule and prices.
Signed and ratified as of April 15,1994.
KUN TENG Industry Co., LTD.
Title:
By: /s/ILLEGIBLE/s/ manager
ALENAX CORPORATlON TRB Systems Inc.
/s/Byung Yim/s/ /s/Byung Yim/s/
By:Byung Yim Byung Yim
Title: President President
<PAGE> 202
LICENSING AGREEMENT
THIS AGREEMENT is made and entered into as of January 4, 1994 by and
between TRB SYSTEMS INC., a New York corporation ("Licensor"),
and SINO-DANISH ENTERPRISES CO. LTD., a TIANJIN CHINA CORPORATION (Licensee).
WITNESSETH
WHEREAS, Licensor is the owner by assignment and otherwise of all right,
title, and interest in and to U.S. Patent No.4,630,839 issued on December
23, 1986 (the "U S Patent"); and
WHEREAS, Byung D. Yim, the President of Licensor and a New Jersey resident,
is the owner by assignment and otherwise of all right, title and interest
in and to China Patent No.12666 issued granting a license to Licensor in
respect of the China Patent which includes the right of Licensor to
sublicense the rights thereunder (the U S Patent and the China Patent being
collectively the "TRB Patent"); and
WHEREAS, Licensee desires to obtain from Licensor a license to manufacture
certain bicycles applying the TRB Patent (the "TRB" Patent Bicycles) in
municipalities of Tianjin, China for the sole purpose of selling them back
to Licensor under the terms and conditions set forth herein.
NOW THEREFORE, in consideration of the foregoing promises and mutual
covenants set forth herein, the parties hereto agree as follows:
Section 1. License Grant.
1.0. The price of "LOW PRICED TRB PATENT BICYCLES", left blank in the
agreements to be negotiated between Licensor and licensee and a price,
agreed to be acceptable by both, inserted into the agreement where blanks
exist.
1.1. Licensor hereby grants to Licensee a license to manufacture TRB Patent
Bicycles to the extent that the unit Purchase Price (as defined in Section 7
below) of which bicycles shall not exceed U.S. C.N.F. (Cost, not including
insurance, plus freight) New York of any east coast port of the United
States (such or below price TRB Patent Bicycles being collectively the "Low
Priced TRB Patent Bicycles"; and over $ price TRB Patent Bicycles being
collectively the "High Priced TRB Patent Bicycles"), in municipalities of
Tianjin China for the sole purpose of selling them back to Licensor under
the terms and conditions set forth herein.
1.2. In the event that Licensor or its assigns sells Low Priced TRB Patent
Bicycles, Licensee shall be the sole manufacturer in China for export of Low
Price TRB Patent Bicycles sold exclusively to Licensor,
1.3. In the event that Licensor or its assigns receives a bona fide
proposal to manufacture TRB Patent Bicycles for sales in China during the
term of this Agreement, and the proposal is acceptable to Licensor, Licensor
shall give Licensee the right to manufacture the TRB Parent Bicycles for
sales in China; on the same terms and conditions as proposed to Licensor.
This right shall be given by a written notice to Licensee of the foregoing
proposal, requiring Licensee to accept the proposal in writing and to sign a
suitable contract within 14 days after receipt of such notice. The failure
of Licensee to accept; the proposal and to sign the contract within the
foregoing period shall be at liberty to enter into an agreement with the
person or entity who made the proposal.
1.4. Notwithstanding Section 1.2 above, Licensor hereby reserves the right
to grant a license to any person. company or any other legal entity to
manufacture Low Priced TRB Patent Bicycles in any country other than China
for the purpose of domestic sales only in such licensed country.
1.5. The license granted hereunder shall not include any of the following
rights:
<PAGE> 203
i) the right to manufacture High Priced TRB Patent Bicycles;
ii) the right to manufacture Low Priced TRB Patent Bicycles for sales in
China, except the right of first refusal specified in Section 1.3;
iii) the right to sell to any person other than Licensor; and
iv) the right to sell or export any or all the exclusive Transbar
v) Power components (as defined in Section 3.2 -below) or parts
thereof other than to Licensor.
Section 2. Expenses.
Licensee shall be fully responsible for all expenses incurred to make TRB
Patented Bicycles and special parts, including but not limited to molds,
tooling, machinery and equipment.
Section 3. Technical Assistance.
3.1. TRB Samples. Licensee hereby acknowledges that it has received one
sample of the TRB Patent Bicycles and has been allowed to disassemble this
sample bicycle for the sole purpose of manufacturing preparation. Licensor
shall furnish to Licensee one more samples of the TRB Patent Bicycles or
TRB special parts only free of cost within 30 days of the signing of this
Agreement (such sample bicycles collectively being the "TRB Samples")
3.2. Transbar Power Technical Documents. Within 30 days of the signing of
this Agreement Licensor shall furnish to Licensee copies of all the technical
drawings and documents in its possession necessary for Licensee to
manufacture the special components, i.e. the Transbars, Free Wheel Hub
Unit and See Saw Idler (collectively the "Transbar Power Components")
as illustrated in Exhibit A hereto, of the TRS Patent Bicycles (such
technical drawing and documents collectively being the "Transbar Power
Technical Documnents").
3.3. Specifications of General Components and Styling.
Within 30 days after arrival of the TRB Technician or nominated person (as
defined below)at Licensee's office located at No. 16, Bo Hai Road.
TEDA, Tianjin, China, Licensor shall decide, after consultation with
Licensee the specifications of components other than the Transbar
Power Components (the "General Components") and the styling of the TRB
Patent Bicycle:.
3.4. Technician.
3.4.1. Within 45 days of the signing of this Agreement, Licensor shall
send one skilled and competent technician or nominated person (the "TRB
Technician") to Licensee to advise on the manufacture of the TRB Patent
Bicycle.
3.4.2. As soon as practical, Licensor shall inform Licensee of the TRB
Technician's name, date of birth, nationality, specialty and knowledge of
foreign language so that Licensee can make the necessary visa arrangements
for the TRB Technician.
3.4.3. The TRB technician shall work at Licensee's factory in
Tianjin, China for a mutually agreeable period, or as long as required, and
shall work forty-four hours per week, i.e. eight hours per day during
weekdays and four hours on Saturday.
3.4.4. Licensee shall provide the TRB Technician free of charge with
appropriate meals, hotel accommodation, and office suitable to his position,
the necessary working facilities and transportation in China. International
travel and salary will be the responsibility of Licensor.
<PAGE> 204
3.4.5. During his stay in China, the TRB Technician shall follow the laws
of China.
3.4.6. During the period of time this Agreement is in effect,
Licensee shall take all necessary measures to provide the T R B
Technician with a safe working environment and safety in respect of his
stay in China.
Section 4. Quality Standards.
4.1. Licensee hereby guarantees that the TRB Parent Bicycles will be
manufactured and assembled in strict compliance with the quality standards
set forth below (the "Quality Standards").
4.1.1. The Transbar Power Components to be manufactured by Licensee must
meet the specifications and quality standards set forth in the Transbar
Power Technical Documents and a certain quality control and test procedures
manual (the "QC and Test Manual"), a copy of which manual is attached hereto
as Exhibit B.
4.1.2. The General components to be manufactured by Licensee must meet the
specifications, requirements and quality standards set forth in the JIS, ISO
and United States Consumer Product Safety Regulations applicable to the
bicycles.
4.1.3. The whole assemblies of the TRB Patent bicycles to be manufactured
and assembled hereunder shall meet the standards set forth in the QC and
Test Manual, and in additional shall meet the specifications requirements
and quality standards set forth in the JIS,lSO abd United States Consumer
Product safety Regulations, applicable to the bicycles.
4.2. Licensor may, at its option, send one or more quality control experts
(the "QC expert(s)"), whether employees of Licensor or independent agents,
to Licensee to monitor and supervise the quality control process at
Licensee's factory. Licensee hereby guarantees that any reasonable
instructions of the QC Experts to improve quality of the TRB Patent
Bicycle or their components shall be immediately executed.
4.3. Licensor may, at its option, send one or more inspectors (the
"Inspector(s)") to Licensee to inspect the TRB Patent Bicycles prior to
being packed for shipment to Licensor. In the event that there is no
Inspector at Licensee's factory sent by Licensor. Licensee shall inspect
with its best efforts to ensure the required quality.
4.4. QC Experts and Inspectors' full costs, including but not limited to,
travel, meals accommodation, visas and salary shall be the responsibility of
the Licensor. In the event that the Technician (Section 3.4.) be used to
act in the capacity of QC Expert and Inspector, during his working in China,
providing that no extension to the previously agreed period of his stay is
required, the terms in Section 3.4.4 shall apply.
Section 5. Manufacturing Preparation
5.1. Within 60 days after arrival of the TRB Technician or a mutually agreed
date, Licensee shall produce at least 50 sets of the Transbar Power
Components and General Components meeting the Quality standards.
5.2. Within 70 days after arrival of the TRB Technician or 10 days after
the mutually agreed date, Licensee shall produce 50 samples of the TRB
Bicycles; each of which samples shall meet the Quality Standards.
5.3. Immediately after production of 50 samples, Licensee shall begin to
test 20 samples in China under supervision of the TRB Technician or
Nominated Person in accordance with test procedures set forth in a certain
road test manual (the "RoadTest Manual"), which will be provided to Licensee
within 45 days after arrival of the TRB Technician or dominated personnel
<PAGE> 205
in accordance with test procedures set forth in a certain road test manual
(the "RoadTest Manual"),which will be provided to Licensee within 45 days
after arrival of the TRB Technician or a Mutually agreed date and such other
tests as Licensor may determine, and shall ship simultaneously to Licensor
by air the remaining 30 samples to be tested commencing immediately upon
receipt by Licensor in the United States (such 30 samples being referred to
as the "US Test Samples") in accordance with the RoadTest Manual and such
other tests as Licensor may determine.
5.4. Within 30 days after receipt by Licensor of the US Test Samples,
Licensor shall notify Licensee in writing as to Licensor's approval
or disapproval of the foregoing 50 samples. If Licensor disapproves,
Licensor shall specifically set forth all the problems found during the
tests, and Licensee, with technical support of Licensor, shall cure all
the problems within 30 days after such notification. The expense of
corrective changes will be born by, the Licensor for design defects,
and the licensee for on and assembly defects. Licensee shall then submit
20 units of new samples to Licensor for its approval in accordance with this
Section 5.4.
5.5. Licensor shall bear the expenses of testing the foregoing samples in
the United States and the air freight charges for the US Test Samples, and
shall pay for the foregoing samples at $ F. 0. B. China, per unit. This
price is to be negotiated between Licensor and
licensee and inserted into the agreement within 30 days of the date of this
agreement. Licensee shall bear the expenses of testing the foregoing
samples in China.
Section 6. Purchase-back.
6.1. Licensor shall issue a confirmation of purchase (the "Confirmation of
Purchase") to Licensee to purchase back the TRB Patent Bicycles from
Licensee. Upon receipt by Licensee of a Confirmation of Purchase and an
irrevocable documentary letter of credit covering each Confirmation of
Purchase, Licensee shall manufacture and deliver the TRB Patent Bicycles
in accordance with the terms and specifications of each Confirmation of
Purchase and this Agreement. If the terms and conditions of this Agreement
and a Confirmation of Purchase conflict, the terms and conditions of the
agreement shall prevail.
6.2. Licensor agrees to issue its Confirmation of Purchase Order and letter
of credit at least 30 days prior to shipment date. During the start-up
phase of business the purchase order and letter of credit shall be issued
60 days prior to requested shipment date.
6.3. All TRB Patent Bicycles shall bear a Certain trademark, the details of
which include the design and art-work along with permit will be provided by
Licensor to licensee within 70 days of the signing of this Agreement (the
"TRB Trademark").
6.4. If in the first year the Licensor fails to issue a confirmation of
Purchase order and letter of credit The Licensor shall reimburse the
Licensee in the amount of USD300,000 to cover mold, manufacturing tools
and all costs. The licensee on receipt of this payment hereby agrees to
transfer and assign to Licensor the ownership of all foregoing
manufacturing tools on the termination of this agreement.
Section 7. Purchase Price.
The purchase price of the TRB Patent Bicycles to be manufactured and
purchased back hereunder shall be the manufacturing cost of Licensee plus
a reasonable profit and the cost of packing and shipping equivalent to
New York port(s) (the "Purchase Price "), which will be determined within
7 Days after completion(of first volume mass production of the foregoing
based on a mutually agreeable calculation method; provided, however,
that in any event the Purchase Price shall not exceed U.S.
C&F equivalent New York port (s), per unit, which maximum price
<PAGE> 206
shall be valid during the three-year period commencing the
date of completion of production of the foregoing 50 samples.
The price excludes currency exchange rate fluctuations in excess
of more than 5%, the changes of price due to these exchange
rate fluctuations requires a 90 day period of notification.
Section 8. Defective Bicycles
Except for defects in the design of the Transbar Power Components,
Licensee shall be responsible for any defects in the TRB Patent
Bicycles, as to which defects Licensee shall, at its expense, replace
the defective components or it the replacement of the defective
components is not economical or does not cure the defects, the
whole units of the TRB Patent Bicycles.
Section 9. Indemnification.
9.1. Licensee shall indemnify, defend and hold harmless Licensor and its
directors, officers, employees and agents from and against any and all
claims, losses, liabilities , and expenses, including reasonable attorneys'
fees, arising out of claims alleging personal injury, death, or property
damage resulting from manufacturing and assembling defects in the TRB Patent
Bicycles not resulting from the gross negligence or willful misconduct of
Licensor.
9.2. Licensor shall indemnify, defend and hold harmless Licensee and his
directors, officers, employees and agents from and against any and all
claims, losses, liabilities, and expenses, including reasonable attorney's
fees arising out of patent or trademark infringement claims under this
Agreement provided that nothing hereunder shall be construed to obligate
Licensor to defend, indemnify or hold harmless Licensee against patent or
trademark infringement claims brought against Licensee arising ou of acts
taken by Licensee not required by this agreement or not approved by
Licensor in writing. Licensor may however, elect to defend any such action,
in which case Licensee shall reimburse to Licensor the actual expenses
incurred by Licensor. If Licensor elects not to defend. Licensee may, with
the consent of Licensor, defend such action at its own expense. Licensee
shall not
settle any such action without the written consent of Licensor.
9.4 The obligations of Licensor stated in Section 9.3 above apply only if
(i) Licensee shall promptly inform Licensor in writing of any claim
within the scope of Section 9.3, (ii) Licensor is given exclusive control
of the defense of such claim and all negotiations relating to
its settlement, and (ii) Licensee shall assist Licensor in all necessary
respects in the conduct of the suit.
9.5 This section shall survive for a period of five years after termination
of this Agreement.
Section 10. Protection Guarantee. Licensee has negotiated an agreement
with TIANJIN ECONOMETIC-TECHNOLOGICAL DEVELOPMENT AREA (TEDA) INDUSTRIAL
INVESTMENT COMPANY to guarantee and be responsible for licensee'e obligation
not to infringe the TRB Patent or the TRB trademark and not to breech
licensee's obligation of Confidentiality set forth in Section 13 hereof.
Such guarantee protection will include TEDA assisting Licensor to defend
any violation and protect Licensor's interests, including covering all
legal fees, out of pocket expenses and losses and to be responsible and
accountable for violations that maybe committed by the Licensee.
Section 11. Insurance. Licensee shall maintain, with an insurance company
reasonably acceptable to Licensor, a policy or policies of comprehensive
general liability insurance (including product liability coverage) with
limits if not less than $1 million or other mutually agreed amount or
each occurance which policy or policies shall name Licensor as an
additional insured and shall provide that the insurer give Licensor
<PAGE> 207
thiry days prior written notice in the event of any material change
in, cancellation, termination, or non-renewal of such policy or
policies. Licensee shall deliver to Licensor, within 10 days prior
to completion of production of 50 samples, a certificate of insurance
evidencing such coverage. This section shall survive for a period
of three years after termination of this Agreement.
Section 12. Parts. As soon as practical, but not later than 7 days after
completion of production of 50 samples, Licensee shall
supply a mutually agreeable price list of replacement parts for the TRB
Patent Bicycles and further agrees that such replacement parts shall be
available to Licensor for purchase during the term of this Agreement and for
a period after the date the last of the TRB Patent Bicycles is produced (i)
of two years for cosmetic and non-functional parts and (ii ) three years for
functional parts.
Section 13. Confidentiality
13.1. Any and all of the Transbar Power Technical Documents, the QC and Test
Manual, the RoadTest Manual, Other technical in formation contained
therein, technology and technical information obtained through disassembling
of the TRB Samples, and other technical documents and information generated
by Licensee with respect to the TRB Patent Bicycles, whether obtained before
or after the execution of this Agreement (collectively the "TRB
Confidential Information"), shall be held in strict confidence.
13.2 Any and all of the TAB Confidential Information shall not, directly
or indirectly, be divulged, disclosed or communicated to any other person or
entity or used for any purposes other than those expressly contemplated by
this Agreement.
13.3. Licensee shall require each of employees and consultants of Licensee
having access to the TRB Confidential Information to enter into an
agreement whereby each such employee or consultant agrees to hold the TRB
Confidential Information in strict confidence at all times, and agrees not
to compete with Licensor by manufacturing or working on bicycles which are
covered by the claims of the TRB Patent, either during his, her or its
employment or engagement and for a five-year period thereafter, or, in the
rceable, then a reasonable period as agreed by a proper Judicial body.
13.4. In the event this Agreement is terminated, than Licensee shall
immediately return to Licensor any and in whatever form (Including
electronic form). In the possession of Licensee, its employees, consultants
or any entity or person to whom Licensee has provided the TRB Confidential
information.
13.5. In the event of a violation or breach of this Section 13 by Licensee,
or its employees or consultants. Licensor shall have the specific right to
enforce the provisions of this Section 3; and to commence an action with
respect thereto, in Licensee's name and stead, if License for any reason
elects not to enforce such provision.
13.6. This Section 13 shall survive for a period of five years after
termination of this Agreement.
Section 14. Non-Competition.
Licensee hereby guarantees that, for the life of the TRB Patent, Licensee
shall not be directly or indirectly engaged in the promotion, handling or
selling of any bicycles, bicycle parts or other TRB-related products which
are covered by the claims of the TRB Patent, unless the prior Written
consent of Licensor has been first secured.
Section 15. Infringement Action.
In the event that the TRB Patent or TRB Trademark is infringed by any third
party In the United States or China, Licensee shall notify Licensor,
and Licensor may, if it chooses, bring suit to enjoin such infringement.
<PAGE> 208
In the event Licensor elects not to bring such suit Licensee may bring such
suit upon advice to, and with written consent of Licensor. Licensee shall
not settle any such suit without written consent of Licensor; provided,
however, that Licensor shall not unreasonably withhold such consent.
Section 16. Improvements
16.1. Licensee shall require each of the employees and consultants of
Licensee having access to the TRB Confidential Information to enter into an
agreement with Licensee, in form and substance satisfactory to Licensor,
whereby each such employee or consultant agrees to assign to Licensee
the entire right, title and interest in and to any and all inventions,
concepts, ideas, processes, and technology information relating to the TRB
Patent Bicycles, or relating to or useful in the, manufacture of
(collectively "Inventions and Know-How"), made by him or her or it
whether during the course of his, her or its employment or engagement by
Licensee and during a five-year period thereafter.
16.2. Licensee shall promptly assign to Licensor. any Inventions
and Know-How that are made or acquired by Licensee or its employees or
consultants during the term of this Agreement and during a period of
five years following the termination of this Agreement.
16.3. Licensor shall have the exclusive right and option to file and
perfect any and all patent applications embodying or arising out of the
Inventions and Know-How in China, the United States and elsewhere, in
the name of the Licensor and to that end shall have the right to receive
and inspect all drawings, plans, models, specifications and
worksheets relating thereto and to interview any and all of
licensee's employee and associated personnel and organizations
having knowledge thereof. Licensee shall retain a license to
use the Inventions and Know-How on the TRB Patent Bicycles for
the purpose of manufacturing the TRB Patent Bicycles pursuant
to this Agreement, without additional payments to Licensor.
Section 17. Term and Termination
17.1 Except to the extent provided herein with respect to the survival
of certain provisions following termination of the Agreement,
unless terminated earlier pursuant to Sections 17.2 hereof,
this Agreement shall continue in force for a period of five
years from the date of this Agreement, and thereafter shall be renewed
on mutually agreeable terms and conditions for additional
successive one-year period unless one party gives the other notice
of its intention to terminate no later than 90 days prior
to the expiration of the term hereof or of any renewal period.
17.2. If any party shall at any time default in fulfilling any of the its
material obligations hereunder, and such default shall not be cured within
30 days after written notice thereof is given by other party to the
defaulting party, the other party shall have the right to terminate this
Agreement by giving written notice of termination to the defaulting party;
this Agreement thereby being terminated 30 days after such notice of
termination.
Section 18. Notices. All notices and other communications provided for
hereunder shall be in writing and registered air mail or delivered by
international courier or transmitted by fax. If to
Licensor, at TRB systems Inc., 354 Eisenhower Parkway, Suite No.26,
Livingston, New Jersey 07039, Fax No.207-392-5577, Attention: Byung D. Yim;
if to Licensee, at its address at Sino-Danish Enterprises Co. Ltd.,
Tianjin, China, Fax No.-0225325359, Attention of Mr. GUO SHOU ZH ENG, or as
to either party at such other address as is designated by such party in a
written notice to the other party. All such notices and other
communications shall be effective (a) on the 10 day after registered
express air mailing, postage pre paid, or (b) on the 10 day after deposit
with a recognized international courier service providing written receipt of
delivery, or (c) on the 3rd day after transmitting by fax; provided that
any notices sent by fax shall be followed by a "hard" copy sent by courier
or mail in accordance with (a) or (b) above, but without affecting the
effective date of receipt of the notice sent by fax.
<PAGE> 209
Section 19. Miscellaneous
19.1 Amendments. This Agreement may not be changed, amended, or modifyed
except by a writing signed by the parties hereto.
19.2 Waiver. The waiver by either party hereto of any right hereunder,
or of the failure to perform or breach by the other party, shall not
be deemed a waiver of any other right hereunder or of any other breach
or failure by said other party, whether of a similar nature or otherwise.
19.3 Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the state of New York.
19.4 Consent to Jurisdiction.
19.4.1 Licensee hereby irrevocably submits to the jurisdiction of any
New York State or Federal court sitting in the New York County in any
action or proceeding arising out of or relating to this agreement.
Licensee hereby irrevocably agrees that all claims in respect of such
action or proceeding may be heard and determined in such New York State
or Federal court. Licensee agrees that a final judgment of any such action
or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided
by law.
19.4.2 Nothing in this Section shall affect the right of the Licensor
to bring any action or proceeding against either Licensee or its
property in the courts of any other jurisdictions.
19.5. Entire Agreement. This Agreement (together with the Exhibits
hereto) constitutes the entire agreement and understanding by the
parties hereto as to the subject matter of this Agreement, and
merges aqll prior discussions by and between them.
19.6 Severability. Any provision of this Agreemnet which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition
or unenforceability without invalidating the remaining provisions
of the Agreement or affecting the validity or enforceability of
such provision in any other jurisdiction.
19.7 Successors and Assigns. This Agreement shall be binding upon
and insure to the benefit of the parties hereto and their respective
successors and permitted assigns, but shall not be assignable or delegable
by any party without the prior written consent of the other party.
19.8. Titles and Headings. Titles and headings to sections herein are
inserted for convenience of reference only and are not intended to be part
of or to affect the meaning or interpretation of this Agreement.
19.9. Execution Counterparts. This Agreement maybe executed in two or
more counterparts, each of which shall be deemed an original but all
of which together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their respective officers thereunto duly authorized, as of the
date first above written.
Licensor: Licensee:
TRB SYSTEMS INC. SINO-DANISH ENTERPRISES CO. LTD.
/s/Byung Yim/s/, President /s/illegible/s/, President
TIANJIN WORLDWIDE INC. By /s/illegible/s/, President and Chairman
<PAGE> 210
SHARE PURCHASE AGREEMENT
MEMORANDUM OF AGREEMENT made as of the 18 day of April, 1997,
BETWEEN:
MOTION PLUS INTERNATIONAL CORPORATION, A Delaware Corporation.
(hereinafter collectively called the "Vendors")
OF THE FIRST PART
A N D:
TRB SYSTEMS INTERNATIONAL INC. a corporation incorporated
under the laws of the State of Delaware,
(hereinafter called the "Purchaser")
OF THE SECOND PART
WHEREAS, the vendors own all of the authorized issued and outstanding
shares of capital stock (there being no other securities) of TRB
Systems Inc. (herein referred to as the "Corporation"), a corporation
engaged in the provision and sale of, and manufacture of bicycles,
motorized two wheeled transport, and exercise equipment in the
United States, and, generally, worldwide, from facilities in the
State of New Jersey and manufacturing facilities, worldwide ; and
AND WHEREAS, the Vendors desire to acquire 100% of the issued and
outstanding shares of the Purchaser's Common Stock, par value $0.001
per share (the "Exchange Shares), in consideration for their
conveyance of all shares of the Corporation's stock (which will
constitute 100% of the Corporation's authorized, issued and
outstanding securities); and
AND WHEREAS, the parties hereto agree that this transaction is to
be structured and completed in compliance with all requirements of
Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as
amended:
NOW, THEREFORE, THIS AGREEMENT WITNESSETH THAT in consideration of
the covenants, agreements, warranties and payments herein set out
and provided for, the parties hereto hereby respectively covenant
and agree as follows:
<PAGE> 211
ARTICLE 1.00 - DEFINED TERMS
1.1 When used herein or in any amendments hereto, the following
terms shall have the following meanings respectively:
"Agreement" means this agreement and all schedules attached
to this agreement, in each case as they may be supplemented or amended from
time to time and the expressions "hereof", "herein", "hereto", "hereunder",
"hereby" and similar expressions refer to this agreement, and "Article",
"section" and "subsection" mean and refer to the specified Article, section
and subsection of this agreement;
"Auditors" means the Corporation's auditors, namely Stan Lee; CPA;
"books and records" means the accounting books of original
entry including the general ledge, record of cash receipts and disbursements,
purchase journal and banking records;
"Business" means the business presently and heretofore
carried on by the Corporation, consisting of the provision and sale of, and
manufacture of bicycles, motorized two wheeled transport, and exercise in
the United States, and, generally, worldwide, from facilities in the State
of New Jersey and manufacturing facilities, worldwide;
"Business day" means a day other than a Saturday, Sunday or
a day that is a statutory holiday in the United States;
"Closing" means the closing of the transaction of purchase
and sale contemplated herein;
"Closing Date" or "Date of Closing" means April 18th, 1997
or such other date as may be mutually agreed upon in writing by the parties
hereto;
"Closing Financial Statements" has the meaning ascribed to
it in section 4.1.1 hereof;
"Common Shares" means the issued and outstanding common
shares in the capital of the Corporation;
"Corporation" means, TRB Systems, Inc., a corporation
incorporated under the laws of the State of Delaware;
"EBIT" means net earnings before income taxes, as determined
by the auditors, in accordance with GAAP;
<PAGE> 212
"Exchange Shares" means 100% of the common shares in the
capital of the Purchaser;
"Financial statements" means, collectively, the Closing
Financial Statements defined hereinabove;
"Intercompany Transactions" means, collectively, all
transactions of any nature between the Corporation and any Person associated
with or related to the Corporation or otherwise not dealing with the
Corporation on an arms-length basis;
"GAAP" means generally accepted accounting principles in
the United States, as appropriate, as in effect from time to time,
consistently applied;
"NASDAQ" means the National Association of Securities
Dealers and Quotations;
"Non Arm's Length Person" means any shareholder director,
officer, employee, affiliate or associate of the Corporation or any one or
more of the Vendors or any other Person who does not deal at arm's length
with the Corporation or any one or more of the Vendors;
"Person" includes an individual, a corporation, a joint
venture, a partnership, a trust or trustee, any unincorporated organization,
an association, joint venture or any other entity (including any
governmental, administrative or regulatory authority);
"Permitted Liens" means, at any time, such Liens as the
Purchaser may agree, in writing, shall constitute a Permitted Lien for the
purpose of this Agreement;
"Purchased Shares" shall have the meaning attributed thereto
in section 3.1 hereof;
"Requirements of Law" means, as to any Person, the
certificate of incorporation and by-laws or other organizational, governing
documents of such Person, and any law, treaty, regulation or rule, or
determination of an arbitrator or a court or other governmental authority or
agency, in each case applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject;
"Rule 144 means rule 144 of the United States Securities act
of 1933;
"SEC" means the Securities and Exchange Commission of the
United States;
<PAGE> 213
"Subsidiary", in relation to any body corporate, means any
corporation of which issued and outstanding securities are held, other than
by way of security only, by such body corporate, and includes any
corporation in like relation to a Subsidiary;
"this agreement", "herein", "hereto", "hereunder", "hereof" and similar
expressions refer to the within agreement and not to any particular portion
thereof, and include the schedules referred to in Article 2.00;
"Time of Closing" means two o'clock in the afternoon on the
Closing Date;
ARTICLE 2.00 - SCHEDULES
2.1 The following are the Schedules attached to and incorporated
in this Agreement by reference and deemed to be part hereof:
Schedule 1 - SB-2 for the Corporation and Purchaser, to
be completed as of April 30, 1997, and delivered to the president of the
Purchaser on or before the 15th day of July, 1997.
ARTICLE 3.00 - PURCHASE AND SALE
3.1 Subject to the terms and conditions hereof, the Vendors
covenant and agree to sell, assign and transfer to the Purchaser and the
Purchaser covenants and agrees to purchase from the Vendors, 100 % the
issued and outstanding shares owned by the Vendors in the capital of the
Corporation (the "Purchased Shares") for an amount equal, in the aggregate,
to the Purchase Price, payable as hereinafter set out.
3.2 Subject to the hereinafter described conditions, the
Purchaser hereby agrees to exchange the equivalent of 100% of its common
Stock (100/100th share of the Purchaser), $0.001 par value (the "Exchange
shares"), with the Vendors for all of the Purchased Shares, which upon
transfer, will constitute 100% of the Companies to be acquired's authorized,
issued and outstanding securities.
3.2(a) The Purchaser shall call a special meeting of its
stockholders for the purpose of:
(a) Amending the Purchaser's articles of
incorporation in the following manner:
(b) New directors shall be elected and new
by-laws shall be adopted.
<PAGE> 214
(c) The Purchaser's entry into this agreement
shall be ratified, provided, however, that such ratification shall not be a
condition subsequent but a condition precedent to this agreement and that
by executing this Agreement, the Purchasers declare such ratification has
been effected.
3.2(b) Immediately following the calling of the said
meeting, all officers and Directors of the purchaser shall resign, effective
immediately after the meeting abovementioned.
3.2(c) The Purchaser hereby represents, warrants, covenants
and acknowledge that:
(c)(1) The Purchaser's Stock is being transferred without
Registration under the provisions of the Delaware Blue Sky Law pursuant to
exemptions provided under the Act and the analogous sections of the Delaware
Companies' Law;
(c)2 All of the Purchaser's Stock will bear legends
restricting its transfer, sale, conveyance or hypothecation within the
jurisdictional boundaries of the United States, unless such Acquired
companies' Stock is either registered under the provisions of Section 5
of the Act and under applicable state securities laws, or an opinion of
legal counsel is provided by the Purchaser certifying that such registration
is not required as a result of applicable exemptions therefrom;
(c)(3) The Purchaser shall not transfer any of the acquired
Companies' Stock except in compliance with all applicable laws; and
(c)(4) The Purchaser is acquiring the Acquired Companies'
Stock for its own account, for investment purposes only and not with a view
to further sale or distribution.
(d) The Vendors hereby represents, warrants, covenants and
acknowledges that:
(d)(1) The Stock is being transferred without registration
under the provisions of Section 5 of the Act:
(d)(2) All of the Exchange shares will bear legends restricting its
transfer, sale, conveyance or hypothecation within the jurisdictional
boundaries of the United States, unless such Exchange Shares are either
registered under the provisions of Section 5 of the act and under applicable
state and provincial securities laws, or an opinion of legal counsel is
provided by the Purchaser certifying that such registration is not required
as a result of applicable exemptions therefrom;
<PAGE> 215
(d)(3) The vendors shall not transfer any of the Acquired Companies'
Stock except in compliance with all applicable laws; and
3.2(d)(4) The vendors are acquiring the Acquired Companies' Stock for their
own account, for investment purposes only and not with a view to further
sale or distribution , except as permitted by law.
(d)(5) The vendors have made themselves fully and completely
familiar with all aspects of the Purchaser's business, operations, and
financial statements and, immediately following closing on this Agreement,
will assume operational control thereof.
3.3 The Certificates representing the shares being exchanged
shall each bear the following legend:
"THESE SHARES HAVE NEITHER BEEN REGISTERED WITH THE UNITED STATES SECURITIES
AND EXCHANGE COMMISSION OR WITH THE SECURITIES REGULATORY AUTHORITIES OF THE
STATE OF DELEWARE (OR ANY OTHER STATE, OR NATIONAL AUTHORITY).
CONSEQUENTLY, THESE SHARES MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR
HYPOTHECATED UNLESS THEY ARE FIRST REGISTERED UNDER APPLICABLE STATE,
PROVINCIAL AND FEDERAL SECURITIES LAWS OR THE TRANSACTION'S EXEMPTION
THEREFROM IS DEMONSTRATED TO THE FULL SATISFACTION OF THE CORPORATION'S
LEGAL COUNSEL."
3.4 The Purchaser warrants and represents that except as
described herein, there are no other outstanding securities of any class
or of any kind or character of the Purchaser, there being no outstanding
subscriptions, options, warrants or other agreements or commitments
obligation the Purchaser to issue or sell any additional shares of the
Purchaser's Stock or any options or rights with respect thereto, or any
securities convertible into any shares of Stock of any class;
3.5 The Purchase Price shall be paid and satisfied in full by
the delivery of the issued Exchange Shares at the Times of Closing, said
shares to be held in escrow by Edward H. Suh, Esq. until July 30, 1997,
pending the approval of the SB-2 by the Purchaser.
ARTICLE 4.00 - COVENANTS, REPRESENTATIONS AND WARRANTIES OF THE VENDORS
4.1 The Vendors hereby jointly and severally covenant, represent
and warrant as follows and acknowledge that the Purchaser is relying upon
such covenants, representations and warranties in connection with the
purchase by the Purchaser of the Purchased Shares:
<PAGE> 216
4.1.1 On or before June 30, 1997, the Vendors shall
prepare the Financial statements of the Corporation and deliver them to the
Purchaser, who shall have 15 days to approve the same, or declare this
Agreement null and void.
4.2.2 TRB Systems Inc. has been duly incorporated and
organized and is validly subsisting and in good standing under the laws of
Delaware.
4.2.3 TRB Systems Inc. has the corporate power to own or
lease its property and carry on the Business. The said corporation is duly
qualified as a corporation to do business under the laws of New Jersey,
being the only jurisdictions in which the nature of its business or the
property owned or leased by it makes such qualification necessary.
4.2.4 The authorized capital of TRB Systems Inc. consists
of 1,000 shares with a par value of $1.00 each.
4.2.5 Of the authorized capital of the said corporation,
510 shares (and no more) have been duly and validly allotted and issued and
are outstanding as fully paid and non-assessable and are beneficially owned
by the he Vendors.
4.2.6 All of the Purchased shares are owned by the said
Vendors as the beneficial owners of record, with a good and marketable title
thereto, free and clear of all mortgages, liens, charges, security
interests, adverse claims, pledges, encumbrances and demands whatsoever,
including voting trusts shareholders' agreements, options or other
agreements of any kind and the said Vendors have the absolute right to
transfer the Purchased shares and they shall be enjoyed by the Purchaser
free from any interruption or disturbance subject only to the terms and
conditions herein.
4.2.7 TRB Systems Inc. has no subsidiaries and owns no
shares in the capital of any other corporation and has not agreed to acquire
any Subsidiary or any shares of the capital of any other corporation or to
acquire or lease any other business operations.
4.2.8 Deleted by agreement.
4.2.9 Deleted by agreement.
4.2.10 Deleted by Agreement.
4.2.11 Deleted by Agreement.
4.2.12 All of the Purchased Shares are owned by the said
Vendors as the beneficial owners of record, with a good and marketable title
thereto, free and clear of all mortgages, liens, charges, security
interests, adverse claims, pledges, encumbrances and
<PAGE> 217
demands whatsoever, including voting trusts, shareholders' agreements,
options or other agreements of any kind an the said vendors have the
absolute right to transfer the Purchased Shares and they shall be enjoyed
by the Purchaser free from any interruption or disturbance subject only to
the terms and conditions herein.
4.2.13 The Corporation does not have any Subsidiaries and
nor owns any shares in the capital of any other corporation and has not
agreed to acquire any Subsidiary or any shares of the capital of any other
corporation or to acquire or lease any other business operations.
4.2.14 No person, firm or corporation has any agreement or
option or any right or privilege (whether by law, pre-emptive or contractual)
capable of becoming an agreement or option for the purchase from any one or
more of the Vendors of any of the Purchased Shares.
4.2.15 No person, firm or corporation has any agreement or
option or any right or privilege (whether by law, pre-emptive or contractual)
capable of becoming an agreement, including convertible securities, warrants
or convertible obligations of any nature, for the purchase, subscription,
allotment or issuance of any of the unissued shares in the capital of the
Corporation or of any securities of the Corporation.
4.2.16 Except with respect to product warranties provided
by the Corporation in the ordinary course of business, the Corporation is
not a party to or bound by any agreement of guarantee, indemnification,
assumption or endorsement or any other like commitment of the obligations,
liabilities (contingent or otherwise) or indebtedness of any person, firm or
corporation;
4.2.17 There are not now, nor will there be on Closing, any
material claims or potential or contingent claims against the Corporation
for product liability in respect of goods manufactured and/or sold by the
Corporation.
4.2.18 There are not now, nor will there be on Closing, any
material claims or potential or contingent claims against the Corporation
for product liability in respect of goods manufactured and/or sold by the
Corporation.
4.2.18 The Financial Statements have been prepared in
accordance with GAAP and present fairly:
4.2.18 (a) all the assets, liabilities (whether
accrued, absolute, contingent or otherwise) and the financial condition of
the Corporation as at the respective dates of the Financial Statements;
and
4.2.18 (b) the sales, earnings and results of
the operations of the Corporation during the periods covered by the
Financial Statements, respectively.
<PAGE> 218
4.2.19 The corporate records and minute books of the
Corporation contain complete and accurate minutes of all meetings of and
copies of all by-laws and resolutions passed by the directors and
shareholders of the Corporation since the incorporation of the Corporation,
all such meetings were duly called and held and the share certificate books
register of shareholders, register of transfers, register of directors and
other corporate registers of the Corporation are complete and accurate in
all material respects.
4.2.20 The Business has been carried on in the ordinary
course since the Inception of the Companies to be acquired. Since that t
ime there has been no change in the business operations, affairs or
condition of the Corporation, financial or otherwise, or arising as a
result of any legislative or regulatory change, revocation of any license
or right to do business, fire, explosion, accident, casualty, labor trouble,
flood, drought, riot, storm, condemnation, act of God or otherwise,
except changes occurring in the ordinary course of business, which changes
have not materially aversely affected and will not materially aversely
affect the organization, business, properties, prospects and financial
condition of the Corporation or the ability of the Corporation to carry on
Business.
4.2.21 The books and records, financial and otherwise, of
the Corporation fairly and correctly set out and disclose in all material
respects the financial position and result of operations of the Corporation
as at the date hereof and all material financial transactions of the
Corporation have been accurately recorded in such books and records.
4.2.22 Execution of this Agreement by the Vendors and
delivery of the Agreement by them to the Purchaser and their performance
hereunder have been duly authorized and no further action will be necessary
on the part of the Vendors to make this agreement valid and binding in
accordance with its terms upon the Vendors.
4.2.23 The entering into of this Agreement and the
consummation of the transaction of purchase and sale contemplated by this
Agreement will not result in a breach of any term or provision of or
constitute a default under the constating documents, by-laws or resolutions
of the Corporation or of any indenture, agreement, instrument, license,
permit or understanding to which the Corporation or any one or more of the
Vendors is a party or by which any one or more of them is bound, nor will
the consummation of such transaction accelerate any commitment or obligation
of the Corporation or result in the creation of any lien or encumbrance upon
any of the assets or property of the Corporation.
4.2.24 The entering into of this agreement and the
consummation of the transactions contemplated hereby will not result in the
violation of any law or regulation or any applicable order of any court,
arbitrator or governmental authority having jurisdiction over the
Corporation or the Vendors or their respective properties or businesses.
4.2.25 No consent, authorization, license, franchise,
permit, approval or order of any court or governmental agency or body or of
any lessor under any lease or of
<PAGE> 219
any person is required for the acquisition by the Purchaser of the
Purchased Shares or the completion of any of the other transactions
contemplated hereby or the continuance, following closing, of any rights
of the Corporation pursuant to any agreement affecting its assets or the
Business.
4.2.26 The Corporation will not, prior to the Closing
Date, hire any new employees, terminate any employee or increase the salary
or remuneration of any employee except in the normal course of business.
4.2.27 The aggregate amount of salaries, pension, bonuses,
rents or other remuneration of any nature paid or payable by the
Corporation to or for the Vendors or Non Arm's Length Persons subsequent
to the execution of this Agreement and up to the Time of Closing will be
made only at the regular rates heretofore paid.
4.2.28 No capital expenditures, except in the ordinary
course of business, will be made or authorized by the Corporation after the
date hereof and up to the Time of Closing, without the prior written consent
of the Purchaser.
4.2.29 Listed in Schedule 1 is a complete list of all
outstanding bonds, debentures, mortgages, notes or other evidence of
indebtedness or other security instruments of the Corporation, none of
which are presently in default and the Corporation is not under any
agreement to and shall not create or issue any bonds, debentures, mortgages,
notes or other evidence of indebtedness or other security agreements from
the date hereof until Closing without the written consent of the Purchaser.
4.2.30 The Corporation is not a party to any lease or
agreement in the nature of a lease, whether as lessor or lessee, except
those leases described in Schedule 1 hereto (in which is specified the
parties to each of such leases, their dates of execution and expiry dates,
any options to renew, any consents required, the locations of any leased
lands and premises and the rental payable thereunder), and each of such
leases is in good standing and in full force and effect without amendment
thereto and the Corporation is not in breach of any of the covenants,
conditions or agreements contained in each such lease; and there are no
consents required from or on behalf of any persons to the transaction
contemplated by this Agreement.
4.2.31 The Corporation is not a party to any conditional
sales contract, hire-purchase agreement or other title retention agreement.
4.2.32 The Corporation is not and will not be, at the Time
of Closing, a party to any agreement to acquire or to acquire any beneficial
interest in any real or immovable property.
4.2.33 The Corporation maintains appropriate policies of
insurance, given the nature of the Business, and such insurance coverage
will be continued in full force and effect to and including the Date of
Closing. The Corporation is not in default with respect
<PAGE> 220
to any of the provisions contained in any such insurance policy and has not
failed to give any notice or present any claim under any such insurance
policy in due and timely fashion. Schedule 4 hereto lists all insurance
policies of the Corporation, specifying the insurance company, insurance
agent, policy number, type of coverage and amount of coverage.
4.2.34 There are no actions, suits or proceedings,
including product warranty claims, pending or threatened against or
affecting the Corporation, at law or in equity or before or by any federal,
provincial, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, and the Vendors is
not aware of any existing ground on which any such action, suit or
proceeding might be commenced with any reasonable likelihood of success.
4.2.35 Except for agreements, contracts and commitments in
the ordinary course of business which have no more than three (3) months to
run, the Corporation is not a party to any outstanding agreement, contract
or commitment, whether written or oral, except as stated in Schedule 3
attached hereto.
4.2.36 All vacation pay, bonuses, commissions and other
emoluments are accurately reflected and have been accrued in the books of
account of the Corporation.
4.2.37 The Corporation is and at Closing will be in
substantial compliance in all jurisdictions in which it employs persons,
with legislation governing hours of work, termination and severance pay,
vacation pay and similar employee rights, the Worker's Compensation Act
and all such similar statutes.
4.2.38 The uses of the real properties owned or leased by
the Corporation referred to in this agreement or the Schedules hereto are
not in material breach of any statute, by-law, ordinance, regulation,
covenant, restriction or official plan.
4.2.39 The Corporation owns, possesses and has a good and
marketable title to its undertaking, property and assets, free and clear of
any and all mortgages, liens, pledges, charges, security interests,
encumbrances, actions, claims or demands of any nature whatsoever or
howsoever arising.
4.2.40 The conduct of the business does not infringe
upon the patents, trade marks, trade names or copyrights, domestic or
foreign, of any other person, firm or corporation.
4.2.41 Annexed hereto in Schedule 1 is a true and complete
list showing the name of each bank, trust company or similar institution in
which the Corporation has accounts or safe deposit boxes and the names of
all persons authorized to draw thereon or to have access thereto; and
4.2.42 The Corporation is conducting the Business in
compliance with all applicable laws, rules and regulations of each
jurisdiction in which the Business is carried
<PAGE> 221
on, is not in breach of any such laws, rules or regulations, except for
breaches which in the aggregate are immaterial, and is duly licensed,
registered or qualified in each jurisdiction in which the Corporation owns
or leases property or carries on the Business, to enable the business to be
carried on as now conducted and its property and assets to be owned, leased
and operated, and all such licenses, registrations and qualifications are
valid and subsisting and in good standing and none of the same will be
canceled or amended by virtue of the transaction of purchase and sale
herein provided for.
4.2.43 All facilities and equipment owned and used by the
Corporation in connection with the Business are in good operating condition
and are in a state of good repair and maintenance.
4.2.44 There are not now any loans or other indebtedness
outstanding between the Corporation and the Vendors, or any directors,
officers, shareholders or employees of the corporation or former directors,
officers, shareholders or employees of the Corporation or former directors,
officers, shareholders or employees of the corporation or any Non Arms
Length Persons, other than normal salaries, bonuses, fringe benefits and
the obligation to reimburse for expense incurred on behalf of the
Corporation in the normal course of business.
4.2.45 To the best of the Vendors knowledge, there are no
liabilities of the Corporation of any kind whatsoever, whether or not
accrued and whether or not determined or determinable, in respect of which
the Corporation or the Purchaser may become liable on or after Closing and
relating to periods before Closing except liabilities which have been
disclosed on, reflected in or provided for in the Financial Statements and
any liabilities incurred in the ordinary course of business and attributable
to the period since February, 1983, none of which is materially adverse,
individually or in the aggregate, to the Business, operations, affairs or
financial condition of the Corporation.
4.2.46 There is not now nor will there be at the Time of
Closing any application pending for the issuance of articles of amendment to
the originating documents of the Corporation.
4.2.47 The Corporation is not in default in the filing of
any corporate return or report that may be required under any federal,
provincial and/or municipal law or regulation.
4.2.48 The Corporation has duly and timely filed all tax
returns required to be filed by it and has paid all taxes and installments
of taxes which are due and payable, and has paid all assessments and
reassessments, and all other taxes, governmental charges, penalties, interest
and fines due and payable by it on or before the date hereof; the Canadian
federal and all provincial income tax liability of the corporation has
been reviewed and determined by the IRA for all fiscal years up to and
including the fiscal year ended June 30, 1996; adequate provision has
been made for taxes payable for the current period of which tax returns
are not yet required to be filed; there are no agreements,
<PAGE> 222
waivers or other arrangements providing for an extension of time with
respect to the filing of any tax return by, or payment of any tax,
governmental charge or deficiency against, the Corporation in respect of
taxes, governmental charges or assessments, asserted by such authority; the
Corporation has with held from each payment made to any of its officers,
directors, employees, former directors, officers and employees the amount of
all taxes, including but not limited to income tax, and other deductions
required to be withheld therefrom and has paid the same to the proper tax
or other receiving officers within the time required under the applicable
tax legislation.
4.2.49 The IRA has not issued a Notice of determination
with respect to the Vendors or the Corporation.
4.2.50 The Vendors have no information or knowledge of any
facts relating to the vendors, the Business, the Corporation or the
Purchased shares which, if known to the Purchaser, might reasonably be
expected to deter the Purchaser from completing the transaction of purchase
and sale herein contemplated.
4.2.51 The vendors have attached the questionnaire
requested of them as Schedule 6, and understand that the Purchasers are
relying on the information therein, and the said information is warranted
to be true and correct.
ARTICLE 5.00 - REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
5.1 The Purchaser covenants, represents and warrants as follows
and acknowledges that the vendors are relying upon such covenants,
representations, warranties and covenants in connection with the sale
by the Vendors of the Purchased Shares:
5.1.2 The purchaser has been duly incorporated, and is
validly subsisting and in good standing under the laws of the State of
Delaware;
5.1.3 The execution of this Agreement by the Purchaser,
and its delivery to the Vendors, and the performance by the Purchaser
hereunder, have been duly authorized and no further action will be
necessary on the part of the Purchaser to make this Agreement valid and
binding in accordance with its terms upon the Purchaser;
5.1.4 The execution and delivery by the Purchaser of
this agreement and the performance of its obligations hereunder will not
violate the constating documents or by-laws of the Purchaser, any indenture
or other agreement, written or oral, to which it is a party, or by which it
is bound, or any law, rule, regulation or order to which it is subject;
5.1.5 OMIT
<PAGE> 223
5.1.6 None of the assets of the Purchaser have been
pledged to secure debt of the Purchaser.
5.1.7 The Purchaser has the corporate power to own or
lease its property and carry on its Business.
5.1.8 No person, firm or Corporation has any agreement or
option or any right or privilege (whether by-law, pre-emptive or contractual)
capable of becoming an agreement or option for the purchase of any shares
in the Purchaser.
5.1.9 OMIT
5.1.10 Except with respect to product warranties provided
by the purchaser in the ordinary course of business, the Purchaser is not a
party to or bound by any agreement of guarantee, indemnification, assumption
or endorsement or any other like commitment of the obligations, liabilities
(contingent or otherwise) or indebtedness of any person, firm or corporation;
5.1.11 There are not now, nor will there be on Closing, any
material claims or potential or contingent claims against the Purchaser for
product liability in respect of goods manufactured and/or sold by the
Purchaser.
5.1.12 The financial statements of the Purchaser Statements
have been reviewed and accepted as fair and valid by the Vendors.
5.1.13 The corporate records and minute books of the
Purchaser contain complete and accurate minutes of all meetings of and copies
of all by-laws and resolutions passed by the directors and shareholders of
the Purchaser since the incorporation of the Purchaser, all such meetings
were duly called and held and the share certificate books, register of
shareholders, register of transfers, register of directors and other
corporate registers of the Purchaser are complete and accurate in all
material respects.
5.1.14 The books and records, financial and otherwise, of
the Purchaser fairly and correctly set out and disclose in all material
respects the financial position and result of operations of the Purchaser
as at the date hereof and all material financial transactions of the
Purchaser have been accurately recorded in such books and records.
5.1.15 Execution of this Agreement by the Purchaser and delivery
of the agreement by them to the Vendors and their performance hereunder have
been duly authorized and no further action will be necessary on the part of
the Purchaser to make this agreement valid and binding in accordance with
its terms upon the Purchaser.
5.1.16 The entering into of this Agreement and the consummation of
the transaction of purchase and sale contemplated by this Agreement will
not result in a breach of any term or provision of or constitute a default
under the constating documents,
<PAGE> 224
by-laws or resolutions of the Corporation or of any indenture, agreement,
instrument, license, permit or understanding to which the Purchase is a
party or by which it is bound, nor will the consummation of such
transaction accelerate any commitment or obligation of the Purchaser or
result in the creation of any lien or encumbrance upon any of the assets
or property of the Purchaser.
5.1.17 The entering into of this Agreement and the consummation
of the transactions contemplated hereby will not result in the
violation of any law or regulation or any applicable order of any
court, arbitrator or governmental authority having jurisdiction over
the Purchaser.
5.1.18 No consent, authorization, license, franchise,
permit, approval or order of any court or governmental agency or body
or of any lessor under any lease or of any person is required for the
acquisition by the Purchaser of the Purchased Shares or the completion
of any of the other transactions contemplated hereby or the continuance,
following closing, of any rights of the Purchaser pursuant to any agreement
affecting its assets.
5.1.19 The Purchaser has not declared, directly or indirectly,
or paid any dividends or declared or made any other distribution on any
of its shares since April 9th, 1997 and no dividends declared or
distributions authorized remain unpaid. The Purchaser will not declare
and pay any dividends or make any other distributions on any of its
issued shares prior to the Closing Date. The Purchaser has not,
directly or indirectly, redeemed, purchased or otherwise acquired any
of its shares or agreed to do so.
5.1.20 No payments, benefits or credits have been granted,
made or authorized, since April 9th, 1997, by the Purchaser to its
officers, directors, shareholders or employees, or to its former
officers, directors, shareholders or employees or to any Non Arms
Length Persons, except in the ordinary course of business and at the
regular rates payable to them as salary, pension, bonuses, rents or
other remuneration of any nature.
5.1.21 The Purchaser will not, prior to the Closing Date, hire
any new employees, terminate any employee or increase the salary or
remuneration of any employee except in the normal course of business.
5.1.22 The aggregate amount of salaries, pension, bonuses,
rents or other remuneration of any nature paid or payable by the
Purchaser to or for the Vendors or Non Arm's Length Persons subsequent
to the execution of this Agreement and up to the time of closing will be
made only at the regular rates heretofore paid, and no such payment will
be due and owing to any employee, director, or officer of the Purchaser
after the closing.
5.1.23 No capital expenditures, except in the ordinary course of
business, will be made or authorized by the Purchaser after the date hereof
and up to the Time of Closing, without the prior written consent of the
Vendors.
<PAGE> 225
5.1.24 The Purchaser is not a party to any written or oral
agreement for the employment of any officers or individual. All
employees are hired for an indefinite period subject to immediate
termination on 24 hours notice. The employment contracts described in
Schedule 7 hereto are valid and in good standing and fully reflect and
outline the entire agreement between each employee and the Purchaser.
5.1.25 The Purchaser is not a party to any agreement providing
for a pension plan, profit sharing plan or bonus based on profit with any
employee, officer or director of the Purchaser.
5.1.26 The Purchaser has not made any agreements with any labor
union or employee association nor made commitments to or conducted
negotiations with any labor union or employee association with respect
to any future agreements and none of the Vendors is aware of any current
attempts to organize or establish any labor union or employee association
in the Purchaser.
5.1.27 The Purchaser has no outstanding debts whatsoever, nor
will it have any at the time of closing.
5.1.28 The Purchaser is not a party to any lease or agreement
in the nature of a lease, whether as lessor or lessee, except those
leases described in Schedule 9 hereto (in which is specified the parties
to each of such leases, their dates of execution and expiry dates, any
options to renew, any consents required, the locations of any leased
lands and premises and the rental payable thereunder), and each of such
leases is in good standing and in full force and effect without amendment
thereto and the Purchaser is not in breach of any of the covenants,
conditions or agreements contained in each such lease; and there are no
consents required from or on behalf of any persons to the transaction
contemplated by this Agreement.
5.1.29 The Purchaser is not a party to any conditional sales
contract, hire-purchase agreement or other title retention agreement.
5.1.30 The Purchaser maintains appropriate policies of insurance,
given the nature of its and its subsidiaries businesses, and such insurance
coverage will be continued in full force and effect to and including the
Date of Closing, The Purchaser is not in default with respect to any of
the provisions contained in any such insurance policy and has not failed
to give any notice or present any claim under any such insurance policy in
due and timely fashion
5.1.31 There are no actions, suits or proceedings, including
product warranty claims, whether or not purportedly on behalf of the
Purchaser, pending or threatened against or affecting the Purchaser,
at law or in equity, or before or by any federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, and the Purchaser is not aware of
<PAGE> 226
any existing ground on which any such action, suit or proceeding might
be commenced with any reasonable likelihood of success.
5.1.32 The service marks, trade names, trade marks and patents,
both domestic and foreign, used in whole or in part in or required for
the proper carrying on of the businesses of the Purchaser and its
subsidiaries are owned by or validly licensed to the Purchaser with the
sole and exclusive right to use the same and are in good standing and duly
registered in all appropriate offices to preserve the right thereof and
thereto;
5.1.33 Except for agreements, contracts and commitments in the
ordinary course of business which have no more than three (3) months to
run, the Purchaser is not a party to any outstanding agreement, contract
or commitment, whether written or oral in the nature of a prepaid service
contract.
5.1.34 All vacation pay, bonuses, commissions and other emoluments
are accurately reflected and have been accrued in the books of account of
the Purchaser.
5.1.35 The Purchaser is and at Closing will be in substantial
compliance in all jurisdictions in which in employs persons, with
legislation governing hours of work, termination and severance pay,
vacation pay and similar employee rights, the Worker's Compensation
Act and all such similar statutes. The uses of the real properties owned
or leased by the Purchaser referred to in this Agreement or the Schedules
hereto are not in material breach of any statute, by-law, ordinance,
regulation, covenant, restriction or official plan.
5.1.36 Except as set out and described in Schedule 10 hereto,
the Purchaser owns, possesses and has a good and marketable title to its
undertaking, property and assets, free and clear of any and all mortgages,
liens, pledges, charges, security interests, encumbrances, actions, claims
or demands of any nature whatsoever or howsoever arising.
5.1.37 The conduct of the businesses of the Purchaser and any
of its subsidiaries do not infringe upon the patents, trade marks,
trade names or copyrights, domestic or foreign, of any other person,
firm or corporation.
5.1.38 DELETED.
5.1.39 DELETED.
5.1.40 There are not now any loans or other indebtedness
outstanding between the Purchaser and its shareholders, or any of them,
its directors or any of them, and/or its officers or any of them, or
employees of the Purchaser or former directors, officers, shareholders
or employees of the Purchaser or any Non Arms Length Persons, other than
normal salaries, bonuses, fringe benefits and the obligation to reimburse
for expenses incurred on behalf of the Purchaser in the normal course of
business.
<PAGE> 227
5.1.41 All receivables recorded on the books of the Purchaser
are bona fide and good and, subject to an allowance for doubtful accounts
taken in accordance with GAAP, collectible without set-off or counter-claim.
5.1.42 There are no liabilities of the Purchaser of any kind
whatsoever, whether or not accrued and whether or not determined or
determinable, in respect of which the Corporation or the Purchaser
may become liable on or after Closing and relating to periods before
Closing except liabilities which have been disclosed on, reflected in or
provided for in the Financial Statements;
5.1.43 The Purchaser is not in default in the filing of any
corporate return or report that may be required under any federal, state
and/or municipal law or regulation.
5.1.44 All inventories on hand at the Time of Closing will be of
good and marketable quality, capable of being sold in the ordinary course
of the Business at current market prices.
5.1.45 The Purchaser has duly and timely filed all tax returns
required to be filed by it and has paid all taxes and installments of
taxes which are due and payable, and has paid all assessments and
reassessments, and all other taxes, governmental charges, penalties,
interest and fines due and payable by it on or before the date hereof;
the American federal and all state income tax liability of the Purchaser
has been reviewed and determined by the Internal Revenue Service of the
United Stated or the applicable state for all fiscal years up to and
including the fiscal year ended in 1994; adequate provision has been made
for taxes payable for the current period for which tax returns are not yet
required to be filed; there are no agreements, waivers or other arrangements
providing for an extension of time with respect to the filing of any tax
return by, or payment of any tax, governmental charge or deficiency against
the Purchaser in respect of taxes, governmental charges or assessments,
asserted by such authority; the Purchaser has withheld from each payment
made to any of its officers, directors, employees, former directors,
officers and employees the amount of all taxes, including but not limited to
income tax, and other deductions required to be withheld therefrom and has
paid the same to the proper tax or other receiving officers within the time
required under the applicable tax legislation.
5.1.46 The Purchaser has no information or knowledge of any facts
relating to the Purchaser, its subsidiaries, its business or the businesses
of its subsidiaries which, if known to the Vendors, might reasonably be
expected to deter the Vendors from completing the transaction and sale
herein contemplated.
ARTICLE 6.00-COVENANTS OF THE VENDORS
6.1.1 The Vendors covenant and agree with the Purchaser that on or
before the Closing Date they will do or cause to be done the following:
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6.1.2 Take all necessary steps and proceedings required to permit all of
the Purchased Shares to be duly and regularly transferred to the Purchaser
of its nominee;
6.1.3 Until the Time of Closing continue to operate the business of the
Corporation prudently and in such a manner as preserve and maintain the
goodwill of the Corporation;
6.1.4 All necessary corporate actin and proceedings by the Purchaser shall
have been taken to permit the due execution and delivery of this Agreement
and the valid transfer of the Purchased Shares to the Purchaser;
6.1.5 DELETED.
6.1.6 DELETED.
ARTICLE 7.00-COVENANTS OF THE PURCHASER
7.1 The Purchaser covenants and agrees with the Vendors that on
or before the Closing Date it will do or cause to be done the following:
7.2 all necessary corporate action and proceedings by the Purchaser
shall have been taken to permit the due execution and delivery of this
Agreement and the valid transfer of the Exchange Shares to the Vendor;
and
7.3 DELETED.
7.4 provide the Vendors at least four (4) days prior to the Closing
Date, with a list of all persons in possession of all of the keys, credit
cards, books, records, files and other properties of the Purchaser and
deliver to the Vendors custody of all such keys, credit cards, books,
records, files and other property in the possession of any person whom
the Vendors designate by notice in writing to the Purchaser at least four
(4) days prior to the Closing Date as not being authorized to continue to
possess any of the foregoing;
7.1.1 DELETED.
7.1.2 obtain written releases from all lessors of real and personal
property that such leases satisfied in full and of no further effect;
7.1.3 cause such directors and officers of the Purchaser and any of its
subsidiaries as the Vendor may specify to resign in favor of nominees of
the Vendor, such resignations to be effective as at the Time of Closing;
<PAGE> 229
7.1.4 DELETED.
7.1.5 up to the Time of Closing continue to operate the businesses of the
Purchaser and its subsidiaries prudently and in such a manner as to preserve
and maintain the goodwill of the Purchaser and its subsidiaries; and
7.1.6 on the Closing Date of this Agreement, the Purchaser's aggregate
cash assets will be at least $0.00; its total assets will be at least $215;
and its liabilities, whether accrued or inchoate but excluding liabilities
as a result of the transaction contemplated hereby, shall not exceed
$10,000;
ARTICLE 8.00-SURVIVAL OF COVENANTS, REPRESENTATIONS AND WARRANTIES
8.1 The covenants, representations and warranties of the Vendors
contained in this Agreement and contained in any document or certificate
given pursuant hereto shall survive the Closing herein provided for and,
notwithstanding Closing, nor any investigation made by or on behalf of the
Purchaser, shall continue in full force and effect for the benefit of the
Purchase following the Closing Date.
8.2 The covenants, representations and warranties of the
Purchaser contained in this Agreement and contained in any document or
certificate given pursuant hereto shall survive the closing herein provided
for and, notwithstanding Closing, nor any investigation made by or on behalf
of the Vendors, shall continue in full force and effect for the benefit of
the Vendors following the Closing Date.
ARTICLE 9.00-CONDITIONS OF CLOSING
9.1 The sale and purchase of the Purchase Shares is subject to
the following terms and conditions, each of which is hereby declared to be
for the exclusive benefit of the Purchaser to be fulfilled and performed at
or prior to the Time of Closing:
9.2 The covenants, representations and warranties of the Vendors
contained in this Agreement or any Schedule hereto or certificate or other
document delivered or given to the Purchaser pursuant to this Agreement,
including without limitation the representations and warranties contained in
Article 4.00 shall be true and correct on and as of the Closing Date with
the same force and effect as if they had been made as of the date hereof,
each and every one of which is hereby deemed to be a condition;
9.3 The Vendors shall provide at the Time of Closing a
certificate dated the Closing Date,, to the effect that the covenants,
representations and warranties of the Vendors contained herein are true and
correct on and as of the Closing Date, with the same force and effect as
though made on and as of such date, provided that the acceptance of such
certificate and the closing of the transaction herein provided for shall
not be a
<PAGE> 230
waiver of the said covenants, representations and warranties which
shall continue in full force and effect as provided herein;
9.4 The Vendors shall have complied with all covenants
and agreements herein agreed to be performed or caused to be performed by
it;
9.5 At the Closing Date, there shall have been no
material adverse change in the affairs, assets, liabilities, financial
condition or business of the Corporation from that shown on or reflected
in the Financial Statements;
9.6 At the Closing Date, there shall have been no
material adverse change in the affairs, assets of the Corporation shall
have occurred prior to the Time of Closing;
9.7 Any consent, authorization, license, franchise,
permit, approval or order of any court or governmental agency or regulatory
body required for the acquisition by the Purchaser of the Purchased Shares
shall have been obtained;
9.8 The Purchaser shall provide at the Time of Closing
a certificate dated the Closing Date, to the effect that the covenants,
representations and warranties of the Purchaser contained herein are true
and correct on and as of the Closing Date, with the same force and effect
as though made on and as of such date, provided that the acceptance of
such certificate and the closing of the transaction herein provided for
shall not be a waiver of the said covenants, representations and warranties
which shall continue in full force and effect as provided herein; and
9.9 The Purchaser shall have complied with all covenants
and agreements herein agreed to be performed or caused to be performed by
it.
9.10 The Purchaser shall provide to the Vendors the written
opinion of the Purchaser's legal counsel in the form annexed hereto and
marked Exhibit 13.
ARTICLE 10.00-CLOSING ARRANGEMENTS
10.1 The closing shall take place at the Time of Closing
at such offices as are agreed to in writing among the parties hereto at
least 24 hours prior to the said Closing.
10.2 At the Time of Closing and upon fulfillment of
all the condition set out in this Agreement, which have not been waived
in writing by the Vendors or the Purchaser, the Vendors shall deliver to
the Purchaser proper certificates for all the Purchased Shares.
ARTICLE 11.00-NOTICE
11.1 Any notice or other document to be given by any
party hereto to any other party shall be in writing and may be given by
personal delivery the offices of Edward H. Suh, known to both parties
hereto.
<PAGE> 231
11.2 Any notice or other document aforesaid, if delivered, shall
be deemed to have been given or made on the date on which it was delivered
or, if mailed, shall be deemed to have been given and received on the fourth
(4th) business day following the date on which it was mailed; provided that
if there exists at the time of mailing of a notice hereunder or within four
(4) business days thereafter a labor dispute or other event which would
affect the normal delivery of the notice by the postal service of the United
States, then such notice will only be effective if actually delivered.
11.3 The parties hereto may change any address for
notices hereunder, from time to time, by notice given in accordance
with the foregoing.
ARTICLE 12.00-GENERAL
12.1 Time shall be of the essence of this Agreement.
12.2 This Agreement may be executed in one or more
counterparts, each of which when so executed shall constitute an original
and all of which together shall constitute one and the same agreement.
12.3 This Agreement, including the Schedules hereto,
constitutes the entire agreement between the parties hereto. There are
not and shall not be any verbal statements, representations, warranties,
undertaking or agreements between the parties and this Agreement may not
be amended or modified in any respect except by written instrument signed
by the parties hereto.
12.4 This Agreement shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the
laws of the State of New York. Any and all disputes arising under this
Agreement whether as to interpretation, performance or otherwise, shall
be subject to the exclusive jurisdiction of the Courts of the State of New
York. Each of the parties hereto hereby irrevocably attorns to the
jurisdiction of the Courts of the State of New York.
12.5 The headings used herein are inserted for
convenience of reference only and shall not affect the construction of or
interpretation of this Agreement.
12.6 Except as other wise set out in this Agreement,
each of the parties hereto shall pay all of its own costs and expenses of
the transaction of purchase and sale including all fees and expenses of its
accountants, counsel and officers.
12.7 In the event that any Article or section of this
Agreement is held to be invalid or unenforceable by a court of competent
jurisdiction, such invalidity or unenforceability shall not affect the
remainder of the provisions hereof, but such part shall be fully severable,
and this Agreement shall be construed and enforced as if such invalid or
unenforceable part had never been inserted herein and the parties do hereby
agree that
<PAGE> 232
they would have signed this Agreement without such invalid or
unenforceable part included herein.
12.8 In this Agreement words importing the singular
number only shall include the plural and vice versa; and words importing
the masculine gender shall include the feminine and vice versa.
12.9 This Agreement shall enure to the benefit of
and be binding upon the parties hereto and their respective heirs,
legal personal representatives, successors and permitted assigns.
12.10 Where the date for the expiry of any time period
or for the closing of any thing hereunder expires or falls upon a day which
is not a Business Day, the time so limited extends to and the thing shall
be done on the day next following that is a Business Day.
12.11 The parties hereto agree that no disclosure or
public announcement with respect to this Agreement or any of the
transactions contemplated by this Agreement shall be made by any party
hereto without the prior written consent of the other parties hereto.
IN WITNESS WHEREOF the parties hereto have executed this
Agreement on the day and year first above written.
SIGNED, SEALED AND DELIVERED )
in the presence of )
/s/Anton Stephens/s/ )
) /s/Byung Yim/s/, President
) TRB SYSTEMS
INTERNATIONAL, INC.
) /s/Byung Yim/s/, President
) MOTION PLUS
INTERNATIONAL CORP.
<PAGE> 233
"LOGO"
PRETTY WHEEL INDUSTRIAL,CO.,LTD.
NO. 170-7 CHUNG CHENG RD.,TA YA
HSIANG, TAICHUNG HSIEN TAIWAN, R.O.C.
AGREEMENT
- ---------
TRB SYSTEMS INC., (TRB) at 4 Becker Farm Road, Roseland, N.J. 07068
U.S.A. agrees to utilize PRETTY WHEEL IND. CO., LTD. (PW) at
NO. 170-7, CHUNG CHENG RD., TA YA HSIANG, TAICHUNG HSIEN, TAIWAN,
R.O.C. in the R&D process, manufacture, and assembly of TRB
Products (such as TRB Bicycle, TRB Exerciser Bicycle, Electric
Bicycle, etc.), provided that the prices quoted by PW are
competitive with those quoted by other companies for the same
service. This agreement is for work to be performed in Taiwan.
However, TRB may extend this agreement to work and contracts in
other countries at its sole discretion.
TRB SYSTEMS INC. PRETTY WHEEL IND. CO., LTD.
- ------------------- --------------------------
/s/Byung D. Yim/s/ /s/Tony Tu/s/
Chief Operating Officer General Manager
<PAGE> 234
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