1. INTRODUCTION
On behalf of the Board of Directors of AIC, we are pleased to
announce that the Company’s wholly-owned subsidiary, Brimal Holdings Sdn Bhd
("BHSB" or "the Licensee") has on 8 August 2002 entered into a License
and Technical Assistance Agreement ("the Agreement") with NVH Korea, Inc.
("NVH" or "the Licensor"), whereby NVH will grant to BHSB the license
and technical know-how to manufacture and sell non-modularised NVH resin-felt headliners
for motor vehicles.
2. BACKGROUND INFORMATION
2.1 BHSB
BHSB is a private limited company incorporated in Malaysia under
the Companies Act, 1965 on 10 September 1975. The principal activities of BHSB are the
design, assembly and distribution of electronic products and automotive components. The
authorised share capital of BHSB is RM22,000,000 comprising 22,000,000 ordinary shares of
RM1.00 each ("BHSB Shares") and RM3,000,000 comprising 3,000,000 redeemable
preference shares of RM1.00 each, of which 8,000,000 BHSB Shares have been issued and are
fully paid-up.
BHSB is wholly-owned by AIC Inspirasi Sdn. Bhd., an investment holding
company which is a wholly-owned subsidiary of AIC.
2.2 NVH
NVH was incorporated on 17 January 1984 under the laws of Korea.
Its principal activities are the production of automotive interior parts and materials,
total NVH integrated engineering solution and interior module. NVH has an authorised share
capital of 5 billion Korean Won comprising of 1,000,000 ordinary shares of 5,000 Korean
Won each, of which 300,000 ordinary shares (1.5 billion Korean Won) have been issued and
are fully paid-up.
3. DETAILS OF THE AGREEMENT
On 8 August 2002, BHSB has entered into the Agreement with NVH, to
obtain the license to manufacture and sell non-modularised NVH resin-felt headliners for
motor vehicles ("the Licensed Products") under the specialised technical
knowledge, information, manufacturing process, skill and other proprietary information
provided by NVH ("the Know-How"). Training and technical support in relation to
the manufacture of the Licensed Products and the use of the Know-How will be provided by
NVH under the Agreement.
The Agreement is effective upon execution and shall remain in effect
for an initial term of 5 years which may be extended for additional one year periods
unless either party notifies the other in writing of its intention not to further extend
the Agreement.
The License obtained is an exclusive and non-transferable license in
Malaysia. BHSB has secured two contracts to manufacture and supply headliners for certain
motor vehicle models assembled by Proton. BHSB is also granted a non-exclusive license to
manufacture and sell the Licensed Products in Thailand, Singapore, Indonesia, Brunei, The
Philippines, Vietnam, Cambodia, Myanmar and China, subject to the Licensor’s prior
written consent for each of the said countries.
BHSB is required to pay semi-annually running royalties at the rate
("the Royalty Rate") of 2% of the net sales price of each unit of the Licensed
Products sold, distributed or disposed of by them for the initial 5 year term. If the
Agreement is extended, the Royalty Rate will be reduced to 1.5% for each of the first
three extended one-year terms, and the Royalty Rate thereafter shall be mutually agreed to
between the parties.
4. RATIONALE FOR THE AGREEMENT
The Agreement is expected to contribute positively towards AIC
Group’s future earnings in its electronics and automotive business. In addition,
other than broadening our product base, the Agreement also provides an excellent
opportunity and leverage for the Electronics Division to become an upper trim modular
supplier to automotive companies in this region so as to be more competitive.
5. CONDITIONS OF THE AGREEMENT
The grant of the License under the Agreement is subject to BHSB
obtaining the approval or statement of non-objection from the Ministry of International
Trade and Industry ("MITI") for acquiring the Know-How from the Licensor, NVH.
6. FINANCIAL EFFECTS OF THE AGREEMENT
6.1 Share Capital
The Agreement will not have any effect on the issued and paid-up
share capital of AIC.
6.2 Net Tangible Assets ("NTA")
The Agreement is not expected to have any material effect on the
NTA of the AIC Group.
6.3 Earnings
The Agreement is expected to contribute positively to the future
earnings of the AIC Group as it is in the ordinary course of business and it is also in
line with our management’s direction to be an upper trim modular supplier.
7. DIRECTORS' AND MAJOR SHAREHOLDERS' INTEREST
None of the Directors and Major Shareholders of AIC and persons
connected to the Directors and Major Shareholders of AIC have any interest, direct or
indirect, in the Agreement.
8. STATEMENT BY DIRECTORS
The Board of Directors of AIC, having considered all aspects of the
Agreement, is of the opinion that the Agreement is in the best interest of the AIC Group.
