K-LINE and Lionel Reach Technology Agreement

[eZAK]

Some Good News for a Change!

[Anonymous]

CHAPEL HILL, NC, Aug. 10 -- K-LINE Electric Trains is pleased to announce that the lawsuit with Lionel has been settled through negotiation. We will continue to ship all of our products as catalogued and advertised.

While K-LINE hired as an outside consultant a Lionel engineer, Marty Pierson, he was not hired to develop advances on Lionel technology, but to create superior alternatives. For example, K-LINE’s Cruise Control is not related in any way to Lionel’s Odyssey System.

The sound and speed control products were developed by Mr. Pierson in collaboration with K-LINE engineers. However, certain agreements he signed as a Lionel employee gave Lionel a claim of ownership of this work. K-LINE has agreed to pay a royalty for the use of this technology through January 31, 2006.

“We are satisfied with the outcome of the negotiation. However, we prefer to compete in the marketplace rather than the court system which only hurts consumers, adding cost to the products of all parties,” said Maury D. Klein, President of MDK / K-LINE Electric Trains. “K-LINE will continue the evolution of our technology in engines and transformers, as well as other products. Upgrades are already in the development stream. We certainly agree with two contentions that Lionel made in their lawsuit: K-LINE offers superior technology, and at considerably lower prices. We will maintain that leadership.”

The key elements of the settlement include:

· K-LINE will continue to deliver all products with the sound, speed control and transformer technology at issue and pay a royalty to Lionel through January 31, 2006

· The agreement places no restrictions of any kind on wholesalers and retailers selling these K-LINE products before or after January 31, 2006

· The agreement has no impact on K-LINE’s on-going license of TrainMaster Command Control and RailSounds technology from Lionel

· K-LINE has granted Lionel a license to incorporate our patented next-generation ‘Radio-linked Bi-Directional Control System’ into Lionel locomotives and other command products. The companies further agreed to jointly share all improvements and enhancements to the system made by either company.

MDK, Inc., headquartered in Chapel Hill, NC, is a leading manufacturer of O Scale and O Gauge model trains and accessories, sold under the K-LINE Trains brand for more than 30 years. K-LINE products are available online at www.k-linetrains.com, at K-LINE SuperStores and K-LINE Authorized Retailers nationwide.

Cruise Control is a trademark of MDK Inc.
TrainMaster, RailSounds, and Odyssey are trademarks of Lionel LLC.