SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (D)
of the
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported) June 7, 2000
ELECTRO-KINETIC SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Pennsylvania
(State or other jurisdiction of incorporation or organization)
2-85175W 22-1954716
(Commission File Number) (IRS Employer Identification Number)
525 Washington Blvd., 36th Floor
Jersey City, New Jersey 07310
(Address of principal executive offices)
201-216-0100
(Registrant's telephone number, including area code)
ITEM 5. OTHER EVENTS
.........Proposed Acquisition and Change of Control. On June 7, 2000 Electro-Kinetic Systems, Inc.
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("Electro-Kinetic") entered into a Letter Agreement with Sterling Media Fund Managers, L.L.C. dba Sterling Media
Capital Group ("Sterling"), providing for a two-step acquisition of Sterling by Electro-Kinetic. Upon completion
of both steps of the acquisition the current members of Sterling will own approximately 91.5% of the equity and
voting rights of Electro-Kinetic, which will change its name to Sterling Media Capital Group, Inc. and
Electro-Kinetic will own 100% of the equity in Sterling. The Letter Agreement states that the estimated net
worth of Sterling is in excess of $2,000,000.
.........Under the Letter Agreement, following the first step of the acquisition, Dwight L. Pierce, President and
Chief Executive Officer of Sterling will be appointed President, CEO and a director of Electro-Kinetic. Raymond
L. Burke will resign from these positions with the parent company upon Mr. Pierce's appointment. Mr. Pierce
intends to appoint Gilbert F. Amelio as Chairman of the Board and Director, Paul Nussbaum as Vice Chairman of the
Board of Directors, David Annin as Vice President, Secretary, Treasurer and Director and Bob L. McGiboney as
Executive Vice President and Director.
.........Because of the change in ownership and the composition of the board upon completion of the first step of
the acquisition, there will be a change in control of Electro-Kinetic.
.........The Acquisition. The acquisition is expected to be completed in two steps. The first step on or about
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July 3, 2000 by the issuance of 46,000,000 (a majority) of the common stock to the shareholders of Sterling in
exchange for approximately 15% of the equity interests of Sterling. The parent company will then change its name
to Sterling Media Capital Group, Inc. The second step will be completed thereafter by acquisition of the
remaining 85% of Sterling. After completion of the second step of the acquisition process, Sterling will be a
wholly-owned subsidiary of Electro-Kinetics and the present stockholders of Sterling will own approximately 91.5%
of the outstanding equity interest and voting rights of the parent company. The first step of the acquisition
will not require approval of stockholders of Electro-Kinetics. The Letter Agreement states that the estimates
net worth of Sterling will be in excess of $2,000,000.
It is expected
that following completion of the acquisition, the stockholders of
Electro-Kinetics will be presented a proposal to “reverse-split” the
outstanding shares of common stock and amend the Articles of Incorporation to
increase the number of shares of common stock Electro-Kinetics is authorized to
issue. If the “reverse-split” is approved and the amendment to the
Articles is authorized, upon completion of the acquisition, there will be
approximately 17,000,000 outstanding common shares. Approximately 15,555,000
common shares (91.5%) will be held by the present Sterling stockholders and
approximately 1,445,000 common shares (8.5%) will be held by the present
Electro-Kinetic stockholders.
About
Sterling. Sterling currently manages a pool of non-cash assets with a total
net value, based on third party appraisals, of approximately $500,000,000. This
asset pool is expected to double over the next twelve months by the addition of
two new asset based investment programs coming under the management of Sterling.
Sterling uses the assets under its management to raise investment capital, which
it, in turn, invests in emerging growth companies as venture capital. The assets
managed now and presumably in the future by Sterling provide a “profits
interest” to Sterling in concert with other third parties.
Sterling’s
executive office is in Tulsa, Oklahoma with its administrative offices in
Dallas, Texas. Sterling presently has 10 employees, most of whom are
shareholders.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
Financial Statements
None
Exhibits
Exhibit A - Letter Agreement among Electro-Kinetic Systems, Inc., Sterling Media Fund Managers, L.L.C.
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and the shareholders of Sterling Media Fund Managers, L.L.C. dated June 7, 2000.
Exhibit B
– Press Release dated June 9, 2000 of Electro-Kinetic Systems, Inc.
SIGNATURE
Pursuant to the
requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned hereunto duly
authorized.
ELECTRO-KINETIC SYSTEMS, INC.
By:/s/Raymond L. Burke
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Raymond L. Burke, President
Date: June 14, 2000
EXHIBIT A
ELECTRO-KINETIC SYSTEMS, INC.
525 Washington Blvd., Ste. 3600, Jersey City, New
Jersey 07310
Telephone (201) 216-0100 - Facsimile (201)
216-1105
June 6, 2000
Mr. Dwight L. Pierce, President/CEO
Mr. David Annin, Vice President
Sterling Media Fund Managers, L.L.C.
General Partner
Sterling Media Capital Fund, L.P. and
Sterling Media Investment Group, L.P. Via Facsimile No. (972) 248-4815
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7136 S. Yale Avenue, Suite 300
Tulsa, Oklahoma 74136
Re:......Acquisition of Sterling Media Fund Managers, L.L.C. by Electro-Kinetic Systems, Inc.
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Gentlemen:
.........The Board of Directors of Electro-Kinetic Systems, Inc. ("EKS"), a Pennsylvania corporation, has
authorized the undersigned to execute this Letter Agreement whereby EKS shall acquire Sterling Media Fund
Managers, L.L.C. ("Managers"), an Oklahoma limited liability company, from its shareholders of membership
interest (the "Managers Shareholders") in an exchange (the "Exchange Transaction") for Forty Six Million of EKS
Class A common stock (the "Acquisition EKS Shares"). After the Exchange Transaction, Managers will be fifteen
percent (15%) owned by EKS, and the Acquisition EKS Shares would be owned collectively by the Managers
Shareholders (and individually by each of the Managers Shareholders in their appropriate pro-rata amounts). This
letter (the "Letter Agreement") will set forth the terms and conditions upon which the Exchange Transaction shall
be consummated.
1........Legal Effect.
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This Letter
Agreement is intended to be, and does constitute, a legally binding contract
between the parties for the transactions contemplated herein.
2. Exchange Transaction.
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A.
The closing of the Exchange Transaction contemplated herein is contingent upon
the approval by 100% of the Managers Shareholders and the holders of all
of the “Convertible Promissory Note(s)” now issued by Managers,
such approvals to be evidenced by written consent to be duly requested and
received on or before 5:00 P.M. on June 16, 2000.
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B. Immediately after receipt of notice by Managers of the approvals required in paragraph
2.A. above, the Board of Directors of EKS will adopt, by unanimous consent as provided in Section 1727
of the Pennsylvania Business Corporation Law of 1988, resolutions authorizing:
(i) the change of name by EKS to Sterling Media Fund Managers, Inc. or other name
selected by the holders of the newly issued Acquisition EKS Shares;
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(ii)
execution of this Letter Agreement and issuance of the 46,000,000 common shares
of EKS upon the terms and subject to the conditions contained herein;
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(iii)
cancellation of all outstanding warrants, options or obligations to issue any
securities of EKS over and above a total of 44,000,000 common shares
issued or to be issued. However, while included in the 44,000,000 share total,
the two outstanding options for 3,500,000 shares may be exercised up to 30 days
after closing otherwise they will expire; and
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(iv)
appointment of Atlas Stock Transfer Corporation, Salt Lake City, Utah, as
transfer agent for all of the shares of capital stock of EKS;
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C.
The closing (the “Closing”) shall take place upon such date (the
“Closing Date”) as the parties hereto may mutually agree upon, but
shall be no later than June 27, 2000. The Closing shall take place at the
offices of Ballon, Stoll, Bader & Nadler, P.C., 1450 Broadway, New York, New
York 10018-2268, or at such place in New York, New York as may be mutually
agreed upon by the parties. At the Closing, the following will occur:
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(i)
EKS will deliver to Managers Shareholders certificates
representing 46,000,000 authorized and previously unissued shares of common
stock of EKS. The certificates shall contain the customary restrictive
legend and be issued in names of registered owners and in such denominations
requested by Managers Shareholders. The Acquisition EKS Shares
shall represent a majority of the total issued and outstanding equity interest
of EKS as of the date of Closing;
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(ii)
Managers Shareholders will deliver to EKS the certificates
representing fifteen percent (15%) of the outstanding equity interest of
Managers, duly endorsed (or with duly executed stock powers) so as to
make EKS the sole owner thereof free and clear of all claims and
encumbrances except as specifically assumed by EKS. Simultaneously, on
the Closing date, EKS will deliver the certificates representing the
Acquisition EKS Shares to Managers Shareholders;
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(iii)
EKS will deliver to Managers a certificate from the Department of
State of the Commonwealth of Pennsylvania dated not more than fifteen (15) days
prior to the date of Closing to the effect that EKS is in good standing
under the laws of the said Commonwealth;
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(iv)
EKS will deliver to Managers all corporate records of EKS,
including without limitation corporate minute books (which shall contain copies
of the Articles of Incorporation and By-Laws, as amended to the Closing), stock
books, stock transfer books, corporate seals, and such other corporate books and
records as may reasonably requested by the Managers Shareholders and
their counsel;
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(v) Managers will deliver to EKS a Certificate from the Secretary of State of Oklahoma
dated at or about the date of Closing that Sterling Media Capital Fund I, L.P. and Sterling
Media Investment Group, L.P. are each in good standing under the laws of said state;
(vi) Managers is now and, following the Closing, shall be the sole general partner of
Sterling Media Capital Fund I, L.P., and Sterling Media Investment Group, L.P., each of which is
an Oklahoma limited partnership (a copy of each Limited Partnership Agreement has been delivered
to representatives of EKS); and
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(vii)
The corporate financial records, minute books, and other documents and records
of EKS are to be available to Managers at the time of the Closing and
turned over to new management in their entirety at Closing. Such records are
complete and correct and have been maintained in accordance with good business
and accounting practices.
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D.
Immediately after the closing the existing Board of Directors of EKS will
resign and cause the designees of the holders of the newly issued Acquisition
EKS Shares to be elected to fill the vacancies created by the
resignations of the present EKS directors. The newly elected directors of
EKS will take the following corporate action:
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(i) cause EKS to:
(a) indemnify the former officers and directors against any liability,
cost or expense arising out of the Exchange Transaction; and
(b) provide piggy-back registration rights to the holders of restricted
securities issued upon exercise of conversion rights or options prior to the Closing;
(ii) authorize the payment of all reasonable attorneys' fees to Ballon, Stoll, Bader and
Nadler, P.C. that remain unpaid after the Closing;
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(iii)
amend the capitalization of EKS such that after the amendment a total of
17 million common shares are outstanding of which the present holders of
44,000,000 shares of Class A Common Stock own not less than 1,445,000 shares
(being 8.5% of the total) of common stock and the holders of the remaining
46,000,000 shares of Class A Common Stock and remaining outstanding equity
interest of Managers own 15,555,000 shares of new Common stock and 100%
of the equity interest of Managers is owned by EKS;
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(iv)
procure the prompt preparation and file with the Securities and Exchange
Commission appropriate notice describing this transaction on Form 8-K or other
applicable form, and otherwise comply with the provisions of the Securities
Exchange Act of 1934;
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(v)
procure the preparation of a disclosure statement containing the necessary
information to comply with Rule 15(c)2(11) promulgated by the Securities and
Exchange Commission pursuant to the Securities Exchange Act of 1934 and file
such forms with one or more firms who are members of the National Association of
Securities Dealers, Inc. (“NASD”) who make a market in the securities
of EKS;
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(vi)
as promptly as possible after the Exchange Transaction, prepare, file with the
Securities and Exchange Commission pursuant to the Exchange Act of 1934 and
distribute to Shareholders of EKS an information statement pursuant to
SEC Rule 14-F, and 10 days thereafter resign as directors of EKS (prior
to definitive action being taken regarding an information statement containing
the information specified in Schedule 14-C, which Managers agree will be
prepared, filed with the Securities and Exchange Commission and distributed to
Shareholders of EKS 20 days prior to any shareholder or corporate action
taken by EKS to acquire the balance of the shares of ownership interest
in Managers);
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(vii)
prepare and file with the Securities and Exchange Commission a Preliminary and
Definitive Schedule 14-C and 14-F as may be required within the time allowed,
together with an Information Statement for distribution to the shareholders of
EKS describing the amendment to the Articles of Incorporation, the
reincorporation as well as any other action to be taken by the shareholders at a
special meeting called for that purpose; and
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(viii)
apply to the Standard & Poor’s editorial board to approve the Company
for a full description in Standard & Poor’s Standard Corporation
Manual, Standard & Poor’s Daily News Section, coverage of the Company
as part of the S&P Market Access Program and coverage on Standard &
Poor’s Internet Site, www.advisorinsight.com, as well as S&P
Marketscope and the S&P Stock Guide database.
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3. Representations and Warranties of the Managers Shareholders
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A.
Subject to the shareholder’s written consent as set forth in Paragraph 2.A.
above, the record and beneficial owners of 100% of the shares of ownership
interest in Managers shall agree to the terms of this Letter Agreement
and authorize the undersigned representatives of Managers Shareholders to
execute this Letter Agreement and consummate the Exchange Transaction in
accordance with its terms.
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B.
The Managers Shareholders who will participate (in person or by written
proxy) in the Exchange Transaction shall be the record and beneficial owners of
100% of the equity interest of the Managers as of the date of Closing.
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C. Managers is the general partner and manager in good standing of Sterling Media Capital
Fund I, L.P., an Oklahoma limited partnership and Sterling Media Investment Group, L.P., an Oklahoma
limited partnership.
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D.
At the time of the Closing, except for this Agreement, there will be no
outstanding options, contracts, calls, commitments, agreements or demands of any
character relating to the equity ownership interest of the Managers.
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E.
The unaudited financial statements of the Managers as at May 31, 2000
have been delivered to representatives of EKS. The financial statements
of Managers as at May 31, 2000 shall be examined by independent auditors
and delivered by the Managers Shareholders to EKS prior to the
Closing. Based on internal preliminary unaudited financial statements, it is
estimated that Managers will have a net worth in excess of $2,000,000.
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F. The outstanding shares of ownership interest of Managers are validly issued, fully
paid and non-assessable.
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G.
Upon receipt of a written request to do so, the representatives of the
Managers Shareholders executing this Agreement shall cause to be
delivered to EKS prior to closing, copies of complete and accurate
records of all meetings, filings, and other corporate actions of the
shareholders and board of directors of Managers.
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H.
The execution and delivery of this Letter Agreement does not, and the
consummation of the transaction contemplated hereby will not, violate any
provision of the certificate/articles of formation or bylaws of Managers,
or any provisions thereof, or result in the acceleration of any obligation
under, any mortgage lien, lease, agreement, instrument, court order, arbitration
award, judgment or decree to which Managers is a party, or by which it is
bound, and will not violate any other restriction of any kind or character to
which it is subject.
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I.
To the best of the knowledge of the parties signing on behalf of the Managers
Shareholders (which parties constitute the management of Managers),
there are no material liabilities of Manager except as represented on the
unaudited and audited financial statements described in paragraph E of this
Section 3, whether accrued, absolute, contingent or otherwise, which arose or
relate to any transaction of Managers, its agents or servants occurring
prior to the statement date, which are not disclosed by or reflected in the
current reported financial statements. There are no such liabilities of
Managers which have arisen or relate to any transaction of
Managers, its agents or servants, occurring since the statement date,
other than normal liabilities incurred in the normal conduct of the business of
Managers, and none of which have a material adverse effect on the
business or financial condition of Managers. As of the date hereof, there
are no known circumstances, conditions, happenings, events or arrangements,
contractual or otherwise, which may hereafter give rise to liabilities, except
in the normal course of business of the Managers. The representations
made herein shall also be true and correct as of the date of Closing.
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J.
Managers is duly formed and validly existing and in good standing under
the laws of the State of Oklahoma and has all requisite power necessary to do
business in any jurisdiction wherein Managers conducts its business.
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4. Representations and Warranties of the EKS
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A.
EKS has, and at the Closing will have, authority to issue the Acquisition
EKS Shares, representing a majority interest in EKS, which are
being transferred hereunder to the Managers Shareholders.
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B. EKS shall be the record and beneficial owner of 100% of the ownership interests in the
Acquisition EKS Shares prior to Closing.
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C.
EKS is a Pennsylvania corporation whose shares are, and as of the date of
Closing, registered pursuant to Section 12 (G) of the Securities Exchange Act of
1934 and qualified for quotation on the NASD Electronic Bulletin Board operated
by the NASD.
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D.
At the time of the Closing, except for this Agreement, there will be no
outstanding options, contracts, calls, commitments, agreements or demands of any
character relating to the capital stock of EKS.
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E. The financial statements of EKS shall be current and in accordance with the routine
reporting status of the NASD Electronic Bulletin Board (current 10-K's, 10-Q's, etc.).
F. At the time of Closing, EKS shall be trading on the NASD Electronic Bulletin Board
with at least two market makers active and trading in EKS common stock.
G. The outstanding shares of EKS are and on the Closing Date will be, legally and validly
issued and non-assessable.
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H.
EKS shall deliver to the Managers Shareholders, at their written
request prior to closing, copies of complete and accurate records of all
meetings, filings, and other corporate actions of the shareholders and Board of
Directors of EKS.
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I.
The execution and delivery of this Letter Agreement does not, and the
consummation of the transaction contemplated hereby will not violate any
provision of the certificate/articles of incorporation or bylaws of EKS,
or any provisions thereof, or result in the acceleration of any obligation
under, any mortgage, lien lease, agreement, instrument, court order, arbitration
award, judgment or decree to which EKS is a party, or by which it is
bound, and will not violate any other restriction of any kind or character to
which it is subject.
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J.
EKS has the authority to issue one hundred million (100,000,000) shares
of capital stock, of which ninety million (90,000,000) are shares of Class A
common stock, no par value, and ten million (10,000,000) are shares of preferred
stock, no par value. At the date of Closing, including the Acquisition
EKS Shares to be issued hereunder, ninety million (90,000,000) shares of
Class A common stock and none of the preferred shares will be issued and
outstanding.
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K.
To the best of the knowledge of management of EKS, there are no material
liabilities of EKS, whether accrued, absolute, contingent or otherwise,
which arose or relate to any transaction of EKS, its agents or servants
occurring prior to the date of the financial statements included in
EKS’s Form 10-QSB for the quarterly period ended March 31, 2000
filed with the Securities and Exchange Commission (“Statement Date”),
which are not disclosed by or reflected in said financial statements, (i) except
an accrued tax liability of approximately $5,000 by a former subsidiary, and
(ii) except a note payable by EKS in the amount of $25,000 that is deemed
uncollectable because of the four year statute of limitations. There are no such
liabilities of EKS which have arisen or relate to any transaction of EKS,
its agents or servants, occurring since the Statement Date, other than
liabilities incurred in the ordinary conduct of the business of EKS
consistent with the prior conduct of its business, and none of which have a
material adverse effect on the business or financial condition of EKS. As
of the date hereof, there are no known circumstances, conditions, happenings,
events or arrangements, contractual or otherwise, which may hereafter give rise
to liabilities, except in the ordinary course of business of the EKS
consistent with the prior conduct of its business.
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L. The representations made herein shall also be true and correct as of the date of
Closing.
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M.
EKS is duly organized, validly existing and in good standing under the
laws of the Commonwealth of Pennsylvania and has all requisite power necessary
to do business in any jurisdiction wherein EKS conducts its business.
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5. Miscellaneous.
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A.
The EKS shares will be issued to the Managers Shareholders without
registration under the Securities Act of 1933 or the securities laws of any
state of the United States. Therefore, the EKS shares will be restricted
securities as defined in Rule 144 of the Securities Act of 1933, an appropriate
legend will be stamped on each certificate representing such shares and stop
orders will be issued to the transfer agent.
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B.
It is the intention of the parties hereto to cooperate with each other to raise
up to $3,000,000 in cash for EKS from the sale of certain debt and/or
equity securities of EKS, immediately after the Closing. However, there
is no assurance that the parties hereto will be successful is raising these. The
cooperative best efforts of the parties hereto to raise such funds shall
continue after Closing toward that end, such that as soon as is practicable the
total $3,000,000 in cash funds will be raised for the use and benefit of
EKS.
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C.
At any time, and from time to time, after the Closing, each party will execute
such additional instruments and take such action as may be reasonably requested
by the other party to confirm or perfect title to any property transferred
hereunder or otherwise to carry out the intent and purposes of this Agreement;
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D. Any failure on the part of any party hereto to comply with any of its obligations,
agreements or conditions hereunder may be waived in writing by the party to whom such compliance is owed.
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E.
All notices and other communications hereunder shall be in writing and shall be
deemed to have been given if delivered in person or sent by prepaid first class
registered or certified mail, return receipt requested to the following
addresses, or such other addresses as are given to other parties in the manner
set forth herein.
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EKS: Electro-Kinetic Systems, Inc.
525 Washington Blvd., Suite 3600
Jersey City, New Jersey 07310
Attn: Raymond L. Burke, President and CEO
Tel: (201) 216-0100
Fax: (201) 216-1105
With a copy to: Ballon, Stoll, Bader and Nadler, P.C.
1450 Broadway
New York, New York 10018-2268
Attn: Robert M. Shepard, Esq.
Tel: (212) 575-7900
Fax: (212) 764-5060
Managers: Sterling Media Fund Managers, L.L.C.
7136 S. Yale Avenue, Suite 300
Tulsa, Oklahoma 74136
Attn: Dwight L. Pierce, President and CEO
Tel: (972) 248-1601
Fax: (972) 248-4815
With a copy to: Robert L. Sonfield, Jr., Esq.
Sonfield and Sonfield
770 South Post Oak Lane, Suite 435
Houston, Texas 77056-1913
Tel: (713) 877-8333
Fax: (713 877-1547
F. The section and subsection headings in this Agreement are inserted for convenience and
shall not affect in any way the meaning or interpretation of this Agreement.
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G.
This Agreement may be executed simultaneously in two or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument. A facsimile signature by any party on a counterpart
of this Agreement shall be binding and effective for all purposes. Such party
shall, however, subsequently deliver to the other party an original executed
copy of this Agreement.
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H.
The commitment of EKS to consummate the transaction contemplated hereby
(the “Sterling Transaction”) is intended to be binding. However, the
parties acknowledge that the steps outlined in this letter are based on a very
preliminary analysis of the extant facts and applicable legal requirements
presented hereby. Accordingly, the parties agree as follows:
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(i)
in the event that a third party offers to enter into a transaction with EKS
(“Alternative Transaction”) which would be significantly more
attractive to the EKS shareholders than the Sterling Transaction, which
the directors of EKS determine that they have a fiduciary duty to pursue,
EKS may terminate this letter. In the event of a termination as the
result of such determination, EKS shall be required, at the effective
date of the Alternative Transaction, to pay a break-up fee of $350,000 in cash
to Sterling as a contribution to its expenses; provided, however, that such
break-up fee shall be required to be paid only if this letter is terminated
because an Alternative Transaction is presented, a letter of intent regarding
the Alternative Transaction is presented, a letter of intent regarding the
Alternative Transaction is executed within three months of the date hereof and
the Alternative Transaction is consummated within one year thereafter;
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(ii)
in the event that prior to consummation of an Alternative Transaction, either
party (“Injured Party”) becomes aware of the facts not previously
known to such party as a result of which the Sterling Transaction becomes
significantly less attractive to the Injured Party or its security holders than
contemplated hereby, the parties shall negotiate in good faith to adjust the
terms of this Agreement to accommodate such new state of facts, but if such
adjustment proves not to be feasible, the Injured Party shall have the right to
terminate this Agreement without liability of either party to the other; and
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(iii)
in the event that any requirement of law applicable to the Sterling Transaction
is identified which requires action not contemplated by this Agreement, the
parties will negotiate in good faith to adjust the terms of this Agreement to
accommodate such requirement with a view to either (a) complying with such
requirement, or (b) if such compliance is deemed by the parties hereto not to be
feasible within the time and expense constraints of the Sterling Transaction, to
terminate this Agreement without liability of either party to the other, it
being agreed that any action required to be authorized or taken before either
(x) control of EKS changes hands, or (y) the present directors of
EKS (“Present Directors”) are replaced by new directors in
compliance with applicable law, shall be taken by the Present Directors only
after they are satisfied in their reasonable discretion that such action meets
all requirements of law.
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I. This Agreement shall be governed by the laws of New York.
J. This Agreement shall be binding upon the parties hereto and inure to the benefit of
the parties, their respective heirs, administrators, executors, successors and assigns.
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K.
This Agreement is the entire agreement of the parties covering everything agreed
upon or understood in the transaction. There are no oral promises, conditions,
representations, understandings, interpretations or terms of any kind as
conditions or inducements to the execution hereof.
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L. Time is of the essence.
M. If any part of this Agreement is determined by a court of competent jurisdiction to be
unenforceable, the balance of the Agreement shall remain in full force and effect.
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N.
In the event any party hereto has to resort to legal action to enforce any of
the terms hereof, such party shall be entitled to collect attorneys’ fees
and other costs from the party in default.
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If the foregoing
terms are acceptable, please acknowledge your acceptance by signing below in the
space indicated and forwarding an executed copy of this Letter Agreement by
facsimile transmission to the undersigned on or before 5:00 P.M. (CDST), June 7,
2000.
Sincerely,
/s/Raymond L. Burke
__________
Raymond L. Burke, President
President and CEO
Electro-Kinetic Systems, Inc.
Fax. No. (201) 216-1105
AGREED and ACCEPTED this 6th day of June, 2000:
STERLING MEDIA FUND MANAGERS, L.L.C. and Managers Shareholders
By: _/s/Dwight L. Pierce_______________ By: _/s/David Annin______________________
-------------------- --------------- -
Mr. Dwight L. Pierce Mr. David Annin
President/CEO Vice President of Administration
Sterling Media Fund Managers, L.L.C. Sterling Media Fund Managers, L.L.C.
General Partner General Partner
Sterling Media Capital Fund I, L.P. Sterling Media Capital Fund I, L.P.
Sterling Media Investment Group, L.P. Sterling Media Investment Group, L.P.
EXHIBIT B
PRESS RELEASE
ELECTRO-KINETIC SYSTEMS, INC.
525 Washington Blvd., Ste. 3600, Jersey City, New
Jersey 07310Telephone
(201) 216-0100 - Facsimile (201) 216-1105
Contact: Raymond L. Burke, President & CEO
ELECTRO-KINETIC SYSTEMS TO ACQUIRE STERLING MEDIA
ENTERS GROWING MEDIA/COMMUNICATIONS
AND FINANCIAL INDUSTRIES
JERSEY CITY, New
Jersey - June 8, 2000 – Electro-Kinetic Systems, Inc. (OTC BB: EKSIA.OB)
(“Electro-Kinetic”) announced today that it has entered into a Letter
Agreement with Sterling Media Fund Managers, L.L.C. dba Sterling Media Capital
Group (“Sterling”). Sterling is a privately-held asset management
group operating in the media/communications and financial services industries.
Upon completion of both steps of a two-step acquisition, the stockholders of
Sterling will own approximately 91.5% of the equity and voting rights of
Electro-Kinetic, which will change its name to Sterling Media Capital Group,
Inc.
Under the Letter
Agreement, following the first step of the acquisition, Dwight L. Pierce,
President and Chief Executive Officer of Sterling will be appointed President,
CEO and a director of Electro-Kinetic. Raymond L. Burke will resign from these
positions with the parent company upon Mr. Pierce’s appointment. Mr. Pierce
intends to appoint Gilbert F. Amelio as Chairman of the Board and Director, Paul
Nussbaum as Vice Chairman of the Board of Directors, David Annin as Vice
President, Secretary, Treasurer and Director and Bob L. McGiboney as Executive
Vice President and Director.
“I am
excited about the prospects of this new business,” commented Raymond L.
Burke, President & CEO of Electro-Kinetics. “Sterling has a vision of
creating new financial services for the “new economy”. Sterling also
has the distinction of being one of the first financial service entities in the
world to convert under utilized media and internet properties into investment
capital.”
The
Acquisition. The acquisition is expected to be completed in two steps. The
first step on or about July 3, 2000 by the issuance of 46,000,000 (a majority)
of the common stock to the shareholders of Sterling in exchange for
approximately 15% of the equity interests of Sterling. The parent company will
then change its name to Sterling Media Capital Group, Inc. The second step will
be completed thereafter by acquisition of the remaining 85% of Sterling. After
completion of the second step of the acquisition process, Sterling will be a
wholly-owned subsidiary of Electro-Kinetics and the present stockholders of
Sterling will own approximately 91.5% of the outstanding equity interest and
voting rights of the parent company. The first step of the acquisition will not
require approval of stockholders of Electro-Kinetics. The Letter Agreement
states that the estimates net worth of Sterling will be in excess of $2,000,000.
It is expected
that following completion of the acquisition, the stockholders of
Electro-Kinetics will be presented a proposal to “reverse-split” the
outstanding shares of common stock and amend the Articles of Incorporation to
increase the number of shares of common stock Electro-Kinetics is authorized to
issue. If the “reverse-split” is approved and the amendment to the
Articles is authorized, upon completion of the acquisition, there will be
approximately 17,000,000 outstanding common shares. Approximately 15,555,000
common shares (91.5%) will be held by the present Sterling stockholders and
approximately 1,445,000 common shares (8.5%) will be held by the present
Electro-Kinetic stockholders.
About
Sterling. Sterling currently manages a pool of non-cash assets with a total
net value, based on third party appraisals, of approximately $500,000,000. This
asset pool is expected to double over the next twelve months by the addition of
two new asset based investment programs coming under the management of Sterling.
Sterling uses the assets under its management to raise investment capital, which
it, in turn, invests in emerging growth companies as venture capital. The assets
managed now and presumably in the future by Sterling provide a “profits
interest” to Sterling in concert with other third parties.
Sterling’s
executive office is in Tulsa, Oklahoma with its administrative offices in
Dallas, Texas. Sterling presently has 10 employees, most of whom are
shareholders.
Except for
historical information, all of the statements, expectations and assumptions
contained in the foregoing are forward-looking statements. The realization of
any or all of these expectations is subject to a number of risks and
uncertainties and it is possible that the assumptions made by management may not
materialize.
