SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from........................to........................
Commission File Number 2 - 85175W
STERLING MEDIA CAPITAL GROUP, INC. (formerly Electro Kinetic Systems, Inc.)
(Exact name of registrant as specified in its charter)
PENNSYLVANIA 22-1954716
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7136 S. YALE AVE. SUITE 300
TULSA, OKLAHOMA 74136-6381
(Address of Principal executive offices)(Zip Code)
(918) 524-3715
(Registrant's telephone number, including area code)
Electro Kinetic Systems, Inc.
525 Washington Blvd, 36th Floor, Jersey City, N.J. 07910
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes No X
1
2 STERLING MEDIA CAPITAL GROUP, INC. AND SUBSIDIARIES
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS :
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Sections 12, 13 or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution of securities
under a plan confirmed by a court.
Yes No
APPLICABLE ONLY TO CORPORATE ISSUERS:
The number of shares of registrant's Common Stock outstanding as of June 30, 2000, is
31,362,369 shares.
INDEX
PART I. FINANCIAL INFORMATION 3
ITEM 1. FINANCIAL STATEMENTS 3
Consolidated Balance Sheets as of June 30 2000 (Unaudited) and
December 31, 1999 F-1 3
Consolidated Statement of Operations for the Three Months Ended March 31, 2000
and 1999 and Six Months Ended June 30, 2000 and 1999 (Unaudited) F-2 4
Consolidated Statements of Changes in Stockholders' Equity (Deficiency) for the
Six Months Ended June 30, 2000 and Year Ended December 31, 1999 F-3 4
Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2000
and 1999 (Unaudited) F-4 5
Notes to Consolidated Financial Statements F-5. 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS 7
PART II. OTHER INFORMATION 8
SIGNATURES. 11
2
3 STERLING MEDIA CAPITAL GROUP, INC. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
STERLING MEDIA CAPITAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
as of June 30, 2000 and December 31, 1999
ASSETS
(unaudited)
CURRENT ASSETS: $6,182 $611
Cash 0 2,000
- -----
Receivable $6,182 $2,611
====== ======
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
CURRENT LIABILITIES
Accounts Payable $11,345 $22,176
Total Current Liabilities 11,345 22,176
------ ------
NOTES PAYABLE 35,000 0
====== =
STOCKHOLDERS' EQUITY (DEFICIENCY)
Class A common shares, no par value authorized - 3,464,452 3,452,521
90,000,000
shares; issued 31,362,369 in 2000 and 31,287,369 in
1999
Additional paid-in capital 97,043 52,293
Accumulated deficit (3,601,658) (3,524,379)
----------- -----------
Total Stockholders' Equity (deficiency) (40,163) (19,565)
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
$6,182 $2,611
====== ======
See accompanying notes to consolidated financial statements.
F-1
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4 STERLING MEDIA CAPITAL GROUP, INC. AND SUBSIDIARIES
STERLING MEDIA CAPITAL GROUP, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
for the Three Months and Six Months Ended June 30, 2000 and 1999
Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
---- ---- ---- ----
Selling, general and administrative expenses $15,827 $7,276 $32,334 $13,275
------- ------ ------- -------
Other income (expenses)
Interest expense (44,945)
Cancellation of accrued interest 2,100
Cancellation of Indebtedness 40,528 40,528
------ ------
42,628 (44,945) 40,528
------ -------- ------
Net income (loss) for the period $(15,827) $35,352 $(77,279) $27,253
========= ======= ========= =======
Income/(Loss) per share - Basic and Diluted (.0005) .001 (.002) .001
Average number of common shares outstanding 31,325,076 30,166,069 31,325,076 30,166,069
See accompanying notes to consolidated financial statements.
F-2
STERLING MEDIA CAPITAL GROUP, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)
for the year ended December 31, 1999 and the six months ended June 30, 2000
Class A Common Stock
Additional Accumulated Total
Shares Amount Paid-in Deficit
Capital
----------- ---------- --------------- ------------- ----------
----------- ---------- --------------- ------------- ----------
Year ended December 31, 1999:
Balance, beginning of year 30,166,069 $3,441,308 $52,293 $(3,660,673) $(167,072)
Debt settled for stock 1,121,3000 11,213 11,213
Net income 136,294 136,294
----------- ---------- --------------- ------------- ----------
----------- ---------- --------------- ------------- ----------
Balance, end of year 31,287,369 3,452,521 52,293 (3,524,379) (19,565)
Six months ended June 30, 2000:
Imputed interest on
Convertible 44,750 44,750
notes payable
Debt settled for stock 75,000 11,931 11,931
Net Loss (77,279( (77,279)
----------- ---------- --------------- ------------- ----------
----------- ---------- --------------- ------------- ----------
Balance, end of period 31,362,369 $3,464,445 $97,043 $(3,601,658) $(40,163)
========== ========== ======= ============ =========
See accompanying notes to consolidated financial statements.
F-3
STERLING MEDIA CAPITAL GROUP, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
for the six months ended June 30, 2000 and 1999
Six Months Ended June 30,
2000 1999
------------- -------------
------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $(77,279) $27,253
--------- -------
Adjustments to reconcile net loss to net cash used in operating
activities:
Imputed interested on notes payable 44,750
Stock issued for legal fees 5,000
Change in assets and liabilities:
Accounts receivable 2,000
Accounts payable and accrued expenses (3,900) (10,316)
Officer's loans payable (15,700)
Notes payable (35,828)
Reserve for contingencies 20,000
------------- -------------
------------- -------------
47,850 (41,844)
------------- -------------
------------- -------------
Net cash used in operating activities (29,429) 14,951
------------- -------------
------------- -------------
Cash flows from financing activities:
Liabilities settled for stock 10,712
Proceeds from notes payable 35,000
------------- -------------
------------- -------------
Net cash flows from financing activities 35,000 10,712
------------- -------------
------------- -------------
Net increase (decrease) in cash 5,571 (3,879)
Cash, Beginning of period 611 4,065
------------- -------------
------------- -------------
Cash, End of period $6,182 $186
====== ====
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6 STERLING MEDIA CAPITAL GROUP, INC. AND SUBSIDIARIES
See accompanying notes to consolidated financial statements.
F-4
STERLING MEDIA CAPITAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1- BASIS OF PRESENTATION:
The consolidated balance sheet at December 31, 1999 has been derived from the audited
consolidated balance sheet contained in the Company's Form 10-KSB, which became effective on
March 31, 2000 and is presented for comparative purposes. All other financial statements are
unaudited. In the opinion of management, all adjustments which include only normal recurring
adjustments necessary to present fairly the financial position, results of operations and cash
flows for all periods presented have been made. The results of operations for interim periods
are not necessarily indicative of the operating results for the full year.
Footnote disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been omitted in accordance with the
published rules and regulations of the Securities and Exchange Commission. These consolidated
financial statements should be read in conjunction with the financial statements and notes
thereto included in the Company's Form 10-KSB for the most recent fiscal year.
GOING CONCERN - The Company has a history of continuing operating losses and failure in
its ability to exploit various opportunities it has pursued. While its financial position has
improved marginally as a result of its recent financing of $35,000 in the form of two-year
convertible notes, the Company has a negative net worth and no operations to provide capital.
The auditors, in their annual report for the year ended December 31, 1999, expressed doubt
about the Company's ability to continue as a going concern. As of the filing date of this
report, the Company has successfully completed a reverse merger, as described in Note 2, below.
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7 STERLING MEDIA CAPITAL GROUP, INC. AND SUBSIDIARIES
NOTE 2 - SUBSEQUENT EVENTS:
Effective July 7, 2000, the Company acquired Sterling Media Fund Managers LLC ("SMFM") , an
Oklahoma Limited Liability Company resulting in SMFM becoming a wholly owned subsidiary of EKS.
Immediately after the acquisition, EKS changed its name to Sterling Media Capital Group, Inc.
("SMCG"). After the transaction was completed, the former members of SMFM own approximately
91.5% of the equity and voting rights of EKS and the former stockholders of EKS own the
remaining 8.5%. The acquisition will be accounted for as a purchase of EKS by SMFM.
It is currently contemplated that the shareholders of SMCG will authorize a "reverse-split" to
reduce the number of SMCG shares authorized to 17,000,000 shares. After conversion of SMFM
Convertible Note Holders, SMFM Option Holders and others, as discussed below, SMCG will have
17,000,000 shares of common stock issued and outstanding with 15,555,000 of these shares,
(91.5%), held by the old shareholders of SMFM and 1,445,000 shares will be held by the old
shareholders of EKS.
Current SMFM members will own 13,121,111 shares of SMCG common stock after the exchange and
"reverse-split". It is anticipated that the SMFM Convertible Note Holders will exercise their
conversion features and receive, in aggregate, 1,155,736 shares of SMCG common stock after the
exchange and "reverse-split". It is anticipated that the SMFM Option Holders will exercise
their options and receive, in aggregate, 1,162,930 shares of SMCG common stock after the
exchange and "reverse-split". Other SMFM account payable holders will receive 115,223 shares
of SMCG common in extinguishment of their amounts due. EKS convertible note holders are
expected to convert their notes into approximately 229,900 shares of SMCG common stock after
the "reverse-split".
NOTE 3 - IMPUTED INTEREST ON CONVERTIBLE DEBT
The Company borrowed $35,000 during the first two quarters of 2000 under two year, 6% notes,
convertible into 7,000,000 common shares. The accounting requirement is to value the conversion
factor as interest computed by the difference between the average bid and ask price of the
common stock (.0135) and the conversion price (.005) times the number of shares (7,000,000) to
which the loan can be converted. This calculation has no effect on stockholders' equity
(deficiency) since the expense charged to earnings is offset by a corresponding increase in
paid-in capital.
F-5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The following discussion should be read in conjunction with the selected financial data
and the financial statements appearing elsewhere in this report.
GENERAL
Electro-Kinetic Systems, Inc. [EKS or the Company] was formed on April 24, 1972, under the
laws of the State of Pennsylvania. Its corporate office was located in Jersey City, New Jersey.
As of the filing date of this report, the corporate offices have been relocated to Tulsa,
Oklahoma. The consolidated financial statements include the accounts of Electro-
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8 STERLING MEDIA CAPITAL GROUP, INC. AND SUBSIDIARIES
Kinetic Systems, Inc. and its wholly owned subsidiaries. Because the acquisition of SMFM was
after the report date of this report, SMFM's accounts are not included in the consolidated
financial statements. Pro forma financial statements showing combined accounts were presented
with the Company's Form 8-K (and Form 8-K/A) which have been previously filed.
RESULTS OF OPERATIONS
The Company ceased its laboratory operations in March 1995 and failed in its subsequent efforts
for profit education (1996), magazine publishing (1996), visual communication technology
(1997), marketing of computer decision models (1997 and 1998), and desktop publishing and
printing (1995-98).
The Company had no operations in 1999 and 2000, to date. The Company's 50% owned unconsolidated
affiliate, Printone Media Inc., ceased operations in 1998. As a result of the acquisition of
Israel Investment Technologies, Inc. and two affiliates, in September 1995, the Company
acquired certain preliminary designs for developments of computer models in the fields of
medical compliance and electronic book publishing. The Company has been unsuccessful in its
efforts to exploit these developments.
The Company's loss for the first two quarters was ($77,279) in 2000 compared to a profit of
$27,253 for 1999. The change was due primarily as a result of increases in interest expense of
approximately $45,000 and the absence of cancellation of indebtedness income that occurred in
1999.
LIQUIDITY AND CAPITAL RESOURCES
Working capital increased from ($19,565) as of December 31, 1999 to ($5,163) as of June 30
2000. New directors and officers were elected (with the exception of one carryover member) in
January 2000, who negotiated loans in the amount of $35,000, due in two years with an interest
rate of 6%, convertible into common shares of the Company as detailed above.
Shareholders' equity declined from ($19,565) to ($40,163), as a result of an operating loss of
$(77,279) offset by $44,750 of imputed value of the debt conversion feature and by the issuance
of 75,000 shares of stock in partial payment of indebtedness valued at $11,931. (The debt for
which stock was issued and settled.)
The Company's losses during the past years have been funded by the sale of its common stock, by
loans from shareholders, and by the disposal of a subsidiary. For the Company to become a
viable entity, it must continue to raise sufficient capital to fund its plans. The Company has
successfully completed a merger, as described in the footnotes to the financial information,
above, and in Other Items # 5, below. The business combination provided the Company much needed
capital (see form 8-K and amended form 8-K); however SMCG will continue to seek sources of
liquidity.
PART II - OTHER INFORMATION
ITEM 1: LEGAL PROCEEDINGS
NONE
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9 STERLING MEDIA CAPITAL GROUP, INC. AND SUBSIDIARIES
ITEM 2: CHANGES IN SECURITIES
There have been no instruments defining the rights of any holder of any class of any registered
security which has been materially modified.
ITEM 3: DEFAULTS UPON SENIOR SECURITIES
NONE
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
NONE
ITEM 5: OTHER INFORMATION
BUSINESS COMBINATION
Business combination - Electro Kinetic Systems, Inc. entered into an agreement with Sterling
Media Fund Managers, Inc. on June 7, 2000 to acquire all of the outstanding stock of SMFM in
exchange for 91.5% of EKS. The exchange was consummated on July 7, 2000. These transactions
were previously reported in filings 8-K, dated June, 7, 2000 and filed June 14, 2000; 14F1,
filed June 21, 2000; and 8-K, dated July 7, 2000 and filed July 24, 2000, and 8-K/A, filed July
28, 2000.
CONSULTING AGREEMENT(S)
The company has entered into a consulting agreement with DDC/Telesis Realty Group of Texas,
Inc., in which DDC/Telesis will provide assistance in developing the Company's business
operations and strategic planning primarily for activities in the U.S. and selected foreign
countries. DDC/Telesis has significant expertise in financial and strategic planning matters.
The contract is effective as of August 15, 2000 and provides for an initial term of three
years. A copy of the contract, and related Disclosure of Consulting Arrangement is provided
below in Exhibit 10.
DISCLOSURE OF CONSULTING ARRANGEMENTS
Since its inception in April 1999, Sterling Media Fund Managers, L.L.C. ("SMFM", a
newly acquired subsidiary of the Company) has engaged a consulting firm, DDC/Telesis Realty
Group of Texas, Inc. ("DDC") to advise and assist management and the board of directors of
SMFM. In conjunction with that consulting arrangement, certain officers of DDC were founding
shareholders of SMFM. From inception, under that consulting arrangement, DDC had no authority
at any time to bind SMFM.
Pursuant to that consulting arrangement, several of the officers of DDC have been
active in performing DDC's consulting activities to SMFM. Among those officers is Don R.
Dixon, 61, who owned and operated several companies that have been actively involved in the
corporate finance and real estate industries for over 38 years, based in Dallas, Texas and
southern California. From 1981 to 1986 Mr. Dixon was active in the savings and loan industry
as a principal of a Texas savings and loan company. In 1991, Mr. Dixon was convicted in a
criminal proceeding in the United States District Court in the Northern District of Texas for
acts he committed in 1985 and 1986 while he was chief executive officer, a director and
principal shareholder of Dondi Financial Corporation, a savings and loan holding company that
9
10 STERLING MEDIA CAPITAL GROUP, INC. AND SUBSIDIARIES
owned over 90% of the capital stock of Vernon Savings and Loan Association ("Vernon"). Mr.
Dixon was sentenced to five years imprisonment and ordered to pay restitution for conspiracy to
misapply funds and to make false entries and statements with intent to defraud, for
misapplication of funds belonging to Vernon, for making false entries in the records of a
subsidiary of Vernon, and for using a facility in interstate commerce to facilitate the
promotion of prostitution. In 1993, Mr. Dixon entered into a plea agreement in a criminal
proceeding in the same court for acts he committed in 1983 through 1986. Mr. Dixon was
sentenced to four years imprisonment for conspiracy to defraud and obtain monies from a
financial institution, for bank fraud and aiding and abetting a fraud, and for misapplication
of funds in connection with the use of jet aircraft owned or leased by or on behalf of Vernon.
Mr. Dixon's sentences were served concurrently, and he is presently on probation through August
2000.
The Board of Directors of the Company carefully considered these issues, and concluded
that they represent past conduct that is fully settled. Notwithstanding these issues, the
Board of Directors believes that Mr. Dixon will be able to make a significant contribution to
the Company through his arm's-length consulting relationship with the Company as an officer of
DDC.
Therefore, the Company has recently entered into a written consulting agreement (a copy
of which is included as an exhibit to this filing) with DDC that expressly limits DDC to
consulting services with no authority to act, bind, or otherwise officially represent the
Company.
ITEM 6: EXHIBITS AND REPORTS OF FORM 8-K
(a) Exhibits required by Item 601 of Regulation SB.
Exhibit No. Description
--------------
----------------------------------------------------------
10 Consulting contract between the Companyand
DDC/Telesis Realty Group of
Texas, Inc.
(b) Reports on Form 8-K
The Company filed form 8-K on July 24, 2000 reporting the above described business combination.
The Company filed an amended 8-K/A on July 28, 2000 providing all necessary financial
information incident to the business combination.
10
11 STERLING MEDIA CAPITAL GROUP, INC. AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized:
Date: August 15, 2000 STERLING MEDIA CAPITAL GROUP, INC.
---------------------
By: /s/ DWIGHT L. PIERCE
------------------------------
DWIGHT L. PIERCE, President
Pursuant to the requirements of the Securities and Exchange Act of 1934, this report has been
signed below by the following person(s) on behalf of the Registrant and the capacities
indicated and on the dates indicated.
SIGNATURE CAPACITY DATED
/s/ DWIGHT L. PIERCE August
15, 2000
---------------------------
----------------------
DWIGHT L. PIERCE President and CEO;
Director
/s/ DAVID C. ANNIN August 15, 2000
---------------------------
---------------------
DAVID C. ANNIN Vice-President and Treasurer;
Director
(Chief Accounting Officer)
THE REST OF THIS PAGE INTENTIONALLY LEFT BLANK
11
EX-10 STERLING MEDIA CAPITAL GROUP, INC. AND SUBSIDIARIES
1
EXHIBIT INDEX
Exhibit No. Description
--------------
---------------------------------------------------------------------
10 Consulting contract between the Company and DDC/Telesis Realty
Group of Texas,
Inc.
EX-10 - MATERIAL CONTRACTS ENTERED INTO BY COMPANY
This consulting agreement (the "Agreement") is entered into effective this 15th day of August
2000 by and between Sterling Media Capital Group, Inc. and its subsidiaries and affiliated
partnerships (collectively the "Company"), and DDC/Telesis Realty Group of Texas, Inc. and its
principal employees (collectively the "Consultant").
For and in consideration of the mutual covenants contained herein and of the mutual benefits to
be derived hereunder, the parties agree as follows:
1. Services. Consultant is hereby retained by the Company to serve as an independent
---------
consultant to provide advice and services to the Company in connection with developing its
business operations and strategic planning primarily for activities in the U.S. and selected
foreign countries. In general, the Consultant will assist the Company in finding business
opportunities in real estate, equity investments, and other business and joint venture
arrangements with domestic and foreign companies where economic benefits can be recognized. On
behalf of the Company, the Consultant will assist in and/or undertake the negotiation of
various business opportunities and Company agrees to finance and/or undertake these business
opportunities when mutually agreed upon by all parties thereto, subject to the final approval
of the Company's Executive Committee and/or its board of directors. In addition, Consultant
shall serve as a general advisor to the Company's board of directors in such matters as the
board determines, and may from time to time reasonably request, including without limitations,
advice and service with respect to those matters as to which Consultant has special competence
by reason of its principals' experience, knowledge, and abilities. Consultant will make its
principal employees available at reasonable times to perform all services reasonably requested
by the Company. Consultant further agrees to use Company's legal, accounting, banking, and
financing facilities to conduct all business where Company is or may be involved.
2. Limitation on Scope of Services. In connection with the Consultant's role with
--------------------------------
respect to potential projects for business, Consultant is specifically prohibited from making
financial commitments obligating the Company without prior approval of its CEO, its Executive
Committee, and/or its board of directors. Except as otherwise set forth herein, the
Consultant shall have no authority to act, bind, or otherwise officially represent the Company.
3. Term. The term of this Agreement shall commence on the effective date of this
-----
Agreement and continue for three (3) years thereafter. Neither party may terminate this
Agreement prior to the end of the term set forth herein without "cause". Cause shall be
defined herein as actions taken by one of the parties hereto that results in adverse effects to
the other party, where such actions represent fraud, theft, gross misrepresentation, gross
negligence, or bad faith against the other party.
4. Compensation. The Consultant's compensation program for services shall be
-------------
determined by mutual consent of the Consultant and the Compensation Committee of the Company's
board of directors, to be determined and set forth in writing within thirty (30) days following
the effective date of this Agreement (and shall be retroactive to the effective date
EX-10 1
EX-10 STERLING MEDIA CAPITAL GROUP, INC. AND SUBSIDIARIES
2
of this Agreement). Once developed and approved as outlined herein, the Consultant's
compensation program shall be approved in writing by all parties hereto and attached hereto as
Exhibit "A", which shall then become an integral part of this Agreement by reference hereto.
The Consultant's compensation program shall definitively set forth in writing the agreement
between the Consultant and the Company regarding monthly consulting fees, quarterly and/or
annual incentive management fees payable in cash to the Consultant, and reimbursement by the
Company in cash of all reasonable expenses incurred by Consultant on behalf of the Company,
and reasonable benefits available to the Consultant, including but not limited to health
insurance, automobile expenses, the provision of office space, office expenses, and access to
Company staff personnel for services.
5. Independent Contractor. Consultant is retained under the terms of this Agreement
----------------------
as an independent contractor and nothing herein shall be construed as creating an
employer/employee relationship between the parties. Consultant shall be solely liable for the
payment of any taxes imposed or arising out of the payment of the compensation to it by the
Company.
6. Specific Situations. While retained by the Company, Consultant agrees that it will
-------------------
not make any statement or perform any act intended in any way that will or may injure an
interest in the Company in its relationships and dealings with existing or potential clients or
do any act that would be disloyal to the Company or in violation of any provision of this
Agreement.
7. Proprietary Rights. With respect to and except as otherwise agreed in writing by the
-------------------
Parties, each Party will exclusively own any proprietary rights in and to all work products and
other data pertaining to any discoveries, inventions, patent rights, copyright rights and the
like (collectively, "Intellectual Property Rights") that are independently developed by such
Party. This Agreement does not grant to any Party any rights in, or license to, any present or
future Intellectual Property Rights. Neither Party will be prevented from using ideas,
concepts, expressions, know-how, skills and experience possessed by it prior to, or
independently developed with or without the use of the other Party's information and any
information learned by it in the course of, performance of its obligations under this
Agreement. This provision will not, however, be deemed to be a license under any valid U.S.
patent.
8. Nondisclosure of Information. Consultant agrees that, except under written mandate
----------------------------
from a court of competent jurisdiction or authorized government agency, during the term of this
Agreement, Consultant will not, directly or indirectly, disclose to any person not affiliated
with or authorized by the Company to receive or use such information, any of the Company's
confidential proprietary data, information, techniques, or give to any person not authorized by
the Company to receive it or any information that is not generally known to anyone other than
the Company or that is designated by the Company as "limited", "private", "confidential", or
otherwise marked to indicate its confidential nature.
9. Assignment. This Agreement may not be assigned by either party without the prior
-----------
written consent of the other party.
10. Entire Agreement. This Agreement between the parties shall be considered the only
-----------------
agreement or understanding between the parties hereto with respect to the advice and consulting
services to be provided by Consultant to the Company. This Agreement cannot be modified except
by a written document signed by the party to be charged therewith.
Governing Law. This Agreement shall be governed by and interpreted in accordance with
--------------
the laws of the State of Texas.
EX-10 2
EX-10 STERLING MEDIA CAPITAL GROUP, INC. AND SUBSIDIARIES
3
AGREED AND APPROVED THIS 15th DAY OF AUGUST, 2000 BY:
----
STERLING MEDIA CAPITAL GROUP, INC.
"COMPANY"
/s/ Dwight L. Pierce /s/ David C. Annin
-------------------------------------- ---------------------------------------
Dwight L. Pierce, President David C. Annin, Vice President and Secretary
DDC/TELESIS REALTY GROUP OF TEXAS, INC.
"CONSULTANT"
/s/ Don R. Dixon
---------------------------------------
Don R. Dixon, Vice President
EX-10 3
