<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
---
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1999
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-29804
LINK.COM, INC.
(Exact name of registrant as specified in its charter)
NEVADA
(State or other jurisdiction of
incorporation or organization)
82-0255758
(I.R.S. Employer
Identification Number)
201 EAST MAIN STREET, BRADY, TEXAS 78625
(Address of principal executive offices)
Registrant's telephone number, including area code: (915) 792-8400
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $.001 PAR VALUE
(Title of class)
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 Registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes No X
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-B is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Report on Form 10-KSB or any
amendment to this Report on Form 10-KSB.
---
The issuer's revenues for its most recent fiscal year ended
December 31, 1999 were $192,708.
The aggregate market value of the voting stock (which consists solely of
shares of Common Stock) held by non-affiliates of the Registrant as of March 9,
2000 (based upon the average bid and asked price) was $287,757.
Issuers involved in Bankruptcy Proceedings During the Past Five Years. Not
Applicable.
The number of shares of the issuer's Common Stock, par value $.001 per
share, outstanding as of April 10, 2000 was 11,111,111, of which 722,214 shares
were held by non-affiliates.
Documents Incorporated by Reference. None.
Transitional Small Business Issuer Format. Yes No X
--- ---
<PAGE> 2
RISK FACTORS
Some of the information in this Report on Form 10-KSB contains
forward-looking statements that involve substantial risks and uncertainties. You
can identify these statements by forward-looking words such as "may," "will,"
"expect," "anticipate," "believe," "estimate," and "continue" or similar words.
You should read statements that contain these words carefully because they (1)
discuss our future expectations; (2) contain projections of our future results
of operation or of our future financial condition; or (3) state other
"forward-looking" information. We believe it is important to communicate our
expectations to people that may be interested. However, unexpected events may
arise in the future that we are not able to predict or control. The risk factors
that we describe in this section, as well as any other cautionary language in
this Report on Form 10-KSB, give examples of the types of uncertainties that may
cause our actual performance to differ materially from the expectations we
describe in our forward-looking statements. You should know that if the events
described in this section and elsewhere in this Report on Form 10-KSB occur,
they could have a material adverse effect on our business, operating results and
financial condition.
RISKS RELATED TO OUR HEALTHCARE ELECTRONIC SERVICES
WE ARE ENGAGED IN A BUSINESS THAT PROVIDES HEALTHCARE ELECTRONIC COMMERCE
SERVICES AND THAT ONLY RECENTLY BEGAN TO GENERATE REVENUES AND HAS INCURRED NET
LOSSES SINCE INCEPTION. We began our current operations in the fall of 1999 upon
the closing of our reorganization with Link.com, Inc., a privately-held Nevada
corporation, which is now known as Link.com Opps, Inc. We were incorporated
under the name Center Star Gold Mines, Inc. for the primary purpose of exploring
commercial gold deposits, and we owned various unpatented mining claims near
Grangeville, Idaho. We abandoned our last mining claim in 1995. Upon our
reorganization with Link.com Opps, Inc., or the Reorganization, we changed our
business to the healthcare e-commerce industry, specifically connecting
physicians, home health agencies and nursing homes via electronic medical
record, or EMR, products and services. While we have developed or purchased
several EMR products, we have not yet delivered several of our healthcare
e-commerce services. We did not generate our first EMR revenues until the
quarter ended September 30, 1999. As of December 31, 1999, we had an accumulated
deficit of $1,177,590. We expect to continue to incur significant development,
deployment and sales and marketing expenses in connection with our business and
to continue to incur operating losses for at least the next two fiscal years. We
may never achieve or sustain profitability. The provision of services using
Internet technology in the healthcare e-commerce industry is a developing
business that is inherently riskier than businesses in industries where
companies have established operating histories.
WE WILL NOT BECOME PROFITABLE UNLESS WE ACHIEVE SUFFICIENT LEVELS OF
PHYSICIAN PENETRATION AND MARKET ACCEPTANCE OF OUR SERVICES. Our EMR business
model depends upon usage by a large number of physicians with a high volume of
healthcare transactions and to sell home healthcare e-commerce services to
payers and other healthcare constituents. The acceptance by physicians and other
healthcare providers of our EMR solutions will require adoption of new methods
of conducting business and exchanging information. We cannot assure you that
physicians or other health care providers will integrate our services into their
office workflow, or that the healthcare market will accept our services as a
replacement for traditional methods of conducting healthcare transactions. The
healthcare industry uses existing computer systems that may be unable to access
our Internet-based solutions. Customers using existing systems may refuse to
adopt new systems when they have made extensive investment in hardware, software
and training for existing systems or if they perceive that our products or
services will not adequately protect proprietary information. Failure to achieve
broad physician or health care organization penetration or successfully contract
with healthcare participants, would have a material adverse effect on our
business.
Achieving market acceptance for our products and services will require
substantial marketing efforts and expenditure of significant funds to create
awareness and demand by participants in the
<PAGE> 3
healthcare industry. Our management believes that we must gain significant
market share with our services before our competitors introduce alternative
services with features similar to our services. There can be no assurance that
we will be able to succeed in positioning our services as a preferred method for
healthcare e-commerce, or that any pricing strategy that we develop will be
economically viable or acceptable to the market. Failure to successfully market
our products and services would have a material adverse effect on our business,
financial condition and operating results.
OUR BUSINESS PROSPECTS WILL SUFFER IF WE ARE NOT ABLE TO QUICKLY AND
SUCCESSFULLY DEPLOY OUR EMR SYSTEMS AND PRODUCTS. We believe that our business
prospects will suffer if we do not deploy our services quickly. We currently
intend to deploy access to our Web-based EMR services during the year 2000,
although there can be no assurance that we will be able to do so at that time,
or at all. In order to deploy our services, we must integrate our architecture
with physicians', payers' and suppliers' systems. We will need to expend
substantial resources to integrate our EMR systems with the existing computer
systems of large healthcare organizations, home health care organizations and
physicians. We have no experience in doing so, and may experience delays in the
integration process. These delays would, in turn, delay our ability to generate
revenue from our services and may have a material adverse effect on our
business, financial condition and operating results. Once we have deployed our
EMR system, we may need to expand and adapt it to accommodate additional users,
increased transaction volumes and changing customer requirements. This expansion
and adaptation could be expensive. We may be unable to expand or adapt our
network infrastructure to meet additional demand or our customers' changing
needs on a timely basis and at a commercially reasonable cost, or at all. Any
failure to deploy, expand or adapt our system quickly could have a material
adverse effect on the Company's business, financial condition and operating
results.
WE DO NOT CURRENTLY HAVE A SUBSTANTIAL CUSTOMER BASE AND OUR REVENUES WILL
INITIALLY COME FROM A FEW PAYERS IN ONE GEOGRAPHIC MARKET. We currently do not
have a substantial customer base. In addition, we expect that initially we will
generate a significant portion of our revenue from providing our products and
services in Texas, Louisiana, Mississippi, Alabama, Tennessee and Oklahoma. If
we do not generate as much revenue in this market or from these payers as
expected, our revenue will be significantly reduced, which would have a material
adverse effect on our business, financial condition and operating results.
WE ARE SUBJECT TO SIGNIFICANT COMPETITION. Our business operates in a
highly competitive environment. Many healthcare industry participants are
consolidating to create integrated healthcare delivery systems with greater
market power. As the healthcare industry consolidates, competition to provide
products and services to industry participants will become more intense and the
importance of establishing a relationship with each industry participant will
become greater. These industry participants may try to use their market power to
negotiate price reductions for our products and services. If forced to reduce
our prices, our operating results could suffer if we cannot achieve
corresponding reductions in our expenses.
WE MAY EXPERIENCE SIGNIFICANT DELAYS IN GENERATING REVENUES FROM OUR
SERVICES BECAUSE POTENTIAL CUSTOMERS COULD TAKE A LONG TIME TO EVALUATE THE
PURCHASE OF OUR SERVICES. A key element of our strategy is to market our
services directly to large healthcare organizations, including home health care
organizations and nursing home facilities. We do not control many of the factors
that will influence physicians', payers' and suppliers' buying decisions. We
expect that the sales and implementation process will be lengthy and will
involve a significant technical evaluation and commitment of capital and other
resources by home health agencies, nursing homes, physicians, payers and
suppliers. The sale and implementation of our services are subject to delays due
to such organizations' internal budgets and procedures for approving large
capital expenditures and deploying new technologies within their networks.
OUR BUSINESS WILL SUFFER IF THE INTEGRITY AND SECURITY OF ITS SYSTEMS ARE
INADEQUATE. If we are successful in delivering our Web-based healthcare
e-commerce services, our business could be harmed if we or our present or future
customers were to experience any system
2
<PAGE> 4
delays, failures or loss of data. Although we intend to have safeguards for
emergencies, the occurrence of a catastrophic event or other system failure at
our facilities could interrupt our operations or result in the loss of stored
data. In addition, we will depend on the efficient operation of Internet
connections from customers to our systems. These connections, in turn, depend on
the efficient operation of Web browsers, Internet service providers and Internet
backbone service providers. In the past, Internet users have occasionally
experienced difficulties with Internet and online services due to system
failures. Any disruption in Internet access provided by third parties could have
a material adverse effect on our business, financial condition and operating
results. Furthermore, we will be dependent on hardware suppliers for prompt
delivery, installation and services of equipment used to deliver our services.
DESPITE THE IMPLEMENTATION OF SECURITY MEASURES, OUR INFRASTRUCTURE MAY BE
VULNERABLE TO DAMAGE FROM PHYSICAL BREAK-INS, COMPUTER VIRUSES, PROGRAMMING
ERRORS, ATTACKS BY HACKERS OR SIMILAR DISRUPTIVE PROBLEMS. A material security
breach could damage our reputation or result in liability to us. We will retain
confidential customer information in our processing center and on our servers.
An experienced computer user who is able to access our computer systems could
gain access to confidential company information. Furthermore, we may not have a
timely remedy to secure our system against any hacker who has been able to
penetrate our system. Therefore, it is critical that our facilities and
infrastructure remain and are perceived by the marketplace to be secure. The
occurrence of any of these events could result in the interruption, delay or
cessation of service, which could have a material adverse effect on our
business, financial condition and operating results.
A significant barrier to e-commerce and communications are the issues
presented by the secure transmission of confidential information over public
networks. We intend to rely on encryption and authentication technology licensed
from third parties to secure Internet transmission of and access to confidential
information. There can be no assurance that advances in computer capabilities,
new discoveries in the field of cryptography, or other events or developments
will not result in a compromise or breach of the methods used to protect
customer transaction data. A party who is able to circumvent security measures
could misappropriate or alter proprietary information or cause interruptions in
operations. If any such compromise of our security or misappropriation of
proprietary information were to occur, it could have a material adverse effect
on our business, financial condition and operating results. We may be required
to expend significant capital and other resources to protect against such
security breaches or to alleviate problems caused by security breaches. We may
also be required to spend significant resources and encounter significant delays
in upgrading our systems to incorporate more advanced encryption and
authentication technology as it becomes available. Concerns over the security of
the Internet and other online transactions and the privacy of users may also
inhibit the growth of the Internet and other online services generally, and our
services in particular, especially as a means of conducting commercial and/or
healthcare-related transactions. There can be no assurance that our security
measures will prevent security breaches or that failure to prevent such breaches
will not have a material adverse effect on our business, financial condition and
operating results.
OUR OPERATIONS WILL ALSO BE DEPENDENT ON THE DEVELOPMENT AND MAINTENANCE OF
SOFTWARE. Although we intend to use all necessary means to ensure the efficient
and effective development and maintenance of software, both activities are
extremely complex and thus frequently characterized by unexpected problems and
delays.
OUR EXPANSION THROUGH ACQUISITIONS MAY BE DIFFICULT TO IMPLEMENT AND MAY
EXPOSE US TO ADDITIONAL RISK. We maintain an acquisition program and intend to
concentrate our acquisition efforts on businesses that are complementary to our
core businesses. Such emphasis is not, however, intended to limit in any manner
our ability to pursue acquisition opportunities in other related businesses or
in other industries. We anticipate that we may enter into further acquisitions,
joint ventures, strategic alliances or other business combinations. These
transactions may materially change the nature and scope of our business.
3
<PAGE> 5
Although our management will endeavor to evaluate the risks inherent in any
particular transaction, there can be no assurance that we will properly
ascertain all such risks. In addition, no assurances can be given that we will
succeed in consummating any such transactions, that such transactions will
ultimately provide us with the ability to offer the services described or that
we will be able to successfully manage or integrate any resulting business.
The success of our acquisition program will depend on, among other things:
o the availability of suitable candidates,
o the availability of funds to finance transactions, and
o the availability of management resources to oversee the operation of
resulting businesses.
Financing for such transactions may come from several sources, including,
without limitation:
o cash and cash equivalents on hand,
o marketable securities,
o proceeds from new indebtedness, or
o proceeds from the issuance of additional common stock, preferred
stock, convertible debt or other securities
The issuance of additional securities, including common stock, could result
in:
o substantial dilution of the percentage ownership of the Company's
stockholders at the time of any such issuance, and
o substantial dilution of our earnings per share.
The proceeds from any financing may be used for costs associated with
identifying and evaluating prospective candidates, and for structuring,
negotiating, financing and consummating any such transactions and for other
general corporate purposes. We do not intend to seek stockholder approval for
any such transaction or security issuance unless required by applicable law or
regulation.
INTEGRATING OUR BUSINESS OPERATIONS WITH BUSINESSES WE MAY ACQUIRE IN THE
FUTURE, MAY BE DIFFICULT AND MAY HAVE A NEGATIVE IMPACT ON OUR BUSINESS. We may
acquire additional businesses in the future. The integration of companies or
businesses that we may acquire in the future involves the integration of
separate companies that have previously operated independently and have
different corporate cultures. The process of combining such companies may be
disruptive to their businesses and may cause an interruption of, or a loss of
momentum in, such businesses as a result of the following difficulties, among
others:
4
<PAGE> 6
o loss of key employees or customers;
o possible inconsistencies in standards, controls, procedures and
policies among the companies being combined and the need to implement
and harmonize company-wide financials, accounting, information and
other systems;
o failure to maintain the quality of services that such companies have
historically provided;
o the need to coordinate geographically diverse organizations; and
o the diversion of management's attention from our day-to-day business
and that of any company or business that we may acquire, as a result
of the need to deal with the above disruptions and difficulties and/or
the possible need to add management resources to do so.
Such disruptions and difficulties, if they occur, may cause us to fail to
realize the benefits that we currently expect to result from such integration
and may cause material adverse short- and long-term effects on our operating
results and financial condition.
UNCERTAINTIES IN REALIZING BENEFITS FROM A COMBINATION. Even if we are able
to integrate the operations of an acquired company or business into the company
successfully, there can be no assurance that such integration will result in the
realization of the full benefits that we expect to result from such integration
or that such benefits will be achieved within the time frame that we expect.
o Revenue enhancements from cross-selling complementary services may not
materialize as expected.
o The benefits from the combination may be offset by costs incurred in
integrating the companies.
o The benefits from the transaction may also be offset by increases in
other expenses, by operating losses or by problems in the business
unrelated to the transaction.
RAPIDLY CHANGING TECHNOLOGY MAY ADVERSELY AFFECT OUR BUSINESS. All
businesses which rely on technology, including the healthcare e-commerce
business that we are developing, are subject to, among other risks and
uncertainties:
o rapid technological change;
o changing customer needs;
o frequent new product introductions; and
o evolving industry standards.
Internet technologies are evolving rapidly, and the technology used by any
e-commerce business is subject to rapid change and obsolescence. These market
characteristics are exacerbated by the emerging nature of the market and the
fact that many companies are expected to introduce new Internet products and
services in the near future. In addition, use of the Internet may decrease if
alternative protocols are developed or if problems associated with increased
Internet use are not resolved. As the communications, computer and software
industries continue to experience rapid technological change, we must be able
to quickly and successfully modify our services so that we adapt to such
changes. There can be no assurance that we will not experience difficulties
that could delay or prevent the successful development and introduction of our
healthcare e-commerce services or that we will be able to respond to
technological
5
<PAGE> 7
changes in a timely and cost-effective manner. Moreover, technologically
superior products and services could be developed by competitors. These factors
could have a material adverse effect upon our business, financial condition and
operating results.
DEPENDENCE ON PROPRIETARY TECHNOLOGY. The success of our business is
dependent to a significant extent on our ability to protect the proprietary and
confidential aspects of our technology. Although we have filed a provisional
patent application on some of our processes, our technology is not patented and
existing copyright laws offer only limited practical protection. We rely on a
combination of trade secret, copyright and trademark laws, license agreements,
nondisclosure and other contractual provisions and technical measures to
establish and protect our proprietary rights. There can be no assurance that the
legal protections afforded to us or the steps taken will be adequate to prevent
misappropriation of our technology. In addition, these protections do not
prevent independent third-party development of competitive products or services.
Our management believes that our products, services, trademarks and other
proprietary rights do not infringe upon the proprietary rights of third parties.
There can be no assurance, however, that third parties will not assert
infringement claims against us or that any such assertion will not require us to
enter into a license agreement or royalty arrangement with the party asserting
the claim. As competing healthcare information systems increase in complexity
and overall capabilities or the functionality of these systems further overlap,
providers of such systems may become increasingly subject to infringement
claims. Responding to and defending any such claims may distract the attention
of our management and otherwise have a material adverse effect on our business,
financial condition and operating results.
GOVERNMENT REGULATION OF THE COMPANY'S BUSINESS COULD ADVERSELY AFFECT ITS
FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Our services may be subject to
extensive and frequently changing regulation at federal, state and local levels.
The Internet and its associated technologies are also subject to government
regulation. Many existing laws and regulations, when enacted, did not anticipate
the methods of healthcare e-commerce we are developing. We believe, however,
that these laws and regulations may nonetheless be applied to our healthcare
e-commerce business. It may take years to determine the extent to which existing
laws and regulations governing general issues of property ownership, sales and
other taxes, libel, negligence and personal privacy are applicable to the
Internet. Laws and regulations may also be adopted in the future that address
Internet-related issues, including security, privacy and encryption, pricing,
content, copyrights and other intellectual property; contracting and selling
over the Internet; and distribution of products and services over the Internet.
Accordingly, our healthcare e-commerce business may be affected by current
regulations as well as future regulations specifically targeted to this new
segment of the healthcare industry.
OUR LIMITED OPERATING HISTORY MAKES IT DIFFICULT TO FORECAST OUR REVENUES
AND EXPENSES. Our limited operating history makes it difficult to forecast our
future revenues and expenses. Although our revenues increased since the closing
of the Reorganization, you should not consider quarterly revenue growth as
indicative of future performance. Our revenues and operating results may be
adversely affected by a number of risks and uncertainties, including those
listed elsewhere in these risk factors. As a result, our revenues may not grow
at similar levels in future periods and may remain flat or decline over any
given period.
We base our forecast for expenses in part on future revenue projections. We
incur expenses in advance of revenues, and we may not be able to quickly reduce
spending if our revenues are lower than expected. In particular, we expect to
incur additional costs and expenses related to the following:
o The development of relationships with marketing partners and
value-added resellers, or VARs, and commerce service providers, or
CSPs;
o The development and expansion of our sales force and marketing
operations;
o The development and enhancement of existing and new products and
services; and
6
<PAGE> 8
o The expansion of our management team.
We expect that our business, stock price, operating results and financial
condition could be materially adversely affected if our revenues do not meet our
projections or our net losses are greater than expected.
The expected fluctuations of our quarterly results could cause our stock
price to fluctuate or decline.
We expect that our quarterly operating results will fluctuate significantly
in the future based upon a number of factors, many of which are not within our
control. We plan to further increase our operating expenses in order to expand
our sales and marketing activities and broaden our product offerings. We base
our operating expenses on anticipated market growth, and our operating expenses
are relatively fixed in the short term. As a result, if our revenues are lower
than we expect, our quarterly operating results may not meet the expectations of
public market analysts or investors, which could cause the market price of our
common stock to decline. Our quarterly results may fluctuate in the future as a
result of many other factors, including the following:
o Our ability to retain our existing customers and to attract new
e-businesses, VARs and CSPs;
o Customer acceptance of our pricing model;
o Changes in the level of demand for our products or services;
o Our success in expanding our sales and marketing programs;
o The number, timing and significance of product enhancements and new
product announcements by us or our competitors;
o The length of our sales cycle;
o The level of e-commerce transactions;
o The evolution of related technology and the emergence of standards and
competing technology; and
o Changes in the level of our operating expenses.
These risks and uncertainties are particularly significant for companies
such as ours that are in the evolving market for Internet products and services.
In addition, other factors that may affect our quarterly results are set forth
elsewhere in these risk factors. As a result of these and other factors, our
revenues and expenses may not be predictable.
Due to the uncertainty surrounding our revenues and expenses, we believe
that quarter to quarter comparisons of our historical operating results may not
be meaningful and our historical operating results should not be relied upon as
an indicator of our future performance.
WE MAY NOT BE ABLE TO SECURE FUNDING IN THE FUTURE NECESSARY TO OPERATE OUR
BUSINESS AS PLANNED. We require substantial working capital to fund our
business. We have had and are experiencing significant operating losses and
negative cash flow from operations since the closing of the Reorganization and
expect this to continue for the foreseeable future. In addition, we may incur
significant capital expenditures in connection with our planned expansion of our
products and services. Our capital requirements depend on several factors,
including the rate of market acceptance of
7
<PAGE> 9
our products and services, our ability to expand our customer base, increased
sales and marketing expenses, the growth of the number of our employees and
related expenses and other factors. If capital requirements vary materially from
those currently planned, we will require additional financing sooner than
anticipated. If additional funds are raised through issuance of equity
securities, the percentage ownership of our stockholders will be reduced, and
these equity securities may have rights, preferences or privileges senior to
those of the holders of our common stock. Additional financing may not be
available when needed on terms favorable to us or at all. If adequate funds are
not available or are not available on acceptable terms, we may be unable to
develop or enhance our products and services, adequately support and maintain
relationships with key partners and customers, take advantage of future
opportunities or respond to competitive pressures.
WE MAY BE UNABLE TO ADEQUATELY DEVELOP A PROFITABLE PROFESSIONAL SERVICES
ORGANIZATION, WHICH COULD AFFECT BOTH OUR OPERATING RESULTS AND OUR ABILITY TO
ASSIST OUR CLIENTS WITH THE IMPLEMENTATION OF OUR PRODUCTS. We cannot be certain
that we can attract, retain or successfully manage a sufficient number of
qualified professional services personnel. We believe that growth in our product
sales depends on our ability to provide our clients with these services and to
attract and educate third-party consultants and service providers to provide
similar services. As a result, we expect to significantly increase the number of
our services personnel to meet these needs. New services personnel will require
extensive training and education and take time to reach full productivity.
Competition for qualified services personnel with the appropriate
Internet-specific knowledge is intense. We are in a new emerging market, and a
limited number of people have the skills needed to provide the services that our
customers demand. To meet our needs for services personnel, we may also need to
use more costly third-party service providers and consultants to supplement our
own professional services organization. We cannot be certain that our
professional services revenue will exceed professional services costs in future
periods. Difficulties we may encounter managing our growth could adversely
affect our results of operations.
RISKS RELATED TO OUR GOLD MINING BUSINESS
THE GOLD MINING ACTIVITIES OF CENTER STAR GOLD MINES, INC. CONDUCTED PRIOR
TO THE REORGANIZATION ARE SUBJECT TO A NUMBER OF ENVIRONMENTAL LAWS AND
REGULATIONS. We were incorporated under the laws of the State of Idaho on May 1,
1961, under the name Center Star Mines, Inc., for the primary purpose of
exploring gold deposits. We changed our corporate name on May 15, 1962 to Center
Star Gold Mines, Inc. We had owned various unpatented mining claims in Idaho
from 1962 until the last mining claim was abandoned in 1995. Since 1995, we have
been inactive in the gold mining business. However, the exploration, development
and production of gold mines conducted in the United States are subject to
local, state and federal regulations regarding environmental protection. All
operations involving the exploration for or the production of minerals are
subject to existing laws and regulations relating to exploration procedures,
safety precautions, employee health and safety, air quality standards,
pollution of water sources, waste materials, odor, noise, dust and other
environmental protection requirements adopted by federal, state and local
governmental authorities. We may be required to prepare and present to such
authorities data pertaining to the effect or impact that any proposed
exploration for or production of minerals may have upon the environment. Any
environmental clean up obligations or other environmental violations relating
to our gold mining activities would have a material adverse effect on our
business, financial condition and operating results.
ITEM 1. BUSINESS
General
Link.com, Inc. (formerly known as Center Star Gold Mines, Inc.) (the
"Company" or "Link.com") was incorporated for the primary purpose of exploring
for commercial gold deposits and operated under the name of Center Star Gold
Mines, Inc. The Company had owned various unpatented mining claims near
Grangeville, Idaho, from 1962 until the last mining claim was abandoned in 1995.
The claims were
8
<PAGE> 10
abandoned because the Company did not have adequate working capital in order to
pay the annual maintenance fee of $100 per mining claim to the U.S. Bureau of
Land Management. From 1995 until the reorganization with Link.com, the Company
was inactive. During 1998 the Company changed its domicile to the State of
Nevada and effected a one-for-four reverse split of the outstanding shares of
Common Stock effective on August 12, 1998.
The Company is a Nevada corporation and was incorporated on May 1, 1961
under the laws of the state of Idaho as Center Star Mines, Inc. On July 21,
1998, the Company filed Articles of Merger in the state of Nevada, whereby
Center Star Mines, Inc., an Idaho corporation merged with Center Star Gold
Mines, Inc., a Nevada corporation, which was incorporated on June 2, 1998.
The Company's Current Business
Link.com, Inc., a privately-held Nevada corporation, was co-founded by
Marion Robert Rice and Andy W. McBee to develop Internet software products for
use by physicians and other health care providers. This company was originally
incorporated in Nevada on May 12, 1999 and reincorporated on September 15, 1999.
On August 31, 1999, this company purchased the assets and liabilities of two
entities: National Health Care Information Systems, LLC, a Texas limited
liability company ("National Health Care") organized on November 4, 1998, and
Venture Information Systems, LLC, a Texas limited liability company ("Venture
Information"), organized on August 7, 1996. National Health Care was organized
to develop a product known as scanware, which was designed to scan specific
documents for clinical tracking of patient care and the financial reporting
resulting from a patient's care. There have been no sales of this product.
Venture Information was created to develop and implement the Company's current
software known as DocLink.
The Reorganization
On September 20, 1999, the Company entered into an Agreement and Plan of
Reorganization (the "Reorganization Agreement") with Link.com, Inc., a
privately-held Nevada corporation. Pursuant to the Reorganization Agreement, the
shareholders of privately-held Link.com agreed to exchange 100% of the issued
and outstanding shares of common stock, or 25,000 shares, in exchange for
10,388,898 shares of the Company's common stock, par value $.001 (the "Common
Stock"). For accounting purposes, the acquisition of Link.com by CSGM is
treated as a recapitalization of Link.com with Link.com as the acquiror (a
reverse acquisition). Accordingly, the historical financial statements are
those of Link.com and its predecessor Venture Information and National
HealthCare. Subsequent to the merger, the Board of Directors of the Company
approved a reverse split of the outstanding shares at the rate of one share for
every 4.5 shares outstanding. The Board of Directors also approved a change of
the Company's name to Link.com, Inc. Shareholders representing a majority of
the outstanding shares of Common Stock approved such actions, subject to the
notification of the shareholders as required by the rules and regulations of
the Securities and Exchange Commission.
9
<PAGE> 11
The E-Commerce Business
Since the closing of the reorganization, the Company has developed and
intends to continue to develop software solutions for physicians and other
providers, such as home health agencies, pharmacies, durable medical equipment
providers, and nursing homes. The Company's initial product, DocLink, provides
an electronic link between doctors and home health care agencies to expedite the
processing of paperwork. The Company also intends to develop an Internet-based
healthcare network for interactive use by the users of DocLink, as well as other
providers that will benefit from the technology of a "paperless" and more
streamlined paper and approval system.
The Company's business is connecting physicians, home health agencies and
nursing homes via electronic medical records ("EMR") products and services. The
Company has developed a systems solution that transforms the EMR into an
interactive document. This paperless communication between the provider and
physician is achieved through electronic order and signature software, which can
be layered onto Internet communications, enterprise systems, databases, and
other technology. The physician can review the EMR and return the electronic
records to the provider, with signatures, through the Company's paperless
system. The software also allows the physician to electronically track and bill
for Care Plan Oversight ("CPO")--the time a physician can bill per month per
patient. Many physicians overlook the CPO billings, primarily due to the
increased paperwork to manually track the billing. The Company's DocLink
software automatically tracks the time spent and produces reports that can be
used as the source document for billing.
The Company is developing and intends to provide a broad range of Web-based
healthcare electronic commerce services that will improve communication among
physicians, suppliers, and other providers; however, there can be no assurance
given that the Company will be successful in its development efforts. These
services using Internet technology in the healthcare electronic commerce
industry are subject to risks, including but not limited to those associated
with competition from existing companies offering similar services, rapid
technological change, development risks, management of growth and a minimal
previous record of operations or earnings. For additional description of the
risks inherent in the business of the Company, see "Risk Factors" above.
Our Products
Link.com has developed a Web-based software product and a dial-up software
product that enables health care providers to communicate and validate pertinent
and private information to physicians and other ancillary providers while
keeping the data secure and reducing costs typically incurred in the time and
expenses to communicate such information manually. Some of our product offerings
are as follows:
DOCLINK. Link.com's first product, DocLink, was released in January 1997.
This product furnishes health care providers with a means to send doctor's
orders (and other vital patient information) to a physician's office, where the
orders would then be reviewed and authorized by the physician on his or her
desktop computer. DocLink allows a home care provider to scan in an order and
send it to a physician. At the doctor's office, DocLink alerts the physician
with a "you've got mail" type icon, where the physician can read the order on
the screen and affix his or her electronic signature by invoking a password.
DocLink automatically delivers the signed order back to the home care provider
and automatically prints the order to be stored in the paper chart. While the
physician is reviewing orders, DocLink can provide him or her with a timing
routine which also feeds a database that furnishes per-patient oversight billing
reports.
SAFE HAVEN. Link.com's second product, Safe Haven, was released in August
1999. Safe Haven is a Web-based product or service that was developed by the
Company in conjunction with several clinical and administrative professionals in
home health care to verify whether services rendered by a provider to a patient
are eligible for reimbursement. The program allows home health care providers to
upload an "OASIS" (the Outcomes Assessment Information Set) file which is a
project implemented by the Health Care Finance Administration ("HCFA"), after
ten years of development (and mandated by the HCFA) to the Safe Haven Web site
and receive immediate results on the validity of the data. This product reduces
the labor costs associated with nurses spending several hours reviewing data in
a patient's paper chart and also
10
<PAGE> 12
the chances of claim rejections for documentation deficiencies. Safe Haven is
designed to detect conflicting nursing responses, to assist with the
coordination and preparation of a patient's plan of care, to recognize patients
who may not be eligible for particular services, and to make suggestions for
completion of the patient's plan of treatment.
Currently, the DocLink product is being licensed to 200 physicians and home
health care agencies located in Texas, Louisiana, Mississippi, Alabama, and
Oklahoma, while Safe Haven is currently being used in several areas of the
country.
Company Services
The Company intends to utilize the Internet to provide browser initiated
healthcare e-commerce solutions that facilitate the confidential, on-line
exchange of healthcare information for many participants in the healthcare
industry. Some of the Company's services are as follows:
Physician - Home Health Care Services. The Company has developed and
intends to continue development of software solutions for physicians and home
health agencies. The Company's initial product, DocLink, provides an electronic
link between doctors and home health care agencies to expedite the processing of
paperwork. The electronic link consists of original documents that must be
signed by the physician, electronically sent to the physician, electronically
signed by the physician, and returned to the provider. The Company is developing
an Internet browser-based healthcare network for interactive use by the users of
DocLink, as well as other providers that will benefit from the technology of a
"paperless" and more streamlined paper and approval system.
Home Health Care Patient Approval. In 1999, the HCFA implemented OASIS.
The primary focus of the project was to improve the quality of care in home
care. However, OASIS has become the financial determinant of reimbursement for
home health care. OASIS determines eligibility for Medicare as well as
appropriateness of care and actual payment rates. There are many instances in
the assessment form that allows the home health care agency to contradict other
portions of the assessment, albeit minor, thereby disallowing proper charges
for payment. The Company has developed an Internet-based audit tool (called
Safe Haven) to discover such discrepancies before the information is sent to
the state or HCFA. This allows changes to be implemented prior to the
submission of the data, all performed in minutes, where a manual audit could
take one to two hours.
Other related products. Based on the technology and products in place,
other applications can be developed that will enhance the Company's position in
both the physician's office, home health agencies, and other providers such as
nursing homes, pharmacies, durable medical equipment providers, and information
sites.
Industry Background
Healthcare expenditures in the United States totaled approximately $1.0
trillion in 1996, representing a 6.7% compound annual increase since 1990.
Increases in healthcare costs have been driven principally by technological
advances in the healthcare industry and by the aging of the population, as older
Americans utilize more healthcare resources on a per capita basis. This
increasing trend in aggregate healthcare costs is expected to continue.
In the past 15 years, the U.S. healthcare industry has undergone
significant changes. Among the most significant of these changes has been a
shift away from fee-for-service indemnity plans into health maintenance
organizations, or HMOs, and other managed healthcare benefit plans. These payers
have used a variety of managed care techniques to control administrative costs
including, but not limited to, lowering reimbursement rates, shifting costs from
payers to patients, restricting coverage for services, limiting access to a
select group of providers, negotiating discounts with healthcare providers, case
management functions,
11
<PAGE> 13
and shifting the economic risk for the delivery of care to providers through
alternative reimbursement models, such as capitation and risk pools. While these
techniques have been initially helpful in controlling healthcare costs, the
Company believes that these techniques have over time become less effective in
reducing costs.
The Company believes that future healthcare cost management is increasingly
dependent upon compliance with federal and state guidelines and adherence to
best practices to improve the quality of care. The Company believes that costs
are better managed with an efficient channel of communications between the
providers of care. The Company also believes that Internet-based e-commerce
solutions can improve communication between providers as well as reduce costs.
Despite managed care initiatives, the cost of healthcare services delivery
in the United States continues to rise. Increasing cost pressures, shifting
financial risks, and consolidation/ integration are forcing providers to find
innovative ways to reduce costs and add revenue. The current need in healthcare
for such solutions is well known. Healthcare is an extremely
transaction-intensive industry and is laden with inefficiency. It is estimated
that between $0.25 and $0.40 of every healthcare dollar is spent on excessive
administrative costs, the performance of redundant tests and the delivery of
unnecessary care.
Initially physician practice management software vendors entered the market
with technological solutions to address some of the administrative and
redundancy issues. The computerized version of a paper medical record EMR
emerged as one strategy for connectivity between providers with purported
business benefits. Adoption of the EMR, however, has been slow due to the
proliferation of disparate information systems that have made connecting
providers an expensive and technologically volatile objective. Data and
information remain buried in non-integrated systems in hundreds of thousands of
facilities and physician offices across the country.
More recently, Web-based technologies have emerged as a technological
solution that can create a more seamless connectivity between disparate provider
environments without requiring a large capital investment. Its use of browser
technology, open standards and networking protocols address many of the legacy
issues surrounding access, cost and compatibility. Business-to-business
applications ("B2B") have fostered a new breed of Internet vendors. The pace of
activity in the connectivity and applications sector has been fierce, and
although the market is in its infancy as far as network development and
electronic transaction volumes are concerned, an intense competitive environment
is developing rapidly.
The electronic health market is substantial. Industry reports estimate
that market size for connectivity players is $250 billion to $400 billion in
administrative costs; $5 to $10 billion in estimated transaction revenues.
Physicians are proving reluctant to pay for services and even more
unwilling to change practice patterns without compelling financial incentives.
Lack of physician motivation to adopt and use new technology is a problem in
many solutions. By using its EMR to facilitate communications and automate the
transactions that occur between the home health/nursing home and the physician
office, the Company not only promises the physician a cost-avoidance benefit of
reduced administrative costs but, more importantly, it promises to provide a
means of enhancing physician revenue via the documentation of billable services.
The Company serves as the utility that automates CPO billing report thereby
creating the mechanism for the physician to add CPO revenue to the physician's
bottom line. According to a customer information survey by HCFA, there were
154,992,259 total home health agency visits and 12,229,153 home health claims in
1998; however, the volume of physician CPO billing submitted does not appear to
coincide with projected utilization. Demographic data indicates that Medicare
patients are a large customer segment of the home care market. The industry
experiences a 40% increase in Medicare enrollees receiving fee-for-service home
health services between 1990 and 1997. For the same period, Medicare home health
expenditures increased from $3.9 billion to an estimated $17.2 billion. Most of
this increase in the rise in
12
<PAGE> 14
spending occurred as a result of the increase in visits, which increased from 70
million in 1990 to an estimated 270 million in 1997. Growth in the Medicare home
health benefit between 1990 and 1996 can be attributed to specific court
decisions, legislative expansions of the benefit, and to a number of
socio-demographic trends. Home health utilization trends are projected to
continue to increase. Reimbursement for any home health service rendered is tied
to the physician oversight of care; therefore, any means that expedites the
turn-around of physician orders directly impacts the home health agency's
accounts receivables and cash flow.
The Company's plan is to capitalize on the intersection of these market
variables: physician desire for untapped revenue (CPO), increasing utilization
of home health services and the home health agency's need to efficiently address
payment issues.
Marketing and Sales Strategy
The Company intends to build a strong national and regional sales force
with the intent to develop a national following for the DocLink product. The
Company believes that the development of its Web-based DocLink product will
enjoy a quicker sales closing schedule with the increased availability to both
doctors and home health care agencies, as well as other strategic users such as
nursing homes and pharmacy providers. The Company also believes that additional
sources of revenue will be available when the base of doctors on a Web-based
platform exceeds a certain amount, especially due to the fact that the doctors
themselves will be signing orders on their computers.
The Company intends to pursue strategic relationships, including
customer/vendor agreements, joint ventures and acquisitions. The Company
believes that making strategic acquisitions and developing strategic industry
relationships will enhance its ability to penetrate additional markets through
new distribution channels and develop and provide additional services.
The Company's sales and marketing strategies are focused in three primary
areas: (i) a sales force aimed toward national accounts, (ii) a focus on
distribution partners or other channel sales, and (iii) a team for direct sales
and telephone sales support.
The Company's targeted customer consists of home health and nursing home
chains, home health associations as well as large physician practice management
groups ("PPM") or well-organized independent physician associations ("IPA") and
physician associations (national/state medical societies).
Distribution partners and channel sales consist of a partner with access to
multiple customers with one transaction, or a distribution partner who will
assume responsibility for the sale and roll-out of the product at a local level.
The Company is considering outsourcing this function to an organization with a
proven track record in establishing this distribution channel.
Technology
The Company is currently designing software for the physician, long term
facilities and home health care agencies that will track patient conditions and
assessments that generate verbal orders and standard form filings and billing
functions. The Company intends to develop comprehensive content services
programs, which will provide physicians with on-line access to available medical
reference material. The Company believes that it can position products into the
Internet medium to collect and distribute information, communication, interact
and engage in commerce to overcome the historical technical barriers for
connecting the participants in the health care industry. However, the Company
can give no assurance that it will successfully develop these software products.
The Company's core products will be available from industry standard Web
browsers. The backend will consist of a series of Web servers that will store
and read data from a Sequential ("SQL") database controlled by the Company.
Physicians and other health care providers will be issued digital
13
<PAGE> 15
certificates from the Company that will allow them access to specific subsets of
data (patients and documents) from the SQL database. Digital certificates will
allow the Company to use secure socket layer ("SSL") between the browser and the
Web server with firewall protection to provide maximum security for sensitive
patient information. DocLink allows providers to enter patient demographics and
documents into on-line Web forms. These forms will be generated from standard
Hypertext Markup Language ("HTML") pages and the data will be saved with
attached security information in the SQL database. Many of the other basic
features of DocLink, such as reports, reviewing charts, email, and employee
management can also be handled from the browser interface.
The Company intends to implement other technologies that will allow it to
do things not possible in a browser-based front-end alone. The add-ons will be
considered optional for most users, but will add value to the products. For
example, Web browser plug-ins will allow the Company to integrate advanced image
technology into DocLink. These technologies can be used in conjunction with
industry standard browsers for the purpose of image acquisition from document
scanners. The technology can also be used as advanced image viewers from within
the browser. Providing this technology will allow any ancillary provider to send
any document over the Internet without excessive data entry.
The technology that the Company is developing has built in security
database elements in the system and maintains the required information to
support all functions, including login, availability of data, user privileges,
user activity and inactivity monitoring, access control, transaction routing,
billing, and error messaging. The security database is being designed to address
unauthorized disclosure of information, unauthorized modification of
information, loss of data integrity, and denial of service. The company's system
will employ a variety of techniques in order to provide a comprehensive and
secure system, including 128-bit data encryption technology, firewall technology
among all sub-networks throughout the system, and systems to immediately
identify break-in attempts and automate lockouts if breaches are suspected. The
system architecture is being designed to support redundant network
infrastructure, web application, and database servers, system CPU's, and
databases to scale to customers' ultimate needs. In addition, the system will
work through any HTML browser supporting Java, ASP, VB and XML, which enables
rapid deployment of product extensions without installation of new client
software.
Competition
The market for healthcare e-commerce is in its infancy and is undergoing
rapid technological changes. Competition will potentially come from several
areas, including traditional healthcare software vendors, electronic data
interchange network providers, emerging e-commerce companies or others. Two of
the principal competitors of the Company are WebMD and Careinsite. These
companies have expended large amounts of capital to obtain a market share with
physicians, and these companies offer services which may be competitive with the
Company's healthcare e-commerce services. Companies like WebMD and other
emerging e-commerce companies offer a range of services which are competitive to
the Company's services. Any organizations that create stand-alone healthcare
software products may migrate into the healthcare e-commerce business. Due to a
high degree of system and application interconnectivity, the Company believes
that it will share common customers with many of these organizations. The
Company also believes that, in most instances, the Company's services are
incremental and complementary applications to the existing services offered by
these companies. Some of the Company's competitors have services that are
currently in operation. Many of the Company's competitors also have greater
financial, technological and marketing resources than the Company. Further, some
of the Company's competitors have entered into strategic relationships that make
them more competitive. See "Risk Factors" above.
14
<PAGE> 16
Government Regulation
Participants in the healthcare industry are subject to extensive and
frequently changing regulation at the federal, state and local levels. The
Internet and its associated technologies are also subject to government
regulation. Many existing laws and regulations, when enacted, did not anticipate
the methods of healthcare e-commerce the Company is developing. The Company
believes, however, that these laws and regulations may nonetheless be applied to
the Company's healthcare e-commerce business. See "Risk Factors" above.
Current laws and regulations that may affect the healthcare e-commerce
industry relate to the following:
o Confidential patient medical record information;
o The electronic transmission of information from physicians' offices to
agencies, pharmacies, and other healthcare providers;
o The use of software applications in the diagnosis, cure, treatment,
mitigation or prevention of disease;
o Health maintenance organizations, insurers, healthcare service
providers and/or employee health benefit plans; and
o The relationships between or among healthcare providers.
Employees
As of December 31, 1999, the Company had 28 full-time employees primarily
located in two offices. The Company's ability to achieve its financial and
operational objectives depends on the Company's ability to continue to attract,
integrate, retain and motivate highly qualified technical and customer support
personnel. A competitive environment exists for attracting such personnel.
ITEM 2. PROPERTIES
The Company's principal executive office is located in Brady, Texas in
approximately 2,000 square feet of leased office space shared with Centratex,
Inc., which is a company owned by Marion Robert Rice, the Company's Chief
Executive Officer, and Andy McBee, a director of the Company. The Company has an
oral month-to-month lease for a total of $2,000 per month, which is paid $500 to
each of Marion Robert Rice and Andy McBee as rent and $1,000 to Centratex, Inc.
for shared services provided to the Company. The Company also maintains 7,000
square feet of leased office space in Austin, Texas under a sub-lease with GTECH
Corporation (as sub-landlord) at a rate of $4,957 per month. This sublease
expires on September 29, 2002. The Company believes that its facilities are
adequate for the Company's current operations and that additional leased space
can be obtained if needed.
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to any material legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On September 23, 1999, pursuant to their written consent, the Company's
shareholders approved an amendment of the Company's Articles of Incorporation
approving the change of the Company's name form Center Star Gold Mines, Inc. to
Link.com, Inc. and a reverse split of the outstanding shares of the
15
<PAGE> 17
Common Stock of the Company at the rate of one share for each 4.5 shares
outstanding. No proxies were solicited in connection with this shareholder
action.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
Our Common Stock is traded on the OTC Bulletin Board. It is currently
traded under the symbol "CSGM." However, the Company intends to apply for a new
symbol to reflect the Company's recent name change to Link.com, Inc. The
following table sets forth the range of high and low prices as reported on the
OTC Bulletin Board for the periods indicated. The quotations reflect
inter-dealer prices without retail mark-up, mark-down or commission, and may not
necessarily represent actual transactions. Prior to the last fiscal year, the
Company has had minimal or no trading activity since 1995.
<TABLE>
<CAPTION>
Fiscal Year 1999 High Low
- ---------------- ---- ---
<S> <C> <C>
Quarter ended March 31 -0- -0-
Quarter ended June 30 -0- -0-
Quarter ended September 30 -0- -0-
Quarter ended December 31 $.75 $.05
</TABLE>
As of March 31, 2000, the Company had 930 holders of record of its Common
Stock.
The Company has not declared or paid cash dividends on its Common Stock and
presently has no plans to do so. Any change in the Company's dividend policy
will be at the sole discretion of the Board of Directors and will depend on the
Company's profitability, financial condition, capital needs, future loan
covenants, general economic conditions, future prospects and other factors
deemed relevant by the Board of Directors. The Company currently intends to
retain earnings for use in the operation and expansion of the Company's business
and does not anticipate paying cash dividends in the foreseeable future.
From August to December 1999, the Company issued an aggregate amount of
$1,217,750 of Convertible Debentures to approximately 50 individuals. The
Debentures are convertible at any time after the reverse merger transaction and
accrue interest at 12% per annum. The Debentures are convertible at $2.00 per
share or 60% of the bid price of the Company's Common Stock, whichever is
greater. These securities were issued pursuant to an exemption from registration
available under Section 4(2) of the Securities Act of 1933, as amended. However,
management of the Company determined that such offering may have violated such
registration requirements and, therefore, the Company made a rescission offer to
the Debenture holders during the first quarter of 2000. In March 2000, the
Company completed its rescission offer, and all but two of the Debenture holders
elected not to rescind the purchase of their securities. The Company paid an
aggregate amount of approximately $12,000 of principal and interest to these two
individuals in connection with the rescission offer.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with the
consolidated financial statements of the Company and the notes thereto included
elsewhere in this Report on Form 10-KSB. The discussion in this section of this
Report on Form 10-KSB contains forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ materially from those
discussed herein. Factors that could cause or contribute to such differences
include, but are not limited to, those discussed in this section, those
discussed in "Risk Factors" and those discussed elsewhere in this Report on Form
10-KSB.
Overview
The Company's business is connecting physicians, home health agencies
and nursing homes via electronic medical records ("EMR") products and services.
The Company has developed a systems solution that transforms the EMR into an
interactive document. This paperless communication between the provider and
physician is achieved through electronic order and signature software, that can
be layered onto Internet communications, enterprise systems, databases, and
other technology. The physician can review the EMR and return to the provider,
with signatures, through this paperless system. The software also allows the
physician to electronically track and bill for Care Plan Oversight ("CPO"); the
time a physician can bill per month per patient. Many physicians overlook the
CPO billings, primarily due to the increased paperwork to manually track the
billing. DocLink automatically tracks the time spent and produces reports that
can be used as the source document for billing. The Company has several other
products in development, two of which are Internet products which involve
increased regulations in home health agencies and nursing homes derived from the
Outcomes Assessment Information Set ("OASIS").
Results of Operations
Year Ended December 31, 1999 Compared to Year Ended December 31, 1998
Revenues in fiscal year 1999 were $192,708 compared to $253,869 in
fiscal 1998. The decrease in revenue was primarily attributable to the closings
of many home health care agencies in the Company's primary markets, Texas and
Louisiana. These closings were caused by changes in the Medicare home health
payment system as implemented due to the Balanced Budget Amendment of 1997. As a
result of this amendment, Congress instituted the Interim Payment System for
home health agencies, which eventually forced many providers out of business.
Operating expenses were $970,258 in fiscal 1999 compared to $357,189 in
fiscal 1998. The increase in operating expenses was primarily attributable to
the increase in salaries and marketing expenses from the ramp up of sales
support to increase the visibility and use of the DocLink product. The increase
was also attributable to acquisition costs of the public shell of approximately
$206,000 and professional fees of approximately $85,000.
Interest expense in the year ended December 1999 was $74,583 compared
to $32,676 in 1998 due to increased borrowings from long-term debt incurred in
September 1999 to fund increased marketing of the Company's products.
Liquidity and Capital Resources
The Company's operations in fiscal 1998 through September 1999 were
funded through cash from operations and a bank line of credit. In September
1999, the Company raised $1.2 million in long-term debt to increase the
marketing and visibility of its core product, DocLink. As of March 2000, each of
the individual debenture holders may convert these notes into the Company's
common stock.
The Company has a line of credit at a bank in the amount of $400,000
which is currently fully borrowed. The line of credit was due in March 2000 and
was subsequently reissued with a maturity date of October 2001.
The Company has limited cash resources and intends to raise additional
capital through convertible notes and the issuance of preferred stock or
additional common stock. The Company believes the additional capital will allow
it to continue its marketing efforts in its core products and develop the new
browser based version of DocLink. The availability of cash through such
resources is not assured and if the Company is not able to raise enough cash to
complete these goals, the outcome would be uncertain.
The consolidated financial statements have been prepared on the
assumption that the Company will continue as a going concern. The Company
sustained net operating losses of $851,678 and $127,872 during the years ended
December 31, 1999 and 1998, respectively, and has accumulated losses through
December 31, 1999 of $1,177,590. Cash used in operating activities for the same
periods aggregated $735,809 and $107,837, respectively. Total liabilities at
December 31, 1999 of $1,848,001 exceed total assets of $670,411. The Company's
continued existence depends upon the success of management's efforts to raise
additional capital necessary to meet the Company's obligations as they come due
and to obtain sufficient capital to execute its business plan. There can be no
degree of assurance given that the Company will be successful in completing
additional financing transactions.
The consolidated financial statements do not include any adjustments to
reflect the possible effects on the recoverability and classification of assets
or classification of liabilities which may result from the inability of the
Company to continue as a going concern.
New Accounting Standards
The Company adopted Statement of Financial Accounting Standards No.
131, "Disclosures about Segments of an Enterprise and Related Information"
("SFAS 131") during the fiscal year ended December 31, 1998. SFAS 131
establishes standards for reporting information regarding operating segments in
annual financial statements and requires selected information for those segments
to be presented in interim financial reports. SFAS 131 also establishes
standards for related disclosures about products and services and geographic
areas. Operating segments are identified as components of an enterprise about
which separate discrete financial information is available for evaluation by the
chief operating decision maker, or decision making group, in making decisions
about how to allocate resources and assess performance. The Company has only one
operating segment at December 31, 1999 and 1998.
In June 1999, the FASB issued SFAS No. 137, "Accounting for Derivative
Instruments and Hedging Activities-Deferral of the Effective Date of FASB
Statement No. 133", which establishes accounting and reporting standards for
derivative instruments. SAS No. 137 is effective for all fiscal quarters for all
fiscal years beginning after June 15, 2000. The adoption of SFAS 137 is not
expected to have a significant impact on the Company's results of operations.
Inflation
The Company believes that inflation generally has not had a material
impact on its operations or liquidity to date.
16
<PAGE> 18
ITEM 7. FINANCIAL STATEMENTS
The consolidated financial statements of the Company are included herein on
pages F-1 to F-13.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
The Company reported a change in its principal independent accountants on a
Form 8-K filed with the Securities and Exchange Commission on March 13, 2000,
and a Form 8-K/A filed on March 24, 2000. There were no disagreements with the
Company's former principal independent accountants on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedures, which disagreements if not resolved to their satisfaction would have
caused them to make reference in connection with their opinion to the subject
matter of disagreement
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(A) OF THE EXCHANGE ACT.
The following table sets forth the age and position of each of the
Company's executive officers, directors and key employees:
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Marion Robert Rice 47 Chief Executive Officer, President and Director
Andy W. McBee 41 Assistant Secretary and Director
Donald Deshotels 31 Director
</TABLE>
Mr. Rice has served as Chief Executive Officer, President and as a director
of Link.com since September, 1999. From July 1993 until May 1999, Mr. Rice was a
co-founder, Chairman of the Board and Director of Centratex Support Services, a
health care consulting firm. Mr. McBee has served as a director and assistant
secretary of Link.com since March 10, 2000. Mr. McBee was a co-founder of
Centratex Support Services, along with Mr. Rice, and has served as president of
such company since June, 1993. Mr. Deshotels has been a director of Link.com
since March 10, 2000. From June 1996 until May 11, 1999, he was the chief
technical officer for Venture Information Systems, a software development firm.
From April 1992 to June 1996, he held several positions with Lewis Computer
Services, a software development firm in Baton Rouge, Louisiana.
In connection with the Company's reorganization in September 1999, the
existing officers and directors of the Company resigned and were replaced by the
current slate of officers and directors. No compensation was paid by the Company
during the last three fiscal years to such former directors and officers.
The Company is not aware of involvement in any legal proceedings by its
directors or executive officers during the past five years that are material to
an evaluation of the ability or integrity of such director or executive officer.
The Company does not have standing audit, nominating or compensation
committees of the Board of Directors or committees performing similar functions.
No meetings of the Board of Directors were held during the year ended December
31, 1999. All actions were held by unanimous written consent.
No reporting person failed to file on a timely basis reports required by
section 16(a) of the Exchange Act since such reporting persons became subject to
such reporting requirements during 1999,
17
<PAGE> 19
except each of Marion Robert Rice, Andy Wade McBee, Donald Deshotels and
Sandra Denise Deshotels each failed to timely file Form 3s during the year 1999.
ITEM 10. EXECUTIVE COMPENSATION
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------- ----------------------
COMMON SHARES
RESTRICTED UNDERLYING ALL OTHER
OTHER STOCK AWARDS OPTIONS GRANTED COMPENSATION
ANNUAL ------------ --------------- ------------
NAME AND POSITION YEAR SALARY BONUS COMPENSATION ($) (# SHARES)
- ----------------- ---- ------ ----- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Marion Robert Rice, 1999 $13,333 -0- -0- -0- -0- -0-
President and CEO 1998 -0- -0- -0- -0- -0- -0-
(1) 1997 -0- -0- -0- -0- -0- -0-
Andy McBee 1999 $13,333 -0- -0- -0- -0- -0-
(2) 1998 -0- -0- -0- -0- -0- -0-
1997 -0- -0- -0- -0- -0- -0-
Donald Desholtels 1999 $10,096 -0- -0- -0- -0- -0-
(3) 1998 -0- -0- -0- -0- -0- -0-
1997 -0- -0- -0- -0- -0- -0-
</TABLE>
(1) Mr. Rice has served as President and Chief Executive Officer of Link.com
Inc. since its reorganization in September, 1999. Mr. Rice's salary figure
for 1999 includes $8,333 of accrued salary through December 31, 1999.
(2) Mr. McBee has served as a director and Assistant Secretary since March 10,
2000. Mr. McBee's salary figure for 1999 includes $8,333 of accrued salary
through December 31, 1999.
(3) Mr. Deshotels has served as a director since March 10, 2000.
The directors were not paid any monetary compensation for serving on
the Board of Directors. From time to time, we may engage certain members of the
board of directors to perform services on our behalf. In such cases, we
compensate the members for their services at rates no more favorable than could
be obtained from unaffiliated parties.
As permitted by Section 78.751 of the Nevada General Corporation Law, the
Company's Certificate of Incorporation includes a provision that eliminates the
personal liability of our directors for monetary damages for breach or alleged
breach of their fiduciary duty as directors. In addition, as permitted by
Section 78.751 of the Nevada General Corporation Law, the Company's Bylaws
provide that it may, in its discretion: (i) indemnify its directors, officers,
employees and agents and persons serving in such capacities in other business
enterprises (including, for example, its subsidiaries) at its request, to the
fullest extent permitted by law; and (ii) advance expenses, as incurred, to its
directors and officers in connection with defending a proceeding.
ITEM 11. SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of the Company's common stock as of March 24, 2000 by (i)
each of our directors, (ii) each of our Executive Officers, (iii) each person
who is known by us to own beneficially more than 5% of the common stock and (iv)
all directors and officers as a group. All share numbers reflect the 1- for -4.5
reverse stock split, effective as of April 3, 2000.
18
<PAGE> 20
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Name (1) Number of Shares Percentage
- ---- ---------------- ----------
<S> <C> <C>
Marion Robert Rice 3,532,225 31.79%
Andy Wade McBee 2,389,446 21.5%
Donald Deshotels 1,199,917 10.8%
Sandra Denise Deshotels 1,199,917 10.8%
Sheila Kay Hemphill 1,558,334 14.03%
Phil White 509,056 4.58%
All directors and officers as group (3 persons) (2) 8,321,505 74.9%
</TABLE>
(1) The address for each of the above individuals is 201 East Main Street,
Brady, Texas 78625, except for Mr. and Mrs. Deshotels whose address is 8200
Cameron Road, Suite 170, Austin, Texas 78729.
(2) Includes 1,199,917 shares held by Sandra D. Deshotels, the wife of Mr.
Deshotels.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On September 20, 1999, the Company entered into an Agreement and Plan of
Reorganization (the "Reorganization Agreement") with Link.com, Inc., a
privately-held Nevada corporation, and the shareholders of such entity,
including, among others, Marion Robert Rice, Andy McBee and Donald Deshotels.
The Reorganization Agreement provided for the issuance of 10,388,898 shares of
the Company's Common Stock in exchange for all of the outstanding shares of the
privately-held company. The transaction resulted in a change of control of the
Company and the election of the Company's current management. See Item
1-"Business--The Reorganization" above.
The Company's principal executive office is located in Brady, Texas in
approximately 2,000 square feet of leased office space shared with Centratex,
Inc., which is a company owned by Marion Robert Rice, the Company's Chief
Executive Officer, Andy McBee, a director of the Company. The Company has an
oral month-to-month lease for a total of $2,000 per month, which is paid $500 to
each of Marion Robert Rice and Andy McBee as rent and $1,000 to Centratex, Inc.
for shared services provided to the Company. As of December 31, 1999, the
Company had paid $2,500 to each of Messrs. Rice and McBee under such
arrangement.
PART IV
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
The following Exhibits are incorporated by reference to the filing or are
included following the Index to Exhibits.
Number Description
3.1 Articles of Incorporation of the Company(1)
3.2 Articles of Amendment to Articles of Incorporation
3.3 Bylaws of Company(1)
4.1 Form of Debenture Agreement with Conversion Privileges
19
<PAGE> 21
10.1 Lease Agreement, dated November 3, 1999, by and between Texas
Townhouse and Condominium Association, Inc. and Link.com, Inc.
10.2 Sublease, dated February 1, 2000, by and between GTECH Corporation, a
Delaware corporation (as sublandlord) and Link.com, Inc. (as
subtenant).
10.3 Assignment and Assumption Agreement, effective as of August 31, 1999,
by and between Venture Information Systems, LLC, a Texas limited
liability company and Link.com, Inc., a Nevada corporation.
10.4 Assignment and Assumption Agreement, effective as of August 31, 1999,
by and between National Healthcare Information Systems, LLC, a Texas
limited liability company and Link.com, Inc., a Nevada corporation.
10.5 Promissory Note, dated April 30, 2000, by and between Link.com, Inc.
and the Commercial National Bank of Brady, in the amount of
$400,000.00.
16.1 Letter on Changes in Certifying Accountants(2)
21.1 Subsidiaries of the Company
23.1 Signed Audit Report From King Griffin & Adamson P.C.(3)
27.1 Financial Data Schedule
27.2 Financial Data Schedule Restated
- -----------------
(1) Incorporated by reference to the Company's original registration statement
on Form 10-SB, filed with the Securities Exchange Commission on January 11,
1999, File No. 0-29804.
(2) Incorporated by reference to the Company's Form 8-K/A, filed March 24,
2000.
(3) See page F-3.
(b) REPORTS ON FORM 8-K
On March 13, 2000, the Company filed a Form 8-K to report a change in the
Company's principal independent accountants to King Griffin & Adamson P.C., and
the Company filed a Form 8-K/A on March 24, 2000 to include a letter from the
Company's former principal independent accountants regarding such change in
auditors.
[THIS SPACE INTENTIONALLY LEFT BLANK]
20
<PAGE> 22
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
LINK.COM, INC.
Date: April 14, 2000 By: /s/ MARION ROBERT RICE
------------------------------------------
Marion Robert Rice,
President and CEO
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE SIGNED
- ---- ----- -----------
<S> <C> <C>
By: /s/ MARION ROBERT RICE Director, CEO and President (Principal April 14, 2000
------------------------ Executive, Financial and Accounting
Marion Robert Rice Officer)
By: /s/ ANDY W. McBEE Director and Assistant Secretary April 14, 2000
------------------------
Andy W. McBee
By: /s/ DONALD DESHOTELS Director April 14, 2000
------------------------
Donald Deshotels
</TABLE>
Supplemental information to be Furnished with Reports Filed Pursuant to
Section 15(d) of the Exchange Act by Non-Reporting Issuers: Not Applicable.
21
<PAGE> 23
Consolidated Financial Statements and
Report of Independent Certified Public Accountants
LINK.COM, INC. AND SUBSIDIARIES
(Formerly Center Star Gold Mines, Inc.)
December 31, 1999 and 1998
F-1
<PAGE> 24
LINK.COM, INC. AND SUBSIDIARIES
(Formerly Center Star Gold Mines, Inc.)
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS..........................................F-3
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheets at December 31, 1999 and 1998................................F-4
Consolidated Statements of Operations for the years ended December 31, 1999 and 1998.....F-5
Consolidated Statement of Changes in Shareholders' Deficit for the years ended
December 31, 1999 and 1998............................................................F-6
Consolidated Statements of Cash Flows for the years ended December 31, 1999 and 1998.....F-7
Notes to Consolidated Financial Statements...............................................F-8
</TABLE>
F-2
<PAGE> 25
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF
LINK.COM, INC.
We have audited the accompanying consolidated balance sheets of Link.com, Inc.
(Formerly Center Star Gold Mines, Inc.) and Subsidiaries as of December 31, 1999
and 1998 and the related consolidated statements of operations, changes in
shareholders' deficit, and cash flows for the years then ended. 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 generally accepted auditing
standards. Those standards require that we plan and perform the audits 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 financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Link.com, Inc. and
Subsidiaries as of December 31, 1999 and 1998, and the consolidated results of
their operations and their consolidated cash flows for the years then ended, in
conformity with generally accepted accounting principles.
As described in Note 3, the accompanying consolidated financial statements have
been prepared assuming that the Company will continue as a going concern. The
Company has experienced recurring losses and has liabilities significantly in
excess of assets at December 31, 1999. Additionally, the Company has generated
negative cash flows from operations. These conditions raise substantial doubt
about the Company's ability to continue as a going concern. Unless the Company
obtains additional financing, it will not be able to meet its obligations as
they come due and it will be unable to execute its long-term business plan. The
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
/S/ KING GRIFFIN & ADAMSON P.C.
KING GRIFFIN & ADAMSON P.C.
Dallas, Texas
March 24, 2000, except for note 5, as to
which the date is April 13, 2000
F-3
<PAGE> 26
LINK.COM, INC. AND SUBSIDIARIES
(Formerly Center Star Gold Mines, Inc.)
CONSOLIDATED BALANCE SHEETS
December 31, 1999 and 1998
<TABLE>
<CAPTION>
ASSETS
1999 1998
----------- ---------
<S> <C> <C>
Current assets
Cash and cash equivalents $ 576,424 $ 7,283
Accounts receivable - trade, net of allowance for
doubtful accounts of $30,864 and $11,165 in 1999
and 1998, respectively 20,162 20,621
Related party receivables 53,500 53,500
Prepaid expenses 175 2,437
----------- ---------
Total current assets 650,261 83,841
Property and equipment, net 20,150 41,951
Deposits -- 2,437
----------- ---------
Total assets $ 670,411 $ 128,229
=========== =========
LIABILITIES AND SHAREHOLDERS' DEFICIT
1999 1998
----------- ---------
Current liabilities
Bank overdraft $ -- $ 2,059
Line of credit 400,000 410,000
Payable to related parties 142,059 35,139
Accounts payable 10,000 3,107
Accrued liabilities 78,192 3,836
----------- ---------
Total current liabilities 630,251 454,141
Long-term debt 1,217,750 --
----------- ---------
Total liabilities 1,848,001 454,141
Shareholders' deficit
Common stock - $0.001 par value; 50,000,000 shares authorized,
11,111,111 shares issued and outstanding at December 31,
1999 and 1998 11,111 11,111
Additional paid-in capital (deficit) (9,111) (9,111)
Receivable for the purchase of equity (2,000) (2,000)
Accumulated deficit (1,177,590) (325,912)
----------- ---------
Total shareholders' deficit (1,177,590) (325,912)
----------- ---------
Total liabilities and shareholders' deficit $ 670,411 $ 128,229
=========== =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE> 27
LINK.COM, INC. AND SUBSIDIARIES
(Formerly Center Star Gold Mines, Inc.)
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
Revenues $ 192,708 $ 253,869
Operating expenses 970,258 357,189
------------ ------------
Operating loss (777,550) (103,320)
Interest income from related parties -- 4,937
Other income 455 3,187
Interest expense (74,583) (32,676)
------------ ------------
Net loss $ (851,678) $ (127,872)
============ ============
Net loss per common share - basic and diluted $ (0.08) $ (0.01)
============ ============
Weighted-average number of common shares outstanding - basic
and diluted 10,592,701 10,388,898
============ ============
</TABLE>
The accompanying notes are an integral part of this consolidated financial
statement.
F-5
<PAGE> 28
LINK.COM, INC. AND SUBSIDIARIES
(Formerly Center Star Gold Mines, Inc.)
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' DEFICIT
For the Years Ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
Common Stock Additional
-------------------- Paid-in Accumulated Notes
Shares Amount Capital (Deficit) Deficit Receivable Total
---------- ------- ----------------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balances at January 1, 1998 240,938 $ 241 $ 433,464 $ (439,258) $ -- $ (5,553)
Issuance of common stock and
recapitalization in reverse
acquisition transaction 10,388,898 10,389 (447,647) 241,218 (2,000) (198,040)
Issuance of common stock
for services 36,831 37 626 -- -- 663
Capital contributed by officer 444,444 444 4,446 -- -- 4,890
Net loss for the year -- -- -- (127,872) -- (127,872)
---------- ------- --------- ----------- ------- -----------
Balances at December 31, 1998 11,111,111 11,111 (9,111) (325,912) (2,000) (325,912)
Net loss for the year -- -- -- (851,678) -- (851,678)
---------- ------- --------- ----------- ------- -----------
Balances at December 31, 1999 11,111,111 $11,111 $ (9,111) $(1,177,590) $(2,000) $(1,177,590)
========== ======= ========= =========== ======= ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-6
<PAGE> 29
LINK.COM, INC. AND SUBSIDIARIES
(Formerly Center Star Gold Mines, Inc.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
----------- ---------
<S> <C> <C>
Cash flows from operating activities
Net loss from operations $ (851,678) $(127,872)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation 29,462 30,110
Gain on sale of property and equipment -- (1,267)
Bad debt expense 19,699 11,165
Changes in operating assets and liabilities:
Accounts receivable - trade (19,240) (31,786)
Related party receivables -- 22,059
Prepaid expenses 2,262 (146)
Accounts payable 6,893 (4,042)
Accrued liabilities 74,356 (3,621)
Deposits 2,437 (2,437)
----------- ---------
Cash flows used in operating activities (735,809) (107,837)
Cash flows from investing activities
Purchases of property and equipment (7,661) (16,409)
Proceeds from sale of equipment -- 4,472
----------- ---------
Cash flows used in investing activities (7,661) (11,937)
Cash flows from financing activities
Borrowings on line of credit -- 88,500
Payments on line of credit (10,000) --
Borrowings on long-term debt 1,217,750 --
Payable to related parties 106,920 35,139
Bank overdraft (2,059) 2,059
----------- ---------
Cash flows provided by financing activities 1,312,611 125,698
----------- ---------
Net increase in cash 569,141 5,924
Cash, beginning of year 7,283 1,359
----------- ---------
Cash, end of year $ 576,424 $ 7,283
=========== =========
Supplemental disclosures for cash flow information:
Cash paid during the year for:
Interest $ 52,540 $ 38,120
=========== =========
Income taxes $ -- $ --
=========== =========
Supplemental non-cash financing and investing activities:
Receivable issued in exchange for equity $ -- $ 1,000
=========== =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-7
<PAGE> 30
LINK.COM, INC. AND SUBSIDIARIES
(Formerly Center Star Gold Mines, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 1999 and 1998
1. NATURE OF OPERATIONS
Link.com, Inc. (the "Company" or "Link"), a Nevada corporation, provides
development, marketing, licensing, service, and support for software products
which are designed for the healthcare industry. The Company, which is located in
Texas, sells its software products to customers throughout the United States.
In September 1999, Link entered into a reverse acquisition agreement with Center
Star Gold Mines, Inc. ("CSGM"), a publicly held "shell" Nevada Corporation. CSGM
purchased 100% of Link's shares in a tax-free reorganization. CSGM issued
10,388,898 shares of CSGM $0.001 par value common stock in exchange for all of
the outstanding shares of Link. For accounting purposes, the acquisition of Link
by CSGM is treated as a recapitalization of Link with Link as the acquirer (a
reverse acquisition). Accordingly, the historical financial statements prior to
the reverse acquisition date included herein are those of Link and its
predecessors, Venture Information Systems, LLC and National Health Care
Information Systems, LLC. Subsequent to the reverse acquisition, the name of
Center Star Gold Mines, Inc. was changed to Link.com, Inc.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of
Link.com, Inc., Venture Information Systems, LLC, and National Health Care
Information Systems, LLC. All significant intercompany transactions and balances
have been eliminated in consolidation.
Cash Equivalents
For purposes of the statement of cash flows, the Company considers all highly
liquid investments purchased with an original maturity of three months or less
to be cash equivalents.
Accounts Receivable
The Company extends unsecured credit in the normal course of business to
virtually all of its customers. Management has provided an allowance for
doubtful accounts which reflects its opinion of amounts which may ultimately
become uncollectible. In the event of non-performance of accounts receivable,
the maximum exposure to the Company is the recorded amount shown on the balance
sheet.
Property and Equipment
Property and equipment are carried at cost. Expenditures for maintenance and
repairs are charged directly against income. Major renewals and betterments are
capitalized.
Depreciation on property and equipment is calculated using the straight-line
method over the estimated useful lives of the assets, which range from 3 to 5
years.
F-8
<PAGE> 31
LINK.COM, INC. AND SUBSIDIARIES
(Formerly Center Star Gold Mines, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 1999 and 1998
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Software Development Costs
Costs incurred in the research and development of new software products and
enhancements to existing software products are expensed as incurred until
technological feasibility has been established. After technological feasibility
is established, any additional costs are capitalized in accordance with SFAS No.
86, "Accounting for the Costs of Computer Software to Be Sold, Leased or
Otherwise Marketed". Because the Company believes that its current process for
developing software is essentially completed concurrently with the establishment
of technological feasibility, no software development costs have been
capitalized as of December 31, 1999.
Federal Income Taxes
The Company provides for income taxes under the asset and liability approach.
This method requires that deferred tax assets and liabilities be recognized for
the future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases. Valuation allowances are established, when necessary, to
reduce deferred tax assets to the amount expected to be realized. Deferred tax
assets and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to
be recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.
Prior to August 31, 1999, the predecessor companies operated as limited
liability companies; therefore, they were not subject to federal income taxes.
Accordingly, federal income taxes are not reflected in the accompanying
financial statements prior to that date.
Revenue Recognition
The Company recognizes revenue from software sales at the time of product
shipment, or in accordance with terms of licensing contracts. Maintenance and
service revenue are recognized ratably over the contractual period or as the
services are provided. Advance billings are recorded as deferred revenue.
Loss Per Common Share
Basic loss per share is computed by dividing the net loss by the
weighted-average number of common shares outstanding during the year. Diluted
loss per common share is computed by dividing the net loss by the weighted-
average number of common shares outstanding plus the number of additional
shares that would have been outstanding if potentially dilutive securities
had been issued. As of December 31, 1999 and 1998, the Company did not have
any potentially dilutive securities.
F-9
<PAGE> 32
LINK.COM, INC. AND SUBSIDIARIES
(Formerly Center Star Gold Mines, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 1999 and 1998
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Fair Value of Financial Instruments
Statement of Financial Accounting Standards No. 107 "Disclosure About Fair Value
of Financial Instruments", requires disclosure about the fair value of all
financial assets and liabilities for which it is practicable to estimate. At
December 31, 1999 and 1998 the carrying value all of the Company's accounts
receivable, accounts payable and accrued liabilities approximate fair value
because of their short term nature.
Lines of credit and long term-debt carrying values approximate fair values based
on the borrowing rates currently available to the Company for loans with similar
terms.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities as of the date of the financial statements, as
well as the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Recent Accounting Pronouncements
The Company adopted Statement of Financial Accounting Standards No. 131,
"Disclosures about Segments of an Enterprise and Related Information" ("SFAS
131") during the fiscal year ended December 31, 1998. SFAS 131 establishes
standards for reporting information regarding operating segments in annual
financial statements and requires selected information for those segments to be
presented in interim financial reports. SFAS 131 also establishes standards for
related disclosures about products and services and geographic areas. Operating
segments are identified as components of an enterprise about which separate
discrete financial information is available for evaluation by the chief
operating decision maker, or decision making group, in making decisions about
how to allocate resources and assess performance. The Company has only one
operating segment at December 31, 1999 and 1998.
In June 1999, the FASB issued SFAS No. 137, "Accounting for Derivative
Instruments and Hedging Activities-Deferral of the Effective Date of FASB
Statement No. 133", which establishes accounting and reporting standards for
derivative instruments. SFAS No. 137 is effective for all fiscal quarters for
all fiscal years beginning after June 15, 2000. The adoption of SFAS 137 is not
expected to have a significant impact on the Company's results of operations.
3. GOING CONCERN
The consolidated financial statements have been prepared on the assumption that
the Company will continue as a going concern. The Company sustained net
operating losses of $851,678 and $127,872 during the years ended December 31,
1999 and 1998, respectively, and has accumulated losses at December 31, 1999 of
$1,177,590. Cash used in operating activities for the same periods aggregated
$735,809 and $107,837, respectively. Total liabilities at December 31, 1999 of
$1,848,001 exceed total assets of $670,411. The Company's continued existence
depends upon the success of management's efforts to raise additional capital
necessary to meet the Company's obligations as they come due and to obtain
sufficient capital to execute its business plan. The Company intends to obtain
capital primarily through issuances of equity.
F-10
<PAGE> 33
LINK.COM, INC. AND SUBSIDIARIES
(Formerly Center Star Gold Mines, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 1999 and 1998
3. GOING CONCERN (CONTINUED)
There can be no degree of assurance given that the Company will be successful in
completing additional financing transactions.
The consolidated financial statements do not include any adjustments to reflect
the possible effects on the recoverability and classification of assets or
classification of liabilities which may result from the inability of the Company
to continue as a going concern.
4. PROPERTY AND EQUIPMENT
Property and equipment at December 31 consists of the following:
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Computer equipment $ 95,436 $ 89,875
Furniture and fixtures 3,811 1,711
----------- -----------
99,247 91,586
Less accumulated depreciation (79,097) (49,635)
----------- -----------
$ 20,150 $ 41,951
=========== ===========
</TABLE>
Depreciation expense for the years ended December 31, 1999 and 1998 was $29,462
and $30,110, respectively.
5. LINE OF CREDIT
During September 1997, the Company entered into a revolving credit agreement
with a financial institution which provides for borrowings of up to $400,000.
Borrowings under the agreement bear interest at a variable rate equal to the
prime lending rate in effect plus one percent (9.5% and 8.75% at December 31,
1999 and 1998, respectively). Principal and interest payments are due on demand,
but if no demand is made, at maturity. The Company renewed the agreement during
September 1999 extending the maturity date to March 2000. In April 2000, the
line of credit was extended with a maturity date of October 2001. Outstanding
borrowings under this agreement were $400,000 at December 31, 1999 and 1998.
Additionally, the Company had a $25,000 line of credit agreement with a
financial institution, with interest at 9%, which matured on November 12, 1999.
The balance due under this line of credit agreement was $10,000 at December 31,
1998.
6. LONG-TERM DEBT
Long-term debt at December 31, 1999 consists of convertible debentures. The
debentures are convertible into cash or stock (or a combination of cash and
stock) upon maturity. The maturity dates range from September, 2001 to November,
2001. These debentures are subject to an annual interest rate of 12% payable
monthly through maturity. Upon conversion to common stock, the holder of the
debenture will be given stock with an assigned value of $2.00 per share. (Also
see Note 11)
F-11
<PAGE> 34
LINK.COM, INC. AND SUBSIDIARIES
(Formerly Center Star Gold Mines, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 1999 and 1998
6. LONG-TERM DEBT (CONTINUED)
At December 31, 1999, scheduled maturities of long-term debt are as follows:
2000 $ --
2001 1,217,750
-----------
Total future maturities $ 1,217,750
===========
7. INCOME TAXES
At December 31, 1999 and 1998 deferred tax assets and liabilities are comprised
of the following:
<TABLE>
<CAPTION>
1999 1998
--------- -------
<S> <C> <C>
Deferred tax assets
Accounts receivable $ 11,410 $ --
Net operating loss 248,063 --
--------- -------
Total deferred tax asset 259,473 --
Less: Valuation allowance (259,473) --
--------- -------
Net deferred tax asset $ -- $ --
========= =======
</TABLE>
The deferred tax assets have a 100% valuation allowance due to the uncertainty
of generating future taxable income.
A reconciliation of the Company's income tax provision with the amount of tax
computed at the statutory rate for the years ended December 31, 1999 and 1998 is
as follows:
<TABLE>
<CAPTION>
1999 1998
--------- --------
<S> <C> <C>
Income tax benefit at statutory rate $ 289,571 $ 43,476
Loss allocable to limited liability companies (58,785) (43,476)
Changes in valuation allowance (259,473) --
Other 28,687 --
--------- --------
$ -- $ --
========= ========
</TABLE>
The Company has a net operating loss carryover of approximately $671,000 at
December 31, 1999. The net operating loss carryover, which is subject to annual
limitations as prescribed by the Internal Revenue Code, is available to offset
the future taxable income through 2019.
8. LEASES
The Company leases its office facilities and office equipment under various
non-cancelable operating lease agreements which expire through September 2002.
Total rent expense associated with these leases was $49,662 and $53,804 for the
years ended December 31, 1999 and 1998, respectively.
Future minimum lease payments under non-cancelable operating leases at December
31, 1999 are as follows:
<TABLE>
<S> <C>
2000 $ 62,832
2001 59,484
2002 44,613
--------
Total $166,929
========
</TABLE>
F-12
<PAGE> 35
LINK.COM, INC. AND SUBSIDIARIES
(Formerly Center Star Gold Mines, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 1999 and 1998
9. RELATED PARTY TRANSACTIONS
During 1999 and 1998 the Company incurred liabilities to its shareholders for
unpaid compensation. Total amounts accrued for unpaid compensation were $106,056
and $35,139 at December 31, 1999 and 1998, respectively.
The majority shareholders of the Company also own 100% of the stock of
Centratex, Inc. ("Centratex"). During 1999, the Company incurred $36,003 in
management fees payable to Centratex. These charges related to certain general
and administrative cost allocations and salaries of Centratex personnel for the
provision of services to the Company. Total amounts due to Centratex for
management fees were $36,003 and $0 at December 31, 1999 and 1998, respectively.
The Company rents one of its facilities from the shareholders on a
month-to-month basis. The shareholders were paid $5,000 in rent for the year
ended December 31, 1999.
Additionally, during 1998 the Company advanced $53,500
to a shareholder. This advance is non-interest bearing and there are no stated
repayment terms. The receivable amount at December 31, 1999 and 1998 was
$53,500. The Company intends to collect the entire balance in 2000.
10. BUSINESS AND CREDIT CONCENTRATIONS
At December 31, 1999 no customers accounted for 10% or more of revenues or
accounts receivable. The Company had one customer that accounted for 10% of
accounts receivable at December 31, 1998.
In addition, cash is maintained in financial institutions which, at times, may
exceed Federal Deposit Insurance Corporation insured amounts. However, the
Company mitigates its risk by assuring that cash is maintained in high quality
credit institutions.
11. SUBSEQUENT EVENT
In March, 2000 the Company entered into a letter of understanding to purchase
substantially all of the property, equipment and intellectual property of LuRo
Associates, LLC in exchange for 145,000 shares of the Company's common stock and
the assumption of certain lease and license obligations. The transaction is
expected to close during the second quarter of 2000.
From August to December 1999, the Company issued an aggregate amount of
$1,217,750 of Convertible Debentures to approximately 50 individuals. These
securities were issued pursuant to an exemption from registration available
under Section 4(2) of the Securities Act of 1933, as amended. However,
management of the Company determined that such offering may have violated such
registration requirements and, therefore, the Company made a rescission offer
to the Debenture holders during the first quarter of 2000. In March 2000, the
Company completed its rescission offer, and all but two of the Debenture
holders elected not to rescind the purchase of their securities. The Company
paid an aggregate amount of approximately $12,000 of principal and interest to
these two individuals in connection with the rescission offer.
On September 23, 1999, the Board of Directors of the Company approved a reverse
split of the outstanding common shares at the rate of one share for every 4.5
shares outstanding. Shareholders representing a majority of the outstanding
shares of common stock approved such actions, subject to the notification of
the shareholders as required by the rules and regulations of the Securities and
Exchange Commission. The split became effective March 7, 2000. Share and per
share data for all periods presented herein have been adjusted to give effect
to the stock split.
F-13
<PAGE> 36
EXHIBIT INDEX
<TABLE>
<CAPTION>
Number Description
- ------ -----------
<S> <C>
3.1 Articles of Incorporation of the Company(1)
3.2 Articles of Amendment to Articles of Incorporation
3.3 Bylaws of Company(1)
4.1 Form of Debenture Agreement with Conversion Privileges
10.1 Lease Agreement, dated November 3, 1999, by and between Texas
Townhouse and Condominium Association, Inc. and Link.com, Inc.
10.2 Sublease, dated February 1, 2000, by and between GTECH Corporation, a
Delaware corporation (as sublandlord) and Link.com, Inc. (as
subtenant).
10.3 Assignment and Assumption Agreement, effective as of August 31, 1999,
by and between Venture Information Systems, LLC, a Texas limited
liability company and Link.com, Inc., a Nevada corporation.
10.4 Assignment and Assumption Agreement, effective as of August 31, 1999,
by and between National Healthcare Information Systems, LLC, a Texas
limited liability company and Link.com, Inc., a Nevada corporation.
10.5 Promissory Note, dated April 13, 2000, by and between Link.com, Inc.
and the Commercial National Bank of Brady, in the amount of $400,000.00
16.1 Letter on Changes in Certifying Accountants(2)
21.1 Subsidiaries of the Company
27.1 Financial Data Schedule
27.2 Financial Data Schedule Restated
</TABLE>
- --------------------
(1) Incorporated by reference to the Company's original registration statement
on Form 10-SB, filed with the Securities Exchange Commission on January 11,
1999, File No. 0-29804.
(2) Incorporated by reference to the Company's Form 8-K/A, filed
March 24, 2000.
<PAGE> 1
EXHIBIT 3.2
[STAMP]
CERTIFICATE OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
CENTER STAR GOLD MINES, INC.
A NEVADA CORPORATION
It is hereby certified that:
1. The name of the corporation (the "CORPORATION") is Center Star Gold
Mines, Inc.
2. The Articles of Incorporation of the Corporation are hereby amended as
follows:
A. Article I is amended to read in its entirety as follows:
"Article I
Name
The name of the corporation is Link.com, Inc."
B. Article IV is amended to read in its entirety as follows:
"Article IV
Capitalization
The total number of shares of Common Stock of all classes of
capital stock that the Corporation shall have authority to issue is Fifty
Million (50,000,000), designated Common Stock, par value $0.001 per share (the
"COMMON STOCK").
Every 4.5 shares of Common Stock, par value $0.001 per share,
of the Corporation that are issued and outstanding at the time this Article IV
becomes effective (the "ORIGINAL SHARES") shall automatically and without any
further action on the part of the holder thereof be converted into one (1) share
of the Company's $0.001 par value Common Stock (but rounded to the nearest whole
share to avoid the issuance of fractional shares) upon this Article IV becoming
effective. From and after the time this Article IV becomes effective, each share
certificate representing Original Shares may be surrendered for a certificate
representing the number of shares of Common Stock after giving effect to the
1-for-4.5 reverse split (but rounded to the nearest whole share to avoid the
issuance of fractional shares); and the Corporation shall issue a certificate or
certificates representing such number of shares of Common Stock to each holder
of Original Shares upon the surrender of the certificate(s) representing such
Original Shares, provided, however, that the surrender of the certificates
representing Original Shares shall not be necessary to effect such conversion."
<PAGE> 2
3. The number of shares of the Corporation outstanding at the time such
amendments were presented to the shareholders for a vote was
50,000,000, all of which shares were entitled to vote on the adoption
of such amendments. There were no shares of any class or series
entitled to vote on the amendment as a class. Shareholders owning
26,647,522 shares, or approximately 53.3% of the 50,000,000 issued and
outstanding shares, consented in writing to each of the foregoing
amendments.
EXECUTED this 31 day of March, 2000
/s/ M. ROBERT RICE
----------------------------------
M. Robert Rice, President
/s/ ANDY W. MCBEE
----------------------------------
Andy W. McBee, Assistant Secretary
2
<PAGE> 1
EXHIBIT 4.1
DEBENTURE AGREEMENT
WITH
CONVERSION PRIVILEGES
DUE: August 18, 2001
BRADY, TEXAS Date: August 18, 1999
After date and for value received, LINK.COM, INC. Promises to pay to the order
of _______ whose address is _____________ the sum of $_______ pursuant to the
terms hereinafter set forth:
1. SECURITIES PURCHASED. The Holder hereof has purchased as an investment a
$______ convertible debenture. The debenture may be converted to shares of the
common stock of LINK.COM, INC. as further described in the Debenture Agreement.
2. PUBLIC COMPANY. Holder understands that LINK.COM, INC. is presently a
privately owned Corporation that has full intentions of becoming a publicly
traded company within a period of Ninety (90) days from the date of this
Agreement through a reverse merger. Holder understands this Agreement is
structured as if the reverse merger has been completed and LINK.COM, INC. will
be a publicly traded company, quoted and listed on the NASDAQ BULLETIN BOARD.
3. SENIOR DEBT. The debenture shall have a preference in liquidation to all
obligations except bank debt or secured leases. Upon a liquidation, dissolution,
bankruptcy or reorganization, or similar transaction by the company, the holders
of the "senior debt" would be paid full before payment would be made on the
debentures.
4. SECURITY. The convertible debenture is not secured by any assets of LINK.COM,
INC.
5. CONVERSION. The convertible debenture holder may convert the debenture into
Common Stock of the corporation by exercising his right to conversion after six
(6) months from the date of this debenture or at any time thereafter.
Should the Holder elect to exercise his right to conversion, the Corporation
shall pay any accrued interest on said debenture and issue it's Common Stock at
a price of $2.00 per share or Sixty percent (60%) of bid price whichever is
greater at the date of conversion in the amount of shares necessary to satisfy
the debenture.
When the debenture expires the debenture Holder may elect to take cash only,
cash and stock, or all stock. The debenture Holder will advise the Corporation
ninety (90) days prior, to the due date of the debenture as to the payment
method desired.
6. INTEREST. This debenture shall be subject to an annual interest rate of 12%
per annum payable monthly during the one year period. LINK.COM, INC. shall be
obligated to make interest only payments. The Debenture is due in full including
all principal and accrued interest on or before August 18, 2000.
<PAGE> 2
Any payments of principal and interest not paid when due shall bear Interest at
a default rate of 15% per annum until paid.
7. CONVERSION RIGHTS. In addition to the Conversion Rights discussed in
paragraph 4 above, the holder shall have the following rights:
a) Should the Holder elect to exercise his right to conversion, the
corporation shall pay in cash upon delivery of the Stock Certificate any
accrued interest on said debenture less any value of a dividend which has been
declared but not paid on the date of the election to convert.
b) Should LINK.COM, INC. at any time during the conversion period have
a capital reorganization, merger, consolidation, stock swap or sell
substantially all of its assets to any person or corporation, then as part of
such merger, consolidation or sale, provision shall be made for the Conversion
Rights to be adjusted in such a manner as to provide for the protection of said
rights so as to permit the conversion in as nearly equivalent a manner as set
forth herein as is possible. LINK.COM, INC. shall reserve for issuance upon
conversion sufficient, equivalent recapitalized equity to meet its obligations
hereunder during the entire conversion period.
c) Upon presentation to LINK.COM, INC. at the notice address of (1) a
letter requesting conversion, (2) the Conversion Form, which is Exhibit "A"
attached hereto and which provides for the cancellation of the Debenture upon
issuance of the Common Stock, and (3) the original Debenture Agreement all duly
executed; LINK.COM, INC. shall within 5 business days issue a certificate for
the appropriate number of shares and send said certificate to the holder postage
prepaid, registered mail, return receipt or any other manner agreed to by the
holder and LINK.COM, INC.
d) All shares of Common Stock or other securities delivered upon the
exercise of the rights of conversion shall be validly issued, fully paid and
non-assessable.
e) Irrespective of the date of issuance and delivery of a certificate
or certificates for any shares of Common Stock issuable upon the exercise of
conversion rights, each person (including a corporation) in whose name any such
certificate or certificates is to be issued will for all purposes be deemed to
have become the holder of record of the Common Stock, the securities, and/or
property represented thereby on the date on which a duly executed notice of
exercise of conversion rights and the canceled underlying Debenture is
delivered to the Company.
f) The Holder is not, by virtue of ownership of the convertible
debenture, entitled to any rights whatsoever of a stockholder of the Company.
8. NOTICES. All notices and communications to any party to this debenture shall
be in writing and sent to LINK.COM, INC., Attn: Bob Rice, Chairman and CEO, at
201 East Main, Brady, Texas 76825, and to the Holder at the address set forth
below the Holder's signature or at such other place as may be designated in
writing by either party hereto. All notices to overseas addresses shall be by
telex or FedEx overnight with confirmation of receipt required.
9. GENERAL.
a) This debenture is being delivered and is intended to be performed in
the State of Texas and shall be construed and enforced in accordance with and
governed by the laws of such State. All of the terms of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
successors and assigns of the parties hereto whether so expressed or not, and in
particular shall inure to the benefit of and be enforceable by any holder or
holders at the time of the debentures. This Agreement embodies the entire
convertible debenture agreement and understanding between the
<PAGE> 3
undersigned Holder and the company and supersedes all prior agreements and
understandings relating to the subject matter hereof.
b) LINK.COM, INC. may not consolidate or merge, or transfer or lease
all or substantially all of its assets to another corporation unless the other
entity assumes in writing all of the obligations of the Company under the
debentures, and that in the case of a transfer or lease of assets, although the
successor assumes the obligations in writing, the Company shall not be released
from its obligations to pay principal or interest on the debentures.
c) Should the holder lose the Debenture or should it be stolen or
destroyed, the Company will issue a replacement upon receipt of such assurances
as may be reasonably requested by the Company.
d) Interest is payable on the Debenture from the date of acceptance by
LINK.COM, INC. which date shall not exceed 2 business days from receipt of the
Subscription Agreement with funds.
If you agree to the foregoing terms of the Convertible Debenture,
please sign the form in the place provided for the "Holder" and print or type
your full name, address, telephone number and social security number and
execute the attached subscription agreement. No debenture will be accepted
without an executed subscription agreement and payment in full which shall not
be refundable.
DATED this 18th day of August, 1999
ATTEST:
-----------------------------------
Marion Robert Rice Chairman and CEO
The foregoing debenture with attached warrant is hereby agreed to as of
the date hereof
HOLDER: Date:
----------------------------- -----------------------------
-----------------------------
-----------------------------
SS NUMBER:
---------------------------
<PAGE> 4
Link.com, Inc. Debenture Agreement
EXHIBIT "A"
(Attached to the Convertible Debenture
Dated_____)
EXERCISE AGREEMENT
To: Dated:
---------
The undersigned, pursuant to the Conversion Rights set forth in the
attached Debenture hereby agrees to subscribe for and purchase * _______ shares
of the Common Stock covered by such Debenture and makes payment herewith in full
therefor by assigning the attached Debenture to Link.com, Inc. thereby canceling
said debt.
Signature:
-------------------
Address:
-------------------
<PAGE> 1
EXHIBIT 10.1
LEASE AGREEMENT
TEXAS TOWNHOUSE & CONDOMINIUM
OWNERS ASSOCIATION, INC.
AS LANDLORD
and
LINK.COM
---------------------
AS TENANT
DATED: 11-3-99
-------
<PAGE> 2
BASIC LEASE INFORMATION
Tenant: LINK.COM
Notification Address: 15200 Middlebrook Drive, Suite B
Houston, Texas 77058
Landlord: Texas Townhouse & Condominium Owners
Association, Inc.
Notification Address: P.O. Box 890288
Houston, Texas 77289-0288
Project: University Park Business Center
15200 Middlebrook Drive
Houston, TX 77058
Premises: Suite B containing 1,079 square feet in the
Project, as shown on Exhibit "A", attached
to this Lease.
Term: The period beginning on December 1, 1999,
the Commencement Date, and ending at
6:00 p.m. on the last day of the
November 30, 2000 full calendar month after
the Commencement Date. Thus, unless the
Commencement Date falls on the first day
of a calendar month, the Term will also
include the initial partial calendar month
immediately following the Commencement
Date.
Base Rent: .70 p.s.f. N.N.N. % of Common Area
Maintenance. Tenant pay own electricity.
Security Deposit: First Month plus one month security.
Base Year: Calendar year N.A.
Tax Costs Base Rate: The rate of Tax Costs per square foot in
the Project for the Base Year.
Insurance Costs Base Rate: The rate of Insurance Costs per square foot
in the Project for the Base Year.
Tenant Improvements: Any leasehold improvements installed in the
Premises as of the date of this Lease,
together with (and as altered by) the Work
Letter Improvements, if any.
Tenant Finish Allowance: N.A.
Broker: N.A.
Guarantor: LINK.COM
Permitted Use: OFFICE
Utilities: HLEP Electric - Approx .10 p.s.f.
average
C.A.M. % of Square Footage in project: Billed once
yearly approximately .15 cents p.s.f.
The Basic Lease Information is part of the Lease. Each term in the left
column is used throughout the Lease as a defined term with the meaning
stated in the Basic Lease Information.
24,320 S.F. in project
Common Area Maintenance = Refuse, lawn, water, ins, taxes, etc.
2
<PAGE> 3
COMMERCIAL LEASE AGREEMENT
ARTICLE I
PREMISES
1.01 Demise of Premises. In consideration of the mutual covenants and
agreements set forth in this Lease, and other good and valuable consideration,
and subject to all the terms and provisions of this Lease Agreement (hereinafter
referred to as the "Lease"). Landlord hereby leases to Tenant and Tenant hereby
leases from Landlord the Premises which is situated on the land described in
Exhibit "B" attached hereto and made a part hereof for all purposes
("Property").
1.02 Condition of Premises. Tenant hereby accepts the Premises in their
AS IS, WHERE IS, WITH ALL FAULTS condition existing as of the date or the
possession hereunder, (save only for Work Letter Agreement; if any) subject to
all applicable zoning, municipal, county and state laws, ordinances and
regulations governing and regulating the use of the Premises. Tenant shall, at
Landlord's request, execute an acceptance of Premises form prior to taking
possession thereof. TENANT ACKNOWLEDGES THAT NEITHER LANDLORD NOR LANDLORD'S
AGENT(S) HAS MADE ANY REPRESENTATION OR WARRANTY AS TO THE SUITABILITY OF THE
PREMISES FOR THE CONDUCT OF TENANT'S BUSINESS AND TENANT WAIVES ANY IMPLIED
WARRANTY THAT THE PREMISES ARE SUITABLE FOR TENANT'S INTENDED COMMERCIAL
PURPOSES. TENANT EXPRESSLY ACKNOWLEDGES THAT TENANTS OBLIGATION TO PAY RENT
HEREUNDER IS NOT DEPENDENT UPON THE CONDITION OF THE PREMISES. THE TAKING OF
POSSESSION OF THE PREMISES SHALL BE CONCLUSIVE EVIDENCE THAT THE TENANT ACCEPTS
THE PREMISES AND THAT THE PREMISES WERE IN GOOD CONDITION AT THE TIME POSSESSION
WAS TAKEN. IN NO EVENT SHALL LANDLORD BE LIABLE FOR ANY DEFECTS IN THE PREMISES
OR FOR ANY LIMITATION ON ITS USE.
1.03 Use of Premises. Tenant shall have the right to use the Premises
as specified in the Basic Lease Information.
1.04 Compliance. Tenant, at its own expense, will comply with all
federal, state, municipal and other laws, ordinances, rules and regulations
applicable to the Leased Premises and the business conducted therein by Tenant,
including, without limitation, the Americans With Disabilities Act and related
state statutes, and will indemnify and hold Landlord harmless from any costs or
expenses in connection therewith; will install, remove and alter such fixtures,
equipment and facilities in, and make such alterations to, the Leased Premises
as may be necessary so to comply; and will furnish and maintain an adequate
number of fire extinguishers in good operating condition as may be required by
Applicable Law. Tenant will not engage in any activity or permit any nature of
construction by Tenant or any other condition at the Leased Premises which would
cause Tenant's fire and extended coverage insurance to be canceled, or the rate
therefor increased (unless Tenant pays any such increase); will comply with such
safety recommendations and loss prevention and loss reduction recommendations as
Tenant's insurance carriers may, from time to time, request; will not make any
unlawful use thereof; and will not commit any act which is a nuisance or
annoyance to Landlord.
1.05 Rules and Regulations. Tenant agrees to comply with all building
rules and regulations or Landlord as attached hereto as Exhibit "C" and
incorporated herein by reference and as may be promulgated by Landlord and any
protective covenants pertaining to the Property as attached hereto as Exhibit
"D" and incorporated herein by reference.
1.06 Signage. Tenant shall not, without Landlord's prior written
consent erect or install any signs upon the Premises. Any signs which Tenant
may be permitted to erect or install shall comply with Landlord's established
sign criteria. Tenant shall remove all signs at the termination of this Lease at
Tenant's sole cost, risk and expense and shall in a workmanlike manner properly
repair any damage caused by the removal of Tenant's signs.
ARTICLE II
TERM OF LEASE
2.01 Initial Term and Commencement. The initial term ("Term") or this
Lease shall commence on the Commencement Date, and shall, unless sooner
terminated as provided herein, expire as specified in the Basic Lease
Information.
2.02 Delay in Commencement. In the event that the Premises should not
be ready for occupancy by the Commencement Date for any reason, Landlord shall
not be liable or responsible for any claims, damages or liabilities in
connection therewith or by reason thereof and, unless such delay is due to the
act or omission of Tenant, this Lease shall be effective only from the time that
the Premises became ready for occupancy by Tenant. In such event, Landlord shall
notify Tenant or the date that the Premises will be ready for occupancy and such
date shall be the Commencement Date or this Lease. If the Premises are not ready
for occupancy by the Commencement Date due in whole or in part to the act or
omission of
3
<PAGE> 4
Tenant, then the Commencement Date of this Lease shall not be delayed pursuant
to this Paragraph 2.02.
2.03 Early Possession. In the event that Landlord shall permit Tenant
to occupy the Premises prior to the Commencement Date of the term, such
occupancy shall be subject to all provisions of this Lease, including, but not
limited to, payment of Rent. Said early possession shall not advance the
Termination Date of this Lease. Subject to prior written approval by Landlord,
Tenant may be permitted to enter the Premises for the sole purpose or making
approved improvements in the Premises without payment, of rent during the
construction period prior to the Commencement Date.
2.04 Delivery or Possession. Tenant shall be deemed to have been
delivered possession of the Premises upon the earliest to occur of any of the
following: (a) Landlord delivers or tenders delivery for possession of the
Premises to Tenant; (b) upon a Certificate from the Landlord's architect or
contractor, or from Landlord or from the City of Houston Public Works Department
inspectors (or the applicable government department) that the Premises are
ready for occupancy; or (c) partial occupancy or use of the Premises by Tenant;
or (d) Certificate of Occupancy is granted by proper governmental authority.
ARTICLE III
RENT
3.01 Payment of Rent. Tenant shall pay to Landlord the Base Rent as
specified in the Basic Lease Information in advance and without demand on the
first day of each calendar month throughout the Term. Tenant shall pay the first
installment of Base Rent upon execution of this Lease. Monthly installments for
any partial calendar month of the Term shall be pro rated.
3.02 Security Deposit. Concurrently with Tenant's execution of this
Lease. Tenant has deposited the Security Deposit as specified in the Basic
Lease Information to secure the faithful performance by Tenant of all the
covenants and conditions contained in this Lease.
3.03 Application of Security Deposit. The Security Deposit shall be
applied as follows:
(a) In the event of the occurrence of an Event of Default, as
hereinafter defined, by Tenant hereunder, Landlord, at its
sole option, may cause the forfeiture of the Security Deposit
as provided in Section 12.03 hereinafter, or apply the
Security Deposit to cure such Event of Default. Landlord shall
not be required to apply the Security Deposit to past due
rent.
(d) The Security Deposit shall be returned to Tenant, less damages
or unpaid obligations owed by Tenant to Landlord pursuant to
this Lease within sixty (60) days of the expiration of the
Term hereof, together with an itemized list of deductions.
(e) Landlord may deliver the Security Deposit to any purchaser
of Landlord's interest in the Premises in the event that such
interest be sold, whereupon Landlord shall be discharged from
further liability with respect thereto. Tenant shall not be
entitled to any interest on the Security Deposit, and Landlord
shall have the right to commingle the Security Deposit with
other funds of Landlord.
(f) The Security Deposit shall not be considered an advance
payment of Rent or a measure of Landlord's damages in case of
default by Tenant.
(g) Should the Security Deposit be applied to cure an Event of
Default. Tenant shall reimburse Landlord for the amount so
applied within ten (10) days after notice to Tenant of such
application.
3.04 Rent. The term "Rent" as used in this Lease shall mean Base Rent
plus all other amounts provided for in this Lease to be paid by Tenant, all of
which shall constitute rental in consideration for this Lease and the leasing of
the Premises.
3.05 Late Charges. All past due installments of rent or other payments,
charges, costs or damages due from Tenant to Landlord shall bear interest at
the rate of 18% per annum or the maximum rate of interest allowed by law from
date due until paid if such rate is lower than 18% per annum. Tenant hereby
acknowledges that late payment by Tenant to Landlord of rent and other sums due
hereunder will cause Landlord to incur costs not contemplated by this Lease and
in addition to interest charges, the exact amount of which will be extremely
difficult to ascertain. Such costs include, but are not limited to, processing
and accounting charges, and late charges which may be imposed on Landlord by
the terms of any mortgage or deed of trust covering the Premises. If any check
from Tenant to Landlord is returned unpaid by Tenant's bank for any reason
whatsoever. Landlord shall have the right, in its sole and absolute discretion,
to require all future payments to be made by cashier's check or money order for
such period as Landlord deems necessary or desirable. Other remedies
notwithstanding, if
4
<PAGE> 5
the monthly rental payment is not received by Landlord on or before the fifth
(5th) day of each month for which rent is due, or if any other payment due
Landlord by Tenant is not received by Landlord on or before the fifth (5th) day
of the month next following the month in which Tenant was invoiced an initial
service charge of twelve percent (12%) of such past due amount shall become due
and payable in addition to such amounts owed under this Lease. In addition, if
the monthly rental payment is not received by Landlord on or before the
fifteenth (15th) day of the month for which rent is due, or if any other
payment due Landlord by Tenant is not received by Landlord on or before the
fifteenth (15th) day of the month next following the month in which Tenant was
invoiced, an additional service charge of twelve percent (12%) of such past due
amount shall become due and payable in addition to such amounts owed under the
Lease and the initial service charge. Payment of such interest and service
charges shall not excuse or cure any default by Tenant under this Lease.
3.06 Place and Manner of Payment. Rent and any other payment required
to be made to Landlord shall be made to the address specified in the Basic Lease
Information or elsewhere in the United States of America as Landlord may from
time to time designate in writing, in legal Lender for the payment or public and
private debts without notice or demand, and without abatement, reduction, or
deduction therefrom (except as provided in Sections 10.01 and 10.02). For
purposes of establishing venue in any proceeding relating to this Lease, all
such amounts shall be deemed payable in Harris County, Texas, where exclusive
venue shall lie. Failure by Tenant to pay Rent shall constitute a default
hereunder, and shall give rise to all remedies available to Landlord under this
Lease, in equity and at law for non-payment of rent.
ARTICLE IV
TAXES
4.01 Personal Property Taxes. Tenant shall pay before the same become
delinquent all taxes which may be charged, assessed, or imposed upon all
fixtures, equipment and other personal property located in or on the Premises,
and Tenant shall pay all license fees, sales taxes and other taxes which may be
imposed upon the business of Tenant conducted upon the Premises.
4.02 Definition or "Real Property Taxes". As used herein, the term
"real property taxes" shall include any form or assessment, license fee, rent
tax, rent sales tax, levy, penalty, or tax, (other than inheritance or estate
taxes), imposed by any authority having the direct or indirect power to tax,
including any city, county, state or federal government, or any school;
agricultural, lighting, drainage or other improvement, district, thereof, as
against any legal or equitable interest of Landlord in the Premises or in the
Property of which the Premises are a part, as against the Landlord's right to
rent or other income therefrom, or as against Landlord's business or leasing the
Premises.
4.03 Joint Assessment of "Real Property Taxes". If the Property is not
separately assessed. Tenant's liability shall be an equitable proportion of the
real property taxes for all of the land and improvements included within the tax
parcel assessed, such proportion to be determined by Landlord from the
respective valuations assigned in the assessor's work sheets or such other
information as may be available. Landlord's determination thereof shall be
conclusive.
4.04 Payment of Real Property Taxes. Landlord shall pay all real
property taxes applicable to the Property; provided, however, that Tenant shall
pay during the term hereof as Additional Rent. Tenant's pro rata share of the
amount of the increases, if any, by which real property taxes applicable to the
Property increases over and above the amount being paid by Landlord in the Base
Year. Tenant shall pay Tenant's pro rata share of the amount or such real
property Lax increases within thirty (30) days after receipt of Landlord's
written statement setting forth the amount of such increase. Landlord's
determination of the amount due shall be conclusive. If the term of this Lease
shall not expire concurrently with the expiration period covered by such real
property taxes, Tenant's liability for the amount or the increased real property
taxes shall be prorated on an annual basis.
4.05 Increase In "Real Property Taxes". Notwithstanding the provisions
of this Article IV, Tenant shall pay any increase in "real property taxes"
resulting from any and all improvements of any kind whatsoever placed on or in
the Premises for the benefit of or at the request of Tenant regardless of
whether said improvements were installed or constructed either by Landlord, or
Tenant, except those items included with the original Premises.
ARTICLE V
UTILITIES
5.01 Utilities. Landlord shall provide normal utility service
connection to the Premises. Tenant, at its sole expense, for its sole account
and at all times shall make all arrangements, contracts, deposits and payments
required for any utility services, gas, water, sewer, electricity, lighting, air
conditioning, heating, telephone service, security services, janitorial
services, trash pickup, and other services of any kind which may be desired by
Tenant. Under no
5
<PAGE> 6
circumstances will Landlord be liable for interruptions or failure in the supply
of any such utilities, nor shall such interruptions or failure constitute an
eviction or disturbance of Tenant's use or possession of the Leased Premises, or
a breach by Landlord of any of its obligations hereunder or entitle Tenant to be
relieved from any of its obligations hereunder (including monetary obligations).
ARTICLE VI
REPAIRS AND MAINTENANCE
6.01 Maintenance by Landlord. Landlord shall at its expense maintain
only the roof, foundation and the structural soundness of the exterior walls
(excluding all windows, window glass, plate glass and all doors) of the building
in good repair and condition, except for reasonable wear and tear and repairs
occasioned by the act or negligence of Tenant, its agents, employees or
invitees. Tenant shall repair and pay for any damage caused by Tenant's
negligence or default hereunder or resulting from any forced entry or break-in
at the demised Premises. Tenant shall immediately give written notice to
Landlord of the need for repairs, and Landlord shall proceed promptly to make
such repairs after having had reasonable opportunity. Landlord's liability
hereunder shall be limited to the cost of such repairs or corrections.
6.02 Maintenance by Tenant. Tenant shall, at its own cost and expense,
maintain all other parts of the building and other improvements on the demised
Premises (including the area located at the rear of the demised Premises) in
good repair and condition (including all necessary replacements), including, but
not limited to, all windows, window glass, plate glass, all doors, plumbing
lines, pipes and fixtures, including sanitary sewer lines to the point of
connection with the main sewer line serving the demised Premises and all water
lines from the meter to the demised Premises, air conditioning and heating
systems, ducts and equipment, electrical lines, fixtures and equipment,
including provisions for electrical service to the demised Premises, and
regular removal of debris. Tenant shall take good care of the demised
Premises and suffer no waste, and Tenant shall keep the parking areas, driveways
and alleys adjacent to the demised Premises in a clean and sanitary
condition. Should Tenant neglect to make any repairs or perform any maintenance
required herein within ten (10) days after written notice from Landlord, then
Landlord shall have the right (but not the obligation) to make such repairs
without liability to Tenant for any loss or damage which may result to its stock
or business by reason of such repairs, and any reasonable costs therefor shall
be charged to Tenant as Additional Rent and shall be payable by Tenant with the
payment of rental next due hereunder. At the termination of this Lease, Tenant
shall deliver up the demised Premises in the same good order and condition as
existed at the beginning date of this Lease, ordinary wear and tear, natural
deterioration beyond the control of Tenant, and damage by fire, tornado or
other casualty alone excepted.
ARTICLE VII
ASSIGNMENT AND SUBLETTING
7.01 Landlord's Assignment. Landlord shall have the right to transfer
and assign in whole or in part, by operation of law or otherwise. Its rights and
obligations under this Lease whenever Landlord, in its sole judgment, deems it
appropriate without any liability to Tenant and Tenant shall attorn to any party
to which Landlord transfers the Leased Premises.
7.02 Tenant's Assignment and Subleasing. Tenant shall not assign its
rights under this Lease or sublease any part of the Premises, or permit any
licensee or concessionaire to operate in or out of the premises, without the
prior written consent of the Landlord. Should Landlord consent to any such
assignment, sublease, license or concession, any rent (including, without
limitation, any percentage rent included therein) received by Tenant therefrom
in excess of the Rent allocable to the area so assigned or sublet shall be paid
to Landlord immediately upon receipt by Tenant. No assignment or subletting by
Tenant or any license or concession arrangement shall relieve Tenant of any
obligation under this lease. Any attempted assignment or sublease by Tenant or
any license or concession arrangement in violation of the terms and covenants of
this Section shall be void and shall constitute a material breach of this Lease.
ARTICLE XIII
INSURANCE, WAIVER OR SUBROGATION, AND INDEMNITY
8.01 Tenant's Insurance. Tenant shall provide public liability and
property damage insurance for its business operations on the Leased Premises in
the amount of $1.000,000.00 which policy shall cover the Landlord as well as the
Tenant. Said Insurance policies required to be provided by Tenant herein shall
name Landlord as an insured and shall be issued by an insurance company approved
by Landlord. Tenant shall provide Landlord with certificates of insurance
evidencing the coverage required herein. Tenant shall be solely responsible for
fire and casualty insurance on Tenant's property on or about the Leased
Premises. If Tenant does not maintain such insurance in full force and effect.
Landlord may notify Tenant of such failure and if Tenant does not deliver to
Landlord within ten (10) days after such notice certification showing all such
insurance to be in full force and effect, Landlord may at his option take out
6
<PAGE> 7
the necessary insurance to comply with the provision hereof and pay the premiums
on the items specified in such notice, and Tenant covenants thereupon on demand
to reimburse and pay Landlord any amount so paid or expended in the payment of
the Insurance premiums required hereby and specified in the notice, with
interest thereon at the rate of ten percent (10%) per annum from the date of
such payment by Landlord until repaid by Tenant.
8.02 Property Insurance. Landlord may at its election, obtain and keep
in force during the term of this Lease a policy or policies of insurance
covering loss or damage to the Project in an amount of 80% (or such other
percentage as Landlord elects or as may be necessary to comply with the
provisions of any co-insurance clauses of the policy) of the replacement value
thereof, less applicable deductions, providing protection against all perils
included within the classification of fire and extended coverage; such coverages
and endorsements to be as defined, provided and limited in the standard bureau
forms prescribed by the insurance regulatory authority for the state in which
the Premises are situated for use by insurance companies admitted in such state
for the writing of such insurance on risks located within such state. The
proceeds of any such insurance shall be for the sole benefit of Landlord, under
its sole control and shall be paid to Landlord. Landlord shall not be obligated
in any way or manner to insure any personal property (including but not limited
to, any furniture, machinery, goods or supplies) of Tenant or which Tenant may
have upon or within the Premises or any fixtures installed by or paid for by
Tenant upon or within the Premises or any additional improvements which Tenant
may construct on the Premises. Tenant shall pay during the term hereof, as
Additional Rent, Tenant's pro rata share of the annual amount of the increase,
if any, by which the premiums for the insurance exceed the amount of insurance
premiums paid by Landlord for the Base Year. The term "property insurance
premium" shall include the total annual insurance premiums which accrue on all
casualty insurance, public liability and property damage insurance, rent loss
insurance and other insurance which, from time to time, may at Landlord's
election be carried by Landlord with respect to the Property and its operation
during any applicable calendar year (or portion thereof) occurring during the
term of this Lease. Tenant shall pay such premium increases to Landlord within
thirty (30) days after receipt by Tenant of Landlord's written statement setting
forth the amount of such increase. Landlord's determination of the amount due
shall be conclusive. If the term of this Lease shall not expire concurrently
with the expiration of the period covered by such insurance, Tenant's liability
for the amount of the premium increases shall be prorated on an annual basis.
8.03 Indemnity By Tenant and Landlord. Except for injury, death or
property damage resulting from the negligence of Landlord for which Landlord is
legally liable. Tenant agrees to expressly indemnify and save Landlord harmless
from all claims (including costs and expenses of defending against such claims)
arising or alleged to arise from any act or omission of Tenant or Tenant's
agents, employees of contractors, or resulting from any injury to any person or
damage to any property of any person occurring during the term of this Lease in
the Project or in the Leased Premises. Tenant agrees to use and occupy the
Premises and other facilities of the Project at its own risk and hereby releases
Landlord, its agents or employees, from all such claims for any damage or injury
to the full extent permitted by law.
Except for injury, death or property damage resulting from the
negligence of Tenant for which Tenant is legally liable, Landlord agrees to
expressly indemnify and save Tenant harmless from all claims (including costs
and expenses of defending against such claims) arising or alleged to arise from
any act or omission of Landlord or Landlord's agents, employees or contractors
or resulting from any injury to any person or damage to any property of any
person occurring during the term of this Lease in the Project or in the Premises
and other facilities of the Project and hereby releases Tenant, its agents or
employees, from all such claims for any such damage or injury to the full extent
permitted by law.
8.04 Waiver of Right of Recovery. Neither Landlord nor Tenant shall be
liable to the other, or to any insurance company (by way of subrogation or
otherwise) insuring the other Party, for any loss or damage to any building,
structure, improvement or other tangible property, or liability for personal
injury, or loss under workmen's compensation laws and benefits even though such
loss or damage might have been occasioned by the negligence of such party or its
agents or employees. However, if by reason of the foregoing waiver, either party
shall be unable to obtain any such insurance, such waiver shall be deemed not to
have been made by either party. Further, if by reason of the foregoing waiver,
either party shall be unable to obtain any such insurance without the payment of
an additional premium therefore, then, unless the party claiming the benefit of
such waiver shall agree to pay such party for the cost of such additional
premium, within thirty (30) days after notice thereof, setting forth such
additional premium requirement and the amount of such additional premium, such
waiver shall be or no force and effect between either party,
8.05 Landlord Not Responsible for Acts of Others. Landlord shall not be
responsible or liable to Tenant, or to those claiming by, through or under
Tenant for any loss or damage that may be occasioned by or through the acts or
omissions of persons occupying space adjoining the Premises, or any part thereof
or adjacent to or connected to the Premises or any other part of the Project or
otherwise, or for any loss or damage resulting to Tenant, or those claiming by,
through or under Tenant, and their respective property, from the breaking,
bursting, stoppage or leaking of any electrical cables or wires, or water, gas,
sewer, heating, air-conditioning or steam pipes, lines, ducts or vents. To the
maximum extent permitted by law, Tenant agrees that it
7
<PAGE> 8
shall use and occupy the Premises, and such other portions of the Project as
Tenant shall use at its own risk.
ARTICLE IX
IMPROVEMENTS AND ALTERATIONS
9.01 Construction by Landlord. Landlord will construct at his sole cost
and expense the Project shell including parking areas, exterior lighting and
landscaping in which the Leased Premises are to be located.
9.02 Tenant's Plans and Specifications. Tenant shall prepare and
present to Landlord plans and specifications for the work to be done as shall be
required to finish the Leased Premises in accordance with Tenant's needs and
desires ("Work Letter Agreement") attached hereto as Exhibit "E" and
incorporated herein by reference. Such Tenant Work shall include only costs for
actual improvements and fixtures to Landlord's Project and shall not include
expenditures for Tenant's trade fixtures, equipment, moving expense or similar
items not constituting permanent improvements to Landlord's Project. Such plans
and specifications shall be subject to Landlord's written approval. In the event
such plans and specifications, as submitted, fail to meet with Landlord's
immediate approval. Landlord shall promptly notify Tenant of those particular
matters to which Landlord objects and how the same may be amended or corrected
in order to meet with Landlord's approval. Upon receipt of any such notice from
Landlord, Tenant shall promptly cause such plans and specifications to be
revised in such manner as shall be requisite to obtaining Landlord's final
approval of the same, which revised plans shall be forthwith submitted for
Landlord's approval. When Landlord and Tenant have finally approved Tenant's
Plans and Specifications, Landlord hereby expressly reserving the right, in
Landlord's reasonable discretion and judgment, to approve all Tenant finish
work, which approval shall not be unreasonably withheld or delayed, the same
shall become a part hereof and shall be incorporated herein by reference for all
purposes as Exhibit "F". Landlord shall pay without reimbursement, from Tenant,
up to, but not in excess of the amount specified in the basic lease information
for improvements to the Leased Premises. Any costs in excess of this allowance
of the Tenant Finish Allowance shall be paid directly by Tenant.
9.03 Tenant's Alterations. Upon Landlord's reasonable consent, Tenant
may from time to time if Tenant shall not then be in default), at its own
expense alter, renovate, or improve the Premises, provided such work be
performed in a good and workmanlike manner by contractors and subcontractors
approved by Landlord, in accordance with accepted building practices and
applicable laws and so as not to adversely affect or lessen the value of the
Premises. Prior to the commencement of any such work, Tenant, shall obtain
Landlord's prior written approval of the plans and specifications therefor and
the selection of contractors and subcontractors and shall satisfy Landlord's
requirements for bonding, insurance, and Landlord's other contractor
requirements. Failure by Tenant to complete any work approved and commenced as
provided hereunder within the time periods specified by Landlord in its approval
shall constitute a material breach of this Lease.
9.04 Ownership at Termination of Lease. Any and all alterations,
additions, improvements and fixtures which may be made or installed by either
Landlord or Tenant upon the Premises and which in any manner are permanently
attached to the floor, walls, or ceilings (including without limitation any
air-conditioning, heating, and kitchen equipment) shall at the expiration or
termination of this Lease automatically become the property of the Landlord
without reimbursement to Tenant therefor, shall remain upon the Premises and
shall be surrendered with the Premises as a part thereof. Tenant's trade
fixtures, furniture, and equipment which may be installed in the Premises prior
to or during the Term hereof at the cost of Tenant and which are not attached to
the floors, walls, or ceilings shall not be deemed to become a part of the
Premises and may be removed by Tenant from the Premises upon the expiration of
termination or this Lease if, but only if, (a) Tenant is not then in default
hereunder and (b) such removal will not damage the Premises or any improvements,
or if such removal will damage the Premises or any improvements, Tenant repairs
any and all such damage. If Tenant does not remove any such trade fixtures,
furniture and equipment prior to the expiration or termination or this Lease
they shall automatically become the property of Landlord.
ARTICLE X
DAMAGE, DESTRUCTION, OR CONDEMNATION
10.01 Damage and Repair. If the Premises are partially damaged or
destroyed by fire or other casualty so as to render the premises untenantable in
whole or in part for more than Ten (10) consecutive business days, the Rent
provided for hereunder shall abate from the expiration of such Ten (10) business
day period pro rata as to the portion of the Premises rendered untenantable
until such time as the Premises are made tenantable, as determined by Landlord.
The Premises shall be deemed to have been rendered untenantable by casualty only
if following such casualty, Tenant is not able to use the Premises
substantially for the purposes for which the Premises were used prior to such
casualty. Any such abatement shall automatically extend the Term for the
duration or such abatement. Subject to the following sentence to the extent
insurance proceeds are made available therefor, Landlord agrees (subject to the
requirement of
8
<PAGE> 9
any "Security Documents" or "Landlord's Mortgagee") to commence and prosecute
necessary structural repairs promptly and with reasonable diligence, provided,
however, that Landlord shall have no obligation to make any such Repairs with
respect to casualties occurring during the final two (2) years of the Term. If
such damage or destruction will result in the Premises being untenantable in
substantial part for a period reasonably estimated by Landlord to be six 16)
months or longer and Landlord decides not to rebuild, then all Rent owed up to
the date of such damage or destruction shall be paid by Tenant, and this Lease
shall terminate upon notice thereof to Tenant. Landlord shall give Tenant
written notice of its decisions, estimates, or elections under this Section
within sixty (60) days after any such damage or destruction. The foregoing
provisions of this Section 10.01 notwithstanding, if any such damage or
destruction described in this Section results in whole or in part from the acts,
negligence or omissions of Tenant, its agents, employees, contractors,
subcontractors, invitees, customers, licensees or concessionaires, this Lease
shall continue In full force and effect with no abatement of Rent, whether or
not Landlord elects to make necessary structural repairs (which Landlord shall
have no obligation to do).
10.02 Condemnation. If the Premises, or any part thereof, shall be
taken or condemned for any public purpose (or conveyed in lieu or in settlement
thereof) to such an extent as to render the remainder or the Premises, in the
opinion of Landlord, not reasonably suitable for Tenant's occupancy or continued
use, as authorized in this Lease, then this Lease shall, at the option of
Landlord, forthwith cease and terminate, and all proceeds from any taking or
condemnation of the Premises shall belong to and be paid by Landlord. If this
Lease is not so terminated, Landlord shall repair any damage resulting from such
taking, to the extent and in the manner provided in Section 10.01 of this
Article, and Rent hereunder shall (a) be abated to the extent the Premises are
rendered untenantable during the period of repair, and (2) thereafter be
adjusted on an equitable basis considering the areas of the Premises taken and
remaining.
ARTICLE XI
MORTGAGE FINANCING
11.01 Subordination. The rights and interests of Tenant under this
Lease and in and to the Premises shall be subject and subordinate to all deeds
of trust, mortgages and other security instruments and to all renewals,
modifications, consolidations, replacements, and extensions thereof (the
"Security Documents") heretofore or hereafter executed by Landlord covering the
Premises or any parts thereof, but the holder ("Landlord's Mortgage") of such
Security Documents shall have the right at any time to elect to make this Lease
superior to such Security Documents.
11.02 Attornment. In the event any proceedings are brought for
foreclosure, or in the event of exercise of the power or sale or any conveyance
or deed in lieu or foreclosure under any mortgage or deed of trust made by
Landlord covering the Premises, the Tenant shall, if requested, attorn to the
purchaser upon any such foreclosure or sale and shall recognize such purchase as
Landlord under this Lease.
11.03 Notice to Landlord's Mortgagee. Tenant shall, if requested by
any Landlord's Mortgagee, deliver to Landlord's Mortgagee a copy of all notices
given to Landlord hereunder. Landlord's Mortgagee shall have the right (but not
the obligation) to cure any defaults of Landlord hereunder.
11.04 Further Assurances. Tenant shall, upon the request of Landlord
and/or the holder of any mortgage on the Premises, or any part thereof, execute
and deliver such instruments as may be required by Landlord and such holder to
make this Lease either superior or subordinate to any mortgages, deeds or trust,
ground leases, or any financing covering the Premises or any part thereof.
ARTICLE XII
EVENTS OF DEFAULT AND LANDLORD'S REMEDIES
12.01 Events of Default. Each or the following acts, omissions, or
occurrences shall constitute an "Event of Default" and a material breach of
this Lease:
(a) Failure by Tenant to pay timely any Rent or other payments
required to be paid hereunder.
(b) Failure by Tenant to perform or observe any other covenant,
condition or provision or this Lease to be performed or
observed by Tenant upon the expiration of ten (10) days after
written notice to Tenant of such failure,
(c) The adjudication of Tenant to be Insolvent, the institution of
an order for relief with respect to Tenant, or the filing or
execution or occurrence of: a petition in bankruptcy or other
insolvency proceeding by or against Tenant; a petition or
answer seeking relief by or against Tenant under any provision
of the federal or state bankruptcy laws or any similar law; an
assignment (or the benefit of
9
<PAGE> 10
creditors or a composition: Tenant's taking any action, or
permitting any action to be taken under any bankruptcy,
Insolvency, reorganization, or rehabilitation law or
proceeding, or a petition or other proceeding by or against
Tenant for the appointment of a trustee, custodian, receiver,
or liquidator of Tenant or any of Tenant's property or a
proceeding by any governmental authority for the dissolution
or proceeding against Tenant is dismissed or stayed within
thirty (30) days thereafter.
(d) The occurrence of any of the items described in paragraph (c)
above with respect to any guarantor of this Lease.
(e) A substantial change in the ownership or management of
Tenant, or the sale or transfer by Tenant of a significant
portion of Its assets.
(f) Abandonment or vacating of the Premises or any significant
portion thereof.
(g) Determination by Landlord that Tenant has allowed any liens to
be filed against the Premises.
12.02 Abandonment. Tenant's absence from the Premises for seven (7)
consecutive business days while all or any portion of the Rent is in default
shall be deemed an abandonment of a substantial portion of the Premises. Nothing
herein shall prevent Landlord or its agent from removing the contents of the
Premises when Tenant has abandoned them. Tenant shall be liable for, among other
things, all expenses and reasonable storage charges after the abandonment,
whether the contents remain on the Premises or be removed by Landlord. In
addition, the vacating or all or a substantial portion of the Premises by Tenant
shall constitute abandonment by Tenant, whether or not Tenant is in default of
rental payments.
12.03 Landlord's Remedies.
(a) Upon the occurrence of any Event, of Default. Landlord may, at
its option, in addition to any and all other rights, remedies,
or recourses available to it. hereunder or at law or In
equity, do any one or more of the following: (i) Terminate
this Lease, in which event Tenant shall immediately surrender
possession of the Premises to the Landlord, (ii) Enter upon
and take possession of the Premises and Tenant's property
located therein and expel or remove Tenant and any other
occupant therefrom, with or without having terminated the
Lease, (iii) Cause the forfeiture of the Security Deposit, if
any, at its discretion alter locks and other security devices
at the Premises, (iv) Apply the Security Deposit, if any, at
its discretion, without diminishing or affecting any of
Tenant's obligations for the payment of Rent or otherwise
without any further accountability to Tenant.
(b) Exercise by Landlord of any one or more remedies herein
granted or otherwise available shall not be deemed to be an
acceptance or surrender of the Premises by Tenant, whether by
agreement or by operation or law, it being understood that
such surrender can be effected only by the written agreement
of Landlord and Tenant. No such alteration of security devices
and no removal or other exercise or dominion by Landlord over
the property of Tenant or others at the Premises shall be
deemed unauthorized or constitute a conversion, Tenant hereby
consenting, after any Event of Default, to (the aforesaid
exercise of dominion over Tenant's property within the
Premises. All claims for damages for reason of such re-entry
and/or repossession and/or alteration or locks or other
security devices are hereby waived, as are all claims for
damages by reason of any distress warrant, forcible detainer
proceedings, sequestration proceedings, or other legal
process.
(c) If Landlord terminates this Lease by reason of an Event of
Default, then Tenant shall remain liable for all Rent, any
other item of Rent, and all other indebtedness accrued to the
date of such termination, plus, as damages, an amount of money
equal to the amount (if any) by which (i) the total Rent and
all other payments due for the balance of the original Term
exceed, (ii) the fair market rental value of the Premises for
the balance of the original Term, as of the occurrence of the
Event or Default, such excess to be discounted at the rate of
10% per annum to present value.
(d) If Landlord elects to repossess the Premises without
terminating this Lease, then Tenant shall be liable for and
shall pay to Landlord all Rent, and all other indebtedness
accrued to the date of such repossession, plus all Rent,
additional rent and other sums required to be paid by Tenant
to Landlord over the remainder of the original scheduled Term.
diminished by any net sums thereafter received by Landlord
through reletting or the Premises during such period (after
deducting expenses incurred by Landlord as hereinafter
provided). Such amounts shall be paid by Tenant to Landlord in
monthly installments on the
10
<PAGE> 11
first day of each calendar month during the remainder of the
original scheduled Term. In no event shall Tenant be entitled
to any excess or any net sums obtained by reletting over and
above the amounts required to be paid by Tenant under this
Lease. Actions to collect amounts due by Tenant as provided in
this paragraph may be brought from time to time on one or more
occasions, without the necessity of Landlord's waiting until
the expiration of the original scheduled Term.
(e) In case of an Event of Default, Tenant shall also be liable
for and shall pay to Landlord upon demand, in addition to any
other sums provided to be paid hereunder; brokers' fees
incurred by Landlord in connection with reletting all or any
portion of the Premises; the costs of removing and storing
Tenant's or other occupant's property found in the Premises;
the costs or repairing, altering, remodeling or otherwise
putting the Premises into their original condition at the
inception of this Lease; and all reasonable expenses incurred
by Landlord in enforcing Landlord's remedies, including
reasonable attorneys' fees.
(f) in the event of any such reletting, Landlord may relet the
whole or any portion of the Premises for any period, to any
tenant, for any rental and for any use and purpose.
(g) The following provisions shall override and control any
conflicting provisions of Section 93.002 of the Texas Property
Code of 1990, as well as any successor statute governing the
right of a landlord to change the door locks of commercial
tenants. In the event an Event of Default occurs, Landlord is
entitled and is hereby authorized, without any further notice
to Tenant whatsoever, to enter upon the Premises by use of a
master key, a duplicate key, or other peaceable means, and to
change, alter, and/or modify the door locks on all entry doors
of the Premises, thereby permanently excluding Tenant and its
officers, principals, agents, employees and representatives
therefrom. In the event that Landlord has either permanently
repossessed the Premises pursuant to the foregoing provisions
of this Lease, or has terminated this Lease by reason of
Tenant's default, Landlord shall not thereafter be obligated
to provide Tenant with a key to the Premises at any time,
regardless of any amounts subsequently paid by Tenant
provided, however, that in any such instance, during
Landlord's normal business hours; and at the convenience of
Landlord, and upon receipt of written request from Tenant
accompanied by such written waivers and releases as Landlord
may require, Landlord will (at Landlord's option) either (i)
escort Tenant or its authorized personnel to the Premises to
retrieve any personal belongings or other property of Tenant
not subject to the Landlord's statutory lien or the lien and
security interest described in Section 14.09 or this Lease, or
(ii) obtain a list from Tenant of such personal property as
Tenant intends to remove, whereupon Landlord shall remove such
property and make it available to Tenant at a time and place
designated by Landlord. However, if Landlord elects option
(ii), Tenant shall pay, in cash, in advance, all costs and
expenses estimated by Landlord to be incurred in removing such
property and making it available to Tenant and all moving
and/or storage charges theretofore incurred by Landlord with
respect to such property. If Landlord elects to exclude Tenant
from the Premises without permanently repossessing or
terminating pursuant to the foregoing provisions of this
Lease, then Landlord shall not be obligated to provide Tenant
a key to re-enter the Premises until such time as all
delinquent Rent and other amounts due under this Lease have
been paid in full and all other defaults, if any, have been
completely cured to Landlord's satisfaction (if such cure
occurs prior to any actual permanent repossession or
termination), and Landlord has been given assurance
reasonably satisfactory to Landlord evidencing Tenant's
ability to satisfy its remaining obligations under this Lease.
During any such temporary period or exclusion, Landlord will,
during Landlord's regular business hours and at Landlord's
convenience, upon receipt of written request from Tenant
(accompanied by such written waivers and releases as Landlord
may require), escort Tenant or its authorized personnel to the
Premises to retrieve personal belongings of Tenant or its
employees, and such other property of Tenant as is not subject
to the Landlord's statutory lien and security interest
described in section 14.09 of this Lease. All rights and
remedies of Landlord shall be cumulative and not exclusive.
Landlord shall be entitled to pursue simultaneously multiple
or alternative remedies, at any time to abandon or resume
pursuit of any remedy, and at, any time to pursue additional
remedies.
12.04 Non-Waiver; Time of Essence. No consent or waiver, express or
implied, by Landlord to or of any breach in the performance or observance by
Tenant of any of the covenants, conditions or provisions in this Lease shall be
Construed as a consent of waiver to or of any other breach in the performance or
observance by Tenant, of the same or any other covenant, condition or provision.
Neither failure on the part or Landlord to complain of any action or non-action
on the part of Tenant or to declare Tenant in default, no matter how long such
failure may continue, nor acceptance of rental or other sums from Tenant after
any such breach, shall be deemed to be a waiver by Landlord of any of its rights
hereunder, except as
11
<PAGE> 12
otherwise specifically provided herein. Time is of the essence with respect to
the performance and observance by Tenant of every covenant, condition and
provision of this Lease in which time of performance is a factor.
ARTICLE XIII
ENVIRONMENTAL COVENANTS
13.01 Compliance. Tenant shall not, and shall not permit any other
person to, use any portion of the Premises for any activity involving, directly
or indirectly, the use, production, storage, handling, transfer, refinement,
treatment, processing, transport, generation, removal, remediation, manufacture,
discharge, release or disposal or any Hazardous material, except those
chemicals, lubricants and cleaning fluids approved by Landlord and used and
stored in compliance with all legal requirements.
13.02 Definitions. For purposes of this Agreement, "Hazardous
Materials" shall mean petroleum and petroleum by-products; any pollutant; any
contaminant; any flammable, explosive, or radioactive material; any hazardous
waste, toxic substance, or related material; and any other substance or material
defined or designated as a hazardous or toxic substance, material, or waste by
any legal requirement applicable to the use of or any activity conducted upon
the Premises or the removal of which is required, or the manufacture, use,
maintenance, storage, ownership, or handling of which is restricted, prohibited,
regulated, or penalized by any legal requirement applicable to the use of or any
activity conducted upon the Leased Premises, and shall include:
(i) those substances included within the definition of "hazardous
substances," "extremely hazardous," "hazardous materials," "hazardous
waste," "toxic substances" or "solid waste" in the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as
amended, 42 U.S.C. Sections 9601 et seq., the Emergency Planning and
Community Right-to-Know Act, 42 U.S.C. Sections 11001-11050, the
Resource Conservation and Recovery Act of 1976, 42 U.S.C. Sections 6901
et seq., and the Hazardous Materials Transportation Act, 49 U.S.C.
Section 1801 et seq., and in the regulations adopted and promulgated
pursuant to said laws;
(ii) those substances listed in the United States Department of
Transportation Table (49 C.F.R. 172.101 and amendments thereto) or by
the Environmental Protection Agency (or any successor agency) as
hazardous substances (40 C.F.R. Part 302 and amendments thereto);
(iii) such other substances, materials, and wastes which are regulated
under any legal requirement applicable to the use of or any activity
conducted upon the Leased Premises, or which are classified as
hazardous or toxic under any legal requirement applicable thereto;
(iv) any substance which contains polychlorinated byphenyls (PCBs),
and any asbestos or asbestos containing substance; and
(v) any waste, substance, or materials that exhibit any of the
characteristics enumerated in 40 C.F.R. Sections 261.20-261.24,
inclusive, or any "extremely hazardous" substance listed under Section
302 of the Superfund Amendment And Reauthorization Act of 1986
("SARA") that are present in excess of or equal to threshold planning
or reportage quantities defined under SARA.
13.03 Indemnification. Tenant shall defend, indemnify and hold Landlord
and Landlord's officers and directors harmless from any and all liabilities,
claims, actions, demands, costs or expenses (including, without limitation,
attorneys' fees and expenses) of any and every kind whatsoever which may now or
in the future be paid, incurred or suffered by or asserted against Landlord with
respect to, or as a direct or indirect result of, Hazardous Materials
contamination caused by Tenant or any of Tenant's employees, servants, agents,
partners, directors, officers, shareholders, contractors, subcontractors,
successors or assigns. Landlord shall defend, indemnify and hold Tenant and
Tenant's officers and directors harmless from any and all liabilities, claims,
actions, demands, costs or expenses (including, without limitation, attorneys'
fees and expenses) of any and every kind whatsoever which may now or in the
future be paid, incurred or suffered by or asserted against Tenant with
Hazardous Materials contamination caused by Landlord or any of Landlord's
employees, servants, agents, partners, directors, officers, shareholders,
contractors, subcontractors, successors or assigns but not by Landlord's tenants
or predecessors-in-interest.
ARTICLE XIV
COMMON AREAS
14.01 Definitions. The phrase "Common Areas" means all areas and
facilities outside the Premises, whether or not located on the Property that are
provided and designated for general use and convenience of Tenant and other
tenants and their respective officers, agents
12
<PAGE> 13
and employees, customers, licensees, visitors and invitees. Common Areas include
(but are not limited to) pedestrian sidewalks, landscaped areas, roadways,
driveways and parking areas. Landlord reserves the right from time to time to
make changes in the shape, size, location, number, and extent of the land and
improvements constituting the Common Areas. Landlord may designate, from time to
time, additional land for use as a part thereof, and any additional land so
designated by Landlord for such use shall be included until such designation is
revoked by Landlord. Nothing this paragraph or elsewhere in this Lease shall be
construed as constituting the Common Areas, or any part thereof, as part of the
Premises.
14.02 Maintenance. During the term of this Lease, Landlord shall
operate, manage and maintain the Common Areas so that they are clean and free
from accumulations of debris, filth, rubbish, and garbage (other than normal
Tenant trash pick-up which is a Tenant responsibility). The manner in which such
Common Areas shall be so maintained, and the expenditures for such maintenance,
shall be at the sole discretion of Landlord, and the use of the Common Areas
shall be subject to such reasonable regulations and changes therein as Landlord
shall make from time to time, including (but not by way of limitation) the right
to close from time to time, if necessary, all or any portion of the Common Areas
to such extent as may be legally sufficient, in the opinion of Landlord's
counsel, to prevent a dedication thereof or the accrual of rights of any person
or the public therein. Landlord shall also have the right to contract for
dumpsters and normal trash pick-up for the Property, and Tenant shall pay
Tenant's pro rata share of the cost for such service in such intervals as
Landlord shall invoice Tenant for same.
14.03 Common Area Maintenance Costs. Tenant hereby agrees to pay, in
the manner as provided herein for the payment of Rent, throughout the original
and any extended term of this Lease. Tenant's pro rata share of Common Area
Maintenance Costs paid or to be paid by Landlord, as described below:
(a) The term "Common Area Maintenance Costs" shall mean all costs
and expenses of every kind paid or incurred in connection with
the operation and upkeep, of the Common Areas within the
Property, including without limitation, the costs of cleaning
and landscaping the Common Areas and where necessary the
costs of improving, repairing or replacing any of the common
facilities comprising the Common Areas or common improvements
in the vicinity of the Property (as determined by Landlord)
and the cost of policing and protecting same. In addition to
the foregoing, the Common Area Maintenance Costs shall
include maintaining the exterior maintenance of the Premises
and buildings in the Property (including painting) and the
common storm and sanitary sewage line, periodic resurfacing
and repairing of the sidewalks, roadways, driveways and
parkway areas. If Tenant is responsible for obstructions or
stoppage of the common storm or sanitary sewage line, then
Tenant shall pay the entire cost thereof on demand, as
additional rent. The Common Area Maintenance Costs shall also
include subdivision maintenance fees or dues, property owner's
association fees or dues and similar charges, direct and
indirect costs or labor, personal property taxes, licenses and
permits, supplies and equipment, used or related to the
operation and maintenance of the Common Areas. Nothing in this
Subparagraph 14 shall obligate Landlord to provide any
services or facilities not otherwise required to be provided
elsewhere in this Lease.
(b) Within a reasonable period after the end of each calendar
month during the term of this Lease, or in such intervals as
Landlord elects, Landlord shall deliver to Tenant a written
statement showing the total amount due for Common Area
Maintenance Costs relating to such preceding calendar
month(s). Tenant shall pay Tenant's pro rata share of such
Common Area Maintenance Costs within thirty (30) days after
receipt of Landlord's written statement therefor.
ARTICLE XV
MISCELLANEOUS PROVISIONS
15.01 Covenant of Quiet Enjoyment. Tenant, subject to the terms and
provisions of this Lease and all governmental regulations, upon paying all the
Rent and observing, keeping, and performing all of the covenants, conditions,
and provisions of this Lease on its part to be observed, kept and performed,
shall lawfully, peaceably and quietly have, hold, occupy and enjoy the Premises
during the Term without hindrance or ejection by any persons lawfully claiming,
by, through or under Landlord, but not otherwise.
15.02 Liability of Landlord. Any provision of this Lease to the
contrary notwithstanding, Tenant hereby agrees that no personal or corporate
liability of any kind or character whatsoever now attaches or at any time
hereafter under any condition shall attach to Landlord or any of its partners
or any of Landlord's successors and assigns or any future owner of the
Premises, or any part thereof, for the performance of any obligations of
Landlord under this Lease, and Tenant specifically agrees to look solely to
Landlord's interest in the Premises for the recovery of any judgment from
Landlord pursuant to this Lease.
13
<PAGE> 14
15.03 Allocation of Risks. TENANT ACKNOWLEDGES THAT IT HAS BEEN ADVISED
TO HAVE THE PROVISIONS OF THIS LEASE REVIEWED BY AN ATTORNEY OF ITS OWN CHOOSING
AND THAT IT HAS DONE SO OR KNOWINGLY ELECTED NOT TO DO SO. EACH OF THE WAIVERS,
RELEASES, AND OTHER LIMITATIONS ON LIABILITY OR CLAIMS PROVIDED IN THIS ARTICLE
OR ELSEWHERE IN THIS LEASE (INCLUDING WITHOUT LIMITATION, LIABILITY OR CLAIMS
BASED ON NEGLIGENCE OR OTHER FAULT) HAS BEEN KNOWINGLY AND INTENTIONALLY MADE
AND AGREED TO BY TENANT. THIS SECTION IS INTENDED TO SATISFY ANY REQUIREMENT OF
LAW THAT A WAIVER, RELEASE, OR OTHER LIMITATION OF CLAIMS OR LIABILITY BASED ON
NEGLIGENCE OR OTHER FAULT BE CONSPICUOUSLY DISCLOSED.
15.04 Status Report. Recognizing that both parties may find it
necessary to establish to third parties, such as accountants, banks, mortgagees,
or the like, the then current status of performance hereunder, either party, on
the written request of the other made from time to time, will promptly furnish a
written statement on the status of any matter pertaining to this Lease.
15.05 Removal of Liens. Tenant agrees to discharge within ten (10) days
of filing (either by payment or by filing or the necessary bond, or otherwise)
any mechanic(s), materialmen's or other lien or security interest against the
Premises or any part thereof or Landlord's interest therein arising out of or in
connection with Tenant's actions, negligence, or omissions to act, or the acts,
negligence, or omissions of Tenant's agents, employees, invitees, customers,
contractors, subcontractors, subtenants, licensees or concessionaires.
15.06 Attorney's Fees. In the event Landlord or Tenant brings any court
action alleging default by the other party in one or more provisions of this
Lease, the party losing such action shall pay the prevailing party its
reasonable attorney's fee.
15.07 Brokers. Each of Landlord and Tenant represents and warrants to
the other that it has not entered into any agreement with, or otherwise had any
dealings with any broker or agent other then Broker as the result of which any
commission, fee, or other compensation of any kind will be payable by the other
party in connection with this Lease. Each party will indemnify, defend, and hold
the other party harmless against any loss, liability, damage, cost, or expense
(including reasonable attorneys' fees and costs of litigation), or claim
therefor, resulting from the untruth or inaccuracy of the foregoing warranty and
representation made by such party. Any fee of commission owing to Broker will be
paid only in accordance with the terms of a separate written agreement directly
between Landlord and Broker.
15.08 Legal Interpretation. This Lease and the rights and obligations
of the parties hereto shall be interpreted and enforced in accordance with the
laws of the State or Texas. If any term or provision of this Lease or the
application thereof to any person or circumstance shall, to any extent, be
invalid or unenforceable, whether by reason of the federal or state antitrust
laws, or otherwise, the remainder of this Lease, or the application of such term
or provision to persons or circumstances other than those as to which it is held
invalid or unenforceable, shall not be affected thereby, and each term and
provision of this Lease shall be valid and be enforced to the fullest extent
permitted by law. All obligations of either party requiring any performance
after the expiration of the Term shall survive the expiration of the Term and
shall be enforceable in accordance with those provisions pertaining thereto. If
the rights of Tenant hereunder are owned by two or more parties, such parties
shall be jointly and severally liable for the obligations of Tenant hereunder.
15.09 Notices. Any notice to be given hereunder shall be in writing and
shall be given by depositing such notice in the United States mail, postage
prepaid, registered or certified with return receipt requested, or by delivering
same in person, addressed to the party at the address specified in the Basic
Lease Information.
15.10 Landlord's Lien. To secure the payment of all Rent, and all other
sums due and to become due hereunder, and the performance of all of the Tenant's
other obligations hereunder, Tenant hereby grants to Landlord as express
contract lien on and security interest in all equipment, inventory, fixtures,
consumer goods, goods and any and all other personal property of any kind or
character of Tenant which may be placed in or on the premises and also upon all
proceeds thereof (including the proceeds of any insurance which may accrue to
Tenant by reason of damage to or destruction of any such property). This lien
and security interest are given in addition to, and not in lieu of, Landlord's
statutory lien and shall be cumulative thereto. To the extent permitted by law,
this lien and security interest may be foreclosed with or without court
proceedings. by public or private sale, with or without notice, and Landlord
shall have the right to become purchaser at any such sale upon being the highest
bidder. Upon request of Landlord, Tenant shall execute (and Landlord may file)
Uniform Commercial Code financing statements relating to the aforesaid security
interest.
15.11 Surrender of Premises and Holding Over. On the last day of the
Term, or upon the earlier termination of this Lease, Tenant shall peaceably and
quietly leave, surrender and yield up to Landlord the Premises, broom clean and
in as good condition as on the date Tenant first opens for business, excepting
only ordinary wear and tear. Prior to the surrender of the Premises to the
Landlord, Tenant, at its sole cost and expense, shall remove all liens and other
encumbrances affecting the Premises that may have resulted from the acts,
negligence, or
14
<PAGE> 15
omissions of Tenant, Tenant's agents, employees, invitees, customers,
contractors, subcontractors, subtenants, licensees, or concessionaires. If
Tenant fails timely to surrender the Premises or to do any or the foregoing,
Landlord may without notice, enter upon, re-enter, possess and repossess itself
thereof, by force, summary proceedings, ejectment, forcible detainer, or
otherwise, and may dispossess and remove Tenant and all persons and property
from the Premises; and Tenant hereby waives any and all damages or claims for
damages as a result thereof. Such dispossession and removal of Tenant shall not
constitute a waiver by Landlord of any claims by Landlord against Tenant. If
Tenant does not surrender possession of the Premises at the end of the Term or
upon the earlier termination of this Lease, then at the election of Landlord,
Tenant shall be a tenant-at-sufferance of Landlord and Rent due during such
holdover shall be one and one-half (1.5) times the Base Rent per month. No
holding over by Tenant shall operate to extend this Lease, and in the event of
any such holding over. Tenant shall, in addition to all other obligations and
liabilities of Tenant hereunder (all of which shall remain in full force and
effect during the entire period of any such holding over) indemnify, defend, and
hold harmless Landlord from and against any and all claims for damages
(including consequential damages) by any other tenant to whom Landlord may have
leased all or part of the premises for a term to commence after the termination
of this Lease.
15.12 Inspection and Entry. Landlord and its representative shall have
the right to enter the Premises during any business day (and, in the case of
emergency, at all times) at all reasonable hours for the purpose of inspecting,
making repairs, altering or adding to the Premises or curing any default of
Tenant that Landlord elects to cure. Landlord shall not be liable to Tenant for
any expense, loss, or damage from any such entry.
15.13 Sale of Premises. Tenant shall permit Landlord, at any time
during this Lease, to place upon the Premises any usual or ordinary "For Sale"
or "For Lease" sign and during the last sixty (60) days of this Lease,
Landlord or its agents, may, during normal business hours, enter upon the
Premises and exhibit same to prospective purchasers and tenants.
15.14 Landlord's Performance of Tenant's Obligations. If Tenant fails
to perform any of its obligations hereunder, then in addition to the other
rights, remedies and recourses available to Landlord hereunder, at law or in
equity, and without waiving any of such rights remedies or recourse or the
existence of any default by Tenant, Landlord shall have the right (but not the
obligation) to perform such obligation of Tenant. Tenant shall reimburse
Landlord upon demand for all expenses (including, but not limited to, reasonable
attorneys' fees and a reasonable amount to reimburse Landlord for its overhead
and administration costs) incurred by Landlord in performing such obligations,
together with interest thereon from the date of expenditure or incurrence until
the date of repayment.
15.15 Relationship of the Parties. Nothing contained in this Lease
shall be deemed or construed as creating the relationship of principal and agent
or of partnership or joint venture between the parties hereto. It being
understood and agreed that neither the method of computing Rent, nor the manner
of constructing the Premises, nor any other provisions herein, nor any acts of
the parties shall be deemed to create any relationship between the parties other
than that of landlord and tenant.
15.16 Tenant's Pro Rata Share. The term "Tenant's pro rata share" of a
cost or expense shall mean the amount derived by multiplying such cost or
expense by a fraction, the numerator of which is the square foot area of
Tenant's Premises and the denominator of which is the gross leasable area of the
Project.
15.17 Exhibits; Entire and Binding Agreement. The Exhibits attached
hereto constitute a part of this Lease and references herein to this Lease
include references to such Exhibits. It is agreed and understood by Tenant that
no representations have been made to Tenant by Landlord other than those
contained herein or in the Exhibits hereto, and this Lease contains all of the
agreements between the parties and may not be modified in any manner other than
by agreement in writing, signed by both parties or their successors in interest.
The terms, covenants, and conditions contained herein shall inure to the benefit
of and be binding upon Landlord and Tenant and their respective successors and
assigns, except, as may be otherwise expressly provided in this Lease.
15.18 Effective Date. The effective date of this Lease shall be the
date recited herein.
15.19 Number and Gender. Whenever necessary for the proper construction
and interpretation of this Lease, a singular shall include the plural and vice
versa, and nay gender shall be deemed to read neuter, masculine, feminine, or
collective, as the case may be.
15.20 Captions. The Article and Section headings or titles appearing
herein are for convenience only and shall not be given any effect in construing
this Lease.
15.21 No Merger. There shall be no merger of this Lease or of the
leasehold estate hereby created with the fee estate in the Premises or any
portion thereof by reason of the fact that the same person may acquire or hold,
directly or indirectly, all or part or such fee estate and this Lease or the
leasehold estate hereby created or any interest in this Lease, and this Lease
shall not be terminated for any cause except as expressly provided herein.
15
<PAGE> 16
EXHIBITS ATTACHED
-----------------
EXHIBIT A: PREMISES
EXHIBIT B: LEGAL DESCRIPTION
EXHIBIT C" PROJECT RULES
EXHIBIT "D" PROTECTIVE COVENANTS
EXHIBIT "E" WORK LETTER AGREEMENT
IN WITNESS WHEREOF, Landlord and Tenant have duly executed this Lease on
the 8th day of Nov., 1999 in multiple counterparts, each such counterpart
constituting an original document.
LANDLORD: TENANT:
TEXAS TOWNHOUSE & CONDOMINIUM LINK.COM, INC.
OWNERS ASSOCIATION, INC. ------------------------------
BY: BY: JACKIE AUTHEMENT JR.
-------------------------------- ---------------------------
NAME: NAME: /s/ JACKIE AUTHEMENT JR.
------------------------------ -------------------------
TITLE: TITLE: C.O.O.
----------------------------- ------------------------
16
<PAGE> 17
EXHIBIT "C"
PROJECT RULES
1. Sidewalks, doorways, vestibules, halls, stairways, elevator lobbies, and
other similar common areas of the Project may not be used for storage of
materials or disposal of trash, obstructed by any tenant, or used by any
tenant for any purpose other than movement about the Project.
2. Plumbing fixtures may be used only for the purposes for which they are
designed, and no sweepings, rubbish, rags, or other unsuitable materials
may be disposed in them.
3. Movement in or out of the Project of furniture, office equipment, or any
other bulky or heavy materials is restricted to hours reasonable designated
by Landlord. Landlord will determine the method and routing of the
movement of such items to ensure the safety of persons and property, and
Tenant will be responsible for all associated costs and expenses. Written
notice of intent to move such items must be given to Landlord at least
twenty-four (24) hours before the time of the move.
4. All deliveries (other than of small hand-carried parcels) must be made
through the freight elevators. Passenger elevators are to be used only for
the movement of persons. Delivery vehicles are permitted only in areas
designated by Landlord for deliveries to the Project. No carts or dollies
are allowed through the main entrances of the Project or on passenger
elevators without the prior written consent of Landlord.
5. After-hours removal of hand-carried items must be accompanied by an
"Equipment Removal Form" or "Property Pass" provided by Landlord or by a
letter signed by an authorized representative of a tenant on the tenant's
letterhead. Each tenant must give Landlord a list of persons authorized to
sign the Equipment Removal Form or Property Pass.
6. Landlord must approve the proposed weight and location of any safes and
heavy furniture and equipment, which must in all cases stand on supporting
devices approved by Landlord in order to distribute the weight.
7. Corridor doors that lead to common areas of the Project (other than doors
opening into the elevator lobby on floors leased entirely to a tenant) must
be kept closed at all times.
8. Each tenant must cooperate with Landlord to keep its premises neat and
clean. No tenant may employ any person for the purpose of cleaning other
than the Project's cleaning and maintenance personnel.
9. No birds, fish, or other animals may be brought into or kept in, on, or
about the Project (except for seeing-eye dogs).
10. Each tenant will comply with all security procedures during business hours,
after hours, and on weekends. Landlord will give each tenant prior notice
of the security procedures.
11. Tenants must lock all office doors leading to corridors and turn out all
lights at the close of their working day.
12. No flammable or explosive fluids or materials may be kept or used within
the Project except in areas approved by Landlord, and each tenant must
comply with all applicable building and fire codes.
13. No machinery of any kind other than normal office equipment may be operated
by any tenant in its premises without the prior written consent of
Landlord.
14. Canvassing, peddling, soliciting, and distribution or handbills in the
Project (except for activities within a tenant's premises that involve only
the tenant's employees) is prohibited. Tenants will notify Landlord if such
activities occur.
15. Tenants must refer all contractors, contractors' representatives, and
installation technicians tendering any service to them to Landlord for
Landlord's supervision, approval, and control before the performance of any
contractual services. This provision applies to all work performed in the
Project (other than work under contract for installation or maintenance of
security equipment or banking equipment), including but not limited to,
installations of telephones, telegraph equipment, electrical devises and
attachments, and any and all installations of every nature affecting
floors, walls, woodwork, trim, windows, ceilings, equipment, and any other
portion of the Project.
16. Each tenant is responsible for removal of trash resulting from large
deliveries or move-ins. Such trash must be removed from the Project, and
Project facilities may not be used for dumping. Each tenant is responsible
for compliance with this rule by its contractors. If trash is not properly
removed, Landlord may cause it to be removed at the tenant's sole cost plus
a Project standard charge to be determined by Landlord to cover Landlord's
administrative costs.
<PAGE> 18
17. Tenants may not install, leave or store equipment, supplies, furniture, or
trash outside their premises.
18. Each tenant must provide Landlord with names and telephone numbers of
individuals who should be contacted in an emergency.
19. Tenants must comply with the Project's life safety program established by
Landlord, including without limitation, fire drills, training programs, and
fire warden staffing procedures, and must use reasonable efforts to cause
all tenant employees, invitees, and guests to comply with such program.
20. If a tenant requires telegraphic, telephonic, annunciator, or other
communication service, Landlord will direct the electricians where and how
wires are to be introduced and placed, and none may be introduced or placed
except as Landlord may approve. Electrical current may not be used for
space heaters, cooking, or heating devices or similar appliances without
Landlord's prior written permission.
21. No portion of any tenant's premises may be used or occupied as sleeping or
lodging quarters, nor may personnel occupancy loads exceed limits
reasonable established by Landlord for the Project.
22. All communications to Landlord in connection with these rules may be
addressed to Landlord's property manager, and any approvals required of
Landlord under these rules may be obtained from or through Landlord's
property manager.
If there is a conflict between any other provision of the Lease and these
Project Rules, the other provisions of the Lease control.
<PAGE> 1
February 1, 2000
EXHIBIT 10.2
Mr. Marion R. Bob Rice
Chief Executive Officer of
Link.Com, Inc.
204 East Main Street
Brady, Texas 76825
RE: Current Status of certain Lease Agreement dated as of January 15, 1992, by
and between Norwood-Reunion Cameron Centre Joint Venture (hereinafter
referred to as NRCC), as Landlord, and GTECH, Corporation, a Delaware
corporation (hereinafter referred to as Sublandlord), as Tenant, as amended
by (i) Lease Amendment Number 1 dated as of March 10, 1992, by and between
NRCC and Sublandlord, (ii) Lease Amendment Number 2 dated as of July 20,
1992, by and between NRCC and Sublandlord, (iii) Third Amendment to Lease
Agreement dated July 14, 1997, by and between Gateway Central Properties
(successor to NRCC, hereinafter referred to as Landlord) and Sublandlord,
and (iv) Fourth Amendment to Lease Agreement dated October 17, 1997, by and
between Landlord and Sublandlord (such Lease Agreement, as amended, being
referred to herein as the Master Lease) for the lease of approximately
7,082 square feet of space (herein called the Sublease Premises) situated
in Travis County, Texas, within that certain building locally known as
Cameron Centre, Building B, located at 8200 Cameron Road, Suite B-170,
Austin, Texas
Dear Mr. Rice,
As an inducement to Link.Com, Inc. to enter into a sublease agreement for
the Sublease Premises with Sublandlord, Sublandlord represents and warrants to
Sublessee that Sublandlord, as of the date of this letter, is not in default of
any term or condition of the Master Lease in any manner or of any other
agreement in any manner concerning the Sublease Premises, and that no event
exists which could constitute a Master Lease Termination, as defined in that
Consent to Sublease agreement, which is attached hereto and incorporated by
reference herein.
Additionally, Sublandlord also joins in making the representations
contained in this letter as an inducement to Link.Com, Inc. to enter into a
sublease agreement for the Sublease Premises with Sublandlord. In consideration
of the rent and security deposit paid by Link.Com, Inc. to Sublandlord pursuant
to the certain sublease agreement, Sublandlord agrees to indemnify and save and
hold harmless Link.Com, Inc. from any and all claims, demands, costs, expenses,
damages, rents, fines, penalties, interest expenses, moving or relocation
expenses, utility installation expenses, or reasonable attorneys' fees, in any
manner incurred by Link.Com, Inc. as a result of the breach of the
representations and warranties contained in this letter. Sublandlord
specifically agrees that all obligations imposed upon them by this letter as
subject to set-off and deduction by Link.Com, Inc.
This letter is intended to be a part of that certain sublease agreement
between Link.Com, Inc. and GTECH Corporation.
Sincerely yours,
GTECH Corporation
/s/ PAUL D. DONNELLY /s/ JACKIE ANTHEMENT JR.
Paul D. Donnelly Jackie Anthement Jr.
Director Facilities & Real Estate COO
<PAGE> 2
SUBLEASE AGREEMENT
This SUBLEASE AGREEMENT (the "Sublease") dated and effective as of
___________________, 2000, by and between GTECH CORPORATION, a Delaware
corporation (herein called "Sublandlord"), and LINK.COM, INC., a Nevada
corporation (herein called "Subtenant");
WITNESSETH:
Reference is made to that certain Lease Agreement dated as of January 15,
1992, by and between Norwood-Reunion Cameron Centre Joint Venture ("NRCC"), as
Landlord, and Sublandlord, as Tenant, as amended by (i) Lease Amendment Number
1 dated as of March 10, 1992, by and between NRCC and Sublandlord, (ii) Lease
Amendment Number 2 dated as of July 20, 1992, by and between NRCC and
Sublandlord, (iii) Third Amendment to Lease Agreement dated July 14, 1997, by
and between Gateway Central Properties (successor to NRCC, hereinafter referred
to as "Landlord") and Sublandlord, and (iv) Fourth Amendment to Lease Agreement
dated October 17, 1997, by and between Landlord and Sublandlord (such Lease
Agreement, as amended, being referred to herein as the "Master Lease"),
covering and describing, among others, the "Sublease Premises" hereinafter
described.
Sublandlord has agreed to sublease the Sublease Premises to Subtenant,
Subtenant has agreed to sublease the Sublease Premises from the Sublandlord,
and the Landlord has consented to such sublease by Sublandlord to Subtenant,
all as hereinafter provided.
NOW, THEREFORE, KNOW ALL MEN BY THESE PRESENTS:
THAT, for and in consideration of the rents to be paid by Subtenant and
the covenants and agreements of the Sublandlord and Subtenant hereinafter set
forth, the Sublandlord does hereby SUBLEASE, SUBLET and DEMISE unto the
Subtenant and the Subtenant does hereby SUBLEASE and SUBLET from the
Sublandlord approximately 7,082 square feet of space (herein called the
"Sublease Premises") situated in Travis County, Texas, within that certain
building locally known as Cameron Centre, Building B, located at 8200 Cameron
Road, Suite B-170, Austin, Texas, as more particularly described and/or
depicted on Exhibit A attached hereto and incorporated herein by reference for
all purposes;
TO HAVE AND TO HOLD the Sublease Premises, subject to the terms, covenants
and conditions in this Sublease and in the Master Lease unto the Subtenant for
the term hereinafter stated.
1
<PAGE> 3
ARTICLE ONE
TERM
The term ("Term") of this Sublease shall commence on the Effective Date
(as hereinafter defined) and shall expire at 11:59 p.m. on September 24th 2002,
unless sooner terminated as herein provided. The "Effective Date" of this
Sublease shall be date on which Landlord executes the Consent to Sublease
attached hereto as Exhibit B and incorporated herein by this reference for all
purposes.
ARTICLE TWO
RENT AND SECURITY DEPOSIT
2.1 Rent. Subtenant agrees to pay to Sublandlord, as the "Base Rent" in
this Sublease, in lawful money of the United States of America, the sum of the
following amounts on the respective dates stated below:
(a) On the Effective Date, if the Effective Date is a date other than
the first day of a calendar month, the Subtenant agrees to pay to the
Sublandlord an amount equal to the product of the number of days from
and including the Effective Date to and including the last day of the
calendar month in which the Effective Date occurs multiplied by
$165.25, as the Base Rent for such initial partial month during the
Term; and
(b) Commencing on the first day of the fourth (4th) full calendar month
to ensure after the calendar month in which the Effective Date occurs,
and on the first day of each calendar month thereafter during the Term,
Subtenant agrees to pay to the Sublandlord Four Thousand Nine Hundred,
Fifty-seven and 40/100 Dollars ($4,957.40), as the Base Rent for such
respective calendar months; provided, that if Effective Date occurred
on other than the first day of a calendar month, then the amount
payable by the Subtenant on the first day of the last calendar month to
commence during the Term shall be prorated as provided in paragraph
2.1(a) above for the number of days in such calendar month which are
within the Term.
2.2 Additional Rent. In addition to the Base Rent described above,
Subtenant agrees to pay to Sublandlord, as Additional Rent, its Proportionate
Share (as defined in the Master Lease) of operating expenses set forth in
Section 2.03 of the Master Lease attributable to the Sublease Premises
(determined on a square foot of rentable area basis) for the period of the Term
commencing on the ninety-first (91st) day of the Term. Subtenant agrees to pay
its Proportionate Share to Sublandlord through payments to Sublandlord of
Forecast Additional Rent (as defined in the Master Lease) for the period of the
Term of this Sublease commencing the ninety-first day of the Term. The Forecast
Additional Rent applicable during calendar year 2000 is One Thousand Six Hundred
Seventy-Five and 60/100 Dollars ($1675.60) per calendar month. For any partial
calendar month during the Term of this Sublease in which Subtenant has agreed to
pay Forecast Additional Rent, the monthly installment of Forecast Additional
Rent shall be proportionately reduced based on the proportion of such calendar
month which is within the portion of the Term in which Subtenant has agreed to
pay Forecast Additional Rent. Additional Rent shall be due and payable monthly,
in advance, commencing on the ninety-first day of the
2
<PAGE> 4
Term and thereafter on the first day of each calendar month during the Term of
this Sublease. Except as otherwise provided herein, Additional Rent shall be
determined and paid to Sublandlord with respect to the Sublease Premises in the
same manner as set forth in the Master Lease.
2.3 Place of Payment. The Minimum Rent and the Additional Rent is
hereinafter collectively called "Rent." All Rent and other sums owing or to
become owing by Subtenant to Sublandlord shall be payable at the Sublandlord's
office at ___________________________________________.
2.4 Security Deposit. Upon execution hereof, Subtenant shall pay to
Sublandlord the cash sum of Eleven Thousand Sixty-Seven and No/100 Dollars
($11,067.00) as security for the full and faithful performance by Subtenant of
the Subtenant's monetary and non-monetary obligations under this Sublease and
the Master Lease. In the event of default by Subtenant of any of its
obligations hereunder or under the Master Lease, Subtenant agrees that
Sublandlord may apply all or any part of the Security Deposit for the payment
of Minimum Rent, Additional Rent or any other amount owed by Subtenant under
the terms of this Sublease or the Master Lease, or to payment or reimbursement
of any expense incurred by Sublandlord as a result of any default by Subtenant
under the terms of this Sublease or the Master Lease; provided, however, the
foregoing shall not be construed as a limitation on or impairment of any other
remedy of the Sublandlord or the Landlord under the terms of this Sublease or
the Master Lease. In the event all or any portion of the Security Deposit is
applied to cure any default of Subtenant under the terms of this Sublease or
the Master Lease, Subtenant agrees to and shall deposit with the Sublandlord
any sums drawn from the Security Deposit and so applied, in order that the
Security Deposit shall at all times be the amount specified herein. If the
Subtenant faithfully performs all of its obligations under this Sublease and
the Master Lease, Sublandlord shall return the Security Deposit to the
Subtenant, without interest, within sixty (60) days following the final
recapitulation and comparison of the Forecast Additional Rent for the final
Lease Year of the Master Lease.
2.5 In addition to the Base Rent and the Additional Rent and the Security
Deposit, Subtenant further agrees to timely pay any and all amounts to become
owing during the Term with respect to any costs, expenses, fees or other sums
or amounts attributable to the Sublease Premises (as determined on a square
foot of rentable area basis), including, without limitation, all after normal
business hours service charges, late charges, and interest as set forth in the
Master Lease.
ARTICLE THREE
AGREEMENTS BY SUBTENANT
3.1 Subtenant's Compliance with Master Lease. Commencing on the Effective
Date and thereafter during the Term of this Sublease, except as specifically
stated herein to the contrary, Subtenant agrees to keep and perform all the
obligations set forth in the Master Lease to be kept and performed by the
"Tenant" as defined thereunder with reference to the Sublease Premises and all
such obligations are incorporated into this Sublease by reference as fully and
for all purposes as if set forth herein in full. Subtenant further agrees
that, during the term of this
3
<PAGE> 5
Sublease, it will not take or fail to take any action upon or with reference to
the Sublease Premises that would cause Sublandlord to be or become in default
under the Master Lease.
3.2 Use. Subtenant agrees to use the Sublease Premises solely for
administrative offices, a computer center, computer maintenance and other uses
relating to Subtenant's business which are authorized under and conducted in
accordance with the provisions of the Master Lease.
3.3 Same Conditions Apply. Except as otherwise stated in this Sublease,
Subtenant agrees that its subleasehold in and to the Sublease Premises is
subject to the same conditions as set forth in the Master Lease to which
reference is here made therefor and the same are incorporated herein by
reference as fully and for all purposes as if set forth herein in full.
3.4 No Renewal Term. Subtenant acknowledges and agrees that nothing in this
Sublease shall be deemed or construed to grant to Subtenant the right to
exercise any option or right granted to Sublandlord under the Master Lease,
including, without limitation, any option to renew or extend the term of the
Master Lease or any right of first refusal granted to Sublandlord under the
Master Lease.
3.5 No Subleasing or Assignment. Subtenant acknowledges and agrees that
nothing in this Sublease shall be deemed or construed to permit Subtenant, and
Subtenant shall have no right, to transfer or assign this Sublease or to further
sublease the Sublease Premises without the prior written consent of Sublandlord
and Landlord, which consent Sublandlord and Landlord may withhold or grant in
their sole discretion.
3.6 Condition of Sublease Premises. Except as stated specifically in
Section 4.2, Subtenant acknowledges and agrees that neither Sublandlord nor
Landlord shall have any obligation to pay for or provide any improvements in or
to the Sublease Premises and Subtenant does hereby agree that this sublease of
the Sublease Premises is made by Sublandlord and accepted by Subtenant AS IS,
WHERE IS, WITH ALL FAULTS AND WITHOUT ANY WARRANTY OR REPRESENTATION, EXPRESS OR
IMPLIED, OF ANY KIND OR NATURE WHATSOEVER, INCLUDING, WITHOUT LIMITATION, AS TO
FITNESS, CONDITION, OR HABITABILITY.
3.7 Representations as to Master Lease. Sublandlord represents and warrants
to Sublessee that Sublandlord, as of the Effective Date, is not in default of
any term or condition of the Master Lease in any manner or of any other
agreement in any manner concerning the Sublease Premises, and that no event
exists which could constitute a Master Lease Termination, as defined in that
Consent to Sublease agreement, which is attached hereto and incorporated by
reference herein. SUBLANDLORD AGREES TO INDEMNIFY AND SAVE AND HOLD HARMLESS
SUBLESSEE FROM ANY AND ALL CLAIMS, DEMANDS, COSTS, EXPENSES, DAMAGES, RENTS,
FINES, PENALTIES, INTEREST EXPENSES, OR REASONABLE ATTORNEYS' FEES, IN ANY
MANNER INCURRED BY SUBLESSEE AS A RESULT OF THE BREACH OF THE REPRESENTATIONS
AND WARRANTIES CONTAINED IN THE PARAGRAPH.
4
<PAGE> 6
ARTICLE FOUR
AGREEMENTS BY SUBLANDLORD
4.1 Obtain Services from Landlord. Upon request by Subtenant, Sublandlord
agrees to seek and/or make appropriate demand on the Landlord to provide any
services to the Sublease Premises which Landlord is obligated to provide under
the Master Lease. In no event shall Sublandlord be obligated or liable to
Subtenant for the failure of Landlord to provide any such services. Any damages
recovered by Sublandlord from Landlord on account of a failure of Landlord to
provide such services to the Sublease Premises shall be paid to Subtenant after
deducting therefrom the reasonable costs and expenses (including, without
limitation, its reasonable attorney's fees and court cost(s) incurred by
Sublandlord in enforcing the terms and provisions of the Master Lease and/or
prosecuting any such claim against Landlord.
ARTICLE FIVE
REMEDIES
5.1 Sublandlord's Remedies. Any failure by Subtenant to satisfy and perform
all covenants, obligations and provisions of this Sublease and any act or
omission by Subtenant which would constitute an event of default by Tenant under
the Master Lease shall constitute an event of default by Subtenant hereunder.
Subtenant agrees that upon: (i) the occurrence of any event of Monetary Default
(as defined in the Master Lease) by Subtenant, written notice by Sublandlord,
and the passage of fifteen (15) business days in which Subtenant has failed to
cure the Monetary Default, or (ii) the occurrence of any Non-Monetary Default
(as defined in the Master Lease) by Subtenant, written notice by Sublandlord to
Subtenant, and the passage of thirty (30) days in which Subtenant has failed to
cure the Non-Monetary Default, Sublandlord may exercise, in addition to any
other remedy available at law or in equity, any one or more of the remedies set
forth in the Master Lease.
5.2 Subtenant's Remedies. In the event of any default by Sublandlord
hereunder, Subtenant shall not exercise any remedy until thirty (30) days after
Subtenant has given Sublandlord and Landlord written notice of such default and
Sublandlord has failed within such 30-day period of time to remedy such default
by Sublandlord.
ARTICLE SIX
MISCELLANEOUS PROVISIONS
6.1 Brokerage Commissions. Sublandlord and Subtenant acknowledge and agree
that Colliers Oxford has provided real estate brokerage services to Subtenant
and that Hill Partners, Inc. has provided real estate brokerage services to
Sublandlord, and that Colliers Oxford and Hill Partners, Inc. are the only real
estate brokers involved in this transaction. In the event and only in the event
that Subtenant enters possession of the Sublease Premises and pays timely the
initial partial month, and the first full calendar month of Base Rent plus the
Security Deposit to Sublandlord, Sublandlord agrees (a) to pay to Colliers
Oxford a real estate leasing commission of four percent (4%) of the total Base
Rent payable by Subtenant under this Sublease and (b) to pay Hill Partners, Inc.
a real estate leasing commission of two percent (2%) of the total Base Rent
payable by Subtenant under this Sublease. Except for the real estate leasing
commission
5
<PAGE> 7
provided in this Section, each of Sublandlord and Subtenant agree to indemnify
and hold the other harmless from and against ALL CLAIMS of all brokers, finders
and others claiming a commission, fee or other compensation in connection with
this transaction on account of an agreement claimed to have been made by,
through or under such indemnifying party. Sublandlord and Subtenant agree to
indemnify and hold the Landlord harmless from and against all claims of all
brokers, finders and others claiming a commission, fee or other compensation in
connection with this transaction on account of an agreement claimed to have been
made by, through, or under them, respectively.
6.2 Costs of Enforcement. In the event that either party shall take action
to enforce any rights under this Sublease, the prevailing party shall be
entitled to court costs and reasonable attorney's fees (including those
relating to any appeals). Such fees shall include all costs incident to
recovery hereunder whether directly related to litigation or not.
6.3 Notices. Any notice or request required by this Sublease or the Master
Lease must be in writing and may, unless otherwise expressly provided in this
Master Lease, be given or served by depositing the same in the United States
Postal Service, post-paid and certified, addressed to the party to be notified,
with return receipt requested, or by hand delivering the same in person to such
party (or in the case of a corporate party, to an officer of such party). For
purposes of notice, the addresses of the parties shall be as follows, until
changed as herein provided:
If to LANDLORD:
-------------------
-------------------
-------------------
If to SUBLANDLORD: GTECH Corporation
Attn: General Counsel
55 Technology Way
West Greenwich, RI 02817
With copy to: R.G. Converse
Fulbright & Jaworski L.L.P.
600 Congress Avenue, 24th Floor
Austin, Texas 78701
If to SUBTENANT: Link.Com, Inc.
201 East Main Street
Brady, Texas 76825
Such notice shall be deemed to be given when deemed given under the terms
and provisions of the Master Lease. The parties hereto shall have the right
from time to time to change their respective addresses by giving written notice
to the other parties.
6
<PAGE> 8
6.4 Entire Agreement. This Sublease contains the entire understanding
between Sublandlord and Subtenant and supersedes any prior understandings and
agreements between them regarding the subject matter hereof. There are no other
representations, agreements, arrangements, understandings, oral or written,
between and among the parties hereto or made by any agents, employees or
representatives of any of the parties hereto (including, without limitation,
real estate brokers and salesmen) relating to the subject matter of this
Sublease that are not set forth herein. No amendment of or supplement of this
Sublease shall be valid or effective unless made in writing and executed by
each of the parties hereto.
6.5 Partial Invalidity. If any portion of this Sublease shall be deemed to
be null and void or unenforceable by action of a court of law, such portion
shall be severable and shall not affect the balance of this Sublease, which
shall remain in full force and effect.
6.6 Time of the Essence. Time shall be of the essence with respect to all
matters pertaining to this Sublease.
6.7 Binding Effect. This Sublease is binding on and enforceable against
the parties and their respective legal representatives, successors and assigns;
provided, that nothing in this Section shall be deemed or construed to permit
the assignment of this Sublease or the further sublease of the Sublease
Premises by Subtenant.
6.8 Word Forms. Unless the context indicates otherwise, the singular form
when used herein will include the plural form, and any masculine, feminine, or
neuter gender, when used herein, will include all other genders.
6.9 Applicable Law. This Sublease has been made and entered into in the
State of Texas, and shall be governed by and construed in accordance with the
law of the State of Texas. Any cause of action or other proceeding of any kind
or nature shall be conducted in Travis County, Texas.
6.10 Counterpart Execution. This Sublease may be executed in multiple
original counterparts and shall not be or become effective unless and until
Sublandlord, Subtenant and Landlord have executed and delivered a copy of this
Sublease to each other party hereto. Until each of Sublandlord, Subtenant and
Landlord have so executed and delivered this Sublease to all the other parties
hereto, any party which has signed this or any other counterpart of this
Sublease may withdraw such person's execution by written notice to all other
parties named in the first paragraph.
6.11 Notwithstanding anything in this Sublease to the contrary, if the
Landlord fails to execute a written consent in the form attached to this
Sublease as Exhibit B and made a part hereof for all purposes on or before
February 21, 2000, the Sublandlord shall have the option and right within ten
(10) days after such date to cancel and terminate this Sublease without
liability to Subtenant of any kind or nature by written notice to the Subtenant.
Executed to be effective as of the Effective Date.
7
<PAGE> 9
SUBLANDLORD: SUBTENANT:
GTECH CORPORATION, LINK.COM, INC.,
a Delaware corporation a Nevada corporation
By: /s/ PAUL D. DONNELLY By: /s/ JACKIE ANTHEMENT JR.
------------------------------- -------------------------------
Name: Paul D. Donnelly Name: Jackie Anthement Jr.
----------------------------- -----------------------------
Title: Director, Facilities & R.C. Title: COO
---------------------------- ----------------------------
Address: 55 Technology Way Address: Link.Com, Inc.
---------------------------- ----------------------------
W. Greenwich, RI 281 E. Main St.
---------------------------- ----------------------------
02817 Brady, Texas 76835
---------------------------- ----------------------------
8
<PAGE> 10
EXHIBIT A
Legal Description: The Property is 7.140 acres of land out of the James P.
Wallace Survey No. 57 in Travis County, Texas, said 7.140
acres of Land being a portion of that certain 14.12 acre
tract of land conveyed to Vantage Properties, Inc. by Deed
recorded in Volume 8760, Page 910, Deed Records, Travis
County, Texas and all of that certain 0.049 acre tract of
Land conveyed to Vantage Properties, Inc. by Deed recorded
in Volume 9165, Page 191, Deed Records, Travis County,
Texas.
Address: 8200 Cameron Road
Building B
Austin, Texas 78754
[PROPERTY DRAWING]
<PAGE> 11
EXHIBIT "B"
CONSENT TO SUBLEASE
THIS CONSENT TO SUBLEASE ("Consent Agreement") dated as of ________, 2000,
is made with reference to that certain sublease (the "Sublease") dated ______,
2000, by and between GTECH Corporation, a Delaware corporation ("Tenant") and
LINK.COM, INC. ("Sublessee"), and is entered into between the foregoing parties
and Gateway Central Properties, Inc., ("Landlord"), having an address at TA
Realty Associates, 28 State Street, 10th Floor, Boston, Massachusetts 02109 with
reference to the following facts:
A. Landlord and Tenant are the parties to that certain master lease (the
"Master Lease") dated as of January 15, 1992, respecting certain premises
("Premises") known as Suite B170, located in the building ("Building") located
at 8200 Cameron Road, Suite B-170, Austin, Texas "Cameron Centre".
B. Tenant and Sublessee wish to enter into the Sublease respecting the
portion of the Premises described therein (the "Sublease Premises").
C. The Master Lease provides that Tenant may not enter into any sublease
without Landlord's prior written approval.
D. Tenant and Sublessee have herewith presented the fully-executed Sublease
to Landlord for Landlord's approval, and Landlord is willing to approve the
same, upon all of the terms and conditions hereinafter appearing.
NOW, THEREFORE, for good and valuable consideration, the parties hereto
agree as follows:
1. Neither the Master Lease, the Sublease nor this Consent shall be deemed
to grant Sublessee any rights whatsoever against Landlord. Sublessee hereby
acknowledges and agrees that its sole remedy for any alleged or actual breach of
its rights in connection with the Sublease Premises (as defined in the Sublease)
shall be solely against Tenant.
2. This Consent shall not release Tenant from any existing or future duty,
obligation or liability to Landlord pursuant to the Master Lease, nor shall this
Consent change, modify or amend the Master Lease in any manner. This consent
shall not be deemed Landlord's consent to any further subleases.
3. (a) In the event of Master Lease Termination (as hereinafter defined)
prior to the termination of the Sublease, at Landlord's option, Sublessee agrees
to attorn to Landlord and to recognize Landlord as Sublessee's landlord under
the Sublease, upon the terms and conditions and at the rental rate specified in
the Sublease, and for the then remaining term of the Sublease, except that
Landlord shall not be bound by any provision of the Sublease which in any way
increases Landlord's duties, obligations or liabilities to Sublessee beyond
those owed to Tenant under the Master Lease. Sublessee agrees to execute and
deliver at any time and from time to time, upon request of Landlord, any
instruments which may be necessary or appropriate to evidence such attornment.
Landlord shall not (i) be liable to Sublessee for any act, omission or breach of
the Sublease by Tenant, (ii) be subject to any offsets or defenses which
Sublessee might have against Tenant, (iii) be bound by any rent or additional
rent which Sublessee might have paid in advance to Tenant, or (iv) be bound to
honor any rights of Sublessee in any security deposit made with Tenant except to
the extent Tenant has turned over such security deposit to Landlord. Tenant
hereby agrees that in the event of Master Lease Termination, which occurs on
account of a default by Tenant under the Master Lease, Tenant shall immediately
pay or transfer to Landlord any security deposit then held by Tenant. Landlord
shall have the right, in Landlord's sole discretion, to elect not to have
Sublessee attorn to Landlord and, in this event, the Sublease shall be deemed
terminated on the date of Master Lease Termination and, Landlord shall have no
obligation to permit Sublessee to continue to occupy the Premises.
(b) "Master Lease Termination" means any event, which by voluntary or
involuntary act or by operation of law, might cause or permit the Master Lease
to be terminated, expired, be cancelled, be foreclosed against, or otherwise
come to an end, including but not limited to (1) a default by Tenant under the
Master Lease of any of the terms or provisions thereof; (2) foreclosure
proceedings brought by the holder of any mortgage or trust deed to which the
Master Lease is subject; or (3) the termination of Tenant's leasehold estate by
dispossession proceeding or otherwise.
<PAGE> 12
(c) In the event of attornment hereunder, Landlord's liability shall
be limited to matters arising during Landlord's ownership of the Building, and
in the event that Landlord (or any successor owner) shall convey or dispose of
the Building to another party, such party shall thereupon be and become
landlord hereunder and shall be deemed to have fully assumed and be liable for
all obligations of this Consent or the Sublease to be performed by Landlord
which first arise after the date of conveyance, including the return of any
security deposit, and Tenant shall attorn to such other party, and Landlord (or
such successor owner) shall, from and after the date of conveyance, be free of
all liabilities and obligations hereunder not then incurred. The liability of
Landlord to Sublessee for any default by landlord under this Consent or the
Sublease after such attornment, or arising in connection with Landlord's
operation, management, leasing, repair, renovation, alteration, or any other
matter relating to the Building or the Sublease Premises, shall be limited to
the interest of the Landlord in the Building (and proceeds thereof). Under no
circumstances shall any present or future general partner of Landlord (if
Landlord is a partnership) have any liability for the performance of Landlord's
obligations under this Consent or the Sublease.
4. In addition to Landlord's rights under Section 3 hereof, in the event
Tenant is in default under any of the terms and provisions of the Master Lease,
Landlord may elect to receive directly from Sublessee all sums due or payable to
Tenant by Sublessee pursuant to the Sublessee, and upon receipt of Landlord's
notice, Sublessee shall thereafter pay to Landlord any and all sums becoming
due or payable under the Sublease and Tenant shall receive from Landlord a
corresponding credit for such sums against any payments then due or thereafter
becoming due from Tenant. Neither the service of such written notice nor the
receipt of such direct payments shall cause Landlord to assume any of Tenant's
duties, obligations and/or liabilities under the Sublease, nor shall such event
impose upon Landlord the duty or obligation to honor the Sublease, nor
subsequently to accept Sublessee's attornment pursuant to Section 3(a) hereof.
5. Sublessee hereby acknowledges that it has read and has knowledge of
all of the terms, provisions, rules and regulations of the Master Lease and
agrees not to do or omit too do anything which would cause Tenant to be in
breach of the Master Lease. Any such act or omission shall also constitute a
breach of this Consent Agreement and shall entitle Landlord to recover any
damage, loss, cost or expense which it thereby suffers, from Sublessee, whether
or not Landlord proceeds against Tenant.
6. In the event of any litigation between the parties hereto with
respect to the subject matter hereof, the unsuccessful party agrees to pay the
successful party or parties, all costs, expenses and reasonable attorney's fees
incurred therein by the successful party or parties, in accordance with Section
4.20 of the Master Lease.
7. This Consent Agreement shall be binding upon and inure to the benefit
of the parties' respective successors and assigns, subject to all agreements
and restrictions contained in the Master Lease, the Sublease and herein with
respect to subleasing, assignment, or other transfer. The agreements contained
herein constitute the entire understanding between the parties with respect to
the subject matter hereof, and supersede all prior agreements, written or oral,
inconsistent herewith. No amendment, modification or change therein will be
effective unless Landlord shall have given its prior written consent thereto.
This Consent Agreement may be amended only in writing, signed by all parties
hereto.
8. Notices required or desired to be given hereunder shall be effective
either upon personal delivery or three (3) days after deposit in the United
State mail, by certified mail, return receipt requested, addressed to the
Landlord at the address set forth above, or to Tenant or Sublessee at the
address of the Premises or of the Sublease Premises, respectively. Any party may
change its address for notice by giving notice in the manner hereinabove
provided.
9. As a condition to the effectiveness of Landlord's consent to the
Sublease, Tenant agrees to pay Landlord concurrently with Tenant's delivery of
an executed counterpart hereof, Two Hundred Fifty Dollars ($250.00) in
reimbursement of Landlord's reasonable attorneys' fees and administrative
expenses incurred in connection with this Consent Agreement, as additional
rent. Landlord's acceptance of such fee shall impose no duty on Landlord to
approve or to execute the Sublease. Tenant shall also promptly pay Landlord any
share of bonus rents, or other items required under the Master Lease in
connection with subleases.
10. Notwithstanding anything to the contrary set forth herein or
elsewhere, if the Master Lease was guaranteed at the time of execution or at
any time prior hereto by any guarantor, then Landlord may at any time hereafter
declare all of its agreements in this Consent Agreement to be null and void and
of no force and effect unless and until Landlord receives a counterpart of this
Consent Agreement indicating approval thereof by any and all such guarantor(s),
and their spouses (if any).
<PAGE> 13
11. Tenant and Sublessee agree to indemnify and hold Landlord harmless
from and against any loss, cost, expense, damage or liability, including
reasonable attorneys' fees, incurred as a result of a claim by any person or
entity (i) that it is entitled to a commission, finder's fee or like payment in
connection with the Sublease or (ii) relating to or arising out of the Sublease
or any related agreements or dealings.
12. Tenant agrees to apply all payments received under the Sublease
first to the satisfaction of all of Tenant's obligations under the Master Lease
which are then due and owing by Tenant thereunder before using any part thereof
for any other purpose.
IN WITNESS WHEREOF, the following parties have executed this
Consent to Sublease as of the date first above written.
TENANT:
GTECH CORPORATION
By: /s/ PAUL D. DONNELLY
---------------------------------------
Name Typed: Paul D. Donnelly
-------------------------------
Title: Director, Facilities & Real Estate
------------------------------------
SUBLESSEE:
LINK.COM INC.
By: /s/ [ILLEGIBLE]
---------------------------------------
Name Typed: [ILLEGIBLE]
-------------------------------
Title: COO
------------------------------------
LANDLORD:
GATEWAY CENTRAL PROPERTIES, INC.
A CALIFORNIA CORPORATION
By: TA Realty Corporation, As Agent
By:
---------------------------------------
Name Typed:
-------------------------------
Title:
------------------------------------
<PAGE> 1
EXHIBIT 10.3
ASSIGNMENT AND ASSUMPTION AGREEMENT
This Assignment and Assumption Agreement ("Assignment") effective as of
August 31, 1999, is by and between Venture Information Systems, LLC, a Texas
limited liability company ("Assignor"), and Link.com, Inc., a Nevada corporation
("Assignee").
RECITALS
WHEREAS, Assignor, owns certain assets that it wishes to transfer to
Assignee upon the terms contained in this Assignment; and
WHEREAS, in order to effectuate the transfer of such assets, and to
confirm the terms under which Assignee will issue stock to Assignor as
contemplated hereby, Assignor and Assignee are executing and delivering this
Assignment, and the parties intend such transfer to qualify as a tax-free
transaction under Section 351 of the Internal Revenue Code of 1986, as amended.
NOW THEREFORE, in consideration of the premises, the mutual covenants
and agreements contained herein, Assignor and Assignee hereby agree as follows:
AGREEMENT
1. CONVEYANCE OF ASSETS. Assignor hereby conveys, transfers, assigns
and delivers unto Assignee and its successors and assigns, forever, free and
clear of any and all liens, claims and encumbrances of any nature whatsoever,
any and all the assets, rights and properties of Assignor including, without
limitation, (i) any and all rights in and to the software program identified as
SafeHaven Software (the "Program"); and (ii) any and all trademarks, trade
names, service marks, copyrights, internet domain names, processes, formulas,
trade secrets, proprietary and technical information, know-how, other trade
rights and other intangible assets related to the Assignor's business or the
development of the Program and related programs, together with all rights to,
and applications and licenses for, the foregoing. (collectively, the "Assets").
If Assignor has any such rights that cannot be assigned to Assignee for any
reason, Assignor waives the enforcement of such rights. If Assignor has any such
rights that cannot be assigned or waived, Assignee hereby grants to Assignor an
exclusive, irrevocable, perpetual, worldwide, fully-paid license, with the right
to sublicense through multiple tiers, to such rights.
2. ASSUMPTION OF THE ASSUMED LIABILITIES. Assignee hereby agrees to
assume the indebtedness evidenced by that certain Promissory Note in the face
amount of $400,000 between Assignor, as maker, and Bank of Brady, as Payee,
dated September 7, 1999 (the "Note"), subject to the consent of Payee. Assignee
also assumes those business liabilities of Assignor which are known to both
parties as of August 31, 1999 (such as Assignor's accounts payable). Other than
as specified above, Assignee does not and will not assume or be responsible for
payment of any liability or obligation of Assignor of any kind whatsoever.
Assignor agrees to remain solely liable for all such other liabilities of
Assignor and shall indemnify and hold Assignee harmless from any and all
claims, demands or losses incurred as a result of such other liabilities.
1
<PAGE> 2
3. ISSUANCE OF STOCK. In consideration for the value of the Assets,
Assignee hereby agrees to issue Assignor 12,500 shares of its Common Stock, par
value $0.001 (the "Securities").
4. REPRESENTATIONS OF ASSIGNOR. Assignor represents as follows:
a) The Securities to be received by Assignor will be acquired for
investment for such Assignor's own account, not as a nominee
or agent, and not with a view to the resale or distribution of
any part thereof, and Assignor has no present intention of
selling, granting any participation in, or otherwise
distributing the same.
b) Assignor has had an opportunity to ask questions and receive
answers from Assignee regarding the terms and conditions of
the offering of the Securities.
c) Assignor understands that the Securities that it is purchasing
are characterized as "restricted securities" under the federal
securities laws inasmuch as they are being acquired in a
transaction not involving a public offering and that under
such laws and applicable regulations such securities may not
be resold without registration under the Act and applicable
state securities laws, except in certain limited
circumstances. In this connection, Assignor represents that it
is familiar with Rule 144 under the Act, and understands the
resale limitations imposed thereby and by the Act. Assignor
understands that Assignee is under no obligation to register
any of the securities sold hereunder.
d) Assignor understands that the certificates evidencing the
Securities shall bear the following legend (or one similar
thereto), as well as any other legend as may be required by
applicable federal and state securities laws:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER
THE SECURITIES LAWS OF ANY STATE. THESE SECURITIES ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE
TRANSFERRED, RESOLD, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT IN
ACCORDANCE WITH AND SUBJECT TO ALL THE TERMS AND CONDITIONS OF A
SHAREHOLDER AGREEMENT THEN IN EFFECT AND EXCEPT AS PERMITTED UNDER
THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO
REGISTRATION OR EXEMPTION THEREFROM. THE ISSUER OF THESE SECURITIES
MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY
TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS
IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES
LAWS."
5. REPRESENTATIONS AND WARRANTIES. Assignor represents and warrants to
Assignee that (i) Assignor is a limited liability company organized, existing
and in good standing under the laws
2
<PAGE> 3
of the State of Texas and has all requisite power and authority to enter into
this Assignment and comply with the terms hereof; (ii) all necessary action has
been taken to authorize and approve the execution of this Assignment and the
performance hereof by Assignor; (iii) this Assignment has been duly executed by
Assignor and constitutes the valid and binding obligation of Assignor and is
enforceable in accordance with its terms; (iv) Assignor has good and
indefeasible title to the Assets, free and clear of any mortgages, pledges,
liens, security interests, or other encumbrances of any character and that the
Program was developed internally by Assignor or acquired by Assignor, and was
not misappropriated from another.
6. CONSENT OF MEMBERS. All members of the Assignor hereby consent to
the terms and conditions of this Assignment including, without limitation, the
irrevocable assignment of the Assets to the Assignee. It is the intent of each
member, by executing this Assignment, that this document constitutes the consent
required under Article 2.23 of the Texas Limited Liability Company Act (TEX.
CIV. STAT. Section 1528n, art. 101, et. seq.) and that the manager of the
Assignor is hereby authorized (a) to sign, execute, certify to, verify,
acknowledge, deliver, accept, file, and record any and all instruments and
documents, and (b) to take, or cause to be taken, any and all such action, in
the name and on behalf of the Assignor, as (in the manager's judgment) shall be
necessary, desirable or appropriate in order to effect the purposes of this
Assignment.
7. GOVERNING LAW. THIS ASSIGNMENT HAS BEEN NEGOTIATED, EXECUTED AND
DELIVERED AT AND SHALL BE DEEMED TO HAVE BEEN MADE IN TEXAS. THIS ASSIGNMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE
STATE OF TEXAS WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION
OR RULE (WHETHER OF THE STATE OF TEXAS OR ANY OTHER JURISDICTION) THAT WOULD
CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF
TEXAS.
8. CONSENT TO JURISDICTION AND FORUM. The parties hereto hereby consent
and agree that the District Court of Travis County, Texas or, at the option of
the Assignee, the United States District Court for the Western District of
Texas, shall have exclusive jurisdiction to hear and determine any claims or
disputes between the parties hereto pertaining to this Assignment or to any
matter arising out of or related to this Assignment. The parties hereto
expressly submit and consent in advance to such jurisdiction in any action or
suit commenced in any such court, and hereby waive any objection which it may
have based upon lack of personal jurisdiction, improper venue or forum non
conveniens and hereby consent to the granting of such legal or equitable relief
as is deemed appropriate by such court. Each party hereto irrevocably consents
to the service of process by registered or certified mail, postage prepaid, to
it at its address given pursuant to this Assignment. Nothing in this Assignment
shall be deemed or operate to affect the right of either party to serve legal
process in any other manner permitted by law, or to preclude the enforcement by
either party of any judgment or order obtained in such forum or the taking of
any action under this Assignment to enforce same in any other appropriate forum
or jurisdiction.
9. CONSTRUCTION. The parties have participated jointly in the
negotiation and drafting of this Assignment. In the event an ambiguity or
question of intent or interpretation arises, this Assignment shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions
3
<PAGE> 4
of this Assignment. Whenever the context of this Assignment requires, the gender
of all words herein shall include the masculine, feminine, and neuter, and the
number of all words herein shall include the singular and plural. All references
to section numbers in this Assignment shall be references to sections in this
Assignment, unless otherwise specifically indicated. The captions used herein
are for convenience only and are not to be considered in the construction of
this Assignment.
10. AMENDMENTS; WAIVER. This Assignment may be amended from time to
time only by written agreement of the parties. No term or provisions of this
Assignment may be waived or modified unless such waiver or modification is in
writing and signed by the party against whom such waiver or modification is
sought to be enforced. No failure on the part of any party to exercise and no
delay in exercising, any right, power, or remedy under this Assignment shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right under this Assignment preclude any other or further exercise thereof or
the exercise of any other right. The remedies provided in this Assignment are
cumulative and not exclusive of any remedies provided by law.
11. FORCE MAJEURE. The parties shall be excused from delays in
performing or from their failure to perform hereunder to the extent that such
delays or failures result from causes beyond the reasonable control of the party
(including, but not limited to, power loss, telecommunications failure, fire,
flood, other natural disasters, strikes, labor trouble, riots, civil
disobedience, or acts of God).
12. ENTIRE AGREEMENT. This Assignment is the entire agreement of the
parties with respect to the subject matter if this Assignment, and supersedes
all prior agreements between them, whether oral or written, of any nature
whatsoever with respect to the subject matter hereof. No amendment, alteration,
or modification of this Assignment shall be valid unless in each instance such
amendment, alteration, or modification is expressed in a written instrument duly
executed by the parties hereto.
13. SEVERABILITY. If any provision of this Assignment is held by final
judgment of a court of competent jurisdiction to be invalid, illegal or
unenforceable, such invalid, illegal or unenforceable provision shall be severed
from the remainder of this Assignment, and the remainder of this Assignment
shall be enforced. In addition, the invalid, illegal or unenforceable provision
shall be deemed to be automatically modified, and, as so modified, to be
included in this Assignment, such modification being made to the minimum extent
necessary to render the provision valid, legal and enforceable. Notwithstanding
the foregoing, however, if the severed or modified provision concerns all or a
portion of the essential consideration to be delivered under this Assignment by
one party to the other, the remaining provisions of this Assignment shall also
be modified to the extent necessary to equitably adjust the parties' respective
rights and obligations hereunder.
14. NO RELIANCE. Each party expressly warrants and represents and does
hereby state and represent that no promise or agreement which is not herein
expressed has been made to such party in executing this Assignment, and that no
party is relying upon any statement or representation of any other party, its
agents or its representatives, of the parties. Each party represents and
warrants that it is relying on its own judgment and each has been represented by
legal counsel in this matter. Each party represents and warrants that it has had
its legal counsel read and explain to it the entire contents of this Assignment
in full, as well as the legal consequences of this Assignment.
4
<PAGE> 5
15. COUNTERPARTS. This Assignment may be executed in any number of
counterparts and any party hereto may execute any such counterpart, each of
which when executed and delivered shall be deemed to be an original and all of
which counterparts taken together shall constitute but one and the same
instrument. This Assignment shall become binding when all counterparts taken
together shall have been executed and delivered by the parties. A telecopied
facsimile of an executed counterpart of this Assignment shall be sufficient to
evidence the binding agreement of each party to the terms hereof. However, each
party agrees to return to the other parties an original, duly executed
counterpart of this Assignment promptly after delivery of a telecopied facsimile
thereof.
16. FURTHER ASSURANCES. From time to time, as and when requested by
Assignee, Assignor shall execute and deliver, or cause to be executed and
delivered, such documents and instruments and shall take, or cause to be taken,
such further or other actions as may be reasonably necessary to carry out the
purposes of this Assignment.
17. CONTROLLING AGREEMENT. It is contemplated that Assignor may, at any
time or from time to time, execute, acknowledge and deliver one or more separate
instruments of assignment and conveyance relating to certain of the Assets. No
such separate instrument of assignment or conveyance shall limit the scope and
effect of this Assignment. In the event that any conflict or ambiguity exists as
between this Assignment and any such separate instrument of assignment, the
terms and provisions of this Assignment shall govern and be controlling.
[Remainder of page intentionally left blank. Signature page follows.]
5
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have executed this Assignment as
of the date first set forth above.
<TABLE>
ASSIGNOR: ASSIGNEE:
<S> <C>
VENTURE INFORMATION SYSTEMS, LLC LINK.COM, INC.
By: By:
--------------------------------- ---------------------------------
Name: Name:
------------------------------- --------------------------------
Title: Title:
------------------------------- -------------------------------
</TABLE>
MEMBERS OF VENTURE INFORMATION
SYSTEMS, LLC
- -------------------------------------
Marion Robert Rice, Member
- -------------------------------------
Andrew Wade McBee, Member
- -------------------------------------
Donnie Deshotels, Member
- -------------------------------------
Dee Dee Deshotels, Member
- -------------------------------------
Phil White, Member
6
<PAGE> 1
EXHIBIT 10.4
ASSIGNMENT AND ASSUMPTION AGREEMENT
This Assignment and Assumption Agreement ("Assignment") effective as of
August 31, 1999, is by and between National Healthcare Information Systems, LLC,
a Texas limited liability company ("Assignor"), and Link.com, Inc., a Nevada
corporation ("Assignee").
RECITALS
WHEREAS, Assignor, owns certain assets that it wishes to transfer to
Assignee upon the terms contained in this Assignment; and
WHEREAS, in order to effectuate the transfer of such assets, and to
confirm the terms under which Assignee will issue stock to Assignor as
contemplated hereby, Assignor and Assignee are executing and delivering this
Assignment, and the parties intend such transfer to qualify as a tax-free
transaction under Section 351 of the Internal Revenue Code of 1986, as amended.
NOW THEREFORE, in consideration of the premises, the mutual covenants
and agreements contained herein, Assignor and Assignee hereby agree as follows:
AGREEMENT
1. CONVEYANCE OF ASSETS. Assignor hereby conveys, transfers, assigns
and delivers unto Assignee and its successors and assigns, forever, free and
clear of any and all liens, claims and encumbrances of any nature whatsoever,
any and all the assets, rights and properties of Assignor including, without
limitation, (i) any and all rights in and to the software program identified as
DocLink (the "Program"); and (ii) all trademarks, trade names, service marks,
copyrights, internet domain names, processes, formulas, trade secrets,
proprietary and technical information, know-how, other trade rights and other
intangible assets related to the Assignor's business or the development of the
Program and related programs, together with all rights to, and applications and
licenses for, the foregoing (collectively, the "Assets"). If Assignor has any
such rights that cannot be assigned to Assignee for any reason, Assignor waives
the enforcement of such rights. If Assignor has any such rights that cannot be
assigned or waived, Assignee hereby grants to Assignor an exclusive,
irrevocable, perpetual, worldwide, fully-paid license, with the right to
sublicense through multiple tiers, to such rights.
2. ASSUMPTION OF THE ASSUMED LIABILITIES. Assignee hereby assumes those
business liabilities of Assignor known to both parties as of August 31, 1999
(such as Assignor's Accounts payable). Assignee does not and will not assume or
be responsible for payment of any other liability or obligation of Assignor of
any kind whatsoever. Assignor agrees to remain solely liable for all other
liabilities of Assignor and shall indemnify and hold Assignee harmless from any
and all claims, demands or losses incurred as a result of such other
liabilities.
3. ISSUANCE OF STOCK. In consideration for the value of the Assets,
Assignee hereby agrees to issue Assignor 12,500 shares of its Common Stock, par
value $0.001 (the "Securities")
1
<PAGE> 2
4. REPRESENTATIONS OF ASSIGNOR. Assignor represents as follows:
a) The Securities to be received by Assignor will be acquired for
investment for such Assignor's own account, not as a nominee
or agent, and not with a view to the resale or distribution of
any part thereof, and Assignor has no present intention of
selling, granting any participation in, or otherwise
distributing the same.
b) Assignor has had an opportunity to ask questions and receive
answers from Assignee regarding the terms and conditions of
the offering of the Securities.
c) Assignor understands that the Securities that it is purchasing
are characterized as "restricted securities" under the federal
securities laws inasmuch as they are being acquired in a
transaction not involving a public offering and that under
such laws and applicable regulations such securities may not
be resold without registration under the Act and applicable
state securities laws, except in certain limited
circumstances. In this connection, Assignor represents that it
is familiar with Rule 144 under the Act, and understands the
resale limitations imposed thereby and by the Act. Assignor
understands that Assignee is under no obligation to register
any of the securities sold hereunder.
d) Assignor understands that the certificates evidencing the
Securities shall bear the following legend (or one similar
thereto), as well as any other legend as may be required by
applicable federal and state securities laws:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER
THE SECURITIES LAWS OF ANY STATE. THESE SECURITIES ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE
TRANSFERRED, RESOLD, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT IN
ACCORDANCE WITH AND SUBJECT TO ALL THE TERMS AND CONDITIONS OF A
SHAREHOLDER AGREEMENT THEN IN EFFECT AND EXCEPT AS PERMITTED UNDER
THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO
REGISTRATION OR EXEMPTION THEREFROM. THE ISSUER OF THESE SECURITIES
MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY
TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS
IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES
LAWS."
5. REPRESENTATIONS AND WARRANTIES. Assignor represents and warrants to
Assignee that (i) Assignor is a limited liability company organized, existing
and in good standing under the laws of the State of Texas and has all requisite
power and authority to enter into this Assignment and comply with the terms
hereof; (ii) all necessary action has been taken to authorize and approve the
2
<PAGE> 3
execution of this Assignment and the performance hereof by Assignor; (iii) this
Assignment has been duly executed by Assignor and constitutes the valid and
binding obligation of Assignor and is enforceable in accordance with its terms;
(iv) Assignor has good and indefeasible title to the Assets, free and clear of
any mortgages, pledges, liens, security interests, or other encumbrances of any
character and that the Program was developed internally by Assignor or acquired
by Assignor, and was not misappropriated from another.
6. CONSENT OF MEMBERS. All members of the Assignor hereby consent to
the terms and conditions of this Assignment including, without limitation, the
irrevocable assignment of the Assets to the Assignee. It is the intent of each
member, by executing this Assignment, that this document constitutes the consent
required under Article 2.23 of the Texas Limited Liability Company Act (TEX.
CIV. STAT. Section 1528n, art. 101, et. seq.) and that the manager of the
Assignor is hereby authorized (a) to sign, execute, certify to, verify,
acknowledge, deliver, accept, file, and record any and all instruments and
documents, and (b) to take, or cause to be taken, any and all such action, in
the name and on behalf of the Assignor, as (in the manager's judgment) shall be
necessary, desirable or appropriate in order to effect the purposes of this
Assignment.
7. GOVERNING LAW. THIS ASSIGNMENT HAS BEEN NEGOTIATED, EXECUTED AND
DELIVERED AT AND SHALL BE DEEMED TO HAVE BEEN MADE IN TEXAS. THIS ASSIGNMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE
STATE OF TEXAS WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION
OR RULE (WHETHER OF THE STATE OF TEXAS OR ANY OTHER JURISDICTION) THAT WOULD
CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF
TEXAS.
8. CONSENT TO JURISDICTION AND FORUM. The parties hereto hereby consent
and agree that the District Court of Travis County, Texas or, at the option of
the Assignee, the United States District Court for the Western District of
Texas, shall have exclusive jurisdiction to hear and determine any claims or
disputes between the parties hereto pertaining to this Assignment or to any
matter arising out of or related to this Assignment. The parties hereto
expressly submit and consent in advance to such jurisdiction in any action or
suit commenced in any such court, and hereby waive any objection which it may
have based upon lack of personal jurisdiction, improper venue or forum non
conveniens and hereby consent to the granting of such legal or equitable relief
as is deemed appropriate by such court. Each party hereto irrevocably consents
to the service of process by registered or certified mail, postage prepaid, to
it at its address given pursuant to this Assignment. Nothing in this Assignment
shall be deemed or operate to affect the right of either party to serve legal
process in any other manner permitted by law, or to preclude the enforcement by
either party of any judgment or order obtained in such forum or the taking of
any action under this Assignment to enforce same in any other appropriate forum
or jurisdiction.
9. CONSTRUCTION. The parties have participated jointly in the
negotiation and drafting of this Assignment. In the event an ambiguity or
question of intent or interpretation arises, this Assignment shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Assignment. Whenever the context of this Assignment
requires, the gender of all words herein shall include the masculine, feminine,
and neuter, and the number of all words herein shall include the
3
<PAGE> 4
singular and plural. All references to section numbers in this Assignment shall
be references to sections in this Assignment, unless otherwise specifically
indicated. The captions used herein are for convenience only and are not to be
considered in the construction of this Assignment.
10. AMENDMENTS; WAIVER. This Assignment may be amended from time to
time only by written agreement of the parties. No term or provisions of this
Assignment may be waived or modified unless such waiver or modification is in
writing and signed by the party against whom such waiver or modification is
sought to be enforced. No failure on the part of any party to exercise and no
delay in exercising, any right, power, or remedy under this Assignment shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right under this Assignment preclude any other or further exercise thereof or
the exercise of any other right. The remedies provided in this Assignment are
cumulative and not exclusive of any remedies provided by law.
11. FORCE MAJEURE. The parties shall be excused from delays in
performing or from their failure to perform hereunder to the extent that such
delays or failures result from causes beyond the reasonable control of the party
(including, but not limited to, power loss, telecommunications failure, fire,
flood, other natural disasters, strikes, labor trouble, riots, civil
disobedience, or acts of God).
12. ENTIRE AGREEMENT. This Assignment is the entire agreement of the
parties with respect to the subject matter of this Assignment, and supersedes
all prior agreements between them, whether oral or written, of any nature
whatsoever with respect to the subject matter hereof. No amendment, alteration,
or modification of this Assignment shall be valid unless in each instance such
amendment, alteration, or modification is expressed in a written instrument duly
executed by the parties hereto.
13. SEVERABILITY. If any provision of this Assignment is held by final
judgment of a court of competent jurisdiction to be invalid, illegal or
unenforceable, such invalid, illegal or unenforceable provision shall be severed
from the remainder of this Assignment, and the remainder of this Assignment
shall be enforced. In addition, the invalid, illegal or unenforceable provision
shall be deemed to be automatically modified, and, as so modified, to be
included in this Assignment, such modification being made to the minimum extent
necessary to render the provision valid, legal and enforceable. Notwithstanding
the foregoing, however, if the severed or modified provision concerns all or a
portion of the essential consideration to be delivered under this Assignment by
one party to the other, the remaining provisions of this Assignment shall also
be modified to the extent necessary to equitably adjust the parties' respective
rights and obligations hereunder.
14. NO RELIANCE. Each party expressly warrants and represents and does
hereby state and represent that no promise or agreement which is not herein
expressed has been made to such party in executing this Assignment, and that no
party is relying upon any statement or representation of any other party, its
agents or its representatives, of the parties. Each party represents and
warrants that it is relying on its own judgment and each has been represented by
legal counsel in this matter. Each party represents and warrants that it has had
its legal counsel read and explain to it the entire contents of this Assignment
in full, as well as the legal consequences of this Assignment.
4
<PAGE> 5
15. COUNTERPARTS. This Assignment may be executed in any number of
counterparts and any party hereto may execute any such counterpart, each of
which when executed and delivered shall be deemed to be an original and all of
which counterparts taken together shall constitute but one and the same
instrument. This Assignment shall become binding when all counterparts taken
together shall have been executed and delivered by the parties. A telecopied
facsimile of an executed counterpart of this Assignment shall be sufficient to
evidence the binding agreement of each party to the terms hereof. However, each
party agrees to return to the other parties an original, duly executed
counterpart of this Assignment promptly after delivery of a telecopied facsimile
thereof.
16. FURTHER ASSURANCES. From time to time, as and when requested by
Assignee, Assignor shall execute and deliver, or cause to be executed and
delivered, such documents and instruments and shall take, or cause to be taken,
such further or other actions as may be reasonably necessary to carry out the
purposes of this Assignment.
17. CONTROLLING AGREEMENT. It is contemplated that Assignor may, at any
time or from time to time, execute, acknowledge and deliver one or more separate
instruments of assignment and conveyance relating to certain of the Assets. No
such separate instrument of assignment or conveyance shall limit the scope and
effect of this Assignment. In the event that any conflict or ambiguity exists as
between this Assignment and any such separate instrument of assignment, the
terms and provisions of this Assignment shall govern and be controlling.
[Remainder of page intentionally left blank. Signature page follows.]
5
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have executed this Assignment as
of the date first set forth above.
<TABLE>
ASSIGNOR: ASSIGNEE:
<S> <C>
NATIONAL HEALTHCARE LINK.COM, INC.
INFORMATION SYSTEMS, LLC
By: By:
--------------------------------- ---------------------------------
Name: Name:
------------------------------- --------------------------------
Title: Title:
------------------------------- -------------------------------
</TABLE>
MEMBERS OF NATIONAL HEALTHCARE
INFORMATION SYSTEMS, LLC
- -------------------------------------
Marion Robert Rice, Member
- -------------------------------------
Sheila Hemphill, Member
6
<PAGE> 1
EXHIBIT 10.5
[COPY]
<TABLE>
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
LINK.COM THE COMMERCIAL NATIONAL BANK OF
201 E. MAIN BRADY Loan Number
BRADY, TX 76825-4525 105 E SECOND ST P O BOX 591 -------------------------------
BRADY, TX 76825-0591 Date SEPTEMBER 7, 1999
-------------------------------------
Maturity Date APRIL 6, 2000
-----------------------------
Loan Amount $400,000.00
-------------------------------
Renewal Of 33898 (2)
--------------------------------
BORROWER'S NAME AND ADDRESS LENDER'S NAME AND ADDRESS SSN: 75-2666581
"I" includes each borrower "You" means the lender, its
above, jointly and severally. successors and assigns.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
For value received, I promise to pay to you, or your order, at your address
listed above the PRINCIPAL sum of FOUR HUNDRED THOUSAND AND NO/100 Dollars
$400,000.00
[X] SINGLE ADVANCE: I will received all of this principal sum on APRIL 6,
2000. No additional advances are contemplated under this note.
[ ] MULTIPLE ADVANCE: The principal sum shown above is the maximum amount of
principal I can borrow under this note. On ________________ I will receive
the amount of $_________________________ and future principal advances are
contemplated.
Conditions: The conditions for future advances are
_______________________
_________________________________________________________________________
_________________________________________________________________________
[ ] OPEN END CREDIT: You and I agree that I may borrow up to the maximum
principal sum more than one time. This feature is subject to all other
conditions and expires on _______________________________.
[ ] CLOSED END CREDIT: You and I agree that I may borrow (subject to all
other conditional up to the maximum principal sum only one time.
INTEREST: I agree to pay interest on the outstanding principal balance from
APRIL 6, 2000 at the rate of 10.000% per year until FIRST CHARGE DATE.
[X] VARIABLE RATE: This rate may change as stated below.
[X] INDEX RATE: The future rate will be 1.000% OVER the following index
rate: WALL STREET PRIME BASE RATE (FLOATING) WHICH IS STATED IN THE WALL
STREET JOURNAL
[ ] CEILING RATE: The interest rate ceiling for this note is the ___________
ceiling rate announced by the Credit Commissioner from time to time.
[X] FREQUENCY AND TIMING: The rate on this note may change as often as
DAILY.
A change in the interest rate will take effect ON THE SAME DAY.
[X] LIMITATIONS: During the term of this loan, the applicable annual
interest rate will not be more than 18.000% or less than 1.000%. The
rate may not change more than _____% each ________________________.
EFFECT OF VARIABLE RATE: A change in the interest rate will have the
following effect on the payments.
[X] The amount of each scheduled [ ] The amount of the final
payment will change. payment will change
ACCRUAL METHOD: Interest will be calculated on a ACTUAL/365 basis.
POST MATURITY RATE: I agree to pay interest on the unpaid balance of this note
owing after maturity, and until paid in full, as stated below:
[ ] on the same fixed or variable rate basis in effect before maturity has
indicated above.
[X] at a rate equal to TWO PERCENT ABOVE THE CURRENT RATE IN EFFECT ON THE
NOTE.
[ ] LATE CHARGE: If a payment is made more than ____ days after it is due, I
agree to pay a late charge of ________________________.
[ ] ADDITIONAL CHARGES: In addition to interest, I agree to pay the following
charges which [ ] are [ ] are not included in the principal amount
above: __________________.
PAYMENTS: I agree to pay this note as follows:
[X] INTEREST: I agree to pay accrued interest ON DEMAND, BUT IF NO DEMAND IS
MADE THEN ON THE 6TH DAY OF EACH OCTOBER AND APRIL, BEGINNING OCTOBER 6,
2000
[X] PRINCIPAL: I agree to pay the principal ON DEMAND, BUT IF NO DEMAND IS MADE
THEN ON MARCH 5, 2000
[ ] INSTALLMENTS: I agree to pay this note in __________ payments. The final
payment will be in the amount of $________________ and will be due
__________________. A payment of $________________ will be due
__________________ thereafter. The final payment of the entire unpaid balance
of principal and interest will be due _________________________.
PURPOSE: The purpose of this loan is BUSINESS: ORIGINALLY - WORKING CAPITAL AND
TO PURCHASE COMPUTER AND WORKING CAPITAL
ADDITIONAL TERMS:
SECURITY
SECURITY INTEREST: I give you a security interest in all of the Property
described below that I now own and that I may own in the future (including,
but not limited to, all parts, accessories, repairs, improvements, and
accessions to the Property), wherever the Property is or may be located, and
all proceeds and products from the Property.
[ ] INVENTORY: All inventory which I hold for ultimate sale or lease, or
which has been or will be supplied under contracts of service, or which
are raw materials, work in process, or materials used or consumed in the
business.
[ ] EQUIPMENT: All equipment including, but not limited to, all machinery,
vehicles, furniture, fixtures, manufacturing equipment farm machinery and
equipment, shop equipment, office and recordkeeping equipment, and parts
and tools. All equipment described in a list or schedule which I give to
you will also be included in the secured property, but such a list is not
necessary for a valid security interest in my equipment.
[ ] FARM PRODUCTS: All farm products including, but not limited to:
(a) all poultry and livestock and their young, along with their products,
produce and replacements;
(b) all crops, annual or perennial; and all products of the crops; and
(c) all feed, seed, fertilizer, medicines, and other supplies used or
produced in my farming operations.
[X] ACCOUNTS, INSTRUMENTS, DOCUMENTS, CHATTEL PAPER AND OTHER RIGHTS TO
PAYMENT: All rights I have now and that I may have in the future to the
payment of money including, but not limited to:
(a) payment for goods and other property sold or leased or for services
rendered, whether or not I have earned such payment by performance;
and
(b) rights to payment arising out of all present and future debt
instruments, chattel paper and loans and obligations receivable. The
above include my rights and interests (including all liens and
security interests) which I may have by law or agreement against any
account debtor or obligor of mine.
<TABLE>
<S> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
UNIVERSAL NOTE AND SECURITY AGREEMENT (page 1 of 3)
</TABLE>
<PAGE> 2
[COPY]
[ ] GENERAL INTANGIBLES: All general intangibles including, but not limited to,
tax refunds, applications for patents, patents, copyrights, trademarks,
trade secrets, good will, trade names, customer lists, permits and
franchises, and the right to use my name.
[ ] GOVERNMENT PAYMENTS AND PROGRAMS: All payments, accounts, general
intangibles, or other benefits (including, but not limited to, payments in
kind, deficiency payments, letters of entitlement, warehouse receipts,
storage payments, emergency assistance payments, diversion payments, and
conservation reserve payments) in which I now have and in the future may
have any rights or interest and which arise under or as a result of any
preexisting, current or future Federal or state government program
(including, but not limited to, all programs administered by the Commodity
Credit Corporation and the ASCS).
[X] THE SECURED PROPERTY INCLUDES, BUT IS NOT LIMITED BY, THE FOLLOWING:
MERRILL LYNCH ACCT #592-23G75 IN THE NAME OF BOB AND CINDY RICE IN THE
AMOUNT OF $289,299.00 AS OF 2/29/2000; MERRILL LYNCH ACCT #592-23G74 IN THE
NAME OF ANDY AND JANNA MCBEE IN THE AMOUNT OF $337,773.00 AS OF 2/29/2000;
PERSONAL GUARANTIES FROM DONALD RAY AND SANDRA DENISE DESHOTELS, BOB AND
CINDY RICE AND ANDY AND JANNA MCBEE.
If this agreement covers timber to be cut, minerals (including oil and gas),
fixtures or crops growing or to be grown, the description of the real estate is:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
[ ] If checked, file this agreement on the real estate records. Record owner (if
not me) ________________________________________________________________________
________________________________________________________________________________
The Property will be used for a [X] personal [ ] business [ ] agricultural
[ ] purpose.
____________________________
ADDITIONAL TERMS OF THE SECURITY AGREEMENT
GENERALLY - The agreement secures this note and any other debt I have with
you, now or later. However, it will not secure other debts if you fail with
respect to such other debts, to make any required disclosure about this
security agreement or if you fail to give any required notice of the right of
rescission. If property described in this agreement is located in another
state, this agreement may also, in some circumstances, be governed by the law
of the state in which the Property is located.
OWNERSHIP AND DUTIES TOWARD PROPERTY - I represent that I own all of the
Property, or to the extent this is a purchase money security interest I will
acquire ownership of the Property with the proceeds of the loan. I will defend
it against any other claim. Your claim to the Property is ahead of the claims
of any other creditor. I agree to do whatever you require to protect your
security interest and to keep your claim in the Property ahead of the claims of
other creditors. I will not do anything to harm your position.
I will keep books, records and accounts about the Property and my business
in general. I will let you examine these records at any reasonable time. I will
prepare any report or accounting you request which deals with the Property.
I will keep the Property in my possession and will keep it in good repair
and use it only for the purpose(s) described on page 3 of this agreement. I
will not change this specified use without your express written permission. I
represent that I am the original owner of the Property and, if I am not, that I
have provided you with a list of prior owners of the Property.
I will keep the Property at my address listed on page 1 of this agreement,
unless we agree I may keep it at another location. If the Property is to be
used in another state, I will give you a list of those states. I will not try to
sell the Property unless it is inventory or I receive your written permission
to do so. If I sell the Property I will have the payment made payable to the
order of you and me.
You may demand immediate payment of the debt(s) if the debtor is not a
natural person and without your written consent; (1) a beneficial interest in
the debtor is sold or transferred, or (2) there is a change in either the
identity or number of members of a partnership, or (3) there is a change in
ownership of more than 25 percent of the voting stock of a corporation.
I will pay all taxes and charges on the Property as they become due. You
have the right of reasonable access in order to inspect the Property. I will
immediately inform you of any loss or damage to the Property.
If I fail to perform any of my duties under this security agreement, or any
mortgage, deed of trust, lien or other security interest, you may without
notice to me perform the duties or cause them to be performed. Your right to
perform for me shall not create an obligation to perform and your failure to
perform will not preclude you from exercising any of your other rights under
the law of this security agreement.
PURCHASE MONEY SECURITY INTEREST - For the sole purpose of determining the
extent of a purchase money security interest arising under this security
agreement: (a) payments on any nonpurchase money loan also secured by this
agreement will not be deemed to apply to the Purchase Money Loan, and (b)
payments on the Purchase Money Loan will be deemed to apply first to the
nonpurchase money portion of the loan, if any, and then to the purchase money
obligations in the order in which the items of collateral were acquired or if
acquired at the same time, in the order selected by you. No security interest
will be terminated by application of this formula. "Purchase Money Loan" means
any loan the proceeds of which, in whole or in part, are used to acquire any
collateral securing the loan and all extensions, renewals, consolidations and
refinancing of such loan.
PAYMENTS BY LENDER - You are authorized to pay, on my behalf, charges I am or
may become obligated to pay to preserve or protect the secured property (such
as property insurance premiums). You may treat those payments as advances and
add them to the unpaid principal under the note secured by this agreement or
you may demand immediate payment of the amount advanced.
INSURANCE - I agree to buy insurance on the Property against the risks and for
the amounts you require and to furnish you continuing proof of coverage. I will
have the insurance company name you as loss payee on any such policy. You may
require added security if you agree that insurance proceeds may be used to
repair or replace the Property. I will buy insurance from a firm licensed to do
business in the state where you are located. The firm will be reasonably
acceptable to you. The insurance will last until the Property is released from
this agreement. If I fail to buy or maintain the insurance (or fail to name you
as loss payee) you may purchase it yourself.
WARRANTIES AND REPRESENTATIONS - If this agreement includes accounts, I will
not settle any account for less than its full value without your written
permission. I will collect all accounts until you tell me otherwise. I will
keep the proceeds from all the accounts and any goods which are returned to me
or which I take back in trust for you, I will not mix them with any other
property of mine. I will deliver them to you at your request. If you ask me to
pay you the full price on any returned items or items retaken by myself, I will
do so.
If this agreement covers inventory, I will not dispose of it except in my
ordinary course of business at the fair market value for the Property, or at a
minimum price established between you and me.
If this agreement covers farm products I will provide you, at your request,
a written list of the buyers, commission merchants or selling agents to or
through whom I may sell my farm products. In addition to those parties named on
this written list, I authorize you to notify at your sole discretion any
additional parties regarding your security interest in my farm products. I
remain subject to all applicable penalties for selling my farm products in
violation of my agreement with you and the Food Security Act. In this paragraph
the terms farm products, buyers, commission merchants and selling agents have
the meanings given to them in the Federal Food Security Act of 1985.
DEFAULT - I will be in default on this security agreement if I am in default on
any note this agreement secures of if I fail to keep any promise contained in
the terms of this agreement. Default shall also exist if any loan proceeds are
used for a purpose that will contribute to excessive erosion of highly erodible
land or to the conversion of wetlands to produce an agricultural commodity, as
further explained in 7 CFR Part 1940, Subpart G, Exhibit M.
REMEDIES - If I default, you have all of the rights and remedies provided in
the note and under the Uniform Commercial Code. You may require me to make the
secured property available to you at a place which is reasonably convenient.
You may take possession of the secured property and sell it as provided by law.
The proceeds will be applied first to your expenses and then to the debt. I
agree that 10 days written notice sent to my last known address by first class
mail will be reasonable notice under the Uniform Commercial Code. My current
address is on page 1. I agree to inform you in writing of any change of my
address.
FILING - A carbon, photographic or other reproduction of this security
agreement or the financing statement covering the Property described in this
agreement may be used as a financing statement where allowed by law. Where
permitted by law, you may file a financing statement which does not contain my
signature, covering the Property secured by this agreement.
- --------------------------------------------------------------------------------
Any person who signs within this box does so to give you a security interest in
the Property described on page 1 and this page. This person does not promise to
pay the note. "I" as used in this security agreement will include the borrower
and any person who signs within this box.
Date
--------------------------------
Signed
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(page 2 of 3)
<PAGE> 3
[COPY]
ADDITIONAL TERMS OF THE NOTE
DEFINITIONS - As used on pages 1 and 2, "[X]" means the terms that apply to
this loan. "I," "me" or "my" means each Borrower who signs this note and each
other person or legal entity (including guarantors, endorsers, and sureties)
who agrees to pay this note (together referred to as "us"). "You" or "your"
means the Lender and its successors and assigns.
APPLICABLE LAW - The law of the state of Texas will govern this agreement. Any
term of this agreement which is contrary to applicable law will not be
effective, unless the law permits you and me to agree to such a variation. If
any provision of this agreement cannot be enforced according to its terms, this
fact will not affect the enforceability of the remainder of this agreement. No
modification of this agreement may be made without your express written
consent. Time is of the essence in this agreement.
PAYMENTS - Each payment I make on this note will first reduce the amount I owe
you for charges which are neither interest nor principal. The remainder of each
payment will then reduce accrued and unpaid interest, and then unpaid
principal. If you and I agree to a different application of payments, we will
describe our agreement on this note. I may prepay a part of, or the entire
balance of this loan without penalty, unless we specify to the contrary on this
note. Any partial prepayment will not excuse or reduce any later scheduled
payment until this note is paid in full (unless, when I make the prepayment,
you and I agree in writing to the contrary).
INTEREST - Interest accrues on the principal remaining unpaid from time to
time, until paid in full. If I receive the principal in more than one advance,
each advance will start to earn interest only when I receive the advance. The
interest rate in effect on this note at any given time will apply to the entire
principal sum outstanding at that time. Notwithstanding anything to the
contrary, I do not agree to pay and you do not intend to charge any rate of
interest that is higher than the maximum rate of interest you could charge under
applicable law for the extension of credit that is agreed to in this note
(either before or after maturity). If any notice of interest accrual is sent and
is in error, we mutually agree to correct it, and if you actually collect more
interest than allowed by law and this agreement, you agree to refund it to me.
INDEX RATE - The index will serve only as a device for setting the interest
rate on this note. You do not guarantee by selecting this index, or the margin,
that the interest rate on this note will be the same rate you charge on any
other loans or class of loans you make to me or other borrowers.
POST MATURITY RATE - For purposes of deciding when the "Post Maturity Rate"
(shown on page 1) applies, the term "maturity" means the date of the last
scheduled payment indicated on page 1 of this note or the date you accelerate
payment on the note, whichever is earlier.
SINGLE ADVANCE LOANS - If this is a single advance loan, you and I expect that
you will make only one advance of principal. However, you may add other amounts
to the principal if you make any payments described in the "PAYMENTS BY LENDER"
paragraph on page 2.
MULTIPLE ADVANCE LOANS - If this is a multiple advance loan, you and I expect
that you will make more than one advance of principal. If this is closed end
credit, repaying a part of the principal will not entitle me to additional
credit.
SET-OFF - I agree that you may set off any amount due and payable under this
note against any right I have to receive money from you.
"Right to receive money from you" means:
(1) any deposit account balance I have with you,
(2) any money owed to me on an item presented to you or in your possession
for collection or exchange, and
(3) any repurchase agreement or other nondeposit obligation.
"Any amount due and payable under this note" means the total amount of
which you are entitled to demand payment under the terms of this note at the
time you set off. This total includes any balance the due date for which you
properly accelerate under this note.
If my right to receive money from you is also owned by someone who has not
agreed to pay this note, your right of set-off will apply to my interest in the
obligation and to any other amounts I could withdraw on my sole request or
endorsement. Your right of set-off does not apply to an account or other
obligation where my rights are only as a representative. It also does not apply
to any Individual Retirement Account or other tax-deferred retirement account.
You will not be liable for the dishonor of any check when the dishonor
occurs because you set off this debt against any of the accounts. I agree to
hold you harmless from any such claims arising as a result of your exercise of
your right to set-off.
DEFAULT - I will be in default on this loan and any agreement securing this
loan if any one or more of the following occurs:
(1) I fail to perform any obligation which I have undertaken in this note
or any agreement securing this note; or
(2) you, in good faith, believe that the prospect of payment on the
prospect of my performance of any other obligations under this note or
any agreement securing this note is impaired.
REMEDIES - If I am in default on this note, you have, but are not limited to,
the following remedies:
(1) You may demand immediate payment of my debt under this note (principal,
accrued unpaid interest and other accrued charges).
(2) You may set off this debt against any right I have to the payment of
money from you, subject to the terms of the "SET-OFF" paragraph herein.
(3) You may demand security, additional security, or additional parties to
be obligated to pay this note as a condition for not using any other
remedy.
(4) You may refuse to make advances to me or allow purchases on credit by
me.
(5) You may use any remedy you have under state or federal law.
(6) You may make use of any remedy given to you in any agreement securing
this note.
By selecting any one or more of these remedies you do not give up your
right to use later any other remedy. By waiving your right to declare an event
to be a default, you do not waive your right to consider later the event a
default if it continues or happens again.
COLLECTION COSTS AND ATTORNEY'S FEES - I agree to pay all costs of collection,
replevin or any other or similar type of cost if I am in default. In addition,
if you hire an attorney to collect this note, I also agree to pay any fee you
incur with such attorney plus court costs (except where prohibited by law). To
the extent permitted by the United States Bankruptcy Code, I also agree to pay
the reasonable attorney's fees and costs you incur to collect this debt as
awarded by any court exercising jurisdiction under the Bankruptcy Code.
WAIVER - I give up my rights to require you to do certain things. I will not
require you to:
(1) demand payment of amounts due (presentment);
(2) obtain official certification of nonpayment (protest);
(3) give notice that amounts due have not been paid (notice of dishonor);
(4) give notice of intent to accelerate; or
(5) give notice of acceleration.
I waive any defenses I have based on suretyship or impairment of
collateral.
OBLIGATIONS INDEPENDENT - I understand that I must pay this note even if someone
else has also agreed to pay it (by, for example, signing this form or a
separate guarantee or endorsement). You may sue me alone, or anyone else who is
obligated on this note, or any number of us together, to collect this note. You
may without notice release any party to this agreement without releasing any
other party. If you give up any of your rights, with or without notice, it will
not affect my duty to pay this note. Any extension of new credit to any of us,
or renewal of this note by all or less than all of us will not release me from
my duty to pay it. (Of course, you are entitled to only one payment in full.) I
agree that you may at your option extend this note or the debt represented by
this note, or any portion of the note or debt, from time to time
without limit to notice and for any term without affecting my liability for
payment of the note. I will not assign my obligation under this agreement
without your prior written approval.
CREDIT INFORMATION - I agree and authorize you to obtain credit information
about me from time to time (for example, by requesting a credit report) and to
report to others your credit experience with me (such as a credit reporting
agency). I agree to provide you, upon request, any financial statement or
information you may deem necessary. I warrant that the financial statements and
information I provide to you are or will be accurate, correct and complete.
- --------------------------------------------------------------------------------
THIS WRITTEN LOAN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT, ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
- --------------------------------------------------------------------------------
SIGNATURES: I AGREE TO THE TERMS OF THIS NOTE AND SECURITY AGREEMENT (INCLUDING
THOSE ON PAGES 1 AND 2). I have received a copy of this note and security
agreement on today's date.
LINK.COM
BY: BY:
------------------------------ ---------------------------------
BOB RICE, CEO/Individually ANDY MCBEE, DIRECTOR/Individually
SIGNATURE FOR LENDER
X
------------------------------ ---------------------------------
W CLAY JONES CRL
(page 1 of 3)
<PAGE> 4
[COPY]
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
VENTURE INFORMATION SYSTEMS, THE COMMERCIAL NATIONAL BANK Loan File Number_______________
LLC OF BRADY Date SEPTEMBER 7, 1999
P.O. Box 70 105 E. Second St. P.O. Box 591 Loan Amount $400,000.00
Brady, TX 76825-0070 Brady, TX 76825-0591 Maturity Date March 5, 2000
BORROWER'S NAME AND ADDRESS LENDER'S NAME AND ADDRESS Renewal Of 33898(2)
includes each borrower above, Includes the lender, its successors SSN: 75-2666581
jointly and severally. and assigns.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
DISCLAIMER OF ORAL
AGREEMENTS
The borrower, any other obligor, and Lender, hereinafter the Parties, have
entered into a transaction generally described as one note dated 9/7/99 in the
principal amount of $400,000.00. In conjunction with this transaction, the
Parties have executed one or more promissory notes, assignments, security
agreements, mortgages, deeds of trust or other documents. It is the intention
of the Parties that this Disclaimer be incorporated by reference into each of
the documents so executed for this transaction.
The Parties warrant and represent that the entire agreement made between the
Parties is contained within the executed documents, as amended and
supplemented hereby, and that no agreements or promises exist between the
Parties that are not reflected in the language of the various documents
executed in conjunction with this transaction.
THIS WRITTEN LOAN AGREEMENT REPRESENTS THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED
BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES
THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
VENTURE INFORMATION SYSTEMS, LLC
By:
----------------------------
Borrower Bob Rice, Manager
By:
---------------------------- ------------------------------
Borrower Andy McBee, Manager Lender W. Clay Jones,
VICE PRESIDENT/TRUST OFFICER
- --------------------------------
- --------------------------------
(page 1 of 1)
<PAGE> 1
EXHIBIT 21.1
SUBSIDIARY OF LINK.COM, INC.
The following entity is a subsidiary of Link.com, Inc.:
1) Link.com Opps, Inc., a Nevada corporation.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 576,424
<SECURITIES> 0
<RECEIVABLES> 51,026
<ALLOWANCES> 30,864
<INVENTORY> 0
<CURRENT-ASSETS> 650,261
<PP&E> 99,246
<DEPRECIATION> (79,097)
<TOTAL-ASSETS> 670,411
<CURRENT-LIABILITIES> 630,251
<BONDS> 0
0
0
<COMMON> (11,111)
<OTHER-SE> 1,188,701
<TOTAL-LIABILITY-AND-EQUITY> (670,411)
<SALES> (192,708)
<TOTAL-REVENUES> (192,708)
<CGS> 0
<TOTAL-COSTS> 970,258
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 74,583
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (851,678)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (851,678)
<EPS-BASIC> (0.08)
<EPS-DILUTED> (0.08)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 7,283
<SECURITIES> 0
<RECEIVABLES> 31,786
<ALLOWANCES> 11,165
<INVENTORY> 0
<CURRENT-ASSETS> 83,841
<PP&E> 91,586
<DEPRECIATION> 49,635
<TOTAL-ASSETS> 128,229
<CURRENT-LIABILITIES> 454,141
<BONDS> 0
0
0
<COMMON> (11,111)
<OTHER-SE> 337,023
<TOTAL-LIABILITY-AND-EQUITY> (128,229)
<SALES> (253,869)
<TOTAL-REVENUES> (253,869)
<CGS> 0
<TOTAL-COSTS> 357,189
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 32,676
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (127,872)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (127,872)
<EPS-BASIC> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
