EXHIBIT 10.21
PLACEMENT AGENCY AGREEMENT
This Placement Agency Agreement (the "AGREEMENT"), made effective as of
the 10th day of March, 2004, by and between iLinc Communications, Inc. (the
"COMPANY"), and Peacock, Hislop, ▇▇▇▇▇▇ & Given, Inc., (the "PLACEMENT AGENT").
1. DESCRIPTION OF THE OFFERING. The Company proposes to offer and sell
to accredited investors within the meaning of Rule 501(a) of the Securities Act
of 1933, as amended (the "SECURITIES ACT"), through the Placement Agent hereby
appointed as exclusive selling agent, up to $3,000,000 of units (the "OFFERING")
consisting of $2,250,000 of Senior Notes and $750,000 of Common Stock (such
Senior Notes and Common Stock together comprise the "UNITS"). Each Unit will
consist of $37,500 of Senior Notes and $12,500 of Common Stock. The Common Stock
will be priced at a forty percent (40%) discount to the average closing price of
the Common Stock for the ten trading days preceding the Closing Date (the
"OFFERING PRICE"). The total shares of Common Stock per Unit will be an amount
such that the investment in Common Stock closest approximates $12,500. Subject
to market conditions, the Offering may be expanded up to $4,000,000.
Subscriptions obtained in the Offering may be accepted or rejected in whole or
in part by the Company for any reason. Except as required by applicable laws or
regulations, subscriptions which are accepted by the Company may not be
withdrawn by any subscriber. The Units will be offered through a Private
Placement Memorandum dated March 12, 2004, including all exhibits, financial
statements, schedules, appendices, supplements or amendments thereto
(collectively, the "MEMORANDUM"). All capitalized terms used herein, unless
specifically defined herein, shall have the meanings set forth in the
Memorandum.
2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY. The
Company represents, warrants and covenants to the Placement Agent that:
(a) The Units have not been and will not be registered with
the Securities and Exchange Commission or any state securities regulatory
authorities ("REGULATORS"). The Units shall be offered and sold pursuant to an
exemption from registration under the Securities Act. The Company will: (i)
offer the Units only to accredited investors, and (ii) conduct the Offering as a
private placement in substantial compliance with the requirements of Regulation
D, promulgated under the Securities Act, and with all other applicable federal
or state securities laws and rules and regulations (collectively, the
"SECURITIES LAWS AND REGULATIONS"). The Company will, in a timely manner, make
any required filings with any applicable Regulators. The issuance, offer, sale
and delivery of the Units, in the manner and circumstances contemplated by the
Memorandum and this Agreement, is exempt from the registration requirements of
the Securities Act.
(b) The Memorandum, with respect to the Units, has been or
will be prepared by the Company in conformity with the applicable requirements
of the Securities Laws and Regulations.
(c) No Regulators have issued any order preventing or
suspending the Offering contemplated herein or use of the Memorandum, nor
instituted, or to the best knowledge of the Company, contemplated instituting
proceedings for that purpose. The Memorandum does not contain any untrue
statement of any material fact and does not omit to state any material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
(d) Neither the Company nor its Affiliates is in violation of
or default under any provision of its articles of incorporation or bylaws.
Neither the Company nor its Affiliates is in violation or default under any of
its material agreements, leases, licenses, contracts, franchises, mortgages,
loans, notes, permits, deeds of trust, security agreements, indentures or other
instruments or obligations to which it is a party or by which it or any of its
properties is bound or may be affected (collectively, the "CONTRACTS"), which
failure or default would materially adversely affect the business, prospects,
properties, operations, or financial condition of the Company or any of its
Affiliates (a "MATERIAL ADVERSE Effect"). The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated herein and in the Memorandum do not and will not (i) conflict with
or result in a material breach or violation of any of the terms or provisions
of, or constitute, either with or without notice or the passage of time or both,
a default under, any Contract to which the Company or its Affiliates is a party
or by which the Company or its Affiliates is bound, which default would have a
Material Adverse Effect upon the Company or its Affiliates, (ii) violate any
statute, rule or regulation applicable to the Company or its Affiliates or any
order, judgment or decree of any court or of any regulatory, administrative or
governmental body or agency or arbitral forum having jurisdiction over the
Company or its Affiliates or any of its property which violation would have a
Material Adverse Effect upon the Company, (iii) result in the creation or
imposition of any lien, charge or encumbrance upon any of the assets of the
Company or its Affiliates, or (iv) violate any of the provisions of the articles
of incorporation or bylaws of the Company or its Affiliates. No other consent,
approval, authorization or action is required for the consummation of the
transactions herein contemplated other than such as has been obtained. There are
no Contracts or other documents required to be described in the Memorandum or to
be included as exhibits to the Memorandum in order to make the information
therein not misleading which have not been described or included as required.
(e) The Company shall provide to the Placement Agent and to
each purchaser such information, documents and instruments as may be reasonably
requested and are required to be provided pursuant to applicable Securities Laws
and Regulations and the laws of any state in which the offer or sale of
securities has been approved by the Company and the Placement Agent and to
otherwise comply with such requirements.
(f) The Company:
(i) Has not offered for sale or sold any other
securities of the Company, the offer for sale or sale of which would be
"integrated" under the standards of existing Securities Laws and Regulations
with the offers for sale or sales of the Units proposed to be made by the
Placement Agent pursuant hereto in determining whether a public offering of the
Units has been made so as to impose with respect to the Offering of the Units
hereunder by the Placement Agent any compliance with different requirements of
the applicable Securities Laws and Regulations; and
(ii) Shall not offer for sale or sell any Units or
other securities except and to the extent that any such offer for sale or sale
shall not cause the provisions of the Securities Laws and Regulations relied
upon with respect to the Offering and sale of the Units contemplated by this
Agreement to be inapplicable thereto.
(g) The Company and each of its Affiliates is duly authorized
to transact the business in which it is engaged and in which it proposes to
engage as described in the Memorandum.
(h) Since the respective dates as of which information is
given in the Memorandum and other than as therein contemplated, neither the
Company nor any of its Affiliates have incurred, nor during the period of the
Offering will any such party incur, any material liabilities or obligations
contingent or otherwise, except in the ordinary course of business, or as set
forth in the Memorandum and there has not been, and during the period of the
Offering there will not be, any material adverse change in the condition of the
Company, or its financial condition.
2
(i) The Company will notify the Placement Agent immediately
and confirm the notice in writing of the issuance by the Regulators of any stop
order suspending the effectiveness of any qualification of the Units for sale,
suspending the sale of the Units or the use of the Memorandum, or of the
initiation of any proceedings for any such purpose. The Company will use its
best efforts to prevent the issuance of any such stop order and, if any such
stop order shall at any time be issued, to obtain the lifting thereof at the
earliest possible moment.
(j) Other than as disclosed in the Memorandum, neither the
Company, nor to its knowledge, after due and diligent inquiry, any person other
than the Placement Agent, has made any representation, promise or warranty,
whether verbal or in writing to anyone, whether an existing shareholder or not,
that any of the Units will be reserved for or directed to them during the
proposed Offering.
(k) The Company and each of its Affiliates has been
incorporated and is validly existing and in good standing under the laws of its
jurisdictions of incorporation. The Company and each of its Affiliates is duly
qualified to transact business in all jurisdictions in which the conduct of its
business requires such qualification where the failure to do so would have a
Material Adverse Effect. The Company has fully disclosed to the Placement Agent
the existence of each of its Affiliates.
(l) The Company and each of its Affiliates possess all
requisite licenses, permits and other authorities which may be required to
conduct its business, each of which remains in full force and effect in
accordance with its terms, where the failure to possess the same would have a
Material Adverse Effect. The government authority which issued each such license
has not determined or threatened to revoke or suspend any such license, no
investigation or proceeding is pending or threatened with respect to any such
license, and the Company has disclosed to the Placement Agent and in the
Memorandum any current unresolved dispute or disagreement between the Company or
any Affiliate and any such governmental authority regarding the business or
financial condition of the Company or any Affiliate or the Company's or any
Affiliate's alleged lack of compliance with applicable laws, rules or
regulations, which dispute or disagreement if resolved adversely to the Company
or any Affiliate would have a Material Adverse Effect.
(m) The Company and each of its Affiliates is conducting
business in compliance with all applicable federal, state and local laws, rules
and regulations, including, without limitation, ERISA, OSHA, environmental laws,
rules and regulations, and all federal laws, except where the failure to so
comply would not have a Material Adverse Effect.
(n) All representations, warranties and covenants of the
Company made to investors in the Unit Purchase Agreement relating to the Units
are hereby made to the Placement Agent and are incorporated herein by reference.
(o) The Company has the legal right, corporate power and
authority to enter into this Agreement on behalf of itself and to perform as
contemplated thereby. All necessary and proper corporate proceedings have been
or will be taken to validly authorize the Units and no further approval or
authority of the stockholders of the Company is required for the offer and sale
of the Units as contemplated herein and in the Memorandum. This Agreement has
been duly authorized, executed and delivered by the Company, and is legally
binding upon and enforceable against the Company in accordance with its terms,
except as its enforceability may be limited by applicable bankruptcy,
reorganization, insolvency, moratorium or other similar laws from time to time
in effect affecting creditors' rights generally or by principles governing the
availability of equitable remedies.
3
(p) The Units conform with the statements concerning them in
the Memorandum in all material respects.
(q) The consolidated financial statements of the Company,
together with related notes and schedules as set forth in the Memorandum,
present fairly in all material respects the financial position and the results
of operations of the Company and its Affiliates, as at the dates and for the
indicated periods. Such financial statements, schedules and related notes have
been prepared in accordance with generally accepted accounting principles,
consistently applied throughout the periods involved, and all adjustments
necessary for a fair presentation of results for such periods have been made.
The summary and selected financial and statistical data and schedules included
in the Memorandum present fairly the information shown therein and have been
compiled on a basis consistent with the financial statements presented therein.
(r) There is no securities action, suit or proceeding pending
or, to the best knowledge of the Company after due inquiry, threatened against
the Company or any Affiliate before any court or regulatory, governmental or
administrative agency or body, or arbitral forum, domestic or foreign, which
might result in any Material Adverse Effect, except as set forth in the
Memorandum. Neither the Company nor any Affiliate is subject to the provisions
of any injunction, judgment, decree or order of any court, regulatory body,
administrative agency or other governmental body or arbitral forum that would
have a Material Adverse Effect, except as set forth in the Memorandum. There are
no labor disputes involving the Company or any Affiliate that exist or are
imminent which could have a Material Adverse Effect.
(s) The Company and each of its Affiliates has good and
marketable title to all of the properties and assets reflected as owned by such
party in either the financial statements or as described in the Memorandum, and
such properties and assets are subject to no lien, mortgage, security interest,
pledge or encumbrance (other than easements, if any) of any kind, except those
(i) reflected in such financial statements or as described in the Memorandum; or
(ii) that, individually or in the aggregate, would not have a Material Adverse
Effect.
(t) The Company and each Affiliate has filed all federal,
state, local and foreign income tax returns which have been required to be filed
and has paid all taxes indicated by such returns and has paid all tax
assessments against it where the failure to file or pay would have a Material
Adverse Effect. There is no income, sales, use, transfer or other tax deficiency
or assessment which has been or might reasonably be expected to be asserted or
threatened against the Company or its Affiliates which could have a Material
Adverse Effect.
(u) Any material transactions among the Company and the
officers, directors, and Affiliates of the Company have been accurately
disclosed in the Memorandum to the extent necessary to make the statements
therein, in light of the circumstances under which the Memorandum is to be used,
not misleading.
(v) If and to the extent required to do so, each of the
Company and its Affiliates is in material compliance with all reporting
requirements under Section 12(b), Section 12(g) or Section 15(d), as applicable,
of the Securities Exchange Act of 1934, as amended ("EXCHANGE ACT").
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PLACEMENT AGENT.
The Placement Agent represents, warrants and covenants to the Company that:
4
(a) The Placement Agent is a corporation duly organized,
validly existing and in good standing under the laws of the State of Arizona,
with all requisite power and authority to enter into this Agreement and to carry
out its obligations hereunder;
(b) This Agreement has been duly authorized, executed and
delivered by the Placement Agent and is a valid and binding agreement on the
part of the Placement Agent, except as its enforceability may be limited by
applicable bankruptcy, reorganization, insolvency, moratorium or other similar
laws from time to time in effect affecting creditors' rights generally or by
principles governing the availability of equitable remedies.
(c) The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated herein and those
contemplated by the Memorandum will not result in a material violation or breach
of any of the terms or conditions of or constitute a default under any
indenture, agreement, judgment, decree, order or other instrument to which the
Placement Agent is a party which default would have a Material Adverse Effect
upon the Placement Agent or its business, or, assuming the accuracy of the
representations and warranties of the Company made herein, violate any law or
any order directed to the Placement Agent of any court or any federal or state
regulatory body or administrative agency having jurisdiction over the Placement
Agent.
(d) The Placement Agent is duly registered pursuant to the
provisions of the Exchange Act as a broker-dealer and is a member in good
standing of the National Association of Securities Dealers, Inc. ("NASD") and is
duly registered as a broker-dealer in those states in which it is required to be
so registered in order to carry out the Offering contemplated by the Memorandum.
(e) The Placement Agent will conduct the Offering in
compliance with applicable Securities Laws and Regulations and in this regard it
will:
(i) During the course of the Offering, make every
reasonable effort to avoid making representations other than those set forth in
the Memorandum, and to the extent any representations other than those set forth
in the Memorandum are made, not to make any untrue statements of a material fact
or omit to state a material fact required to be stated or necessary to make any
statement made not misleading concerning the Offering or the Company or any
matters set forth in or contemplated by the Memorandum not misleading;
(ii) Not offer, offer for sale or sell the Units by
any means prohibited by applicable Securities Laws and Regulations;
(iii) Limit its offer and sale of the Units to
persons who it has reasonable grounds to believe, based upon representations by
those investors, are accredited investors, and maintain for the Placement
Agent's benefit and for the benefit of the Company, memoranda and other
appropriate records substantiating the foregoing;
(iv) Prior to the sale of any of the Units, have
reasonable grounds to believe, based upon representations by those investors,
that each subscriber alone or together with such subscriber's duly appointed
purchaser representative, if any, meets the suitability standards set forth in
the Memorandum;
(v) Distribute no sales materials to prospective
investors, other than the Memorandum;
5
(vi) Provide each investor with a copy of the
Memorandum during the course of the Offering prior to the investor executing a
Unit Purchase Agreement; and
(vii) Until the Closing Date (as defined below), if
any event affecting the Company should occur which the Company, or its counsel,
or the Placement Agent or its counsel believe should be set forth in a
supplement or amendment to the Memorandum, the Placement Agent shall promptly
distribute such supplement or amendment to the Memorandum to persons who have
previously received a copy of the Memorandum from the Placement Agent and who
continue to be interested in the Company, and the Placement Agent shall include
such supplement or amendment in all further deliveries of the Memorandum. The
Company shall, at its own expense, promptly prepare and furnish to the Placement
Agent a reasonable number of copies of each such supplement or amendment to the
Memorandum for such distribution.
(f) Upon receipt of an executed Unit Purchase Agreement and
the payments representing subscriptions for Units, the Placement Agent will
promptly forward copies of the Unit Purchase Agreement (together with all
consideration received for such Units, as applicable) to the Company or its
counsel.
(g) The Placement Agent will not take any action which,
assuming the Company's representation in Section (2) hereof is correct, it
believes would cause the Offering to violate the provisions of the Securities
Act, the Securities and Exchange Act of 1934, (the "EXCHANGE ACT"), the
respective rules and regulations promulgated thereunder or applicable Blue Sky
laws of any state or jurisdiction.
(h) The Placement Agent shall use commercially reasonable
efforts to determine (i) whether any prospective purchaser is an Accredited
Investor (or qualified non-Accredited Investor) and (ii) that any material
information furnished by a prospective investor is true and accurate. Except as
set forth in the immediately preceding sentence, the Placement Agent shall have
no obligation to insure that any check, note, draft or other means of payment
for the Units will be honored, paid or enforceable against the subscriber in
accordance with its terms.
4. FURTHER UNDERTAKINGS OF THE COMPANY. The Company represents,
covenants and warrants that:
(a) Except as set forth or otherwise contemplated in the
Memorandum, the Company shall not offer for sale or sell the Units, nor shall
any employee or agent of the Company do so, during the Offering without the
prior approval of the Placement Agent.
(b) Until the Closing Date (as defined below), if any event
affecting the Company shall occur which, in the Company's or the Placement
Agent's opinion, should be set forth in a supplement or an amendment to the
Memorandum, the Company will forthwith, at its own expense, prepare and furnish
to the Placement Agent a reasonable number of copies of a supplement or
amendment to the Memorandum so that it, as so supplemented or amended, will not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they are made, not misleading. The Company shall not
prepare or file any such amendment or supplement of which the Placement Agent
shall not previously have been advised and furnished with a copy or to which the
Placement Agent shall have reasonably objected in writing or which is not in
compliance with applicable Securities Laws and Regulations.
(c) The Company will cause to be prepared, executed and timely
filed with respect to the Offering, any and all notices or filings required by
applicable Securities Laws and Regulations, will promptly furnish the Placement
6
Agent and its counsel with a true and correct copy of each such notice of filing
and will take all acts necessary or appropriate to comply with all applicable
Securities Laws and Regulations.
(d) The Company will apply the net proceeds from the sale of
the Units substantially in accordance with the use of proceeds section of the
Memorandum.
5. STATE SECURITIES FILINGS. The Company further represents, warrants
and covenants that:
(a) It shall take all necessary action and file all necessary
forms and documents required to be filed in connection with an offering exempt
from registration pursuant to the Securities Act in the State of Arizona, and in
such other states as the Placement Agent and the Company mutually agree.
(b) In each jurisdiction where the Units have been offered in
an exempt transaction as provided above after notice from the Placement Agent of
such an offer in each jurisdiction, the Company will make and file such
statements, documents, materials and reports in each year and take all other
actions as are or may be required to be made or filed by the Company by the laws
of each such jurisdiction.
(c) The Company will promptly provide to the Placement Agent
for delivery to all purchasers and their representatives any additional
information, documents and instruments which the Placement Agent or the Company
deems necessary to comply with the rules, regulations and judicial and
administrative interpretations with respect to compliance with such exemptions
or qualifications and registration requirements in those states where the Units
are to be offered or sold.
6. APPOINTMENT OF THE PLACEMENT AGENT AND NATURE OF THE OFFERING.
(a) On the basis of the representations, warranties and
covenants herein contained, and subject to the conditions herein set forth, the
Company hereby appoints the Placement Agent as its exclusive agent to effect
sales of the Units during the Offering Period (hereinafter defined) and upon the
terms and conditions set forth in the Memorandum. The Placement Agent hereby
accepts such appointment and, as agent for the Company, shall use its best
efforts to find purchasers for the Units.
(b) The Offering shall commence on the date designated by the
Placement Agent and the Company shall continue until the earlier of (i) the
maximum number of Units described in the Memorandum, or (ii) April 30, 2004, or
a date thereafter mutually agreed upon by the parties. The offering period may
be extended for a period of up to sixty (60) days at the discretion of the
Company.
(c) The Placement Agent shall remit all funds received from
purchasers of the Units to the Company on the Closing Date. Payment for the
Units sold is to be made by certified or bank cashier's check(s) drawn to the
order of the Company, or by wire transfer of funds, against delivery of such
Units to the Placement Agent. Such payment and delivery is to be made at the
offices of the Placement Agent set forth in SECTION 14 hereof at 10:00 A.M.,
Phoenix time, on the third business day after the sale, or at such other time,
date and place not later than five business days thereafter as the Placement
Agent and the Company shall agree upon (such time and date the "CLOSING DATE").
The common stock comprising a portion of the Units, which shall be represented
by certificates in definitive form, and the Senior Notes comprising a portion of
the Units shall be made to the order of such holders of Units as the Placement
Agent requests in writing not later than the third full business day prior to
the Closing Date, and shall be made available for inspection by the Placement
Agent prior to the Closing Date at the offices of the Placement Agent noted in
SECTION 14. As used herein, "BUSINESS DAY" means a day other than (i) a Saturday
7
or a Sunday or (ii) a day on which banks in Arizona are authorized or obligated
by law or executive order to be closed.
(d) The Placement Agent shall be entitled to (i) a commission
equal to ten percent (10%) of the gross amount raised through the sale of the
Units and, (ii) reimbursement for all reasonable expenses incurred by the
Placement Agent in connection with the sale of the Units, including fees and
expenses of Placement Agent's legal counsel incurred in connection with this
Agreement, the Unit Purchase Agreement, and the Offering; PROVIDED, HOWEVER,
that the Company shall not be liable for any expense, other than legal expenses
incurred in connection with the offering, exceeding $5,000 without the prior
consent of the Company. In addition, the Placement Agent will be granted a
three-year warrant (the "WARRANT") equal to ten percent (10%) of the shares of
Common Stock sold in the Offering. The Warrant shall be exercisable at 120% of
the Offering Price of the Common Stock. The Warrant will have net exercise
rights and piggyback registration rights. On the Closing Date, the Placement
Agent shall deduct the commission and expenses from the proceeds received from
the sale of the Units prior to transmitting payment to the Company.
(e) The Placement Agent has not assumed, will not assume, and
will not be permitted to assume any duties, responsibilities or obligations
regarding the management, operations or any of the business affairs of the
Company after the Closing Date. The Placement Agent shall be held harmless by
the Company from and against any claim, suit, loss, damage, liability or
securities action by or against the Company based upon or arising out of the
assertion that the Placement Agent has any continuing duty or obligations after
the Closing Date to the Company, except the indemnification obligations as set
forth in SECTION 11 of this Agreement.
7. EXPENSES OF SALE. Subject to SECTION 6(D), the Company will pay all
reasonable costs, expenses and fees in connection with the Offering or incident
to the performance of the obligations of the Company hereunder including, but
not limited to, the fees and expenses of the Company, the fees and expenses of
the Company's counsel and accounting firm, the fees and expenses of the
Placement Agent's counsel, the cost of qualifying the offer and sale of the
Units in various states for an exemption from state registration requirements,
the cost of preparing, printing and delivering the Memorandum to, or as
requested by, the Placement Agent, the Units and copies of the Memorandum and
other documents related to the Offering, and any transfer taxes imposed on the
sale of the Units. If the transactions contemplated by this Agreement shall not
be consummated because this Agreement is terminated by the Placement Agent
pursuant to SECTION 8, 9 OR 12 hereof, or because of a decision by the Company
to terminate or delay the Offering for any reason or a failure, refusal or
inability on the part of the Company to perform any undertaking or satisfy any
condition of this Agreement or to comply with any of the terms hereof on its
part to be performed, then in lieu of the foregoing provisions in this SECTION 7
(and without prejudice to all other rights and remedies which the Placement
Agent may have against the Company at law and in equity, and which are in
accordance with the NASD's Rules of Fair Practice) the Company shall reimburse
the Placement Agent for all reasonable costs and expenses, including all fees
and disbursements of the Placement Agent's counsel, actually incurred by the
Placement Agent in connection with investigating, marketing and proposing to
market the Units or in contemplation of performing its obligations hereunder.
8. CONDITIONS TO THE PLACEMENT AGENT'S OBLIGATIONS. The Company's right
to receive proceeds from the sale of the Units and the obligations of the
Placement Agent hereunder shall be subject to the accuracy of and compliance
with, as of the date hereof and on the Closing Date, the representations,
covenants and warranties contained herein, to the performance by the Company of
its obligations hereunder required to be performed on or before the Closing
Date, and to the following additional conditions:
8
(a) During the period of the Offering there has not been any
material adverse change affecting the Company.
(b) No stop order suspending the Offering contemplated herein
or use of the Memorandum, as amended or supplemented, shall have been issued and
no proceedings for that purpose shall have been taken or, to the best knowledge
of the Company, after due inquiry, shall be contemplated by the Regulators.
(c) The Placement Agent shall have received on the Closing
Date the opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, LLP, counsel for the Company, in a form
reasonably satisfactory to the Placement Agent. Such opinion shall be dated as
of the Closing Date and addressed to the Placement Agent.
(d) The Placement Agent shall have received on the Closing
Date a certificate or certificates of the Chief Executive Officer and the Chief
Financial Officer of the Company to the effect that, as of the Closing Date,
each of them jointly and severally represents as follows:
(i) No stop order suspending the Offering
contemplated herein or use of the Memorandum has been issued, and no proceedings
for such purpose have been taken or are, to the best of their knowledge, after
due inquiry, contemplated or threatened by the Regulators;
(ii) They do not know of any material investigation,
litigation, or proceeding instituted or threatened or contemplated against the
Company which is not disclosed in the Memorandum. The representations and
warranties of the Company contained in SECTION 2 hereof are true and correct in
all respects as of the Closing Date as if such representations and warranties
were made as of such date;
(iii) They have carefully examined the Memorandum
and, in their opinion, at the time the Memorandum was distributed or used and at
the Closing Date and through the date the Offering is terminated, the statements
contained in the Memorandum were and are correct, in all material respects, and
such Memorandum does not omit to state a material fact required to be stated
therein or necessary in order to make the statements therein not misleading and,
in their opinion, no event has occurred which should be set forth in a
supplement to or an amendment of the Memorandum which has not been so set forth
in such supplement or amendment;
(iv) The Company has performed all of its obligations
pursuant to this Agreement required to be performed on or prior to the Closing
Date; and
(v) The Company has provided all due diligence
materials requested by the Placement Agent.
(e) The Company shall have furnished to the Placement Agent
such further certificates and documents confirming the representations,
warranties and covenants contained herein and related matters as the Placement
Agent may reasonably have requested.
The opinions and letters described in this Agreement shall be
addressed to the Placement Agent. The opinions, letters and certificates
described in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in all respects satisfactory in form and
substance to the Placement Agent and to counsel for the Placement Agent.
If any of the conditions provided for in this SECTION 8 shall
not have been fulfilled when and as required by this Agreement to be fulfilled,
the obligations of the Placement Agent hereunder may be terminated by the
Placement Agent by notifying the Company of such termination in writing or by
9
telegram at or prior to the Closing Date. In such event, the Company and the
Placement Agent shall not be under any obligation to each other (except to the
extent provided in SECTIONS 7 AND 11 hereof).
9. CONDITIONS OF COMPANY'S OBLIGATIONS. The obligations of the Company
(other than its obligations under SECTIONS 7 AND 11 hereof) shall be subject to:
(i) the accuracy of and compliance with, as of the date hereof and on the
Closing Date, the representations, covenants and warranties contained herein
made by the Placement Agent, and (ii) the performance by the Placement Agent of
its material obligations required to be performed on or before the Closing Date.
10. PLACEMENT AGENT'S AUTHORITY. Neither the Placement Agent nor any of
its representatives is authorized to make any representations on behalf of the
Company other than those contained in the Memorandum or to act as the agent of
the Company in any other capacity except as expressly set forth herein.
11. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company will indemnify and hold the Placement Agent
harmless for, from and against any losses, claims, damages or liabilities, joint
or several, to which the Placement Agent may become subject under applicable
Securities Laws and Regulations, including, but not limited to, any applicable
state securities laws or regulations or otherwise, insofar as such losses,
claims, damages or liabilities (or securities actions with respect thereto)
arise out of or are based upon (i) any untrue statement or alleged untrue
statement of any material fact contained in the Memorandum, any amendment or
supplement thereto, any additional information provided with respect to the
Offering or that arises out of or is based upon the omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading and/or (ii) a breach by the Company
of the representations, covenants, agreements and warranties contained in this
Agreement; and will reimburse the Placement Agent for any legal or other expense
reasonably incurred in connection with investigating or defending any such loss,
claim, damage, liability or securities actions.
The foregoing indemnity agreement shall extend upon
the same terms and conditions to, and shall inure to the benefit of, the
Placement Agent's officers, directors and counsel, and each person, if any, who
"controls" the Placement Agent.
(b) The Placement Agent will indemnify and hold the Company
harmless for, from and against any losses, claims, damages or liabilities, joint
or several, to which the Company may become subject under the applicable
Securities Laws and Regulations, the various state securities laws or
regulations or otherwise, insofar as such losses, claims, damages or liabilities
(or securities actions with respect thereto) arise out of or are based upon a
breach by the Placement Agent of the representations, covenants and warranties
contained in SECTION 3 of this Agreement; and will reimburse the Company for any
legal or other expenses reasonably incurred in connection with investigating or
defending any such loss, claim, damage, liability or securities actions.
Notwithstanding the preceding sentence, the Placement Agent shall in no event be
liable for any lost profits or loss of bargain damages of the Company.
The foregoing indemnity agreement shall extend upon
the same terms and conditions to, and shall inure to the benefit of, the
Company's officers, directors, and counsel, and each person, if any, who
"controls" the Company.
(c) Promptly after receipt by an indemnified person of notice
of the commencement of any securities action, such indemnified person shall, if
a claim in respect thereof is to be made against the indemnifying party pursuant
to this SECTION 11, notify the indemnifying party in writing of the commencement
10
thereof; but the omission to so notify the indemnifying party shall not relieve
it from any liability which it may have to any indemnified party. In case any
such securities action shall be brought against such indemnified party, it shall
notify the indemnifying party of the commencement thereof, and the indemnifying
party shall be entitled to participate in, and, to the extent that it shall
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel approved by the indemnified party. The
indemnified party shall not be responsible for any legal or other expenses
incurred by such indemnified party in connection with the defense thereof, other
than reasonable costs of investigation.
(d) If the indemnification provided for in this SECTION 11 is
unavailable to or insufficient to hold harmless an indemnified party under
SECTION 11(A) above in respect of any losses, claims, damages or liabilities
referred to therein, then each indemnifying party shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the Placement
Agent on the other from the Offering of the Units. If, however, the allocation
provided by the immediately preceding sentence is not permitted by applicable
law, then each indemnifying party shall contribute to such amount paid or
payable by such indemnified party in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of the
Company on the one hand and the Placement Agent on the other in connection with
the statements, omissions or breaches which resulted in such losses, claims,
damages or liabilities, as well as any other relevant equitable considerations.
The relative benefits received by the Company on the one hand and the Placement
Agent on the other shall be deemed to be in the same proportion as the total net
proceeds from the Offering (before deducting expenses) received by the Company
bear to the total commissions received by the Placement Agent. The relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
on the one hand or the Placement Agent on the other and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Company and the Placement Agent agree that it
would not be just and equitable if contributions pursuant to this SECTION 11(D)
were determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to above in
this SECTION 11(D). The amount paid or payable by an indemnified party as a
result of the losses, claims, damages or liabilities referred to above in this
SECTION 11(D) shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or defending
any such securities action or claim. Notwithstanding the provisions of this
SECTION 11(D), (i) the Placement Agent shall not be required to contribute any
amount in excess of the commission received by it, and (ii) no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
In any proceeding relating to the Memorandum or any
supplement or amendment thereto, each party against whom contribution may be
sought under this SECTION 11(D) hereby consents to the jurisdiction of any court
having jurisdiction over any other contributing party, agrees that process
issuing from such court may be served upon them or it by any other contributing
party and consents to the service of such process and agrees that any other
contributing party may join them as an additional defendant in any such
proceeding in which such other contributing party is a party.
11
12. TERMINATION. This Agreement may be terminated by the Placement
Agent or the Company, as the case may be, by notice to the other party as
follows:
(a) at any time prior to the closing itself if any of the
following has occurred:
(i) since the respective dates as of which
information is given in the Memorandum, any material adverse change or any
development involving a prospective material adverse change in or affecting the
condition, financial or otherwise, of the Company, or the earnings, business
affairs, management or business prospects of the Company, whether or not arising
in the ordinary course of business;
(ii) any outbreak of hostilities, act of terrorism or
other national or international calamity or crisis or change in economic or
political conditions if the effect of such outbreak, calamity, crisis or change
on the financial markets or economic conditions would, in the Placement Agent's
or the Company's reasonable judgment, make the offering or delivery of the Units
impracticable;
(iii) suspension of trading in securities on the
American Stock Exchange or limitation on prices (other than limitations on hours
or numbers of days of trading) for securities on such Exchange;
(iv) the enactment, publication, decree or other
promulgation of any federal or state statute, regulation, rule or order of any
code or other governmental authority which in the Placement Agent's or the
Company's reasonable opinion materially adversely affects or will materially
adversely affect the business or operations of the Company;
(v) the taking of any securities action by any
federal, state or local government or agency in respect of its monetary or
fiscal affairs which in the Placement Agent's or the Company's reasonable
opinion has a material adverse effect on the securities markets in the United
States or the prospects of the Company; or
(vi) if the Placement Agent's "due diligence" review
discloses information which (A) is in any material respect inconsistent with the
information previously provided to the Placement Agent; (B) discloses matters
concerning the business (past, current or prospective) of the Company not
previously fully disclosed to the Placement Agent; or (C) would require any
material amendment or modification to the Memorandum previously circulated to
reflect additional risk factors or material changes which may have a Material
Adverse Effect; and
(b) failure of the Company or the Placement Agent to fulfill
the obligations set forth in SECTION 8 or 9.
13. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY. All
representations, warranties and agreements of the Company and the Placement
Agent, herein or in certificates delivered pursuant hereto, and the indemnity
agreement provisions contained in SECTION 11 hereof, shall survive the delivery,
execution and closing hereof and shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of the Placement
Agent or the Company, and shall survive delivery of the Units hereunder. The
indemnification provisions of SECTION 11 hereof are in addition to any and all
other remedies or rights any of the parties hereto may have, including the right
to ▇▇▇ and recover damages for any breach of any representation, warranty or
covenant made or given by one or more parties to any other party.
12
14. NOTICES. All notices required or permitted hereunder shall be in
writing and shall be mailed, delivered or telegraphed to the following address:
If to the Placement Agent: Peacock, Hislop, ▇▇▇▇▇▇ & Given, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇, Managing Director
with a copy to Placement
Agent Counsel: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, LLP
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
If the Company: iLinc Communications, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
Any such notices shall be either (a) sent by certified mail,
return receipt requested, in such case notice shall be deemed delivered three
(3) business days after deposit, postage prepaid, in the U.S. mail, or (b)
personally delivered to recipient or sent by a nationally recognized overnight
courier, in which case it shall be deemed delivered upon receipt, if personally
delivered, or one (1) business day after deposit with an overnight courier for
overnight delivery. The above addresses may be changed by written notice to the
other party; provided, however, that no notice of a change of address shall be
effective until actual receipt of such notice.
15. PARTIES. This Agreement shall inure to the benefit of and be
binding upon the Placement Agent and the Company and each of their respective
successors and assigns and, if expressly applicable, their Affiliates. Nothing
expressed or mentioned in this Agreement is intended or shall be construed to
give any person or corporation, other than the parties hereto and their
respective successors and assigns, Affiliates, and the controlling persons,
officers, directors and counsel referred to in SECTION 11, any legal or
equitable right, remedy or claim under or with respect to this Agreement and all
conditions and provisions hereof are intended to be and are for the sole and
exclusive benefit of the parties hereto. No purchaser of any of the Units shall
be construed a successor or assignee by reason merely of such purchase.
"AFFILIATE" means a Person who, with respect to any other Person: (a) directly
or indirectly controls, is controlled by or is under common control with such
other Person; (b) owns or controls 10 percent or more of the outstanding voting
securities of such other Person; (c) is an officer, director, partner or member
of such other Person, or (d) if such other Person is an officer, director,
partner or member, any Person for which such other Person acts in any such
capacity. "PERSON" means an individual or a firm, corporation, partnership,
limited liability company, association, estate, trust, pension or profit-sharing
plan, or any other entity.
16. SEVERABILITY. Every provision in this Agreement is intended to be
severable. If any term or provision hereof is illegal or invalid for any reason
whatsoever, such illegality or invalidity shall not affect the validity of the
remainder hereof.
17. CAPTIONS. The captions or headings in this Agreement are inserted
for convenience and identification only and are in no way intended to describe,
interpret, define, or limit the scope, extent, or intent of this Agreement or
any provision hereof.
13
18. APPLICABLE LAW. This Agreement and all disputes and controversies
relating hereto or in connection with the transactions contemplated hereby shall
be governed by and construed in accordance with the internal laws of the State
of Arizona without regard to choice or conflict of law principals.
19. JURISDICTION AND VENUE. Each of the parties to this Agreement
hereby agree that all actions or proceedings arising in connection with this
Agreement shall be tried and litigated only in the state and federal courts
located in the County of Maricopa, State of Arizona. The Company hereby waives
any right it may have to assert the doctrine of forum non conveniens or to
object to the venue to the extent any proceeding is brought in accordance with
this SECTION 19 and stipulates that the state and federal courts located in the
County of Maricopa, State of Arizona, shall have in personam jurisdiction and
venue over the Company for the purpose of litigating any such dispute,
controversy or proceeding arising out of or related to this Agreement. Service
of process sufficient for personal jurisdiction in any action against either
party hereto may be made by registered or certified mail, return receipt
requested to its address indicated in SECTION 14.
20. PRIOR AGREEMENTS. This Agreement supersedes all prior agreements,
oral or written, covered in the same subject matter.
21. COUNTERPARTS. This Agreement and any notices delivered hereunder
may be executed in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument. This Agreement and any and all notices may be delivered by telecopy
and shall be effective upon receipt, with the original of such document to be
deposited promptly in the U.S. Mail.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
this 12th day of March, 2004, to be effective as of the date first written
above.
ILINC COMMUNICATIONS, INC. PEACOCK, HISLOP, ▇▇▇▇▇▇ & GIVEN, INC.
(Company) (Placement Agent)
By: __________________________________ By: __________________________________
Name: ________________________________ Name: ________________________________
Title: _______________________________ Title: _______________________________
14