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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, Staley
& 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withdrawn by any subscriber.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
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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.
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(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.
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(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:
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(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;
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(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
