Vfinance
Investments, Inc.
Access Success.
This Investment Banking Agreement (the "Agreement") is made and entered into as
of August 17, 2001, by and among BrightCube, Inc. having a principal place of
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business at 000 Xxxxxx Xxxxxx, Xx Xxxxxxx, XX 00000 (the "Company"), vFinance
Investments, Inc. ('"VFIN") and vFinance Capital L.C. (the "Investment Bank"),
affiliated NASD member broker dealers, having a place of business at 0000 Xxxxx
Xxxxxxxx Xxxxx, Xxxxx 000, Xxxx Xxxxx, Xxxxxxx, 00000-0000.
ENGAGEMENT OF SERVICES
The Company hereby retains (i) VFIN, for the purpose of providing to the Company
financial consulting services and (ii) the Investment Bank for the purpose of
providing investment banking and management consulting services. VFIN and the
Investment Bank severally but not jointly agree to be retained to provide such
services pursuant to the terms and conditions set forth herein.
SECTION ONE
STATEMENT OF WORK
VFIN will, on behalf of the Company, perform the following financial advisory
services:
Financial Advisory Services. VFIN will provide capital market advice and
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will work with the Company's management in creating market awareness of the
Company and its stock, and in the organization and sponsorship of investor
presentations. VFIN will make a market in the Company's stock and will seek
to establish other market makers in the Company's stock. VFIN will seek to
increase liquidity and maintain an orderly market in the Company's stock,
including assisting the buy-side and in cross-block trades of the Company's
stock. VFIN will provide advice to the Company pertaining to stock buyback
plans, stock splits or dividends and other related plans as they pertain to
the Company's stock price and liquidity. At the request of the management
("Management") of the Company, VFIN will attend shareholder and Board
meetings to make presentations.
Investment Bank will, on behalf of the Company, perform the following investment
banking and management consulting services:
Assessment. If requested, the Investment Bank will prepare an assessment
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("Assessment") of the Company's current business, operations, strategies
and target markets. The Assessment will highlight market conditions and
other contributing factors that would likely influence the Company's
ability to successfully pursue the current course of business.
Fairness Opinion. Investment Bank will render a Fairness Opinion with
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respect to any potential transaction that the Company might contemplate.
Said Fairness Opinion will be organized and will contain language standard
to such documents.
Information Memorandum. Investment Bank will work with Management to become
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educated in the Company's intended business, operations, strategies and
target markets. Investment Bank will then, in coordination with Management,
assist in the preparation of an Informational Memorandum ("Memorandum")
that will articulate the business opportunity, the business model and an
investment opportunity.
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The Memorandum will reflect the future business of the Company, detail the
Company's strategic position, and define requirements and terms for
funding. The Memorandum shall describe potential distribution channels,
market potential, marketing strategies, a description of key technologies,
organizational structure and financial projections.
Mergers/Acquisitions and Investments-- Investment Bank will research market
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opportunities, identify potential mergers, acquisitions and investors,
model the transactions, structure the deals, and work with Management to
close said transactions.
For the duration of this Agreement, the Investment Bank will have the
ability to engage in substantive discussions with potential investors,
acquirers or joint venture partners on behalf of the Company. Investment
Bank will provide the names of parties to whom it Intends to disclose
proprietary information and they will be identified and included as an
"Investment Bank Party' under the Agreement.
In the event the Company, Management or its stockholders receive an inquiry
from, or are otherwise in contact with, a party concerning the availability
of the Company regarding a Covered Transaction, as defined herein below in
Section Five, Company will promptly notify the investment Bank of such
discussions.
In the event Company withholds its written approval authorizing Investment
Bank to approach an Investment Banking Party, the Company agrees that
neither it nor its agents, will discuss or enter into a Covered Transaction
with that party during the term of this Agreement, as defined in Section
Four, and for a period of twenty-four (24) months after the termination or
expiration of this Agreement.
Each prospect will be qualified and meetings will be set to present the
Company to potential investors. Investment Bank will work with Management
to negotiate and close a Covered Transaction.
IN PERFORMING ITS SERVICES HEREIN, VFIN AND INVESTMENT BANK SHALL BE ENTITLED TO
RELY WITHOUT INVESTIGATION UPON ALL INFORMATION THAT IS PROVIDED BY THE COMPANY,
WHICH INFORMATION THE COMPANY HEREBY WARRANTS SHALL BE COMPLETE AND ACCURATE IN
ALL MATERIAL RESPECTS, AND NOT MISLEADING. VFIN AND INVESTMENT BANK IN NO WAY
GUARANTEE THAT THE COMPANY WILL SUCCESSFULLY RAISE CAPITAL.
SECTION TWO
PLACE OF WORK
It is understood that VFIN and Investment Bank's services will be rendered both
on and off-site of the Company. The Company agrees to provide appropriate
support to VFIN and Investment Bank while on-site performing the services
described in Section One.
SECTION THREE
TIME DEVOTED TO WORK
In the performance of the services covered by this Agreement, the services and
the hours VFIN and Investment Bank are to work will be entirely within VFIN and
Investment Bank's control and the Company will rely upon VFIN and Investment
Bank to put in such number of hours as is reasonably necessary to fulfill the
spirit and the purpose of this Agreement.
SECTION FOUR
DURATION
The duration of this Agreement (the 'Term") shall be from August 17, 2001 to
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August 17, 2002, provided however, that this Agreement may be terminated at any
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time by either Company or VFIN or Investment Bank, with or without cause, upon
sixty (60) days written notice to the other.
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SECTION FIVE
PAYMENT
Upon execution of this Agreement, the Company will issue to VFIN warrants to
purchase common shares of the Company's stock for services provided in the
performance of Financial Advisory Services articulated in Section One above. The
Company will issue 200,000 warrants at an exercise price of $0.27 per share. The
warrants will have a term of 5 years, piggy- back registration rights, and have
a provision for cashless exercise. Upon completion of a private placement of at
least $1 million on the Company's behalf, the Company will issue to VFIN
warrants to purchase common shares of the Company's stock at a rate of 130,000
per $100,000 funded at an exercise price of $0.27 per share up to maximum of
1,300,000 shares. The warrants will have a term of five (5) years, piggyback
registration rights and have a provision for cashless exercise.
The Company will pay Investment Bank a consulting fee of Six Thousand Dollars
($6,000) per calendar month in consideration of investment banking and
management consulting services performed in the Statement of Work, of which
three (3) months shall be due upon signing of this Agreement, with the remainder
payable at the beginning of each calendar month thereafter.
For purposes of this Agreement, the term "Covered Transaction(s)" shall mean any
private placement, capital infusion, equity investment or financing, "Investment
Bank Initiated Purchase or Sale Transaction", "Debt Financing" or "Subordinated
Debt Financing" as defined below.
For purposes of this Agreement, an "Investment Bank Initiated Purchase or Sale
Transaction" is any acquisition, sale, merger, consolidation, joint venture,
exchange offer, sale or license (or any variation thereof) of any part of or all
of the business or property of the Company, or other transaction, including, but
not limited to: the purchase or sale of stock or other transaction resulting in
any change of control of the Company, the acquisition of any shares of its
stock, or the disposition outside of the ordinary course of business of any of
its assets.
For the purpose of this Agreement, Subordinated Debt Financing shall mean debt
financing junior to other debt, i.e., repayable in the case of liquidation only
after senior debt with a higher claim has been satisfied. This type of debt may
be but not necessarily characterized by such features as interest only payments
for a specified period of time, equity participation through warrants and other
instruments, and convertible features. Senior and working capital lines are
defined as borrowings normally undertaken by businesses in the course of
operations. It includes notes, bonds, equipment leasing, or debentures not
expressly defined as junior or subordinated.
For the purposes of this Agreement, Total Consideration shall mean and be
computed as the total sale proceeds and other consideration received by Company,
its stockholders, directed beneficiaries, or any newly formed entity owned or
affiliated with or participated in by Company or any of its shareholders ("New
Company") upon consummation of the Covered Transaction including, but not
limited to: cash, securities, notes, debentures, purchase options, royalties,
management, consulting and employment agreement; marketing, licensing and
revenue contracts; agreements not-to-compete, including contingent and
installment payments; consideration for assets owned by affiliates of Company or
entities in any business relationship which are used in or are potentially
useful in Company's business; the total value of liabilities avoided by the
Company or assumed by the acquirer; the total value of all liabilities on the
Company's balance sheet that are transferred to, or assumed by, the acquirer of
the stock of Company in a stock transaction and any other tangible net benefit
to the Company, its shareholders or directed beneficiaries.
If a Covered Transaction is consummated between the Company and an Investment
Bank Party during the term of this Agreement, or a period of twenty four (24)
months thereafter, Company shall pay Investment Bank, or cause Investment Bank
to be paid, at the closing of such transaction a fee computed by taking the
Total Consideration multiplied by ten percent (10%). In addition, the Company
shall pay the Investment Bank an additional 2% non-accountable expense to cover
due diligence and legal expenses.
If an Investment Bank Initiated Purchase or Sale Transaction is consummated
between the Company and an Investment Bank Party during the term of this
Agreement, or a period of twenty four (24) months thereafter, Company shall pay
Investment Bank, or cause Investment Bank to be paid, at the closing of such
transaction a fee computed by taking the Total Consideration
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received at each respective closing involved in such Investment Bank Initiated
Purchase or Sale Transaction multiplied by a percentage determined pursuant to
the following schedule:
TOTAL CONSIDERATION Fee
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$ 0 to $1,999,999 6.0%
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$ 2,000,000 to $3,999,999 5.0%
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$ 4,000,000 to $5.999,999 4.0%
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$ 6,000,000 to 7,999,999__ 3.0%
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$ 8,000,000 or greater 2.0%
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An example of the fee due to Investment Bank based on the above fee schedule
would be as follows on an Investment Bank Initiated Purchase or Sale Transaction
of $11,000,000 in Total Consideration:
Fee = ($2,000,000 X 6%) + ($2,000,000 x 5%) + ($2,000,000 X 4%) + ($2,000,000 X
3%) + ($3,000,000 X 2%) = $420,000
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In the case of a "Debt Financing" where the source of debt financing, excluding
subordinated debt financing, is originated by Investment Bank or is from an
Investment Bank Party and the transaction closes during the Term of this
Agreement, or within eighteen (18) months of any termination thereof, Investment
Bank shall receive upon closing of the transaction, a lump-sum consulting fee
computed by taking the total commitment multiplied by four (4%) percent. If such
Debt Financing is coupled with equity securities such as warrants, the value of
the equity securities (to the extent same are options, warrants, or similar
securities) shall be determined under the Black-Scholes methodology.
In the case of a "Subordinated Debt Financing" where the source of subordinated
debt financing is originated by Investment Bank or is from an Investment Bank
Party and the transaction closes during the Term of this Agreement, or within
eighteen (18) months of any termination thereof, Investment Bank shall receive
upon closing of the transaction, a lump-sum consulting fee computed by taking
the total commitment multiplied by six (6%) percent. If such Subordinated Debt
Financing is coupled with equity securities such as warrants, the value of the
equity securities (to the extent same are options, warrants, or similar
securities) shall be determined under the Black-Scholes methodology.
At the time of execution of this Agreement, the Company will identify all
parties with which the Company is engaged in active discussions concerning the
availability of the Company regarding a Purchase or Sale Transaction.
All fees due to Investment Bank pursuant to this Agreement are payable in cash.
All fees are payable to Investment Bank at the closing date of the subject
transaction. To the extent amounts are payable to Company after the closing date
of a transaction, Company shall pay Investment Bank the applicable fee
associated with such amounts at the time such amounts are actually received by
Company.
For example, if $7,000,000 is payable on the closing of the Covered Transaction
and $3,000,000 is payable six (6) months thereafter, Company shall pay
Investment Bank ($7,000,000 X 10.0%) on the day of the closing of the Covered
Transaction and ($3,000,000 X 10.0%) upon its receipt of the final $3,000,000.
Any fees due and not paid when due will accrue interest at the rate of twelve
percent (12.0%) annually and the Company will be responsible for legal expenses,
including without limitation appellate expenses (at both the trial and appellate
level) incurred by Investment Bank in collecting such fees. Warrant and
registration rights as well as the Company's obligations to compensate the
Investment Bank as described in this Section Five shall remain in full force and
effect following the termination of this Agreement.
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In addition, upon closing of a Investment Bank Initiated Purchase or Sale
Transaction(s), or Debt Financing(s) or Subordinated Debt Financing(s)
(hereinafter each of which is referred to as a "Financing Transaction") with
respect to which Investment Bank is entitled to a fee as described hereinabove,
the Company or any successor entity will grant to Investment Bank a warrant to
purchase the common stock of Company, at a purchase price per share ("the
"Purchase Price") equal to the lower of a) the closing bid price of the
Company's stock the day prior to the closing date of a Covered Transaction(s),
or b) the price per share paid by investors in the Covered Transaction(s);
and in an amount of shares to be calculated by taking the success fee paid to
Investment Bank and dividing it by the Purchase Price. Warrants shall be issued
at the closing of the Covered Transaction, and can be exercised at any time by
Investment Bank in whole or part over five (5) years. Company or its successor
entity agrees to reserve sufficient amount of common shares to cover the
exercise of the warrant.
Company shall grant VFIN and Investment Bank piggyback registration rights for
the common stock and the common stock underlying the warrants paid, granted or
otherwise issued pursuant to this Section 5 in accordance with Addendum "A" to
this Agreement.
These warrants shall be subject to a weighted average adjustment in the common
stock underlying such warrants and the per share exercise price in the event of
any (a) stock splits, stock dividends, recapitalizations or similar events, or
(b) issuances of common stack or options, warrants or other capital stock with
the exercise or conversion price at a per share price less than the per share
warrant exercise price.
The Company will reimburse VFIN and Investment Bank for all approved business
expenses ("Expenses") incurred by VFIN and Investment Bank in the performance of
the work defined herein. Expenses will be billed and paid on a monthly basis,
beginning on Sept. 1, 2001 and on the first of each subsequent month.
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SECTION SIX
STATUS OF VFIN AND INVESTMENT BANK; INDEMNIFICATION
VFIN and Investment Bank are and shall be independent contractors and are not
and shall not be deemed or construed to be employees of the Company by virtue of
this Agreement. Neither VFIN, Investment Bank nor the Company shall hold VFIN
and Investment Bank out as an agent, partner, officer, director, or other
employee of the Company in connection with this Agreement or the performance of
any of the duties, obligations or performances contemplated hereby and VFIN and
Investment Bank further specifically disclaim any and all rights to an equity
interest in or a partnership with the Company by virtue of this Agreement or any
of the transactions contemplated hereby, except as specifically provided herein.
VFIN and Investment Bank specifically acknowledge and agree that they shall have
no authority to execute any contracts or agreements on behalf of the Company or
any other person that, directly or indirectly through one or more
intermediaries, controls, is controlled by or is under common control with the
Company (an "Affiliate") and it shall have no authority to bind the Company or
its Affiliates to any obligation (contractual or otherwise). For purposes of
this Agreement, (a) the term "control" shall mean the possession, direct or
indirect, of the power to direct or cause the direction of the management and
policies of a person, whether through the ownership of voting interests, by
contract or otherwise and (b) the term "person" shall mean an individual,
partnership, corporation, limited liability company, limited liability
partnership, trust, joint venture or other entity.
It is hereby acknowledged and agreed that the Company has not, is not and shall
not be obligated to make, and that it is the sole responsibility of VFIN and
Investment Bank to make, in connection with any income earned by VFIN and
Investment Bank from the Company, all periodic withholding taxes, FICA taxes,
SECA payments, Federal unemployment taxes (FUTA) and any other Federal or state
taxes, payments or filings required to be paid, made or maintained.
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In the event that VFIN and Investment Bank, or their officers, shareholders,
directors, employees or agents (collectively "Indemnitee") become involved in
any capacity in any action, proceeding or investigation in connection with any
matter referred to in this Agreement not resulting from or relating to
Indemnitee's recklessness, negligence, or bad faith, the Company will reimburse
Indemnitee for legal and other expenses as such expenses are incurred in
connection therewith.
The Company will also indemnify and hold harmless Indemnitee against losses,
claims, damages or liabilities to which Indemnitee may become subject in
connection with any matter referred to in this Agreement, except to the extent
that any such loss, claim, damage or liability results from the recklessness,
negligence, or bad faith of Indemnitee performing the services that are the
subject of this Agreement. The provisions of this Section 6 shall survive any
termination or expiration of this Agreement.
SECTION SEVEN
SERVICES FOR OTHERS
VFIN and Investment Bank may, during or subsequent to the Term, perform services
for any other person or firm without the Company's prior approval.
SECTION EIGHT
OWNERSHIP
VFIN and Investment Bank acknowledge that the Company will be free to use all
work developed under this Agreement for future and continued usage without any
obligation to remit any payment to VFIN and Investment Bank other than that
which is defined in this Agreement.
SECTION NINE
GOVERNING LAW
The laws of the State of Florida shall govern this Agreement. Any controversy or
claim arising out of, or relating to, this Agreement, to the making,
performance, or interpretation of it, shall be settled by arbitration in Fort
Lauderdale, Florida unless otherwise mutually agreed upon by the parties, under
the commercial arbitration rules of the American Arbitration Association then
existing, and any judgment on the arbitration award may be entered in any court
having jurisdiction over the subject matter of the controversy. If any legal
action or any arbitration or other proceeding is brought for the enforcement of
this Agreement, or because of an alleged dispute, breach, default, or
misrepresentation in connection with any of the provisions of this Agreement,
the successful or prevailing party or parties shall be entitled to recover
reasonable attorney's fees and other costs incurred in that action or
proceeding, in addition to any other relief to which it or they may be entitled.
The Governing Law provisions shall survive any termination of this Agreement.
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SECTION TEN
INTEGRATION
This Agreement contains the entire Agreement among the parties and supersedes
all prior oral and written agreements, understandings, and representations among
the parties. No amendments to this Agreement shall be binding unless executed in
writing by all the parties.
IN WITNESS WHEREOF, The parties to this Agreement have duly executed it on the
day and year first above written.
COMPANY
BRIGHTCUBE, INC.
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By: /S/Xxxx Xxxxxx 08/17/01
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Authorized Representative Date
vFinance Investments, Inc.
By: /S/ [Illegible] 08/22/01
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Authorized Representative Date
INVESTMENT BANK
vFinance Capital L.C.
By: /S/ [Illegible] 08/22/01
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Authorized Representative Date
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ADDENDUM "A"
REGISTRATION RIGHTS
(a) Piggy-Back Registration Rights. If at any time five (5) years from the
date of this Agreement (the "Registration Period"), the Company proposes to
register any securities under the Securities Act of 1933, as amended (the "1933
Act") (other than on a registration form relating to a registration of a stock
option, stock purchase or compensation or incentive plan or of stock issued or
issuable pursuant to any such plan, or dividend investment plan, a registration
of stock proposed to be issued in exchange for securities or assets of, or in
connection with the merger or consolidation with, another corporation, or a
registration of stock proposed to be issued in exchange for other securities of
the Company), the Company shall give prompt written notice thereof
("Registration Notice") to VFIN and Investment Bank and, upon the written
request made within ten (10) days after VFIN and Investment Bank received such
Registration Notice, the Company shall use its best efforts to effect as part of
such registration the registration under the 1933 Act of that number of the
shares which VFIN and Investment Bank requests the Company to register, provided
that the managing underwriter of the Company's public offering, if any, shall be
of the opinion that the inclusion in such registration of such number of shares
will not interfere with the successful marketing of all of the Company's
securities being registered. If the managing underwriter requests VFIN and
Investment Bank to reduce in whole or in part the number of shares sought or be
registered by VFIN and Investment Bank, VFIN and Investment Bank shall comply
with the request of the managing underwriter. VFIN and Investment Bank agree to
execute any document required to be executed by the managing underwriter in
order to effectuate such offering. In any underwritten offering, VFIN and
Investment Bank shall sell the shares registered as part of such underwritten
offering to the underwriters of such offering on the same terms and conditions
as apply to the Company. In connection with any registration pursuant to this
Section (a), VFIN and Investment Bank shall provide the Company with such
information regarding VFIN and Investment Bank and the distribution of the
shares as the Company and the managing underwriter shall reasonably request. The
Company shall pay all costs and expenses of VFIN and Investment Bank. The
Company shall not be obliged to effect registration under the 1933 Act of common
stock held by VFIN and Investment Bank pursuant to this Section (a) on more than
one occasion. However, if all of the shares sought to be registered by VFIN and
the Investment Bank are not registered by the Company for any reason, the
piggy-back registration rights set forth in this Section (a) shall remain in
effect until all of the shares of VFIN and the Investment Bank have been
registered hereunder or the five-year period referred to in this Section (a)
have expired, whichever event occurs first.
(b) General Conditions. In connection with each registration affected
pursuant to Section (a), the Company and VFIN and Investment Bank agree as
follows:
(I) Indemnification of VFIN and Investment Bank, The Company shall indemnify
and hold harmless VFIN, Investment Bank and their respective officers,
directors, shareholders, employees and agents (collectively, "Investment Bank
Indemnitees") from and against any and all losses, claims, damages, or
liabilities to which any of the Investment Bank Indemnitees may become subject
under the 1933 Act, or any other statute or common law, including any amount
paid in settlement of any litigation, commenced or threatened, if such
settlement is effected with the written consent of the Company, and to reimburse
any of the Investment Bank Indemnitees for any legal or other expenses incurred
by any of the Investment Bank Indemnitees in connection with investigating any
claims and defending any action insofar as any such losses, claim, damages,
liabilities or actions arise out of or are based upon 1) any untrue statement or
alleged untrue statement of a material fact, contained in the registration
statement relating to the sale of the shares of VFIN and the Investment Bank, or
any post-effective amendment thereof, or 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, 2) any untrue statement or alleged untrue
statement of a material fact, contained in a preliminary prospectus, if used
prior to the effective date of such registration statement, or contained in the
prospectus (as amended or supplemented, if the Company shall have filed with the
SEC any amendment thereof or supplement thereto), if used within the period
during which the Company is required to keep the registration statement to which
the prospectus relates current and effective pursuant to the terms hereof, or
the omission or alleged omission to state therein (if so used) a material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
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The indemnification agreement contained in this Agreement, however, shall not:
1) apply to such losses, claims, damages, liabilities, or actions arising out
of, or based upon, any such untrue statement or alleged omission, if such
statement or omission was in reliance upon and in conformity with the
information furnished in writing to the Company by VFIN and Investment Bank in
connection with the preparation of the registration statement or any preliminary
prospectus or prospectus contained in the registration statement or any
amendment thereof or supplement thereto, or 2) inure to the benefit of any
underwriter from whom the person asserting any such losses, claims, damages,
expenses or liabilities purchased the securities which are the subject thereof
(or to the benefit of any person controlling such underwriter), if such
underwriter failed to send or give a copy of the prospectus to such person at or
prior to the written confirmation of the sale of such securities to such person.
(ii) Indemnification of the Company. VFIN and Investment Bank severally and
not jointly agree, in the same manner and to the same extent as set forth in the
preceding paragraph, to indemnify and hold harmless the Company and each person,
if any, who controls the Company within the meaning of Section 15 of the 1933
Act, its directors and those officers of the Company who shall have signed such
registration statement, with respect to any statement in or omission from such
registration statement or any post-effective amendment thereof or any
preliminary prospectus (as amended or supplemented, if amended or supplemented
as aforesaid) contained in such registration statement, if such statement or
omission was made in reliance upon and in conformity with information furnished
in writing to the Company by VFIN and the Investment Bank for use in connection
with the preparation of such registration statement or any preliminary
prospectus or prospectus contained in such registration statement or any
amendment thereof or supplement thereto.
(iii) Notice of Indemnifiable Action. Promptly after the receipt of notice
or the commencement of any action against such indemnified party in respect of
which indemnity may be sought from a party hereto on account of the provisions
contained in this Addendum A, each indemnified party will notify the
indemnifying party in writing of the commencement thereof. The omission of any
indemnified party to so notify an indemnifying party of any such action shall
not relieve the indemnifying party from any liability hereunder, unless such
failure to promptly notify the indemnifying party shall prejudice the
indemnifying party in any material respect in connection with such action.
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