Finder's Fee Agreement
http://www.1000ventures.com/doc/legal/agr_sample_vc-finder_byvpa.html
THIS AGREEMENT is made this ______ day of _______________ by and between Venture Planning Associates, hereinafter referred to as ("CONSULTANT") and ____________________ hereinafter referred to as ("CLIENT").
The following represents our agreement, in consideration of each other's promises or acts with respect to this Finder's Fee Agreement. Consultant has introduced and/or will introduce potential Investors to Client in return for Client's agreement to pay Consultant (or nominee) compensation for these introductory services if an investment is made. Therefore, the parties herein agree as follows:
1. Investor. The "registered" Investors, i.e., those investors which Consultant will introduce to Client, will be named and listed by separate cover letter(s), and such letters) shall be governed by, and included under the provisions of this Agreement as if included herein.
Further, the compensation you have agreed to pay Consultant shall be payable in the event any registered investor, associate, co-investor or other entity procured by a "registered" Investor purchases from, invests in or advances funds toward Client's project and/or company. All are defined as an "Investor."
2. Initial Investment. Should an Investor purchase, invest and/or loan monies, properties, patents (or anything of value) toward any of Client's projects and/or Client's company (all defined as "Company"), regardless of the form such proceeds are so invested, then Client agrees to pay Consultant six percent (6 %) of the proceeds (or value) so purchased, invested and/or loaned to the Company. this compensation to
Consultant shall be based upon the gross amount invested, prior to any deductions, expenses or offsets of any kind. Payment will be made by cashier's checks or money order payable to the order of Consultant upon Client's receipt of funds (or value).
3. Other Investments. Should Investor invest additionally In Client's Company after the initial investment is made, Client will pay Consultant a fee of six percent (6%) of any such additional funds (or value) later invested. This fee will be paid to Consultant upon Client's receipt of funds (or value). These provisions for compensation, as to other funding, shall last for a period of three (3) years from the date any Investor first Invests In Client's Company.
4. Limitation of Service. This Agreement relates solely to Consultant's services as a finder in introducing Client to prospective investors. There are no additional services that Consultant is required to perform to be entitled to the above compensation in the event an investment is made. Consultant will not engage in any negotiations whatsoever on behalf of Client or any investor. Nor will Consultant provide Client or any investor with information which may be used as a basis for such negotiations. Consultant will have no responsibility for nor will Consultant make recommendations concerning the terms, conditions or provisions of any agreement between Client and an investor, including the manner or means of consummating the transaction.
CONSULTANT REPRESENTS THAT IT IS NOT A LICENSED SECURITIES DEALER, AND THAT THIS AGREEMENT IS NOT INTENDED FOR T14E PURPOSE OF BUYING, SELLING OR TRADING SECURITIES.
5. Miscellaneous. This Agreement shall be binding upon all parties and their respective estates, heirs, successors and permitted assigns. This Agreement may be changed only by the written consent of all parties. This Agreement may not be assigned by either party without the written consent of the other. This Agreement is the entire agreement between us. Should any legal proceeding be necessary to construe or enforce the provisions or this Agreement, then the prevailing party in such legal action shall be entitled to recover all court costs, reasonable attorney fees and costs of enforcing or collecting any judgment awarded. The judgment by any court of law that a particular section of this Agreement is illegal shall not affect the validity of the remaining provisions.
It is our intention that the laws of the State of Hawaii shall govern the validity of this Agreement. Your signature below shall bind you to the terms and conditions of this Agreement.
http://www.foreclosureforum.com/forms/14FindersFeeAgreement.pdf
Finder’s Fee Agreement 0406
Date:_____________________________________ at________________________________, California
In consideration of services to be rendered by __________________________________________ (Finder),
_______________________________________________(Client) hereby employs Finder to refer to Client a
prospective: q buyer q owner q borrower q tenant q
1. Finder agrees not to participate in or conduct any negotiations with prospects, or solicit loans on
behalf of prospects. Finder is/is not licensed by the California Department of Real Estate.
2. Finder hereby delivers to Client the name and identity of the following prospect:
Name_________________________________________________________
Address_______________________________________________________
Telephone_____________________________________________________
3. Finder hereby delivers to Client particulars concerning a real estate parcel that Client might want:
Address ____________________________________________________________________________
Legal Description_____________________________________________________________________
Other: ______________________________________________________________________________
Compensation:
4. As compensation for Finder’s referral, Client agrees to pay Finder as follows:
q $ __________________________________________________________________________________
q _____________% of Client’s commission on the first transaction.
q _____________% of the purchase price of the first transaction.
q Other:______________________________________________________________________________
5. Finder’s compensation is payable as follows:
q Upon the closing of the transaction involving the above-cited real property (#3), or upon the
closing of the first transaction involving the above-cited prospect (#2).
q Other: ______________________________________________________________________________
____________________________________________________________________________________
6. Should the prospect or the property not result in a transaction involving Client within ______months
of the date of this agreement, Client shall owe Finder no compensation.
7. Additional terms and conditions: __________________________________________________________
Understood and Agreed:
Finder:______________________________________ Client:_____________________________________
http://www.privateequitylawreview.com/2008/06/articles/legal-forms/issue-securities/finders-fee-agreement/
Finders Fee Agreement
Posted on June 17, 2008 by Geoffrey Parnass
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Here is a form for Finders Fee Agreement.
This agreement is useful when a company needs to hire a finder to help identify purchasers of its capital stock. The finder acts to introduce parties interested in investing in the company and providing a sales lead. The agreement contains sections regarding the acceptance of investors and the finder’s fee in the event of a sale of stock to qualified investors introduced by finder.
FINDERS FEE AGREEMENT
This is an agreement made by and between _________________, a corporation ("Company") and ______________________ ("Finder").
1. Stock. Company seeks a purchaser or purchasers of some of its capital stock from qualified sophisticated investors. Finder represents to Company that he has access to sophisticated investors and believes that he can introduce parties interested in investing in the Company.
2. Legal Compliance. In connection with introduction to investors, Finder shall comply with all applicable laws and shall specifically, but not as a limitation thereof, comply with the requirements set forth in Rule 506 of Regulation D under the Securities Act of 1935, as amended. Finder represents and warrants that it has all permits, licenses and registrations required to perform the services hereunder.
3. Nonexclusive Right. For a period of 90 days after the date hereof, Finder shall have the non-exclusive right to introduce prospective investors to the Company who meet the definition of "accredited investors" under SEC Rule 506, and who are not already known to the Company ("Qualified Investors"). Finder shall confirm to the Company that the introduction has been made in writing within 10 days of the introduction.
4. Acceptance of Investors. The decision to accept a Qualified Investor as a shareholder in the Company is in the sole discretion of the Company.
5. Fee. In the event that a Qualified Investor is accepted by the Company, and the Qualified Investor closes the purchase of Company stock within six (6) months of the date hereof, then the Company shall pay Finder a finder's fee equal to ___% of the dollar amount of securities purchased by the Qualified Investors. The fee shall be paid within 30 days after the closing of the sale of stock to the Qualified Investor. Finder shall notify Qualified Investors that he will receive a finder's fee in the event of the sale of stock to Qualified Investors.
6. Miscellaneous. This letter shall be governed by the substantive laws of the State of _____________ without regard to conflict of law principles. This letter constitutes the entire understanding and agreement between the parties hereto and their affiliates with respect to its subject matter and supersedes all prior or contemporaneous agreements, representations, warranties and understandings of such parties (whether oral or written). No promise, inducement, representation or agreement, other than as expressly set forth herein, has been made to or by the parties hereto. This letter may be amended only by written agreement,
signed by the parties to be bound by the amendment. Evidence shall be inadmissible to show agreement by and between such parties to any term or condition contrary to or in addition to the terms and conditions contained in this letter. This letter shall be construed according to its fair meaning and not strictly for or against either party.
Date: ____________________
Company: ___________________ Finder: ____________________
Signature
By: ___________________ _____________________
Printed Name
Title: ___________________
Address: ___________________ Address: _____________________
___________________ _____________________
___________________ _____________________
http://www.allbusiness.com/business-finance/equity-funding-stock/192-1.html
Finder's Fee Agreement $25.00
This is an agreement where the company agrees to pay a fee to a finder of investors who purchase stock in the company.
Format: Microsoft Word
FINDERS FEE AGREEMENT
This is an agreement made by and between _________________, a corporation ("Company") and ______________________ ("Finder").
Stock. Company seeks a purchaser or purchasers of some of its capital stock from qualified sophisticated investors. Finder represents to Company that he has access to sophisticated investors and believes that he can introduce parties interested in investing in the Company.
Legal Compliance. In connection with introduction to investors, Finder shall comply with all applicable laws and shall specifically, but not as a limitation thereof, comply with the requirements set forth in Rule 506 of Regulation D under the Securities Act of 1935, as amended. Finder represents and warrants that it has all permits, licenses and registrations required to perform the services hereunder.
Nonexclusive Right. For a period of 90 days after the date hereof, Finder shall have the non-exclusive right to introduce prospective investors to the Company who meet the definition of "accredited investors" under SEC Rule 506, and who are not already known…
Acceptance of Investors. The decision to accept a Qualified Investor as a shareholder in the Company is in the sole discretion of the Company.
Fee. In the event that a Qualified Investor is accepted by the Company, and the Qualified Investor closes the purchase of Company stock within six (6) months of the date hereof, then the Company shall pay Finder a finder’s fee equal to…
This is only a partial view of this document.
Finder's Fee Agreement is just $25.00 and can be immediately downloaded after purchase.
Finder's fee agreements: Potential pitfalls and considerations
By Meyers, Howard S
Publication: The Attorney - CPA
Date: Monday, July 1 2002
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The rush towards capital formation and strategic alliances often leads companies to engage the services of a "finder" to assist them in locating investors and raising capital. However, unsuspecting finders may become unnecessarily subject to regulation under the federal securities laws. This article examines how finder's fee agreements are treated under New York law generally and what potential pitfalls the drafter of finder's fee agreements should avoid.
I. Background
New York law recognizes a finder as "someone who finds, interests, introduces and brings parties together for a business transaction that the parties themselves negotiate and consummate." See Moore v. Sutton Resources, Ltd., 1998 WL 67664, *4 (S.D.N.Y. 1998) (citing Northeast General Corporation v. Wellington Advertising, Inc., 82 N.Y.2d 158, 163, 604 N.Y.S.2d 1 (1993)). Unlike a broker, a finder has no duty to bring the parties to an agreement, but instead acts as an intermediary or middleman. See Moore v. Sutton Resources, Ltd., 1998 WL 67664, *4. As one court has explained, "[f]inders find potential buyers or sellers, stimulate interest and bring parties together. Brokers bring the parties to an agreement on particular terms." See Train v. Ardshiel Assoc., Inc., 635 F.Supp. 274, 279 (S.D.N.Y. -- 1986), aff'd without opinion, 805 F.2d 391 (2d Cir. 1986). In the corporate financing context, a finder's compensation is generally based on a percentage of the amount invested by one party or, in circumstances involving mergers and acquisitions, a percentage of the transaction value.
II. Causation Requirement
For a finder to recover under the typical finder's agreement, there must be a causal relation between the introduction of the parties and the ultimate conclusion of the transaction. See Moore v. Sutton Resources, Ltd., 1998 WL 67664, *4; see also Simon v. Electrospace Corp., 28 N.Y.2d 136, 142, 320 N.Y.S.2d 225, 229 (1971); Edward Gottlieb, Inc. v. City & Commercial Communications PLC, 200 A.D.2d 395, 606
N.Y.S.2d 148, 150 (1st Dept 1994); Karelitz v. Damson Oil Corp., 820 F.2d 529, 531 (Ist Cir. 1987) (Breyer, J.) (applying New York law). Moreover, courts have consistently required that the finder show more than that his services was a necessary "but-for" condition. See Moore v. Sutton Resources, Ltd., 1998 WL 67664, *4, see also Karelitz v. Damson Oil Corp., 820 F.2d at 531. Rather, the finder must show that the final deal flowed directly from the introduction. See Moore v. Sutton Resources, Ltd., 1998 WL 67664, *4. Accordingly, the finder typically must establish a continuing connection between the finder's service and the ultimate transaction. See Moore v. Sutton Resources, Ltd., 1998 WL 67664, *4.
One commentator has observed that this continuing connection is not dependent upon the finder's participation in negotiations, and a finder's fee may be payable even though a third person brings the party to agreement. Thus, if a finder introduces a prospective investor who enters into negotiations that are abandoned and later resumed, the causation requirement is probably satisfied if the renewed negotiations stem from the original introduction. See B. Fox & E. Fox, Corporate Acquisitions and Mergers, at 30.04(3)(1986).
For example, in Simon v. Electrospace Corp., 32 A.D.2d 62, 299 N.Y.S.2d 712 (1st Dep't 1969), reversed as to damages, 28 N.Y.2d 136, 142, 320 N.Y.S.2d 225, 229 (1971), a finder introduced the defendant, Electrospace Corp. ("Electrospace"), to Louis Taxin ("Taxin"), for the purpose of arranging a merger with one of Taxin's companies. The finder had entered into an agreement which provided that "in the event you can effect the sale of the stock of this corporation . . . by introduction to a party or parties with whom a transaction will be thereafter consummated, then 5% of the gross value of the transaction will be paid as a commission to you at the time of closing." Although nothing came of the initial meetings, Electrospace and Taxin resumed their negotiations eighteen months later. The Court of Appeals, in affirming the Appellate Court's decision that the finder was entitled to a finder's fee, held that the evidence was sufficient to establish a continuing connection between the finder's initial efforts and the merger that came about. See Simon v. Electrospace Corp., 28 N.Y.2d 136, 142, 320 N.Y.S.2d 225, 229 (1971).
III. Chain of Introductions Concept
Some courts have directed the payment of a finder's fee even in situations where the consummation of the transaction at issue culminated not directly from the finder's initial introduction but indirectly from a chain of introductions initiated by the finder's introduction. For example, Defren v. Russell, 71 A.D.2d 416, 422 N.Y.S.2d 433 (Ist Dep't 1979), involved a finder's fee dispute in connection with a series of introductions that allegedly culminated in the acquisition of BioDynamics, Inc. ("Bio-Dynamics") by IMS International, Inc. ("IMS"). The plaintiff and Thomas Russell ("Russell"), Bio-Dynamic's president, had entered into a finder's agreement that stated that plaintiff would receive $75,000 for the consummation of the acquisition of all of the stock of Bio-Dynamics "with or through" Loeb, Rhoades & Co. ("Loeb, Rhoades"), and/or one of its affiliates. Id. at 435-36. After execution of the finders agreement, plaintiff introduced Russell to Peter Dixon ("Dixon"), a representative of Loeb, Rhoades who, along with plaintiff, was going to assist Russell in his efforts to sell the Bio-Dynamics stock. However, approximately 10 months later, Russell told plaintiff that he was going to sell the Bio-Dynamics stock on his own. Id. at 436. In fact, unknown to plaintiff, Russell continued to work closely with Dixon for the next two years in an attempt to sell the Bio-Dynamics stock. After plaintiff made the initial introduction of Russell to Dixon, there was a long series of introductions which eventually culminated in the acquisition of BioDynamics by IMS. Id.
In addressing whether plaintiff was entitled to a finder's fee pursuant to the finder's agreement, the court recognized that the more narrow question presented was whether plaintiff was entitled to recover on the basis of Loeb, Rhoades' efforts on Russell's behalf. Id. Preliminarily, the court noted that the finder's agreement provided that the consummation of the acquisition "with" or "through" Loeb, Rhoades would fulfill the terms of the agreement with respect to the plaintiffs performance thereunder. Id. The court then recognized that there was not the slightest indication that Russell would have become even aware of the existence of IMS except "through" the diligent services performed by Dixon. Id. Thus, the court held that in view of the fact that the Bio-Dynamics stock was sold to IMS through the efforts of Loeb, Rhoades, the plaintiff was entitled to recover a finder's fee of $75,000. Id.
Similarly, in Seckendorff v. Halsey, Stuart & Co., 234 A.D. 61, 254 N.Y.S. 250, 260 (1st Dept 1931), rev'd on other grounds, 259 N.Y. 353 (1932), a plaintiff approached the investment banking firm of Rodgers Caldwell & Co. ("Rodgers Caldwell") to determine if it was interested in arranging bond financing for certain properties located in Washington, D.C. After the plaintiff described the properties, Rogers Caldwell entered into an agreement which provided that the plaintiff would receive a 1% commission on the par value of any securities' distributed to the public and 2% of any securities that Rogers Caldwell may receive as a bonus for handling the transaction. Id. at 254. After signing the agreement, Rogers Caldwell approached the investment firm of Halsey, Stuart & Co. ("Halsey") to inquire whether Halsey would be interested in heading the bond syndicate. Id. at 255. At this time, the plaintiffs agreement was brought to the attention of Halsey. However, Halsey indicated that it was not interested in participating in the bond financing. Id. at 256. Nevertheless, one year later, Halsey and Rogers Caldwell developed a different deal structure and ultimately financed the Washington D.C. properties without the plaintiffs knowledge.
In holding that the plaintiff was entitled to his commission under the agreement, the court recognized that Rogers Caldwell and Halsey were "in reality, partners or, at least, joint adventurers, and that Rogers Caldwell could legally bind its associates Halsey . . ." Id. at 255. Furthermore, the court found that without the plaintiffs introduction, there never would have been any bond issue because plaintiff himself was alone responsible for finding this business and bringing it to the defendants' attention. Id. at 260. Accordingly, the court held that the one year lapse in negotiations and different deal structure did not preclude the jury's finding that the transaction "flowed directly from" the plaintiffs original introduction. Id. at 261.
Both the Defren and Seckendorff cases illustrate that drafters of finder's fee agreements should be cognizant of the "chain of introductions" concept. Accordingly, when drafting finder's fee agreements, the drafter may wish to include a provision entitling the finder to a fee if a transaction is ultimately consummated with any party that resulted from the finder's original introduction. Such a provision may, at the very least, clarify the scope of the finder's relationship and may avoid protracted litigation should a transaction be ultimately consummated with a third-party that was not directly introduced by the finder himself.
IV. Finder's Fee Agreements and the Federal Securities Laws
The federal securities laws generally govern whether a finder must register as a broker-dealer, or conduct its activities through a registered broker-dealer. Section 3(a)(4) of the Exchange Act defines "broker" as "any person engaged in the business of effecting transactions in securities for the account of others." Section 3(a)(5) of the Exchange Act defines "dealer" as "any person engaged in the business of buying and selling securities for his own account, through a broker or otherwise." Section 15(a)(1) of the Securities Exchange Act of 1934 (the "Exchange Act") provides that it is unlawful for any broker or dealer to effect any transaction in, or to induce or attempt to induce the purchase or sale of, any security unless such broker or dealer is registered with the Securities & Exchange Commission.
As one commentator has noted, although a pure finder may "induce the purchase or sale of" a security within the meaning of Section 15(a)(1), he or she is not normally a "broker" because he or she effects no transactions. See Louis Loss, Securities Regulation, Volume VI, page 3004, (1990). In addition, the staff of the Securities and Exchange Commission has issued certain no-action letters further interpreting these provisions. For example, in a no-action letter the staff explained:
"[A]n intermediary who did nothing more than bring merger or acquisition-minded people or entities together and did not participate in negotiations or settlements between them probably would not be a broker in securities and not subject to the registration requirements of Section 15 of the Exchange Act; on the other hand, an intermediary who plays an integral role in negotiating and effecting mergers or acquisitions that involve transactions in securities generally would be deemed to be a broker and required to register with the Commission." See Henry C. Coppelt d/b/a/ May Pac Management Co., 1973-1974 Fed. Sec. L. Rep. (CCH), paragraph 79,814.
In light of the SEC's no-action letter, potential finders should be wary of performing anything more than an intermediary role in bringing parties together for the purposes of consummating business transactions involving the purchase or sale of securities, otherwise they run the risk of being deemed unregistered brokers pursuant to the federal securities laws. In particular, finders should avoid offering investment advice in connection with their services. Accordingly, finders and drafters of finder's fee agreements, should preliminarily determine what the finder's role will be in connection with any potential finder's arrangement. Furthermore, finders and drafters of finder's fee agreements should explore whether the finder's role will be restricted to merely bringing two parties together for a business transaction or whether the finder will assume a more active role in negotiating and structuring the ultimate financing arrangement. Only by examining the finder's duties can the practitioner determine whether the finder must register as a broker pursuant to the federal securities laws.
V. Conclusion
While the use of finder's fee agreements have become commonplace, finders and practitioners alike must be wary of potential pitfalls that may arise from such agreements. Before drafting any finder's agreement, the practitioner should first determine the extent of the finder's role in consummating the transaction at issue. In addition, the practitioner should evaluate whether the finder may be subject to regulation under the federal securities law. Finally, after the practitioner has addressed these considerations, the practitioner may want to include a provision in the finder's fee agreement to ensure that the finder will be compensated from transactions that culminated from a chain of introductions initiated by the finder.
AUTHOR_AFFILIATION
by
Howard S. Meyers, Esq., C.P.A.
Meyers & Heim LLP
New York, New York
AUTHOR_AFFILIATION
About the Author
AUTHOR_AFFILIATION
Howard S. Meyers, Esq., C.P.A. is a former enforcement attorney with the Securities and Exchange Commission and is currently a partner in the law firm of Meyers & Heim LLP (www.MeyersandHeim.com) in New York City. The firm's areas of specialization include: NASD and NYSE Arbitration, Securities Litigation, Investment Advisor Regulation, Hedge Fund Formation and Compliance, White Collar Criminal Defense, Private Placements and Venture Capital. Mr. Meyers, a graduate of Temple University School of Law, is a member of the American Bar Association, American Institute of CPAs, Public Investors Arbitration Bar Association and the AAA-CPA.
http://www.1000ventures.com/doc/legal/agr_sample_vc-finder_byvpa.html
THIS AGREEMENT is made this ______ day of _______________ by and between Venture Planning Associates, hereinafter referred to as ("CONSULTANT") and ____________________ hereinafter referred to as ("CLIENT").
The following represents our agreement, in consideration of each other's promises or acts with respect to this Finder's Fee Agreement. Consultant has introduced and/or will introduce potential Investors to Client in return for Client's agreement to pay Consultant (or nominee) compensation for these introductory services if an investment is made. Therefore, the parties herein agree as follows:
1. Investor. The "registered" Investors, i.e., those investors which Consultant will introduce to Client, will be named and listed by separate cover letter(s), and such letters) shall be governed by, and included under the provisions of this Agreement as if included herein.
Further, the compensation you have agreed to pay Consultant shall be payable in the event any registered investor, associate, co-investor or other entity procured by a "registered" Investor purchases from, invests in or advances funds toward Client's project and/or company. All are defined as an "Investor."
2. Initial Investment. Should an Investor purchase, invest and/or loan monies, properties, patents (or anything of value) toward any of Client's projects and/or Client's company (all defined as "Company"), regardless of the form such proceeds are so invested, then Client agrees to pay Consultant six percent (6 %) of the proceeds (or value) so purchased, invested and/or loaned to the Company. this compensation to
Consultant shall be based upon the gross amount invested, prior to any deductions, expenses or offsets of any kind. Payment will be made by cashier's checks or money order payable to the order of Consultant upon Client's receipt of funds (or value).
3. Other Investments. Should Investor invest additionally In Client's Company after the initial investment is made, Client will pay Consultant a fee of six percent (6%) of any such additional funds (or value) later invested. This fee will be paid to Consultant upon Client's receipt of funds (or value). These provisions for compensation, as to other funding, shall last for a period of three (3) years from the date any Investor first Invests In Client's Company.
4. Limitation of Service. This Agreement relates solely to Consultant's services as a finder in introducing Client to prospective investors. There are no additional services that Consultant is required to perform to be entitled to the above compensation in the event an investment is made. Consultant will not engage in any negotiations whatsoever on behalf of Client or any investor. Nor will Consultant provide Client or any investor with information which may be used as a basis for such negotiations. Consultant will have no responsibility for nor will Consultant make recommendations concerning the terms, conditions or provisions of any agreement between Client and an investor, including the manner or means of consummating the transaction.
CONSULTANT REPRESENTS THAT IT IS NOT A LICENSED SECURITIES DEALER, AND THAT THIS AGREEMENT IS NOT INTENDED FOR T14E PURPOSE OF BUYING, SELLING OR TRADING SECURITIES.
5. Miscellaneous. This Agreement shall be binding upon all parties and their respective estates, heirs, successors and permitted assigns. This Agreement may be changed only by the written consent of all parties. This Agreement may not be assigned by either party without the written consent of the other. This Agreement is the entire agreement between us. Should any legal proceeding be necessary to construe or enforce the provisions or this Agreement, then the prevailing party in such legal action shall be entitled to recover all court costs, reasonable attorney fees and costs of enforcing or collecting any judgment awarded. The judgment by any court of law that a particular section of this Agreement is illegal shall not affect the validity of the remaining provisions.
It is our intention that the laws of the State of Hawaii shall govern the validity of this Agreement. Your signature below shall bind you to the terms and conditions of this Agreement.
http://www.foreclosureforum.com/forms/14FindersFeeAgreement.pdf
Finder’s Fee Agreement 0406
Date:_____________________________________ at________________________________, California
In consideration of services to be rendered by __________________________________________ (Finder),
_______________________________________________(Client) hereby employs Finder to refer to Client a
prospective: q buyer q owner q borrower q tenant q
1. Finder agrees not to participate in or conduct any negotiations with prospects, or solicit loans on
behalf of prospects. Finder is/is not licensed by the California Department of Real Estate.
2. Finder hereby delivers to Client the name and identity of the following prospect:
Name_________________________________________________________
Address_______________________________________________________
Telephone_____________________________________________________
3. Finder hereby delivers to Client particulars concerning a real estate parcel that Client might want:
Address ____________________________________________________________________________
Legal Description_____________________________________________________________________
Other: ______________________________________________________________________________
Compensation:
4. As compensation for Finder’s referral, Client agrees to pay Finder as follows:
q $ __________________________________________________________________________________
q _____________% of Client’s commission on the first transaction.
q _____________% of the purchase price of the first transaction.
q Other:______________________________________________________________________________
5. Finder’s compensation is payable as follows:
q Upon the closing of the transaction involving the above-cited real property (#3), or upon the
closing of the first transaction involving the above-cited prospect (#2).
q Other: ______________________________________________________________________________
____________________________________________________________________________________
6. Should the prospect or the property not result in a transaction involving Client within ______months
of the date of this agreement, Client shall owe Finder no compensation.
7. Additional terms and conditions: __________________________________________________________
Understood and Agreed:
Finder:______________________________________ Client:_____________________________________
http://www.privateequitylawreview.com/2008/06/articles/legal-forms/issue-securities/finders-fee-agreement/
Finders Fee Agreement
Posted on June 17, 2008 by Geoffrey Parnass
Email This
Comments (1)
Comments (1)
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Here is a form for Finders Fee Agreement.
This agreement is useful when a company needs to hire a finder to help identify purchasers of its capital stock. The finder acts to introduce parties interested in investing in the company and providing a sales lead. The agreement contains sections regarding the acceptance of investors and the finder’s fee in the event of a sale of stock to qualified investors introduced by finder.
FINDERS FEE AGREEMENT
This is an agreement made by and between _________________, a corporation ("Company") and ______________________ ("Finder").
1. Stock. Company seeks a purchaser or purchasers of some of its capital stock from qualified sophisticated investors. Finder represents to Company that he has access to sophisticated investors and believes that he can introduce parties interested in investing in the Company.
2. Legal Compliance. In connection with introduction to investors, Finder shall comply with all applicable laws and shall specifically, but not as a limitation thereof, comply with the requirements set forth in Rule 506 of Regulation D under the Securities Act of 1935, as amended. Finder represents and warrants that it has all permits, licenses and registrations required to perform the services hereunder.
3. Nonexclusive Right. For a period of 90 days after the date hereof, Finder shall have the non-exclusive right to introduce prospective investors to the Company who meet the definition of "accredited investors" under SEC Rule 506, and who are not already known to the Company ("Qualified Investors"). Finder shall confirm to the Company that the introduction has been made in writing within 10 days of the introduction.
4. Acceptance of Investors. The decision to accept a Qualified Investor as a shareholder in the Company is in the sole discretion of the Company.
5. Fee. In the event that a Qualified Investor is accepted by the Company, and the Qualified Investor closes the purchase of Company stock within six (6) months of the date hereof, then the Company shall pay Finder a finder's fee equal to ___% of the dollar amount of securities purchased by the Qualified Investors. The fee shall be paid within 30 days after the closing of the sale of stock to the Qualified Investor. Finder shall notify Qualified Investors that he will receive a finder's fee in the event of the sale of stock to Qualified Investors.
6. Miscellaneous. This letter shall be governed by the substantive laws of the State of _____________ without regard to conflict of law principles. This letter constitutes the entire understanding and agreement between the parties hereto and their affiliates with respect to its subject matter and supersedes all prior or contemporaneous agreements, representations, warranties and understandings of such parties (whether oral or written). No promise, inducement, representation or agreement, other than as expressly set forth herein, has been made to or by the parties hereto. This letter may be amended only by written agreement,
signed by the parties to be bound by the amendment. Evidence shall be inadmissible to show agreement by and between such parties to any term or condition contrary to or in addition to the terms and conditions contained in this letter. This letter shall be construed according to its fair meaning and not strictly for or against either party.
Date: ____________________
Company: ___________________ Finder: ____________________
Signature
By: ___________________ _____________________
Printed Name
Title: ___________________
Address: ___________________ Address: _____________________
___________________ _____________________
___________________ _____________________
http://www.allbusiness.com/business-finance/equity-funding-stock/192-1.html
Finder's Fee Agreement $25.00
This is an agreement where the company agrees to pay a fee to a finder of investors who purchase stock in the company.
Format: Microsoft Word
FINDERS FEE AGREEMENT
This is an agreement made by and between _________________, a corporation ("Company") and ______________________ ("Finder").
Stock. Company seeks a purchaser or purchasers of some of its capital stock from qualified sophisticated investors. Finder represents to Company that he has access to sophisticated investors and believes that he can introduce parties interested in investing in the Company.
Legal Compliance. In connection with introduction to investors, Finder shall comply with all applicable laws and shall specifically, but not as a limitation thereof, comply with the requirements set forth in Rule 506 of Regulation D under the Securities Act of 1935, as amended. Finder represents and warrants that it has all permits, licenses and registrations required to perform the services hereunder.
Nonexclusive Right. For a period of 90 days after the date hereof, Finder shall have the non-exclusive right to introduce prospective investors to the Company who meet the definition of "accredited investors" under SEC Rule 506, and who are not already known…
Acceptance of Investors. The decision to accept a Qualified Investor as a shareholder in the Company is in the sole discretion of the Company.
Fee. In the event that a Qualified Investor is accepted by the Company, and the Qualified Investor closes the purchase of Company stock within six (6) months of the date hereof, then the Company shall pay Finder a finder’s fee equal to…
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Finder's fee agreements: Potential pitfalls and considerations
By Meyers, Howard S
Publication: The Attorney - CPA
Date: Monday, July 1 2002
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The rush towards capital formation and strategic alliances often leads companies to engage the services of a "finder" to assist them in locating investors and raising capital. However, unsuspecting finders may become unnecessarily subject to regulation under the federal securities laws. This article examines how finder's fee agreements are treated under New York law generally and what potential pitfalls the drafter of finder's fee agreements should avoid.
I. Background
New York law recognizes a finder as "someone who finds, interests, introduces and brings parties together for a business transaction that the parties themselves negotiate and consummate." See Moore v. Sutton Resources, Ltd., 1998 WL 67664, *4 (S.D.N.Y. 1998) (citing Northeast General Corporation v. Wellington Advertising, Inc., 82 N.Y.2d 158, 163, 604 N.Y.S.2d 1 (1993)). Unlike a broker, a finder has no duty to bring the parties to an agreement, but instead acts as an intermediary or middleman. See Moore v. Sutton Resources, Ltd., 1998 WL 67664, *4. As one court has explained, "[f]inders find potential buyers or sellers, stimulate interest and bring parties together. Brokers bring the parties to an agreement on particular terms." See Train v. Ardshiel Assoc., Inc., 635 F.Supp. 274, 279 (S.D.N.Y. -- 1986), aff'd without opinion, 805 F.2d 391 (2d Cir. 1986). In the corporate financing context, a finder's compensation is generally based on a percentage of the amount invested by one party or, in circumstances involving mergers and acquisitions, a percentage of the transaction value.
II. Causation Requirement
For a finder to recover under the typical finder's agreement, there must be a causal relation between the introduction of the parties and the ultimate conclusion of the transaction. See Moore v. Sutton Resources, Ltd., 1998 WL 67664, *4; see also Simon v. Electrospace Corp., 28 N.Y.2d 136, 142, 320 N.Y.S.2d 225, 229 (1971); Edward Gottlieb, Inc. v. City & Commercial Communications PLC, 200 A.D.2d 395, 606
N.Y.S.2d 148, 150 (1st Dept 1994); Karelitz v. Damson Oil Corp., 820 F.2d 529, 531 (Ist Cir. 1987) (Breyer, J.) (applying New York law). Moreover, courts have consistently required that the finder show more than that his services was a necessary "but-for" condition. See Moore v. Sutton Resources, Ltd., 1998 WL 67664, *4, see also Karelitz v. Damson Oil Corp., 820 F.2d at 531. Rather, the finder must show that the final deal flowed directly from the introduction. See Moore v. Sutton Resources, Ltd., 1998 WL 67664, *4. Accordingly, the finder typically must establish a continuing connection between the finder's service and the ultimate transaction. See Moore v. Sutton Resources, Ltd., 1998 WL 67664, *4.
One commentator has observed that this continuing connection is not dependent upon the finder's participation in negotiations, and a finder's fee may be payable even though a third person brings the party to agreement. Thus, if a finder introduces a prospective investor who enters into negotiations that are abandoned and later resumed, the causation requirement is probably satisfied if the renewed negotiations stem from the original introduction. See B. Fox & E. Fox, Corporate Acquisitions and Mergers, at 30.04(3)(1986).
For example, in Simon v. Electrospace Corp., 32 A.D.2d 62, 299 N.Y.S.2d 712 (1st Dep't 1969), reversed as to damages, 28 N.Y.2d 136, 142, 320 N.Y.S.2d 225, 229 (1971), a finder introduced the defendant, Electrospace Corp. ("Electrospace"), to Louis Taxin ("Taxin"), for the purpose of arranging a merger with one of Taxin's companies. The finder had entered into an agreement which provided that "in the event you can effect the sale of the stock of this corporation . . . by introduction to a party or parties with whom a transaction will be thereafter consummated, then 5% of the gross value of the transaction will be paid as a commission to you at the time of closing." Although nothing came of the initial meetings, Electrospace and Taxin resumed their negotiations eighteen months later. The Court of Appeals, in affirming the Appellate Court's decision that the finder was entitled to a finder's fee, held that the evidence was sufficient to establish a continuing connection between the finder's initial efforts and the merger that came about. See Simon v. Electrospace Corp., 28 N.Y.2d 136, 142, 320 N.Y.S.2d 225, 229 (1971).
III. Chain of Introductions Concept
Some courts have directed the payment of a finder's fee even in situations where the consummation of the transaction at issue culminated not directly from the finder's initial introduction but indirectly from a chain of introductions initiated by the finder's introduction. For example, Defren v. Russell, 71 A.D.2d 416, 422 N.Y.S.2d 433 (Ist Dep't 1979), involved a finder's fee dispute in connection with a series of introductions that allegedly culminated in the acquisition of BioDynamics, Inc. ("Bio-Dynamics") by IMS International, Inc. ("IMS"). The plaintiff and Thomas Russell ("Russell"), Bio-Dynamic's president, had entered into a finder's agreement that stated that plaintiff would receive $75,000 for the consummation of the acquisition of all of the stock of Bio-Dynamics "with or through" Loeb, Rhoades & Co. ("Loeb, Rhoades"), and/or one of its affiliates. Id. at 435-36. After execution of the finders agreement, plaintiff introduced Russell to Peter Dixon ("Dixon"), a representative of Loeb, Rhoades who, along with plaintiff, was going to assist Russell in his efforts to sell the Bio-Dynamics stock. However, approximately 10 months later, Russell told plaintiff that he was going to sell the Bio-Dynamics stock on his own. Id. at 436. In fact, unknown to plaintiff, Russell continued to work closely with Dixon for the next two years in an attempt to sell the Bio-Dynamics stock. After plaintiff made the initial introduction of Russell to Dixon, there was a long series of introductions which eventually culminated in the acquisition of BioDynamics by IMS. Id.
In addressing whether plaintiff was entitled to a finder's fee pursuant to the finder's agreement, the court recognized that the more narrow question presented was whether plaintiff was entitled to recover on the basis of Loeb, Rhoades' efforts on Russell's behalf. Id. Preliminarily, the court noted that the finder's agreement provided that the consummation of the acquisition "with" or "through" Loeb, Rhoades would fulfill the terms of the agreement with respect to the plaintiffs performance thereunder. Id. The court then recognized that there was not the slightest indication that Russell would have become even aware of the existence of IMS except "through" the diligent services performed by Dixon. Id. Thus, the court held that in view of the fact that the Bio-Dynamics stock was sold to IMS through the efforts of Loeb, Rhoades, the plaintiff was entitled to recover a finder's fee of $75,000. Id.
Similarly, in Seckendorff v. Halsey, Stuart & Co., 234 A.D. 61, 254 N.Y.S. 250, 260 (1st Dept 1931), rev'd on other grounds, 259 N.Y. 353 (1932), a plaintiff approached the investment banking firm of Rodgers Caldwell & Co. ("Rodgers Caldwell") to determine if it was interested in arranging bond financing for certain properties located in Washington, D.C. After the plaintiff described the properties, Rogers Caldwell entered into an agreement which provided that the plaintiff would receive a 1% commission on the par value of any securities' distributed to the public and 2% of any securities that Rogers Caldwell may receive as a bonus for handling the transaction. Id. at 254. After signing the agreement, Rogers Caldwell approached the investment firm of Halsey, Stuart & Co. ("Halsey") to inquire whether Halsey would be interested in heading the bond syndicate. Id. at 255. At this time, the plaintiffs agreement was brought to the attention of Halsey. However, Halsey indicated that it was not interested in participating in the bond financing. Id. at 256. Nevertheless, one year later, Halsey and Rogers Caldwell developed a different deal structure and ultimately financed the Washington D.C. properties without the plaintiffs knowledge.
In holding that the plaintiff was entitled to his commission under the agreement, the court recognized that Rogers Caldwell and Halsey were "in reality, partners or, at least, joint adventurers, and that Rogers Caldwell could legally bind its associates Halsey . . ." Id. at 255. Furthermore, the court found that without the plaintiffs introduction, there never would have been any bond issue because plaintiff himself was alone responsible for finding this business and bringing it to the defendants' attention. Id. at 260. Accordingly, the court held that the one year lapse in negotiations and different deal structure did not preclude the jury's finding that the transaction "flowed directly from" the plaintiffs original introduction. Id. at 261.
Both the Defren and Seckendorff cases illustrate that drafters of finder's fee agreements should be cognizant of the "chain of introductions" concept. Accordingly, when drafting finder's fee agreements, the drafter may wish to include a provision entitling the finder to a fee if a transaction is ultimately consummated with any party that resulted from the finder's original introduction. Such a provision may, at the very least, clarify the scope of the finder's relationship and may avoid protracted litigation should a transaction be ultimately consummated with a third-party that was not directly introduced by the finder himself.
IV. Finder's Fee Agreements and the Federal Securities Laws
The federal securities laws generally govern whether a finder must register as a broker-dealer, or conduct its activities through a registered broker-dealer. Section 3(a)(4) of the Exchange Act defines "broker" as "any person engaged in the business of effecting transactions in securities for the account of others." Section 3(a)(5) of the Exchange Act defines "dealer" as "any person engaged in the business of buying and selling securities for his own account, through a broker or otherwise." Section 15(a)(1) of the Securities Exchange Act of 1934 (the "Exchange Act") provides that it is unlawful for any broker or dealer to effect any transaction in, or to induce or attempt to induce the purchase or sale of, any security unless such broker or dealer is registered with the Securities & Exchange Commission.
As one commentator has noted, although a pure finder may "induce the purchase or sale of" a security within the meaning of Section 15(a)(1), he or she is not normally a "broker" because he or she effects no transactions. See Louis Loss, Securities Regulation, Volume VI, page 3004, (1990). In addition, the staff of the Securities and Exchange Commission has issued certain no-action letters further interpreting these provisions. For example, in a no-action letter the staff explained:
"[A]n intermediary who did nothing more than bring merger or acquisition-minded people or entities together and did not participate in negotiations or settlements between them probably would not be a broker in securities and not subject to the registration requirements of Section 15 of the Exchange Act; on the other hand, an intermediary who plays an integral role in negotiating and effecting mergers or acquisitions that involve transactions in securities generally would be deemed to be a broker and required to register with the Commission." See Henry C. Coppelt d/b/a/ May Pac Management Co., 1973-1974 Fed. Sec. L. Rep. (CCH), paragraph 79,814.
In light of the SEC's no-action letter, potential finders should be wary of performing anything more than an intermediary role in bringing parties together for the purposes of consummating business transactions involving the purchase or sale of securities, otherwise they run the risk of being deemed unregistered brokers pursuant to the federal securities laws. In particular, finders should avoid offering investment advice in connection with their services. Accordingly, finders and drafters of finder's fee agreements, should preliminarily determine what the finder's role will be in connection with any potential finder's arrangement. Furthermore, finders and drafters of finder's fee agreements should explore whether the finder's role will be restricted to merely bringing two parties together for a business transaction or whether the finder will assume a more active role in negotiating and structuring the ultimate financing arrangement. Only by examining the finder's duties can the practitioner determine whether the finder must register as a broker pursuant to the federal securities laws.
V. Conclusion
While the use of finder's fee agreements have become commonplace, finders and practitioners alike must be wary of potential pitfalls that may arise from such agreements. Before drafting any finder's agreement, the practitioner should first determine the extent of the finder's role in consummating the transaction at issue. In addition, the practitioner should evaluate whether the finder may be subject to regulation under the federal securities law. Finally, after the practitioner has addressed these considerations, the practitioner may want to include a provision in the finder's fee agreement to ensure that the finder will be compensated from transactions that culminated from a chain of introductions initiated by the finder.
AUTHOR_AFFILIATION
by
Howard S. Meyers, Esq., C.P.A.
Meyers & Heim LLP
New York, New York
AUTHOR_AFFILIATION
About the Author
AUTHOR_AFFILIATION
Howard S. Meyers, Esq., C.P.A. is a former enforcement attorney with the Securities and Exchange Commission and is currently a partner in the law firm of Meyers & Heim LLP (www.MeyersandHeim.com) in New York City. The firm's areas of specialization include: NASD and NYSE Arbitration, Securities Litigation, Investment Advisor Regulation, Hedge Fund Formation and Compliance, White Collar Criminal Defense, Private Placements and Venture Capital. Mr. Meyers, a graduate of Temple University School of Law, is a member of the American Bar Association, American Institute of CPAs, Public Investors Arbitration Bar Association and the AAA-CPA.
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