A finder's agreement is a legal agreement between a business and a contractor or other company that outlines the terms and conditions of their working business relationship. The finder's agreement is used when a company hires another contractor or business to find things like investors or real estate transactions. Finders fees are usually associated with finder's agreements.
When looking at a finder's agreement, it may outline terms for the duties of the finder and the scope of their work, the manner of compensation or fees they will require, and what happens in the event the agreement is terminated. This kind of agreement is usually in place for a company to receive help finding new leads, clients, or potential deals.
Below is a list of common sections included in Finder's Agreements. These sections are linked to the below sample agreement for you to explore.
This Finder’s Agreement (this “Agreement”) is made as of April 3, 2006 between Gabriel Technologies, Inc., a Delaware corporation (the “Company”), and Empire Financial Group, Inc., a Florida corporation (the “Finder”). The Finder and the Company agree:
1.Engagement of Finder : The Company hereby engages the Finder, and the Finder hereby accepts such engagement. to act as the Company’s Finder with respect to sales by the Company in a private placement transaction (the “Offering”) of up to $3 million aggregate principal amount of’ Equity, Equity-Related or Debt Securities (the “Securities”) of the Company to the investors during the term of this Agreement as set forth in Section 5 .
2.Offering Procedures : The Finder will introduce the Company to investors who the Finder reasonably believes to be “accredited investors,” as that term is defined in Rule 501 of Regulation D promulgated under the Securities Act of 1933, as amended (the “ 1933 Act ”), with whom the Finder has a pre-existing substantive relationship (the “Offerees”).
3.Finder’s Compensation : In consideration for the services rendered by the Finder hereunder, the Company shall pay to the Finder, or cause the Finder to be paid, compensation as provided in this section within 3 days of the Company’s receipt of funds from the Offerees.
(a)Cash Compensation : The Company shall pay to the Finder cash compensation equal to nine percent (9%) of the gross Offering funds received in the Offering.
(b)Warrants : The Finder shall receive fifty percent (50%) warrant compensation. The warrant calculation translates to 500,000 warrants per $1 million raised. The warrant’s strike shall equal the strike, expiration, and registration rights of any warrants sold to Offerees in the Offering, and if the Offering does not provide for the issuance of warrants, then the warrants issued to the Finder shall have a strike price equal to the Offering price of any Equity or Equity-Related Securities sold, have a five-year term and cashless exercise after one year if the underlying shares are not then registered. The warrant shares shall be subject to equitable adjustment for stock splits, stock dividends and similar events. The warrant shares shall have “piggyback” registration rights.
(c)If, at any time prior to one year following the end of the Offering (the “Term”) the Company directly or indirectly sells, in a private transaction, any type of security to an investor with whom negotiations were initiated by the Exclusive Finder during the Term, the Company shall pay the Exclusive Finder the compensation to which it would be entitled under paragraph 3 if the transaction had occurred during the Term.
4.For purposes of determining the Finder’s compensation under this Section 3 , the gross offering funds received in the Offering(s) shall include any amounts paid to the Company by investors in respect to an exercise or conversion of any of the Securities or Warrants, including the value allocated to any securities not issued pursuant to a “cashless exercise” or similar provision, whenever actually received by the Company.
5. Certain Matters Relating to Finder’s Duties : (a)The Finder’s responsibilities shall be limited to introducing potential investors to the Company, and the Finder shall not have authority to offer or sell the Securities to any potential investor. Finder shall not use any general solicitation or general advertising within the meaning of the applicable securities laws in connection with any offering. The Finder shall have no responsibility to participate or assist in any negotiations between any potential investor and the Company. The Finder will have no responsibility to act, and the parties contemplate that the Finder will not act, as a broker or dealer with respect to the offer or sale of the Securities. Further, the Finder shall have no responsibility for fulfilling any SEC reporting or filing requirements as relates to the Company provided however, Finder agrees to provide Company with reasonable assistance related to any registration, qualification or other requirements of applicable securities laws and other regulatory matters, upon request of the Company.
(b)The Finder agrees to introduce the Company to Offerees only in states in which the Finder has been advised by the Company that offers and sales of Securities can be legally made by the Company.
(c)The Finder shall perform its duties under this Agreement in a manner consistent with the instructions of the Company. Such performance shall include, but not be limited to, the delivery to each Offeree a current copy of the Private Placement Memorandum, Subscription Agreement and any Offering Questionnaire and/or similar documents provided to the Finder by the Company, as such documents may be amended from time to time by the Company and delivered to the Finder. The Finder shall consecutively number each COPY of the Private Placement Memorandum (which will include the first letter of the Finder’s name or other identifying mark sufficient to designate an Offeree introduced by the Finder); keep a. log of when and to whom each copy of the Private Placement Memorandum is given, with the Private Placement Memorandum numbers; maintain a copy of any written information the Finder obtains regarding the suitability of each Offeree; and only use the Private Placement Memorandum in introducing Offerees to the Company. The Finder shall provide this log and all such written information to the Company at any time and promptly upon request of the Company at the termination of this Agreement. The Company shall, promptly following execution of this Agreement, provide the Finder with a written list of prospective Offerees that the Company does not want the Finder to contact. The Finder agrees to not contact the persons on such list, and the Finder shall not be entitled to the compensation set forth in Section 3 with respect to any investment made by such person in the Company’s Securities.
(d)The Finder is and will hereafter act as an independent contractor and not, as an employee of the Company and nothing in this Agreement shall be interpreted or construed to create any employment, partnership, joint venture, or other relationship between the Finder and the Company. The Finder will not hold itself out as having, and will not state to any person that the Finder has, any relationship with the Company other than as an independent contractor. The Finder shall have no right or power to find or create any liability or obligation for or in the name of the Company or to sign any documents on behalf of the Company.
6.Termination of Agreement . Either party may terminate this Agreement by notifying the other party in writing upon a material breach by that other party, unless such breach is curable and is in fact cured within 15 days after such notice. This Agreement will otherwise terminate upon completion or termination of the Offering. The Company may terminate this Agreement following ninety (90) days after the date hereof upon written notice. Notwithstanding the foregoing, all provisions of this Agreement other than section 1, 2 and 3 shall survive the termination of this Agreement with respect to Offerees who the Finder introduces to the Company prior to any termination with respect to the Offering. The Finder shall be entitled to compensation under section 3 based on investments made by such Offerees prior to the termination of this Agreement or at any time within one year thereafter.
Indemnification . The Company and the Finder each shall indemnify and defend the other and the other’s affiliates, directors, officers, employees, agents, consultants, attorneys, accountants and other representatives (each an “ Indemnified Person” ) and shall hold each Indemnified Person harmless, to the fullest extent permitted by law, from and against any and all claims, liabilities, losses, damages and expenses (including reasonable attorney’s fees and costs), as they are incurred, in connection with the Offering, resulting from the indemnifying party’s negligence, bad faith or willful misconduct in connection with the Offering, any violation by the indemnifying party (not caused by an Indemnified Person) of Federal or state securities laws in connection with the Offering, or any breach by the indemnifying party of this Agreement. In case any litigation or proceeding shall be brought against any Indemnified Person under this section, the indemnifying party shall be entitled to assume the defense of such litigation or proceeding with counsel of the indemnifying party’s choice at its expense (in which case the indemnifying party shall not be responsible for the fees and expenses of any separate counsel retained by such Indemnified Person, except in the limited circumstances described below in this section); provided, however, that such counsel shall be reasonably satisfactory to the Indemnified Person. Notwithstanding the indemnifying party’s election to assume the defense of such litigation or proceeding (a) such Indemnified Person shall have the right to employ separate counsel and to participate in the defense of such litigation or proceeding, and (b) the indemnifying party shall bear the reasonable fees, costs and expenses of separate counsel if (but only if) the use of counsel selected by the indemnifying party to represent such indemnified Person would present such counsel with a conflict of interest under applicable laws or rules of professional conduct.