EXHIBIT 1.1
ATLAS CAPITAL SERVICES, INC.
June 4, 2001
Xx. Xxxx Xxxxxx
Chief Financial Officer
Irvine Sensors Corp
0000 Xxxxxxx Xxxxxx
Xxxxx Xxxx, XX 00000
Re: Finder Agreement
----------------
Dear Xxxx:
This letter confirms the agreement ("Agreement") between Irvine Sensors
---------
Corporation and its affiliated companies (collectively the "Company") to retain
-------
Atlas Capital Services, Inc. ("Atlas"), a registered broker-dealer and member of
the NASD to provide the services described below.
1. Services
--------
1.1 Atlas has and shall continue to use its reasonable best
efforts to introduce to the Company a limited number of corporations,
partnerships, mutual funds, hedge funds, accredited investors, investment
partnerships, securities firms, lending and other institutions and entities
(collectively "Entities") which may engage in or provide a "Transaction" (as
defined below) to the Company. As used herein, the term "Entities" also means
and includes any party, which is directly or indirectly connected with or
related to one of the Entities described above including, without limitation,
all affiliates as well as any referral from any of the Entities, any client or
customer of any of the Entities, and any investor in any of the Entities.
1.2 Except as set forth below, all services provided by Atlas under
this Agreement shall be at Atlas's cost and risk. Atlas's sole compensation, if
any, shall be a "Transaction Fee" (as set forth in Section 4 below) upon
consummation of a Transaction in any form with any Entity introduced to the
Company by Atlas.
1.3 The Company acknowledges that Atlas's responsibilities shall be
limited to the foregoing, and that Atlas shall have no (i) authority to offer or
sell securities of the Company to any potential Entity, (ii) responsibility to
participate or assist in any negotiations between any potential Entity and the
Company, and (iv) no responsibility for fulfilling any reporting or filing
requirements of the Company pursuant to applicable federal and state securities
laws. The foregoing notwithstanding, if any filings or submissions are required
of Atlas by the NASD in connection with any Transaction, Atlas shall take all
steps necessary and proper to obtain required clearances. In addition, the
Company expressly acknowledges and agrees that Atlas's obligations hereunder are
on a reasonable best effort basis only and that the execution of this Agreement
does not constitute a commitment by Atlas to purchase or sell the securities of
the Company.
1.4 Notwithstanding anything in this Agreement to the contrary, the
Company shall have the sole and absolute discretion to accept or not accept the
terms of any Transaction. Neither the Company nor any of its affiliates shall
have any liability whatsoever to Atlas or any other person or entity resulting
from its decision not to enter into a proposed Transaction, regardless of the
terms of the proposed Transaction.
2. Term
----
This Agreement shall take effect immediately and shall continue for a
term of one hundred twenty (120) days unless terminated by either party upon
thirty (30) days prior written notice to the other or unless extended by mutual
written agreement of the Company and Atlas. Notwithstanding the foregoing, the
parties hereto agree that the term "Entities" shall include any Entities
introduced to the Company by Atlas prior to the date of this Agreement.
3. Information
-----------
In connection with Atlas's engagement hereunder, the Company will
furnish Atlas and any prospective Entity with any information concerning the
Company that Atlas reasonably deems appropriate and will provide Atlas and
prospective Entities with reasonable access to the Company's officers,
directors, accountants, counsel and other advisors. In addition, Atlas shall be
kept fully informed of any events that are reasonably likely to have a material
effect on the financial condition of the Company. The Company represents and
warrants to Atlas that all such information concerning the Company and all
private placement materials, whether in the form of a letter, circular,
memorandum, notice or otherwise to be used in placing the securities, to the
extent that the Securities are placed in a private placement, or an appropriate
subscription agreement, to the extent that the securities to be placed have been
publicly registered ("Materials") will, to the best of its knowledge and belief,
---------
be true and accurate in all material respects and will not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein not misleading in light of the circumstances
under which such statements are made. The Company acknowledges and agrees that
Atlas will not undertake any "due diligence" investigation and will be using and
relying upon the information supplied by the Company and its officers, agents
and others, the Materials, and any other publicly available information
concerning the Company.
4. Transaction Fee
---------------
In consideration of Atlas's services, Atlas shall be entitled to
receive, and the Company hereby agrees to pay to Atlas, the following:
4.1 Atlas shall receive a Transaction Fee in cash or certified check
equal to 5% of the principal amount of the Transaction Amount (as defined
below), and shall be paid as proceeds are received by the Company from any
Transaction with an Entity introduced to the Company by Atlas. Any portion of
Atlas's Transaction Fee that is attributable to proceeds to be received by the
Company upon the occurrence of a future event, or the satisfaction of a
contingency shall be paid when the event occurs or the contingency is satisfied.
4.2 In addition to the foregoing, upon consummation of a Transaction,
the Company will issue to Atlas and/or its designee(s) warrants (the "Warrants")
to purchase securities comparable to those purchased by the Entities (which
securities may include common stock, units, warrants or other securities) in an
amount equal to 5% of the securities purchased by the Entities. The Warrants
shall be purchased for a nominal sum and shall be exercisable for a period of
five years from the date of closing with an exercise price equal to the highest
effective per security price paid for such security or securities in the
Transaction or to be paid upon exercise or conversion of any security or
securities purchased in the Transaction by the Entities engaging in the
Transaction. The terms of the Warrants shall be set forth in one or more
agreements (the "Warrant Agreements") in form and substance reasonably
satisfactory to Atlas and the Company. The Warrant Agreements shall contain
customary demand and piggyback registration rights consistent with the
registration rights granted to the Investors.
4.3 Atlas's Transaction Fee shall have been earned and shall be
payable to Atlas upon consummation of any Transaction which occurs as a result
of this Agreement with any Entity introduced to the Company by Atlas in which a
Transaction was made in whole or in part (1) prior to or during the term of this
-----------
Agreement (hereafter "Phase I"); or, (2) within 18 months following the
termination date of this Agreement (hereafter "Phase II") with regard to an
Entity introduced to the Company by Atlas with which Atlas or the Company has
had any communications during Phase I.
4.4 As used herein, the term Transaction Amount" shall mean the gross
amount of all consideration, including without limitation to, all cash, cash
equivalents, notes, restrictive covenant agreements, employment agreements,
stock, warrants, and/or assets that is exchanged or provided to or by the
Company or its shareholders, affiliates, or subsidiaries in a Transaction, or
any entities formed in or which results from a Transaction. The Transaction
amount shall be cumulative (e.g., if the Company receives initial consideration
and then subsequently received royalty an/or licensing fees, warrant exercise
funds, etc,.) such that the Transaction Amount shall include all such
consideration.
5. Transaction.
-----------
5.1 As used herein, the term "Transaction" means any business
agreement, arrangement or transaction or series or combinations thereof which
may include sales or exchanges of stock, warrants, or assets, or the making of
loans, leases and other arrangements of every type and description, by which,
directly or indirectly, an interest in the Company, its affiliates, or any
business with common management with the Company, or any of their respective
assets, capital stock or other securities is transferred to another Entity,
including, without limitation, by way of or in the form of, an investment,
merger, acquisition, sale or exchange of stock or assets, lease of assets, with
or without purchase option, joint venture, licensing arrangements, minority
investment, or partnership.
5.2 As used herein, the term "Transaction" also means any business
agreement,
arrangement or transaction or series or combinations thereof which may include
sales or exchanges of stock, warrants, or assets, or the making of loans, leases
and other arrangements of every type and description by which, directly or
indirectly, an interest in any Entity is transferred to the Company, its
affiliates, or any business with common management with the Company, or any of
their respective assets, capital stock or other securities, including, without
limitation, by way of and in the form of an investment, merger, acquisition,
sale or exchange of stock or assets. lease of assets, with or without purchase
option, joint venture, licensing arrangements, minority investment, or
partnership.
6. Non-Circumvent
--------------
In order to prevent the Company from circumventing Atlas's position
with an Entity, the Company agrees that whether or not any Transaction
concerning the Company is completed, for a two-year period commencing from the
date of this Agreement, without the prior express written consent of Atlas,
neither the Company nor any of its officers, employees, or agents will (a)
contact directly or indirectly any person or Entity introduced to the Company by
Atlas during the term of this Agreement; or (b) circumvent Atlas's position with
respect to the Company or said Entity in any manner whatsoever.
7. Non-Exclusive
-------------
Each party acknowledges and agrees that the rights granted to the
other in this Agreement are non-exclusive, and that, without limiting the
generality of the foregoing, nothing in this Agreement shall be deemed or
construed to prohibit either party herein from participating in similar business
arrangements as those described herein.
8. Indemnification
---------------
The Company shall indemnify Atlas under its standard indemnification
provisions attached hereto as Schedule A and made a part hereof.
----------
9. General Provisions
------------------
9.1 This Agreement may not be amended or modified except in writing
signed by both parties to the Agreement and shall be governed by and construed
in accordance with the laws of the State of New York. Any and all claims,
disputes, or controversies arising out of this Agreement will be resolved by
arbitration before the NASD and that with respect to this Agreement, a party may
seek injunctive relief and ancillary damages before the NASD. Each party
irrevocably consents to subject matter jurisdiction before the NASD. The parties
shall restrict themselves to claims for compensatory damages and no claims shall
be made by any party for punitive or similar damages. The parties agree that any
award or decision by the NASD shall be final and binding upon the parties and a
judgement may be entered in a court of competent jurisdiction upon such award or
decision. The parties agree that the situs of any arbitration or legal
proceedings hereunder shall be the City of New York.
9.2 All notices and other communications hereunder shall be deemed
given upon (a) the sender's confirmation of receipt of a facsimile transmission
to the recipient's facsimile number set forth below, (b) confirmed delivery by a
standard overnight carrier to the recipient's address set forth below, (c)
delivery by hand to the recipient's address set forth below or (c) the
expiration of five (5) business days after the day mailed in the United States
by certified or registered mail, postage prepaid, return receipt requested,
addressed to the recipient's addresses set forth below (or, in each case, to or
at such other facsimile number or address for a party as such party may specify
by notice given in accordance with this Section 9.2):
(a) If to the Company, to:
Xx. Xxxx X. Xxxxxx, Xx.
Chief Financial Officer
Irvine Sensors Corp.
0000 Xxxxxxx Xxxxxx
Xxxxx Xxxx, XX 00000
Fax: (000) 000-0000
(b) If to Atlas, to:
Xxxxx Xxxxxxxxxx
Executive Vice-President
Atlas Capital Services, Inc.
000 Xxxxxxxx, Xxxxx 000
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
9.3 This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their successors and assigns.
9.4 Atlas shall perform its services hereunder as an independent
contractor and not as an employee of the Company or an affiliate thereof. It is
expressly understood and agreed to by the parties hereto that Atlas shall have
no authority to act for, represent or bind the Company or any affiliate thereof
in any manner, except as may be agreed to expressly by the Company in writing
from time to time.
9.5 The Company hereby represents that it is a sophisticated business
enterprise that has retained Atlas for the limited purposes set forth in this
letter, and the parties acknowledge and agree that their respective rights and
obligations are contractual in nature. Each party disclaims an intention to
impose fiduciary obligations on the other by virtue of the engagement
contemplated by this letter.
9.6 Execution of this letter by the Company, and return of a signed
copy, by fax or otherwise to Atlas, completes this Agreement between Atlas and
the Company. Atlas will begin work with the Company to provide the services
contemplated herein.
If the foregoing is acceptable to you, please sign and return the
enclosed copy of this letter to my attention.
Very truly yours.
ATLAS CAPITAL SERVICES, INC.
By: /s/ Xxxxx Xxxxxxxxxx
-------------------------------
Name: Xxxxx Xxxxxxxxxx
Title: Executive Vice-President
AGREED AND ACCEPTED:
IRVINE SENSORS CORPORATION
By: /s/ Xxxx X. Xxxxxx, Xx.
---------------------------
Name: Xxxx X. Xxxxxx, Xx.
Title: Chief Financial Officer
Date: June 5, 2001
-------------------------
Schedule A
Atlas Capital Services, Inc.
000 Xxxxxxxx, Xxxxx 000
Xxx Xxxx, XX 00000
Ladies and Gentlemen:
In connection with our engagement of Atlas Capital Services, Inc.
("Atlas") as a Finder, we hereby agree to indemnify and hold harmless Atlas and
its affiliates, and the respective directors, officers, shareholders, agents and
employees of Atlas (collectively the "Indemnified Persons"), from and against
any and all claims, actions, suits, proceedings (including those of
shareholders), damages, liabilities and expenses as incurred by any of them
(including the reasonable fees and expenses of counsel) which (A) relate to or
arise out of (i) any actions taken or omitted to be taken (including any untrue
statements made to any Indemnified Person in connection with our engagement of
Atlas, or (B) otherwise relate to or arise out of Atlas's activities on our
behalf under Atlas's engagement, including any action by Atlas to collect
amounts owed to it in connection therewith, and we shall reimburse any
Indemnified Person for all expenses (including the reasonable fees and expenses
of counsel) as incurred by such Indemnified Person in connection with
investigating, preparing or defending any such claim, action , suit or
proceeding (collectively a "Claim"), in connection with pending or threatened
litigation in which any Indemnified Person is a party. We will not, however, be
responsible for any Claim which is finally judicially determined to have
resulted exclusively from the gross negligence or willful misconduct of any
person seeking indemnification hereunder. We further agree that no Indemnified
Person shall have any liability to us for or in connection with our engagement
of Atlas except for any Claim incurred by us solely as a direct result of any
Indemnified Person's gross negligence or willful misconduct.
We further agree that we will not, without the prior written consent of
Atlas, settle, compromise or consent to the entry of any judgment in any pending
or threatened Claim in respect of which indemnification may be reasonably sought
hereunder (whether or not any Indemnified Person is an actual or potential party
to such Claim), unless such settlement, compromise or consent includes an
unconditional, irrevocable release of each Indemnified Person against whom such
claim may be brought hereunder from any and all liability arising out of such
claim.
Promptly upon receipt by an Indemnified Person of notice of any
complaint or the assertion or institution of any Claim with respect to which
indemnification is being sought hereunder, such Indemnified Person shall notify
us in writing of such complaint or of such assertion or institution but failure
to do so notify us shall not relieve us from any obligations we may have
hereunder, unless and only to the extent such failure results in the forfeiture
by us of substantial rights and defenses, and will not in any event relieve us
from any other obligation or liability we may have to any Indemnified Person, we
will assume the defense of such Claim, including the employment of counsel
reasonably satisfactory to such Indemnified Person and the payment of reasonable
fees and expenses of such counsel. In the event, however, that such Indemnified
Person reasonably determines that having common counsel with the Company and/or
another Indemnified Person would present such counsel with a conflict of
interest or if the defendant in, or target of, any such Claim, includes an
Indemnified Person and us, and such Indemnified reasonably concludes that there
may be legal defenses available to it or other Indemnified Persons different
from or in addition to those available to us, then such Indemnified Person may
employ its own separate counsel to represent or defend it in any such Claim and
we shall pay the reasonable fees and expenses of such counsel. Notwithstanding
anything herein to the contrary, if we fail timely or diligently to defend,
contest, or otherwise protect against any Claim, the relevant Indemnified Person
shall have the right, but not the obligation, to defend, contest, compromise,
settle, assert crossclaims, or counterclaims or otherwise protect against the
same, and shall be fully indemnified by us therefore, including without
limitation, for the reasonable fees and expenses of its counsel and all amounts
paid as a result of such Claim or the compromise or settlement thereof. In any
Claim in which we assume the defense, the Indemnified Person shall have the
right to participate in such Claim and to retain its own counsel therefore at
its own expense.
We agree that if any indemnity sought by an Indemnified Person
hereunder is held by a court to be unavailable for any reason, then (whether or
not Atlas is the Indemnified Person), we and Atlas shall contribute to the Claim
for which such indemnify is held unavailable in such proportion as is
appropriate to reflect the relative benefits to us, on the one hand, and Atlas
on the other, in connection with Atlas's engagement referred to above, and the
relative fault, as between us and the Indemnified Person in respect of the
Claim, subject to the limitation that in no event shall the amount of Atlas's
contribution to such Claim exceed the amount of fees actually received by Atlas
from us pursuant to Atlas's engagement. We hereby agree that the relative
benefits to us, on the one hand, and Atlas on the other, with respect to Atlas's
engagement shall be deemed to be in the same proportion as (a) the total value
paid or proposed to be paid or received by us or our stockholders as the case
may be, pursuant to the transaction (whether or not consummated) for which you
are engaged to render services bears to (b) the fee actually paid to Atlas in
connection with such engagement; provided, however, that under no circumstances
whatsoever shall Atlas be required to contribute to any such claim any amount in
excess of the fee actually paid in connection with such engagement.
Our indemnity, reimbursement and contribution obligations under this
Agreement shall be in addition to, and shall in no way limit or otherwise
adversely affect, any rights that any Indemnified Party may have at law or at
equity.
Should Atlas or its personnel be required or requested by us to provide
documentary evidence or testimony in connection with any proceeding arising form
or relating to Atlas's engagement, we agree to pay all reasonable expenses
(including fees incurred for legal counsel) in complying therewith.
We hereby consent to personal junction and service of process and venue
in any court in the State of New York in which any claim for indemnity is
brought by and Indemnified Person.
It is understood that, in connection with Atlas's engagement, Atlas may
be engaged to act in one or more additional capacities and that the terms of the
original engagement or any such additional engagement may be embodied in one or
more separate written agreements. The provisions of this Agreement shall apply
to the original engagement, any such additional engagement and any modifications
of the original engagement or such additional engagement and shall remain in
full force and effect following the completion or termination of Atlas's
engagement(s).
Very truly yours,
IRVINE SENSORS CORP.
By: /s/ Xxxx X. Xxxxxx, Xx.
--------------------------
Name: Xxxx X. Xxxxxx, Xx.
Title: Chief Financial Officer
Confirmed and agreed to:
ATLAS CAPITAL SERVICES INC.
By: /s/ Xxxxx Xxxxxxxxxx
---------------------------
Name: Xxxxx Xxxxxxxxxx
Title: Executive Vice-President
