BROKER-DEALER SERVICES AGREEMENT
This Broker-Dealer Service Agreement ("Agreement") is made and
entered into as of March 21 , 2020 by and between JumpStart
Securities, LLC ("Jumpstart", "us, "our", or "we") and Atlis Motor
Vehicles ("Issuer", "you" or "your").
Whereas, Jumpstart is a broker-dealer registered with the
Securities and Exchange Commission and a member of the Financial
Industry Regulatory Authority ("FINRA") providing capital markets
compliance and other services for market participants, including
issuers conducting offerings of securities pursuant to exemptions
from the registration requirements of the Securities Act of 1933,
as amended (the "Securities Act"), including Regulation A, as
amended. In servicing this market, Jumpstart has created and
maintains proprietary tools and technology, negotiated third-party
integrations, and has developed operational services, including
limited customer service and compliance, to provide certain
back-end tools and specific compliance services to issuers raising
capital, and,
Whereas, Issuer is undertaking a capital raising effort pursuant
to the exemption from registration (the "Offering"); and,
Whereas Issuer recognizes the benefit of having Jumpstart as a
regulated market participant, provide certain support services as
described herein for proposed investors in its Offering, and
therefore Issuer desires to retain Jumpstart and Jumpstart desires
to be retained by Issuer pursuant to the terms and conditions set
forth herein.
Now, therefore, in consideration of the mutual promises and
covenants contained herein and for good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the
Parties agree as follows:
1. Retention:
a. Issuer hereby retains Jumpstart to provide the services set
forth in Section 2 below (the "Services") during the Offering period,
commencing on the date hereof and until the earlier of the
completion or cancellation of the Offering or the termination of
this Agreement as provided in Section 8 hereof.
b. Jumpstart shall serve as the back-office service provider for
all potential investors in the Offering as requested by the Issuer.
However, Jumpstart will not provide services for any investors who
are introduced to the Offering by a registered broker-dealer that
entered into a selling agreement with Issuer.
c. Issuer agrees to provide Jumpstart with due diligence information
and materials as it reasonably requests and undertakes to update
such information and materials throughout the Offering as may be
necessary for accuracy.
d. Jumpstart will not advise Issuer or any prospective investor
with respect to the Offering, or the terms and structure thereof,
which will be determined solely and exclusively by Issuer and its
advisers in meeting its capital needs, but will assist in advising
concerning marketing and distribution. Issuer will provide Jumpstart
with copies of the Offering materials and disclosures, including the
investor subscription agreement and the offering circular
(collectively, the "Offering Circular"). Under no circumstances shall
any communication, whether oral or written, be construed or relied
on by Issuer as advice from Jumpstart. Issuer acknowledges that
Jumpstart is not acting as a placement agent or underwriter for the
Offering and has not and will not at any time provide any securities,
financing, legal or accounting advice to Issuer. Issuer represents
that it will only rely on the advice of its securities counsel,
accountants and/or auditors, and any placement agent or underwriter.
Further, Issuer acknowledges and understands that Jumpstart will not
have any direct communication with investors other than unsolicited
contact that will be redirected to Issuer or Issuer's designees.
2. Services:
a. JumpStart Securities Responsibilities -
JumpStart agrees to:
i. Phase one:
A. Advisory services, covering in-depth analysis and assessment
activities on the offering, business feasibility, business
analysis, marketing approach, management experience with offerings,
and certain out-of-pocket expenses for other analysis
work/activities, such as legal work, diligence, etc.
ii. Phase two:
A. As part of a fee selection in Section 3c, JumpStart Securities
may Market the offering to its previous investors, potential
investors, and solicit interest from investors that meet the
suitability, sophistication, and purchase criteria for the Offering;
B. Accept investor data from Issuer, generally via any software
system used to capture investors, but also via other means
as may be established by mutual agreement of the Parties;
C. Review and process information from potential investors,
including but not limited to running reasonable background
checks for anti-money laundering ("AML."), IRS tax fraud
identification and USA PATRIOT Act purposes, and gather and review
responses to customer identification information;
D. Verification of accredited investor status of each investor,
as applicable in Regulation D, Rule 506c offerings;
E. Review subscription agreements received from prospective
investors to confirm they are complete;
F. Contact Issuer and/or Issuer's designees, if needed, to
gather additional information or clarification from
prospective investors;
G. Advise Issuer as to permitted investment limits for investors
pursuant to Regulation D, Rule 506(c);
H. Provide Issuer with prompt notice about inconsistent,
incorrect or otherwise flagged (e.g. for underage or AML reasons)
subscriptions;
I. Serve as registered agent where required for state blue sky
requirements, but in no circumstance will Jumpstart solicit a
securities transaction, recommend the Issuer's securities or provide
investment advice to any prospective investor;
J. Transmit data to transfer agent as book-entry data for
maintaining Issuer's responsibilities for managing investors
(investor relationship management, aka "CRM") and for maintaining
future good-delivery and recordkeeping;
K. Transmit any checks received from subscribers promptly upon
settlement.
b. Issuer Responsibilities - Issuer agrees to:
i. Refer investor data, at its sole and arbitrary discretion,
to Jumpstart Securities;
ii. Ensure investors understand they are making a "self-directed"
decision, and provide Jumpstart with all information and data
required to ascertain whether the investor is eligible to
invest in the Offering and the investment threshold, if applicable;
iii. Immediately, but not later than within 24 hours, notify
Jumpstart with details of any notices, requests, complaints or
actions of or by any regulators, law enforcement, investors, trade
associations or legal counsel regarding the Offering;
iv. Comply with state and federal laws and rules; and
v. Not compensate any unregistered person directly or indirectly
with any fees, commissions or other consideration based upon the
amount, sale of securities or success of an Offering.
c. Marketing of Offering - Issuer represents that it will ensure
the marketing and promotional activities it engages in, as related
to the Offering, are not materially misleading and in compliance
with all SEC rules and regulatory guidance, as well as industry best
practices. Issuer will not compensate any person for directly
selling securities unless such person is associated with a FINRA
member brokerdealer and is appropriately registered with both the
SEC and the state(s) in which the investors reside. Issuer may use
Jumpstart's name but only to extent set forth in Section 6 of this
Agreement.
3. Compensation: For services provided under this Agreement, the
terms and payments shall be:
a. Advisory Service Fee. We will pay Jumpstart Securities, LLC a
$10,000 advisory fee for providing initial analysis work in the
first phase of services.
b. Administrative Service Fees: During the second phase of
services, additionally, we will pay Jumpstart Securities, LLC the
following administrative service fee:
1) fee per AML check executed, below,
2) fee per AML exception, as described in the fees below, and
3) accredited investor verification fee.
Administrative service fees will be charged to Issuer at
the time of the subscription.
i. US Individual $2
ii. US Entity $5
iii. CA/UK Individual $5
iv. CA/UK Entity $75
v. International Individual $60
vi. International Entity $75
vii. AML Exceptions $15O/investor owed upon exception
viii. Investor verification $45/verification owed upon subscription
c. Broker-Dealer Close Fees: During the second phase of services,
a broker-dealer fee will be as selected below. Please select one.
Marketing fee, including broker of record service fee of 3.25%
(three and one quarter percent) of the aggregate amount of gross
Offering proceeds received, and that are accepted, by the Issuer
for use of Jumpstart's marketing services in state notice filings
required for the Offering and review of subscription information
for accuracy, completeness, and compliance with Regulation D
guidelines. Such fee shall not apply for any investor purchasing
directly through Issuer wherein such investor is a contact of
Issuer, and shall not apply to any investor referred by any other
broker-dealer to Issuer.
(selected} Broker of record fee of 1.50% (one and one half percent)
of the aggregate amount of gross Offering proceeds received, and
that are accepted by the Issuer.
Fees may be reduced on a case-by-case basis, or as required in
compliance with FINRA rules. For these purposes, an email from
Jumpstart to Issuer will constitute sufficient evidence of an
alteration of the fees contained in this Agreement. Any alteration
to the fees shall not be interpreted to be, or constitute an
amendment or general waiver of other terms of this Agreement unless
specifically set forth by Jumpstart in writing.
d. Expenses: Issuer will be responsible for and pay directly (i) fees
due to FINRA for filings made with respect to the Offering, if
necessary. Pre-approved Travel and Offering expense reimbursements
may also be paid to Jumpstart Securities for out-of-pocket
expenses (not to exceed $2,500). If expenses are expected to exceed
$2,500 they will be pre-approved. Receipts would be presented with
the requested reimbursements.
e. Payment Terms: Jumpstart will charge Administrative service fees
directly to Issuer via ACHdebit and Issuer hereby authorizes such
payment. Brokerage service fees are due upon the sale of securities
to investors and Issuer agrees and directs that they will be paid
from the flow of funds upon the acceptance by the Issuer of any
investor, with such acceptance being conditional on the terms of the
Offering. Once the Issuer countersigns the investor subscription
the investors are accepted. The parties shall have the reasonable
right to obtain documentation concerning the details of the payments
due.
4. Warranties and Representations: The Issuer and Jumpstart
represent and warrant that each has all requisite power and authority
to enter into and carry out the terms and provisions of this
Agreement and the execution, delivery and performance of this
Agreement does not breach or conflict with any agreement, document
or instrument to which it is a party or bound, and further:
a. Jumpstart warrants and represents to the Issuer that:
i. It is an SEC registered, FINRA member, SIPC insured firm in good
standing and licensed to conduct securities business;
ii. It is duly registered in states where investors reside;
iii. Its personnel who provide services to the Issuer are licensed
securities representatives and/or principals, as required by
regulations for the business being conducted;
iv. It will not compensate any unregistered person with any fees
based upon the amount or success of any investment in the
Offering;
v. It will not solicit or sell investors any other services or
investment products; and
vi. It will not provide any investment advice nor any investment
solicitation or recommendations to any investor.
b. Issuer warrants and represents to Jumpstart that:
i. The offering materials will be complete and correct 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, in light of the circumstances
under which they were made, not misleading.
ii. It will duly comply with all applicable state and Federal
laws, rules and regulations and make all filings as required.
5. Non-Exclusivity, No Underwriting: This Agreement is
non-exclusive and shall not be construed to prevent either party
from engaging in any business activities.
6. Limited License of Trademarks. During the term of this
Agreement, Issuer may request to use Jumpstart's name, logo and
trademarks on its website and other marketing materials, but
Jumpstart must approve in advance the specific usesnintended by
Issuer. Generally, the use of Jumpstart's name, logo or trademarks
is not used in a manner that implies the Offering is endorsed,
recommended, or vetted by Jumpstart, or that Issuer or its
agents are authorized to act as a securities agent or a
representative of Jumpstart. Furthermore, it is agreed that
Jumpstart and Issuer each, in perpetuity, have the option to use
the name and logo of one another in disclosing the existence of
this business relationship.
7. Independent Contractor: It is agreed that Jumpstart and Issuer
are independent contractors for the business and services provided
hereunder. Under no circumstances shall this Agreement be deemed
to imply or infer that Issuer and Jumpstart have anything other
than an arm's length and independent relationship. Both Jumpstart
and Issuer shall be individually responsible and liable for their own
respective federal, state, local and other taxes or fees, as well
as all costs associated with their businesses. Jumpstart is not a
fiduciary of the Issuer or its management or board of directors in
regard to any of the Services provided under this Agreement.
8. Term and Termination: This Agreement is effective beginning
on the date set forth above through the completion or cancellation of
the Offering unless terminated by either Party pursuant to
this Section 8.
a. Either Party may terminate their participation in this Agreement
without cause by giving 10 days' notice via email to the other at any
time. Such termination shall only affect future business and not
apply to transactions or other business conducted prior to the
date of termination.
b. Either Party may terminate their participation in this Agreement
for a material breach of this Agreement immediately by giving notice
via email to the other at any time. Such termination shall only
affect future business and not apply to transactions or other
business conducted prior to the date of termination. The
non-breaching Party has the sole discretion to grant a period to cure
by giving notice via email of the time period for such cure.
However, the grant of a cure period does not waive any
indemnification or rights of the non-breaching Party to pursue all
remedies.
c. In the event of any termination, the responsibilities of each
party detailed in Section 2 shall cease.
d. If the agreement is terminated by Issuer, Issuer will reimburse
Jumpstart for its actual, documented out-of-pocket expenses up to an
aggregate cap of $10,000 (except if termination is for breach of the
Agreement by Jumpstart).
9. Mutual Indemnification: The Parties hereby agree as follows:
a. To the extent permitted by law, the Issuer will indemnify
Jumpstart and its affiliates, stockholders, directors, officers,
employees and controlling persons (within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act) against
all losses, claims, damages, expenses and liabilities, as the same
are incurred (including the reasonable fees and expenses of counsel),
relating to or arising out of its activities hereunder or pursuant
to this engagement letter, except to the extent that any losses,
claims, damages, expenses or liabilities (or actions in respect
thereof) are found in a final judgment (not subject to appeal) by a
court of law to have resulted primarily and directly from
Jumpstart's willful misconduct or gross negligence in performing
the services described herein.
b. Promptly after receipt by Jumpstart of notice of any claim or
the commencement of any action or proceeding with respect to which
Jumpstart is entitled to indemnity hereunder, Jumpstart will notify
the Issuer in writing of such claim or of the commencement of
such action or proceeding, and the Issuer will assume the defense
of such action or proceeding and will employ counsel reasonably
satisfactory to Jumpstart and will pay the fees and expenses of such
counsel. Notwithstanding the preceding sentence, Jumpstart will be
entitled to employ counsel separate from counsel for the Issuer and
from any other party in such action if counsel for Jumpstart
reasonably determines that it would be inappropriate under
the applicable rules of professional responsibility for the
same counsel to represent both the Issuer and Jumpstart. In such
event, the reasonable fees and disbursements of no more than one
such separate counsel will be paid by the Issuer, in addition to
local counsel. The Issuer will have the exclusive right to
settle the claim or proceeding provided that the Issuer will not
settle any such claim, action or proceeding without the prior written
consent of Jumpstart, which will not be unreasonably withheld.
c. The Issuer agrees to notify Jumpstart promptly of the
assertion against it or any other person of any claim or the
commencement of any action or proceeding relating to a transaction
contemplated by this engagement letter.
d. If for any reason the foregoing indemnity is unavailable to
Jumpstart or insufficient to hold Jumpstart harmless, then the Issuer
shall contribute to the amount paid or payable by Jumpstart as a
result of such losses, claims, damages or liabilities in such
proportion as is appropriate to reflect not only the relative
benefits received by the Issuer on the one hand and Jumpstart on the
other, but also the relative fault of the Issuer on the one
hand and Jumpstart on the other that resulted in such losses,
claims, damages or liabilities, as well as any relevant
equitable considerations. The amounts paid or payable by a party in
respect of losses, claims, damages and liabilities referred to above
shall be deemed to include any legal or other fees and
expenses incurred in defending any litigation, proceeding or
other action or claim. Notwithstanding the provisions hereof,
Jumpstart's share of the liability hereunder shall not be in excess
of the amount of fees actually received, or to be received, by
Jumpstart under this engagement letter (excluding any amounts
received as reimbursement of expenses incurred by Jumpstart).
10. Certain Placement Procedures. On or prior to the date the
securities are made available for purchase by subscribers for the
purchase and sale of the securities to subscribers in the Offering
(the "Closing Date"), Jumpstart shall have obtained from the Company
the following:
a. Officers' Certificate signed by the Chairman of the Board
or the Chief Executive Officer and the Secretary of the Company (in
their capacities as such) to the effect that the Company has
performed all covenants and complied with all conditions required
by this Agreement to be performed or complied with by the Company,
that the representations and warranties of the Company set forth
herein and the disclosure provided in the offering materials are
true and correct.
b. Secretary's Certificate signed by the Secretary ornAssistant
Secretary of the Company, respectively, certifying
(i) that the Certificate of Incorporation and Bylaws, as amended
of the Company are true and complete, have not been modified and are
in full force and effect,
(ii) that the resolutions of the Company's
Board of Directors relating to the public offering contemplated by
this Agreement are in full force and effect and have not been
modified,
(iii) as to the accuracy and completeness of allcorrespondence
between the Company or its counsel and the Commission, and (iv) as
to the incumbency of the officers of the Company. The documents
referred to in such certificate shall be attached to such
certificate.
c. Legal Opinion of Company Counsel and negative assurance
statement with respect to offering customarily provided in public
offerings addressed to Jumpstart Securities in form and substance
satisfactory to Jumpstart Securities.
11. Confidentiality and Mutual Non-Disclosure: It is acknowledged
that in the performance of this Agreement each party may become
aware of and/or in possession of confidential, non-public
information of the other party. Except as necessary in this
Agreement's performance, or as authorized in writing by a Party or
by law, the Parties (and their affiliated persons) shall not disclose
or make use of such non-public information. Nothing contained herein
shall be construed to prohibit the SEC, FINRA, or other government
official or entities from obtaining, reviewing, and auditing any
information, records, or data. Issuer acknowledges that regulatory
record-keeping requirements, as well as securities industry best
practices, require Jumpstart to maintain copies of practically all
data, including communications and Offering materials, regardless
of any termination of this Agreement. Notwithstanding the
foregoing, information which is, or was, in the public domain
(including having been published on the internet) is not subject to
this section.
12. Notices: All notices given pursuant to this Agreement shall be
in writing and sent via email to:
Jumpstart Securities, LLC
xxxxxxxx@xxxxxxxxxxxxxxxxxxx.xxx
13. Binding Arbitration, Applicable Law and Venue, Attorneys Fees:
This Agreement is governed by, and will be interpreted and enforced
in accordance with the regulations of the SEC and FINRA, and
laws of the State of New York, without regard to principles of
conflict of laws. Any claim or dispute arising under this Agreement
may only be brought in arbitration, pursuant to the rules of the
Financial Industry Regulatory Authority ("FINRA"), with venue in
New York City, New York. Each of the parties hereby consents to
this method of dispute resolution, as well as jurisdiction, and
waives any right it may have to object to either the method, venue
or jurisdiction for such claim or dispute. Any award an
arbitrator makes will be final and binding on all parties
and judgment on it may be entered in any court having jurisdiction.
Furthermore, the prevailing party shall be entitled to recover
damages plus reasonable attorney's fees .
14. Entire Agreement, Amendment, Severability and Force Majeure:
This Agreement contains the entire agreement between Issuer and
Jumpstart regarding this Agreement. If any provision of this
Agreement is held invalid, the remainder of this Agreement shall
continue in full force and effect. Furthermore, no party shall be
responsible for any failure to perform due to acts beyond its
reasonable control, including acts of regulators, acts of God,
terrorism, shortage of supply, labor difficulties (including
strikes), war, civil unrest, fire, floods, electrical outages,
equipment or transmission failures, internet interruptions, vendor
failures (including information technology providers), or other
similar causes. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof.
This Agreement must be amended in writing.
15. Counterparts; Facsimile. This Agreement may be executed in
counterparts, each of which will be deemed an original and all of
which, taken together, will constitute one and the same instrument,
binding on each signatory thereto. This Agreement may be executed
by signatures, electronically or otherwise, delivered by facsimile
or email, and a copy hereof that is properly executed and delivered
by a party will be binding upon that party to the same extent as an
original executed version hereof.
IN WITNESS WHEREOF, the parties have entered into this Agreement as
of the date set forth above.
JumpStart Securities, LLC
