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: (i) 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 $ !SO/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.
D 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.
f!J 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 uses
intended 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 Issue
r 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 Jumps tart 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 or
Assistant 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 all
correspondence 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 FIN
RA, 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: Thi s 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
