StartupBUSINESS.COM

Broker Engagement Agreement

Issuing Company: [Name of Company Raising Money]

This Engagement Agreement establishes the Terms and Conditions under which the Issuing Company above (the “Company”) agrees to engage [Broker], (the “Firm”) to assist the Company in obtaining financing through a private placement of its securities.  The Firm is a registered broker/dealer licensed to provide private placement services.

The Company is:  [describe the company’s business, financing round, amount sought, and other pertinent information.]

The Firm is:  [describe nature of broker’s location, nature of services, subsidiaries, licenses, and other pertinent information.]

The Company and the Firm agree to the following Terms and Conditions:

1.         The Company represents that the information contained in its Application and in any other materials provided to the Firm, or its Member Investors was prepared by the Company in good faith and does not to its knowledge contain any misrepresentation or false statement or fail to disclose any information necessary to prevent the information disclosed from being misleading.  If any such information becomes inaccurate in any material respect, the Company will promptly notify the Firm and take appropriate steps to correct the inaccuracy.  The Company represents that neither the Company nor any officer or director of Company has been involved in any proceeding accusing such person of securities fraud or a failure to comply with applicable federal or state securities laws.  The Company and its legal counsel are solely responsible for assuring that there are no conflicts with or violation of the rights of any present or former stockholders, employees or employer of any of the Company’s officers, directors, employees or consultants, nor will any be created by the anticipated financing of the Company.

2.         The Firm may withdraw at any time for no reason or immediately upon any breach of these Terms and Conditions by the Company.  The Company may withdraw at any time for no reason upon notice to the Firm, provided that the placement fee due to the Firm in Section 6 below shall continue to apply.

3.         The Company will determine what information about the Company is seen by potential investors.  The Company understands that any information voluntarily released by the Company to The Firm’s Member Investors, including bulletins and newsletters, is nonconfidential.  If the Company wants to provide confidential information to any such Member Investors, it is the Company’s responsibility first to obtain an appropriate nondisclosure agreement from such Member Investors.

4.         The Company understands that it is solely responsible for determining the suitability under applicable federal and state securities laws of persons or organizations wanting to invest in the Company and that the Firm can not make any representation about the qualifications or accuracy of information provided to the Company by Member Investors.  The Company will not make any representation to investors that the Firm has verified or validated any information provided by the Company or have expressed any view on the merits of any investment in the Company.  The Company also understands that it is solely responsible for assuring that any securities it offers for sale are legally registered or are exempt from registration in all jurisdictions in which they are being offered or sold.  If the Company is relying on a private placement exemption from registration, the Company agrees that it will conduct itself so as to preserve such exemption.  If the applicable exemption so requires, the Company will not engage in any general solicitation in connection with the offer or sale of the Company’s securities.  The Company will promptly notify the Firm of any and all registrations and exemptions the Company has obtained or filed, and the Company will make this information known to Member Investors.  The Company agrees to include in any offering materials distributed to any investors appropriate disclosures about any conflicts of interest that may arise as a result of the Company’s relationship with the Firm, Member Investors or any related parties or investment funds.  The Company agrees to indemnify the Firm and its Member Investors against damages and other costs resulting from any violations by the Company of federal or state securities laws.  The Firm agrees to indemnify the Company against damages and other costs resulting from any violations by the Firm of federal or state securities laws.

5.         The Company understands that the Firm may be liable (as a “statutory seller”) for the losses of all of Member Investors participating in the offering if the offering is held not to be exempt from registration requirements imposed by the applicable jurisdictions.  The Company also understands that future offerings by the Company may affect the exempt status of the offering contemplated in this Agreement.  In addition, the Company understands that the Firm is responsible for ensuring that the offering meets certain regulatory requirements imposed by the S.E.C. and N.A.S.D.  As a consequence, the Company agrees that with respect to any offering contemplated in this Agreement:

(a)  All funds secured from Member Investors and other investors introduced through the Firm to the Company shall be held in escrow until the close of the offering.  The escrow account will meet all the criteria required by the applicable laws or regulatory authorities.

(b)  The Company will restrict or prohibit transfer of any securities purchased in the offering for whatever period is required to ensure that the offering remains exempt from federal registration and from registration in the applicable states or foreign countries.

(c)  The Company will provide adequate assurances, by contract or otherwise, that it will not engage in future offerings that may endanger the exemption from federal, state or foreign registration of the offering.

(d)  Regardless of  which party establishes the escrow account, the escrow agreement shall provide that funds will not be distributed from the escrow account to the Company without the Firm’s written consent.  The Firm may withhold such consent if the Firm reasonably believes that  (i)  the offering does not comply with the applicable exemption(s) from registration or that closing the offering would result in a violation of the securities laws of any applicable jurisdiction or the regulations of any applicable authority; or  (ii)  the restrictions or prohibitions on stock transfer or the form or substance of the Company’s assurances concerning future offerings are inadequate to ensure ongoing exemption from registration for the offering in any applicable jurisdiction.

6.         The Company will:

(a)  Promptly notify the Firm, within five business days, when it has received commitments for financing, of the persons or organizations making those commitments and the amounts and terms and conditions of such commitments (including price per share).

(b)  Pay to the Firm a placement fee of five percent (5%) of the total cash raised or other value received through the sale of equity and debt securities, or by other means, by the Company (other than from Excluded Investors) from the date of this agreement for (i) twelve months from the date of this agreement, or (ii) the date the Company has raised a total of $2,500,000 from the sale of securities, or by other means.  Such payments of placement fees shall be made within 10 days after the date(s) funds are received.  Sales of securities to Excluded Investors (as set forth below the Company’s signature) shall not be included in such calculation.  Any officer or director of the Company listed in the Company’s Application and any members of their immediate families (parents, grandparents, siblings, children, grandchildren, aunts, uncles, first cousins and persons related to such persons by marriage) shall automatically be considered to be Excluded Investors.  Each placement fee payment shall be accompanied by a notice listing the investors from whom financing has been obtained and the amount of each investment (including any Excluded Investors).

(c)  Review with the Firm expressions of interest in the Company by Member Investors.  If the Company reasonably believes interest generated from Member Investors after 90 days from the date of posting is inadequate, the Company and the Firm will, in good faith, enter into discussions to amend section (b) above to add to Excluded Investors those investors who are not introduced to the Company by the Firm or its Member Investors, either directly or indirectly.

7.         The Company understands that all negotiations concerning investments (including price, percentage ownership and other terms) will take place directly between the Company and the applicable investors, and that the Firm is not acting as agent or principal in these negotiations or transactions.  The Firm is not an investment advisor for the investors or an underwriter, investment advisor, promoter, placement agent or dealer for the Company or its securities.  The Firm takes no responsibility for the accuracy of any of the advice or content which may be distributed by the Company or otherwise communicated by any of its principals, employees, advisors, founding sponsors or by any other party, orally or in writing.  The Firm makes no guarantee the Company will obtain the funding it seeks.

8.         The Company understands that companies using services of the Firm’s subsidiaries or partners may be required to follow additional or modified terms and conditions concerning the use of such services, of which the Company may be notified from time to time.

9.         The Company grants the Firm permission to use the Company’s name, logo and trademarks and the name(s) of its founders, officers and directors in its communications, on its Web site and in its promotional materials, as long as such use does not affect any registrations or exemptions under which the Company is offering its securities.

10.        If any provision of this Agreement is or should become inconsistent with any present or future law, rule or regulation of any governmental or regulatory body having jurisdiction over the subject matter of this Agreement, such provision will be deemed to be rescinded or modified in accordance with any such law, rule or regulation.  In all other respects, this Agreement will continue and remain in full force and effect.  Either party’s failure to insist at any time on strict compliance with this Agreement or with any of the terms hereunder or any continued course of such conduct on its part will in no event constitute or be considered a waiver by such party of any of its rights or privileges. This Agreement and the rights and obligations created under it will be binding on and inure solely to the benefit of the parties hereto and their respective successors and permitted assigns. The provisions of Sections  4, 6 and 9 of this Agreement will survive the termination of this Agreement.

11.        The Company understands that this Engagement Agreement is the entire agreement between the Company and the Firm.  Notwithstanding the foregoing, the Company understands that certain parties related to the Firm may separately seek to provide services to the Company or make investments in the Company.  The Company understands that any transaction with any related party shall not be construed as compensation for any services provided by the Firm under this Agreement.  This Agreement may only be amended or waived by written agreement of the parties (which may take the form of email messages), and shall be governed by the internal laws of the State of [state] without regard to conflicts or laws principles thereof.  Notices shall be in writing and shall be sent by email or telecopier, delivered in person or deposited in the U. S. mail.  The Company’s address for notices is shown below.  The Firm’s address for notices is shown below.  Should legal action arise concerning this Engagement Agreement, the prevailing party shall be entitled to recover its legal fees and costs.

12.        The Company represents that it has been represented by suitably qualified legal counsel in the review and execution of this Agreement.

IN WITNESS WHEREOF, the undersigned, through their duly authorized officers, have executed this Agreement as of _____________________, 200*.

For the Company:                                        For Broker

By:_________________________             By:_______________________

Print Name__________________               Print Name_____________________

Title________________________             Title__________________________

State of Incorporation                                     State of Incorporation

Address                                                           Address

City                                                                   City

State                                                                State

Zip                                                                    Zip

Excluded Investors:

Exemption under Regulation D: Date Form D filed: