LAUNCH413 STARTUP SERVICES AGREEMENT

Agreement Date: ____________________

Party Definitions & Signatures

Party

“LAUNCH”

“COMPANY”

Company Name

Launch413 Accelerator

Entity State & Type

MA Limited Liability Company

Principal place of business:

9.5 Market Street, Northampton, Massachusetts 01060

Representative’s Name & Title

Paul G. Silva, Managing Partner

Signature

Terms

IN WITNESS OF: LAUNCH offers startup services to companies to plan, develop and grow their operations and financial planning using a panel of advisors; and COMPANY wishes to engage LAUNCH’s services; It is agreed that:

  1. Good Faith
  1. LAUNCH’s commitment is to help COMPANY succeed. LAUNCH and COMPANY understand that many challenges can arise and if they do, LAUNCH and COMPANY will be open to re-negotiate this agreement in good faith. Some of the reasons that might trigger such re-negotiation: fundraising needs, constrained cash flow, etc.
  2. COMPANY’s commitment is to compensate LAUNCH for providing startup services and for LAUNCH assuming the upfront risk.
  1. Commitment to Quality and Fairness
  1. Trial Period - This agreement may be terminated (in writing) by either party for any reason during the 3 months following the date of this agreement. If this occurs then neither party has any obligation or liability to the other. At the end of the Trial period, LAUNCH and COMPANY will meet to review progress and determine if continuing makes sense for both groups.
  2. Termination - At any time COMPANY or LAUNCH can, for any reason, terminate this agreement.
  1. Impact of Termination:
  1. Removes LAUNCH’s responsibility to continue advising COMPANY.
  2. Halts the vesting (see section 2 b iii) of the compensation owed to LAUNCH.
  3. Does NOT relinquish COMPANY’s responsibility to compensate Launch as detailed section 4.
  1. Process for Termination - The concerned party must notify the other in writing of a desire to terminate the agreement. The other party will have 3 weeks to rectify the issue to the concerned party’s satisfaction. If the concerned party is still unsatisfied then the agreement will be Terminated.
  2. Vesting - The amount of compensation owed to LAUNCH starts at zero and increases (vests) over time. This protects the entrepreneur in case of early termination of the Agreement.
       
     
    Vesting Percentage is defined as follows:
  1. During the Trial period: 0%
  2. Trial period + 1 day: 16.67%
  3. From then on: 16.67% + 2.78% per month until reaching 100%. So in other words, vesting takes 3 years.
  4. If COMPANY is sold (as defined in section 5b) and this Agreement has not been Terminated: 100%.
  5. If LAUNCH Terminates this Agreement within the first 12 months: 0%
  1. Startup Services Provided by LAUNCH:
  1. LAUNCH Advisors agree to act as mentors or advisors to COMPANY and to, where appropriate, actively promote and make introductions on behalf of COMPANY through LAUNCH’s overall network of business contacts.
  2. Advisors will meet with COMPANY as frequently as COMPANY requests so long as COMPANY is completing deliverables it assigns itself at prior meetings.
  3. LAUNCH will meet with COMPANY at the start of the Agreement to help COMPANY develop a strategic plan.
  4. On an as-needed basis (as determined by LAUNCH & COMPANY) LAUNCH will hold Strategy Meetings with COMPANY to:
  1. Review COMPANY’s progress against the strategic plan.
  2. Review LAUNCH’s progress against the commitments it made to COMPANY at the last Strategy Meeting.
  3. Update the strategic plan to reflect new information.
  4. Identify which Advisors (and other resources) LAUNCH should assist COMPANY during the next month. An estimate of time commitment by LAUNCH Advisors will be provided.
  1. LAUNCH will match Advisors to COMPANY based on COMPANY’s needs as identified by both parties. Both parties acknowledge that those needs are likely to change over time.
  2. COMPANY agrees that it will participate in rating and evaluating the effectiveness and usefulness of each of the Advisors COMPANY interacts with as part of LAUNCH’s startup services.
  3. COMPANY agrees that LAUNCH has not and does not make any representation or warranty on the startup services provided under this agreement or the business effect on COMPANY of any such services. COMPANY at all times remains responsible for the operation and success or failure of its business.
  1. Compensation:
  1. Royalty: In exchange for the startup services provided COMPANY agrees to compensate LAUNCH as follows:

    0% of COMPANY revenue earned during the first 3 years.

    5% of the next $10 million* in COMPANY revenue, paid quarterly.

    *If this Agreement is Terminated then this value is decreased by (1-[Vesting Percentage]).
  2. Sale of COMPANY - In the event of a sale (defined in section 5b) of COMPANY, COMPANY agrees to compensate LAUNCH the smaller of:
  1. 5% * [Vesting Percentage] * (COMPANY’s sale price)  
  2. (5% * $10 million) - (sum of payments made before the sale of COMPANY)
  1. Conversion to equity - In the event COMPANY and LAUNCH agree, COMPANY’s Royalty obligation to LAUNCH can be exchanged for a common stock equity stake in COMPANY.
  2. Records - COMPANY agrees to provide LAUNCH:
  1. A copy of the revenue section of COMPANY's federal tax return within 30 days of its filing each year.
  2. Quarterly update on COMPANY revenues.
  1. General
  1. Confidentiality - Each LAUNCH Advisor that commits to helping COMPANY (and receiving a share of future compensation from COMPANY) will sign a Non Disclosure Agreement (see exhibit A).  
  2. Definition of “Sale” - For purposes of this Agreement “Sale” is a shorthand for:
  1. A sale of all or substantially all of the assets of COMPANY OR
  2. A merger, reorganization or other transaction in which 50% of the outstanding voting power of COMPANY is transferred OR
  3. An exclusive, irrevocable licensing of all or substantially all of COMPANY’s intellectual property to a third party will be treated as a liquidation event.
  1. COMPANY represents that:
  1. The execution, delivery and performance by COMPANY of this agreement is within its power and this agreement is a legal, valid and binding obligation of COMPANY, enforceable against COMPANY in accordance with its terms. To the knowledge of COMPANY, it is not in violation of any material statute, rule or regulation applicable to it or any material contract to which it is a party or by which it is bound, where, in each case, such violation or default, individually, or together with all such violations or defaults, could reasonably be expected to have a material adverse effect on COMPANY. COMPANY also represents that the performance and consummation of the transactions contemplated by this Agreement do not and will not violate any material judgment, statute, rule or regulation applicable to COMPANY.
  2. If COMPANY is an entity, that it is duly organized, validly existing and in good standing under the laws of the state of its organization, and has the power and authority to own, lease and operate its properties and carry on its business as now conducted. 
  1. Arbitration
    Any claim, dispute, or controversy of whatever nature arising out of or relating to this Agreement, including, without limitation, any action or claim based on tort, contract, or statute, or concerning the interpretation, effect, termination, validity, performance or breach of this Agreement (“Claim”), shall be resolved by final and binding arbitration before a single arbitrator selected from and administered by the American Arbitration Association in accordance with its then-existing commercial arbitration rules. The arbitration shall be held in Springfield, Massachusetts and all parties and the arbitrator shall make all efforts to conclude said arbitration within sixty days, it being agreed that a speedy resolution is desired by the parties. In any arbitration other than an arbitration filed for the purposes of enforcing payment of royalties under Royalty Section of this Agreement, the arbitrator shall declare which of the parties is the prevailing party and award that party reasonable attorney fees. BY AGREEING TO THIS BINDING ARBITRATION PROVISION, THE PARTIES UNDERSTAND THEY ARE WAIVING INCLUDING, WITHOUT LIMITATION, THE RIGHT TO A JURY TRIAL, RIGHTS OF APPEAL, AND A RIGHT TO INVOKE FORMAL RULES OF PROCEDURE AND EVIDENCE. The Arbitrator shall have the authority to award only the relief authorized by this Agreement.
  2. Fees
    Except as otherwise provided in the Arbitration Section of this agreement, each party shall bear its own attorney’s fees, costs, and disbursements arising out of the Arbitration and shall pay an equal share of the fees and costs of the Administrator and the Arbitrator; provided, however, the Arbitrator shall be authorized to determine that the fees and costs of the Administrator and the Arbitrator may be otherwise charged.
  3. Miscellaneous
    Should any provision, or a part of any provision of this Agreement be or become invalid or unenforceable, the remaining provisions or parts of any provisions shall remain valid and enforceable and the Agreement shall be interpreted as if the offending language were stricken. This Agreement is the entire understanding of the parties with respect to the subject matter hereof, and supersedes all other prior representations, warranties, agreements and understandings between the them. This Agreement may only be modified or amended by a separate writing signed by an authorized representative of each party. Any term or provision of this Agreement may be waived, or the time for its performance extended, by the party entitled to the benefit thereof, and such waiver shall not be deemed a waiver of any right of enforcement or of any other provision. The rights and obligations of the parties under this Agreement, and the interpretation and construction of this Agreement, shall be subject to and governed by the internal laws of the Commonwealth of Massachusetts, without regard to conflict or choice of law principles applicable therein. Any notice required or permitted by this Agreement will be deemed sufficient when delivered personally or by overnight courier or sent by email to the relevant address listed on the signature page, or 48 hours after being deposited in the U.S. mail as certified or registered mail with postage prepaid, addressed to the party to be notified at such party’s address listed at the beginning of this Agreement or as subsequently modified by written notice.