Free Startup Funding Milestone Agreement Template
Startup Funding Milestone Agreement
This Startup Funding Milestone Agreement (the "Agreement") is entered into as of [Insert Date], by and between [Your Company Name], a [Insert Organization Legal Structure] with its principal place of business located at [Your Company Address] (hereinafter referred to as the "Company"), and [Investor Name], an investor with an address at [Investor Address] (hereinafter referred to as the "Investor").
WHEREAS, the Company is engaged in [Brief Description of Business Activity], and is seeking funding to support its operations, growth, and development objectives;
WHEREAS, the Investor has expressed an interest in providing financial support to the Company, subject to certain conditions and milestones being achieved by the Company;
WHEREAS, both the Company and the Investor wish to set forth the terms and conditions under which the Investor will provide funding to the Company;
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
Section 1: Funding Details
1.1 Total Funding Amount: The Investor agrees to provide the Company with a total funding amount of $[Total Funding Amount], to be disbursed in stages according to the achievement of specified milestones as set forth in this Agreement.
1.2 Funding Stages: The funding will be disbursed in [Number of Stages] stages. Each stage of funding is contingent upon the Company's achievement of the milestones outlined in Section 2: Milestone Schedule.
1.3 Conditions for Tranche Release: Prior to the release of each funding tranche, the Company must submit a report demonstrating the achievement of the relevant milestones to the satisfaction of the Investor. The Investor will review the submitted report within [Number of Days for Review] days of receipt and, upon approval, will disburse the respective tranche within [Number of Days for Disbursement] days.
Section 2: Milestone Schedule
2.1 Milestone Definitions: For the purposes of this Agreement, milestones are defined as specific, measurable objectives that the Company agrees to achieve within a set timeframe. These include, but are not limited to, product development milestones, sales targets, market entry milestones, and other operational or financial achievements critical to the Company's growth.
2.2 Schedule of Milestones:
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Milestone 1: [Description] to be achieved by [Completion Date].
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Milestone 2: [Description] to be achieved by [Completion Date].
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Final Milestone: [Description] to be achieved by [Completion Date].
2.3 Evaluation and Adjustment: The milestones may be subject to adjustment by mutual agreement of the parties in response to unforeseen circumstances or opportunities. Any adjustments must be documented in writing and signed by both parties.
Section 3: Use of Funds
3.1 Allocation: The funds provided by the Investor shall be used exclusively for the purposes outlined in this section, as follows:
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Product Development: $[Amount] allocated for development costs including, but not limited to, research and development, prototype creation, and testing.
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Marketing and Sales: $[Amount] allocated for marketing campaigns, sales activities, and market expansion efforts.
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Operational Expenses: $[Amount] allocated for day-to-day operational costs including, but not limited to, salaries, rent, and utility expenses.
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Other Specified Uses: $[Amount] allocated for [Other Uses], as detailed herein.
3.2 Budget Compliance: The Company agrees to adhere strictly to the budget allocations specified in this section. Any deviation from the allocated amounts for the specified uses requires prior written approval from the Investor.
3.3 Reporting: The Company shall provide the Investor with quarterly financial reports detailing the use of the funds, progress towards milestones, and overall financial health of the Company.
Section 4: Monitoring and Reporting
4.1 Monitoring: The Investor shall have the right to monitor the Company's progress towards achieving the milestones outlined in Section 2: Milestone Schedule. This may include, but is not limited to, regular updates, meetings, and access to documentation as reasonably requested by the Investor.
4.2 Quarterly Reporting: The Company is required to submit quarterly reports to the Investor. These reports shall include, at a minimum, a detailed account of progress towards milestones, financial statements, and a summary of the use of funds as per Section 3: Use of Funds.
4.3 Annual Audit: The Company agrees to undergo an annual audit of its financial statements by an independent certified public accountant selected by the Company and approved by the Investor. The results of such audit shall be made available to the Investor within [Number of Days] days of its completion.
Section 5: Conditions Precedent
5.1 Due Diligence Completion: The obligation of the Investor to provide the first tranche of funding is contingent upon the satisfactory completion of due diligence on the Company.
5.2 Legal Compliance: The Company must provide evidence of compliance with all relevant laws and regulations, including but not limited to corporate governance, employment, and intellectual property laws.
5.3 No Material Adverse Change: There shall be no material adverse change in the Company's business condition (financial or otherwise), operations, assets, or prospects between the date of this Agreement and the closing of the first funding tranche.
Section 6: Warranties and Representations
6.1 Company Warranties: The Company represents and warrants that it is a business duly organized, validly existing, and in good standing under the laws of its jurisdiction of incorporation; that it has the power and authority to enter into this Agreement; and that this Agreement constitutes a legal, valid, and binding obligation of the Company.
6.2 Investor Warranties: The Investor represents and warrants that it has the authority to invest the funds as specified in this Agreement and that the execution of this Agreement constitutes a legal, valid, and binding obligation of the Investor.
Section 7: Covenants
7.1 Affirmative Covenants: The Company agrees to:
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Operate its business in a professional and lawful manner.
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Maintain accurate and complete records of its operations and finances.
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Notify the Investor promptly of any material changes to its business or financial condition.
7.2 Negative Covenants: The Company agrees not to:
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Incur additional debt beyond a specified limit without the prior written consent of the Investor.
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Sell, lease, or dispose of a significant portion of its assets outside the ordinary course of business without the Investor's prior written consent.
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Enter into any agreements that would materially affect the Company's ability to fulfill its obligations under this Agreement without the Investor's prior written consent.
Section 8: Dispute Resolution
8.1 Negotiation: In the event of any dispute arising under the terms of this Agreement, the parties agree to first attempt to resolve the dispute through good faith negotiation.
8.2 Mediation: If the dispute cannot be resolved through negotiation within [Number of Days] days, the parties agree to submit the dispute to mediation, to be conducted by a mutually agreed-upon mediator, before resorting to litigation.
8.3 Arbitration: Should mediation fail, the dispute shall be finally settled by arbitration administered by [Name of Arbitration Association] in accordance with its Arbitration Rules. The arbitration shall take place in [Location], and the language of the arbitration shall be English. The decision of the arbitrator(s) shall be final and binding upon the parties.
Section 9: Governing Law
This Agreement shall be governed by and construed in accordance with the laws of [Specify Jurisdiction], without giving effect to any principles of conflicts of law.
Section 10: Confidentiality
10.1 Confidential Information: The parties acknowledge that in the course of this Agreement, they may receive confidential information. Such confidential information shall include, but not be limited to, the terms of this Agreement, business and financial information, customer and vendor lists, and pricing and sales information.
10.2 Obligation of Confidentiality: The parties agree to maintain the confidentiality of such information and to not disclose it to any third party without the prior written consent of the other party, except as may be required by law or as necessary to enforce this Agreement.
10.3 Duration of Confidentiality: The obligations under this section shall survive the termination or expiration of this Agreement.
Section 11: Termination
This Agreement may be terminated by either party upon written notice if the other party materially breaches any of its obligations under this Agreement and fails to cure such breach within [Number of Days] days after receiving written notice of the breach. Upon termination, the Company shall return to the Investor any unspent funds from the allocated investment tranches. Any obligations intended to survive termination (including confidentiality obligations) shall remain in effect.
Section 12: Amendments
Any amendments or modifications to this Agreement must be made in writing and signed by both parties. No oral amendments shall be considered valid.
Section 13: Signatures
This Agreement is executed by the duly authorized representatives of the Company and the Investor as of the date first above written.
FOR THE COMPANY
[Signature]
[Name]
[Title]
[Date]
FOR THE INVESTOR
[Signature]
[Name]
[Title]
[Date]
