Startup Legal and Advisory Agreement
This Startup Legal and Advisory Agreement (the “Agreement”) is the written fee contract that governs the relationship between Lomax Advisory, LLC and this client. We, Lomax Advisory, a Mississippi Limited Liability Corporation (hereinafter “LA”), will provide legal and advisory services to you, [CLIENT] ( hereinafter “Client” ), on the terms and conditions set forth below.
1. CONDITIONS.
This Agreement will not take effect, and LA will have no obligation to provide legal or advisory services to you, until you return a signed copy of this Agreement and pay the initial retainer required under Section 5.
For organizational clients (corporations, associations, etc.), the person signing the Agreement on the Client’s behalf warrants and represents that he or she is the duly authorized representative of the Client.
The Client must not have taken more than $250,000.00 in equity side financing to qualify for this package.
2. SCOPE OF SERVICES.
You are hiring LA to provide legal and business advisory services for services outlined in this document and/or agreed by the two parties to this agreement at a later date in writing.
LA will provide the legal and advisory services reasonably required to represent you. LA will take reasonable steps to keep you informed of the progress of the matter and respond to all your inquiries. LA shall diligently represent you and conform to the Rules of Professional Conduct of the Mississippi State Bar.
Unless and until you and LA make a different agreement in writing, this Agreement will govern all future services LA may perform for you in connection with this matter.
3. CLIENT’S DUTIES.
You agree to be truthful with LA, to cooperate, to keep LA informed of developments, to abide by this Agreement, to pay LA’s bills on time, and to keep LA advised of your address, telephone number, and whereabouts.
4. LEGAL FEES AND BILLING PRACTICES.
You agree to LA’s Startup Package rates for time spent on your matters by LA’s personnel. LA’s hourly rates for legal personnel are based on such factors as an individual’s experience, expertise and efficiency, and the type or nature of the matter.
The current hourly rate for this type of matter for Attorneys is $150 an hour for Legal Services and $150/hour for non-legal business advisory. The current hourly rate for any law clerks, legal assistants or paralegals utilized or employed by LA is $35 an hour.
These hourly rates are subject to change upon thirty (30) days written notice to you. If you decline to pay any increased rates, LA will have the right to withdraw from this contract.
5. STARTUP LEGAL AND ADVISORY PACKAGE.
The Startup Legal and Advisory package consists of 8 hours of legal or advisory work per month at $200/month from LA for a base year-long commitment of $2,400 from the Client. For Additional Documents produced by LA, the Client will pay $100 per document. LA will begin agreed upon work as needed by the Client upon receipt of the Client’s signature and the Client’s first payment for the amount indicated below.
If the Client has an outstanding billing statement, LA will not perform any further work until the outstanding billing statement(s) have been paid and brought current. Additional hours required outside the 8 hour monthly pool will be paid at the ‘By the Hour’ prices as agreed upon before the work has begun. LA will not start work outside of the pool hours until expressly instructed to by the Client.
Pool hours do not roll over beyond 8 hours from month to month.
The Client agrees to pay for this Startup Legal and Advisory Package as follows:
1. Get Started Fee: $400.00.
A combined $200.00 payment for your first month and a $200.00 up-front payment for your last month are due to activate this contract.
2. Monthly Subscription Fee: $200.00.
A $200.00 a month fee entitles the Client to 8 hours of startup and legal counseling every month. This averages out to a $25.00/hour. Additional hours are billed at the hourly billing rate as stated in Section 4.
3. Document Fees: $100.00 per document.
The following documents can be produced for the Client at a flat fee of $100.00 per document and against 2 hours of the Client’s monthly 8 hour monthly pool. Client will not be charged more hours per document unless the requests by the Client go beyond two (2) extraneous requests in addition to the document produced by LA.
LA may choose to not perform any extraneous requests that LA finds imprudent or unnecessary to the effectiveness of the document, or request the Client’s request as counting against its pool of hours or additional hourly rates.
The Startup Legal and Advisory Package includes the following documents and services
Services:
Access to Lyceum Labs Slack (if requested, included, no hours expended);
Asana Task Management and Business Efficiency Set Up (if requested, included, no hours expended);
Documents (as requested by the Client).
Documents Available in Package:
If the Client chooses to change corporate form from the form chosen below, LA will do the requested work using available pool hours, or at its ‘Bill by the Hour’ rate.
Choose Original Corporate Form: LLC _______ ; C-Corp _______ ; B-Corp _________ .
Choose State: Delaware, Mississippi, Other: ______________________ .
Incorporation, Organization, and Qualification:
Reservation of corporate name;
Filing of Registered Agent;
Filing LLC Articles of Organization;
Preparation of LLC Operating Agreement;
Preparation and filing of Certificate of Incorporation;
Preparation of Bylaws and Certificate of Secretary;
Preparation of Action By Incorporator;
Preparation of Organizational Board Consent regarding organization and corporate governance matters;
Preparation and filing of Form SS-4 Application for Employer Identification Number (and state tax application for state where the business is located);
Preparation and filing of qualification to do business as a foreign corporation in the state in which the company is located (if applicable) - 1State - additional states out of additional consulting hours;
Preparation and organization of corporate records and minute book;
Preparation of Stockholder Consent regarding the following organization and corporate governance matters:
Approval of form of Indemnification Agreement for officers and directors;
Approval of Stock Option/Stock Issuance Plan.
Preparation of form of Indemnification Agreement for officers and directors.
Capitalization Matters (Corps Only):
Preparation of Founders’ Restricted Stock Purchase Agreements for up to four Founders (with standard vesting terms - custom terms out of pool hours);
Preparation of Stock Certificates and Receipts for up to four Founders;
Preparation of 83(b) Elections for Founders.
Employment and Consulting Matters:
Preparation of form of At-Will Employment Offer Letter;
Preparation of form of Employee Confidentiality and Inventions Agreement;
Preparation of form of Independent Contractor Services Agreement.
Intellectual Property Matters:
Preparation of form of Unilateral (One Way) Nondisclosure Agreement (NDA);
Preparation of form of Mutual (2-Way) Nondisclosure Agreement (NDA);
Preparation of Assignment of intellectual property from Founders to the company.
Business Documents
Scope of Work Outline;
Business Plans;
Business Pitch Decks;
Employee Handbooks (1 handbook = 3 documents)
Branding Products
Logo Design;
Web Design ( 2 pages equal 1 document );
App Design ( 4 screens equal 1 document );
Use of Pool Hours:
The Client receives five (8) hours every month of advice and consultation with a startup attorney (including document review), negotiation on matters of your choice (which may include topics such as employment, real estate (office or store leases), intellectual property, venture capital and/or angel investor term sheets, private placement memorandums (PPMs), fund raising, technology consulting, general business management consulting, marketing consulting, and/or business plans; also, negotiating, reviewing, drafting, and execution of other business or personal related agreements for the company or its employees.
Unused Advisory Pool Hours do not roll over from month to month beyond 8 hours. The Client may use hours from future months in months when 8 hours is not sufficient to accomplish the work needed by the Client. Advanced hours from future months will be taken off of the backside of the pool hours (i.e., from the last month available) at a 2 to 1 rate ( $50/hour ).
Advisory Pool Hours are amenable to both parties schedules, but LA will make all attempts to work as quickly as possible when requested.
What is Not Included:
The Startup Legal and Advisory Package is designed to provide startups with a comprehensive set of tools that will allow them to protect their intellectual property and become investor-ready to seek outside financing. This package does not include any future stockholders’ agreement or any private placement memorandum or other documents to raise external financing. These may be created at separately and upon request using Advisory Pool Hours, or ‘Bill by the Hour’.
6. SUBSCRIPTION FEES, HOLDING FUND, AND RETURN OF SUBSCRIPTIONS.
The Startup Legal and Advisory Package is designed to provide startups with an affordable way of establishing their company that gives the startup the chance to build, not worry about legal. To accomplish this, the Client pays a Monthly Subscription Fee which is invested in a holding fund by LA. The holding fund is a public investment account run by LA. LA has complete autonomy in what company or companies to invest the paid in subscription funds.
If the held funds increases in value over 20% over the course of this 12 month partnership, the Client will be returned 100% of the paid-in subscription fees. Document fees are not returned. If the fund increases in value under 20%, LA will return paid-in subscription fees minus 20%.
If the held fund decreases in value over the course of this 12 month partnership, the Client will be returned all subscription fees remaining minus 20%. The Client will be entitled a minimum return of capital of a value half of the paid-in subscription fees.
At the conclusion of the 12 month subscription term of this contract, the Client may end this contract and request return of the paid-in subscription fees. LA has 30 days to return the above calculated amount to the Client. Once returned, the Client is not due any further appreciation of value that may occur to LA’s holding fund.
The Client may request early return of the paid-in subscription payments, but not paid document fees, at the conclusion of the third month. Early return of paid-in subscription payments ( ‘principal funds’ ) are returned according to the following schedule:
Month 1-3: No refund of funds or equity assignment.
Month 4: 100% of principle funds, plus 2% equity in company retained;
Month 5: 100% of principle funds, plus 2% equity in company retained;
Month 6: 100% of principle funds, plus 2% equity in company retained;
Month 7: 100% of principle funds, plus 1% equity in company retained;
Month 8: 100% of principle funds, plus 1% equity in company retained;
Month 9: 100% of principle funds, plus 1% equity in company retained;
Month 10: 100% of remaining principle funds, minus 40%;
Month 11: 100% of remaining principle funds, minus 40%.
Beyond the first twelve months, the Client is automatically rolled over into a month-to-month subscription contract. The Client may choose to exit the agreement beyond 12 months with no exit penalty and according to the return of capital guidelines as outlined in the paragraphs directly above.
7. EQUITY SECURITY.
The Client through individual owners agrees to secure this 12 month contract with a reverse-vesting equity assignment in their company. By signing the ‘Equity Security’ section following the contract signature page, all signing individuals to the Equity Security assign a total of two percent ( 2% ) of their own equity or future equity to LA — if two individuals assign their equity, each assigns 1%. After the payment of Month Six’s subscription payment, the equity assigned to LA drops to one percent ( 1% ). After Month Nine’s subscription payment, the all equity previously assigned to LA is no longer assigned to LA but returns to the signing individuals.
At any point, the Client may buy back the assignment in lieu of finishing this contract for the remaining subscription fees due under the contract, i.e., total subscription fee price minus previously paid-in subscription fees. If at any point LA terminates this relationship for any reason other than non-payment of fees due, The equity assignment is dissolved and all equity returns to the signing individuals.
8. FINANCING EVENT.
Upon a Financing Event in which the Client raises $250,000.00 or more debt or equity, the Client agrees that any remaining subscription fees are doubled until the ending of this contract, upon which paid-in subscription fees will be paid back as outlined by this agreement.
9. COSTS AND OTHER CHARGES.
In General – LA will incur various costs and expenses in the performance of legal services under this Agreement. You agree to pay for those costs and expenses in addition to LA’s hourly rates.
The costs and expenses commonly include filing fees, document search and copying fees, fees fixed by law or assessed by courts and other agencies, postage, messenger and other delivery fees, word processing charges, parking and other local travel expenses, long distance telephone calls and facsimiles, photocopying and other reproduction costs, deposition costs, preparation of exhibits, computer research costs, and other similar items.
Out-of-Town Travel – You agree to pay transportation, mileage, meals, lodging, and all other costs of any necessary out-of-town travel by LA legal personnel. You will also be charged the hourly rates for the time legal personnel spend traveling. Out-of-Town travel will be approved by the Client before the travel occurs.
Consultants and Investigators – To aid in the preparation or presentation of your legal or business materials, it may be necessary to hire consultants or investigators. LA will not hire such persons unless you agree to pay their fees and charges prior to hiring. LA and client will jointly select any consultants or investigators to be hired.
10. BILLING STATEMENTS.
A monthly billing summarizing all legal services performed, fees charged, and costs incurred shall be provided to you by LA. Payment is due within 15 days of issuance of the bill and balances outstanding for 30 days shall be deemed by LA to be delinquent.
You agree that delinquent status may, at the election of LA, result in the interruption or termination of service. A termination of service that occurs because of failure to pay due balances results in the final assignment of equity to LA from the signing equity holders. Each individual equity holder may reacquire their equity assignment within 60 days of termination of service by paying any due bills plus the individual’s owed security remaining under the contract. After 60 days, the assignment of equity is final and fully assigned to LA.
Any balance that remains unpaid beyond 30 days will be subject to a finance charge of 10% after 30 days and an additional 1.5% per month (18% annual percentage rate).
11. DISCHARGE AND WITHDRAWAL.
You may discharge LA at any time. LA may withdraw with your consent or for good cause. Good cause includes, but is not limited to, breach of this Agreement, your refusal to cooperate with LA or to follow LA’s advice on a material matter, or any fact or circumstance that would render LA’s continuing representation unlawful or unethical.
When LA’s services conclude, all unpaid worked hours will immediately become due and payable. A return of subscription fees and assigned equity will follow as outlined in Section 6.
If LA is discharged by the Client, unpaid worked hours will be paid at the ‘Pay by the Hour’ rate.
Moreover, after LA’s services conclude, LA will, upon your request, deliver your file to you, along with any funds or property belonging to you in LA’s possession.
12. DISCLAIMER OF GUARANTEE.
Nothing in this Agreement or in LA’s statements to you should be construed as a promise or guarantee about the outcome of work to be performed for you by LA. LA makes no promises or guarantees. You recognize that LA can only use its best efforts and diligence and that LA does not guarantee or warrant the results of any representation or the time and/or resources it will take to complete any particular case or project. LA’s comments about the outcome of your case are only expressions of LA’s opinion.
13. EFFECTIVE DATE.
This Agreement will take effect when you have fully satisfied the conditions stated in Paragraph 1, but its effective date will be retroactive to the date LA first provided services to the Client. The date at the beginning of this Agreement is only for purposes of reference. Even if this Agreement does not take effect, you will be obligated to pay LA the reasonable value of any services LA may have performed for you at your request.
14. SEVERABILITY.
In the event any provision of this Agreement, in whole or in part, is held unenforceable for any reason, the remainder of this Agreement shall remain in full force and effect.
15. ENTIRE AGREEMENT.
This document contains the entire agreement between LA and the Client and there are no representations or warranties between the parties other than those expressly stated herein.
16. INDIVIDUAL LIABILITY AND AUTOMATIC ASSIGNMENT.
In the case that this Agreement is signed by an individual or individuals in their personal capacity and LA assists the individuals in setting up a company as part of the services outlined herein, the individuals are liable under this contract until such time that the new legal entity is formed and completed. Once formed, the new legal entity formed under the services provided by this Agreement will automatically be assigned the duties and liabilities of the individuals and the individuals will no longer be personally bound by this Agreement. This automatic assignment occurs even if the entity formed bears a different name than listed on this document so long as it is formed by LA under contractual obligations created by this Agreement.
Signing Section Here by Client Representatives
EQUITY ASSIGNMENT
The undersigned individuals agree to assign a total of 2% of our personal equity or future equity ( split evenly between the undersigned ) in the below stated Company to Lomax Advisory according to the terms stated in this Agreement in Section 7.
Equity Signing Section by Individual Owners