Summary of Grant Award Terms
The key points of our standard Grant Agreement are summarized below.
Our grant agreement can only be executed with a Delaware C corp. Conversion may occur after the proposal has been accepted, but must occur before funds are distributed.
After the initial payment, funds are released based on successful completion of milestones which are mutually agreed upon at the start of the grant period.
Return on Investment
When it completes its next round of financing (e.g. Series A), the grantee shall issue Breakout Labs the same equity securities as issued in such next round calculated by dividing the amount of the grant by the applicable price per share or unit, discounted by 20%. In addition, Breakout Labs will receive warrant coverage, initially equal to 6% of the foregoing securities. Starting 12 months after the date of the grant, the warrant coverage will increase at a rate of 6% per month until the grantee receives at least $1.2MM of outside funding such as other grants, debt financing and/or equity financing.
For more information, see our blog post on calculating warrants.
Companies submit quarterly progress reports detailing their business, technical and scientific accomplishments, as well as financial reports detailing the use of grant funds. Breakout Labs has board observer and audit/ inspection rights.
Research funded by Breakout Labs must be submitted to a journal for open-access publication, allowing for appropriate intellectual property protection.
Companies own all inventions, discoveries and associated intellectual property rights created using the grant funds.