Early termination penalty buried in Exhibit C: 12 months remaining rent PLUS loss of security deposit PLUS $15,000 "administrative fee." Total early exit cost: $73,000 The lease also had a "personal guarantee" clause Marcus didn't notice—his personal assets were on the line.
Payment terms said "Net 30" but required: - Purchase order approval (7-10 days) - Three-level internal approval (up to 21 days) - Monthly payment batch processing (up to 30 days) Real payment timeline: 58-91 days For a $180K contract billed monthly ($15K/month), she was essentially providing a $30-45K interest-free loan to her client.
Annual price escalation clause tied to "vendor's published rate sheet" with no cap. Year 1: $24,000 Year 2: $26,400 (10% increase) Year 3: $29,900 (13% increase) Year 4: $34,400 (15% increase) Year 5: $39,600 (15% increase) 5-year total: $154,300 vs. expected $120,000 (if 0% increase) They'd budgeted for 3% annual increases max.
"Exclusive distribution rights" clause meant: - They couldn't sell through ANY other channel - Partner could sell competing products - No minimum purchase requirements for partner - 2-year exclusive lock-in If the partner didn't perform, they were stuck for 2 years with no other way to reach customers.
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