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Embed code for: Contract Translation
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26232 Nottingham Drive
Loma Linda, CA 92354
December 7, 2015
The William Smith Company, LLC
1244 Plaza Dr., Suite 180
Orange, California 92866
Re: Contract Translation
Please find the attached document which contains a translated version of the consulting agreement with Capital Edge into plain English. Some of the wording has been copied verbatim as it doesn’t need any further translating. In addition, I have attached a separate page containing comments to each paragraph and potential problems that could arise from the contract.
In summary, this is a completely one-sided agreement in favor of Capital Edge Consulting, LLC. According to the contract proposed, they would receive far too much compensation for the services provided. Moreover, the contract contains an automatic renewal provision and unfair restrictions on the right to terminate for lack of performance. Finally, watch out for subjective ambiguous language along with the overly broad and one-sided indemnity, hold harmless provision.
Plain English Translation of Consulting Agreement
“Company” will refer to The William Smith Company, LLC.
“Consultant” and “Capital Edge” refers to Capital Edge Consulting, LLC.
“Agreement” is synonymous with all provisions provided below.
“Term” implies the length of the contract.
Words in their singular form will also imply the plural.
“Including,” “for example,” “any,” “each,” “e.g.,” “such as,” “etc.” or any derivation intended to be illustrative and not in limitation of.
All references to the masculine, feminine, or neuter genders signifies all genders.
Company agrees to hire Consultant as their business consultant throughout the term as defined in the second paragraph. Consultant shall only advise Company with regards to the following:
Company’s capital raising strategy and the tracking and preparation of presentation materials;
Company’s strategy, direction and growth that could possibly include the hiring of additional employees to do so;
Identification and securing of advisors, contractors, vendors, endorsements and strategic alliances, including distributors of Company’s products;
Identification of and helping to secure new business opportunities;
Structuring Company and relationships for proper incentives for all relating participants and stakeholders; and
Other matters mutually and specifically agreed upon.
Initially, the consulting services provided by Consultant will run for 12 months (Initial Term) and automatically extend for additional periods of 6 months (Extension Term). Either party can terminate the contract under the conditions outlined in paragraph 8 via notice delivered anywhere from 30-90 days prior to the end of the Initial Term or then-current Extension Term.
(a) When this Agreement comes into effect, Consultant will receive a 9% interest in Company. If and only if Company terminates the contract in compliance with such terms outlaid in paragraph 8, Company will have the option of buying back up to 6% of ownership, at a purchase price of $1. From March 1, 2013 – November 30, 2013, Company will have the right to purchase these shares of ownership back from Consultant, but the portion of the shares will diminish at a rate of 0.6667% per month. After the 9-month period ending November 30, 2013, whatever interest that has not been purchased back from Consultant, will remain Consultant’s property forever.
(b) Promptly following the execution of this Agreement, Company will rewrite their governing documents to show Consultant’s interest in company as stated in the above paragraph. At the sole discretion of Capital Edge, the interests held by Consultant can be restructured to have a 9% share of Company’s profits. If Company participates in any dilutive transactions such as stock buy-backs or the like, Consultant’s interest in Company shall be adjusted to remain equal to 9%. Capital Edge is free to transfer their interests to any party they see fit. In the event that Company modifies their organizational structure, Capital Edge will continue to receive the interest entitled to them as stated here.
(c) Capital Edge and its affiliated fund, Capital Edge Founder Fund, L.P, and each of Lee Weinberg and Tye Gonser, has the option through February 28, 2015 to invest and participate in all securities transactions which are otherwise offered to any persons or entities affiliated or not with Company.
(d) Capital Edge shall receive a commission equal to twelve percent (12%) of gross revenues received from the sales and services provided by Company. Payment of this commission is due with fifteen (15) days of the end of each month’s earned gross revenues. Capital Edge will have the right to audit, examine and copy the books and records kept by Company during the term and for two (2) years following the termination of contract. Any discrepancies or short-falls discovered in the book and records shall be immediatly rectified by Company to make up for payments which will then include interest at the rate determined by the then-current JPMorgran Chase Bank, N.A prime rate per annum compounded monthly from the dates(s) proper payment was originally due.
4. For any and all expenses that Consultant incurs resulting from performance of this Agreement shall be covered by Company. Company will reimburse Consultant no more than ten (10) days from invoice date. No expenses greater than $200 will be reimbursed unless Consultant notifies Company via email or telephone on or before the day they incur. Furthermore, Consultant’s travel, meals and accommodations outside of the County of Los Angeles shall be comparable to those arranged for Company’s executives or principals granted they are in direct relation to contractual agreements.
5. (a) From herein, “Consultant Affiliates” is defined by Consultant’s officers, advisors, members, investors, employees, consultants, contactors, attorneys, accountants and agents.
During the term of contract and afterwards, Company agrees to not to hold Consultant and Consultant Affiliates liable for any loss, claim or damage resulting from;
Breach of contract by Company
Any acts committed or refrained from by entities other than Consultant
Business relationship between both parties
Any acts committed or refrained from by Consultant and Consultant Affiliates defined within Agreement or otherwise authorized by Company.
Any costs incurred by Consultant and/ or Consultant Affiliates in connection to the guarantee above shall be reimbursed by Company.
(b) From herein, “Company Affiliates” is defined by Company’s officers, advisors, members, investors, employees, consultants, contactors, attorneys, accountants and agents.
During the term and afterwards, Consultant agrees to not hold Company and Company Affiliates liable for any loss, claim or damage whereas Consultant knowingly acts in bad faith with respect to their performance obligations. This is contingent that such performance was not agreed to by Company.
6. (a) Consultant agrees they will not render consulting services to any other entity that is a direct competitor to Company during the term of this Agreement. Company hereby understands that at anytime after this contract has been terminated, Consultant is free to conduct business and render services to any entity even if they directly compete with Company.
(b) Company agrees to the following:
They have not entered into any other agreement that would conflict with the services provided by Consultant.
Company has no promise requiring it to render services or restricting Company from doing business or giving up the rights Company has or may acquire in any intellectual property or asset. Moreover, there is no action, proceeding or investigation of any kind pending or threatened against that relates to any intellectual property or other asset.
Consultant’s obligation of performance is limited to those listed in paragraph 1.
While Consultant’s attorneys are members of the State Bar of California, they can not and will not provide any legal services during or after term directly to Company. However, the attorneys for Capital Edge can act as business consultants to Capital Edge in order to benefit the relationship between the parties of this Agreement during the term it runs for.
Compensation and the provisions of this Agreement have been negotiated by both parties and are not set by the law.
Provisions of this Agreement will not be divulged to any person or persons other than The William Smith’s legal counsel, accountant and then current members, unless it is court mandated.
Company understands all of the terms of this Agreement and Company’s relationship with Consultant. Furthermore, Company and has had the opportunity to retain and consult with a qualified and independent legal counsel to review this Agreement prior to acceptance of all the provisions contained within.
(c) During and after term of this Agreement, Consultant is free to advertise that they are/were the business consultant for Company.
7. The addresses corresponding to Company and Capital Edge are in fact true of those listed on the first page of the Agreement until a new address is provided. Any and all notices between the parties must be in writing and be delivered by a mail carrier service that provides a signed receipt.
8. (a) This contract can be terminated by the mutual written agreement of both parties.
(b) Company may ONLY terminate this contract if, and only if, Capital Edge is in material breach of the Agreements contained within it. This is contingent upon Company providing a written notice to Consultant which includes a detailed description of the alleged breach and such breach has remained uncured for thirty (30) days. No breach of contract shall be deemed incurable.
(c) Capital edge may terminate the contract at any time upon (30) days written notice to company.
9. (a) The contract has been entered into the State of California and its validity is based solely of the laws applicable to the State of California. Unless expressed otherwise, the Agreement is not intended to create a partnership between Company and Consultant.
(b) Any disputes between the parties relating to this Agreement shall be resolved via arbitration before a single arbitrator in Los Angeles, California pursuant to the rules, regulation and procedures of JAMS. Such arbitration will be conducted as follows;
Party seeking arbitration will provide written notice to the other parties of demand for arbitration which also includes a detailed account of the dispute.
Within ten (10) business days after delivery of written notice, he parties shall meet to attempt to agree on the selection of the arbitrator.
If parties cannot agree on the arbitrator, the party demanding arbitration may petition the Superior Court for the County of Los, Angeles, California for the appointment of an arbitrator.
The arbitrator cannot reform the Agreement.
Any arbitration award or judgment rendered shall be enforceable in any court of competent jurisdiction.
The right for either party to seek a temporary restraining order, injunctive or other equitable relief in connection with Agreement through court or administrative proceedings does not conflict with this paragraph 9(b).
(c) The prevailing party of the arbitration is entitled to recover the costs from the preparation and presentation of suit from losing party, including all reasonable attorney fees even if it does not proceed to final judgment. No recovery of costs from suit reduces the amount of arbitration award or judgment.
10. During the term of Agreement, Consultant can assign this Agreement to any entity either owned of controlled by Consultant. Company does not have this right; no other persons or entity can receive the rights contained within the contract.
11. If any part of this Agreement is found to be void or unenforceable, that part will be severed and eliminated, and the rest of this Agreement will remain in full force. If a provision is found void or unenforceable, both parties agree to come up with a new one as close as possible to the one being severed. The invalidity or unenforceability of such provisions will not affect Consultant’s right to compensation. Along that same note, if the parties cannot agree on new provisions to make them valid, Consultant is entitled to the “reasonable” value of their services and the reimbursement of expenses.
12. This is the complete agreement between the parties of the consulting services to be provided by Capital Edge to Company. This Agreement supersedes any prior oral or written agreement or understanding on the subject. It is agreed and understood that neither party is relying on statements made in connection to this Agreement except for those listed in the provisions above. Both parties understand they might have to sign documents and perform acts that couldn’t have been anticipated at the time the Agreement was formed.
The provisions that relate to limitations on liability, indemnity, governing law and venue will survive past the termination of Agreement. In order to modify the Agreement, the change must be in writing and signed by both parties. Failure to comply with the terms above does not create a new contract or modification to the provisions. Finally, if one party abandons any part of the agreement, either express or implied, does not affect the others’ right to enforce the contract or to seek remedy. greement of both parties.
11. If any part of this Agreement is found to be void or unenforceable, that part will be severed and eliminated, and the rest of this Agreement will remain in full force. If a provision is found void or unenforceable, both parties agree to come up with a new one as close as possible to the one being severed. The