The contract seems quite fair and it's worth pointing out that Andy Bechtolsheim invested $100,000 in "Google" before "Googol" was even incorporated. Google lore has it they changed the name just to cash the check. As far as 1% penalties, it's not unheard of (particularly in construction) to penalize lateness and reward early completion. This guy's lawyer may be a putz, but if it has merit he'll have no trouble hiring better counsel.