Minimum Volume Requirements. Buyer acknowledges that Seller will procure Manufacturing Equipment, Initial Inventory, and other Component Parts, equipment, inventory, materials and resources in anticipation of the initial and ongoing Manufacture of Products under the terms of this Agreement. As consideration for Seller's capital investments in preparation for its performance of Seller's duties and obligations under this Agreement, Buyer agrees that it will schedule monthly shipments and purchase a minimum of One Million Dollars ($1,000,000.00) of Products per month (based upon the prices set forth in EXHIBIT C) from Seller (the "MINIMUM VOLUME REQUIREMENTS") beginning the third (3rd) calendar month after the commencement of the Manufacture of Products by Seller, and continue on a month to month basis for the life of this agreement. If, in any month following the third (3rd) calendar month after the commencement of the Manufacture of Products by Seller, Buyer fails to meet the Minimum Volume Requirements, Buyer shall pay Seller a "SHORTFALL CHARGE." The "SHORTFALL Charge" will be calculated by subtracting the sum of all invoices billed to Buyer by Seller for Products shipped during any applicable month from One Million Dollars ($1,000,000.00), then multiplying that figure by 25%. For example, if in one month, the sum of the total invoices for Products shipped is $900,000.00, then Buyer shall pay to Seller a Shortfall Charge of $25,000.00. The Seller shall invoice Buyer and provide sufficient detail on how the Shortfall Charge is calculated. Payment is due net thirty (30) days after the invoice date. Should buyer fail to make payment within thirty (30) days after the invoice date, Seller may, at its sole option, (i) cease shipments to the Buyer or other destinations designated by Buyer, and/or (ii) make partial or all future shipments on a C.O.D. basis until such delinquency has been paid. Interest at the rate of one percent (1.0%) per month shall accrue and be charged on all late payments. Non-payment of a monthly Shortfall Charge constitutes a material breach under Paragraph 8.2(a) and Paragraph 8.2(b) and all rights and remedies of the Seller to enforce the continued Minimum Volume Requirement remain in effect for the life of the Agreement.
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Minimum Volume Requirements. Buyer acknowledges that Seller will procure Manufacturing Equipment, Initial Inventory, and other Component Parts, equipment, inventory, materials and resources in anticipation of the initial and ongoing Manufacture of Products under the terms of this Agreement. As consideration for Seller's capital investments in preparation for its performance of Seller's duties and obligations under this Agreement, Buyer agrees that it will schedule monthly shipments and purchase a minimum of One Million Dollars ($1,000,000.00) 900,000 of Products per month (based upon the prices set forth in EXHIBIT Cdetermined on a three (3) month rolling average) from Seller (the "MINIMUM VOLUME REQUIREMENTSMinimum Volume Requirements") beginning the third (3rd) calendar month after the commencement of the Manufacture of Products by Seller, and continue on a month to month basis for the life of this agreement. If, in any month following the third (3rd) calendar month after the commencement of the Manufacture of Products by Seller, If Buyer fails to meet the Minimum Volume Requirements, Buyer shall pay Seller a "SHORTFALL CHARGE." Shortfall Charge". The "SHORTFALL Charge" Shortfall Charge for any month will be calculated by subtracting one third (1/3rd) of the sum of all invoices billed to Buyer by Seller for Products shipped during any the applicable month and the two months preceding the applicable month (each such rolling three (3) month period is referred to as a "Measurement Period"), from One Million Dollars ($1,000,000.00)900,000, then multiplying that figure by the Applicable Percentage from the following table: Last Month of Measurement Period Applicable Percentage -------------------------------- --------------------- 11/2002 through 1/2003 5% 2/2003 through 4/2003 5% 5/2003 through 7/2003 10% 8/2003 through 10/2003 15% 11/2003 through 1/2004 20% 2/2004 and thereafter 25%. % For example, if in one month2/2003, the sum of the total invoices for Products shipped is $900,000.00800,000.00, and the total for the first preceding month was $750,000.00 and the second preceding month was $850,000.00, then Buyer shall pay to Seller a Shortfall Charge of $25,000.005,000.00 for that Measurement Period (1/3rd of three month total ($2,400,000/3 = $800,000) deducted from $900,000 = $100,000 x 5% = $5,000). The Seller shall invoice Buyer and provide sufficient detail on how the Shortfall Charge is calculated. Payment of any Shortfall Charge is due net thirty sixty (3060) days after the invoice date. Should buyer fail to make payment within thirty (30) days after Notwithstanding the invoice date, Seller may, at its sole optionprovisions above, (i) cease shipments to the Buyer or other destinations designated by Buyer, and/or no Shortfall Charge shall be due and payable for any month in which on-time delivery (as defined below) falls below 90%; (ii) make partial or the amount on which the Shortfall Charge is calculated shall be reduced (but not below zero) by the dollar amount of all future shipments units during the month that are not delivered on time. For purposes of this Agreement, "on-time delivery" shall be measured on a C.O.D. monthly basis until such delinquency has been paid. Interest at and shall be calculated as the rate number of one percent (1.0%) per units delivered on schedule during the month shall accrue and over the number of units delivered or scheduled to be charged on all late payments. Non-payment of a monthly Shortfall Charge constitutes a material breach under Paragraph 8.2(a) and Paragraph 8.2(b) and all rights and remedies of delivered during the Seller to enforce the continued Minimum Volume Requirement remain in effect for the life of the Agreementsame month.
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