Common use of Residual Payments Clause in Contracts

Residual Payments. MPL shall pay to Distributor residual payments following the expiration or termination of this Agreement, as follows: for the first twelve (12) month period following the expiration or termination of this Agreement, and payable within forty five (45) days after such expiration or termination, an amount equal to thirty percent (30%) of Average Annual Net Sales; and for the second twelve (12) month period following the expiration or termination of this Agreement, and payable within forty-five (45) days after the first anniversary of such expiration of termination, an amount equal to fifteen percent (15%) Average Annual Net Sales. For purposes of this Agreement, "Average Annual Net Sales" shall be calculated as follows: (A/B) x 12 where, A = total Net Sales from the Effective Date through the date of expiration or termination; and B = the total number of months that have elapsed from the Effective Date through the date of expiration or termination. In no event are the payments set forth above to be considered cumulative payments (i.e., more than forty-five percent (45%) of Average Annual Net Sales). In the event that it is determined that Distributor is in breach of the payment obligations under Section 5.07 of this Agreement, MPL shall be entitled to offset any amounts due and owing MPL against the residual payments due and owing Distributor under this Section 12.07.