Common use of Shortfall Fee Clause in Contracts

Shortfall Fee. If, in any quarter of a twelve month measurement period NLS and its Affiliates purchase from Broadcom less than the stated minimum purchase commitment percentage less five percentage points for any Broadcom Product (determined for this purpose as if the annual purchase commitments were also applicable to such [*****] Confidential portion has been filed separately with the Securities and Exchange Commission. quarter), then NLS shall promptly pay to Broadcom an amount equal to [*****] of Broadcom's unit profit margin (as set forth in Section 6) for such Broadcom Product multiplied by the additional number of units of such Broadcom Product that NLS and its Affiliates would be required to purchase so that their aggregate purchases of such Broadcom Product for the quarter would have equaled the stated minimum purchase commitment; provided, however, that in no event will NLS's payment obligations to Broadcom pursuant to this Section 7.4(b) exceed [*****] for any quarter. NLS shall provide Broadcom with reasonably detailed calculations of its purchase commitment compliance within thirty (30) days after the end of each quarter of a twelve month measurement period. Nothing contained in this Section 7.4(b) shall be deemed to create a minimum purchase obligation for NLS and its Affiliates in addition to the annual minimum purchase commitments set forth in this Section 7, and no failure on the part of NLS and its Affiliates to purchase particular quantities of Broadcom Products in any quarter (other than as set forth in Section 7.4(a)) shall in itself be deemed to constitute a material breach of this Agreement, but the failure of NLS and its Affiliates to purchase the stated minimum quantity of each Broadcom Product described in Sections 7.1, 7.3 and 7.5 during a twelve month measurement period shall constitute a material breach of this Agreement.