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PENALTY:

1. In the event that the Buyer fails to issue the L/C in compliance then Buyer shall immediately pay, without protest, to Seller a two percent (2%) Penalty on the aggregate Contract value of Contract for all shipments, upon Seller's demand upon the Buyer.

2. In the event that the Seller fails to deliver his Product, then Seller shall pay to Buyer a two percent (2%) Penalty on the aggregate Contract value of Contract for all shipments.