Contingent Cap Clause Samples
A Contingent Cap clause sets a maximum limit on a party’s financial liability, but only if certain specified conditions or events occur. In practice, this means that the cap on damages or payments is not always in effect, but is triggered by particular circumstances, such as a breach of contract or the failure to meet performance milestones. This clause is used to manage risk by providing a clear upper boundary on potential losses, but only in situations where the agreed-upon contingencies arise, thereby balancing flexibility with financial protection for both parties.
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Contingent Cap. The aggregate amount of Liquidated Damages payable to any Holder under this Agreement shall not exceed ten percent (10%) of the amount of the Holder’s initial investment in Registrable Securities (“Liquidated Damages Cap”), provided that the Liquidated Damages Cap shall be automatically increased or eliminated without further action by the parties hereto to the extent that such increase or elimination does not, under the then published statements of the Fair Accounting Standards Board (to the extent not challenged or disputed by the Commission), result in (A) the Liquidated Damages payment obligation being accounted for as a derivative instrument rather than a contingent payment obligation under generally accepted accounting principles and the rules and regulations of the Commission or (B) any of the Registrable Securities (whether or not deemed to include the Liquidated Damages payment obligation) being accounted for as interests other than equity interests under generally accepted accounting principles and the rules and regulations of the Commission.