Waterfall Caps Sample Clauses

A Waterfall Caps clause sets a maximum limit on the amount or percentage that can be distributed to parties at each stage of a distribution waterfall, commonly used in finance and investment agreements. In practice, this means that after certain thresholds or priorities are met—such as repaying initial capital or preferred returns—subsequent distributions to investors or stakeholders are capped at predefined levels before moving to the next tier. This clause ensures that no single group receives more than the agreed-upon share at each stage, promoting fairness and predictability in the allocation of returns and helping to prevent disputes over excess distributions.