Common use of Penalty Payment Reductions Clause in Contracts

Penalty Payment Reductions. Subject to Section 4.1 of this Addendum, milestone reduction penalties described in this Section 4.3 (“Milestone Reduction Penalties”) will be deducted from the amounts payable to RB if MSX exceeds the applicable target delivery date for successfully completing all project activities pertaining to a particular milestone by more than [***], with larger reduction penalties if MSX exceeds the applicable Target Delivery Date for successfully completing all project activities pertaining to a particular milestone by more than [***]. The Milestone Reduction Penalty column indicates the percentage of the penalty, with the number to the left of the diagonal line indicating the percentage penalty if MSX completes the project activities more than [***] after the target date and the (larger) percentage to the right of the diagonal line indicating the percentage penalty if MSX completes the project activities more than [***] after the target date. As an example, the Milestone Reduction Penalty for the “Analytical Toolkit” phase is written “[***]% / [***]%,” and the target delivery date is described as “[***] from Signing” and the Milestone Amount is $[***]. If MSX completes all of the project activities in the Analytical Toolkit milestone at least [***] after the target delivery date, i.e., a minimum of [***] from Signing, MSX would receive a reduction penalty of [***]% of the milestone payment. In such case, its reduction penalty would be $[***] ([***]% x $[***] = $[***]) deducted from the base milestone payment of $[***], which means that that total amount payable for this milestone to MSX would be $[***]. If MSX completes all of the project activities in the Analytical Toolkit milestone at least [***] after the target delivery date, i.e., a minimum of [***] from Signing, MSX would receive a reduction penalty of [***]% of the milestone payment. In such case, its reduction penalty would be $[***] ([***]% x $[***] = $[***]) deducted from the base milestone payment of $[***], which means that that total amount payable for this milestone to MSX would be $[***].