The Cap Contracts Clause Samples
The Cap Contracts clause sets a maximum limit, or "cap," on the total liability or financial exposure that a party may incur under a contract. In practice, this means that regardless of the number or severity of claims, the responsible party's obligation to pay damages or compensation cannot exceed the specified cap amount. For example, if a contract for services includes a cap of $100,000, the service provider cannot be held liable for more than that sum, even if actual damages are higher. This clause's core function is to allocate and limit risk, providing certainty and protecting parties from potentially unlimited financial losses.
The Cap Contracts. The Seller shall assign all of its right, title and interest in and to the interest rate cap transactions evidenced by the Cap Contracts to, and shall cause all of its obligations in respect of each such transaction to be assumed by, the Trustee on behalf of the Trust Fund, on the terms and conditions set forth in the Cap Contract Assignment Agreements. The Cap Contracts will be assets of the Trust Fund but will not assets of any REMIC. The Master Servicer, on behalf of the Trustee, shall deposit any amounts received from time to time with respect to the Cap Contracts into the Carryover Reserve Fund. The Master Servicer, on behalf of the Trustee, shall prepare and deliver any notices required to be delivered under the Cap Contracts. The Master Servicer, on behalf of the Trustee, shall act as calculation agent and/or shall terminate the Cap Contracts, in each case upon the occurrence of certain events of default or termination events to the extent specified thereunder. Upon any such termination, the Cap Contract Counterparty will be obligated to pay the Trustee or the Master Servicer for the benefit of the Trust Fund an amount in respect of such termination. Any amounts received by the Trustee or the Master Servicer for the benefit of the Trust Fund, as the case may be, in respect of such termination shall be deposited and held in the Carryover Reserve Fund to pay Net Rate Carryover for the Certificates (by deposit of the amount of any such Net Rate Carryover in the Carryover Reserve Fund for payment to the related Certificateholders) as provided in Section 4.04(a) on Distribution Dates following such termination to and including the related Cap Contract Termination Date. On the related Cap Contract Termination Date, after all other distributions on such date, if any such amounts in respect of early termination remain in the Carryover Reserve Fund, such amounts shall be distributed by the Trustee to the Class C Certificateholder.
The Cap Contracts. The Seller shall assign all of its right, title and interest in and to the interest rate cap transactions evidenced by, respectively, the Confirmation And Agreement 1 and the Confirmation And Agreement 2 to, and shall cause all of its obligations in respect of each such transaction to be assumed by, the Trustee on behalf of the Trust Fund, on the terms and conditions set forth in, respectively, the Cap Contract 1 Assignment Agreement and the Cap Contract 2 Assignment Agreement. Each Cap Contract will be an asset of the Trust Fund but will not be an asset of any REMIC. The Master Servicer, on behalf of the Trustee, shall deposit any amounts received from time to time with respect to each Cap Contract into the Distribution Account. The Master Servicer, on behalf of the Trustee, shall prepare and deliver any notices required to be delivered under each Cap Contract. The Master Servicer, on behalf of the Trustee, shall act as calculation agent and/or shall terminate each Cap Contract, in each case upon the occurrence of certain events of default or termination events to the extent specified thereunder. Upon any such termination, the applicable Cap Contract Counterparty will be obligated to pay the Trustee or the Master Servicer for the benefit of the Trust Fund an amount in respect of such termination. Any amounts received by the Trustee or the Master Servicer for the benefit of the Trust Fund, as the case may be, in respect of such termination shall be deposited and held in the Distribution Account to pay Net Rate Carryover for the Certificates as provided in Section 4.04(a) on Distribution Dates following such termination to and including the related Cap Contract Termination Date. On the related Cap Contract Termination Date, after all other distributions on such date, if any such amounts in respect of early termination remain in the Distribution Account, such amounts shall be distributed by the Trustee to the Class A-IO Certificateholder.