Meaning and transaction use
An SEC-filed asset purchase agreement provides indemnification for specified losses and illustrates survival periods, a minimum claim threshold, an aggregate basket and a cap for certain representation claims. [S1]
Another SEC-filed agreement illustrates a tipping basket and separate ordinary-representation caps, with stated exclusions for fundamental representations and other claims. [S2]
Proposed control method: build a claim matrix by trigger, beneficiary, loss definition, evidence, notice deadline, defence rights, basket, cap, exclusion, insurance and payment source; update remaining limits after each claim.
Worked example
Illustrative deductible-basket claim only. Assume eligible aggregate losses of 0.60 million, a 0.10 million deductible basket, a 1.00 million cap and no earlier claims or applicable carve-outs.
Scroll the table horizontally to view all columns.
| Measure | Calculation | Result |
|---|---|---|
| Eligible aggregate losses | Given | 0.60m |
| Deductible basket | Given | 0.10m |
| Amount above basket | 0.60 - 0.10 | 0.50m |
| Remaining cap | Given | 1.00m |
| Illustrative recovery | Minimum of 0.50 and 1.00 | 0.50m |
The illustrative recovery is 0.50 million under the assumed deductible basket and cap. The actual agreement may produce a different result.
Proposed transaction review process
Define covered risk
Specify triggers, covered losses, beneficiaries, exclusions and interaction with other remedies.
Set limitations
Negotiate claim thresholds, basket type, caps, sub-limits, survival and carve-outs.
Design the claim process
Set notice, information, mitigation, third-party defence, settlement and dispute procedures.
Track recovery
Maintain claims, deadlines, evidence, insurance, escrow and remaining-limit schedules.
Evidence checklist
Contract evidence
Indemnity clause, defined losses, limitations, survival and exclusive-remedy provisions.
Loss evidence
Invoices, calculations, accounting entries, expert reports and mitigation record.
Claim evidence
Notice, contract references, chronology, supporting documents and responses.
Recovery evidence
Insurance, escrow, set-off, settlement, payment and remaining cap schedule.
Decision framework
| Situation | Proposed action |
|---|---|
| A potential claim is discovered | Check notice and survival deadlines immediately and preserve supporting evidence. |
| A third party makes the claim | Apply control-of-defence, consent and settlement provisions before taking material steps. |
| Insurance may respond | Notify under the policy and coordinate contractual and insurance recovery requirements. |
| Several limitations may apply | Calculate each threshold, cap, carve-out and prior recovery under the executed wording. |
Common errors to check
- Assuming every basket operates as a deductible.
- Missing a survival or notice deadline.
- Calculating loss without applying exclusions, mitigation or insurance.
- Settling a third-party claim without following contractual consent rights.
Map the indemnity exposure
Bring the draft agreement, identified risks, insurance and proposed recourse package to an indemnity review. Quantify each trigger, limitation, deadline and recovery source before signing.
Discuss the transactionPrimary references and editorial scope
- SEC filing: Indemnification survival, basket and cap
Example claims for specified losses, survival periods, minimum claim size, deductible basket and cap. Reference checked 17 September 2026. - SEC filing: Tipping basket and ordinary representation caps
Example tipping basket, ordinary representation caps and stated exclusions. Reference checked 17 September 2026.
General transaction education using public United States filings. Figures and claim mechanics are hypothetical. Legal effect, recoverable loss, limitation, insurance, tax and procedure depend on the executed documents, facts and jurisdictions.
General business information. Obtain advice appropriate to the legal, tax, accounting and financing facts. No offer, lender commitment or transaction outcome is represented. All worked examples use expressly assumed figures. Editorial draft date: 17 September 2026.
